Opinion
8:23-cv-00256-DCC-JDA
03-02-2023
Zaatnure Xi-Amaru, Appellant, v. PennyMac Loan Services, LLC, Appellee, v. Michelle L. Vieira, Trustee.
REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE
JACQUELYN D. AUSTIN, UNITED STATES MAGISTRATE JUDGE
This matter is before the Court on an appeal from an order of the United States Bankruptcy Court for the District of South Carolina (the “Bankruptcy Court”), at case number 22-bk-02435-HB (the “Bankruptcy Action”). Specifically, Zaatnure Xi-Amaru (“Appellant”) filed a pro se Notice of Appeal [Doc. 1] from the Bankruptcy Court's order dated January 4, 2023, denying Appellant's request for relief (the “Bankruptcy Court's Order”) [Doc. 8-4].
The Court takes judicial notice of the records from the Bankruptcy Action. See Philips v. Pitt Cnty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (explaining courts “may properly take judicial notice of matters of public record”); Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th Cir. 1989) (“We note that ‘the most frequent use of judicial notice is in noticing the content of court records.'”).
Pursuant to the provisions of 28 U.S.C. § 636 and Local Civil Rule 73.02(B)(2)(e), D.S.C., the undersigned United States Magistrate Judge is authorized to review all pretrial proceedings involving litigation by individuals proceeding pro se, such as this action, and submit findings and recommendations to the District Judge. Having reviewed the entire record before this Court, including the designated record on appeal from the Bankruptcy Court, the undersigned recommends that the District Court construe Appellant's Notice of Appeal as a request for leave to appeal an interlocutory order, deny Appellant leave to appeal the Bankruptcy Court's Order, and dismiss this action.
BACKGROUND
On September 8, 2022, Appellant commenced the Bankruptcy Action by filing a Petition for Chapter 7 relief. Bankruptcy Action, Doc. 1. On January 3, 2023, Appellant filed an “Affidavit of Debtor Objection to Creditor Concerning PennyMac Loan Service as a Secured Creditor” in the Bankruptcy Action, which the Bankruptcy Court construed as a motion seeking certain relief. Bankruptcy Action, Docs. 59; 60. The following day, the Honorable Helen E. Burris denied Appellant's motion as follows:
On January 3, 2023, the Court received a document titled Affidavit of Debtor Objection to creditor Concerning PennyMac Loan Service as a Secured Creditor filed by [Appellant]. The Affidavit makes demands on a creditor regarding the validity of a note and mortgage and requests relief from the Court if the demands stated in the Affidavit are not met. The Affidavit does not include sufficient facts to warrant relief nor any legal authority in support. After a careful review of the pleading, TAKE NOTICE that no relief is due and no relief will be granted by the Court as a result of the filing of this Affidavit.
Bankruptcy Action, Doc. 60. This appeal followed.
Specifically, Appellant filed a Notice of Appeal from the Bankruptcy Court's Order quoted above on January 18, 2023, in the Bankruptcy Court. Bankruptcy Action, Doc. 69. The Bankruptcy Court transmitted a notice to this Court, and the present action was opened on January 19, 2023. [Doc. 1.] Thereafter, the Bankruptcy Court transmitted the designated record on appeal to this Court, which was entered on the docket in this action on February 23, 2023. [Docs. 8; 8-1; 8-2; 8-3; 8-4.] As such, this matter is ripe for review by this Court.
APPLICABLE LAW
Review and Liberal Construction of Pro Se Pleadings
Because Appellant is proceeding pro se, the pleadings are accorded liberal construction and held to a less stringent standard than formal pleadings drafted by attorneys. See Erickson v. Pardus, 551 U.S. 89, 94 (2007). However, even under this less stringent standard, the pro se pleadings are subject to summary dismissal. The mandated liberal construction afforded to pro se pleadings means that, if the Court can reasonably read the pleadings to state a valid claim on which a plaintiff could prevail, it should do so, but the Court may not rewrite a petition to include claims that were never presented, Barnett v. Hargett, 174 F.3d 1128, 1133 (10th Cir. 1999), or construct a plaintiff's legal arguments for him, Small v. Endicott, 998 F.2d 411,417-18 (7th Cir. 1993), or “conjure up questions never squarely presented” to the court, Beaudett v. City of Hampton, 775 F.2d 1274, 1278 (4th Cir. 1985). The requirement of liberal construction does not mean that the Court can ignore a clear failure in the pleading to allege facts which set forth a claim cognizable in a federal district court. See Weller v. Dep't of Soc. Servs., 901 F.2d 387 (4th Cir. 1990).
