Opinion
C/A 2:20-cv-04199-BHH-MHC
01-27-2022
Christopher James France, Appellant, v. United States Trustee, Appellee.
REPORT AND RECOMMENDATION
Molly H. Cherry United States Magistrate Judge
This matter is before the Court on a pro se appeal from two orders entered by United States Bankruptcy Judge David R. Duncan in Appellant's Chapter 7 bankruptcy case, In re, Christopher James France, Debtor, C/A No. 20-03044-dd (D.S.C.), in the United States Bankruptcy Court for the District of South Carolina.
Pursuant to the provisions of Title 28, United States Code, Section 636(b)(1)(A), and Local Rule 73.02(B)(2)(e), D.S.C., all pretrial matters in cases involving pro se litigants are referred to a United States Magistrate Judge for consideration. For the reasons set forth below, the undersigned recommends that the Court deny Appellant leave to appeal the interlocutory orders, or, in the alternative, affirm the bankruptcy court's orders in full.
BACKGROUND
On July 27, 2020, Appellant voluntarily commenced a Chapter 7 bankruptcy case by signing and filing a Chapter 7 petition. ECF No. 4-1 at 9-17. According to his bankruptcy schedules, Appellant has $23,945,926 of debts. ECF No. 4-2 at 6-17. Against that, Appellant claims he has no unencumbered assets except for his alleged rights as the beneficiary of “Trust Bond CUSIP 31638R808 Subaccount XXX-XX-XXXXXX” (the “Alleged Trust”) which Appellant claims is worth $100,000,000. Id.
For purposes of this R&R, the sub-account number has been redacted.
Two days after commencing his case, Appellant served the United States Trustee with document requests for “[t]he true and correct numbers and/or other such identifiers for the CHRISTOPHER JAMES FRANCE trust, CUSIP 3168R808 sub-account XXX-XX-XXXXXX” and “[t]he current and exact dollar value of the CHRISTOPHER JAMES FRANCE trust account.” ECF No. 4-2 at 63-64. He then filed a motion to compel responses to these requests (the “Motion to Compel”). ECF No. 4-3 at 11-12.
Shortly after filing the Motion to Compel, Appellant filed a motion titled “Motion for Cease, Desist, and Liquidation of Trust, ” asserting that “the DEBTOR, CHRISTOPHER JAMES FRANCE” was different from the “Claimant/Beneficiary/living man” and that the court “has jurisdiction over the STATE created trust/transmitting utility, CHRISTOPHER JAMES FRANCE” but not over “the living man/Claimant/Beneficiary or his private property.” ECF No. 4-3 at 27-29. Appellant asked the bankruptcy court to enter an order stopping the Chapter 7 Trustee from seizing “Claimant/Beneficiary's private property” and requiring him to liquidate the Alleged Trust “to settle all claims.” Id. at 29.
The bankruptcy court held a hearing on both motions. ECF No. 13-1 at 145-66. At the hearing, Appellant conceded that there was no pending adversary proceeding or contested matter to which his document requests related. Id. at 157. Upon this concession, Appellant attempted to withdraw the Motion to Compel, but the United States Trustee, who had responded to the motion, opposed the withdrawal. Id. at 158.
In an Order dated November 20, 2020, the bankruptcy court denied both motions. ECF No. 3 at 7-12. With respect to the Motion to Compel, the bankruptcy court held that (a) the document requests were improper because they were not connected to any contested matter or adversary proceeding, and (b) there is no evidence that the Alleged Trust actually exists. Id. at 10-11. With respect to the Motion for Cease, Desist, and Liquidation of Trust, the bankruptcy court held that as a result of his petition, the bankruptcy court has jurisdiction over Appellant and all of his property, and that pursuant to Section 704 of the Bankruptcy Code, the Chapter 7 Trustee has an obligation to investigate, collect and distribute any nonexempt assets to satisfy Appellant's debts. Id. at 11-12. With respect to the Alleged Trust, the bankruptcy court again held that there was no evidence that any such trust exists. Id. The bankruptcy court, therefore, denied the Motion for Cease, Desist, and Liquidation of Trust. Id.
Appellant subsequently filed two additional documents. The first was a document titled “Attestation of Facts in the Form of an Affidavit” (the “Attestation”). ECF No. 4-4 at 55-64. Attached to the Attestation was a document titled “International Public Notice Regarding the Dead Baby Scam.” Id. The second document Appellant filed was titled “Notice to Remove Trustee” and stated that Appellant “is removing the trustee . . . and all members of his firm, from this case.” ECF No. 4-4 at 65-66.
