Schreiber v. Friedman

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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STEVEN SCHREIBER, individually and

derivatively on behalf of TWO RIVERS

COFFEE, LLC,

Plaintiff,

MEMORANDUM & ORDER

15 CV 6861 (CBA) (CLP)

-against-

EMIL FRIEDMAN, et al.,

Defendants.

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Currently pending before this Court on referral from the Honorable Carol B. Amon,

United States District Judge, is Nelkin & Nelkin, P.C.’s motion to transfer venue to the United

States District Court for the Southern District of Texas, Houston Division, pursuant to 28 U.S.C.

§§ 1334(e) and 1412. For the reasons set forth below, the motion to transfer venue is denied.

FACTUAL AND PROCEDURAL BACKGROUND

This case has a long and complicated history, beginning on December 2, 2015, with the

filing of the Complaint in the underlying action (hereinafter, the “Underlying action”).1 For

purposes of this Order, the Court recites only those facts necessary to understand the background

leading to the current motion to transfer.

On May 6, 2015, plaintiff Steven Schreiber, together with his father, non-party2 Eugene

Schreiber3 – co-founders of Two Rivers Coffee, LLC (“TRC”) (collectively, the “Schreibers” or

1 For a more detailed recitation of the facts in the underlying case, see ECF Nos. 656, 684.

2 Eugene Schreiber was not a named party in the Underlying action. On August 13, 2018, after a settlement

had been reached in the Underlying action, Jay Nelkin filed a notice of appearance on behalf of Eugene Schreiber

(ECF No. 538), and Eugene Schreiber was subsequently added to the case as an Interested Party.

3 On December 13, 2024, Steven Schreiber and Two Rivers Coffee, LLC filed a letter attaching a Notice of

Suggestion of Death of Eugene Schreiber, notifying the Court that Eugene Schreiber died on November 14, 2024.

(ECF No. 751). The letter indicated that Eugene Schreiber’s death should not affect the resolution of the motions

currently pending before this Court. (Id.) On March 7, 2025, after some prior motion practice, Steven Schreiber

and Two Rivers Coffee, LLC filed a renewed motion to substitute “Steven Schreiber as representative of Eugene

the “Schreiber parties”), retained Jay Nelkin, Carol Nelkin, and their firm Nelkin & Nelkin, P.C.

(the “Firm” or “N&N,” or collectively, with the two attorneys, the “Nelkins”) to file suit against

Emil Friedman, an investor in TRC, who the Schreibers believed was misappropriating funds

and converting company assets. (3/7/22 Order4 at 1-2; Schreiber Br.5 at 4). The engagement

agreement entered into between the Schreibers and the Firm contained a contingent fee clause.

(Schreiber Br. at 4; Rosenblatt Decl.,6 Ex. 1).

Acting on behalf of their client, Steven Schreiber, and derivatively on behalf of TRC, the

Nelkins filed suit in this Court on December 2, 2015, asserting 40 causes of action against

Friedman and other individuals and corporate entities. (See ECF No. 1). Eventually, after

almost two years of litigation, in September 2017, the parties reached a settlement in principle in

the Underlying action before the Honorable James Orenstein, former United States Magistrate

Judge, then assigned to the case. (Schreiber Br. at 4 (citing ECF No. 502)).7 Although a

settlement agreement was reached in principle, negotiations as to the terms of the settlement

continued, and the agreement was not actually finalized and executed until August 2018. (Id. at

5). On May 3, 2019, the parties submitted a stipulation of dismissal. (ECF No. 636).

Schreiber’s Estate” in place of Eugene Schreiber as an interested party in this case. (ECF No. 755). This Court

granted the motion on April 17, 2025. (ECF No. 762). That Order is currently pending appeal before the district

court. (ECF No. 763).

4 Citations to “3/7/22 Order” refer to the Memorandum and Order of the district court, filed on March 7,

2022 (ECF No. 684).

5 Citations to “Schreiber Br.” refer to the Omnibus Brief on Behalf of Steven Schreiber, Eugene Schreiber,

and Two Rivers Coffee, LLC in Opposition to Nelkin & Nelkin, P.C.’s Motions to Dismiss, to Transfer Venue, and

For Sanctions, filed September 20, 2024 (ECF No. 747).

6 Citations to “Rosenblatt Decl.” refer to the Declaration of Raphael M. Rosenblatt, Esq. in Opposition to

Nelkin & Nelkin, P.C.’s Motions to Dismiss, to Transfer Venue, and For Sanctions, filed September 20, 2024 (ECF

No. 747-1).

7 In Magistrate Judge James Orenstein’s Memorandum and Order, dated September 16, 2020, he explains

that the Schreibers originally agreed to settle the case with the defendants during a conference held on September

25, 2017, but that issues arose resulting in further negotiations over a nine-month period, before an agreement was

finalized. (ECF No. 656 at 2, n.4).

During the course of settlement negotiations, a separate dispute arose between the

Schreibers and the Nelkins over the calculation of the Firm’s fee. (Schreiber Br. at 5). The

Firm’s engagement letter provided that the Firm was to receive “one-third of the total recovery . .

. (including any funds, increased equity or other benefits), by virtue of a settlement or final

judgment in the litigation.” (3/7/22 Order at 2 (citing ECF No. 623-3)). According to the

Schreibers, their objection was not that the Firm was not entitled to be paid for its legal work;

their objection was to the way the Nelkins calculated the value of the contingent fee, by

overstating the value of TRC as of the date of the settlement, failing to account for the

Schreibers’ payout of $1,000,000 as a buy-out of Mayer Koenig’s shares of TRC, and taking

credit for various actions, among others. (Schreiber Br. at 5-6). The Schreibers also objected to

the Nelkins’ efforts to guarantee payment of the Firm’s fee over time by inter alia, seeking to

obtain an ownership interest in TRC and demanding personal guarantees. (Id. at 6).

Negotiations between the Schreibers and the Nelkins over the valuation of the equity and loan

forgiveness components of the settlement eventually broke down, as did the relationship between

the Schreibers and their lawyers. (Id.; 3/7/22 Order at 2).

According to the Schreibers, in July 2018, the Firm, without notice to or authorization

from the Schreibers, retained the Center for Forensic Economic Studies (the “Center”) to prepare

an “‘opinion letter outlining the economic value derived to the Plaintiffs [the Schreibers] through

a settlement resolution’” of the Underlying action, and provided the Center with copies of TRC’s

tax returns. (Schreiber Br. at 6 (quoting Rosenblatt Decl., Ex. 5)). The Schreibers contend that,

apart from failing to disclose this action, the Firm’s conduct clearly presented a conflict of

interest because it was undertaken solely for the Firm’s benefit and not for that of their clients,

and yet, nevertheless, the Nelkins continued to act as the Schreibers’ attorneys. (Id.) The

Schreibers solicited advice from outside counsel regarding the conflict, but contend that the

Nelkins “took affirmative steps to prevent the Schreiber Parties from bringing the fee dispute

before the Court for resolution,” threatening to withdraw as counsel if the Schreibers brought the

dispute before the Magistrate Judge. (Id. at 6-7; Rosenblatt Decl., Ex. 8).

On August 13, 2018, the Firm filed a Motion to Realign Parties,8 to make TRC a plaintiff

rather than a nominal defendant in the Underlying action, thus removing the case from the

requirements of Fed. R. Civ. P. 23.1, which required court approval for the settlement or

dismissal of a derivative action. (Id. at 7). Also on August 13, 2018, Eugene Schreiber

submitted a letter to the Court seeking a conference to address the Firm’s fee demands, but the

Court declined to hold a conference, noting that Eugene was not a party to the action. (Id. at 8

(citing 8/13/18 Electronic Order)).

On August 15, 2018, the Firm served a Notice of Charging Lien on the Schreibers, and

thereafter, Hillel Parness, Esq., acting on behalf of the Schreibers, requested a conference with

the Court. (Id. (citing Rosenblatt Decl., Exs. 12-13)). The Firm responded by publicly filing a

letter accusing its clients, the Schreibers, of “fraud” and “bad faith” (ECF No. 547), and on

August 30, 2018, the Firm, without notice to the Schreibers or the Court, filed a Complaint in

this Court against the Schreibers, claiming an entitlement to fees, captioned Nelkin & Nelkin,

P.C. v. Schreiber, Dkt No. 18 CV 4930. (Id. at 9 (citing Rosenblatt Decl., Ex. 15); 3/7/22 Order

at 3-4). The Court held a conference that same day at which it discharged the Firm as the

Schreibers’ counsel without prejudice for the Schreibers to seek relief on the ground that the

Firm had been discharged for cause. (3/7/22 Order at 3).

8 The same day, Jay Nelkin filed a notice of appearance on behalf of Eugene Schreiber (ECF No. 538).

On March 7, 2019, the Schreibers moved for an order finding that the Firm had been

discharged for cause and seeking to extinguish the Firm’s charging lien. (ECF No. 623).9 10 On

September 16, 2020, Magistrate Judge James Orenstein issued a Memorandum and Order

granting the Schreibers’ motion, finding that the Firm had been discharged for cause and noting

that the Firm had filed an action against the Schreibers in this Court, and yet had not moved to

withdraw as the Schreibers’ counsel in the Underlying action, as they were obliged to do by the

N.Y. Rules of Professional Conduct 1.7. (ECF No. 656). In his Order, Judge Orenstein also

determined that the Stipulation of Dismissal did not divest the Court of jurisdiction to determine

the pending fee entitlement dispute. (Id.)

On March 7, 2022, the district court agreed that the Court had not been divested of

jurisdiction over the pending fee entitlement dispute,11 but rejected the Magistrate Judge’s

decision as to the discharge for cause. (3/7/22 Order). The Honorable Carol B. Amon then

9 While the motion was pending, the Schreibers commenced a separate malpractice action in the Superior

Court of New Jersey. (See Motion of Nelkin & Nelkin, P.C. to Transfer Venue to the United States District Court

for the Southern District of Texas, Houston Division, filed August 26, 2024 (ECF No. 742) (“N&N Tr. Mot.”) at 6).

The case was removed to the United States Bankruptcy Court for the District of New Jersey and subsequently

transferred to the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Texas

Bankruptcy Court” or the “Bankruptcy Court”). (Id.; see Eugene Schreiber, et al. v. Nelkin & Nelkin, P.C., et al.,

Adversary Proceeding No. 24-3061 (Bankr. S.D. Tex.)). On May 29, 2024, the Schreibers filed a motion to remand

and abstain and alternatively to withdraw the bankruptcy reference in the Texas Bankruptcy case. (N&N Tr. Mot. at

6-7). On September 26, 2024, the Bankruptcy Court denied the motion to remand and abstain, and separately

recommended that the reference be withdrawn, but that the case be referred back to the bankruptcy judge for all

pretrial matters. (Nelkin & Nelkin, P.C.’s Omnibus Reply to the Omnibus Brief on Behalf of Steven Schreiber,

Eugene Schreiber, and Two Rivers Coffee, LLC In Opposition to Nelkin & Nelkin, P.C.’s Motions to Dismiss, to

Transfer Venue, and For Sanctions, filed September 27, 2024 (“N&N Reply”) (ECF No. 750) at 7-8 (citing Exs. A,

B)). (See discussion infra at 32-34).

10 Also while the motion was pending, Jay and Carol Nelkin filed an action for replevin in New Jersey

Chancery Court, seeking the return of certain property that the Nelkins alleged had been stored for them at TRC and

Steven Schreiber’s home, and that the Schreibers allegedly refused to return. (See N&N Tr. Mot. at 7). Jay and

Carol Nelkin filed the replevin action as individuals. Although they are not debtors in the Texas Bankruptcy action,

when the Firm petitioned to extend the Bankruptcy Court’s automatic stay to the replevin action, the Texas

Bankruptcy Court granted that request on March 27, 2024, finding that there is a “substantial likelihood . . . that

there is an identity of interest between [Jay and Carol Nelkin] and the Debtor [(the Firm)] as it pertains to

outstanding ownership disputes concerning estate property in the Replevin Action.” (Id., Ex. F).