Review of a Bankruptcy Court Order
United States District Courts have jurisdiction to hear appeals of the Bankruptcy Court's “final judgments, orders, and decrees.” 28 U.S.C. § 158(a). Bankruptcy Court orders are subject to a “‘relaxed rule of appealability'” and are immediately appealable if they “‘finally dispose of discrete disputes within the larger case.'” Mort Ranta v. Gorman, 721 F.3d 241, 246 (4th Cir. 2013).
“In bankruptcy, a district court sits as an appellate court.” In re Ketaner, 154 B.R. 467, 470 (E.D. Va. 1993). “A district court reviews the bankruptcy court's findings of fact for clear error, and its legal conclusions de novo.” In re Legacy Dev. S.C. Grp., LLC, 551 B.R. 209, 213 (D.S.C. 2015); see also In re Harford Sands Inc., 372 F.3d 637, 639 (4th Cir. 2004). The district court may affirm, modify, or reverse a bankruptcy judge's order, or remand with instructions for further proceedings. See Fed.R.Bankr.P. 8013.
DISCUSSION
Upon review, the undersigned concludes that this appeal should be summarily dismissed. The Bankruptcy Court concluded that Appellant was not entitled to relief because his motion “[did] not include sufficient facts to warrant relief nor any legal authority in support.” [Doc. 8-4 at 1.] Appellant appealed that ruling. For the reasons explained below, this Court should decline to rule on the merits at this time because the Bankruptcy Court's Order from which Appellant appeals is interlocutory and not a final judgment, order, or decree.
The Bankruptcy Court's Order is not a final order
Before it can consider the merits of the appeal, the Court must first address the threshold issue of whether appealing at this time is proper. Although final orders of a bankruptcy court are appealable to the district court pursuant to 28 U.S.C. § 158(a)(1) as a matter of right, interlocutory orders and decrees of the bankruptcy court generally require leave of the district court for such appellate review under 28 U.S.C. § 158(a)(3). The determination of “[w]hat constitutes a final judgment in a bankruptcy proceeding is more forgiving than the standard [that applies] to civil proceedings under 28 U.S.C. § 1291.” In re Rood, 426 B.R. 538, 546 (D. Md. 2010). “As a general rule, a final judgment under 28 U.S.C. § 1291 is one which ends the litigation . . . and leaves nothing for the court to [do] but execute the judgment.” Id. (internal quotation marks omitted). Stated differently, “[o]rders 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).
“An interlocutory order, by contrast, is ‘one which does not finally determine a cause of action but only decides some intervening matter pertaining to the cause, and which requires further steps to be taken to enable the court to adjudicate the cause on the merits.'” In re Rood, 426 B.R. at 546 (quoting In re Hebb, 53 B.R. 1003, 1005 (D. Md. 1985)).
The Bankruptcy Court's Order challenged in the present action does not determine a cause of action, but instead is an interlocutory order that decides an intervening matter pertaining to the cause. Thus, because Appellant seeks to appeal an interlocutory order, and not a final order, he cannot appeal that order “as a matter of right, but instead must apply to the District Court, which has discretion over whether to grant leave to appeal.” Davis v. Taylor, No. 2:12-cv-3208-RMG-BM, 2012 WL 6055452, at *2 (D.S.C. Nov. 16, 2012), Report and Recommendation adopted by 2012 WL 6085245 (D.S.C. Dec. 6, 2012); see also In re Swann Ltd. P'ship, 128 B.R. 138, 139 (D. Md. 1991) (explaining 28 U.S.C. § 158(a) “makes the hearing of interlocutory appeals discretionary by requiring ‘leave of court'”).
Leave to appeal an interlocutory order
Leave to appeal a bankruptcy court order “is governed by Federal Rule of Bankruptcy Procedure 8004(d), which provides that “[i]f an appellant timely files a notice of appeal . . . but does not include a motion for leave, the district court . . . 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.” Pub.-Sector Sols., Inc. v. Hunt & Assocs., P.C., No. JKB-22-cv-02086, 2022 WL 4104342, at *2 (D. Md. Sept. 8, 2022). Here, Appellant did not request leave to file an interlocutory appeal in this Court as required by 28 U.S.C. § 158(a)(3). Nevertheless, the Court will construe Appellant's Notice of Appeal as a motion for leave to appeal an interlocutory order of the Bankruptcy Court. See Fed.R.Bankr.P. 8004(d); 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-cv-2534-DCN-RSC, 2010 WL 4622462, at *1 (D.S.C. Oct. 12, 2010), Report and Recommendation adopted by 2010 WL 4622457 (D.S.C. Nov. 3, 2010).
