united states bankruptcy court in re: in re: … bender instead billed the association for fees that...

1392905v1 995520.0004

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF FLORIDA

WEST PALM BEACH DIVISIONwww.flsb.uscourts.gov

In Re: In re: Case No. 14-34444-EPKChapter 11

SPANISH ISLES PROPERTY OWNERSASSOCIATION, INC.,

Debtor.____________________________________/

MARGARET J. SMITH, Chapter 11 Trustee Adv. Case No.: 17-01035-EPKFor the Bankruptcy Estate of In re Spanish IslesProperty Owners’ Association, Inc.

Plaintiff,v.

KAYE BENDER REMBAUM, P.L.

Defendant.____________________________________/

SECOND AMENDED COMPLAINT

Plaintiff, Margaret J. Smith, in her capacity as the Chapter 11 Trustee (the “Trustee”) for

the estate of In re Spanish Isles Property Owners Association, Inc. (the “Association”), through

the undersigned counsel hereby sues Defendant, Kaye Bender Rembaum, P.L. (“Kaye Bender”),

and states:

INTRODUCTION

1. This is an action by which the Trustee seeks to avoid and recover constructively

fraudulent transfers of estate property and for professional negligence. Kaye Bender is a law

firm that holds itself out to clients and the public, generally, as being focused on – and expert in

– community association law, including, the review and enforcement of community association

Case 17-01035-EPK Doc 66 Filed 08/04/17 of 36

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covenants. This claimed expertise notwithstanding, Kaye Bender failed to identify and correct a

lapse in the Association’s governing documents and/or to notify the Association that its

enforcement actions against homeowners were factually and legally invalid.

2. Kaye Bender instead billed the Association for fees that approached or exceeded

the Association’s entire yearly budget for prosecution of enforcement actions against

homeowners that were flawed because they were: (a) not properly evaluated using Kaye

Bender’s professional judgment and, therefore, in certain cases not factually supported; and (b)

invalid exercises of the Association’s powers where predicated on the lapsed organizational

documents. The Association suffered hundreds of thousands of dollars in damages as a

consequence when homeowners asserted that the Association’s enforcement actions were legally

and/or factually frivolous. In all circumstances, Kaye Bender’s receipt of attorneys’ fees for the

prosecution of baseless enforcement actions constituted fraudulent transfer(s) where the

attorneys’ fees were received by Kaye Bender for value that was not reasonably equivalent.

JURISDICTION AND VENUE

3. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 157(b) and

1334(b).

4. This is a core proceeding for which the Court is authorized to hear and determine

all matters regarding this proceeding in accordance with 28 U.S.C. §§ 157(b)(1), 157(b)(2)(A)

and 157(b)(2)(H).

5. Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409.

6. The claims asserted against Kaye Bender arise out of the same transaction,

occurrence, or series of transactions or occurrences and questions of law that are related to the


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above-captioned bankruptcy case styled In re Spanish Isles Property Owners Association, Inc.,

Case No. 14-34444-EPK.

THE PARTIES

7. On November 2, 2014 (the “Petition Date”), the Association filed a voluntary

petition for relief under Chapter 11 of the United States Bankruptcy Code [ECF No. 1], thereby

commencing the instant bankruptcy case (the “Bankruptcy Case”). Plaintiff, Margaret J. Smith,

is the duly appointed Chapter 11 Trustee for the Association’s estate [ECF No. 440].

8. The Association was originally created to provide for the maintenance,

preservation and architectural control of the properties described in Official Records Book 3068

at Page 727, of the Public Records of Palm Beach County, Florida, which was amended and

recorded in Official Records Book 3077 at Page 1362; Book 3146 at Page 0984; Book 16790 at

Page 1893; Book 18215 at Page 0907 of the Public Records of Palm Beach County, Florida. The

Association is governed by a board of directors and membership includes every person or entity

who is a record owner of a home within the community.

9. Defendant, Kaye Bender, is a Florida professional limited liability company that

maintains its main office at 1200 Park Central Blvd. South, Pompano Beach, Florida. Kaye

Bender served as the Association’s general and litigation counsel from April 2010 through

February 2014.

GENERAL ALLEGATIONS

The Formation of Spanish Isles

10. In May of 1979, the Association was incorporated as a Florida not-for-profit

corporation. The Association was formed as a “homeowners association” pursuant to Chapter

720 of the Florida Statutes for the purposes of operating and maintaining a residential


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community known commonly as “Saddlebrook” or “Spanish Isles” (hereafter “Spanish Isles”).

