The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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In re: MEMORANDUM &
ORDER REGARDING
BANKRUPTCY APPEAL
IRA LEE and HELEN KOH LEE, CV 24-2862 (GRB)
Debtors, FILED
------------------------------------------------------------------X CLERK
3/19/202 5 3:16 pm
ROBERT L. MERCER, individually and derivatively
as a Shareholder of ESB Labs, Inc., U.S. DISTRICT COURT
Appellant, EASTERN DISTRICT OF NEW YORK
-against- LONG ISLAND OFFICE
IRA LEE and HELEN KOH LEE,
Appellees.
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GARY R. BROWN, United States District Judge:
Appellant Robert L. Mercer appeals from a purported “judgment” entered on April 2,
2024 in an adversary proceeding entitled Robert L. Mercer v. Ira Lee and Helen Koh Lee, No. 8-
22-08045 (REG) (Bankr. E.D.N.Y.), dismissing the claims of Mercer under 11 U.S.C. §§ 523(a)
against debtor Helen Koh Lee (“Helen”) after a determination that her as-yet-undefined debts
were dischargeable in bankruptcy. The matter proves factually rich though legally threadbare, as
appellant offers no authority to support his assertion that he is entitled to an appeal as a matter of
right and fails to provide a factual basis for interlocutory review.
The underlying dispute arises largely from the actions of Ira Lee (“Ira”), Helen’s spouse,
who purports to have expertise in software engineering and, crucially, three-cushion billiards.
Bankr. DE 44-4, ¶¶ 1-3. For a time, Ira gave billiards lessons to Mercer, who had “a long-term
interest in the game.” Bankr. DE 1, ¶ 8. After a short time, the pair embarked on an ill-
conceived a venture to “invent technologies . . . that could track billiards shots and predict the
best possible shot from different table configurations [using] technologically enhanced billiards
tables, cameras and sensors.”1 Bankr. DE 1, ¶¶ 31-32. As a result of this arrangement, Ira
obtained more than $10.5 million2 in “reimbursements” from Mercer, purportedly to cover
“setting up a research lab, purchasing equipment, and hiring contractors.” Id. ¶¶ 32, 70. The
pinnacle of this endeavor appears to have been a 2018 Billiards Tournament held at Mercer’s
home to showcase their innovations, at which, perhaps unsurprisingly, “the technology did not
live up to Mr. Lee’s representations, [ ] did not function as intended and was unusable for the
Tournament.” DE 1 ¶¶ 90-93; Bankr. DE 43 at 8; DE 2 at 21.
Mercer commenced an action in New York State Supreme Court, Nassau County, and Ira
and Helen subsequently filed a chapter 7 bankruptcy petition. Mercer filed a proof of claim
against both Ira and Helen, asserting an unliquidated claim based on the claims set forth in the
state court action. Mercer commenced the instant adversary proceeding seeking to except Ira
and Helen’s alleged debt from the Debtors’ discharge under 11 U.S.C. §§ 523(a)(2)(A), (a)(4)
and (a)(6). DE 1.
The bankruptcy court conducted the first phase of a bifurcated trial, receiving
documentary evidence and witness testimony on the question of dischargeability. DE 1-1 at 3.
Judge Grossman’s decision states that this procedure was adopted on consent of the parties, and
that a second phase focusing on the amount of damages would follow shortly thereafter. Id. On
1 Notably, another technique that has been used by aspiring billiards players to identify good
shots during play is called practice.
2 Mercer complains of overcharges and misappropriation of those funds, while the pleadings
dutifully continue to treat the dispute as the product of a legitimate business plan, though one
would be hard pressed to imagine a reality in which this scheme could result in a profitable
venture warranting a $10 million investment. The situation breathes life into a well-known,
unattributed axiom: “If you can’t find the one being hustled in the pool room, it’s you.”
March 25, 2024, the bankruptcy court entered a decision finding Ira’s debt to Mercer non-
dischargeable under 11 U.S.C. §§ 523(a)(2)(A), (a)(4), but finding no “affirmative act by Helen
that could support a finding of non-dischargeability under any subsection of § 523(a).” Id. at 27.
Judgment was entered on April 2, 2024. DE 1-5.
On April 16, 2024, Mercer filed a Notice of Appeal pursuant to 28 U.S.C. § 158 and the
Federal Rules of Bankruptcy Procedure 8001-8006 to the United States District Court for the
Eastern District of New York from the judgment to the extent that it dismissed Mercer’s claims
against Helen under 11 U.S.C. §§ 523(a)(2)(A), (a)(4) and (a)(6). DE 1. Mercer maintains that
Helen’s liability should be excepted from discharge under § 523(a), and alternatively even if
“she had no knowledge or involvement in the scheme,” Helen should be precluded from
discharging any debts owed to him based on the Supreme Court’s holding in Bartenwerfer v.
Buckley, 598 U.S. 69 (2023). 3 Id.
