In re

Chapter 11


Stephen S. Gray, as Creditors' Trustee ("Mr. Gray" or the "Creditors' Trustee") pursuant to the Joint Plan of Reorganization of Stephen S. Gray, Chapter 11 Trustee, Mandela Residents Cooperative Association, Inc., Beacon Residential Properties Limited Partnership and Winter Hill Federal Savings Bank (the "Plan"), confirmed by order of this Court dated September 26, 1997 (the "Confirmation Order"), hereby opposes the within Motion for Change of Venue of this Case to Another State (the "Venue Motion") filed by Alphonse Mourad. As more particularly described below, the Venue Motion is the latest in a continual effort by Mr. Mourad to forum shop or otherwise attempt to litigate this matter before another court, by means of baseless motions to recuse, transfer, withdraw the reference or whatever. Likewise, the instant motion is wholly without merit, grounded on the incorrect premises that this Court somehow might sit on a Bankruptcy Appellate Panel ("BAP") which ultimately might hear any appeal of this matter or that this Court might somehow be called as a witness in this remanded matter with respect to matters specified by Mr. Mourad which are wholly irrelevant to any matter remaining pending before this Court.

In addition to opposing Mr. Mourad's Venue Motion, the Creditors' Trustee also moves for judgment on the pleadings on the remaining matters pending before this Court. As more particularly described below, there remain no funds in the Debtor's estate as to which Mr. Mourad could assert his late administrative claim, all such funds having been transferred under the terms of the Plan, free and clear of all liens, claims and interests to the Creditors Trust established under the Plan. Moreover, to the extent Mr. Mourad seeks to establish a late administrative claim based upon the alleged negligence of the Creditors' Trustee, the Plan expressly provides that, other than with respect to his duties and responsibilities to make the payments required under the Plan:
The Creditors' Trustee, the Creditors' Trust and their employees attorneys, associates, consultants or agents, shall (i) not have or incur any liability to any person or entity for any act or omission in connection with, or arising out of, the administration of this Plan or the property to be distributed under this Plan, except if such act or omission is determined by a Final Order to reflect bad faith or to constitute willful misconduct or gross negligence. ...
Finally, this Court may take judicial notice that, since Mr. Mourad first asserted the claims at issue in this Court, he litigated to a conclusion related disputes with the Internal Revenue Service before the United States Tax Court, which concluded that Mr. Mourad, and not the Debtor or its estate, is solely responsible for the taxes at issue.
In further support of this opposition, the Creditors' Trustee respectfully represents as follows:

1. On January 8, 1996 (the "Petition Date"), V&M Management, Inc. ("V&M") filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§101, et seq. (the "Bankruptcy Code"). On February 5, 1996, this Court appointed an examiner to investigate the Debtor's affairs pursuant to Section 1104 of the Bankruptcy Code. After a
BOS\99572.1 lengthy hearing, Stephen S. Gray was appointed Chapter 11 Trustee pursuant to an order of this Court dated April 2,1996.

2. On September 26, 1997, this Court entered an order confirming the Plan submitted by Mr. Gray as Chapter 11 Trustee and various other creditors and parties in interest. Mr. Gray was appointed Creditors' Trustee of the Creditors' Trust formed pursuant to the confirmed Joint Plan.

3. Upon confirmation of the Joint Plan, the parties proceeded to substantially consummate the Joint Plan in accordance with its terms. Among other things, all or substantially all of the Debtor's assets were sold and the proceeds received were distributed to creditors holding allowed claims by Mr. Gray as Creditors' Trustee in accordance with the Joint Plan.

4. Prior to the Petition Date and throughout the course of its bankruptcy case, the Debtor was and remained a Subchapter S corporation. Accordingly, pursuant to applicable law, shareholders of the Debtor are solely responsible for payment of any taxes arising as a result of any income of the Debtor.

5. On or about September 17, 1998, almost one year after confirmation of the Joint Plan, Alphonse Mourad ("Mourad"), the sole shareholder of the Debtor, filed his Motion To Allow Administrative Claim Of Alphonse Mourad Late (the "Late Claim Motion") with this Court, seeking permission to file a late administrative claim in the amount of $1.3 million against the Debtor on account of his personal income tax liability as a shareholder of the Debtor.