Spanish Isles consists of several hundred single-family homes and associated common areas

located in Palm Beach County, Florida.

11. The Spanish Isles community is governed by a set of By-Laws (the “By Laws”),

Articles of Incorporation and a Declaration of Covenant, Conditions and Restrictions (the

“Declaration”) (collectively the “SIPOA Governing Documents”). The SIPOA Governing

Documents had lapsed and were thus unenforceable during the period that Kaye Bender rendered

services to the Association. Kaye Bender knew or should have known of this invalidity.

12. The SIPOA Governing Documents state the obligations and rights of the

Association, including but not limited to, the right to enforce architecture restrictions, levy liens

for unpaid homeowner dues, and to bring enforcement actions.

13. The affairs of the Association were to be managed by a Board of Directors; each

director to be a member of the Association – i.e. an owner of a home in the community in good

standing (the “Board”). The Board was to be composed nine (9) members who serve for three

(3) year terms, nominated by a committee or by nomination made at the annual meeting of the

Association.

14. The SIPOA Governing Documents expressly required the Board to “exercise

[their] duties in good faith and in the best interest of the Association.” See By-Laws at Article V.

15. The SIPOA Governing Documents provide that the Association has the right to

charge an annual assessment, which at all times relevant, was at or about $350.00 per home

(“Dues”). During the applicable time period, in a typical year Spanish Isles collected around

$100,000.00 in Dues amounting to almost 100% of the Association’s yearly revenue.


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Misconduct by the Board

16. Carol Cetta (“Ms. Cetta”) was Treasurer and a Director of the Association’s

Board of Directors from at least 2009 to 2015.

17. Donna Don (“Ms. Don”) was President and a Director of the Association’s Board

of Directors from at least 2009 to 2015.

18. Ms. Don engaged Kaye Bender and was the primary point of conduct at the

Association for Kaye Bender attorneys. At no time did Kaye Bender inquire as to whether its

engagement – ostensibly by Spanish Isles – was a valid exercise of the Association’s power.

19. During Ms. Don’s and Ms. Cetta’s tenure on the Board, each breached their duties

of care and loyalty to the Association and its members. As more fully set forth in the adversary

proceeding styled Smith v. Cetta and Don, Adv. Pro. No. 16-01285, currently pending before this

Court, Ms. Cetta and Ms. Don’s wrongful conduct included acts of negligence, breaches of

fiduciary duty and self-dealing. The result of Ms. Cetta and Ms. Don’s wrongful conduct was

the waste and misuse of the Association’s assets, and ultimately, the Association’s financial

collapse and bankruptcy.

20. Ms. Don used the Association as her personal fiefdom – directing all of the

Association’s duties and, at times, utilizing the Association’s resources for her personal agenda

and benefit. This conduct wholly ignores the governance scheme and duties of supervision,

financial management and reporting as prescribed by Florida law and the By-Laws. Cetta

acquiesced or ignored (and, upon information and belief in some cases, participated) in Ms.

Don’s conduct.


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21. Kaye Bender participated in these acts by – at a minimum – failing to exercise its

professional duties to investigate the legal and/or factual basis for enforcement actions that it

pursued.

Lapse of Spanish Isles’ Organization Documents

22. Under the Marketable Record Title Act, Chapter 712 of Florida Statutes,

residential homeowners’ associations are required to preserve a covenant or restriction (here, the

“Declaration”) by “filing for record” a written notice pursuant to § 712.05, Fla. Stat., et. seq.

within thirty years of the date the covenant or restriction is established. Prior to filing such a

notice, preservation of the covenant or restriction must be approved by vote of the board of the

interested homeowners’ association.

23. A covenant or restriction lapses and the rights attendant to such a covenant or

restriction cannot be exercised properly in the absence of a timely and substantively complete

written notice pursuant to § 712.05, Fla. Stat., et seq.

24. In 2009, the Association’s Declaration lapsed for failure to timely file the

documents necessary to preserve the Declaration and failure to file substantively complete and

accurate notice necessary to preserve the Declaration.

25. Lapse of the Declaration rendered the Association without legal authority to

assess homeowners, enforce covenants and restrictions, or otherwise govern as specified by the

Declaration.

26. The Association was not notified of the lapse of the Declaration. Only after the

Trustee was appointed in the Bankruptcy Case was the Association made aware of lapse of the

Declaration and a revitalization process was undertaken by counsel to the Trustee to cure lapse

of the Declaration.


