Opinion
Civil Action No. 1:21-CV-3827-SEG
2022-09-06
Veronica M. JOHNSON, Appellant, v. Christopher Lee JOHNSON, Appellee/Debtor.
Kirk Patrick Bremer, Vincent Paul Leibbrandt, Willie Bruce Smith, The Semrad Law Firm, LLC, Atlanta, GA, for Appellee/Debtor. Thomas Wayne Dworschak, Office of the U.S. Trustee, Atlanta, GA, for Office of the United States Trustee. Jordan E. Lubin, Lubin Law, P.C., Atlanta, GA, for Trustee Jordan E. Lubin.
Kirk Patrick Bremer, Vincent Paul Leibbrandt, Willie Bruce Smith, The Semrad Law Firm, LLC, Atlanta, GA, for Appellee/Debtor.
Thomas Wayne Dworschak, Office of the U.S. Trustee, Atlanta, GA, for Office of the United States Trustee.
Jordan E. Lubin, Lubin Law, P.C., Atlanta, GA, for Trustee Jordan E. Lubin.
ORDER
SARAH E. GERAGHTY, United States District Judge
In this bankruptcy appeal, Veronica M. Johnson ("Appellant") appeals the order of the Bankruptcy Court granting Chapter 7 discharge to debtor-appellee Christopher Lee Johnson ("Appellee") (Doc. 1-2). Appellant argues that granting the discharge was erroneous because the Bankruptcy Court lacked jurisdiction over the case. Appellant proceeds pro se, and the Court therefore construes her filings liberally. See Erickson v. Pardus , 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) ("A document filed pro se is to be liberally construed.") (quotation omitted). Appellee has not participated in this appeal. (See Doc. 5.)
Appellant also moves the Court to waive the requirement of Bankruptcy Rule 8018(b) that she file an appendix with her brief, and instead asks that it "dispense with the appendix and permit [her] appeal to proceed on the original record." Fed. R. Bankr. P. 8018(e). The Court GRANTS this motion. The Court has taken judicial notice of the entire bankruptcy record, as it always may with the records of inferior courts. See United States v. Rey , 811 F.2d 1453, 1457 n.5 (11th Cir. 1987). Throughout this opinion, the Court cites to entries from the Bankruptcy Court's docket as "Bankr. Doc. X," while it denotes entries from this Court's docket as simply "Doc. X."
I. Background
For the sake of clarity, the Court will review the basic events in this bankruptcy case that led to the filing of this appeal. The scope of the Court's review, however, is limited to Appellant's challenge to the Court's final discharge order. The Court does not review any of the Bankruptcy Court's other orders and would have no jurisdiction to do so.
"The federal district courts are courts of limited jurisdiction, ‘empowered to hear only those cases ... which have been entrusted to them by a jurisdictional grant authorized by Congress.’ " Schiavo ex rel. Schindler v. Schiavo , 403 F.3d 1223, 1231 (11th Cir. 2005) (quoting University of S. Ala. v. American Tobacco Co. , 168 F.3d 405, 409 (11th Cir. 1999) ). 28 U.S.C. § 158(a) gives district courts jurisdiction to hear appeals from, inter alia , "final judgments, orders, and decrees" of the U.S. bankruptcy courts. This jurisdiction is, however, predicated on the timely filing of a notice of appeal with the bankruptcy clerk. Fed. R. Bankr. P. 8003(a)(1) ("An appeal from a judgment, order, or decree of a bankruptcy court to a district court or BAP under 28 U.S.C. § 158(a)(1) or (a)(2) may be taken only by filing a notice of appeal with the bankruptcy clerk within the time allowed by Rule 8002. ") (emphasis added); Bowles v. Russell , 551 U.S. 205, 210, 127 S.Ct. 2360, 168 L.Ed.2d 96 (2007) (holding that when an appeal "has not been prosecuted in the manner directed, within the time limited by the acts of Congress, it must be dismissed for want of jurisdiction"); Williams v. EMC Mortg. Corp. (In re Williams) , 216 F.3d 1295, 1298 (11th Cir. 2000) ("The Supreme Court has emphasized that the timely filing of a notice of appeal is mandatory and jurisdictional. If the notice is not timely filed, the appellate court is without jurisdiction to hear the appeal.") (quoting Advanced Estimating System, Inc. v. Riney , 77 F.3d 1322, 1323 (11th Cir. 1996) ).
Appellee filed a voluntary Chapter 7 petition in the U.S. Bankruptcy Court for the Northern District of Georgia on May 19, 2020. On September 30, 2020, Appellant filed a "Motion to Dismiss for Lack of Jurisdiction (and Additional Reasons) and Notice of Spousal Support Priority Claim." (Bankr. Doc. 18.) In the filing, Appellant identified herself as a creditor with a large claim for domestic support obligations. (Appellee listed her as such in his petition.) (Bankr. Doc. 1 at 36.) Appellant's motion argued, among other things, that Appellee had misrepresented his domicile to the Bankruptcy Court and concealed certain assets from it. For this reason, it argued that "Debtor's Bankruptcy Petition should be dismissed for lack of jurisdiction, at minimum." (Bankr. Doc. 18 at 3.) The Bankruptcy Court held a hearing on the motion on November 5, 2020, at which Appellant, the Chapter 7 Trustee, and Appellee's counsel appeared. A later order of the Bankruptcy Court noted that, in the hearing, "[Appellant] orally withdrew her motion to dismiss, specifically stating on the record that she was ‘waiving any question of jurisdiction,’ " and instead "focused on identifying additional assets to pay her claim through the bankruptcy case." (Bankr. Doc. 42 at 3.) Shortly after the hearing, the Bankruptcy Court denied Appellant's motion. (Bankr. Doc. 22.)