“Under § 158(a), the decision whether to grant leave to appeal from a bankruptcy court's interlocutory order is committed to the district court's discretion.” In re Wallace & Gale Co., 72 F.3d 21, 25 (4th Cir. 1995). “[I]nterlocutory appeals are generally disfavored and should be reserved for a narrow question of pure law whose resolution will be completely dispositive of the litigation.” Pieterse v. Tyler Donegan Duncan Real Est. Servs., Inc., No. 8:22-cv-00900-PX, 2022 WL 13937215, at *3 (D. Md. Oct. 24, 2022) (internal quotation marks omitted). In deciding whether to grant leave in a particular case, “district courts regularly look by analogy to the standard announced in 28 U.S.C. § 1292(b), which governs interlocutory appeals in non-bankruptcy cases.” In re Health Diagnostic Lab'y, Inc., No. 3:17-cv-297, 2017 WL 2129849, at *2 (E.D. Va. May 16, 2017); see also France v. United States Tr., No. 2:20-cv-04199-BHH-MHC, 2022 WL 494118, at *4 (D.S.C. Jan. 27, 2022) (“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).”), Report and Recommendation adopted by 2022 WL 486997 (D.S.C. Feb. 17, 2022). “[U]nder § 1292(b), 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.” Chesapeake Appalachia, LLC v. Suppa, No. 1:14-cv-159, 2015 WL 12755624, at *3 (N.D. W.Va. Oct. 15, 2015) (internal quotation marks and citation omitted). “[B]ecause § 1292(b) is contrary to the general rule that appeals may be had only after a final judgment, it should be used sparingly and its requirements must be strictly construed.” Difelice v. U.S. Airways, Inc., 404 F.Supp.2d 907, 908 (E.D. Va. 2005).
Here, as noted, Appellant has not sought leave from this Court to file an appeal from the Bankruptcy Court's Order, and the Notice of Appeal, which the undersigned construes as a motion to seek leave, fails to meet the three-part test for determining when an interlocutory appeal should be granted. The Bankruptcy Court's Order that Appellant seeks to appeal did not involve any controlling question of law as to which there is a substantial ground for a difference of opinion. Likewise, an immediate appeal of that Order would not materially advance the termination of the Bankruptcy Action. As such, Appellant cannot satisfy the requirements for leave to appeal.
Accordingly, the Court should decline to decide this appeal from the Bankruptcy Court's interlocutory order.
Frivolous Allegations
Additionally, putting aside the issues already discussed, the undersigned notes that Appellant's Notice of Appeal is frivolous and meritless to the extent it is premised on the sovereign citizen theory. As such, the appeal should be dismissed on this basis as well.
As noted, 28 U.S.C. § 1915 permits an indigent litigant to proceed in forma pauperis, which allows the litigant to commence a federal court action without prepaying the administrative costs of proceeding with the lawsuit. See Staley v. Witherspoon, No. 9:07-cv-195-PMD-GCK, 2007 WL 1988272, at *1 (D.S.C. July 3, 2007). However, the statute provides limitations to such actions “by permitting the Court to dismiss the case upon finding that the action ‘fails to state a claim on which relief may be granted' or is ‘frivolous or malicious.'” Id. (quoting 28 U.S.C. § 1915(e)(2)(B)). A pleading is deemed frivolous when it is “clearly baseless” and includes allegations that are “fanciful,” “fantastic,” or “delusional.” Denton v. Hernandez, 504 U.S. 25, 32-33 (1992) (internal quotation marks omitted) (citing Neitzke v. Williams, 490 U.S. 319, 325, 327-28 (1989)).
In reviewing for frivolousness or malice, the Court looks to see whether a pleading raises an indisputably meritless legal theory or is founded upon clearly baseless factual contentions, such as fantastic or delusional scenarios. Harley v. United States, 349 F.Supp.2d 980, 981 (M.D. N.C. 2004). The Court must accept all well-pled allegations and review the pro se pleading in a light most favorable to the moving party. Mylan Lab'y, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). Nevertheless, it is well-settled that the Court has the authority to dismiss claims that are obviously “fantastic” or “delusional.” Adams v. Rice, 40 F.3d 72, 74 (4th Cir. 1994).
Here, the Court finds that Appellant's bare allegations in his Notice of Appeal clearly fall within the statute's definition of frivolity and that his conclusory assertions fail to state a cognizable claim for relief, particularly to the extent he bases his claims and arguments on the sovereign citizen theory or any similar frivolous legal theory. See Neitzke, 490 U.S. at 325; Brock v. Angelone, 105 F.3d 952, 953-54 (4th Cir. 1997). Although Appellant has not specifically identified himself as a sovereign citizen, his Notice of Appeal-as well as other documents filed in the Bankruptcy Action-bear all of the hallmarks of the sovereign citizen theory.