11 The Schreibers note that this ruling was not appealed and accordingly, constitutes law of the case.

(Schreiber Br. at 10).

referred the fee entitlement dispute to the undersigned12 to conduct an evidentiary hearing and

issue a Report and Recommendation as to whether the Firm was discharged for cause or

otherwise forfeited their entitlement to a fee, consistent with the concerns outlined in her Order.

(Id. at 17-18).

The parties to the fee entitlement dispute then engaged in additional discovery related to

the valuation of the company, filing several motions relating to the scope of this discovery, and

requesting several extensions. Among other things, the Schreibers served expert reports relating

to valuation and liability. (Schreiber Br. at 10-11). The Schreibers note that the Firm has not

retained an expert and has missed deadlines set by this Court for producing an expert report.

(Id.)

On August 25, 2023, the Firm filed a voluntary petition for bankruptcy under Chapter 11

of Title 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq., in the Texas

Bankruptcy Court. (N&N Tr. Mot. at 7). On August 30, 2023, the Firm filed a Suggestion of

Bankruptcy on the record in this Court, noting that the Firm was a debtor in the Texas

Bankruptcy proceeding and that a stay had been entered pursuant to 11 U.S.C. § 362(a),

temporarily staying proceedings in this Court. (ECF No. 733).

Thereafter, on November 1, 2023, the Schreibers filed a motion in the Texas Bankruptcy

Court seeking to lift the stay as to the instant case or declare that the stay was not applicable

because the Schreibers had not asserted any claims against the Firm in this Court; accordingly,

the Schreibers had never filed a proof of claim in the Texas Bankruptcy Court and were not

creditors in the bankruptcy proceeding. (Schreiber Br. at 11 (citing Rosenblatt Decl., Ex. 21)).

Instead, the Schreibers take the position that it was the Firm who had initiated the claim against

12 The case was reassigned to the undersigned on March 2, 2021, after Judge Orenstein retired from the

bench.

the Schreibers in this Court by filing the charging lien (id.); indeed, the Firm admitted as much in

responding to the Schreibers’ motion to lift the stay. (Id. at 11-12 (citing Rosenblatt Decl., Ex.

22)).

Before the Texas Bankruptcy Court could hear the motion to lift the stay, the Schreibers

and the Firm13 agreed to allow an agreed-upon mediator to attempt to mediate the claim. (Id. at

12). The agreement provided that if the mediator determined that an impasse had been reached,

the stay would be lifted or modified to, inter alia, allow the parties to proceed in “‘the Eastern

District of New York litigation.’” (Id. (quoting Rosenblatt Decl., Ex. 23)). The agreement was

memorialized in writing as the “Agreed Order,” and on January 8, 2024, the Texas Bankruptcy

Court entered the Agreed Order. (Id. (citing Rosenblatt Decl., Ex. 24)).

Despite efforts at mediation, a Notice of Impasse was filed on January 30, 2024. (Id. at

13). When the Firm failed to honor the self-executing nature of the Agreed Order, the Schreibers

filed a Motion to Enforce Settlement before the Texas Bankruptcy Court. (Id.) On June 21,

2024, the Bankruptcy Court issued an Order confirming that the Agreed Order was self-

executing and terminating the automatic stay insofar as it related to the instant fee litigation (the

“Bankruptcy Court Order”). (Id.; Rosenblatt Decl., Ex. 26).

Following receipt of a letter from the Schreibers informing this Court that the stay had

been lifted, this Court issued a scheduling order, setting a date for the Firm to obtain new counsel

and setting dates for the completion of discovery related to the fee valuation. (ECF No. 738).

The Court also set an evidentiary hearing, pursuant to Judge Amon’s March 7, 2022 Order, to

begin on October 8, 2024. (Id.)

13 The agreement was technically between the Schreibers, the Firm, Jay Nelkin, and Carol Nelkin.

(Rosenblatt Decl., Ex. 24).

On August 26, 2024, the Firm filed four motions: 1) a motion to change venue to the

District Court for the Southern District of Texas, with referral to the Southern District of Texas

Bankruptcy Court (ECF No. 742); 2) a motion to dismiss the Schreibers’ fee forfeiture claim as

abandoned, waived, and disclaimed based on the Schreibers’ failure to file proofs of claims (ECF

No. 743); 3) a motion to dismiss the Schreibers’ motion to discharge counsel for cause based

upon newly discovered evidence and controlling case law (ECF No. 744); and 4) a motion for

terminating sanctions based upon the Schreibers’ alleged spoliation, manufacture and alteration

of evidence, as well as perjury and false statements to the court (ECF No. 745). On September

20, 2024, the Schreibers filed an Omnibus Brief in response to all four motions (ECF No. 747),

and the Firm filed a Reply on September 27, 2024 (ECF No. 750).

On February 17, 2025, while the motion to transfer venue was pending,14 the Schreibers15

filed a letter advising the Court that the Texas Bankruptcy Court had confirmed the Firm’s Third

Amended Modified Plan of Reorganization (the “Plan”). (Schreiber Suppl. Ltr.16). Thereafter,

the parties filed several supplemental letters with this Court regarding the Plan confirmation and

its relevance to the pending motion to transfer venue. (ECF Nos. 754, 757, 759, 761).

14 On January 24, 2025, the district court denied the remaining three motions (ECF Nos. 743, 744, 745),

without prejudice to renew should the undersigned deny the instant motion to transfer. (1/24/25 Electronic Order).

15 As mentioned at n.3, supra, while these four motions, including the motion to transfer, were pending,

Eugene Schreiber passed away. On January 29, 2025, this Court granted Steven Schreiber and TRC’s first motion to

substitute and added the “Estate of Eugene Schreiber” as an interested party. (1/29/25 Electronic Order). The Court

subsequently withdrew this ruling on February 27, 2025. (2/27/25 Electronic Order). Since, at the time of the

February 17, 2025 letter, the “Estate of Eugene Schreiber” was an interested party in this case, technically this letter

was filed on behalf of “Steven Schreiber, the Estate of Eugene Schreiber, and Two Rivers Coffee, LLC.” (ECF No.

753 at 2).

16 Citations to “Schreiber Suppl. Ltr.” refer to the Schreiber parties’ Letter Advising Court of Chapter 11

Plan Confirmation of Nelkin & Nelkin, P.C., filed February 17, 2025 (ECF No. 753).

At the request of the district court, this Court reviews only the motion to transfer venue at

this time. For the reasons set forth below, the Court denies the motion to transfer venue to the

Southern District of Texas Bankruptcy Court.17

DISCUSSION

I. Legal Standard

A. Bankruptcy Jurisdiction

Section 1334 of Title 28 of the United States Code governs the jurisdiction of federal

district courts over matters involving Title 11, the Bankruptcy Code. Section 1334(b) sets out

the scope of the district courts’ subject matter jurisdiction over civil proceedings specifically.

See In re Motors Liquidation Co., 514 B.R. 377, 381 (Bankr. S.D.N.Y. 2014), aff’d sub nom. In

Matter of Motors Liquidation Co., 829 F.3d 135 (2d Cir. 2016). Pursuant to 28 U.S.C. §

1334(b), federal district courts have original, but not exclusive, jurisdiction over all civil

proceedings “arising under title 11, or arising in or related to cases under title 11.” See also

KeyBank Nat’l Ass. v. Franklin Advisers, Inc., 600 B.R. 214, 224-225 (S.D.N.Y. 2019) (citing

Stern v. Marshall, 564 U.S. 462 (2011)).

Bankruptcy courts derive their jurisdiction from Section 157 of Title 28 of the United

States Code, which gives district courts the authority to refer their bankruptcy-related cases to

the bankruptcy judges of the district. 28 U.S.C. § 157(a).18 Congress enacted Section 157 as

17 The Court notes that the Firm requests to transfer venue to the United States District Court for the

Southern District of Texas, with referral to the Southern District of Texas Bankruptcy Court. (N&N Tr. Mot. at 14).

This is common practice, as this Court only has authority to transfer the case to another federal district court, and

cannot refer it directly to the Texas Bankruptcy Court. See Ecars Factory LLC v. Braunstein, 19 CV 5767, 2019

WL 13219569, at *1 (E.D.N.Y. Nov. 26, 2019) (holding that the court “does not have the authority to refer this

case” to the bankruptcy court of another district, but “can transfer the case to the district court . . . to be referred to

its Bankruptcy Court” (citing Harve Benard Ltd. v. Nathan Rothschild, K.I.D. Int’l, Inc., 02 CV 4033, 2003 WL

367859, at *6 (S.D.N.Y. Feb. 19, 2003) and 28 U.S.C. § 157(a)). Hereafter, all references to transfer to the Texas

Bankruptcy Court incorporate the fact that the proceeding would transfer initially to the United States District Court

for the Southern District of Texas to be referred to the Texas Bankruptcy Court.

18 As the Firm points out, the Eastern District of New York has a Standing Order, pursuant to 28 U.S.C. §

157(a), automatically referring all cases arising under, arising in, or related to Title 11 to the Bankruptcy Court of

part of the Bankruptcy Amendments and Federal Judgeship Act of 1984, which, in response to

the Supreme Court’s decision in Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458

U.S. 50 (1982), restructured bankruptcy judges’ previously “expansive jurisdiction” by “making

the bankruptcy courts delegated adjuncts of the district court.” In re Millenium Seacarriers, Inc.,

419 F.3d 83, 96 (2d Cir. 2005).

B. Standards for Transfer

Transfer of proceedings arising in, arising under, or related to Title 11 are generally

governed by 28 U.S.C. § 1412 or 28 U.S.C. § 1404. Section 1412 is “bankruptcy specific,” as it

provides that “‘[a] district court may transfer a case or proceeding under title 11 to a district

court for another district in the interest of justice or for the convenience of the parties.’” Ecars

Factors LLC v. Braunstein, 2019 WL 13219569, at *1 (quoting 28 U.S.C. § 1412). Thus, while

the Second Circuit has not ruled definitively on the issue, courts in this Circuit have interpreted

Section 1412 to only govern transfers of proceedings arising in or under the Bankruptcy Code

and not to apply to proceedings only “related to” a bankruptcy case; transfers only “related to” a

bankruptcy case may be made pursuant to 28 U.S.C. § 1404(a). Id. (citing Onewoo Corp. v.

Hampshire Brands, Inc., 566 B.R. 136, 140 (Bankr. S.D.N.Y. 2017)).

The party requesting transfer under Section 1412 must establish a “‘strong case for

transfer’” by “‘a preponderance of the evidence.’” In re Westinghouse Electric Co. LLC, No. 18

CV 3942, 2019 WL 1349500, at *6 (S.D.N.Y. Mar. 25, 2019) (quoting New York Marine &

Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d 102, 114 (2d Cir. 2010) and In re Manville

the Eastern District of New York. (N&N Tr. Mot. at 18 n.8 (citing Administrative Order #164 of the United States

District Court for the Eastern District of New York (August 28, 1986))). The application of this Standing Order to

the instant case is mentioned briefly at n.49, infra. A similar Standing Order is in effect in the Southern District of

Texas. (N&N Tr. Mot. at 18 n.8 (citing General Order 2012-6 of the United States District Court for the Southern

District of Texas (May 24, 2012))).

Forest Prods. Corp., 896 F.2d 1384, 1390 (2d Cir. 1990)). Courts consider such motions on an

individualized, case-by-case basis, with “consideration of convenience and fairness.” In re

Manville Forest Prods. Corp., 896 F.2d at 1391 (internal quotation marks and citation omitted).

Under Section 1404(a), the general transfer statute, a case may be transferred “[f]or the

convenience of parties and witnesses, in the interest of justice . . . to any other district or division

where it might have been brought or to any district or division to which all parties have

consented.” 28 U.S.C. § 1404(a). Courts generally evaluate “‘substantially the same factors’” in

a motion to transfer under Section 1404(a) as those under Section 1412. In re Westinghouse

Electric Co. LLC, 2019 WL 1349500, at *5 (quoting Official Comm. of Asbestos Claimants of

G-I Holding, Inc. v. Heyman, 306 B.R. 746, 749 (S.D.N.Y. 2004)). However, Section 1404

imposes a higher standard on the movant in two respects. First, the movant must make out a case

for transfer “‘by clear and convincing evidence.’” Mulgrew v. United States Dep’t of Trans.,

717 F. Supp. 3d 281, 287 (E.D.N.Y. 2024) (quoting National Experiential, LLC v. Nike, Inc.,

No. 20 CV 3197, 2021 WL 9678642, at *3 (E.D.N.Y. July 31, 2021)) (further citations omitted);

see also New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d at 114 (affirming

that district courts in the Circuit “have consistently applied the clear and convincing evidence

standard” to a motion for transfer pursuant to Section 1404(a)). Second, under the plain

language of Section 1404(a), transfer is appropriate only to a forum in which the case could have

originally been brought, unless the parties consent to a transfer to another forum; the same

requirement does not exist for transfer under Section 1412. In re Westinghouse Electric Co.

