Signed April 17, 2007--Memorandum opinion by Judge Deborah K. Chasanow.
This is an appeal by objecting creditors challenging a December 2006 Bankruptcy Court Order Approving Counsel Fees.
Debtor ("Vu") filed a voluntary Chapter 11 in July 2004. As the case progressed, however, it came to light that Vu had participated in a real estate business with her sister, Minh-Vu Hoang ("Hoang"). In June 2006, Vu's primary counsel moved to employ additional counsel ("Regenhardt") when it became clear that the trustee appointed in Hoang's bankruptcy case intended to file a motion for substantive consolidation of Vu's bankruptcy estate into Hoang's bankruptcy estate, which motion was approved by the Bankruptcy Court.
The Hoang trustee filed a motion to substantively consolidate, asserting that many of the assets claimed by Vu as part of her estate were actually titled in the name of other entitities and that Hoang's estate had a superior claim to the ownership of these properties. In August 2006, the U.S. Trustee filed a motion to convert Vu's Chapter 11 to a liquidation proceeding under Chapter 7 based on an assertion that Vu had made unauthorized payments to some of her creditors from her bankruptcy estate.
In October 2006, Vu's counsel applied for payment of their fees for services in connection with Vu's bankruptcy case. Regenhardt's application indicated her services were primarily directed toward defending against the motion for substantive consolidation and the motion to convert to Chapter 7. The creditors argued that Regenhardt's services did not confer a benefit for Vu's bankruptcy estate and that the fees requested were unreasonable. The Bankruptcy Court determined that the services were reasonable and necessary expenses, and that the hours and fees submitted were reasonable.
Upon review, de novo, this Court found Regenhardt's services were of benefit to the estate. Analysis of the benefit to the estate is whether, at the time at which the services were rendered, a reasonable attorney would have believed they would benefit the estate rather than a subsequent consideration of the practical effects actually acheived by an attorney's services. Creditors further argued that Regenhardt failed to exercise billing judgment. The bankruptcy court found that Regenhardt was presented with an unusually challenging litigation schedule and taught deadlines after starting work in the middle of ongoing litigation. In addition, the litigation regarding the motions for substantive consolidation and the conversion to Chapter 7 were difficult and fact-intensive legal issues and this complexity was compounded by complicated facts associated with convoluted financial transactions which had occurred in the case. In light of these factors, this Court affirmed the Bankruptcy Court's order approving counsel fees, finding the amount of time expended was reasonable and necessary, and Regenhardt's substantial qualifications rendered her fee comparable to or lower than comparable professional fees.
The full opinion is available in PDF.
Showing posts with label Judge Chasanow Deborah. Show all posts
Showing posts with label Judge Chasanow Deborah. Show all posts
Saturday, April 21, 2007
Wednesday, March 14, 2007
Howard University v. Watkins (Maryland U.S.D.C) (Not approved for publication)
Signed March 12, 2007. Memorandum opinion by Judge Deborah K. Chasanow (not approved for publication)
Upon consideration of the defendant Howard University's motions to dismiss or in the alternative to transfer, the judge deferred consideration of the grounds raised for dismissal and instead GRANTED the defendant's motion to transfer this case to the U.S.D.C. for the District of Columbia.
Watkins was an employee of and an Acting Dean for the plaintiff, Howard University ("Howard"). Allegedly as a result of Watkins' actions and failure to inform Howard about those actions, Howard was forced to settle an employment discrimination claim made by another employee for a total of $253,000, and sought compensation from Watkins for those damages. Jurisdiction was based on diversity, since Watkins was a resident of Maryland while Howard was located in the District of Columbia ("DC"). Watkins moved to dismiss or in the alternative for summary judgment, or for transfer to the District Court for DC.
The judge noted that although Watkins had raised a "host of issues challenging various aspects of the complaint," the motion to transfer presented a clear basis for deferring consideration of those issues until the forum non conveniens issue was resolved.
