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It’s A Wonderful Life: Waiting for Clarence or At Least Due Process

Isn’t this the United Stated of America where we are guaranteed Due Process by the Constitution …. that all legal proceedings will be fair and that one will be given notice of the proceedings and an opportunity to be heard before the government acts to take away one’s life, liberty, or property? Apparently that principle is not alive in the Bankruptcy Court, District of Connecticut.

This is a story that began with good intentions, but did not play out as hoped. It is an “It’s A Wonderful Life” story with its own modern day Uncle Billy and Mr. Potter.

Four years ago, I left my marketing job making a six figure income because I could no longer work. I have struggled with OCD for years, but the topper was developing Undifferentiated Connective Tissue Disorder, Fibromyalgia and Chronic Fatigue. As a high achiever all my life, straight A high school student, BS in chemical engineering from Bucknell University, graduating magna cum laude, and MBA from Harvard Business School, it was difficult for me to accept I could not work.

Upon leaving my job at TD Ameritrade in February, 2010, I applied for coverage under the employer-provided disability policy. From the get-go, it was clear Hartford, the insurer, would do whatever they could to NOT pay the claim. At 60% of salary, the claim still amounted to over $100,000 a year in benefits, making me a target with a big red bull’s-eye for Hartford.

Being a chronic achiever, I just could not leave my fate to the insurance company. So I decided to buy a business. My background was consumer marketing, so I wanted a consumer business. I decided it would be easier to buy a franchise, than to start something from scratch. I did not have the bandwidth to do the latter anyway, crippled with constant pain and fatigue. I reasoned the franchise offered a template that would make it a simple matter to buy the business.

After doing necessary homework, I bought a Hand & Stone Spa franchise, which I was told could be “manager run.” At least that is what the sales guy told me. That fit with my goal to invest in a business to create an income for myself, but not be needed to work in the business. Optimistic articles were published in the local newspaper, The Stamford Advocate, and links to those historical articles are the following:

The franchise published estimates of the cost for leasehold improvements of between $86,000 to $145,125 in their 2010 Franchise Disclosure Document. (Source: Hand & Stone 2010 FDD (All Regions)_8-19-10). Though my contractor was $50,000 lower in price than his competitors, the actual cost for the build was $255,000, 76% more than the upper limit the franchise published at $145,125.  For that and other reasons, I left the franchise in November 2012, and my spa became independent. I re-launched the business as Kala Spring Spa with the following press release:

The business employed 15 people at less than full capacity and I was most proud of having created jobs in a dismal economy. But despite good intentions, the business never broke even. There are a number of reasons why.  My inability to be “hands on” certainly was a big factor, though not the only one. By far the rent at the Ridgeway Shopping Center in Stamford Connecticut was the most onerous cost. I tried several times to discuss it with the landlord’s CEO, Willing (Wing) Biddle of Urstadt Biddle Properties, my modern day Mr. Potter.

Suffice it to say, Wing would not budge a cent on the rent, even though three additional businesses in the same corner of the center (those whose storefronts are also to the backs of the one-way traffic on Summer Street) have gone out of business in the past two years. Two of those three other failed businesses were national brands, Children’s Place which was open for less time than my spa, and Nine West Shoes.  It slowly became clear to me that the spa would not be successful unless it had a “hands on” day-to-day owner.

Consequently, I filed Chapter 11 on the business for the purpose of selling the facility in a 363 sale. It is a beautiful facility and for anyone wanting to build a spa, in buying mine, it will save them significant time and money to market.

I engaged an attorney, Ellery Plotkin, to represent my company’s interests in the Chapter 11 bankruptcy. When I met Attorney Plotkin, his name reminded me of a cartoon character. But he turned out to be a modern day Uncle Billy.

He signed a stipulation without my review or permission that committed the business to vacating the space on November 22, 2013. Worse than doing such a thing without the permission of the company, he refused to fix his mistake. I sent an email to the other side, namely the landlord, Wing Biddle, and his attorney, Tom Farrell of Hinckley, Allen and Snyder, to let them know my attorney, Plotkin, never had my permission to sign that stipulation. Despite that knowledge, they went ahead with the stipulation.

