NOT FOR PUBLICATION UNITED STATES BANKRUPTCY …

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

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In re:

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Amir Orly,

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Debtor.

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Alfredo Moreno Cocoletzi, Edgar Monteroso,

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Gilberto Dairo Ramirez Ramos, German Torres :

Romero, and Christian Fredy Villar Medina,

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on behalf of themselves and others similarly

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situated,

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Plaintiffs, :

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v.

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Amir Orly,

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Defendant :

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Case No. 15-11650 (JLG) Chapter 7

Adv. P. No. 16-01020 (JLG)

MEMORANDUM DECISION ON DEFENDANT'S MOTION TO DISMISS

A P P E A R A N C E S :

MICHAEL FAILLACE & ASSOCIATES, P.C. Attorneys for Plaintiffs Alfredo Moreno Cocoletzi, Edgar Monteroso, Gilberto Dario Ramirez Ramos, German Torres Romero, and Cristian Fredy Villar Medina 60 East 42nd Street, Suite 2540 New York, New York 10165 By: Joshua S. Androphy, Esq.

GARVEY, TIRELLI & CUSHNER, LTD. Attorneys for Defendant Amir Orly 50 Main Street, Suite 390 White Plains, New York 10606 By: Linda M. Tirelli, Esq.

JAMES L. GARRITY, JR. UNITED STATES BANKRUPTCY JUDGE

Amir Orly (the "Debtor") owns, operates or controls two pizzerias in New York City. Prepetition, Alfredo Moreno Cocoletzi ("Moreno"), Edgar Monteroso ("Monteroso"), Gilberto Dario Ramirez Ramos ("Ramirez", and collectively with Moreno and Monteroso, the "Original Plaintiffs"), German Torres Romero ("Torres"), and Cristian Fredy Villar Medina ("Medina," and collectively with Torres and the Original Plaintiffs, the "Plaintiffs"), each formerly employed by the Debtor at the pizzerias, sued the Debtor and others in the United States District Court for the Southern District of New York (the "District Court Action") for damages occasioned by their alleged violations of the Fair Labor Standards Act, 29 U.S.C. ? 201 et seq. (the "FLSA"), New York Labor Law, ?? 190 et seq. and 650 et seq. ("NYLL"), and the New York Commissioner of Labor codified at N.Y. Comp. Codes R. & Regs., Tit. 12, ? 142-2.4(a) (2009).1 That action is pending and is still at the discovery stage.

The Plaintiffs commenced this adversary proceeding by filing a complaint (the "Complaint") seeking a judgment pursuant to ? 727(a)(4) of the Bankruptcy Code (the "? 727 Claim") denying the Debtor his discharge in bankruptcy or, alternatively, a judgment pursuant to ? 523(a)(6) of the Bankruptcy Code (the "? 523 Claim") determining that any damages awarded to them in the District Court Action are non-dischargeable debts in this bankruptcy case.2 The matter before the Court is the Debtor's motion pursuant to Federal Rule of Civil Procedure 12(b)(6), made applicable herein by Bankruptcy Rule 7012, to dismiss the Complaint for failing

1 See Complaint Collective Action under 29 U.S.C. ? 216(b) [DC ECF Doc. No. 1]. References to "DC ECF Doc. No. __" refer to the docket entries in the action pending against the Debtor in the United States District Court for the Southern District of New York, Case No. 1:15-cv-02696-CM-DCF, "ECF Doc No. __" refer to docket entries in the Debtor's main case, 15-11650 (JLG), and "AP ECF Doc. No. __" refer to docket entries in this adversary proceeding, 16-01020 (JLG). 2 See Complaint Objecting to Dischargeability of Debt and Discharge of Debtor [AP ECF Doc. No. 1].

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to state a claim upon which relief can be granted (the "Motion").3 The Plaintiffs oppose the Motion.4

The Plaintiffs' ? 727 Claim was predicated on the Debtor's alleged failure to disclose in his Statement of Financial Affairs that he owned more than 5% of the voting securities of the entities that owned the pizzerias. In their objection to the Motion, the Plaintiffs concede that the claim should be dismissed because the Debtor has amended his Statement of Financial Affairs to include the information not reflected on the Statement of Financial Affairs, as filed. Obj. at 1. At the argument on the Motion, the Plaintiffs' counsel advised the Court that they will promptly take the steps necessary to withdraw that count of the Complaint. Accordingly, the Court will address the Motion only as it relates to the ? 523 Claim.

