Wellness International Network Ltd. v. Sharif Again. But This Time, It May Finally be Over

When the Supreme Court decided Wellness Int'l Network Ltd. v. Sharif this year, one issue resulting from Stern was finally put to rest. A bankruptcy judge may enter final judgment in Stern matters with the consent of the parties, even when that consent is implied and not explicit. What the Supreme Court did not put an end to, however, was Sharif and his family's attempt to thwart his creditors. An recent Judge Cox opinion in the bankruptcy case may have finally put that to rest as well.

It should have been easy, but it wasn't. After remand, the original 2010 judgment against Sharif was entered, finally. Property Sharif was hiding as property of a trust would become property of the bankruptcy estate, and Wellness would get some distribution as a creditor. Instead, Sharif's sister filed a motion to vacate that judgment.

It is as if the Sharif case keeps repeating itself, endlessly. First discovery noncompliance in Texas, then again in Chicago. Next, an assertion that Sharif's property is not his, but held in trust, then an assertion that the trust's property is not the trust's, but that of a probate estate. Now, a second sister has appeared to assert her nonexistent rights after Sharif has lost.

The Sharif saga began in 2005 when Sharif, his mother Soad Wattar, and his sisters Ragda Sharifeh and Haifa Kaj, and several others sued Wellness International Network, and several others in the Northern District of Texas. After much delay, and no compliance with discovery by the plaintiffs, Wellness won summary judgment based non-responses to requests to admit, and an award of sanctions for their attorney's fees. Whereupon, Sharif filed for Bankruptcy in the Northern District of Illinois, asserting that what assets he had were held as trustee of the Soad Wattar Trust. Wellness followed Sharif to Chicago, participated actively in the bankruptcy, and filed its adversary to deny Sharif a discharge, and for a declaration that the Soad Wattar Trust was an alter ego of Sharif. Once again, Sharif failed to comply with discovery, and had judgment entered against him by default as a sanction (plus more monetary sanctions).

Even though Ragda was not a party to the adversary proceeding, she moved to withdraw the reference to the district court. Sharif also appealed. Judge Leinenweber ruled on both the consolidated actions in a an opinion which was then overruled by the Seventh Circuit, which resulted in the opinion appealed to the Supreme Court. The Supreme Court reversed the Seventh Circuit, upholding the bankruptcy court and district court decisions. Judgment entered in favor of the trustee, and the corpus of the Soad Wattar Trust became property of the bankruptcy estate.

Then Haifa Sharifeh (the bankruptcy court asks but doesn't answer whether Haifa Sharifeh is Haifa Kaj under a different name, but does note that Haifa Kaj was enjoined from attempting to exercise control of property of the estate) moved to vacate the judgment, arguing that as the executrix of the estate of Soad Wattar, she never received notice of the motion seeking turnover.

That argument was soundly rejected in a lengthy, patient opinion. Soad Wattar did not transfer her trust to a probate estate by will. Soad Wattar's will never named Haifa Kaj executor or executrix. Even if it had, the only person entitled to notice was the trustee of the Soad Wattar Trust, Richard Sharif. Anyway, Haifa Kaj did receive notice all the way in 2009. And finally, the motion violated the Barton Doctrine as an attempt to sue the trustee without leave of court, and without a prima facie showing on the merits.

As if all this wasn't bad enough, it looks like like Sharifeh's lawyer is in some kind of trouble as well. The court noticed that Sharifeh's lawyer, Maurice J. Salem was not licensed in Illinois and did not file for leave to appear pro hac vice because of an article about the ARDC accusing him of abusing the pro hac vice admission rule in the Law Bulletin.