A few weeks later, Appellant filed a "Motion to File Late Objection, Motion to Dismiss, Object to Discharge, and Notice of Spousal Support Priority Claim Plus Claim for $9,000 Legal Fees Judgment." (Bankr. Doc. 26.) The motion argued that Appellee was abusing the bankruptcy process in order to avoid contempt proceedings in Virginia related to his spousal support arrears. The Bankruptcy Court held a hearing on January 28, 2021, after which it denied the motion. (Bankr. Doc. 31.)
Finally, on March 18, 2021, Appellant filed a third motion to dismiss. (Bankr. Doc. 34.) This motion renewed her argument that the Bankruptcy Court was without jurisdiction to hear the case based on the allegation that Appellee was not in fact domiciled in Georgia and had misrepresented to the Court that he was. Appellant argued that the petition should have been filed in Tennessee, where Appellee's true residence allegedly was. Attached to the motion were several exhibits, including a bond release document signed by Appellee on April 23, 2019—he had been arrested by U.S. Customs in Florida in connection with criminal proceedings in Virginia—that listed a residential and mailing address in Franklin, Tennessee. Appellant also moved to dismiss on the grounds that Appellee had committed fraud upon the court, at least in part because he had failed to disclose that he lived at any addresses other than one in Alpharetta, Georgia, in the three years prior to filing his petition.
Appellee filed a response in opposition to this motion (Bankr. Doc. 40), and the Bankruptcy Court held another hearing over the course of two non-contiguous days in May and June of 2021. The parties presented evidence and Appellant, who appeared by telephone, questioned Appellee in open court. Following the hearing, Appellee filed an Amended Statement of Financial Affairs that included additional prior addresses. (Bankr. Doc. 41.) On July 30, 2021, the Bankruptcy Court issued an order in which it made some written findings of fact and issued a considered response to Appellant's motion. (Bankr. Doc. 42.) Among other things, the Bankruptcy Court found that Appellee had in fact lived in Tennessee in 2018, but that he had moved to Georgia in May of that year and subleased his Tennessee apartment. (Id. at 7.) Appellee testified that he signed the bond release document—the only contrary evidence regarding his address—while in distress because of his arrest, and the Bankruptcy Court found this testimony to be credible. (Id. at 8.) It noted that "Debtor's testimony and amended Schedules filed post-hearing show[ed] some inconsistencies with prior disclosures made in the case," but concluded that the inconsistencies did "not imply a scheme to hide assets or to live a lavish lifestyle." (Id. at 12.)
The Bankruptcy Court treated Appellant's motion to dismiss for lack of jurisdiction as a motion to transfer venue, since her arguments were essentially directed at "whether Debtor filed in the proper location." (Id. at 6.) It concluded that, because Appellee had lived in Alpharetta, Georgia, for two years prior to filing the petition (during which time he sublet his Tennessee address), the Northern District of Georgia was the proper venue for the case. (Id. at 7-8.) It also stated that even if there were "sufficient evidence of improper venue, ... the Motion would be denied as untimely," for it had come too late in the case. (Id. ) The Bankruptcy Court treated Appellant's motion to dismiss for fraud upon the court as a motion to dismiss "for cause" under 11 U.S.C. § 707(a) and concluded that the circumstances did not warrant dismissal under that provision. (Id. at 11-13.) It stated that, "[b]ased on the record before it, the Court simply cannot find—based on the totality of the circumstances—that Debtor's prosecution of this case is a fraud on the Court. (Id. at 13.)
On March 15, 2021 (a few days before Appellant filed her third motion to dismiss), the Chapter 7 Trustee issued a Report of No Distribution, declaring that, after a diligent inquiry, he had found that "there is no property available for distribution from the estate over and above that exempted by law." On August 20, 2021, the Bankruptcy Court granted Appellee a discharge, closed the estate, and discharged the Chapter 7 Trustee. (Bankr. Doc. 44.) Appellant then filed a notice of appeal of the Bankruptcy Court's final order. (Bank. Doc. 46.)
II. Question Presented
The question presented to the Court by Appellant's brief is whether the Bankruptcy Court had jurisdiction to grant a Chapter 7 discharge to Appellee's estate. "Objections to subject-matter jurisdiction ... may be raised at any time.... Indeed, a party may raise such an objection even if the party had previously acknowledged the trial court's jurisdiction." Henderson ex rel. Henderson v. Shinseki , 562 U.S. 428, 434-35, 131 S.Ct. 1197, 179 L.Ed.2d 159 (2011).