The bankruptcy court entered an order concerning both these filings on December 3, 2020. ECF No. 3 at 5-6. First, the bankruptcy court denied Appellant's request, made in his Attestation, to have all future correspondence addressed to him in a manner the bankruptcy court found “inconsistent with the proper and usual addressing of mail to be sent through the United States Postal Service.” Id. at 5; see ECF No. 4-4 at 55 header & 57 ¶ 21 (requesting that future correspondence by sent to “Christopher James France, In Care Of: 1248 Logbrook Lane, Mount Pleasant City, South Carolina, Near Postal Code Extension [29466], The United States of America (unincorporated)”). The bankruptcy court explained that while “Mr. France may intend this address change to be consistent with and in furtherance of his discredited legal theories . . . changing his address in this fashion in his bankruptcy case will interfere with proper noticing and service.” Id.
With respect to the Notice to Remove Trustee and the International Public Notice Regarding the Dead Baby Scam, the bankruptcy court ruled that both are “ineffective” and “do not impose on any other party any binding legal obligation” and do not give rise to any rights on Appellant's part. Id. at 6. Nevertheless, the bankruptcy court provided Appellant with a ten-day period to request a hearing on any of these documents if he so desired. Id. Appellant did not request a hearing. Instead, he filed this appeal.
On December 2, 2020, Appellant filed a Notice of Appeal of the November 20 Order. On December 11, 2020, Appellant filed a “Notice of Appeal Amended, ” which states that Appellant “is appealing two orders. One order was entered 11.20.20 12:47:20 and the other on 12.03.20 10:04:12.” ECF No. 3 at 1. Appellant further states, “I appeal the decision to DENY liquidation of trust account, CEASE/DESIST the taking of American private property, dismissing my Attestation, and Removal of Trustee, and so moves this matter to a court of competent jurisdiction . . . to order the liquidation of trust account to settle all claims without confiscating American private property.” Id. at 3.
STANDARD OF REVIEW
Under 28 U.S.C. § 158(a), U.S. district courts have jurisdiction to hear appeals from final judgments, orders, and decrees of bankruptcy courts. “Orders in bankruptcy cases qualify as ‘final' when they definitively dispose of discrete disputes within the overarching bankruptcy case.” Ritzen Grp. Inc. v. Jackson Masonry, LLC, 140 S.Ct. 582, 586 (2020) (citing Bullard v. Blue Hills Bank, 575 U.S. 496, 501 (2015)); see In re Daufuskie Island Props., Inc., 441 B.R. 49, 55 (Bankr. D.S.C. 2010) (“Final orders are those that resolve the litigation, decide the merits, settle liability, establish damages, or determine the rights of the parties.”) (citing In re Looney, 823 F.2d 788, 790 (4th Cir. 1987)). The district court also has jurisdiction to hear appeals from interlocutory orders and decrees of the bankruptcy court, provided the district court grants the appellant leave to appeal. 28 U.S.C. § 158(a)(3).
On appeal from the bankruptcy court, the district court acts as an appellate court and reviews the bankruptcy court's findings of fact for clear error, while it reviews conclusions of law de novo. Devan v. Phoenix Am. Life Ins. Co. (In re Merry-Go-Round Enters., Inc.), 400 F.3d 219, 224 (4th Cir. 2005); Kielisch v. Educ. Credit Mgmt. Corp. (In re Kielisch), 258 F.3d 315, 319 (4th Cir. 2001).
DISCUSSION
I. The Court Should Deny Appellant Leave to Appeal the Bankruptcy Court's Interlocutory Orders.
The bankruptcy court's orders were interlocutory orders. The November 20 Order denied Plaintiff's Motion to Compel, and it is well established that orders resolving discovery disputes are not appealable final orders. Pacific Union Conf. of Seventh-Day Adventists v. Marshall, 434 U.S. 1305, 1307 (1977) (explaining that “discovery orders are not themselves appealable”); Doe No. 1 v. United States, 749 F.3d 999, 1004 (11th Cir. 2014) (“Discovery orders are ordinarily not final orders that are immediately appealable.”); see also In re Kaiser Group. Int'l, Inc., 400 B.R. 140, 143 (D. Del. 2009) (“Generally, pretrial discovery decisions are not considered to be final decisions subject to immediate appeal, even under [bankruptcy's] flexible approach to finality.”).