LLC, 2019 WL 1349500, at *5 n.8.

II. The Parties’ Respective Positions

In urging this Court to transfer the case to the Texas Bankruptcy Court, the Firm raises

several arguments in support of its motion that can be summarized as follows: 1) the Texas

Bankruptcy Court has exclusive jurisdiction over this matter pursuant to 28 U.S.C. § 1334(e),

and thus transfer is required (N&N Tr. Mot. at 9-15); 2) even if exclusive jurisdiction does not

lie in the Bankruptcy Court, the determination of the contingent fee issue is a “core proceeding”

because, inter alia, the fees allegedly owed by the Schreibers constitute the largest asset of the

Debtor’s estate, and thus the case should be transferred pursuant to 28 U.S.C. § 1412 (id. at 15-

18); and 3) transfer would be “in the interest of justice or for the convenience of the parties” (id.

at 18-21).

In opposing the transfer, the Schreibers largely rely on the agreement reached between

the parties to submit to mediation in return for lifting the stay to allow the fee entitlement dispute

to be determined by this Court in the event that an impasse in the mediation discussions was

reached. (Schreiber Br. at 16-18).

The Court addresses each of the arguments below, beginning with the Agreed Order

entered into by the parties before the Texas Bankruptcy Court.

III. The Agreed Order

A. The Schreibers’ Objection to Transfer

The Schreibers rely on the agreement reached with the Firm in the Bankruptcy Court to

lift the automatic stay if the fee entitlement dispute could not be resolved during mediation.

(Schreiber Br. at 16). They contend that the Agreed Order is “‘in the nature of a contract to

which the court has given its formal approval, [and] is subject to the rules of construction of

contracts.’” (Id. at 17-18 (quoting Browning v. Navarro, 743 F.2d 1069, 1080 (5th Cir. 1984))).

In essence, the parties entered into the Agreed Order in an effort to settle the fee

entitlement dispute, with the Schreibers agreeing to attempt mediation, in return for which the

Firm agreed that, if an impasse was reached, the automatic stay would be lifted to allow the fee

entitlement dispute to proceed in New York. The parties contemplated that a stay of the instant

fee litigation would remain in effect until the mediator determined that an impasse had been

reached, at which time “the stay with respect to that individual or entity will be modified to allow

them to proceed in their respective litigation, either the Eastern District of New York litigation . .

. or the replevin, the New Jersey Chancery Court litigation as that may apply.” (Rosenblatt

Decl., Ex. 23 (emphasis supplied)). In approving the Agreed Order, the Texas Bankruptcy Court

confirmed that “if the Mediator declares an impasse, . . . the automatic stay in this bankruptcy

case . . . shall terminate . . . .” (Id., Ex. 24).

When the efforts at mediation proved unsuccessful, the mediator filed a Notice of

Impasse on January 30, 2024. (Schreiber Br. at 13). However, the Firm failed to honor the

agreement, forcing the Schreibers to file a Motion to Enforce Settlement before the Texas

Bankruptcy Court. (Id. (citing Rosenblatt Decl., Ex. 23)).

On June 21, 2024, the Bankruptcy Court not only confirmed that the Agreed Order was

self-executing, but explicitly ordered:

The automatic stay of this bankruptcy case and the agreed

temporary restraining order . . . are terminated only to the

extent that the Parties may conclude the litigation pending

in Schreiber v. Friedman, Cause No. 15 CV 6861, for the

United States District Court for the Eastern District of New

York, and any appeals therefrom.

(Rosenblatt Decl., Ex. 26 (emphasis supplied)).

Based on the Agreed Order, the Schreibers argue that the Firm contracted to “return to

[the Eastern District of New York] for final adjudication on the merits if the fee dispute could

not be resolved at mediation,” and in filing the instant motion to transfer venue, the Firm

unreasonably attempts to “turn back the clock and undo what they have already done.”

(Schreiber Br. at 16).

Moreover, the Schreibers argue that the Bankruptcy Court’s Order lifting the stay to

allow the case in this Court to proceed makes sense because there are no affirmative claims by

the Schreibers in the Bankruptcy Court and in fact, the dispute is not a “fee dispute” at all, but

rather a question of whether the Firm was discharged for cause. (Id. at 18). The Schreibers

contend that the dispute is governed by and should be litigated in accordance with New York

State law, since that is where the dispute arose in connection with the Underlying action. (Id. at

16-17). They argue that until the issue of whether the Firm was discharged for cause is

determined, the Firm has no right to a fee and there is no asset that is before the Bankruptcy

Court. (Id. at 18).19 20

B. The Firm’s Response

In its Omnibus Reply memorandum, filed September 27, 2024, the Firm takes issue with

the Schreibers’ interpretation of the Texas Bankruptcy Court’s ruling with respect to the Agreed

Order. (N&N Reply at 3-5). Although the Firm concedes that the Bankruptcy Court determined

that under the Agreed Order, the stay and temporary restraining order were “terminated” as to the

litigation in the Eastern District of New York, the Firm argues that the Bankruptcy Court’s Order

did not restrict the Firm from seeking a transfer to the Southern District of Texas, nor did it

prohibit such a transfer. (Id. at 5). The Firm takes issue with the Schreibers’ description of the

Bankruptcy Court’s actions as agreeing to “return” or send this case back to the Eastern District

19 The Court further addresses this argument in Section IV(B), “Core versus Non-Core Proceeding,” infra

at 30.

20 The Schreibers also argue that the Bankruptcy Court’s Order amounted to a decision to abstain from

asserting jurisdiction over this matter. (Schreiber Br. at 18). The Schreibers contend that this decision is appropriate

under both the doctrines of mandatory and permissive abstention, which are governed by 28 U.S.C. § 1334(c),

although they concede that not all the elements of mandatory abstention are met. (Id. at 18-19 (citing Edge

Petroleum Operating Co. v. GPR Holdings, LLC, 483 F.3d 292, 300 (5th Cir. 2007))). As the Firm notes in its

Reply, the Bankruptcy Court did not actually abstain from asserting jurisdiction, since the instant case “has never

been pending before” the Bankruptcy Court. (N&N Reply at 7). As this Court agrees with the Firm on this point,

there is no reason to analyze the argument further.

of New York, noting that this issue has always been pending here. (Id. at 6). The Firm

maintains that the only issue addressed by the Agreed Order was whether the stay should be

lifted, which left the Firm free to file this motion to transfer as well as the other motions

currently pending before this Court. (Id.)21

C. Supplemental Briefings

On February 17, 2025, the Schreibers advised the Court that the Texas Bankruptcy Court

had confirmed the Firm’s Plan of Reorganization, arguing that, as it relates to the instant motion

to transfer, clearly the determination of what, if any, fees are owed to the Firm was not a

condition precedent to confirming the Plan, as the Plan has been confirmed while this dispute is

pending. (Schreiber Suppl. Ltr. at 1). Thus, the Schreibers contend that the only issue remaining

before this Court is the pending discharge for cause dispute, which can be resolved without

reference to the bankruptcy proceedings, as the Plan has now been confirmed. (Id.)

The Firm filed a response to the Schreibers’ letter on February 24, 2025. (N&N 1st

Suppl. Resp.22). In relevant part, the Firm characterizes the Schreibers’ February 17th, 2025

letter as suggesting that now that the Plan has been approved, there is no longer any need for this

Court to resolve the transfer motion. (Id. at 1-2). The Firm asserts that the Court still must rule

on the motion to transfer, noting that the Schreibers cite no case law in support of the proposition

that the motion to transfer need not be resolved. (Id.)23

21 In its Reply, the Firm also argues that the Schreibers are precluded from raising certain arguments

because they failed to respond to the Firm’s arguments addressing the exclusive jurisdiction of the Bankruptcy

Court, the claim that the charging lien created a vested property interest and is a core proceeding mandating transfer,

and that the public interest would be served by transfer because it would allow the Bankruptcy Court to assess the

decision of the Schreiber parties not to file proofs of claim. (N&N Reply at 9). The Court notes that, while the

Schreibers may not have addressed each of the Firm’s arguments, that fact does not preclude the Court from

evaluating such arguments on the merits, which it does so below.

22 Citations to “N&N 1st Suppl. Resp.” refer to the Firm’s Letter in response to ECF No. 753, filed on

February 24, 2025 (ECF No. 754).

23 Although the Court construes the Schreibers’ February 17, 2025 letter to be an update as to the status of

the bankruptcy proceedings in Texas, and does not agree that the Schreibers were seeking to have the Court ignore

the transfer motion, the Court agrees that the motion to transfer still needs to be resolved.

On March 12, 2025, the Firm filed another letter, indicating that the time to appeal the

Bankruptcy Court’s order confirming the Plan (the “Confirmation Order”) expired on February

28, 2025, and therefore the Plan is now final and unappealable. (N&N 2d Suppl. Resp.24). In the

March 12, 2025 letter, the Firm contends that the Confirmation Order supports its argument that

the motion to transfer should be granted. (Id. at 1). The Firm points to Section 11.1.10 of the

Plan, which states that the Bankruptcy Court has “exclusive jurisdiction”25 to determine the

“validity and priority of any Lien,” and therefore, it has the exclusive jurisdiction to determine

the validity of the Firm’s charging lien at issue in the instant case. (Id.; Schreiber Suppl. Ltr.,

Ex. A at 2726).27 The Firm argues that, although the Schreibers did not file proofs of claim, they

nonetheless are bound by the terms of the confirmed Plan because they are “interested parties” in

the bankruptcy proceeding and were permitted to fully participate in the confirmation hearings.

(N&N 2d Suppl. Resp. at 2). Thus, the Firm argues that because the Confirmation Order must be

construed as conferring the Bankruptcy Court with exclusive jurisdiction over the charging lien

and over the Schreibers’ “challenge to the lien’s validity,” as well as the Schreibers’ “fee

forfeiture claim,” the Schreibers are bound to the provisions of the Confirmation Order and are

required to litigate these issues in the Texas Bankruptcy Court. (Id. at 2-3).28

24 Citations to “N&N 2d Suppl. Resp.” refer to the Firm’s Letter providing supplemental information

regarding ECF Nos. 742, 750, and 753, filed on March 12, 2025 (ECF No. 757).

25 See discussion in Section IV(A), “Section 1334(e),” infra at 24.

26 All pin cites to attached exhibits refer to this Court’s ECF page numbers.

27 Also in its March 12, 2025 letter, the Firm cites additional language from the Confirmation Order that the

Firm contends confers jurisdiction over this proceeding on the Bankruptcy Court. (N&N 2d Suppl. Resp. at 2). The

quoted language reads in relevant part that the Bankruptcy Court has exclusive jurisdiction: “To hear and determine

all controversies, suits and disputes that may arise in connection with the interpretation, enforcement or

consummation of this Plan, the Confirmation Order, any transactions or payments contemplated hereby or any

agreement, instrument or other document governing or related to any of the foregoing.” (Id. (citing Schreiber

Suppl. Ltr., Ex. A at 28) (emphasis added)). Given that the instant fee entitlement dispute arose long before the

consummation of the Plan or the existence of the Confirmation Order, the Court finds this provision irrelevant to the

issue at hand.