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27. Notwithstanding lapse of the Declaration, the Association hired professionals –

including Kaye Bender – who continued to enforce covenants and restrictions and otherwise seek

compliance with the Declaration despite the lack of any authority to do so.

Kaye Bender’s Retention and Negligent Acts

28. Kaye Bender is a law firm that promotes itself as being “devoted to the

representation of more than 800 community associations throughout Florida.” Kaye Bender

purports to assist its clients in all association matters, including, but not limited to, covenant

review and amendment, covenant enforcement and education on an association’s responsibilities

and duties under Florida law and their governing community documents. (See

http://www.kbrlegal.com/about-us/).

29. On or about April 8, 2010, the Association engaged Kaye Bender to provide legal

services on behalf of Association regarding general association matters, as well as general civil

litigation (the “General Engagement Agreement”). Also, on August 8, 2010, the Association

engaged Kaye Bender under a separate engagement agreement to provide collection services of

past-due assessments for the Association (the “Collections Engagement Agreement”)

(collectively, the Collections Engagement Agreement and the General Engagement Agreement

shall be known as the “Engagement Agreement”). The Collections Engagement Agreement was

for an initial eight (8) month term and the agreement provided for automatic one-year renewals

upon the payment of an annual retainer and was renewed annually until 2014. The General

Engagement Agreement and the Collections Engagement Agreement are attached hereto as

Composite Exhibit “A”.

30. Kaye Bender’s responsibilities for “general association matters,” include – among

other things – a detailed review of an association’s governing documents, including, the


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association’s declaration, articles of incorporation and by-laws. Kaye Bender has to undertake a

review of the association’s governing documents because any enforcement action depends on the

rules prescribed by the governing documents and whether such documents are enforceable in the

first instance.

31. Kaye Bender’s review of association governing documents expressly includes an

analysis of whether such governing documents of an association satisfied the Florida statutory

requirements, most notably Florida’s Marketable Record Title Act and Chapter 720, Florida

Statutes. Indeed, the Kaye Bender website specifically lists among the firm’s included services

“Review and Amendment of Governing Documents.” (See http://www.kbrlegal.com/about-us/).

32. Shortly following its retention by the Association, Kaye Bender undertook an

analysis of the governing documents of the Association. Upon review and analysis of the

governing documents of the Association and the Public Records of Palm Beach County, Florida,

Kaye Bender discovered that the Articles of Incorporation and By-Laws of the Association had

never been recorded in the Public Records of West Palm Beach County, Florida.

33. Thus, on or about August 26, 2010, Kaye Bender prepared and recorded and/or

assisted in recording a document titled “Certificate of Recording the Restated Declaration of

Covenants, Conditions and Restrictions of Spanish Isles Property Owners’ Association and the

Articles of Incorporation and the Bylaws of Spanish Isles Property Owners’ Association, Inc”

whereby the Articles and Bylaws were recorded in the public records.

34. But, despite its review of both the SIPOA Governing Documents and the Public

Records of West Palm Beach County, Florida, Kaye Bender failed to identify lapse of the

Declaration, to notify the Association of lapse of the Declaration, or to, at any time, cure the

lapse of the Declaration. Instead, Kaye Bender began preparing demand letters to Spanish Isles


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homeowners for supposed violations of the Association’s – now unenforceable – covenants

immediately after the firm was engaged.

35. Part of Kaye Bender’s responsibilities as “civil litigation” counsel included – by

the terms of its engagement and under the Florida Rules of Professional Responsibility –

assessing the legal and factual merit of claims made by the Association against homeowners.

Thus, Kaye Bender should have analyzed, among other things, the factual basis of the

“violations” allegedly committed by members of the Association and the legal validity of the

Declaration and the SIPOA Governing Documents, generally, prior to commencing any lawsuit

against any homeowner.

36. Separate from, and not including Kaye Bender’s initial review of the SIPOA

Governing Documents, Kaye Bender billed the Association on twenty additional occasions to

“analyze declaration & By-Laws” Despite this repeated and continuous review, Kaye Bender

failed – as described above – to identify lapse of the Declaration, notify the Association of lapse

of the Declaration or to at any time cure lapse of the Declaration.

37. While Kaye Bender served as counsel, Ms. Don (Association President) and/or

Ms. Cetta (Association Vice President) drove around Spanish Isles looking for alleged violations

of Association rules, and, upon information and belief, selectively enforced the rules against their

opponents, real or perceived. Ms. Don and Ms. Cetta undertook enforcement of the “rules” by

letter, fine and otherwise without the procedural safeguards required by the By-Laws.

