Summary
finding that laches is established if there is a delay in asserting the right or claim, the delay was not excusable; and there was undue prejudice to the defendant
Summary of this case from In re GoldOpinion
Case No: 03-60254.
September 29, 2006
MEMORANDUM OPINION DENYING DEBTOR'S MOTION TO DISMISS (DOC # 290)
INTRODUCTION
This is Debtor's third motion to dismiss these consolidated bankruptcy petitions that he alleges were filed by unknown persons without his authorization. The Court had previously denied Debtor's first two motions. By separate written order issued earlier this week, the Court has affirmed dismissal of those previous motions and has denied the present motion. This memorandum gives the findings and conclusions on which that most recent order was based. First, the Debtor simply waited too long to bring the motion. Second, when Debtor did have an opportunity to present his evidence he did not prove his case and the Court ruled against him; therefore Debtor may not revisit the same issue in this case. Finally, Debtor has made the issue moot by filing yet another case.
FACTS
Between May 20, 2003 and July 28, 2003, three voluntary petitions for chapter 7 bankruptcy were filed with the Southern District of Texas in the name of "James Ramey". (Case Nos. 036-0254, 03-39386, and 03-60351). The cases were eventually consolidated into Case No. 036-0254.
On July 24, 2003, the chapter 13 trustee filed a motion (docket # 21) asking the Court to annul the automatic stay retroactively, and to transfer this case to Judge Leal. The chapter 13 trustee alleged that Mr. Ramey was abusing the bankruptcy process by having filed "at least" eleven bankruptcy cases since August 31, 2001. The chapter 13 trustee further alleged that the third case was filed in violation of Judge Leal's order that prohibited Mr. Ramey from filing another bankruptcy case within 16 months after December 9, 2002.
Prior to the chapter 13 trustee's motion, South Trust Bank had filed a motion to lift stay, alleging that it held a claim secured by a Jaguar automobile owned by Mr. Ramey, and that it had been trying to repossess that automobile since 2001, but had been frustrated by Mr. Ramey filing eleven bankruptcy cases which South Trust alleged were filed to stop repossession of the automobile. On motion of South Trust, on July 28, 2003, the Court issued an order (docket # 24) for Mr. Ramey to produce the automobile for inspection and turnover. Mr. Ramey did not comply, although an appeal of the order was filed (docket # 29).
The Court ordered Mr. Ramey to appear and to show cause why he should not be prosecuted for contempt of court. Debtor did not appear at the hearing, and on August 27 the Court issued a warrant for Mr. Ramey's arrest under FRBP 2005 (docket # 36). Mr. Ramey filed an appeal of that order (docket # 39).
The Court granted the motion (docket #33) of Mr. Ramey's home mortgage lender for relief from the stay to foreclose on Mr. Ramey's residence, and Mr. Ramey filed an appeal of that order on September 25, 2003 (docket # 46).
On November 21, the Court directed the US Marshal's to impound Mr. Ramey's property (docket # 72). Mr. Ramey appealed that order (docket # 98).
The Court converted the case to chapter 7 on November 24, 2003 (docket # 80) and Ronald Sommers ("Trustee") was appointed chapter 7 trustee (docket # 84). Mr. Ramey filed an appeal of the order converting the case to chapter 7 (docket # 101).
At no time during any of these previous proceedings did Mr. Ramey appear in court, but he did file appeals of the orders issued by the Court.
On November 24, 2003, the US Marshal's Service produced Mr. Ramey in open court. The Court asked the Marshal's Service to keep Mr. Ramey in custody, but to produce him for examination as required by section 341 of the Bankruptcy Code (docket # 93). After commencement of that examination, Mr. Ramey reported that he was feeling ill, so the 341 meeting was adjourned so that the Marshal's Service could provide medical attention (docket # 120.)
On December 8, 2003, Debtor appeared in court represented by Messrs. Barry Racusin, Jon Wagner, and Michael Oeser (docket # 111). Mr. Oeser informed the Court of Debtor's plans to file a motion to dismiss alleging that Mr. Ramey did not file the petitions.