After reviewing the underlying principles, the judge found the threshold issue, whether the case might have been filed in the alternate jurisdiction, to have been met, since the plaintiff was located there, all the relevant events had occurred there including the suit that resulted in the claimed damages, and that the law of DC would apply. The judge next considered whether the relative inconvenience to the parties and witnesses and the promotion of the interests of justice would support or oppose the requested move. The factors to be considered are 1) the weight accorded the plaintiff's choice of venue, 2) witness convenience and access, 3) convenience of the parties, and 4) the interests of justice.
Little weight was accorded to Howard's choice of forum, since none of the events occurred there and Maryland had no connection to the matter at hand other than being Watkins' state of residence. Similarly, witness convenience and access favored transfer since all events and most witnesses were tied to DC, but only slightly since Maryland was physically so close. Convenience of the parties weighed in favor of transfer, since only Watkins was a resident in Maryland, and she had requested the transfer. Finally, the interests of justice weighed strongly in favor of transfer, since matters would be resolved under DC law, the prior case had been filed there, and there is a strong public interest in having local matters resolved locally. The judge further noted that there would be no undue delay, since the case is in its early stages, and consequently ordered the transfer of the matter to the District Court for DC.
The memorandum opinion is available in PDF format.
Upon consideration of the defendant Howard University's motions to dismiss or in the alternative to transfer, the judge deferred consideration of the grounds raised for dismissal and instead GRANTED the defendant's motion to transfer this case to the U.S.D.C. for the District of Columbia.
Watkins was an employee of and an Acting Dean for the plaintiff, Howard University ("Howard"). Allegedly as a result of Watkins' actions and failure to inform Howard about those actions, Howard was forced to settle an employment discrimination claim made by another employee for a total of $253,000, and sought compensation from Watkins for those damages. Jurisdiction was based on diversity, since Watkins was a resident of Maryland while Howard was located in the District of Columbia ("DC"). Watkins moved to dismiss or in the alternative for summary judgment, or for transfer to the District Court for DC.
The judge noted that although Watkins had raised a "host of issues challenging various aspects of the complaint," the motion to transfer presented a clear basis for deferring consideration of those issues until the forum non conveniens issue was resolved.
After reviewing the underlying principles, the judge found the threshold issue, whether the case might have been filed in the alternate jurisdiction, to have been met, since the plaintiff was located there, all the relevant events had occurred there including the suit that resulted in the claimed damages, and that the law of DC would apply. The judge next considered whether the relative inconvenience to the parties and witnesses and the promotion of the interests of justice would support or oppose the requested move. The factors to be considered are 1) the weight accorded the plaintiff's choice of venue, 2) witness convenience and access, 3) convenience of the parties, and 4) the interests of justice.
Little weight was accorded to Howard's choice of forum, since none of the events occurred there and Maryland had no connection to the matter at hand other than being Watkins' state of residence. Similarly, witness convenience and access favored transfer since all events and most witnesses were tied to DC, but only slightly since Maryland was physically so close. Convenience of the parties weighed in favor of transfer, since only Watkins was a resident in Maryland, and she had requested the transfer. Finally, the interests of justice weighed strongly in favor of transfer, since matters would be resolved under DC law, the prior case had been filed there, and there is a strong public interest in having local matters resolved locally. The judge further noted that there would be no undue delay, since the case is in its early stages, and consequently ordered the transfer of the matter to the District Court for DC.
The memorandum opinion is available in PDF format.
Sunday, March 11, 2007
Thompson v. Beneficial Mortgage Co. of Maryland (Maryland U.S.D.C.) (Not Approved for Publication)
Signed March 9, 2007 -- Memorandum Opinion by Judge Deborah K. Chasanow. (Not approved for publication.)
