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Sabo v. Furr

United States District Court, S.D. Florida

August 18, 2017

ADAM SABO, Appellant,
v.
ROBERT C. FURR, Appellee.

          ORDER AFFIRMING BANKRUPTCY COURT'S ORDER GRANTING MOTION TO APPROVE STIPULATION TO COMPROMISE CONTROVERSY

          ROBIN L. ROSENBERG UNITED STATES DISTRICT JUDGE.

         This is a bankruptcy appeal. On September 13, 2015, Debtor Alberto Candaro ("Debtor") filed a voluntary Chapter 7 bankruptcy petition in the United States District Court for the Southern District of New York. Venue was later transferred to this Court. Appellee Robert Furr ("Trustee") is the permanent trustee of Debtor's estate. Appellant Adam Sabo ("Appellant") is the sole creditor. On November 18, 2016, a Stipulation to Compromise Controversy Between the Trustee, Debtor, and Other Parties ("Stipulation") came before Judge Hyman of the Bankruptcy Court for approval. Appellant objected. Following a hearing, the Bankruptcy Court approved the Stipulation, overruling Appellant's objections. Appellant appealed. Finding no reversible error, the Court now AFFIRMS the Bankruptcy Court's Order Granting Motion to Approve Stipulation to Compromise Controversy between the Trustee, Debtor, and Other Parties ("Order Approving Stipulation"). DE 1.

         I. BACKGROUND

         The facts in this Section largely mirror those set forth in the Stipulation. DE 13-4 at 410-30. The Court has confirmed their accuracy by reference to the record, with a particular focus on the exhibits admitted during the hearing before Judge Hyman. Where this Section supplements the facts provided in the Stipulation, the Court has so noted.

         A. Appellant's Judgment Against Debtor.

         On or about July 16, 1998, Appellant entered into a Stock Purchase Agreement ("SPA") with Debtor to purchase 50% of the shares in Candaro Realty Corporation ("Candaro Realty"). At the time, Debtor was the sole shareholder of Candaro Realty. Candaro Realty's only asset was a single parcel of real estate.

         In early 2002, Appellant filed a derivative lawsuit (the "Initial Action") against Debtor in the Supreme Court of the State of New York, County of New York. See Sabo v. Candaro, Index No. 101800/02.[1]Appellant alleged Debtor had impermissibly sold the parcel and misappropriated the proceeds. Debtor asserted three counterclaims against Appellant, including a breach of contract claim alleging Appellant never paid the amount due under the SPA.

         On March 21, 2007, the Honorable Shirley Kornreich issued a Decision and Order holding that Appellant was a shareholder of Candaro Realty as a matter of law and was, therefore, entitled to recover half of the proceeds from the sale of the parcel. But the court also found that Appellant had breached the SPA by failing to pay the full amount due thereunder.

         On November 2, 2007, the court entered a final judgment (the "New York Judgment"), subtracting the amount still due under the SPA, with interest, from the proceeds from the sale of the parcel to which Appellant was otherwise entitled. Judgment was entered in Appellant's favor against the Debtor in the amount of $560, 304.41 and against Candaro Realty in the amount of $648, 638.06.

         B. Taxi Medallions and Related Litigation

         Debtor was also the operator and sole shareholder of two New York taxi cab businesses: H&M Cab and King Spring Taxi, Inc. ("King Spring"). H&M Cab owned NYC Taxi Medallions Nos. 7N77 and 7N78 ("7N Medallions"). King Spring owned NYC Taxi Medallions Nos. 4J68 and 4J69 ("4J Medallions"). Allegedly in connection with Debtor's retirement to Florida, the four medallions were transferred to businesses owned by Debtor's son, Heath Candaro: Bonehead, LLC and Night Owl.

         On October 17, 2012 H&M Cab entered into a Medallion Sale Contract with Bonehead. The transfer of the 7N Medallions to Bonehead was completed through Gold Taxi Brokers, Inc., another company owned by Debtor. The transfer was approved by the NYC Taxi and Limousine Commission.

         Also on October 17, 2012, King Spring entered into a Medallion Sale Contract with Night Owl. The transfer of the 4J Medallions, like the transfer of the 7N Medallions, was completed through Gold Taxi Brokers, Inc. This transfer, too, was approved by the NYC Taxi and Limousine Commission.

         Based on the Trustee's investigation, which included a discussion with Daniel Goodin of the NYC Taxi and Limousine Commission, the Trustee estimated the medallions' value at $500, 000.00 each. Capital One Medallion Finance, a trade name of Capital One Equipment Finance Corp. ("Capital One"), holds a security interest in the 7N Medallions based upon a Note and Security Agreement, dated July 25, 2013. The face ...


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