28 The Firm also notes that the Confirmation Order provides that the Plan will not impair or extinguish “any

causes of action disclosed on Debtor’s schedules,” and the Firm disclosed the instant action and the Firm’s charging

lien as an asset of the Firm in its Amended Schedule. (N&N 2d Suppl. Resp. at 2 (citing Ex. 1)). The Court agrees

The Schreibers29 filed a Reply on March 17, 2025. (Schreiber Suppl. Reply).30 The

Schreibers argue that the Bankruptcy Court’s Agreed Order, which lifted the stay for the parties

to conclude the fee entitlement dispute in this Court, is still in effect. (Id. at 2). Nothing in the

Plan itself would suggest otherwise. The Schreibers also note that the instant action “is not

mentioned in the confirmed Plan in any meaningful way.” (Id. at 3). Notably, the final Plan

omitted certain proposed language that related to the instant matter and would have referenced

transferring certain of the settlement funds in the Underlying action to the Bankruptcy Court’s

jurisdiction and control. (Id. (citing Ex. C)).

In arguing that the Agreed Order is still operative, the Schreibers cite to Ritzen Group,

Inc. v. Jackson Masonry, LLC, which held that “‘a bankruptcy court’s order ruling on a stay-

relief motion disposes of a procedural unit anterior to, and separate from, claim resolution

proceedings.’” (Schreiber Suppl. Reply at 2 (quoting 589 U.S. 35, 43 (2020))). Thus, the

Schreibers contend that by approving the Agreed Order and lifting the stay, the Texas

Bankruptcy Court’s Order disposed of this transfer issue separate from resolution of the claims

against the Debtor, and thus, this Court retains jurisdiction over the pending fee entitlement

dispute. (Id.) The Schreibers also appear to disagree with the Firm’s assertion that Section

11.1.10 of the Plan addressing the Bankruptcy Court’s “exclusive jurisdiction” is relevant to the

transfer motion, arguing that approval of the Plan demonstrates that resolution of the fee

that the fee entitlement dispute and the validity of the charging lien have not been impaired or extinguished by the

Plan.

29 Technically, the Reply was filed by Steven Schreiber and Two Rivers Coffee, LLC, as the renewed

motion to substitute Eugene Schreiber was pending at the time of filing. (Schreibers’ Letter responding to March

12, 2025 Letter by Jay Nelkin, Esq. regarding Motion to Transfer, filed on March 13, 2025 (ECF No. 759)

(“Schreiber Suppl. Reply”) at 1).

30 In their Reply, the Schreibers argue in the first instance that none of these letters filed after the formal

briefing on the original motion to transfer should be considered by this Court, as they “go well beyond the Federal

Rules of Civil Procedure regarding Motion Practice.” (Schreiber Suppl. Reply at 1). However, given that the Plan

confirmation affects the analysis of the instant motion, the Court considers the supplemental briefings, but only to

the extent they expound upon the Plan confirmation’s effect on the motion to transfer.

entitlement dispute was not necessary to the confirmation of the Plan or the administration of the

Firm’s estate, and noting that the final Plan omitted proposed language that would have

conferred exclusive jurisdiction on the Bankruptcy Court to determine the entitlement to the

settlement funds. (Id.)31

On March 21, 2025, the Firm filed a sur-reply, arguing that the Agreed Order lifting the

bankruptcy stay was “abrogated” by the entry of the Confirmation Order discharging the Firm.

(N&N Suppl. Sur-reply32). In support of this argument, the Firm cites to case law stating that,

where a lift stay order allowed a pre-petition claim against a debtor to proceed, the bankruptcy

court’s discharge order subsequently enjoined the claim from proceeding or the judgment from

being collected. (Id. at 1-2 (citing In re McCulloch, No. 12-20084, 2013 WL 5592880 (Bankr.

S.D. Tex. Oct. 10, 2013), aff’d as modified sub nom. McCulloch v. McClintock, No. 13 CV 374,

2014 WL 1276146 (S.D. Tex. Mar. 27, 2014), and Hart v. Taylor (In re Hart), 2016 Bankr.

LEXIS 4571 (Bankr. W.D. Tenn. Dec. 15, 2016), dismissed, 2018 Bankr. LEXIS 950 (Bankr.

W.D. Tenn. Mar. 7, 2018))).33 Finally, the Firm suggests that the Schreibers wish to delay the

31 The Plan language conferring exclusive jurisdiction over the “validity and priority of any Lien” appears

to be drawn from 28 U.S.C. § 157(b)(2)(K), which defines proceedings involving the determination of “the validity,

extent, or priority of liens” to be “core proceedings” that may be resolved by the bankruptcy courts. However, this

clause has been interpreted by courts in both Texas and New York to refer to liens that encumber the property of the

estate, rather than the debtor’s own liens. See In re Chambers, 419 B.R. 652, 667 (Bankr. E.D. Tex. 2009) (holding

that “the determination of the validity, extent and priority of liens on property of the estate falls within this Court’s

core jurisdiction” (citing Section 157(b)(2)(K)) (emphasis added); In re CIS Corp., 172 B.R. 748, 759 (S.D.N.Y.

1994) (holding that Section 157(b)(2)(K) “has been construed to allow bankruptcy courts to make determinations as

to the validity, extent and priority of liens on the estate’s (or at a minimum, the debtor’s) property”) (emphasis in

original). Thus, Section 11.1.10 simply makes it clear that now that the Texas Bankruptcy Court has confirmed a

Plan, that court would retain jurisdiction to determine the validity and priority of liens that might encumber on the

estate’s property. The Firm has cited no authority to support its assertion that this Section of the Plan or the

statutory language of Section 157(b)(2)(K) was intended to apply here, where the Debtor is attempting to assert a

lien against a third party. Moreover, as explained further infra at 29-30, notwithstanding this language in the Plan,

the Texas Bankruptcy Court, by rejecting certain proposed language and confirming the Plan while this issue

remains outstanding, appears to reject the notion that it has exclusive jurisdiction over the fee entitlement dispute.

32 Citations to “N&N Suppl. Sur-reply” refer to the Firm’s Letter in response to ECF No. 759, filed on

March 21, 2025 (ECF No. 761).

33 These cited cases, which deal with pre-petition efforts to collect monies from the debtor, are

distinguishable from the circumstances presented in this case, where the Firm is making a claim for payment from

the Schreibers. See infra at 22; see also further discussion infra at 35-40.

bankruptcy proceedings because the Bankruptcy Court has exclusive jurisdiction over this matter

and the charging lien. (Id. at 3-4).

D. Analysis

The Schreibers correctly describe the Agreed Order as an agreement—a contract, entered

into by the Schreibers and the Firm in an effort to settle the discharge for cause and fee

entitlement dispute. In exchange for the Schreibers’ agreement to engage in mediation, the Firm

agreed to allow the lifting of the automatic stay in the event that mediation was unsuccessful, and

to allow the discharge for cause question and the related fee dispute to proceed here in New

York. The Texas Bankruptcy Court confirmed its understanding that this was a contract between

the parties when it held: “As both the Schreibers and the Debtor concede, an agreed order is in

the nature of a contract, and the interpretation of its terms presents a question of contract

interpretation.” (Rosenblatt Decl., Ex. 26 at 7).

In analyzing the Firm’s argument that the Schreibers had breached the contract by filing

documents an hour prior to the termination of the automatic stay, the Bankruptcy Court looked to

principles of contract construction and determined that this technical violation did not constitute

a material breach of the Agreed Order. (Id. at 8). The Bankruptcy Judge concluded that the

Agreed Order was self-executing and ordered the stay and temporary restraining order lifted in

accordance with the terms of the Agreed Order. (See generally id.). Thus, it appears that the

parties agreed to lift the stay to allow the proceedings in this Court to continue, and the

Bankruptcy Judge endorsed that agreement as a contractual obligation between the parties.

As a general rule, in New York and in Texas, contracts are to be construed in accordance

with the parties’ intent, and the best evidence of their intent is what they say in the written

agreement. See Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569, 750 N.Y.S.2d 565, 780

N.E.2d 166 (2002) (holding that “the best evidence of what parties to a written agreement intend

is what they say in their writing” (internal quotation marks and citation omitted)); RSUI Indem.

Co. v. The Lynd Co., 466 S.W.3d 113, 118 (Tex. 2015) (holding that, “[w]hen construing a

contract, our primary concern is to ascertain the intentions of the parties as expressed in the

document”). Here, the Agreed Order was clear in that, upon declaration of an impasse, the

automatic stay and temporary restraining order “shall terminate, regarding the Parties and the

litigation [as] the subject of the impasse, and upon the expiration of the Impasse Period the

Agreed Order . . . may be uploaded and will be entered by the Court.” (Rosenblatt Decl., Ex. 24

at 3). While the Agreed Order made no mention of what would occur once the stay was lifted,

the Bankruptcy Court, in lifting the stay, held that the stay and temporary restraining order “are

terminated only to the extent that the Parties may conclude the litigation [in the EDNY] and any

appeals therefrom.” (Id., Ex. 26 at 9 (emphasis added)).

In analyzing the parties’ intent, it is clear from the terms of the Agreed Order, as

confirmed by the motion to lift the stay, that the Schreibers wanted the fee entitlement dispute to

be heard by this Court, which had previously found that the Firm was discharged for cause and

entitled to no fee at all. (See id., Ex. 21). However, in lieu of seeking a ruling on their motion to

lift the stay, the Schreibers, in an attempt to resolve the dispute without further litigation, agreed

first to submit the dispute to mediation in an effort to reach a reasonable compromise of the

Firm’s fees. In exchange for the Schreibers’ agreement to submit to mediation, the Firm agreed

to a lifting of the stay to allow the dispute to be heard before this Court. While the Firm is

correct that nothing in the Agreed Order expressly precluded the Firm from seeking an

immediate transfer of the dispute to the Texas Bankruptcy Court, the Firm’s interpretation of the

parties’ intent essentially renders the agreement a meaningless bargain for the Schreibers. If the

Firm could force an immediate transfer of the dispute back to the Bankruptcy Court, the

Schreibers essentially gained nothing by agreeing to mediate.

Additionally, the language of the Bankruptcy Court Order provides that the stay was

lifted to allow the instant case to be “conclude[d].” (Id., Ex. 26 at 9). Common sense suggests

that judicial economy would not be served by lifting the stay as to the proceedings in this Court,

just to have litigation over whether the case should then be transferred to the Texas Bankruptcy

Court. This is especially true now that the Bankruptcy Court has confirmed a Plan without

waiting for resolution of the fee entitlement dispute and is ostensibly in the final stages of the

bankruptcy proceeding.

The fact that the Texas Bankruptcy Court has now confirmed the Plan further supports

the Schreibers’ position that the resolution of the Firm’s fee entitlement dispute was not a “core”

issue34 to the bankruptcy proceeding that should have been adjudicated by the Bankruptcy Court,

nor did the fact that the dispute remains pending have any impact on the ability of the

Bankruptcy Court to administer the Debtor’s estate. Indeed, it is clear that determining whether

fees are owed to the Firm was not a condition precedent to confirming the Plan. (Schreiber

Suppl. Ltr. at 1). If it had been, the Texas Bankruptcy Court would have been unable to confirm

the Plan.

As noted, in its supplemental briefing, the Firm argues that the Confirmation Order,

which discharges the Debtor of debts or obligations as provided by 11 U.S.C. § 1141(d)(1),

overrides the Agreed Order that allowed for the stay to be lifted. (N&N Suppl. Sur-reply at 1-2;

see also Schreiber Suppl. Ltr., Ex. A at 7)). While the Plan provides that the Firm will

“prosecute all claims and causes of action of the estate, including collection of its fee from the

34 See discussion in Section IV(B), “Core versus Non-Core Proceeding,” infra at 30.

Schreibers and Two Rivers Coffee,” the Plan is silent as to where those claims are to be

prosecuted and nothing in the Plan confirmation appears to affect the validity of the Agreed

Order allowing for the stay to be lifted and for this case to proceed. (Schreiber Suppl. Ltr., Ex. A

at 24). Moreover, the Confirmation Order expressly states that “[n]othing in this Confirmation

Order or the Plan shall in any way . . . have the effect of . . . impairing or extinguishing in any

respect any causes of action disclosed on Debtor’s schedules . . . and the Debtor shall retain such

claims as provided in the Plan . . . .” (Id. at 7). The Plan confirmation simply preserves the

Debtor’s claim for collection of its fees from the Schreibers, but does not dictate where that

claim is to be adjudicated.