Thompson filed this action in the Circuit Court for Prince George's County asserting claims under the Fair Credit Reporting Act and several state tort claims. Her action was removed to this Court which subsequently, by Order dated July 18, 2006, dismissed all of Thompson's federal claims without prejudice and some of her state claims. As a result of Thompson's clarification that she would not replead her federal Fair Credit Reporting Act claim, the Court exercised its discretion to decline to exercise supplemental jurisdiction over her remaining claims, all of which arose under state law. Upon remand of Thompson's remaining state claims, one of the defendants, Provident Bank of Maryland, requested entry of final judgment in its favor pursuant to Fed.R.Civ.P. 54(b), which provides:
"When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties."
Accordingly, the Order dismissing Thompson's claim against Provident was not final when that Order was entered, and, in fact, the Court subsequently denied a motion by Thompson for reconsideration of that ruling.
An interlocutory order becomes final, absent an explicit certification to the contrary, only when all claims against all parties are resolved. In the context of a case remanded to a state court, the remand order, regardless of whether it is itself final and subject to appeal, resolves all matters before the court as to all parties, and renders any previous interlocutory orders final and subject to appeal. Provident's request for entry of final judgment is, therefore, moot under this doctrine. The Court's July 2006 Order decided the merits of Thompson's claim against Provident and, by dismissing this claim, decided the parties' substantive rights. As a result, the Court's remand Order rendered the prior interlocutory Orders final and started the time for any appeal as to those interlocutory Orders pursuant to Fed.R.App.P. 4.
The full opinion is available in PDF.
Thompson filed this action in the Circuit Court for Prince George's County asserting claims under the Fair Credit Reporting Act and several state tort claims. Her action was removed to this Court which subsequently, by Order dated July 18, 2006, dismissed all of Thompson's federal claims without prejudice and some of her state claims. As a result of Thompson's clarification that she would not replead her federal Fair Credit Reporting Act claim, the Court exercised its discretion to decline to exercise supplemental jurisdiction over her remaining claims, all of which arose under state law. Upon remand of Thompson's remaining state claims, one of the defendants, Provident Bank of Maryland, requested entry of final judgment in its favor pursuant to Fed.R.Civ.P. 54(b), which provides:
"When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties."
Accordingly, the Order dismissing Thompson's claim against Provident was not final when that Order was entered, and, in fact, the Court subsequently denied a motion by Thompson for reconsideration of that ruling.
An interlocutory order becomes final, absent an explicit certification to the contrary, only when all claims against all parties are resolved. In the context of a case remanded to a state court, the remand order, regardless of whether it is itself final and subject to appeal, resolves all matters before the court as to all parties, and renders any previous interlocutory orders final and subject to appeal. Provident's request for entry of final judgment is, therefore, moot under this doctrine. The Court's July 2006 Order decided the merits of Thompson's claim against Provident and, by dismissing this claim, decided the parties' substantive rights. As a result, the Court's remand Order rendered the prior interlocutory Orders final and started the time for any appeal as to those interlocutory Orders pursuant to Fed.R.App.P. 4.
The full opinion is available in PDF.
Saturday, February 24, 2007
Sec. & Exch. Comm'n v. SBM Investment Securities, Inc. (Maryland U.S.D.C.) (Not Approved for Publication)
Filed February 23, 2007--Opinion by Judge Deborah K. Chasanow. (Not approved for publication.)
There are four Defendants in this action. Two Defendants, SBMCC and SBMIC, are face amount certificate companies registered with the SEC pursuant to section 8(a) of the Investment Company Act, 15 U.S.C. §80a-8(a). The two other Defendants are a corporate parent of the face amount certificate companies, Geneva, and an individual, Westbury, who controls each of the entity-Defendants. SBMCC is a Maryland corporation that is wholly owned by SBM Financial, LLC. SBM Financial, LLC is, in turn, wholly owned by Geneva. Geneva is wholly owned by Geneva Financial Holdings, LLC, which is wholly owned by Westbury. Westbury is also the Chairman of the Board of Directors, Chief Executive Officer, and President of SBMIC.