Finally, on December 22, 2003, Mr. Ramey filed a motion to dismiss this case alleging that he had not signed the bankruptcy petitions (docket # 125). The motion was filed pro se . The motion was denied for procedural reasons on January 1, 2004 (docket # 133).
Messrs. Racusin, Wagner, and Oeser terminated their representation of Debtor, and on December 22, 2003, Mr. Ramey appeared in court represented by Chris McDaniel and Dinesh Singhal. Those counsel withdrew and on January 12, 2004, Mr. Ramey appeared in court represented by Chris J. McDaniel, Mickele Chimene, and Mark Strann. Those counsel withdrew and on February 5, 2004, Mr. Ramey appeared in court represented by Richard Wilkinson, Jr. All through this parade of counsel, the Court allowed Mr. Ramey additional time to obtain counsel. When Mr. Wilkinson arrived on the scene, the Court allowed additional time but informed Mr. Wilkinson that he was committed to prosecute the case.
On February 19, 2004, Mr. Ramey (through counsel Mr. Wilkinson) filed his second motion to dismiss (docket # 167). The motion alleges that Mr. Ramey had not signed the bankruptcy petition and that he had retained a handwriting expert who would so testify. Continuance of the hearing was granted to allow the parties to conduct discovery.
The second motion to dismiss was scheduled for hearing on May 28, 2006. Shortly prior to the hearing, Debtor's counsel filed a motion (docket # 230) to abate all proceedings in the bankruptcy case, alleging, and at the hearing arguing, that the motion to dismiss and all other proceedings should be abated because Mr. Ramey was incarcerated facing prosecution for passport fraud and was, in addition, under investigation by the FBI, the US Postal Service, and the Secret Service for "various and sundry other potential criminal charges." Counsel for Debtor argued that Debtor could present no evidence except to testify that he did not sign the bankruptcy petition. Counsel stated that Debtor would decline to answer all other questions on the basis of the Fifth Amendment privilege against self incrimination.
After extended legal argument, for reasons stated on the record, the Court commenced the hearing on Debtor's motion to dismiss. Debtor testified substantially more broadly than his counsel represented that he would. He testified that the signatures on the petition were not his signatures, and he testified that he had not asked any other person, including family members, to sign or to file the petition for him. He testified that he did not intend to file a bankruptcy case in 2003. He also testified with respect to other matters. When cross examined on those same subjects, including whether a signature on other documents was his signature, Debtor refused to answer, asserting the Fifth Amendment privilege. Opposing counsel asked the Court to require Debtor to answer. After extended legal argument, the Court ruled that it would not require Mr. Ramey to answer the question under penalty of incarceration for civil contempt, but the Court ruled that failure to answer questions directly related to, and resulting from, his voluntary direct examination would result in the Court striking his direct testimony. After opportunity to discuss options with counsel, Debtor continued to refuse to answer appropriate cross-examination. His testimony was struck. Mr. Ramey did not call the handwriting expert to testify or present any other evidence in support of his motion. Since there was no evidence in the record supporting Debtor's motion to dismiss, the motion was denied.
Mr. Ramey's notice of the present bankruptcy can be inferred from the various objections and appeals filed in the name of James Ramey beginning July 1, 2003. (Doc # 17). Appeals on Debtor's behalf were also signed by Debtor's wife, Ella Ramey, as early as August 20, 2003. (Doc # 40). Debtor did not file his first motion to dismiss until six months later. (Doc # 125) In that motion, Debtor alleged for the first time that he did not file the petitions, and the signature on the petitions was not his own. That motion was denied for procedural reasons. It was almost two months after the Court denied Mr. Ramey's first motion to dismiss that he filed his second motion to dismiss. It was over two years after the second motion was dismissed that Mr. Ramey filed his third motion to dismiss. The allegations in all 3 motions are essentially the same. Debtor was represented by a handful of attorneys between the first motion to dismiss and the third.
In the interim, the Debtor has been incarcerated for failure to respond to Court orders, has refused to fill out bankruptcy schedules and statements of financial affairs, and has appealed many (if not most) of the orders that the Court has issued. Those appeals have all been dismissed. The US Marshal's Service seized Debtor's property early on in the case. And much of Mr. Ramey's property has been sold. Even if the case were now dismissed, there is no way to rescind those sales.