38. To enforce their scheme and hold on the Association, Ms. Don and Ms. Cetta

engaged Kaye Bender to enforce the “rules” by the threat and/or prosecution of unnecessary

and/or frivolous lawsuits. In pursuing these matters, Kaye Bender failed to exercise proper due


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diligence and/or care, and failed to investigate the underlying facts of each case before pursuit of

legal action.

39. This frivolous litigation did not provide any benefit to the Association. Even

worse, the exorbitant and unnecessary legal fees charged by Kaye Bender impaired the

Association’s financial condition. In less than four years, through Kaye Bender’s unnecessary

and improper enforcement actions, the Association incurred nearly $300,000.00 in attorney’s

fees. This amount of attorneys’ fees is simply breathtaking in the context of the Association’s

limited resources – constituting the majority of the Association’s total annual expenditures.

40. The Association paid Kaye Bender $152,449.54 in fees, plus additional monies

for its collection efforts in enforcing alleged code violations (the “Transfers”), without receiving

reasonably equivalent value or consideration.

41. In addition to the Transfers, Kaye Bender filed a proof of claim in the Bankruptcy

Case in the amount of $132,069.15 for its outstanding unpaid fees.

42. Due to the excessive legal fees of Kaye Bender, high litigation costs and the

inability to assess homeowners due to the lapse of the Declaration, the Association was forced to

borrow the following funds:

a. Promissory Note, dated August 1, 2013, obligating the Association to theholder of the Promissory Note, in the principal amount of $20,000; and

b. Promissory Note, dated August 1, 2013, obligating the Association to theholder of the Promissory Note, in the principal amount of $20,000.

43. Center State Bank of Florida, N.A., the alleged assignee of these promissory

notes, has filed claims in the bankruptcy case for the remaining unpaid balance in the total

amount of $20,788.97. See Proof of Claim Nos. 1-2 & 2-2.


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Insolvency of the Association

44. Pursuant to the Association’s financial statements, the Association was insolvent

on the date of each of the Transfers to Kaye Bender.

a. Association was insolvent in 2011. The Association was insolvent in the year

2011 as its liabilities in the amount of $31,308.77, exceeded its assets in the

amount of $9,387.90.1 Additionally, the Association was unable to pay its debts

as they became due as evidenced by the outstanding balance of $15,731.96

alleged due and owing to Kaye Bender in its proof of claim.

b. Association was insolvent in 2012. The Association was insolvent in the year





c. Association was insolvent in 2013. The Association was insolvent in the year





1 The Balance Sheet, as of December 31, 2011, also lists an asset titled “Improvements” in the amount of$39,386.00. The Trustee believes that the fair market value for the “Improvements” is $0.00. Thus, the total assetsfor the year 2011 were $9,387.902 The Balance Sheet, as of December 31, 2012, also lists an asset titled “Improvements” in the amount of$37,167.00. The Trustee believes that the fair market value for the “Improvements” is $0.00. Thus, the total assetsfor the year 2012 were $10,806.71.3 The Balance Sheet, as of December 31, 2013, also lists an asset titled “Improvements” in the amount of$34,949.00. The Trustee believes that the fair market value for the “Improvements” is $0.00. Thus, the total assetsfor the year 2013 were $17,798.14.


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d. Association was insolvent in 2014. The Association was insolvent in the year





Administrative Cost of Revitalizing the Declaration

45. Due to the lapse of the Declaration, the Association was forced to revitalize the

Declaration in this bankruptcy case before it could confirm a plan.

46. On or about December 2, 2016, the Certificate of Recording Revived Declaration

of Covenants, Conditions and Restrictions for Spanish Isles Property Owners’ Association, Inc.,

in accordance with Florida Statutes, Section 720.407, was recorded in the public records of Palm

Beach County, Florida.

47. As of the date of the filing of this Amended Complaint, Tripp Scott, P.A., as

counsel to the Trustee, has incurred fees and costs in the amount of $598,752.39. The large

portion of the fees and costs incurred by Tripp Scott, P.A. are the direct result of efforts to

revitalize the Declaration, and litigation with homeowners and former counsel of the Association

relating to the lapse of the Declaration.