Andrea Dittert, a Supervisory Staff Accountant for the SEC who worked on the investigation in this case, explains that:
The SEC conducted a follow-up examination of SBMCC and SBMIC, which was concluded in September 2005, and as a result of that examination opened a formal investigation of these companies. The SEC filed its complaint in this case on April 4, 2006. The complaint asserts three claims for relief. First, it alleges that SBMCC and SBMIC violated the qualified reserve requirements for face amount certificate companies required by section 28 of the Investment Company Act of 1940, 15 U.S.C. §80a-28. Second, the SEC alleges securities fraud, in violation of section 17a of the Securities Act of 1933, 15 U.S.C. §77q(a); section 10b of the Securities Exchange Act of 1934, 15 U.S.C. §78j(b); and rule 10b-5 under the Securities Exchange Act, 17 C.F.R. §240.10b-5. The SEC alleges that SBMCC, SBMIC, and Westbury committed fraud against investors who hold SBMCC and SBMIC face amount certificates. The SEC also alleges that Geneva and Westbury committed fraud against the District of Columbia. Finally, the SEC alleges that Westbury and Geneva violated fiduciary duties imposed by section 206(1)&(2) of the Investment Advisors Act of 1940, 15 U.S.C. §80b-6(1)&(2), through the alleged fraud upon the District of Columbia.
The same day that the SEC filed its complaint, it also moved for preliminary relief. (Paper 2). In this motion, the SEC seeks a temporary restraining order and a preliminary injunction against future violations of the securities laws, a preliminary injunction freezing Defendants’ assets, appointment of a receiver for the entity-Defendants, an order requiring a full accounting, a preliminary injunction against destruction of evidence, and orders providing for expedited discovery and alternative means of service.
Held:
1. The SEC has offered sufficient evidence to conclude at this stage that SBMCC and SBMIC have likely violated the qualified reserve requirements and will likely continue to be in violation during the pendency of this action. Although it is not clear that a showing of irreparable harm is required, the low levels of qualified reserve assets at SBMCC and SBMIC indicate a risk of irreparable harm. If Defendants are not enjoined from further depleting reserve levels, the remaining reserve assets may be insufficient to satisfy the demands of all investors, causing irreparable harm to investors who otherwise could have been more fully compensated. Nevertheless, an injunction requiring Defendants to come into compliance with the reserve requirements is not appropriate relief at this time, because it is not clear that Defendants would have the ability to comply with such an order. The asset freeze restrictions that have been and will be imposed as ancillary injunctive relief are adequate to address this risk of irreparable harm.
2. The SEC's request for a preliminary injunction was denied because the Court concluded that there was an an insufficient showing of fact to support the issuance of a preliminary injunction. and the SEC has not shown that Westbury or Geneva are likely to commit future securities fraud.
3. Geneva and Westbury moved for summary judgment on the securities fraud issue under section 10(b), section 17(a), and rule 10b-5. The Court concluded that various statements in their private offering memoranda were sufficiently explicit, despite qualifying statements contained in the private offering memoranda, that a jury could conclude that a reasonable investor would rely on them and it denied the motions for summary judgment.
4. The the SEC has not made a sufficient showing on the merits as to past and likely future violations by Geneva and Westbury to justify a preliminary injunction based on the alleged violations of the Investment Advisers Act. However, Geneva's and Westbury's motions to dismiss and for summary judgment were denied because the Court concluded that the SEC has pled and produced adequate evidence of material misstatements and omissions with the requisite mental state, which is negligence under the Investment Advisers Act to create material questions of fact for trial.
5. The Court maintained in place a freeze on the assets of SBMIC and SBMCC, but denied a request for a freeze on the assets of Geneva.
6. The Court denied the request of the SEC for the appointment of a receiver for the Defendants because under the circumstances of this case, appointment of a receiver to provide an accounting of Defendants' affairs is not necessary to preserve the status quo.
7. Various other requests by the SEC for preliminary relief were denied as being unnecessary to maintain the status quo.
8. The Court agreed to amend the scheduling order. This portion of the opinion contained a lengthy discussion of the requirements necessary to be shown to allow a court to amend a scheduling order.