6. Mr. Gray filed an Opposition Of Creditors' Trustee To Motion To Allow Administrative Claim of Alphonse Mourad Late (the "Opposition") on or about September 30, 1998, asserting that Mourad had not shown "cause" to warrant the submission or allowance of a late administrative claim, and that there was no basis for the claim as Mourad, as the Debtor's shareholder, was solely liable for the taxes at issue and neither Mr. Gray, the Debtor or its estate bore any responsibility whatsoever. 3BOS\99572.1

7. On November 16, 1998, this Court entered an Order On Motion OfAlphonse Mourad To Allow Administrative Claim Late (the "Bankruptcy Court Order") denying the Late Claim Motion. In the Memorandum of Decision accompanying the Bankruptcy Court Order, this Court ruled that the Late Claim Motion failed to state a valid claim upon which relief could be granted, and that Mourad had failed to cite any law that would justify shifting tax liability from Mourad to the Debtor or its estate.

8. On November 27,1998, Mourad filed a Notice of Appeal in this Court. Pursuant to an Order dated April 12, 2000 (the "BAP Order"), the Bankruptcy Appellate Panel for the First Circuit (the "BAP") found that "the bankruptcy court's order dismissing the motion did not resolve Mourad's claim that Mr. Gray was negligent in the performance of his duties as trustee." BAP Order at p.5. Accordingly, the BAP remanded the matter to this Court to consider Mourad's allegations that Mr. Gray administered the estate negligently, causing Mourad's tax liability, or increasing his tax liability, and whether Mourad had asserted his claim in a timely fashion.

The Venue Motion
9. As noted above, the Venue Motion consists principally of a rehash of allegations which Mr. Mourad has recited repeatedly throughout the case, including allegations that this Court is for some unspecified reason biased against Mr. Mourad. Clearly, however, it is nothing other than the latest attempt by Mr. Mourad to forum shop or to find a means, through repeated motions for recusal, withdrawal of the reference, belated demands for a jury trial and the like, otherwise to litigate this matter in another court.

10. . The sole bases upon which the Venue Motion is premised, however, appear to be (a) that there is an alleged conflict of interest because the Court "will be the residing [sic] Judge in both the Debtor's Chapter 11 bankruptcy case, and will be the Judge who will be responsible to hear any appeal" to the BAP; and (b) that "[t]here is a further conflict, in that Judge Kenner could potentially be called as a witness in the remand trial based on her knowledge that Harold 4BOS\99572.1

Murphy and Hanify & King, who was [sic] V&M Management's counsel, represented Trustee Gray in a separate matter before Judge Kenner at the very same time." Neither of those conflicts exists, nor do they constitute grounds to transfer venue of the remaining matters before this Court.

11. On information and belief, appeals from Massachusetts bankruptcy courts to the BAP cannot be heard by any Massachusetts bankruptcy judge, much less the judge whose decision is on appeal. Likewise, there are no remaining matters with respect to Hanify & King pending before this Court. The sole remaining matters are those remanded by the BAP to this Court, i.e.. Mr. Mourad's allegations that Mr. Gray "administered the estate negligently, causing Mourad's tax liability, or increasing his liability, and whether Mourad has asserted this claim in a timely fashion."1 The allegations with respect to Hanify & King and Mr. Gray are wholly irrelevant to those matters and, therefore, do not provide any basis for Mr. Mourad to seek to call this Court as a witness or to seek a change of venue based upon any such threat.

12. Thus, there is no basis for the transfer of venue Mr. Mourad seeks, other than his desire to pursue the matter elsewhere. To do so, however, would only serve to delay the resolution of this case and further multiply the costs of such a resolution. Given the protracted history of this case and Mr. Mourad's penchant for revisiting and recharacterizing that history, it would be a woeful imposition on the resources of any other court to which venue were to be transferred and would multiply substantially the expense to the Creditors' Trust of finally resolving this matter.
Judgment on the Pleadings
In footnote 4 of the BAP's decision, it noted:
Before the Panel, Mourad amplified or developed this argument stating his tax liability was increased by interest paid on the unnecessary accumulation of estate income and by Gray's failure to request a low income housing credit.
Mr. Mourad subsequently litigated the tax credit issue before the United States Tax Court, which ruled that he and the Debtor were not eligible for tax credits. A copy of the Tax Court's July 2, 2003 decision is attached hereto as Exhibit A.