48. During the course of this proceeding, the Trustee may learn (through discovery or

otherwise) of additional transfers made to Kaye Bender during the applicable time period. The

Trustee intends to avoid and recover all transfers to Kaye Bender. Accordingly, the Trustee

reserves her right to amend this Complaint to include: (i) further information regarding the

Transfers, (ii) additional Transfers; (iii) modifications of and/or revision to Defendant’s name,

4 The Balance Sheet, as of December 31, 2014, also lists an asset titled “Improvements” in the amount of$32,730.00. The Trustee believes that the fair market value for the “Improvements” is $0.00. Thus, the total assetsfor the year 2014 were $8,053.85.


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(iv) and/or additional defendants, that may become known to Plaintiff at any time during this

adversary proceeding, through formal discovery or otherwise, and for the amendments to relate

back to this original Complaint.

COUNT IPROFESSIONAL NEGLIGENCE

49. The Trustee adopts and incorporates by reference the allegations contained in

paragraphs 1 through 48 of the complaint, supra, as if fully set forth herein.

50. Kaye Bender was engaged by the Association to represent it in general association

matters, as well as in general civil litigation. Thus, the Association had an attorney-client

relationship with Kaye Bender.

51. In its handling of the legal duties described herein, Kaye Bender owed a

professional standard of care to the Association, including a duty to exercise that degree of

knowledge, skill, prudence, diligence and standard care customarily exercised by other lawyers

engaged in the practice of law in South Florida.

52. Kaye Bender neglected this duty and deviated from the appropriate standard of

care owed to the Association by the conduct described in the body of the Complaint.

Specifically, Kaye Bender failed to identify lapse of the Declaration, notify the Association of

lapse of the Declaration or to at any time cure lapse of the Declaration. Due to this failure,

throughout its engagement Kaye Bender did not have the authority to pursue the actions it

undertook as the Association’s attorney, as more fully articulated supra.

53. Additionally, Kaye Bender pursued frivolous litigation that wasted the financial

resources of the Association by billing it $285,047.06 for legal services that provided no value to

the Association.


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54. Kaye Bender also failed to correct lapse of the Declaration, an error that cost the

estate hundreds of thousands of dollars to correct in this bankruptcy case.

55. Finally, the Association was damaged by the expenses incurred by its

homeowners in defending baseless claims and paying fines.

56. Therefore, as a direct and proximate cause of Kaye Bender’s deviations from the

standard of care, the Association has been significantly damaged in amount to be proven at trial.

WHEREFORE, Plaintiff, Margaret J. Smith, in her capacity as the Chapter 7 Trustee,

respectfully requests that this Court enter a Judgment:

a. Awarding damages in an amount to be proven at trial;

b. Awarding costs, prejudgment and post judgment interest to the extent allowed bylaw;

c. Awarding attorney’s fees pursuant to the terms of the parties’ contractualagreement5; and

d. Such other and further relief at law and in equity to which the Trustee is entitled.

COUNT IIBREACH OF FIDUCIARY DUTY



58. This is an action for breach of fiduciary duty against Kaye Bender.

59. Kaye Bender, as attorney for the Association, served in a fiduciary capacity and

owed a duty to exercise care and loyalty, and to perform its function in the best interests of the

Association. Kaye Bender thus had a fiduciary duty to the Association and its homeowners.

5 The Agreement between the Association and Kaye Bender provides that in the event of litigation theprevailing party shall be entitled to reimbursement of its costs and attorney’s fees, including appeals. See paragraph8 of the Agreement.


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60. Kaye Bender breached its duty to the Association by failing to identify lapse of

the Declaration, notify the Association, and/or correct the omission. Kaye Bender further

breached its duty by pursuing payment on covenants and assessments that were not enforceable,

engaging in excessive litigation for violations that were unenforceable due to lapse of the

Declaration and further acting without authority.

61. As a direct and proximate cause of Kaye Bender’s conduct, the Association has

suffered damages.





c. Awarding attorney’s fees pursuant to the terms of the parties’ contractualagreement6; and


COUNT IIIBREACH OF CONTRACT AND THE IMPLIED COVENANT

OF GOOD FAITH AND FAIR DEALING



63. Kaye Bender and the Association entered into the Engagement Agreement on or

about April 8, 2010, whereby Kaye Bender agreed to represent the Association and provide legal

services to the Association.

6 The Agreement between the Association and Kaye Bender provides that in the event of litigation theprevailing party shall be entitled to reimbursement of its costs and attorney’s fees, including appeals. See paragraph8 of the Agreement.


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64. Kaye Bender’s contractual obligations owed to the Association were also

governed by the implied covenant of good faith and fair dealing.