9. The Court granted the SEC's motion for a protective order and blocked a request for deposition notice by Westbury, holding that Westbury has other means of discovery available to procure much of the information he seeks through the disputed deposition, and the burden on the court and the SEC in considering the work product issue as to an inevitable array of issues raised at the deposition are not warranted.
There are four Defendants in this action. Two Defendants, SBMCC and SBMIC, are face amount certificate companies registered with the SEC pursuant to section 8(a) of the Investment Company Act, 15 U.S.C. §80a-8(a). The two other Defendants are a corporate parent of the face amount certificate companies, Geneva, and an individual, Westbury, who controls each of the entity-Defendants. SBMCC is a Maryland corporation that is wholly owned by SBM Financial, LLC. SBM Financial, LLC is, in turn, wholly owned by Geneva. Geneva is wholly owned by Geneva Financial Holdings, LLC, which is wholly owned by Westbury. Westbury is also the Chairman of the Board of Directors, Chief Executive Officer, and President of SBMIC.
Andrea Dittert, a Supervisory Staff Accountant for the SEC who worked on the investigation in this case, explains that:
[f]ace-amount certificate companies issue fixed-income debt securities; these companies agree to pay the principal amount of the instruments (the "face amount") plus accrued interest on maturity. Their profitability is dependent upon the difference between the return they generate on their investment portfolio and the expenses incurred from selling and satisfying certificate obligations.In 2002, the SEC began investigating fraud by John Lawbaugh, a former executive of SBMCC and SBMIC, involving misappropriation of millions of dollars from these companies and from investors. The SEC ultimately filed a civil enforcement action based on that fraud that resulted in disgorgement against Lawbaugh and final injunctive relief against Lawbaugh and the face amount certificate companies. Sec. & Exch. Comm’n v. Lawbaugh. Lawbaugh, formerly the majority shareholder in both SBMCC and SBMIC, filed bankruptcy and his estate was liquidated. The SEC supported Westbury and Geneva in their effort to take control of SBMCC and SBMIC, which succeeded when the bankruptcy court approved their purchase of the stock of both companies from Lawbaugh's bankruptcy estate in December 2003.
The SEC conducted a follow-up examination of SBMCC and SBMIC, which was concluded in September 2005, and as a result of that examination opened a formal investigation of these companies. The SEC filed its complaint in this case on April 4, 2006. The complaint asserts three claims for relief. First, it alleges that SBMCC and SBMIC violated the qualified reserve requirements for face amount certificate companies required by section 28 of the Investment Company Act of 1940, 15 U.S.C. §80a-28. Second, the SEC alleges securities fraud, in violation of section 17a of the Securities Act of 1933, 15 U.S.C. §77q(a); section 10b of the Securities Exchange Act of 1934, 15 U.S.C. §78j(b); and rule 10b-5 under the Securities Exchange Act, 17 C.F.R. §240.10b-5. The SEC alleges that SBMCC, SBMIC, and Westbury committed fraud against investors who hold SBMCC and SBMIC face amount certificates. The SEC also alleges that Geneva and Westbury committed fraud against the District of Columbia. Finally, the SEC alleges that Westbury and Geneva violated fiduciary duties imposed by section 206(1)&(2) of the Investment Advisors Act of 1940, 15 U.S.C. §80b-6(1)&(2), through the alleged fraud upon the District of Columbia.
The same day that the SEC filed its complaint, it also moved for preliminary relief. (Paper 2). In this motion, the SEC seeks a temporary restraining order and a preliminary injunction against future violations of the securities laws, a preliminary injunction freezing Defendants’ assets, appointment of a receiver for the entity-Defendants, an order requiring a full accounting, a preliminary injunction against destruction of evidence, and orders providing for expedited discovery and alternative means of service.