Moreover, the cases cited by the Firm in support of its argument that the Confirmation

Order overrides the Agreed Order are inapposite to the instant dispute. Both In re McCulloch

and Hart v. Taylor (In re Hart) involved creditors who sought to pursue a pre-petition state court

claim or judgment against a debtor after the bankruptcy court had issued a discharge order that

clearly applied to those state court actions. See 2013 WL 5592880, at *1-2; 2016 Bankr. LEXIS

4571, at *4. By contrast, the Schreibers are not creditors, nor have they filed any claims in the

bankruptcy proceeding; as a consequence, no claim of theirs has been discharged by the

Confirmation Order or Plan. Moreover, for reasons outlined in detail infra at pages 35-40, the

Court finds that the proceedings pending in the Eastern District of New York do not involve any

affirmative claims by the Schreibers against the Firm, nor are the Schreibers endeavoring to

collect on any potential debt or obligation from the Firm that would be discharged by the

confirmed Plan.

Thus, the Court finds that there is nothing in the Confirmation Order that would abrogate

the Agreed Order reached between the parties to allow the stay to be lifted and the question of

whether the Firm was discharged for cause to be heard in this Court.

Although this Court finds that technically, neither the Agreed Order nor the Bankruptcy

Court Order lifting the stay explicitly prohibited the filing of the instant motion to transfer, the

question remains whether the Firm has carried its burden to demonstrate that transfer is

appropriate under the circumstances. Thus, the Court examines the other arguments raised by

the Firm to determine if transfer to the Texas Bankruptcy Court is otherwise warranted.

IV. “Exclusive” Jurisdiction and Core Proceedings

First, the Firm contends that the Southern District of Texas, and by extension the Texas

Bankruptcy Court, has exclusive jurisdiction over this matter pursuant to 28 U.S.C. § 1334(e),

and thus the Firm is entitled to a transfer to the Texas Bankruptcy Court. (N&N Tr. Mot. at 9-

15). The Firm argues in the alternative that even if the Bankruptcy Court does not have

exclusive jurisdiction over this fee entitlement dispute, the proceedings are “core” proceedings

which should be handled by the Texas Bankruptcy Court and thus should be transferred pursuant

to 28 U.S.C. § 1412. (Id. at 15-18).

Under the Firm’s formulation, should the Court find that under Section 1334(e), the

Texas Bankruptcy Court has exclusive jurisdiction over the pending dispute, then transfer is

required and further analysis is unnecessary. If the Bankruptcy Court does not have exclusive

jurisdiction, then the Court must determine if this pending fee entitlement dispute is a “core”

proceeding subject to transfer under Section 1412. The Court addresses the jurisdictional

argument first.

A. Section 1334(e)

1. Legal Standard

Section 1334(e) of Title 28, United States Code, provides that, under Title 11, the district

court where the bankruptcy case is pending – the “home court” – has in rem jurisdiction over

property of the bankruptcy estate. 28 U.S.C. § 1334(e) (providing that the district court where

the bankruptcy case is pending has “exclusive jurisdiction . . . of all the property, wherever

located, of the debtor as of the commencement of such case, and of property of the estate”). See

In re JJ Arch LLC., 24 CV 10381, 2024 WL 2933427, at *7 n.11 (Bankr. S.D.N.Y. June 10,

2024) (citing In re Lehman Bros. Holdings Inc., 544 B.R. 16, 41 (Bankr. S.D.N.Y. 2015) and

collecting cases); In re Homaidan, 650 B.R. 372, 405 (E.D.N.Y. 2022) (explaining that Section

1334(e) “vests the ‘home court’ with the exclusive power to control and distribute property of

the estate” (citation omitted)). 28 U.S.C. § 157 extends this jurisdictional grant to the home

bankruptcy court specifically. See David P. Stromes, The Extraterritorial Reach of the

Bankruptcy Code’s Automatic Stay: Theory vs. Practice, 33 Brook. J. Int’l L., 283 n.37 (2007)

(explaining that, “[b]ecause [S]ection 157 passes jurisdiction of the debtor’s estate to the

bankruptcy court in the district in which the [home] district court sits, the bankruptcy court is

able to administer the debtor’s estate”). “Property of the estate” includes “all legal or equitable

interests of the debtor in property . . . .” 11 U.S.C. § 541(a)(1).

Section 1334(e), together with Section 157, therefore vest in the “home” bankruptcy

court exclusive jurisdiction over the debtor’s property until the plan of reorganization is

confirmed and the property is finally vested in the debtor. See Valley Historic Ltd. P’ship v.

Bank of New York, 486 F.3d 831, 837-38 (4th Cir. 2007). The Section is a practical measure

which guarantees that the home bankruptcy court can exert control over the debtor’s assets. See

In re Ajasa, 627 B.R. 6, 31 (Bankr. E.D.N.Y. 2021) (noting that “‘[t]he function of § 1334(e) is

clear – to insure that only one court administers the bankruptcy estate of a debtor’” (quoting

Williams v. Sears Roebuck & Co., 244 B.R. 858, 866 (Bankr. S.D. Ga. 2000))); see also In re

Noletto, 244 B.R. 845, 853 (Bankr. S.D. Ala. 2000) (holding that Section 1334(e) “overrides the

general conflict of jurisdiction rule that the first court to assert jurisdiction has exclusive

jurisdiction over an in rem claim . . . . This is the extent of [Section] 1334(e)”).

It follows, then, that in contrast to Section 1334(b), Section 1334(e) does not by itself

“‘invest [federal] courts with jurisdiction to conduct civil proceedings.’” In re JJ Arch LLC.,

2024 WL 2933427, at *7 n.11 (quoting Valley Historic Ltd. P’ship v. Bank of New York, 486

F.3d at 837). Instead, “‘[Section] 1334(e) must be read narrowly to limit the “home court”

exclusive jurisdiction . . . strictly to in rem matters involving property of the debtor or property

of the estate and not as a restriction on nationwide jurisdiction over claims for violations of

provisions of the [Bankruptcy] Code, other federal statutory provisions, or other remedies.’” In

re Ajasa, 627 B.R. at 18-19 (quoting Harker v. Wells Fargo Bank, NA, 414 B.R. 243, 255-56

(Bankr. S.D. Ohio 2009)). A home court’s exclusive jurisdictional reach under Section 1334(e)

therefore does not automatically extend to in personam claims that exist outside the bankruptcy

court, such as “claims against the debtor, or claims by the debtor against a third party.” In re JJ

Arch LLC., 2024 WL 2933427, at *7 n.11 (rejecting debtor’s argument that because a state court

proceeding would determine the nature and control over one of the debtor’s most valuable assets,

the bankruptcy court had exclusive jurisdiction under Section 1334(e)); see Leopard Marine &

Trading, Ltd. v. Easy St. Ltd., 896 F.3d 174, 193 (2d Cir. 2018) (noting that courts of appeals

state “broadly the principle that one court’s exercise of jurisdiction in rem does not prevent other

courts from declaring rights in the res within an in personam action”).

2. The Parties’ Arguments

The Firm asserts that under New York law, an attorney’s charging lien is “‘presumptively

valid,’” and gives the attorney an enforceable right and “‘an equitable ownership interest in the

client’s cause of action.’” (N&N Tr. Mot. at 12 (quoting In re River Ctr. Holdings, LLC, 394

B.R. 704, 718 (S.D.N.Y. Bankr. 2008) (quoting LMWT Realty Corp. v. Davis Agency, Inc., 85

N.Y. 2d 462, 467-68, 626 N.Y.S.2d 39, 649 N.E.2d 1183 (1995)))). The Firm states that when

“an attorney’s retainer agreement with the client assigns to the attorney a portion of the proceeds

of the action, the attorney acquires a vested property interest which cannot subsequently be

disturbed by the client or anyone claiming through or against the client.” (Id. at 13 (citing

Louima v. City of New York, No. 98 CV 5083, 2004 U.S. Dist. LEXIS 13707, at *178-79

(E.D.N.Y. July 21, 2004))). Citing In re River Center Holdings, LLC, the Firm asserts that it has

a “vested property right in the proceeds of the settlement agreement35 . . . as a result of its

charging lien.” (Id. (citing 394 B.R. at 718)). The Firm contends that because the Schreibers’

motion to find the Firm was discharged for cause is essentially a “fee forfeiture” claim against

the Firm’s property, such proceeding is within the exclusive jurisdiction of the Southern District

of Texas, and therefore transfer to the Texas Bankruptcy Court – the “home bankruptcy court” –

is required under Section 1334. (Id. at 13-14).36 Seemingly in the alternative, the Firm argues

35 According to the Firm, certain funds obtained from the underlying settlement are on deposit with the

Court in the Eastern District of New York, pursuant to a Deposit Agreement and a related Escrow Agreement.

(N&N Tr. Mot. at 13 n.6). In addition, the Firm is claiming the right to other assets, including membership in TRC,

as well as a multimillion-dollar loan and its collateral, which are currently being held in escrow by the firm of

Frankfurt Kurnit, Klein & Selz. (Id. (citing ECF No. 613-1 ¶ 4)).

36 The cases the Firm cites for this proposition are inapposite. Marc Vianello Revocable Trust v. Pete &

Mac’s Lee’s Summit, LLC, 14 CV 187, 2014 U.S. Dist. LEXIS 193365, at *6-7 (W.D. Mo. April 25, 2014) involves

the “interpretation and enforcement” of the bankruptcy court’s confirmation order, which the court held was within

the “exclusive jurisdiction” of the bankruptcy court that confirmed the plan; the case does not even contain the

words “fee forfeiture.” Consolidated Lewis Inv. Corp. v. First Nat’l Bank of Jefferson Parish, 74 B.R. 648 (E.D. La.

1987) involves a debtor seeking relief from allegedly wrongful encumbrances placed on its real property. While the

court suggested the dispute would be “core” to the bankruptcy proceeding, it did not invoke questions of exclusive

jurisdiction under Section 1334(e) at all. (Id. at 651).

that the resolution of the fee entitlement dispute necessarily involves a determination as to

whether and to what extent the fees are the Firm’s property at all, and therefore is a

determination on the extent of property of the bankrupt estate, which is in the Bankruptcy

Court’s “exclusive jurisdiction.” (Id. at 11-12 (citing, e.g., In re Royce Homes, 652 B.R. 488,

495 (Bankr. S.D. Tex. 2023) (quoting Manges v. Atlas (In re Duval Cty. Ranch Co.), 167 B.R.

848, 849 (Bankr. S.D. Tex. 1994)))).37

Further, in its supplemental briefing, the Firm contends that the Confirmation Order

supports its argument here. (N&N 2d Suppl. Resp. at 1). As previously noted, the Firm cites to

the Plan’s language conferring “exclusive jurisdiction” on the Bankruptcy Court to determine the

“validity and priority of any Lien,” arguing that the Bankruptcy Court therefore has exclusive

jurisdiction to determine the validity of the Firm’s charging lien and thus over the instant

proceeding to determine the same. (Id. (citing Schreiber Suppl. Ltr., Ex. A at 27)).38

In response, the Schreibers note that the final Plan of Reorganization omitted certain

proposed language that related specifically to the instant matter and referenced transferring

certain of the settlement funds to the Bankruptcy Court. (Schreiber Suppl. Reply at 3 (citing Ex.

C)). Moreover, the final Plan removed language stating that the Bankruptcy Court “‘retains

exclusive jurisdiction to determine who ultimately is entitled to receive the Settlement

[Funds/Property],’” referring to the settlement in the Underlying action in this Court. (Id. (citing

Exs. C, D)). Thus, the Bankruptcy Court explicitly rejected the notion that it had exclusive

37 While this argument is addressed in greater detail infra at 28-30, the Court also notes that it has reviewed

the cases cited by the Firm for this proposition and finds that they contain distinct factual and legal considerations

that do not apply to the instant dispute. The Court therefore finds the cited authority inapplicable and the argument

unpersuasive.

38 See discussion supra at 16.

jurisdiction over this matter and that a transfer of the matter to the Bankruptcy Court was

necessary to the confirmation of the Plan or the administration of the Firm’s estate. (Id.)

3. Analysis

The Court notes that the settlement funds and assets are currently being held on deposit

with this Court and in escrow by Frankfurt Kurnit, Klein & Seltz. (N&N Tr. Mot. at 13 n.6).