65. Kaye Bender failed to perform its contractual obligations and materially breached

the agreement with the Association. Kay Bender was contractually obligated to provide

professional legal services to the Association, but breached that obligation in numerous ways,

including but not limited to:

a. Failing to adequately supervise associates, paralegals, and other personnel

rendering services to the Association; and

b. Failing to analyze the factual basis of the violations committed by members of the

Association and the legal validity of the Declaration and the SIPOA Governing

Documents prior to commencing litigation.

66. Additionally, Kaye Bender breached the implied covenant of good faith and fair

dealing by:

a. Placing its own interests above those of the Association;

b. Failing to ensure that the legal services provided to the Association were

reasonable and necessary to advance the interests of the Association; and

c. Billing the Association for tasks that were either wholly unnecessary, duplicative,

non-billable, or were grossly excessive.

67. As a direct and proximate result of Kaye Bender’s breaches, the Association has

been damaged.





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c. Awarding attorney’s fees pursuant to the terms of the parties’ contractualagreement; and


COUNT IVAVOIDANCE OF FRAUDULENT TRANSFERS

PURSUANT TO SECTIONS 548(a)(1)(B)



69. Within two (2) years of the Petition Date, the Association voluntarily made

transfers of estate property to Kaye Bender in the amount of $52,875.72 (“Two-Year Transfers”)

as detailed in Exhibit “B” attached hereto, which contains: (i) Kaye Bender’s identity, (ii) the

account number from which the payment was made to Kaye Bender, (iii) a list of each payment

received by Kaye Bender during the applicable time frame, and (iv) the amount and date of each

payment received.

70. The Association did not receive assets or other benefits of reasonably equivalent

value in exchange for Kaye Bender’s receipt of the Two-Year Transfers as more fully explained

in the Complaint, supra.

71. The Two-Year Transfers were made to Kaye Bender at a time when:

a. The Association was insolvent or became insolvent as a result of thetransaction;

b. The Association was engaged in business or a transaction, or was about toengage in a business or a transaction, for which any property remainingwith the Association were an unreasonably small capital; or

c. The Association intended to incur, or believed that the Association wouldincur, debts that would be beyond the Association’s ability to pay as such


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debts matured.

72. By reason of the foregoing, the Trustee is entitled to a judgment avoiding the

Two-Year Transfers to Kaye Bender.



a. Declaring the Two-Year Transfers to have been fraudulent transfers pursuant to11 U.S.C § 548(a)(1)(B);

b. Avoiding the Two-Year Transfers as fraudulent transfers in violation of 11 U.S.C§ 548(a)(1)(B); and

c. Granting such other and further relief as may be just and proper.

COUNT VAVOIDANCE OF FRAUDULENT TRANSFERS

PURSUANT TO SECTION 544 OF THE BANKRUPTCY CODEAND SECTION 726.105(1)(B) OF THE FLORIDA STATUTES



74. This is an action to avoid the Transfers as fraudulent transfers pursuant to 11

U.S.C. 544(b) and Florida Statute 726.105(1)(b).

75. Within the four year period preceding the Petition Date, that is between

November 2, 2010 and November 2, 2014, the Association made the Transfers of property to

Kaye Bender, as detailed in Exhibit “C” attached hereto, which contains: (i) Kaye Bender’s

identity, (ii) the account number from which the payment was made to Kaye Bender, (iii) a list of

each payment received by Kaye Bender during the applicable time frame, and (iv) the amount

and date of each payment received.

76. The Association made the Transfers without receiving reasonably equivalent

value in exchange or fair consideration in exchange for the Transfers.


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77. At the time the Association made the Transfers, the Association:

a. Was engaged or was about to engage in a business or a transaction forwhich the remaining assets of the Association were unreasonable small inrelation to its business or transaction; or

b. Intended to incur, or believed they would incur, debts that would bebeyond the Association ability to pay as they became due.

78. The Association had at least one actual creditor, whose claim arose either before

or after the Transfers, that was harmed by the transfers, including but not limited to, Centerstate

Bank of Florida, NA, Linda Scialo, Paul Preston and Marcia Hintz.

79. The Transfers are avoidable under Section 544(b) of the Bankruptcy Code and

Section 726.105(1)(b) of the Florida Statutes.



a. Declaring the Transfers to have been fraudulent transfers pursuant to Section544(b) of the Bankruptcy Code § 726.105(1)(b) for the Florida Statues;

b. Avoiding the Transfers as fraudulent transfers in violation of Section 544(b) ofthe Bankruptcy Code and Section 726.105(1)(b) of the Florida Statues; and

c. Granting such other and further relief as may be just and proper.