The November 20 Order also denied Appellant's Motion for Cease, Desist, and Liquidation of Trust. In that Motion, Appellant sought an order requiring the Chapter 7 Trustee to liquidate the Alleged Trust while prohibiting the Trustee from liquidating any other assets. Unlike appeals from district courts to courts of appeal under 28 U.S.C. § 1292(a), there is no right to an immediate appeal from the denial of injunctive relief by a bankruptcy court under 28 U.S.C. § 158(a). Moreover, Appellant filed the Motion at a very early stage in his bankruptcy case, before the Chapter 7 Trustee had attempted to liquidate any assets or even made a report of proposed distribution, and Appellant will have opportunities later in the case to object to any proposed distribution. Accordingly, the November 20 Order denying Plaintiff's requested relief is not a final order subject to immediate appeal. See Bullard, 575 U.S. at 499, 502-03 (holding that bankruptcy court's order rejecting a proposed plan was not “final” under § 158(a) because it did not conclusively resolve the relevant proceeding).
The December 3 Order denying Appellant's request to change his address of record was not a final order, as it did not result in any change in the status quo and did not finally resolve any of his rights. See Ritzen, 140 S.Ct. at 586.; In re Daufuskie Island Props., Inc., 441 B.R. at 55. Moreover, the bankruptcy court made no rulings with respect to the statements made in Appellant's Attestation and the document attached thereto, other than noting that merely filing them on the docket is ineffectual. This observation is not a final order subject to immediate appeal.
Finally, the December 3 Order denying Appellant's Notice to Remove Trustee was not a final, appealable order. The test set forth by the Supreme Court is whether the bankruptcy order “definitively dispose[s] of discrete disputes within the overarching bankruptcy case.” Ritzen, 140 S.Ct. at 586. An order denying a motion to remove a trustee does not do that. See SS Farms, L.LC. v. Sharp (In re SK Foods, L.P.), 676 F.3d 798, 802 (9th Cir. 2012) (holding order denying motion to remove trustee is not final); accord Thomas v. Grigsby, 556 B.R. 714, 719 (D. Md. 2016) (explaining that “an order denying removal [of the trustee] is properly construed as non-final because the denial preserves the status quo rather than upsets it”). Indeed, the denial of such a motion “neither resolves nor seriously affects substantive rights, nor finally determines the discrete issue to which it is addressed, since the trustee could be removed at a later time.” SK Foods, 676 F.3d at 802 (further noting that “if a party could file an interlocutory appeal every time he tried unsuccessfully to remove a trustee, he could bring the litigation to a never-ending standstill”).
Because the bankruptcy court's orders were plainly interlocutory, Appellant cannot appeal these orders as a matter of right, but instead must seek leave of the district court prior to filing his appeal. See 28 U.S.C. § 158(a)(3). In this case, Appellant did not contemporaneously file a motion for leave to appeal with either his Notice of Appeal, as required by Fed.R.Bankr.P. 8004(a)(2), (b), or his Notice of Appeal Amended. Nevertheless, as Appellant timely filed both Notices, see Fed.R.Bankr.P. 8002(a), this Court should construe Appellant's Notice of Appeal Amended as a motion for leave to appeal both interlocutory orders of the bankruptcy court. See Fed.R.Bankr.P. 8004(d) (“If an appellant timely files a notice of appeal under this rule but does not include a motion for leave, the district court or BAP may order the appellant to file a motion for leave, or treat the notice of appeal as a motion for leave and either grant or deny it.”); see also Milic v. McCarthy, 469 F.Supp.3d 580, 581 (E.D. Va. 2020) (treating notice of appeal as a motion for leave to appeal pursuant to Rule 8004(d); Cathcart v. Campbell, No. 2:10-2534, 2010 WL 4622462, at *1 (D.S.C. Oct. 12, 2010), report and recommendation approved, 2010 WL 4622457 (D.S.C. Nov. 3, 2010).
Because Appellant's Notice of Appeal Amended encompasses both bankruptcy court orders at issue and was filed as an amendment to his original Notice of Appeal, the undersigned refers to the Notice of Appeal Amended.
However, Appellant's motion for leave to appeal should be denied because Appellant fails to meet the three-part test for determining when an interlocutory appeal should be granted. See 28 U.S.C. § 1292(b); Milic, 469 F.Supp.3d at 582. When evaluating a motion for leave to appeal under 28 U.S.C. § 158(a)(3), district courts in the Fourth Circuit employ the same basic analysis used to evaluate a motion for leave to appeal under 28 U.S.C. § 1292(b). Id.; Prologo v. Flagstar Bank, FSB, 471 B.R. 115, 129-30 (D. Md. 2012). Under this standard, “leave to file an interlocutory appeal should be granted only where (i) the order involves a controlling question of law, (ii) as to which there is substantial ground for difference of opinion, and (iii) immediate appeal would materially advance the termination of the litigation.” Milic, 469 F.Supp.3d at 582.