While this Court is not ruling on the status of the escrow assets at this time, “‘[m]ost courts have

held that assets in escrow are not property of the estate. Estate property is confined to the rights

conferred upon the debtor by the escrow agreement, not property rights in the assets escrowed.’”

In re Urban Commons 2 West LLC, 648 B.R. 530, 538 (Bankr. S.D.N.Y. 2023) (quoting 5

Collier on Bankruptcy ¶ 541.09[2] (16th ed. 2023)). As mentioned supra, in the parties’

Stipulated Agreement to hold the settlement funds and assets with this Court and with Frankfurt

Kurnit, Klein & Selz, the Firm stipulated that this “Court shall retain jurisdiction over the

enforcement of . . . the Charging Lien until final resolution of the Charging Lien.” (ECF No.

613-1 ¶ 8). Specifically, the Stipulated Agreement states that the funds on deposit with this

Court “shall remain under the jurisdiction and control of the Court until such time as the

dispute(s) between Plaintiff, Schreiber, Two Rivers and Nelkin is resolved by agreement or final

Order of the Court.” (Id. ¶ 9). Thus, it appears that prior to the filing of the bankruptcy petition,

the Firm had agreed that the resolution of the instant dispute between the Firm and the Schreibers

is a matter before this Court, and until such dispute is resolved, another court does not have

exclusive jurisdiction over the charging lien or the underlying property.

Indeed, it appears that the Bankruptcy Court itself does not believe it has exclusive

jurisdiction over this case. If the Bankruptcy Court had concluded that this dispute between the

Firm and the Schreibers involved, or the dispute itself constituted, “property” of the estate and

therefore fell within its exclusive jurisdiction to control and administer the same, the Bankruptcy

Court could have refused to honor the parties’ agreement to lift the stay of proceedings in this

Court. Instead, the Bankruptcy Court approved the parties’ agreement and entered an order to

lift the stay to allow this Court to “conclude” the case. (Rosenblatt Decl., Ex. 26). Thus, it

appears that the Bankruptcy Court did not consider the instant dispute as one over which it had

exclusive jurisdiction.

Moreover, as noted above, Section 1334(e) mainly facilitates the home bankruptcy

court’s administration of the estate until the plan is confirmed and the property is finally vested

in the debtor. Valley Historic Ltd. P’ship v. Bank of New York, 486 F.3d at 837 (noting that, in

the context of a Chapter 11 proceeding, Section 1334(e) “creates exclusive jurisdiction over

‘property’ for a limited period of time—until confirmation and the property vests in the

reorganized debtor”). The Texas Bankruptcy Court entered a Confirmation Order before the

Firm’s entitlement to fees was resolved. Thus, it appears the Bankruptcy Court did not consider

it necessary to exercise exclusive jurisdiction over this proceeding in order to confirm the Firm’s

Plan or administer the estate.

Nor does the Bankruptcy Court appear to believe, as the Firm argues, that this proceeding

is one to determine the extent of estate property such that the Bankruptcy Court has exclusive

jurisdiction over the question. Indeed, as the Schreibers point out, the Plan specifically omitted

proposed language that would have declared that the settlement funds, subject to the charging

lien, were property of the estate, and that the Texas Bankruptcy Court had exclusive jurisdiction

to determine the Firm’s entitlement to these funds. (Schreiber Suppl. Reply at 3; Exs. C, D)).

The only instance in which the Plan appears to mention the instant action is in its Liquidation

Analysis, where there is a reference to a “Claim for Fees vs. Schreibers” as an asset of the estate.

(Schreiber Suppl. Ltr., Ex. A at 16, 32).39 Even then, the claim is only a potential source of

liquidation, which is predicated on the outcome of the proceeding; that resolution of the dispute

could result in the augmentation of funds available for distribution does not mean that the

proceeding itself, involving the determination of whether the Firm was discharged for cause, is

within the Bankruptcy Court’s exclusive jurisdiction.

Thus, despite the Firm’s assertion that the Plan’s language reserving exclusive

jurisdiction to determine the “validity and priority of any Lien” vests the Bankruptcy Court with

exclusive jurisdiction over this proceeding, the Bankruptcy Court seemingly rejected the

argument that it had exclusive jurisdiction over this dispute. The Court finds that it would be

incongruous to hold that the Bankruptcy Court has exclusive jurisdiction over this matter when it

has repeatedly refused to exercise this supposed exclusive jurisdiction when given the

opportunity. Thus, the Court finds the Firm’s argument relating to exclusive jurisdiction to be

unpersuasive.

B. Core versus Non-Core Proceeding

As noted supra, the Firm argues in the alternative that the contingent fee determination

falls under the definition of a “core” civil proceeding, subject to the full jurisdiction of the

bankruptcy court, and that transfer to the Texas Bankruptcy Court is thus warranted pursuant to

28 U.S.C. § 1412. (N&N Tr. Mot. at 15-18).

The scope of bankruptcy courts’ jurisdiction over civil proceedings is limited. In

Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), the Supreme

Court held that in the absence of the parties’ consent, a bankruptcy judge lacks jurisdiction “to

decide a state-law contract claim against an entity that [is] not otherwise part of the bankruptcy

39 It is also unclear to what extent this language references the Firm’s other pending litigation on the fee

issue, such as its counterclaims in the New Jersey malpractice action.

proceedings.” Wellness Int’l Network, Ltd. v. Sharif, 575 U.S. 665, 681 (2015) (internal

quotation marks and citation omitted). See also id. at 673 (holding that under Stern v. Marshall,

564 U.S. 462 (2011), with respect to a state-law tort claim, “Article III prevents bankruptcy

courts from entering final judgment on claims that seek only to ‘augment’ the bankruptcy estate

and would otherwise ‘exis[t] without regard to any bankruptcy proceeding’”).

To comply with the Supreme Court’s decision in Marathon, Section 157(b) dictates that

the jurisdiction of bankruptcy courts over civil proceedings “depends on whether Congress has

classified the matter as a ‘[c]ore proceedin[g]’ or a ‘[n]on-core proceedin[g].’” Wellness Int’l

Network, Ltd. v. Sharif, 575 U.S. at 670 (quoting 28 U.S.C. § 157(b)(2)-(4)). Essentially,

bankruptcy courts are granted subject matter jurisdiction under 28 U.S.C. § 157(b)(1) to hear and

determine most “core” civil proceedings arising under or arising in Title 11. In re New York

Skyline, Inc., 512 B.R. 159, 172-73 (S.D.N.Y. 2014), aff’d, 601 F. App’x 52 (2d Cir. 2015); see

also In re U.S. Lines, Inc., 197 F.3d 631, 636 (2d Cir. 1999). The statute enumerates several

examples of core proceedings, such as “matters concerning the administration of the estate,”

“allowance or disallowance of claims against the estate,” and “determinations of the validity,

extent, or priority of liens.” 28 U.S.C. § 157(b)(2). However, the list is not exclusive.

By contrast, non-core or “related” proceedings may be referred to the bankruptcy courts,

but, in the absence of the parties’ consent, the bankruptcy court may only submit proposed

findings of fact and conclusions of law, which are then subject to de novo review by the district

court. Wellness Int’l Network, Ltd. v. Sharif, 575 U.S. at 671; 28 U.S.C. § 157(c)(1). Related

proceedings are those in which the outcome may have “‘any conceivable effect on the bankrupt

estate.’” SPV Osus Ltd. v. UBS AG, 882 F.3d 333, 339-40 (2d Cir. 2018) (quoting Parmalat

Cap. Fin. Ltd. v. Bank of Am. Corp., 639 F.3d 572, 579 (2d Cir. 2011)).

Prior to the confirmation of the reorganization Plan, the Firm argued that since the

contingent fees owed to the Firm “make up the largest asset” of the estate, the charging lien

clearly impacts the administration of the estate and the claims resolution process. (N&N Tr.

Mot. at 16-17). In addition, the Firm reiterated its argument that the proceeding “requires a

determination on whether and to what extent the fees are property of the Debtor’s Estate.” (Id. at

17). For these reasons, the Firm asserts that the fee entitlement dispute is a “core proceeding,”

and argues that this proceeding should be transferred to the Texas Bankruptcy Court pursuant to

28 U.S.C. § 1412. (Id. at 16-17). Indeed, the Second Circuit has stated that “‘the district in

which the underlying bankruptcy case is pending is presumed to be the appropriate district for

hearing and determination of a proceeding in bankruptcy.’” (Id. at 18 (quoting In re Manville

Forest Prods. Corp., 896 F.2d at 1391 (finding a proceeding to be “core” and affirming the denial

of a motion to transfer from the “home” bankruptcy court to another district))).40

The Firm further notes that, with respect to the related New Jersey state malpractice

case41 filed by the Schreibers against the Nelkins, that action was removed to the Bankruptcy

Court in New Jersey and then transferred to the Texas Bankruptcy Court. (N&N Reply at 7). In

the New Jersey malpractice case, the Schreibers pleaded a number of claims, including: 1)

breach of contract; 2) professional malpractice; 3) breach of fiduciary duty; 4) negligence; 5)

40 The Firm also cites certain cases that apply this presumption to proceedings “related to” the bankruptcy.

(N&N Tr. Mot. at 18, 20). In Glick v. Creative Group, LLC, No. 13 CV 6549, 2014 U.S. Dist. LEXIS 192429

(S.D.N.Y. Apr. 21, 2014), the court transferred a pre-petition breach of contract claim to the district where the

bankruptcy proceedings were located. However, plaintiff in the contract claim sought an award related to his 16.7%

interest in the debtor company. Id. at *4. Here, the Schreibers have no claim against the Firm in either court and

seek to acquire no property of the Firm, rendering this proceeding far less “related” to the bankruptcy case or

necessary to the effective administration of the estate. While Hohl v. Bastian, 279 B.R. 165 (W.D. Pa. 2002) also

involves a pre-petition breach of contract claim, the case is distinguishable in that the court never even reached the

question as to whether transfer to the “home court” was appropriate. Instead, the court referred the question back to

the bankruptcy court for further consideration. Id. at 178. The Court further notes that, even where the “home

court” presumption is applied to cases related to the bankruptcy proceeding, courts still evaluate whether the transfer

is in the interest of justice or the convenience of the parties. This Court finds that under the circumstances, transfer

of this proceeding meets neither standard. See discussion infra at 40-45.

41 See n.9, supra.

vicarious liability; 6) unauthorized practice of law; 7) malicious use of process; and 8) punitive

damages. The Nelkins counterclaimed with claims of, inter alia, 1) breach of contract; 2)

quantum meruit; 3) unjust enrichment; 4) fraudulent inducement; and 5) equitable fraud. (Id.,

Ex. B). Although the Schreibers asked the Texas Bankruptcy Court to abstain and remand that

case, or in the alternative, to withdraw the bankruptcy reference (id.), the Texas Bankruptcy

Court denied the request to abstain and remand on September 26, 2024. (Id., Ex. A). However,

in a separate Report and Recommendation to the District Court in the Southern District of Texas

filed the same day, the Bankruptcy Court recommended that the District Court’s reference to the

bankruptcy court be withdrawn, but that the District Court refer the case back to the bankruptcy

judge for all pretrial matters. (Id. at 7-8 (citing Ex. B)). The Bankruptcy Court explained that

the Schreibers had requested and were entitled to a jury trial, but since they did not consent to a

jury trial in bankruptcy court, it was recommended that all pretrial matters be completed before

the Bankruptcy Court and, once the case was ready for trial, the trial would be conducted in

district court. (Id.) In making this recommendation, the Texas Bankruptcy Court held:

The instant adversary proceeding concerns the administration of

the estate, as well as the liquidation of the assets of the estate or the

adjustment of the debtor-creditor relationship. The contingent fees

owed to Nelkin and Nelkin P.C. (the “Debtor”) make up the largest

asset of the Debtor’s bankruptcy estate and are therefore critical to

the administration of same. Determination of the amounts due by

the TRC Parties to the estate will directly affect the Debtor’s

ability to confirm a plan of reorganization, including any

distributions made to creditors of the estate. Given that the fees

make up such a significant portion of the Debtor’s assets, absent

this Court’s resolution of the Debtor’s counterclaim, the Debtor

will be prevented from properly administering its estate and

carrying out a successful reorganization. . . .42 Thus, adjudication

of the counterclaim will necessarily involve the allowance or

disallowance of a scheduled claim, which is plainly unique – and

core to – the bankruptcy.