For example, in the first paragraph of the Notice of Appeal, Appellant identifies himself as follows:
I Debtor in Person Zaatnure Xi-Amaru formaly [sic] known as Dane Earl Finley Jr, doing business as Indigenous of the North Zaatnure Xi-Amaru #81-3404136 for here on in referred to as debtor or Zaatnure Xi-Amaru is a United States National nonresident inhabitant of the State of South Carolina Republic that apart of his own Tribal Government ISIS, later renamed ARNA (After Criminal elements in the federal Government stole our name) The Aboriginal Republic of North America. That I Zaatnure Xi-Amaru have both Jus soli and Jus Sanguineous rights in South Carolina and That I Zaatnure Xi-Amaru put before the record that Greenwood County is a (misnomer) and that I Zaatnure Xi-Amaru Inhabit the ancestral tribal land known under our indigenous clan name Region 3 Southeast Yamasih (misnomer Greenwood County).
Bankruptcy Action, Doc. 69 at 1. Appellant makes numerous other similar nonsensical allegations and assertions throughout his Notice of Appeal. Id. at 1-7. Further, Appellant purportedly premises his arguments on the Uniform Commercial Code and other statues and laws that have no connection to the claims he asserts in this appeal or the underlying Bankruptcy Action. Id. at 6. Appellant's other filings are replete with similar allegations and frivolous assertions.
Each of these allegations is couched in terms of the sovereign citizen argument, which “has been rejected repeatedly by the courts.” Smith v. United States, No. 1:12-cv-00900, 2013 WL 5464723, at *1 (S.D. W.Va. Sept. 30, 2013) (quoting Nunn v. United States, No. 3:13-cv-12-MHT, 2013 WL 1099321, at *2 (M.D. Ala. Feb. 27, 2013)). Adherents to the sovereign citizen theory “believe that the state and federal governments lack constitutional legitimacy and therefore have no authority to regulate their behavior.” United States v. Ulloa, 511 Fed.Appx. 105, 106 n.1 (2d Cir. 2013); see also Presley v. Prodan, No. 3:12-3511-CMC-JDA, 2013 WL 1342465, at *2 (D.S.C. Mar. 11, 2013) (collecting cases describing the sovereign citizen movement and its common features), Report and Recommendation adopted by 2013 WL 1342539 (D.S.C. Apr. 2, 2013).
Federal courts have repeatedly rejected the sovereign citizen theory as baseless. See, e.g., United States v. Benabe, 654 F.3d 753, 767 (7th Cir. 2011) (“Regardless of an individual's claimed status . . . as a ‘sovereign citizen' . . . that person is not beyond the jurisdiction of the courts. These theories should be rejected summarily, however they are presented.”); United States v. Schneider, 910 F.2d 1569, 1570 (7th Cir. 1990) (describing the “sovereign citizen” theory as having “no conceivable validity in American law”); United States v. Jagim, 978 F.2d 1032, 1036 (8th Cir. 1992) (defendant claimed he was “outside” the jurisdiction of the United States; however, the court found this argument to be “completely without merit” and “patently frivolous” and rejected it “without expending any more of this Court's resources on discussion”); Glover v. South Carolina, No. 5:16-cv-00969-JMC, 2017 WL 1836982, at *1 n.1 (D.S.C. May 8, 2017), appeal dismissed, No. 17-6846, 2017 WL 5197454 (4th Cir. Nov. 8, 2017). Thus, to the extent Appellant is asserting claims in this case and/or premising his appeal based on the sovereign citizen theory, his claims are subject to summary dismissal as frivolous.
Conclusion
The Bankruptcy Court's Order subject to this appeal was an interlocutory order. This Court is authorized to dispatch such appeals to allow the Bankruptcy Court to exercise skillfully its duties in deciding the issues in the pending Chapter 7 Bankruptcy Action. As such, this appeal is subject to summary dismissal.
RECOMMENDATION
For the reasons set forth above, it is recommended that Appellant's Notice of Appeal be considered a motion for leave to appeal the Bankruptcy Court's Order. It is further recommended that the Notice of Appeal be DENIED and this action be dismissed. Alternatively, should the District Court grant Appellant leave to appeal, then it is recommended that the Bankruptcy Court's Order be AFFIRMED.
IT IS SO RECOMMENDED.
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
250 East North Street, Suite 2300
Greenville, South Carolina 29601
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).