For the reasons stated below, the Motion is GRANTED as to Messrs. Torres and Medina with leave to seek to replead, with any such motion seeking such relief to be filed no later than thirty (30) days after entry of this Order, and is DENIED as to Messrs. Moreno, Monteroso, and Ramirez.

Jurisdiction The Court has subject matter jurisdiction over this proceeding pursuant to 28 U.S.C. ?? 1334, 157(a) and 157(b)(1) and the Amended Standing Order of Reference M-431 (Preska, C.J.). This is a core proceeding. See 28 U.S.C. ? 157(b)(2)(I) and (J).

Legal Standard and Scope of the Record Rule 12(b)(6) provides that a complaint may be dismissed "for failure to state a claim upon which relief can be granted [.]" FED. R. CIV. P. 12(b)(6). The purpose of a motion to

3 See Defendant Amir Orly's Memorandum of Law in Support of Motion to Dismiss Complaint [AP ECF Doc No. 8], as supported by Defendant's Reply to Plaintiff's Opposition [AP ECF Doc. No. 13] (the "Reply"). 4 See Plaintiffs' Memorandum of Law in Opposition to Defendant Amir Orly's Motion to Dismiss Complaint [AP ECF Doc. No. 12] (the "Objection").

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dismiss is "merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof." Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980); see also Halebian v. Berv, 644 F.3d 122, 130 (2d Cir. 2011) (describing purpose of Rule 12(b)(6) motion "is to test, in a streamlined fashion, the formal sufficiency of the plaintiff's statement of a claim for relief without resolving a contest regarding its substantive merits."). Thus, when considering a motion to dismiss, the court must liberally construe the complaint, accept the factual allegations set forth in the complaint as true, and draw all reasonable inferences in favor of the plaintiff. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). See also Papasan v. Allain, 478 U.S. 265, 286 (1986) (noting that on a motion to dismiss, courts "are not bound to accept as true a legal conclusion couched as a factual allegation."). That is because to defeat a Rule 12(b)(6) motion, a plaintiff must plead sufficient factual allegations "to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). A claim will be dismissed if the plaintiff does not nudge its claims "across the line from conceivable to plausible." Twombly, 550 U.S. at 570. "The plausibility standard is not akin to a `probability requirement,' but it [requires the plaintiff to plead] more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678.

On a motion to dismiss, "a complaint is deemed to include any written instrument attached to [the complaint] as an exhibit, materials incorporated in it by reference, and documents that, although not incorporated by reference, are `integral' to the complaint." Sira v.

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Morton, 380 F.3d 57, 67 (2d Cir. 2004) (citations omitted); Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002) (same). For incorporation by reference, a complaint "must make a clear, definite and substantial reference to the document." Helprin v. Harcourt, 277 F. Supp. 2d 327, 330-31 (S.D.N.Y. 2003). The Plaintiffs attached a copy of the District Court Complaint to their complaint and specifically incorporated by reference the allegations in that complaint. See Compl. ? 4. Thus, the Court will consider the facts alleged in both complaints in assessing the merits of the Motion.

Background5 On June 24, 2015, the Debtor filed a voluntary petition under chapter 13 of the Bankruptcy Code. By a Notice of Voluntary Conversion filed on October 23, 2015, the Debtor converted his chapter 13 case to one under chapter 7. [ECF Doc. No. 17]. The Debtor owns, operates, or controls two pizzerias located in New York, New York (collectively, the "Pizzerias") (see District Court Compl. ?? 2, 21, 25)6 operating under the name "Fat Sal's Pizza." The Plaintiffs worked for the Debtor at various respective times between 2008 and March 2015. Id. ?? 37, 57, 76. On April 7, 2015, the Original Plaintiffs, individually, and on behalf of others similarly situated, commenced the District Court Action. Torres and Medina were later joined as plaintiffs in that action.7 As discussed below, in support of the action, the Plaintiffs allege that the Debtor

5 With certain irrelevant exceptions, Bankruptcy Rule 7052 makes Fed. R. Civ. P. 52 applicable in adversary proceedings. Pursuant to Rule 52(a)(3), in resolving this Motion, the Court is not required to state findings of fact or conclusions of law. Accordingly, the facts recited herein are those alleged and incorporated in the Complaint. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 6 The District Court Complaint utilizes the defined term "Defendants" when pleading many of the allegations therein, with the definition of that word including the Debtor. The Court will refer to the Debtor throughout this decision when presenting the factual allegations pled in the District Court Complaint that include "Defendants." 7 See Consent to Become Party Plaintiff under the F.L.S.A. for Christian Villar, and Consent to Become Party Plaintiff under the F.L.S.A. for German Torres [DC ECF Doc. Nos. 6 and 9, respectively].

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