In Re: Interpictures Inc., Debtor. Eliezer Miller v. Generale Bank Nederland, N v. Interpictures Inc., Debtor-Appellee, 217 F.3d 74, 2d Cir. (2000)

217 F.3d 74 (2nd Cir.
2000)
In Re: Interpictures Inc., Debtor.

ELIEZER MILLER, Appellant,
v.
GENERALE BANK NEDERLAND, N.V., Defendant-Appellee,
INTERPICTURES INC., Debtor-Appellee.
Docket No. 99-5055
UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT
Argued: January 11, 2000,
Decided: June 26, 2000,
ELIEZER MILLER, pro se, Brooklyn, New York, for Appellant.

P. GREGORY SCHWED, Loeb & Loeb LLP, New York, New York, for
Defendant-Appellee.
EDWARD P. FREY, Westhampton Beach, New York, for DebtorAppellee.
Before: WINTER, Chief Judge, JACOBS, and CALABRESI, Circuit
Judges.
PER CURIAM:
Eliezer Miller appeals from Judge Korman's affirming of a bankruptcy court

order denying appellant's motion to abandon an asset of the debtor to him
pursuant to 11 U.S.C. 554(b). We hold it was not an abuse of discretion to deny
appellant's motion on the ground that he lacks a possessory interest in the asset,
a civil claim arising under the Racketeer Influenced and Corrupt Organizations
Act, 18 U.S.C. 1961-1968, and various common law claims (collectively, "the
RICO claim" or just "the claim"). We also affirm the bankruptcy court's order
that the RICO claim not revest in the debtor upon the close of the bankrupt
estate.
BACKGROUND
This appeal arises out of nearly fourteen years of bankruptcy proceedings

involving appellant and the debtor, Interpictures Inc. See Miller v. Generale
Bank Nederland, N.V. (In re Interpictures Inc.), No. 99-5055, 2000 WL
232149, at *1 (2d Cir. Feb. 3, 2000) (unpublished table decision) (providing a
procedural history). We summarize here only that portion of the procedural
history relevant to our disposition.
Appellant is a creditor of Interpictures and also claims to own a majority of its

shares. In November 1986, creditors commenced an involuntary Chapter 7
bankruptcy proceeding against Interpictures and its wholly owned subsidiaries,
which Interpictures quickly converted into a voluntary bankruptcy under
Chapter 11. In September 1987, based on appellant's allegations of fraud in the
conduct of the debtor's estate, the bankruptcy court appointed an operating
trustee. Alleging that the fraud continued even after the trustee's appointment,
appellant filed a lawsuit in December 1987 on behalf of the debtor asserting
common law fraud and RICO claims against former principals of the debtor,
the former trustee, the predecessor to creditor-appellee Generale Bank,
Nederland, N.V. (the "Bank") and several other creditors, and counsel to the
trustee and Bank. Appellant's action was dismissed on the grounds that: (i)
appellant, as an alleged holder of stock in the debtor, lacked standing to bring a
derivative lawsuit on the debtor's behalf; and (ii) the RICO claim had not been
abandoned to appellant pursuant to 11 U.S.C. 554, and, absent abandonment,
only the trustee could bring it on the debtor's behalf.
The instant motion is the most recent in a series of appellant's unsuccessful

attempts to have the RICO claim abandoned to him. The bankruptcy court
denied the motion and ordered that the RICO claim not revest in the debtor at
the close of the bankrupt estate, and the district court affirmed the bankruptcy
court's order. We remanded the matter to the district court for a more complete
statement of its reasons for denying abandonment of the claim to appellant
because we were "unable to determine on what ground or grounds the courts
below denied [appellant's] motion." Miller, 2000 WL 232149, at *1.
On remand, the district court gave alternative reasons for denying abandonment
of the RICO claim to appellant: (i) appellant impermissibly sought to have the
claim abandoned to him to prosecute in his personal capacity, not to prosecute
on behalf of the bankrupt estate; and (ii) appellant lacks a possessory interest in
the claim. Appellant thereafter restored jurisdiction in this court pursuant to our
remand order and the procedures described in United States v. Jacobson, 15
F.3d 19, 21-22 (2d Cir. 1994).
DISCUSSION
Section 554(b) of the Bankruptcy Code provides, in pertinent part, as

follows:On request of a party in interest . . ., the court may order the trustee to
abandon any property of the estate that is burdensome to the estate or that is of
inconsequential value and benefit to the estate.
11 U.S.C. 554(b). The parties agree that, for purposes of Section 554(b), the
RICO claim is "of inconsequential value and benefit to the" debtor, id. See In re
Interpictures, Inc., 168 B.R. 526, 536 (Bankr. E.D.N.Y. 1994) (finding that
RICO claim "has no value"). The predicate facts for abandonment having been
established, the issue is whether the district court abused its discretion in
denying appellant's motion to have the claim abandoned to him. See Johnston
v. Webster (In re Johnston), 49 F.3d 538, 540 (9th Cir. 1995) ("Once a
bankruptcy court has determined that the factual predicates for abandonment . .
. are present, the court's decision to authorize or deny abandonment is reviewed
for abuse of discretion.").
Section 554(b) gives the district court discretion to order abandonment of a

