In re: John Brian HAWORTH, Debtor, Jeffery Dieffenbach, Appellant, v. John Brian Haworth, Trustee Barbara Katz, Appellees, 356 F. App'x 529

SUMMARY ORDER In 2004, pro se appellant Jeffery Dief-fenbach moved to reopen his former father-in-law John Brian Haworth’s

chapter 7, “no asset” bankruptcy. See 11 U.S.C. § 701 et seq. Dieffenbach now appeals from the district court’s affirmance of the bankruptcy court’s orders (1) declining to remove Barbara Katz as bankruptcy trustee, and (2) denying Dieffenbach’s request for damages from Haworth’s estate. “[W]e review the bankruptcy court decision independently, accepting its factual findings unless clearly erroneous but reviewing its conclusions of law de novo.” In re Enron Corp., 419 F.3d 115, 124 (2d Cir.2005).

In doing so, we assume the parties’ familiarity with the facts and the record of prior proceedings, which we reference only as necessary to explain our decision to affirm. 1. Removal of Trustee Katz The bankruptcy “court ... may remove a trustee ... for cause.” 11 U.S.C. § 324(a). In defining “cause” for removal, “ ‘[w]e have traditionally stressed the elements of fraud and actual injury to the debtor interests.’ ” In re Freeport Italian Bakery, Inc., 340 F.2d 50, 54 (2d Cir.1965) (quoting Schwartz v.

Mills, 192 F.2d 727, 729 (2d Cir.1951)); accord In re Lundborg, 110 B.R. 106, 108 (Bankr.D.Conn.1990); see also 8 Collier on Bankruptcy ¶ 324.02 (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2009) (“Generally, the courts will not remove a trustee absent fraud or injury.”). We review the bankruptcy court’s removal decision for abuse of discretion, see In re Eloise Curtis, Inc., 326 F.2d 698, 701 (2d Cir.1964); In re Paramount Publix Corp., 68 F.2d 703, 705 (2d Cir.1934), and we detect none here.

Dieffenbach submits that Katz should have been removed for (1) failing to acknowledge and administer putative undisclosed assets; (2) failing to furnish requested financial information to Dief-fenbach; and (3) offering to sell the trustee’s claims to Dieffenbach. We are not persuaded. If Katz had “not fulfilled [her] duty as trustee to press all legitimate claims of the estate,” In re Freeport Italian Bakery, Inc., 340 F.2d at 55, then there might have been cause for her removal.

But the record shows that Katz thoroughly investigated each of Dieffenbach's proposed claims and ultimately concluded, in two detailed reports, that “no property of the estate exists for a trustee to administer.” Trustee’s Report at 14. Katz’s conclusion accorded with that of her predecessor trustee, Roberta Napolitano, who previously examined Dieffenbach’s arguments and similarly concluded there were no grounds to reopen the Haworth bankruptcy. On this record, we identify no error, much less abuse of discretion, in the bankruptcy court’s decision not to remove Katz.

Moreover, even were we to conclude that Katz acted improperly either by declining to furnish Haworth’s tax returns and bank statements, see 11 U.S.C. § 704(a)(7), or by offering to sell Dieffen-bach any claims to the putative undisclosed assets, see In re Greenberg, 266 B.R. 45, 48-51 (Bankr.E.D.N.Y.2001) (discussing standard for allowing trustee to sell claims); cf.

In re Commodore Int’l Ltd., 262 F.3d 96 (2d Cir.2001) (involving standing of creditors to bring claims in name of bankruptcy debtors), we would perceive no “fraud and actual injury to the debtor interests” compelling Katz’s removal as trustee, In re Freeport Italian Bakery, Inc., 340 F.2d at 54. Accordingly, we affirm the decision of the bankruptcy court. 2. Request for Damages Dieffenbach also submits that he is entitled to damages as “an individual injured by a[ ] willful violation of’ the automatic stay. 11 U.S.C. § 362(k)(l).

The automatic stay applies to any “action or proceeding against the debtor.” Id. § 362(a)(1) (emphasis added). An “action or proceeding” includes “any pleading that asserts a claim on which relief is sought.” Koolik v. Markowitz, 40 F.3d 567, 568 (2d Cir.1994). “Thus, an answer that asserts a counterclaim against a plaintiff who becomes a bankruptcy debtor is an ‘action or proceeding against the debtor’ within the meaning of § 362(a)(1).” Id.

In determining whether an action is “against the debtor,” we look to the debtor’s status “at the time of the original proceeding,” not to “which party is ahead at a particular stage in the litigation.” Teachers Ins. & Annuity Ass’n of Am. v. Butler, 803 F.2d 61, 65 (2d Cir.1986).

Dieffenbach contends that Haworth violated the automatic stay by (1) contesting Dieffenbach’s post-petition motion to reopen a state court proceeding, which the debtor brought against Dieffenbach and which resulted in a pre-petition stipulated judgment of $30,000 for the debtor; and (2) collecting $10,000 of that judgment after filing for bankruptcy. We disagree. As the district court noted, Dieffenbach failed to file a counterclaim in the state court proceeding. Thus, we are directed to no “pleading” stating any claim against the debtor that could violate the automatic stay. Koolik v. Markowitz, 40 F.3d at 568.

Dieffenbach’s suggestion that a motion to reopen the state court judgment qualifies as an action “against the debtor” confuses which party might be ahead at a particular stage in the litigation with their status at the outset of the proceeding. See Teachers Ins. & Annuity Ass’n of Am. v. Butler, 803 F.2d at 65. Accordingly, we conclude that, even if Dieffenbach were injured by Haworth’s appearance contesting his motion to reopen the state court proceeding, he is not entitled to damages for any violation of the automatic stay.

We have considered Dieffenbach’s other arguments on appeal and conclude that they lack merit. Accordingly, we AFFIRM the judgment of the district court.