COUNT VIAVOIDANCE OF FRAUDULENT TRANSFERS PURSUANT TO

SECTION 544 OF THE BANKRUPTCY CODE AND SECTION 726.106(1) OF THEFLORIDA STATUTES



81. This is an action to avoid the Transfers as fraudulent transfers pursuant to 11

U.S.C. 544(b) and Florida Statute 726.106(1).


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82. Within the four-year period preceding the Petition Date, that is, between

November 2, 2010 and November 2, 2014, the Association made the Transfers of property to

Kaye Bender, as referenced in Exhibit “C”.

83. The Transfers from the Association to Kaye Bender were fraudulent pursuant to

Florida Statutes § 726.106(1) in that:

a) The Association did not receive the equivalent value in exchange for theTransfers; and

b) The Association was insolvent at the time or the Association becameinsolvent as a result of the Transfers.

84. The Association had at least one actual creditor at the time of each of the

Transfers, including but not limited to, Centerstate Bank of Florida, NA, Linda Scialo, Paul

Preston and Marcia Hintz.

85. The Transfers were fraudulent as to creditors, under Florida Statutes § 726.106(1)

and Section 544(b) of the Bankruptcy Code and, accordingly, may be avoided to the extent

necessary to satisfy creditor claims pursuant to § 726.108.



a. Declaring the Transfers to have been fraudulent transfers pursuant to Section544(b) of the Bankruptcy Code and Section 726.106(1) of the Florida Statutes;

b. Avoiding the Transfers described above as a fraudulent transfer pursuant toSection 544(b) of the Bankruptcy Code and Section 726.106(1) of the FloridaStatutes; and

c. Granting such other relief as this Court deems just and proper.


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COUNT VIIRECOVERY OF PROPERTY

PURSUANT TO SECTION 550 OF THE BANKRUPTCY CODE



87. The Transfers are avoidable pursuant to §§ 544 and 548 of the Bankruptcy Code,

§§ 726.105 and 726.106 of the Florida Statutes. As a result, the Transfers are recoverable by the

Trustee pursuant to § 550 of the Bankruptcy Code.

88. Kaye Bender was the initial transferee of the Transfers and/or the entity for whose

benefit the Transfers were made.

89. Pursuant to 11 U.S.C. § 550, the Trustee is entitled to recover the Transfers from

Kaye Bender, plus interest thereon to the date of payment and the costs in this action.

WHEREFORE Plaintiff, Margaret J. Smith, in her capacity as the Chapter 7 Trustee,

respectfully requests that this Court enter a Judgment and Order of Turnover:

a. Declaring Kaye Bender to be the initial transferees of the Transfers and/or theentity for whose benefit the Transfers were made:

b. Directing Kaye Bender to turn over to the Trustee the Transfers, plus interest atthe applicable federal statutory rate, reasonable attorney’s fees, and costs andexpenses to the extent permissible by applicable law; and

c. Granting such further relief as may be just and proper.

COUNT VIIIDISALLOWANCE OF ALL CLAIMS PURSUANT TO 11 U.S.C. § 502(D)



91. Kaye Bender is an entity from which property is recoverable under 11 U.S.C. §

550.


22

92. Kaye Bender is a transferee of the Transfers avoidable under 11 U.S.C. §§ 544

and/or 548.

93. Pursuant to 11 U.S.C. § 502(d), any and all claims of Kaye Bender and/or its

assignees, against the Bankruptcy estate must be disallowed until such time as Kaye Bender pays

the Association pays an amount equal to the aggregate amount of the Transfers.

WHEREFORE Plaintiff, Margaret J. Smith, in her capacity as the Chapter 7 Trustee,

respectfully requests that this Court enter a Judgment and Order of Turnover:

a. Directing Kaye Bender to turn over to the Trustee the Transfers;

b. Disallowing any claim that Kaye Bender may have against the Association untilsuch time as Kaye Bender repays the Transfers pursuant to 11 U.S.C. § 502(d);and

c. Granting such further relief as may be just and proper.

