Taylor v. Zampella
- Lewis Liman
- 1:23-cv-08409
- U.S. District Court · Southern District of New York
- 10
In Taylor v. Zampella, Judge Liman denied Zampella’s request to vacate an earlier remand order, finding no qualifying mistake and no basis to change the decision.
Aniello Zampella’s motion was denied, and the earlier order sending Robert Taylor’s lawsuit to New York State Supreme Court remained in place. The opinion did not resolve the underlying claims against the defendants.
What happened
In Robert Taylor’s case against Aniello Zampella and others, the federal court considered whether to undo its earlier decision sending the lawsuit back to New York state court. The lawsuit concerns an alleged cryptocurrency-ATM joint venture and asserts state-law claims including breach of contract, fraud, and breach of fiduciary duty.
Zampella argued that the remand decision should be vacated because he and another defendant were not served with Taylor’s remand motion and because Cottonwood Vending LLC’s lawyer had been replaced by a bankruptcy trustee. He also argued that the state-court case could affect Cottonwood’s bankruptcy estate.
Judge Liman ruled that the federal court had authority to reconsider the remand order, but denied Zampella’s motion. The court found that service was adequate and that any service mistake would not have changed its earlier decision that the state-law case should remain in state court.
The detailed version
- Taylor v. Zampella · No. 1:23-cv-08409
- Lewis Liman
- Apr. 26, 2024
Background
Robert Taylor sued Aniello Zampella, Chad Russo, Pierre Basmaji, and Cottonwood Vending LLC in New York State Supreme Court. Taylor sued individually and on behalf of Blue Tree Management LLC. The complaint alleges that Taylor, Zampella, and Russo formed a joint venture to operate Bitcoin automated teller machines, using Cottonwood and Blue Tree in a two-tier business structure. The alleged venture ended after Cottonwood ended its relationship with Blue Tree.
The complaint asserts state-law claims for breach of an oral joint-venture agreement, unjust enrichment, fraud, breach of fiduciary duty, and an accounting. Cottonwood later removed the case to federal court, stating that the lawsuit was related to a bankruptcy case Cottonwood had filed in the United States Bankruptcy Court for the Eastern District of New York.
Taylor moved to send the case back to state court under 28 U.S.C. § 1452(b), which allows a court to remand a bankruptcy-related case on equitable grounds. On February 5, 2024, the court granted that motion. It concluded that the lawsuit involved only New York law, had a limited connection to the bankruptcy court’s jurisdiction, would not undermine efficient administration of the bankruptcy estate, could interfere with Taylor’s jury-trial demand, and would prejudice Taylor if it remained in federal court.
Motion to Vacate
Zampella moved under Federal Rule of Civil Procedure 60(b)(1), which allows a court to relieve a party from an order because of mistake, inadvertence, surprise, or excusable neglect. He argued that Taylor had not served Zampella or Basmaji with the remand motion and that Cottonwood’s lawyer was no longer representing Cottonwood after a bankruptcy trustee was appointed. Zampella also argued that resolving Taylor’s claims in state court could affect creditors’ rights and the bankruptcy estate.
Jurisdiction to Reconsider the Remand Order
Taylor argued that the federal court no longer had authority to reconsider the remand order because the case had already been sent to state court. Judge Liman rejected that argument. The court distinguished 28 U.S.C. § 1447(d), which generally bars review of remand orders issued under specified parts of § 1447, from § 1452(b), which bars review by the federal courts of appeals and the United States Supreme Court but does not bar review by a district court.
The court therefore held that it had jurisdiction to reconsider its own remand order under § 1452(b), even though the case had been sent to state court.
Why the Court Denied Relief
The court concluded that Zampella had not shown a qualifying mistake or excusable neglect. Under Federal Rule of Civil Procedure 5, service generally is required only on parties who have appeared. Because Zampella and Basmaji had not appeared, they did not have to be served with the remand motion. The court also found that electronic filing served Cottonwood through the attorney listed to receive notices. If Cottonwood’s lawyer could no longer receive service, the court said, Cottonwood was responsible for having a new attorney appear or having the prior attorney withdraw.
The court further held that any failure to serve Zampella or Basmaji would not have been material. Rule 60(b)(1) relief requires a material mistake—one that affected the outcome. Judge Liman explained that the prior remand decision rested on the state-law nature of the claims, the limited effect on the bankruptcy estate, potential prejudice to Taylor, and the possible risk to Taylor’s jury-trial right. The court stated that those considerations still supported remand.
The court also rejected Zampella’s argument that Taylor’s filing of a proof of claim in the bankruptcy court required the lawsuit to remain in federal court. It stated that state-law claims can still be considered for remand even when they fall within the bankruptcy court’s core jurisdiction. The court noted that the automatic stay would protect Cottonwood from Taylor’s claims against it while Taylor’s claims against the individual defendants proceeded.
Disposition
Judge Liman denied Zampella’s Rule 60(b)(1) motion to vacate the remand order and directed the Clerk of Court to close the motion. The opinion does not decide the underlying state-law claims.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.