DISCUSSION
Of course, this Court has jurisdiction to review appeals from decisions of a bankruptcy
court pursuant to 28 U.S.C. § 158(a), which provides in relevant part that “[t]he district courts of
the United States shall have jurisdiction to hear appeals . . . from final judgments, orders, and
decrees; . . . [and] with leave of the court, from other interlocutory orders and decrees . . . of
bankruptcy judges.” 28 U.S.C. § 158(a)(1), (3). “An appeal under subsections (a) and (b) of this
section shall be taken in the same manner as appeals in civil proceedings generally are taken to
3 Notably, this case differs from Bartenwerfer in at least two important respects: first, in
Bartenwerfer, the amount of the liability had already been determined by a state court
proceeding, 598 U.S. at 73, whereas the alleged debt here remains unfixed. Second,
Bartenwerfer involved consideration of the liability of a spouse involved in a California
partnership, id., while here, the Lees conducted business through New York corporations. Thus,
very different rules apply.
the courts of appeals from district courts.” 28 U.S.C. § 158(c)(2). On an appeal, the district
court may “affirm, modify, or reverse a bankruptcy court’s judgment, order, or decree” or it may
remand with instructions for further proceedings. Fed. R. Bankr. P. 8013.4
Whether this decision is subject to appeal though turns on questions of finality. On this
question, the Supreme Court has noted:
The provision on appeals to U. S. district courts from decisions of bankruptcy
courts is 28 U.S.C. § 158(a). Under that provision, an appeal of right lies from
“final judgments, orders, and decrees” entered by bankruptcy courts “in cases and
proceedings.” Ibid. By providing for appeals from final decisions in bankruptcy
“proceedings,” as distinguished from bankruptcy “cases,” Congress made “orders
in bankruptcy cases ... immediately appeal[able] if they finally dispose of discrete
disputes within the larger [bankruptcy] case.” Bullard, 575 U.S. at 501, 135 S.Ct.
1686 (quoting Howard Delivery Service, Inc. v. Zurich American Ins. Co., 547
U.S. 651, 657, n. 3, 126 S. Ct. 2105, 165 L.Ed.2d 110 (2006)); see In re Saco
Local Development Corp., 711 F.2d at 444–447. In short, “the usual judicial unit
for analyzing finality in ordinary civil litigation is the case, [but] in bankruptcy[,]
it is [often] the proceeding.” Brief for United States as Amicus Curiae 10.
Ritzen Grp., Inc. v. Jackson Masonry, LLC, 589 U.S. 35, 39 (2020). For its part, the Second
Circuit has instructed that:
In sum, for a bankruptcy court order to be final within the meaning of § 158(d),
the order need not resolve all of the issues raised by the bankruptcy; but it must
completely resolve all of the issues pertaining to a discrete claim, including issues
as to the proper relief.
In re Integrated Res., Inc., 3 F.3d 49, 53 (2d Cir. 1993) (emphasis in original).
4 Mercer’s appeal characterizes Judge Grossman’s decision as a final determination, rather than
an interlocutory appeal, which would have required the provision and certification of additional
information to warrant consideration. The Court recognizes that there might have been grounds
for an interlocutory appeal. By way of example, if the sole significant asset of the debtors was a
principal residence owned via a joint tenancy by the entireties, it is possible that resolution of the
dischargeability vel non of Helen’s assets may have informed the parties as to the viability of
continuing the litigation. Having failed to even provide the Court with this information –
assuming that such facts exist – the Court was not in a position to make a sua sponte
determination as to whether Helen’s liability should be excepted from discharge under § 523(a)
or, alternatively, be precluded from discharge under the Supreme Court’s holding in
Bartenwerfer.
Here, Mercer cannot satisfy these requisites. Plainly, Judge Grossman’s decision does
not resolve all of the issues related to Mercer’s claim, as that claim is against both debtors and
encompasses purported debts which remain unfixed. Indeed, the “Judgment” appealed from
expressly provides that it “does not determine damages or the allowance or disallowance of
Mercer’s proof of claim.” DE 1-2 at 2. Whether the decision resolves Mercer’s adversary
proceeding is a slightly closer question, yet still presents the same issue. Read narrowly, the
complaint in the adversary proceeding could be viewed as limited to the question of
dischargeability. However, the document appears to encompass the possibility that the
Bankruptcy Court would award damages. See, e.g., DE 1 ¶ 170. By agreeing to bifurcate the
matter and having the damages questions addressed by the Bankruptcy Court, Mercer placed the
question beyond peradventure.
CONCLUSION
Based on the foregoing, Mercer’s appeal is denied without prejudice to renewal after the
entry of a final decision by the Bankruptcy Court. The Clerk of the Court is directed to close the
case.
SO ORDERED.
Dated: Central Islip, New York
March 19, 2025
/s/ Gary R. Brown
GARY R. BROWN
United States District Judge