42 As noted, however, the Bankruptcy Court in fact was able to confirm a Plan of Reorganization.

(Id., Ex. B at 8). As of the date of this Memorandum and Order, that recommendation has not

been acted upon by the Texas District Court and is still pending,43 and although a Plan has now

been confirmed, the New Jersey malpractice proceeding is still ongoing as an associated case to

the main bankruptcy proceeding in the Southern District of Texas Bankruptcy Court. See

Eugene Schreiber, et al. v. Nelkin & Nelkin, P.C., et al. (In re Nelkin & Nelkin, P.C.), Adversary

Proceeding No. 24-3061 (Bankr. S.D. Tex.).44

Relying on the Bankruptcy Court’s view that the counterclaim in the New Jersey action is

“core” to the bankruptcy, the Firm argues that the same reasoning applies to the issue pending

before this Court. (N&N Reply at 8). It contends that the determination of whether the Firm is

entitled to recover any fees or was discharged for cause is clearly intertwined with the claims

raised in the New Jersey malpractice action, and therefore core. (Id.)45

1. Analysis

In differentiating between core and non-core proceedings, courts have generally found

that core proceedings relate to issues arising under or from the Bankruptcy Code, while non-core

proceedings address issues that do not relate to the administration of the estate or involve the

43 See Schreiber et al v. Nelkin et al (In re Nelkin & Nelkin P.C.), No. 24 CV 3787 (S.D. Tex.).

44 The parties set forth a discovery plan in December 2024, but recent filings focus on the issue of

substituting deceased party Eugene Schreiber.

45 This Court notes that the instant proceeding presents distinct considerations that makes it distinguishable

from the New Jersey malpractice case. The issue pending before this Court is limited to a determination as to

whether the Firm was or was not discharged for cause and its entitlement to fees; the New Jersey case includes

multiple claims and counterclaims that are not part of the issues before this Court. Moreover, as the Firm itself

explains, the instant case has never been transferred and has always remained in this Court, as opposed to the New

Jersey malpractice case, which had already been transferred and was before the Texas Bankruptcy Court at the time

of its September 26, 2024 Report and Recommendation. Moreover, the Bankruptcy Court approved the parties’

agreement to lift the bankruptcy stay in order to “conclude” the E.D.N.Y. litigation. Notably, the Bankruptcy Court

has never ruled definitively on whether the instant proceeding is “core” or not (see discussion infra at 35-40), and its

Report that contains its reasoning on the nature of the Firm’s fees has not yet been adopted by the District Court in

the Southern District of Texas. Further, the Bankruptcy Court’s reasoning that “[g]iven that the fees make up such a

significant portion of the Debtor’s assets, absent this Court’s resolution of the Debtor’s counterclaim, the Debtor

will be prevented from properly administering its estate and carrying out a successful reorganization,” is no longer

salient given that a Plan has been confirmed without resolving whether the Firm is entitled to these fees. Thus, this

Court is not bound to follow that reasoning and respectfully declines to adopt it here.

bankruptcy directly, but arise independently under state or federal common law and may affect

the outcome of the bankruptcy case. See In re Kaiser, 722 F.2d 1574, 1582 (2d Cir. 1983)

(holding that a non-core proceeding has a “life of its own in either state or federal common law

or statute independent of the federal bankruptcy laws”); Prosperum Cap. Partners LLC v. NHC

Food Co. Inc., No. 21 CV 7974, 2022 WL 134881, at *3 (S.D.N.Y. Jan. 13, 2022) (noting that a

claim is non-core when it “‘does not depend on bankruptcy laws for its existence’” and “‘could

proceed in a court that lacks federal bankruptcy jurisdiction’” (quoting DeWitt Rehab. & Nursing

Ctr., Inc. v. Columbia Cas. Co., 464 B.R. 587, 591 (S.D.N.Y. 2012))). As the Second Circuit

noted in In re Robert Plan Corp., a core proceeding is one that involves “substantive rights

created by federal bankruptcy law” that “would have no existence outside of the bankruptcy.”

777 F.3d 594, 596-97 (2d Cir. 2015) (citation omitted).

Here, it is clear that this fee entitlement dispute does not involve substantive rights

created by bankruptcy law but rather is a claim arising under state law, as demonstrated in part

by the fact that the dispute existed long before the bankruptcy proceeding was commenced.

However, the mere fact that a claim raises an issue of state law is not enough to find the claim is

non-core; instead, the inquiry is whether “the nature of [the] adversary proceeding, rather than

the state or federal basis for the claim, falls within the core of federal bankruptcy power.” In re

Manville Forest Prods. Corp., 896 F.2d at 1389 (citing In re Wood, 825 F.2d 90, 97 (5th Cir.

1987)).

In making this determination, the Second Circuit in In re Manville Forest Products Corp.

looked to the Supreme Court’s reasoning in Marathon for finding that the bankruptcy court

lacked jurisdiction to enter a final judgment – namely, that the contract claim at issue in

Marathon involved a right created by state law, existed before the bankruptcy petition was filed,

and involved the debtor suing a defendant who had not filed a proof of claim and otherwise had

no connection to the bankruptcy case. See 896 F.2d at 1389 (finding the dispute to be “core” and

distinguishing Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. at 69-70, 84).

Indeed, in a subsequent decision, “the Second Circuit . . . held that a ‘breach-of-contract action

by a debtor against a party to a pre-petition contract, who has filed no claim with the bankruptcy

court, is non-core.’” In re Lenders Abstract and Settlement Serv. Inc., 493 B.R. 385, 394

(E.D.N.Y. 2013) (quoting In re Orion Pictures Corp., 4 F.3d 1095, 1102 (2d Cir. 1993)).

In the instant case, the dispute at issue is in essence a contract dispute between counsel

and their clients that arose long before the Texas Bankruptcy petition was filed in 2023. The

question that has been pending before this Court since 2018 is whether the Firm was discharged

for cause based on its conduct in the Underlying action and consequently forfeited any right to

recover fees. As an initial matter, because the Underlying action and the Firm’s services

rendered in that action occurred in New York, the Firm’s right to assert a charging lien is

governed by New York statute. See N.Y. Judiciary Law § 475 (providing that, “[f]rom the

commencement of an action . . . in any court . . . the attorney who appears for a party has a lien

upon his or her client’s cause of action, claim or counterclaim”). The statute governs not only

charging liens that arise in state court actions but also “attorneys’ charging liens in federal courts

sitting in New York.” Stair v. Calhoun, 722 F. Supp. 2d 258, 267 (E.D.N.Y. 2010) (citing Itar-

Tass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442, 449 (2d Cir. 1998)).

Moreover, “New York law . . . unambiguously holds that an attorney’s lien, once attached to the

client’s cause of action, also attaches to a subsequent settlement . . . .” Fontana v. Republic of

Argentina, 962 F.3d 667, 674 (2d Cir. 2020); N.Y. Judiciary Law § 475. However, pertinent to

the dispute before this Court, “‘[i]t is well-settled under New York law that an attorney loses his

right to enforce a charging lien if the attorney withdraws or is discharged for cause.’” Jeon v.

Riley, No. 18 CV 2612, 2020 WL 9208777, at *3 (E.D.N.Y. Nov. 23, 2020) (quoting Cruz v.

Olympia Trails Bus Co., No. 99 CV 10861, 2002 WL 1835440, at *4 (S.D.N.Y. Aug. 8, 2002)),

report and recommendation adopted sub nom. Yungbaek Jeon v. Riley, 2021 WL 926086

(E.D.N.Y. Mar. 11, 2021). Thus, the determination of whether the Firm was discharged for

cause and therefore is not entitled to assert its charging lien or recover a fee is governed by New

York State law.

Consequently, this dispute involves what is in essence a breach of contract claim that

arises under New York State law. As the Schreibers note, the instant controversy officially

commenced in this Court when the Firm filed its notice of charging lien, claiming attorneys’ fees

allegedly owed to the Firm under its retainer agreement. (Schreiber Br. at 9, 11-12). In refusing

to pay the Firm’s requested fees, the Schreibers argued that the Firm breached its duty to its

clients by failing to withdraw as counsel and filing suit against the Schreibers. The Schreibers’

motion to find the Firm was discharged for cause amounts to a defense against the Firm’s claim

to its charging lien. Thus, the issue before this Court is essentially a dispute over whether the

Firm was discharged for cause or whether the Schreibers breached the retainer agreement by

refusing to pay the Firm’s attorneys’ fees.

Moreover, the Schreibers did not file a proof of claim in bankruptcy court, are not

creditors in the bankruptcy case, and seek nothing from the Firm directly. (Schreiber Br. at 11).

Thus, the Schreibers did not submit themselves to “the equitable power of the bankruptcy court

to disallow [their] claim.” In re Manville Forest Prods. Corp., 896 F.2d at 1389.46 Indeed, the

46 In their Objection to Nelkin & Nelkin, P.C.’s Subchapter V Plan of Reorganization, filed on December

27, 2023, the Schreibers identify themselves as “parties in interest” to the lead bankruptcy case. (N&N Tr. Mot., Ex.

H). The Schreibers are named parties in two related adversary proceedings before the Texas Bankruptcy Court: 1)

the New Jersey malpractice case, removed and transferred on the Firm’s motions (Adversary No. 24-3061, ECF

Schreibers have no affirmative claims against the Firm in either the Bankruptcy Court or this

Court. Thus, this case involves the Debtor asserting a claim against a non-party to the lead

bankruptcy case. The Schreibers’ defense that they discharged the Firm for cause is based in a

right derived from state law that they are entitled to present before an Article III judge. See id. at

1389 (noting that where a debtor brought a breach of contract claim against a defendant who had

not filed a proof of claim and had “no other connection with the bankruptcy case,” Marathon

held that “state-created private rights, such as the debtor’s breach of contract claim, must be

adjudicated by an Article III judge”).

The Firm argues that this dispute will determine the extent of the Firm’s entitlement to

assert its charging lien, and thus the extent of the Debtor’s “property,” which implicates a core

bankruptcy function. However, it is clear that the determination of whether there was a

discharge for cause or not is governed by New York State law and can be adjudicated wholly

without reference to Title 11. Indeed, the fact that the Plan was confirmed while this action

remains pending demonstrates that this proceeding is largely independent from bankruptcy court

functions. The district court’s March 7, 2022 Order focuses primarily on the Firm’s conduct

towards the Schreibers during the beginning of the fee entitlement dispute, and the “heart” of the

dispute here is whether the Firm was discharged for cause based on its attorneys’ alleged

misconduct towards its clients. For example, in rejecting Magistrate Judge Orenstein’s Report

and Recommendation, the district court noted that “the events that led to the souring of the

relationship between the Nelkins and the Schreibers are very much in dispute,” and “where the

facts are disputed, an evidentiary hearing should generally be held to determine whether the

Nos. 1, 17); and 2) an adversary proceeding initiated by the Firm (Adversary No. 23-02005). Although the

Schreibers are certainly involved in these bankruptcy proceedings, they have not assertively availed themselves of

the jurisdiction of the bankruptcy court and have maintained that they wish for this Court to hear their motion and

resolve the instant dispute. (See Schreiber Br. at 20).

attorney was discharged for cause.” (3/7/22 Order at 12, 15). As the district court directed the

undersigned to resolve the fee entitlement dispute in accordance with its Order, it appears that

resolution of this dispute turns not as critically on the valuation and administration of the

property to which the Firm may have been entitled from the settlement,47 but rather whether the

Firm’s actions, including filing suit against its clients while still purportedly representing them,

amounted to attorney misconduct that justified a discharge for cause.