All three requirements must be satisfied in order for the district court to grant leave to appeal an interlocutory order. Here, however, the bankruptcy court's orders that Appellant seeks to appeal involve no controlling question of law as to which there is a substantial ground for a difference of opinion. Nor would an immediate appeal of any of them materially advance the termination of Appellant's bankruptcy case. Thus, Appellant has not satisfied all three requirements for leave to appeal.
For the foregoing reasons, the undersigned recommends that Appellant's Notice of Appeal Amended be considered a motion for leave to appeal, and, as such, that it be denied.
II. Should the Court Grant Appellant Leave to Appeal, the Court Should Affirm the Bankruptcy Court's Interlocutory Orders.
Even if an appeal of the November 20 and December 3 Orders were properly before the Court, the undersigned finds that the bankruptcy court's Orders nonetheless should be affirmed. Each of the issues raised by Appellant's Motions were matters within the sound discretion of the bankruptcy judge, and the denial of those Motions are reviewed for abuse of discretion. See Jacksonville Airport, Inc. v. Michkeldel, Inc., 434 F.3d 729, 732 (4th Cir. 2006) (grant or denial of motions to compel reviewed for abuse of discretion); see also In re Ampal-Am. Israel Corp., 691 Fed.Appx. 12, 16 (2d Cir. 2017) (“Although we generally review a bankruptcy court's factual findings for clear error and its legal conclusions de novo, we review a bankruptcy court's denial of a motion to remove the Trustee for abuse of discretion.”) (internal citation omitted).
“Under abuse of discretion review, the district court will not reverse the bankruptcy court unless its conclusion was guided by erroneous legal principles or rests upon a clearly erroneous factual finding.” In re Yellow Poplar Lumber Co., Inc., 598 B.R. 833, 836 (W.D. Va. 2019). “However, even if the bankruptcy court applies the proper legal principles to supported facts, the district court may reverse if it holds a definite and firm conviction that the bankruptcy court committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors.” Mack v. Yankah (In re Yankah), 514 B.R. 159, 163-64 (E.D. Va. 2014).
In his briefs before this Court, Appellant does not explain how the bankruptcy court abused its discretion, see ECF Nos. 12 & 14, nor is it evident to the undersigned. It is undisputed that Appellant's document requests were not connected to any adversary proceeding or contested matter. Without a pending adversary proceeding or contested matter, there is no legal basis for serving document requests and, thus, no legal basis for compelling responses. See Fed.R.Bankr.P. 7034, 9014(c). Nor has Appellant shown that the bankruptcy court clearly erred in finding that the Alleged Trust does not exist, given that Appellant produced no evidence of its existence at the hearing or otherwise. Finally, a trustee can be removed only “for cause, ” see 11 U.S.C. § 324(a), and Appellant did not provide any evidence of incompetence, misconduct, or wrongdoing on the part of the Trustee. See In re AFI Holding, Inc., 530 F.3d 832, 845 (9th Cir. 2008) (“It is well established that ‘cause' may include trustee incompetence, violation of the trustee's fiduciary duties, misconduct or failure to perform the trustee's duties, or lack of disinterestedness or holding an interest adverse to the estate.”).
Appellant has not demonstrated that the bankruptcy court abused its discretion in denying his Motions. Moreover, the undersigned has reviewed the record on appeal from the bankruptcy court and finds no clear error in the findings of fact below. After a de novo review of the bankruptcy court's conclusions of law, the undersigned also agrees with the legal conclusions set forth in the bankruptcy court's November 20 Order and December 3 Order. Therefore, the undersigned concludes that, even if this Court were to reach the merits of Appellant's appeal, the bankruptcy court's at-issue orders should be affirmed in full.
CONCLUSION
For the reasons set forth above, it is RECOMMENDED that Appellant's Notice of Appeal Amended be considered a motion for leave to appeal, and, as such, that it be DENIED. Alternatively, should the Court grant Appellant leave to appeal, then it is RECOMMENDED that the Bankruptcy Court's Orders filed November 20, 2020, and December 3, 2020, be AFFIRMED.
The parties are referred to the Notice Page attached hereto.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
Post Office Box 835
Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).