Khandalavala, II v. Sandhu
- Garnett
- 1:25-cv-01630
- U.S. District Court · Southern District of New York
- 3
In Khandalavala v. Sandhu, Judge Garnett transferred the case to the Eastern District of New York for bankruptcy-related convenience and justice.
The action’s parties are affected by moving the case from the Southern District of New York to the Eastern District of New York for possible transfer to the bankruptcy court there. The court stated that the transfer would not eliminate Penny K. Sandhu’s personal guarantee.
What happened
In Khandalavala, II v. Sandhu, Karl Khandalavala, II sought to collect a New York state-court judgment against Jus Punjabi LLC and Penny K. Sandhu, who was alleged to be a guarantor. Jus Punjabi had filed for Chapter 11 bankruptcy in the Eastern District of New York and asked to move the federal case there.
Khandalavala objected, arguing that the transfer would prevent enforcement of the state-court judgment and that the case was unrelated to the bankruptcy proceedings. The court rejected those arguments, explaining that the transfer would not eliminate Sandhu’s personal guarantee and that enforcing the judgment could affect Jus Punjabi’s bankruptcy estate.
Judge Margaret M. Garnett granted Jus Punjabi’s motion to transfer venue. She directed the Clerk to send the action to the Eastern District of New York, so it could then be transferred to the bankruptcy court there, and directed that the action be terminated in the Southern District of New York.
The detailed version
- Khandalavala, II v. Sandhu · No. 1:25-cv-01630
- Garnett
- Mar. 17, 2025
Background
Karl Khandalavala, II began the action in New York Supreme Court for New York County, alleging several state-law claims, including breach of contract, concerning a settlement agreement with Jus Punjabi LLC. The opinion states that Penny K. Sandhu was an obligor and/or guarantor under that agreement. On June 10, 2024, the state court granted Khandalavala’s motion for summary judgment on default after Jus Punjabi and Sandhu failed to appear. Khandalavala then sought to collect that judgment from Jus Punjabi and Sandhu.
On December 11, 2024, Jus Punjabi and two other entities filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Eastern District of New York. Jus Punjabi removed the state-court action to the Southern District of New York on February 26, 2025, and moved to transfer it to the Eastern District of New York so it could then be transferred to the bankruptcy court. Sandhu later joined that motion. Khandalavala opposed both removal and transfer.
Transfer analysis
The court considered federal venue-transfer provisions allowing a civil action to be moved for the convenience of the parties and witnesses or in the interest of justice. It also considered the provision allowing a case related to a bankruptcy proceeding to be transferred to another district for those reasons. Jus Punjabi, as the party seeking transfer, had to show by clear and convincing evidence that transfer was warranted.
The court found that the action was related to Jus Punjabi’s bankruptcy because enforcing the judgment against Jus Punjabi could affect administration and distribution of the bankruptcy estate. The court also found that enforcing the judgment against Sandhu could affect that estate because the opinion identifies Sandhu as Jus Punjabi’s founder and majority shareholder. The court further stated that transferring the action would not eliminate Sandhu’s personal guarantee, even if the action were consolidated with Jus Punjabi’s bankruptcy proceedings, because those proceedings could not relieve the obligations of a non-bankrupt party.
Ruling
Judge Margaret M. Garnett found that Jus Punjabi had shown by clear and convincing evidence that removal to the Southern District of New York was appropriate and that convenience and the interest of justice favored transfer to the Eastern District of New York. The court GRANTED the motion to transfer venue. The Clerk was directed to transfer the action to the Eastern District of New York and terminate the action in the Southern District of New York. The opinion does not state that the court dismissed the claims or entered a new judgment on their merits.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.