III. Discussion
A. Jurisdiction of the Bankruptcy Courts
Subject-matter jurisdiction is fundamental: it "underlies a court's power to hear a case." DeRoy v. Carnival Corp. , 963 F.3d 1302, 1311 (11th Cir. 2020) (citing United States v. Cotton , 535 U.S. 625, 630, 122 S.Ct. 1781, 152 L.Ed.2d 860 (2002) ). For that reason—as Appellant correctly stated in one of her motions before the bankruptcy court—"subject-matter jurisdiction can never be forfeited or waived." Id.
"Only Congress may determine a lower federal court's subject-matter jurisdiction." Kontrick v. Ryan , 540 U.S. 443, 452, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004) (citing U.S. Const., Art. III, § 1 ). The jurisdictional power of the U.S. bankruptcy courts flows through the district courts, which "have original exclusive jurisdiction of all cases under title 11," also known as the U.S. bankruptcy code. 28 U.S.C. § 1334(a). Congress, in turn, created jurisdiction over certain proceedings in the bankruptcy courts by enacting 28 U.S.C. § 157, which allows all district courts to refer "any or all" cases and proceedings "arising under title 11" to a district's bankruptcy judges. 28 U.S.C. § 157(a). Those bankruptcy judges are authorized to, among other things, "hear and determine all cases under title 11 and all core proceedings arising under title 11." Id. § 157(b)(1). The "core proceedings" to which this last quotation refers are numerous, but they include "matters concerning the administration of the estate," "determinations as to the dischargeability of particular debts," and "objections to discharge." Id. § 157(b)(2)(A), (I), (J).
These grants of jurisdiction do not refer to where a debtor lives or where his assets are located. No matter the district in which a case under the bankruptcy code is commenced, that district court has "exclusive jurisdiction ... of all the property, wherever located, of the debtor as of the commencement of such case, and of the property of the estate." 28 U.S.C. § 1334(e). The bankruptcy court of any district—anywhere in the country—has subject-matter jurisdiction over "any and all" cases "arising under title 11." In theory, a debtor who lived and kept all of his assets in California could file for bankruptcy in the District of Maine, and the bankruptcy court there would have subject-matter jurisdiction over his case.
To be sure, the case would not remain in Maine, for venue would be improper under 28 U.S.C. § 1408. The Court discusses this issue more in Part III(B) below.
Likewise, even if Appellee was a "resident of Tennessee for the ten years preceding the filing of this bankruptcy" it would have no effect whatsoever on the Bankruptcy Court's subject-matter jurisdiction over his discharge. (Doc. 1-1 at 1.)
The only question relevant to the Bankruptcy Court's jurisdiction to grant Appellee's discharge is whether Appellee's case "arose under" the bankruptcy code. Because the clear answer to this question is yes, the Court concludes that the Bankruptcy Court did have jurisdiction to grant the discharge, and the Court will affirm its order.
B. Venue and Jurisdiction
The Court notes that Appellant is not wrong that a debtor's residence certainly matters to where a bankruptcy case may be brought. It just is not relevant to the bankruptcy court's jurisdiction to hear the case. As the Bankruptcy Court stated, a debtor's residence is relevant to the question of venue. Venue and jurisdiction are different in that "[j]urisdiction is the power to adjudicate, while venue, which relates to the place where judicial authority may be exercised, is intended for the convenience of the litigants." Still v. Rossville Crushed Stone Co. , 370 F.2d 324, 325 (6th Cir. 1966) (per curiam); see also Robert E. Lee & Co., Inc. v. Veatch , 301 F.2d 434, 436 (4th Cir. 1961) ("As opposed to jurisdiction, which relates to the territorial power of a court to hear a controversy, venue relates only to the place where a litigant may require the case to be heard. It is a privilege which permits the one in whose favor it runs to have the case tried at a convenient place."). Congress has provided for the proper venue for cases arising under the bankruptcy code. 28 U.S.C. § 1408 states that "a case under title 11 may be commenced in the district court for the district ... in which the domicile, resident, principal place of business ... or principal assets ... of the person or entity that is the subject of such case have been located for one hundred and eighty days" before the case begins.
Because Appellant appealed only the final order granting discharge and not the Bankruptcy Court's July 30 order, this Court has no power to review its determination that venue was proper. To the extent that Appellant contends that a possible defect in venue would render void the Bankruptcy Court's order granting discharge, her argument must be rejected. "Venue is not a jurisdictional prerequisite and its presence or absence does not affect a court's authority to adjudicate." Harris Corp. v. National Iranian Radio & Television , 691 F.2d 1344, 1349 (11th Cir. 1982) (citing Neirbo Co. v. Bethlehem Shipbuilding Corp. , 308 U.S. 165, 167-68, 60 S.Ct. 153, 84 L.Ed. 167 (1939) ). Any retrospectively identified defects of venue would not affect the validity of the Bankruptcy Court's final order.
See note 2 above.
IV. Conclusion
For the foregoing reasons, the Bankruptcy Court's Order (Doc. 1-2) is AFFIRMED .
SO ORDERED this 6th day of September, 2022.