debtor's worthless or burdensome property, but does not specify to whom such
property may be abandoned. See 11 U.S.C. 554(b). Several courts, citing the
legislative history to Section 554(b), have held that property should be
abandoned only to a holder of a possessory interest in it. See, e.g., In re Pilz
Compact Disc, Inc., 229 B.R. 630, 642 (Bankr. E.D. Pa. 1999) ("Abandonment
must be to an entity with a possessory interest in the property."); In re Popp, 166
B.R. 697, 700 (Bankr. D. Neb. 1993) ("Abandonment may be to any party with
a possessory interest in the property abandoned." (quoting S. Rep. No. 95-989,
at 92 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5878)); see also 5 Collier
on Bankruptcy P 554.02[3], at 554-5 (Lawrence P. King ed., 15th ed. 1999)
("Although section 554 does not specify to whom property is abandoned,
property may be abandoned by the trustee to any party with a possessory
interest in it."). The rationale for this rule is that once the debtor's property is
abandoned in bankruptcy, the property should be treated as though no
bankruptcy proceedings had occurred and therefore revert to the party that held
a pre-petition interest in it. See In re Popp, 166 B.R. at 700; see also Dewsnup
v. Timm (In re Dewsnup), 908 F.2d 588, 590 (10th Cir. 1990) ("Following
abandonment, whoever had the possessory right to the property at the filing of
bankruptcy again reacquires that right." (citation and internal quotation marks
omitted)), aff'd, 502 U.S. 410, 116 L. Ed. 2d 903, 112 S. Ct. 773 (1992).
We need not, and do not, decide whether property should be abandoned only to
a holder of a possessory interest. It is enough to dispose of this appeal that, in
our judgment, the district court did not abuse its discretion in relying on this
rationale as a ground for denying abandonment of the RICO claim to appellant.
The derivative RICO claim belongs to the debtor's estate. Appellant's status as a
creditor to the debtor does not give him either standing to prosecute or a
possessory interest in this claim. See Manson v. Stacescu, 11 F.3d 1127, 113031 (2d Cir. 1993) (holding that creditors of bankrupt estate lack standing to
bring RICO claim alleging indirect injury as result of direct injury to estate).
And, even if we assume that appellant is a majority shareholder of the debtor
and that he is seeking to prosecute the RICO claim on the debtor's behalf, he
still cannot be said to have a possessory interest in the claim. See Rand v.
Anaconda-Ericsson, Inc., 794 F.2d 843, 849 (2d Cir. 1986) ("The [derivative]
RICO action . . . is a corporate asset, and shareholders cannot bring it in their
own names . . . ."). Finally, appellant's conduct in these proceedings has led to
understandable concern that he might use this claim more as a means of
harassment than of obtaining justified relief. See In re Interpictures, Inc., No.
886-11827, slip op. at 3-4 (Bankr. E.D.N.Y. Jan. 29, 1999). Whether such a
concern would be relevant to a determination of an abandonment motion by a
party with a possessory interest in such a claim is something we need not
decide. However, it certainly weighs against abandonment to someone without
such an interest who could not bring such a claim without a bankruptcy court
order abandoning it to him. Accordingly, we affirm the order denying
abandonment of the RICO claim to appellant.
10
We also affirm the order that the RICO claim not revest in the debtor at the
close of the bankrupt estate. As noted, the bankruptcy court exercised its
discretion pursuant to Section 554(c) of the Bankruptcy Code and ordered that
the RICO claim not revest in the debtor upon the closing of the estate, as it
would in the ordinary course. See 11 U.S.C. 554(c) ("Unless the court orders
otherwise, any property . . . not otherwise administered at the time of the
closing of a case is abandoned to the debtor . . . ."). Appellant has not
challenged this order in either his appeal briefs or the submissions he filed with
this court after supplementation of the record on remand. Appellant has
therefore forfeited any objection to it. See Rodriguez ex rel. Rodriguez v.
DeBuono, 175 F.3d 227, 230 n.1 (2d Cir. 1999) (deeming issues not argued in
appellant's brief waived).
11
Finally, the history of appellant's extensive motion practice concerning the

RICO claim renders it necessary for us to underscore that his quest to have that
claim abandoned to him has been fully and finally adjudicated. Under our
ruling, appellant is not entitled to prosecute the claim and may not seek to do so
-- on his behalf, on the debtor's behalf, or in any other capacity. Nor may the
debtor, upon emerging from the bankruptcy, assert this claim in light of our
affirmance of the order that the RICO claim not revest in the debtor. Any
motion, lawsuit, or other proceeding seeking to circumvent these rulings may
be subject to sanctions.
CONCLUSION
12
We therefore affirm the orders denying abandonment of the RICO claim to

appellant and holding that the RICO claim not revest in the debtor at the close
of the bankrupt estate.

In Re: Interpictures Inc., Debtor. Eliezer Miller v. Generale Bank Nederland, N v. Interpictures Inc., Debtor-Appellee, 217 F.3d 74, 2d Cir. (2000)

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217 F.3d 74 (2nd Cir.

In Re: Interpictures Inc., Debtor.

UNITED STATES COURT OF APPEALS

ELIEZER MILLER, pro se, Brooklyn, New York, for Appellant.

Eliezer Miller appeals from Judge Korman's affirming of a bankruptcy court

This appeal arises out of nearly fourteen years of bankruptcy proceedings

Appellant is a creditor of Interpictures and also claims to own a majority of its

The instant motion is the most recent in a series of appellant's unsuccessful

Section 554(b) of the Bankruptcy Code provides, in pertinent part, as

Section 554(b) gives the district court discretion to order abandonment of a

Finally, the history of appellant's extensive motion practice concerning the

We therefore affirm the orders denying abandonment of the RICO claim to

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