In Re: Mosdos Chofetz Chaim Inc.

Background

This was an appeal from three orders entered by Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York. The orders enforced a May 25, 2021 injunction concerning CRDI property and the CCI Building.

The injunction prohibited the appellants and people acting with them from entering or remaining on CRDI’s property, obstructing access, disrupting religious services or study, or interfering with rent collection. It was later modified to state that it did not bar people with a valid written lease or another legal right to possess a residential unit from entering the property for purposes connected to that unit.

The Contempt Order found Rabbi Mayer Zaks, Shimon Zaks, and Yisroel Hochman in contempt for willfully violating the injunction. It ordered coercive, prospective monetary sanctions against the appellants of $5,000 per person per violation. The Reconsideration Order denied the appellants’ request to reconsider the Contempt Order. The Enforcement Order found continuing violations, declined to impose monetary sanctions for earlier conduct because the appellants believed they had constitutional and property-law defenses, clarified that they had no right to enter or remain on the property, confirmed that the injunction remained enforceable, and imposed prospective sanctions beginning at 5:00 p.m. on September 8, 2021.

The three appeals were consolidated. The district court reviewed the bankruptcy court’s factual findings for clear error, legal conclusions without deference, and contempt and sanctions rulings for abuse of discretion.

Analysis

Clarity of the injunction. The appellants argued for the first time on appeal that the injunction was unclear and ambiguous. The court held that they had waived this argument by failing to raise it in the bankruptcy court or during their earlier challenge to the injunction. The court also considered the argument and rejected it on the merits. It explained that the appellants’ good-faith belief that they had property or religious-liberty defenses did not make the injunction objectively unclear. The injunction clearly barred them from entering or remaining on the property, and the residential-unit exception did not apply because they lacked an enforceable leasehold or other property interest.

The court therefore affirmed both the Contempt Order and the Reconsideration Order.

Authority to enforce during an appeal. The appellants argued that the bankruptcy court was barred from issuing the Enforcement Order while the injunction was being appealed. The district court explained that the lower court generally may enforce an order during an appeal but may not alter or expand it. It concluded that the Enforcement Order merely enforced and clarified the existing injunction. It did not add people to the injunction, expand its scope, or change the prohibited conduct. The Enforcement Order therefore did not violate the rule limiting a lower court’s authority during an appeal.

Religious-liberty and New York-law arguments. The appellants argued that the Enforcement Order violated the First Amendment’s Establishment Clause and New York law. The district court held that the issue had been considered on its merits below and was preserved for review. It relied on its earlier conclusion that the injunction did not prevent Rabbi Mayer from practicing or attending religious services generally; it only prevented him from doing so on property where he had no lawful right of access without the owner’s permission. The court held that the property owner’s right to exclude others supported the Enforcement Order. It also rejected reliance on New York law concerning removal of a minister because Rabbi Mayer had not been removed from a religious position; he had been barred from privately owned property.

Disposition

Judge Philip M. Halpern affirmed each of the three challenged orders: the Contempt Order, the Reconsideration Order, and the Enforcement Order. The clerk was directed to terminate the case.