More recently, September 6, 2005, the eve of further foreclosure on his property, Mr. Ramey filed a bankruptcy case in the Western District of Texas. The filing was in violation of this Court's order that prohibited further bankruptcy filings by Mr. Ramey. Bankruptcy Judge King transferred venue to this Court. Judge King denied motions to reconsider, and Judge King's order has been affirmed on appeal.
Mr. Ramey admits that he filed this latest bankruptcy case.
Even though Mr. Ramey admits that he filed this most recent bankruptcy case, he has not filed bankruptcy schedules, statement of financial affairs, or other information required by Bankruptcy Code § 521. Mr. Ramey states that requiring him to do so would violate his Fifth Amendment Rights.
Stated on the record at the hearing on September 26, 2006.
CONCLUSIONS
Laches Precludes Consideration of Debtor's Motions to Dismiss
Debtor's Third Motion to Dismiss alleges, in addition to the allegations made in his previous motions, that laches does not apply to his motion. No adverse party has vigorously asserted that Debtor is precluded from bringing the motion to dismiss on account of laches, but the Debtor addresses it at length in his memorandum. Having considered the issue, the Court concludes that laches indeed applies to preclude Debtor's motions.
Laches is an affirmative defense that may bar a party from asserting a cause of action, claim, motion, or proceeding when that party has delayed in asserting the right or claim, or has delayed in bringing the suit or action, or has delayed in prosecuting a case. 27A Am. Jur. 2d Equity § 140 (2006). It is generally characterized as neglect or delay in bringing suit to remedy an alleged wrong that, taken together with lapse of time and other circumstances, causes prejudice to the adverse party and operates as an equitable bar. Id. Laches is an affirmative defense. It is established if (1) there is a delay in asserting the right or claim; (2) that the delay was not excusable; and (3) that there was undue prejudice to the defendant. Geyen v. Marsh, 775 F.2d 1303, 1310 (5th Cir. 1985).
1. Delay in asserting a claim.
Debtor alleges that filing his First Motion to Dismiss on December 22, 2003, was timely. However, that date was over six months after the filing of the bankruptcy petitions. The docket reflects that in the interim the Debtor participated in the bankruptcy case by filing pleadings, appeals, and responses other than the Motion to Dismiss. (Doc ## 12, 20, 29, et al.) Debtor has raised no issue of authenticity regarding the pleadings, appeals and responses following the filing of the petition in the three years that this case has been pending.
2. Delay was not excusable.
Debtor offers his incarceration and poor health as reasons excusing his delay. But those excuses do not apply to the first two motions which were filed too late. Debtor does not offer any excuse for the initial six month delay in filing the First Motion. And the Court concludes that if Debtor was able to file his most recent bankruptcy case in September, 2005, he surely could have filed a motion to dismiss this case, then. The Third Motion to Dismiss was not filed until ten months after the most recent bankruptcy filing.
The incarceration was principally related to various criminal prosecution; incarceration by the bankruptcy court was for a very short period.
3. Undue prejudice has occurred during the delay.
The chapter 7 Trustee allegedly has incurred over $100,000 in attorney's fees attempting to locate assets and administer this estate. Property has been divided and sold. Debtor alleges that there is no undue prejudice because all creditors of the Debtor have been satisfied through the bankruptcy process and that all assets have been liquidated by the Trustee. But Debtor refuses (and continued to refuse at the hearing on September 26) to provide bankruptcy schedules and statements of financial affairs that would determine the identity and extent of claims against him. Accepting Debtor's bald assertion, while the Debtor refuses to provide sworn bankruptcy schedules and statements, would make no sense whatsoever. Debtor cannot simultaneously refuse to submit the proper schedules required in bankruptcy and claim that creditors have been satisfied.
Debtor is guilty of laches and therefore the motions to dismiss cannot be considered.
The Denial of Debtor's Motion to Dismiss (on the allegation that he did not sign the petition) is the law of the case.