Dated this 4th day of August, 2017.Respectfully submitted,

TRIPP SCOTT, P.A.110 S.E. Sixth StreetFifteenth FloorFort Lauderdale, Florida 33301Tel.: (954) 525-7500Fax: (954) 761-8475

By: /s/ Michael C. FosterMichael C. Foster, Esq.Florida Bar No. 0042765E-Mail: [email protected] E. Aungst, Esq.Florida Bar No. 0055348E-Mail: [email protected] R. Cloyd, Esq.Florida Bar No. 58388Email: [email protected]


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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on August 4, 2017, I electronically filed the foregoing

document with the Clerk of the Court using CM/ECF. I also certify that the foregoing document

is being served this day via transmission of Notice of Electronic Filing generated by CM/ECF on

all counsel of record or pro se parties who are authorized to receive electronically Notices of

Electronic Filing in this bankruptcy case

/s/ Jesse R. CloydJesse R. Cloyd, Esq.Florida Bar No. 0058388


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SERVICE LIST

17-01035-EPK Notice will be electronically mailed to:

Kristopher Aungst, Esq. on behalf of Plaintiff Margaret J [email protected], [email protected];

Jesse R Cloyd on behalf of Plaintiff Margaret J [email protected], [email protected]

Michael Foster on behalf of Plaintiff Margaret J [email protected], [email protected];

Bradley S Shraiberg on behalf of Defendant Kaye Bender Rembaum, [email protected],[email protected];[email protected];[email protected];[email protected];[email protected]

Skipper J Vine on behalf of Defendant Kaye Bender Rembaum, [email protected],[email protected];[email protected];[email protected]


EXHIBIT “A”


EXHIBIT “B”


BankAcct.Number

BankType

Transferor Transferee CheckNo.

Clear Date Amount

8206 Checking SpanishIsles

Kaye Bender 2793 1/14/2013 $8,000


Kaye Bender 2807 1/22/2013 $7,000


Kaye Bender 2810 2/1/2013 $4,000


Kaye Bender 15649 2/13/2013 $2560.97


Kaye Bender 2826 3/4/2013 $1500


Kaye Bender 2834 3/4/2013 $1000


Kaye Bender 2837 4/4/2013 $1000


Kaye Bender 16481 5/31/2013 $333.98


Kaye Bender 16554 6/7/2013 $334.06


Kaye Bender 16593 6/12/2013 $333.98


Kaye Bender 2867 6/19/2013 $10,000


Kaye Bender 16716 7/2/2013 $333.98


Kaye Bender 17216 9/30/2013 $133.56


Kaye Bender 2902 10/3/2013 $5,000


Kaye Bender 17403 10/31/2013 $345.19


Kaye Bender 17435 11/5/2013 $10,000


Kaye Bender 17605 12/12/2013 $1000

TOTAL $52,875.72


EXHIBIT “C”


Bank Acct.Number

Bank Type Transferor Transferee Check No. Clear Date Amount


KayeBender

2465 1/3/2011 $7438.65


KayeBender

2516 3/11/2011 $10,000


KayeBender

2531 4/21/2011 $7,000


KayeBender

2545 5/23/2011 $5,000


KayeBender

2577 7/20/2011 $10,000


KayeBender

2607 10/17/2011 $4,000


KayeBender

2617 11/21/2011 $1,000


KayeBender

2638 1/13/2012 $7,000


KayeBender

2660 3/2/2012 $15,000


KayeBender

2697 5/21/2012 $2,000


KayeBender

2706 5/31/2012 $2,000


KayeBender

2722 7/12/2012 $1,000


KayeBender

2740 8/21/2012 $2,000


KayeBender

14735 9/12/2012 $6,412.46


KayeBender

14948 10/12/2012 $2870.69


KayeBender

2793 1/14/2013 $8,000


KayeBender

2807 1/22/2013 $7,000


KayeBender

2810 2/1/2013 $4,000


KayeBender

15649 2/13/2013 $2560.97


KayeBender

2826 3/4/2013 $1500


Bank Acct.Number

Bank Type Transferor Transferee Check No. Clear Date Amount


KayeBender

2834 3/4/2013 $1000


KayeBender

2837 4/4/2013 $1000


KayeBender

16481 5/31/2013 $333.98


KayeBender

16554 6/7/2013 $334.06


KayeBender

16593 6/12/2013 $333.98


KayeBender

2867 6/19/2013 $10,000


KayeBender

16716 7/2/2013 $333.98


KayeBender

17216 9/30/2013 $133.56


KayeBender

2902 10/3/2013 $5,000


KayeBender

17403 10/31/2013 $345.19


KayeBender

17435 11/5/2013 $10,000


KayeBender

17605 12/12/2013 $1000

Total: $135,597.52