Held:
1. The SEC has offered sufficient evidence to conclude at this stage that SBMCC and SBMIC have likely violated the qualified reserve requirements and will likely continue to be in violation during the pendency of this action. Although it is not clear that a showing of irreparable harm is required, the low levels of qualified reserve assets at SBMCC and SBMIC indicate a risk of irreparable harm. If Defendants are not enjoined from further depleting reserve levels, the remaining reserve assets may be insufficient to satisfy the demands of all investors, causing irreparable harm to investors who otherwise could have been more fully compensated. Nevertheless, an injunction requiring Defendants to come into compliance with the reserve requirements is not appropriate relief at this time, because it is not clear that Defendants would have the ability to comply with such an order. The asset freeze restrictions that have been and will be imposed as ancillary injunctive relief are adequate to address this risk of irreparable harm.
2. The SEC's request for a preliminary injunction was denied because the Court concluded that there was an an insufficient showing of fact to support the issuance of a preliminary injunction. and the SEC has not shown that Westbury or Geneva are likely to commit future securities fraud.
3. Geneva and Westbury moved for summary judgment on the securities fraud issue under section 10(b), section 17(a), and rule 10b-5. The Court concluded that various statements in their private offering memoranda were sufficiently explicit, despite qualifying statements contained in the private offering memoranda, that a jury could conclude that a reasonable investor would rely on them and it denied the motions for summary judgment.
4. The the SEC has not made a sufficient showing on the merits as to past and likely future violations by Geneva and Westbury to justify a preliminary injunction based on the alleged violations of the Investment Advisers Act. However, Geneva's and Westbury's motions to dismiss and for summary judgment were denied because the Court concluded that the SEC has pled and produced adequate evidence of material misstatements and omissions with the requisite mental state, which is negligence under the Investment Advisers Act to create material questions of fact for trial.
5. The Court maintained in place a freeze on the assets of SBMIC and SBMCC, but denied a request for a freeze on the assets of Geneva.
6. The Court denied the request of the SEC for the appointment of a receiver for the Defendants because under the circumstances of this case, appointment of a receiver to provide an accounting of Defendants' affairs is not necessary to preserve the status quo.
7. Various other requests by the SEC for preliminary relief were denied as being unnecessary to maintain the status quo.
8. The Court agreed to amend the scheduling order. This portion of the opinion contained a lengthy discussion of the requirements necessary to be shown to allow a court to amend a scheduling order.
9. The Court granted the SEC's motion for a protective order and blocked a request for deposition notice by Westbury, holding that Westbury has other means of discovery available to procure much of the information he seeks through the disputed deposition, and the burden on the court and the SEC in considering the work product issue as to an inevitable array of issues raised at the deposition are not warranted.
A copy of the Memorandum Opinion is available in PDF.
Friday, February 16, 2007
Halkas v. Grigsby (Maryland U.S.D.C.)(Not Approved for Publication)
Signed February 15, 2007--Opinion by Judge Deborah K. Chasanow (Not aproved for publication)
In a follow up to an earlier Memorandum Opinion in the same case, discussed here, the debtor ("Halkas") challenged the motion by the bankruptcy trustee ("Grigsby") to dismiss the appeal of the debtor from the bankruptcy court. The earlier opinion had required Grigsby to file an affidavit or other evidence of the disbursement of funds to creditors from the estate on or about September 30, 2006, in order to establish that the matters at issue were now moot. Grigsby filed an affidavit and accompanying financial records as proof of those transactions.
Halkas challenged the submissions as inadequate to demonstrate the appeal was moot in that they were not admissible as evidence, and further argued that the appeal was not moot because the debtor might file a claim against the trustee, and that even if the appeal is dismissed, the bankruptcy court's order below should be vacated.
On the first point, Halkas argued that Grigsby's affidavit did not state that it was based upon Grigsby's personal knowledge, and that the checks and financial records submitted were hearsay statements which had not been properly authenticated. The judge had little difficulty in finding that the records qualified as "business records" exempt from exclusion as hearsay, or in finding that Grigsby in fact had personal knowledge of the submitted materials and thus had established a sufficient foundation for admission of the records, notwithstanding some minor technical and format issues with the submission.