Moreover, flowing from the rule regarding pre-petition breach of contract claims as “non-

core” under these circumstances, courts “in this circuit have ‘consistently found professional

malpractice claims arising out of pre-petition misconduct to be non-core.’” In re The VWE Grp.,

Inc., 359 B.R. 441, 448 (S.D.N.Y. 2007) (quoting In re FMI Forwarding Co., Inc., No. 01 CV

9462, 2004 WL 1348956, at *4 (S.D.N.Y. June 16, 2004) and collecting cases); see also In re

Iannacchino, No. 15 CV 9408, 2018 WL 1009279, at *3 (S.D.N.Y. Feb. 20, 2018) (holding

simply that “[p]rofessional malpractice claims which arise pre-petition are . . . deemed non-core

claims”); Weschler v. Squadron, Ellenoff, Plesent, & Sheinfeld LLP, 201 B.R. 635, 639

(S.D.N.Y. 1996) (holding that a breach of contract and malpractice action was non-core when

“all of the alleged acts” took place before the bankruptcy and the claims were “state law claims”

that “could exist independent of the bankruptcy case”).

While the Schreibers’ motion to find the Firm was discharged for cause is not a

malpractice claim, this case presents similar circumstances. To prevail on a malpractice claim

under New York State law, a party must prove the attorney was negligent, or that they “fail[ed]

47 The Court notes that the Firm has taken the position in preparing for this Court’s evidentiary proceeding

that the Schreibers acted unreasonably in challenging the Firm’s valuation of the settlement and TRC assets that

would have determined the Firm’s fees, and thus much of the discovery has been focused on obtaining relevant

information relating to that valuation. Whether that becomes an issue that requires a determination in evaluating the

discharge for cause issue remains to be seen, but this Court was prepared to hear all of the issues prior to the

issuance of the stay.

to exercise that degree of care, skill and diligence commonly possessed and exercised by

ordinary members of the legal community.” Bryant v. Silverman, 284 F. Supp. 3d 458, 471

(S.D.N.Y. 2018) (citing Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y.3d 438, 442,

835 N.Y.S.2d 534, 867 N.E.2d 385 (2007)). Similarly, courts find that an attorney has been

discharged for cause where there has been “a significant breach of legal duty,” and where

counsel’s conduct “constituted a failure to properly represent [the client’s] interests.”

Antonmarchi v. Consolidated Edison Co. of New York, 678 F. Supp. 2d 235, 241 (S.D.N.Y.

2010) (citations omitted). The Schreibers filed a motion to find that the Firm was discharged for

cause based on attorney misconduct that occurred pre-petition. It follows that, like these

malpractice claims, the Schreibers’ right to challenge the Firm’s charging lien is based in state

law and exists outside the bankruptcy regime, and the instant proceeding should similarly be

considered non-core.

In summary, this Court concludes that the instant proceeding is non-core in that it

involves a pre-petition breach of contract claim by the debtor against a non-party in the lead

bankruptcy case that can be decided wholly without reference to Title 11. As non-core, this

proceeding is not subject to transfer under 28 U.S.C. § 1412.

V. Transfer In the Interest of Justice

The final argument raised by the Firm is that transfer of this litigation would be “in the

interest of justice or for the convenience of the parties” under 28 U.S.C. § 1412. (N&N Tr. Mot.

at 18). In considering whether transfer would be in the interests of justice, the court in In re

Suntech Power Holdings Co., Ltd., set forth a number of considerations, including whether:

(i) transfer would promote the economic and efficient

administration of the bankruptcy estate; (ii) the interests of judicial

economy would be served by the transfer; (iii) the parties would be

able to receive a fair trial in each of the possible venues; (iv) either

forum has an interest in having the controversy decided within its

borders; (v) the enforceability of any judgment would be affected

by the transfer; and (vi) the plaintiff’s original choice of forum

should be disturbed.

520 B.R. 399, 421-22 (Bankr. S.D.N.Y. 2014). The Firm argues that here, the “home court”

presumption favors transfer to the Texas Bankruptcy Court, and transfer will serve the interests

of judicial economy because the “other cases pending between the Schreibers and N&N are

currently before the [Texas] Bankruptcy Court.” (N&N Tr. Mot. at 20). The Firm concedes that

the third and fifth factors – ability to receive a fair trial and enforceability of any judgment – are

neutral, but argues that because the Texas Bankruptcy Court has exclusive jurisdiction over

property of the estate, the fourth factor favors having the Texas Bankruptcy Court determine the

issues. (Id.) The Firm argues that since the Schreibers have appeared in Texas both in person

and by remote means, the plaintiff’s original choice of forum is outweighed by the fact that the

fee forfeiture claim is a core issue and one in which the Texas Bankruptcy Court has exclusive

jurisdiction, so transfer is appropriate. (Id. at 20-21).48 Finally, the Firm argues that because the

Firm is located in Houston, Texas, the convenience of the parties and witnesses favors transfer.

(Id. at 24).

Given that the Court finds this proceeding to be non-core, it technically need not reach

the Firm’s further argument on the factors governing transfer under Section 1412. See Ecars

Factors LLC v. Braunstein, 2019 WL 13219569, at *1 (refusing to analyze a motion to transfer a

non-core proceeding under Section 1412 and instead analyzing transfer under 28 U.S.C. §

1404(a) (citing Onewoo Corp. v. Hampshire Brands, Inc., 566 B.R. at 139)). The Firm has not

48 The Firm also argues that the interests of justice favor having the Bankruptcy Court address the failure of

the Schreibers to file proofs of claims, which the Firm argues is an “express disclaim[er], waive[r], and

abandon[ment] [of] their claims against N&N.” (N&N Tr. Mot. at 22-23). The Firm filed a separate Motion to

Dismiss the Schreiber Parties’ Fee Forfeiture Claim on this issue. (ECF No. 743). In their omnibus response, the

Schreibers take the position that it was the Firm who initiated the fees claim, and the Schreibers were not required to

file a notice of claim in order to preserve their defense to the Firm’s efforts to recover fees despite being discharged

for cause. (Schreiber Br. at 21-24). The Court does not directly address this separately filed motion at this time.

moved in the alternative for transfer under Section 1404(a), nor has it argued that transfer is still

appropriate even if the proceeding is non-core. Indeed, a party seeking transfer under Section

1404(a) has a higher burden and must show not only that the claims could have originally been

brought in the transfer forum but also demonstrate by clear and convincing evidence that transfer

is in the interests of justice. (See discussion supra at 11). Here, the Firm has not demonstrated

whether the dispute could have originally been brought in Texas, and the factors to be considered

are virtually the same under both Section 1412 and 1404(a). Even assuming the proceeding is

core, the Court finds that the Firm has failed to meet the substantive requirements of Section

1412, establishing that transfer is in the interest of justice or for the convenience of the parties.

Thus, the Court would, for the same reasons as outlined below, decline to transfer the case under

Section 1404(a) as well.

Looking to the considerations set forth in In re Suntech Power Holdings Co., Ltd., cited

by the Firm, there is no dispute that the parties would be able to receive a fair trial in either

venue, that both fora have an interest in having the controversy decided, and the transfer would

not affect the enforceability of any judgment one way or the other. 520 B.R. at 22. The Court

finds it unlikely, however, that transfer to the bankruptcy court would “promote the economic

and efficient administration of the bankruptcy estate” or “the interests of judicial economy would

be served by the transfer.” Id. Given that the determination of whether the Firm breached its

retainer agreement is a question of New York State law that would fall outside the core

jurisdiction of the bankruptcy court and the parties have not consented to the bankruptcy court’s

jurisdiction, the case, if transferred, would either require the district court in Texas to determine

the issues or result in a referral to the bankruptcy court to recommend findings to the district

court, which would then consider the issues de novo. Wellness Int’l Network, Ltd. v. Sharif, 575

U.S. at 671.

In addition, the fee entitlement dispute arose in this Court in August 2018, five years

before the bankruptcy petition was filed, involving questions related to the Firm’s conduct in the

underlying case which was filed here almost 10 years ago. Keeping this state law contract

dispute separated from the bankruptcy proceeding is not only feasible, but will lessen the burden

on the bankruptcy court because of this Court’s familiarity and prior proceedings dealing with

the fee entitlement dispute. Not only was the question of whether the Firm was discharged for

cause the subject of two prior opinions issued by judges in this district, but this Court has spent

an extensive amount of time supervising and considering disputes about the appropriate scope of

discovery and the issues to be considered in determining the discharge for cause question, and,

when the instant motion was filed, was on the verge of holding an evidentiary hearing to create a

more fulsome record in order to resolve the dispute. A transfer to the bankruptcy court or the

district court in Texas would require the transferee court to become familiar with not only the

now seven years of litigation relating to the fee entitlement dispute, but the facts and

circumstances relating to the underlying dispute as well, given that the valuation of the

company’s assets and the original agreement reached between the parties seven years ago play a

role in analyzing the discharge question.

All of these factors are particularly salient now that the Bankruptcy Court has confirmed

a Plan. Were this Court to transfer the case at this point, the Bankruptcy Court would be saddled

with a complicated, years-long dispute which does not ultimately bear on its central task of

confirming the Debtor’s Plan. Moreover, transfer would inevitably delay any further bankruptcy

proceedings, such as overseeing implementation of the Plan or resolving any outstanding issues

between the Debtor and creditors. The interests of justice favor a quick resolution by this Court

which is more familiar with the issues and ready to proceed.

As for the convenience of the witnesses, the Firm argues that because it is located in

Texas, it is more convenient for witnesses to have the case adjudicated in Texas, and all

witnesses can appear virtually. However, the Schreibers contend that “all witnesses” in the

matter are “located in the immediate geographical region” of this District, and case management

has been done in this District. (Schreiber Br. at 17). Further, “[t]o support a motion to transfer

venue, the moving party should submit an affidavit that lists potential principal witnesses and

their anticipated testimony.” Brown Publ’g Co. v. Brown, No. 15 MC 531, 2017 WL 455418, at

*3 (E.D.N.Y. Feb. 1, 2017). While the Firm submitted a witness list on September 23, 2024 in

connection with the evidentiary hearing, it did not attach an affidavit or include a description of

the witnesses’ anticipated testimony; more importantly, it did not include the location of these

witnesses. (See ECF No. 749). Thus, the Firm has not met its burden of demonstrating that this

factor favors transfer. In addition, the Schreibers emphasize that the Firm agreed to return to this

Court in the Agreed Order and the Bankruptcy Court endorsed that Order as self-executing.

(Schreiber Br. at 17). Thus, while it may be more convenient for the Firm to proceed in Texas, it

is at least equally convenient to hear this case in New York, where at least some witnesses are

located and where the Firm agreed to proceed.

In summary, the Court finds that the issue of whether the Firm was discharged for cause

is not within the exclusive jurisdiction of the Texas Bankruptcy Court and is not a core

proceeding entitled to transfer under Section 1412. To the contrary, the issue is one of New

York State law, and has been pending for many years before this Court, which has more

familiarity with the issues and can adjudicate the question expeditiously. The Texas Bankruptcy

Court arguably had the authority to reject the parties’ Agreed Order to lift the stay and allow this

Court to “conclude” the matter here, particularly if it believed it had exclusive jurisdiction under

Section 1334(e). (Rosenblatt Decl., Ex. 26). In addition, the Bankruptcy Court confirmed a Plan

of reorganization while this fee entitlement dispute was still pending, and declined to include

language that would impose jurisdiction over this proceeding or the charging lien and underlying

settlement funds. While the Agreed Order did not preclude the Firm from raising the issue of

transfer, the Bankruptcy Court’s approval and enforcement of the Agreed Order, as well as its

recent Confirmation Order, support this Court’s view that the Bankruptcy Court does not have

exclusive jurisdiction over the question and that Nelkin & Nelkin, P.C.’s motion to transfer

should be denied in the interest of justice and for the convenience of the parties.49

CONCLUSION

For the reasons set forth above, Nelkin & Nelkin, P.C.’s motion to transfer is DENIED.

This proceeding shall remain in the Eastern District of New York to resolve the issue of whether

the Firm was discharged for cause. Subject to the Court’s rulings on the Firm’s remaining

motions should the Firm decide to renew them, this Court stands ready to schedule the hearing

on the issue of discharge for cause.

SO ORDERED.

Dated: Brooklyn, New York

June 8, 2025

/s/ Cheryl L. Pollak

Cheryl L. Pollak

United States Magistrate Judge

Eastern District of New York

49 To the extent a question exists as to whether this proceeding would be subject to automatic referral to the

Eastern District of New York Bankruptcy Court pursuant to this District’s Standing Order, this Court would

respectfully recommend that such a reference be withdrawn. See 28 U.S.C. § 157(d).