When a court of competent jurisdiction decides upon a rule of law, that decision governs the same issues in subsequent stages of the same case; that is the "law of the case". The rule serves the purpose of promoting finality and efficiency of the judicial process by preventing relitigation of settled issues. U.S.v.O'Keefe, 169 F.3d 281, 283 (5th Cir. 1999) (citing Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1988); Arizona v. California, 460 U.S. 605 (1983)). Law of the case does not involve preclusion by final judgment; instead, it regulates judicial affairs before final judgment. RoyalIns. Co. of America v. Quinn-L Capital Corp., 3 F.3d 877 (5th Cir. 1993). "Under the law of the case doctrine, an issue of fact or law decided on appeal may not be reexamined . . . by the appellate court on a subsequent appeal." United States v. Matthews, 312 F.3d 652, 657 (5th Cir. 2002) (quoting Tollett v. City of Kemah, 285 F.3d 357, 363 (5th Cir. 2002)). But the doctrine is not limited to the appellate level, it applies vertically between coordinate courts as well. See, Copeland v. Merrill Lynch Co., 47 F.3d 1415 (5th Cir. 1995) (considering law of the case as applied between district courts). "When the law of the case doctrine is applied by a court to its own prior decisions, it is properly characterized as discretionary in nature." 169 F.3d at 283. A court has the power to revisit its own decision, but "as a rule, courts should be loathe do so in the absence of extraordinary circumstances." 460 U.S. at 618. Extraordinary circumstances in the Fifth Circuit are those in which (i) the evidence on a subsequent trial is substantially different, (ii) controlling authority has since made a contrary decision of the law applicable to such issues, or (iii) the decision is clearly erroneous and will work a manifest injustice. 169 F.3d at 283.
There are no extraordinary circumstances that require the Court to reconsider its previous decision. There is no allegation that the evidence would be substantially different. But even if there were a slight difference, the law of the case doctrine applies not only to issues decided explicitly, but also to everything decided "by necessary implication." In re Felt, 255 F.3d 220, 225 (5th Cir. 2001) ( cert. denied, 534 U.S. 1078 (2002)) (citing Browning v. Navarrro, 887 F.2d 553, 556 (5th Cir. 1989)). Second, no controlling authority has since made a contrary decision of the law applicable to the issue of whether Debtor signed the petitions. Finally, the Court has been presented with no reason to view its previous decision as clearly erroneous. Furthermore, considering the Debtor's ill cooperation in this case, the Court would easier find a manifest injustice in allowing the case to be dismissed.
In addition, Debtor's First Motion to Dismiss was essentially a challenge to the Court's jurisdiction. The Court has jurisdiction to hear all cases under title 11. 28 U.S.C. §§ 1334, 157. Necessary to the Court's determination of jurisdiction in this case is whether a bankruptcy case exists due to Debtor's filing a chapter 7 bankruptcy petition. The Court held a full evidentiary hearing on this issue. Debtor failed to prove that he had not filed the petitions. No new facts or law are alleged, and as a result, the Court is not compelled to revisit this issue.
Debtor's Filing a New Bankruptcy Case in 2005 Makes the Motion to Dismiss Moot
Debtor admits that he filed case # 05-95620 in the United States Bankruptcy Court for the Western District of Texas. When he did, all property that he owned, including all property that he might regain if this case were dismissed, became property of the bankruptcy estate. 11 U.S.C. § 541. Therefore, dismissal of case number 03-60254 would have no effect. All property that would be distributed to Debtor upon dismissal of the 2003 case would become property of the estate in the 2005 case. All creditors prior to 2005 ( e.g., those who held claims in the 2003 case) would become creditors in the 2005 case. The Court has ordered joint administration of the 2003 case (03-60254) and the 2005 case (05-05620). Therefore the only effect of granting Debtor's motion to dismiss 03-60254 would be to administer the same assets for the same creditors, except under a different case number. There is no apparent difference. The motion is moot on account of the 2005 bankruptcy filing.
MOTION TO DISMISS IS DENIED
Because Debtor has had a full and fair opportunity to litigate the issue of whether he signed the 2003 bankruptcy petitions and the Court ruled against him, and because the adjudication of Debtor's motion to dismiss became moot the moment he filed his 2005 bankruptcy case, Debtor's motion to dismiss has been denied by separate written order issued this date.