Since I no longer trusted my own attorney, I filed a motion myself, despite no legal background, with the Bridgeport Bankruptcy Court asking the stipulation be vacated and my attorney removed. The US Trustee, Holly Claiborne, another attorney, told the judge that she objected to my motion because the company was not at that time represented by an attorney. I guess she was just doing her job. But…

In grade school, we learn how great our country is because of our Constitution, which guarantees Due Process of Law. Due Process is a fundamental, constitutional guarantee that all legal proceedings will be fair and that one will be given notice of the proceedings and an opportunity to be heard before the government acts to take away one’s life, liberty, or property. But in the Bankruptcy Court, District of Connecticut, apparently you only get Due Process if you are represented by an attorney. It seems to be an insider’s game, for attorneys only and I wasn’t one of them. I am just the person that took the risk with my life’s savings to create a business to provide a living for myself and its employees.

Because Ms. Claiborne asked my motion not be considered since it was not filed by an attorney, Judge Alan Shiff would not consider my motion to vacate the phony stipulation. That opened the door for the automatic stay being removed and the landlord to evict my business in the State of Connecticut Housing Court. The landlord, Urstadt Biddle Properties, seized my spa and all the equipment and materials therein with a total value of $350,000 at 10 am on Monday, December 16th. I was served notice of that eviction at around 5 pm on Friday, December 13th. The eviction was clearly timed to not permit me sufficient time to remove spa property.  It was made worse by the snow storm that same weekend.

The business only owed the landlord, Urstadt Biddle Properties and my modern day Mr. Potter, a net $31,000 in rent.  But with a phony stipulation, the landlord was able to seize property worth in far excess of that, $350,000 or 11.3 times the amount owed.

At this writing, I have hired another attorney and sought to regain possession of the spa. On Tuesday, January 7, 2013, we appeared at the Bankruptcy Court District of Connecticut with a motion to have the stipulation vacated, heard again by Judge Alan Shiff. Attorney Farrell argued that his client, my modern day Mr. Potter, Urstadt Biddle Properties, was inconvenienced because they relied upon the stipulation signed by my modern day Uncle Billy, Attorney Plotkin.  The Judge bought that logic, never mind that the interests of my business were prejudiced and caused irreparable harm to it.

Both Attorney Farrell and Wing Biddle were well aware that I never agreed to that stipulation within two days of its filing. The stipulation was filed on October 28, 2013.  I sent both Mr. Biddle and Mr. Farrell an email alerting them that I never agreed to that stipulation on October 30, 2013.  I also underscored that my attorney was not authorized to sign anything for me.

Nevertheless, with the stipulation in place in Federal Bankruptcy Court, the automatic stay of  eviction that debtors receive when filing bankruptcy protection was null.  There was nothing preventing Mr. Biddle and his attorney, Tom Farrell, from seizing my property worth over 11 times what the business owed the landlord. “It’s A Wonderful Life” came out in 1947. Sixty-seven years later, it is sadly just as relevant now as it was then. Mr. Potter knew where the missing money was that Uncle Billy lost, but he hid that fact to seize the Building & Loan. I would have hoped for more progress and ethics in Chapter 11 business bankruptcy cases in the year 2014.

I am not looking for a Sam Wainwright to bail me out. I take responsibility for the failure of the business. I took a risk that did not pay off. But I do expect to have gotten my Constitutional right to Due Process, not my property seized because of a betrayal by my own attorney, a phony stipulation, an opposing party that has no qualms about seizing property with a phony stipulation, and a Judge that refused to take action to correct the situation, despite full knowledge of it.

Isn’t this the United Stated of America where we are guaranteed Due Process by the Constitution …. that all legal proceedings will be fair and that one will be given notice of the proceedings and an opportunity to be heard before the government acts to take away one’s life, liberty, or property? Apparently that principle is not alive in the Bankruptcy Court, District of Connecticut.