13. As noted above, the Plan provided for the transfer of all of the Debtor's estate's remaining property to the Creditors' Trust:
7.2. Transfer of Property. On the Effective Date, except as otherwise specifically set forth in this Plan, the Trust Assets, without any further act or deed of the Creditors' Trustee or the Bankruptcy Court, shall be transferred from the Debtor to the Creditors' Trust, free and clear of all liens, claims and interests. ...
[Emphasis Added]. Thus, even if this Court were to allow Mr. Mourad's late administrative claim, there are no remaining assets to satisfy any such claim. In short, this matter is moot.

14. Moreover, the Plan also precludes any negligence claims against the Creditors' Trustee:
7.13. Exculpation. The Creditors' Trustee, the Creditors' Trust and their employees, attorney, accountants, consultants, or agents, shall (i) not have or incur any liability to any person or entity for any act or omission in connection with, or arising out of, the administration of this Plan or the property to be distributed under this Plan, except if such act or omission is determined by a Final Order to reflect bad faith or constitute willful misconduct or gross negligence. ...
Thus, even assuming that Mr. Gray had any duty to Mr. Mourad individually, which Mr. Gray disputes, see. e.g.. In re J.F.D. Enterprises. Inc.. 223 B.R. 610, 628 n. 20 (Bankr. D. Mass. 1998) ("... the tort of negligence also assumes the existence of some duty which has been breached. The DiStefanos have identified none owed to them by Berman"), the Plan expressly relieves Mr. Gray of any liabilities for negligence claims, including those of Mr. Mourad which are the subject of these remanded proceedings. Id. at 628. Accordingly, Mr. Gray is entitled to judgment on the pleadings with respect to Mr. Mourad's negligence claim.

15. Finally, this Court may take judicial notice that, over the passage of time, Mr. Mourad has litigated against the IRS the same issues he sought to assert herein, that is, the respective obligations of the Creditors' Trustee and Mr. Mourad to the IRS for the income tax
BOS\99572.1 liabilities that are the subject of Mr. Mourad's late administrative claim. Attached hereto as Exhibit A is the Tax Court's decision, filed July 2,2003.

16. As indicated in that decision, Mr. Mourad raised the same issues he is attempting to assert herein. The Tax Court concluded, clearly and unequivocally, that Mr. Mourad was solely responsible for such taxes, and not the Debtor nor its estate. See Exhibit A at p. 10. ("There were no claims against V&M Management for income tax liabilities because an S corporation is not generally liable for income tax. ... [Pjetitioner is obviously confusing V&M Management with himself."). While Mr. Mourad may not like or agree with that decision, he is bound by it and cannot seek to collaterally attack it in further proceedings before this Court against Mr. Gray.

17. Mr. Mourad similarly appears to seek to litigate in this Court, in order to assert a late administrative claim, his assertion that Mr. Gary is somehow responsible for all or part of the interest or penalties that have accrued by reason of Mr. Mourad's failure to pay those taxes. Exhibit A to the Venue Motion, however, clearly establishes that such interest and penalties are solely attributable to Mr. Mourad's own inaction. The Tax Court's decision makes it even more abundantly clear:
Petitioner did not file individual income tax returns for 1996 and 1997. On August 13, 2001, respondent issued a notice of deficiency for the 1997 tax year, which determined that petitioner received income of $2,088,554. Respondent's determination was based on information reported on V&M Management's 1997 Schedule K-l.
See Exhibit A at p. 4. The decision also noted that, despite Mr. Mourad's failure to file any return, the Debtor's 1997 return was signed by Mr. Gray on September 1, 1998. Id. at 4 n. 4.

18. In short, since Mr. Mourad first sought to establish his late claim against the Debtor's estate based upon his tax liabilities, he has litigated to a conclusion the same claims
BOS\99572.1 against the IRS. He is bound by that decision and cannot seek to collaterally attack it in this Court and, accordingly, his remaining claims should be dismissed.
WHEREFORE, the Creditors' Trustee respectfully requests that this Court:

1. Deny in all respects the Venue Motion;

2. Grant the Creditors' Trustee judgment on the pleadings with respect to all of Mr. Mourad's remaining claims against the Debtor, its estate and the Creditors' Trustee and dismiss this contested matter; and

3. Grant the Creditors' Trustee such other and further relief as this Court deems just and proper.

Moore (BBO# 353100) DUANE MORRIS LLP 470 Atlantic Avenue, Suite 500 Boston, MA 02210 Tel: 617-289-9200

Dated: March 18,2004