The judge also found Halkas' claim that she might have a cause of action against Grigsby for fees retained by the trustee or arising from improper disbursements made to nonparty creditors to be speculative and counter to the fact that no such claims had been made to date, and in fact no basis for such claims had been submitted by Halkas.
The judge also found that dismissal of the appeal was the proper remedy rather than vacating the order below, given both the mootness of the matters raised on appeal and the inability of the court below to effect a remedy even if Halkas could prevail on the merits, given the prior disbursal of all available funds to nonparty creditors.
This memorandum opinion is available in PDF.
In a follow up to an earlier Memorandum Opinion in the same case, discussed here, the debtor ("Halkas") challenged the motion by the bankruptcy trustee ("Grigsby") to dismiss the appeal of the debtor from the bankruptcy court. The earlier opinion had required Grigsby to file an affidavit or other evidence of the disbursement of funds to creditors from the estate on or about September 30, 2006, in order to establish that the matters at issue were now moot. Grigsby filed an affidavit and accompanying financial records as proof of those transactions.
Halkas challenged the submissions as inadequate to demonstrate the appeal was moot in that they were not admissible as evidence, and further argued that the appeal was not moot because the debtor might file a claim against the trustee, and that even if the appeal is dismissed, the bankruptcy court's order below should be vacated.
On the first point, Halkas argued that Grigsby's affidavit did not state that it was based upon Grigsby's personal knowledge, and that the checks and financial records submitted were hearsay statements which had not been properly authenticated. The judge had little difficulty in finding that the records qualified as "business records" exempt from exclusion as hearsay, or in finding that Grigsby in fact had personal knowledge of the submitted materials and thus had established a sufficient foundation for admission of the records, notwithstanding some minor technical and format issues with the submission.
The judge also found Halkas' claim that she might have a cause of action against Grigsby for fees retained by the trustee or arising from improper disbursements made to nonparty creditors to be speculative and counter to the fact that no such claims had been made to date, and in fact no basis for such claims had been submitted by Halkas.
The judge also found that dismissal of the appeal was the proper remedy rather than vacating the order below, given both the mootness of the matters raised on appeal and the inability of the court below to effect a remedy even if Halkas could prevail on the merits, given the prior disbursal of all available funds to nonparty creditors.
This memorandum opinion is available in PDF.
Friday, February 9, 2007
Pence v. Zifcak (Maryland U.S.D.C.) (Not Approved for Publication.)
Issued February 7, 2007 -- Opinion of Judge Deborah K. Chasanow. Not approved for publication.
The U.S. District Court for the District of Maryland disposed of a pro se complaint alleging multiple state and federal common law, statutory and constitutional violations arising out of Plaintiff's arrest and involuntary medical commitment and the seizure of Plaintiff's large cache of firearms. These procedures took place after Plaintiff allegedly reported a crime against him to the police, and identified his African-American and "Zionist" physicians as the likely perpetrators of that crime due to their alleged racial or other "animus" against him, and after police officers discovered multiple firearms, ammunition, a bullet-proof vests and multiple gallon containers of human urine at the residence of the Plaintiff.
Having previously dismissed a number of Plaintiff's counts, the Court entered summary judgment against Plaintiff pursuant to Rule 12(b)(6) on the remaining counts brought under 42 U.S.C 1983, Md. Declaration of Rights Arts. 24 and 26 and multiple state law personal and property torts brought under the Local Government Tort Claims Act against several of the arresting officers.
The full opinion is available in PDF.
The U.S. District Court for the District of Maryland disposed of a pro se complaint alleging multiple state and federal common law, statutory and constitutional violations arising out of Plaintiff's arrest and involuntary medical commitment and the seizure of Plaintiff's large cache of firearms. These procedures took place after Plaintiff allegedly reported a crime against him to the police, and identified his African-American and "Zionist" physicians as the likely perpetrators of that crime due to their alleged racial or other "animus" against him, and after police officers discovered multiple firearms, ammunition, a bullet-proof vests and multiple gallon containers of human urine at the residence of the Plaintiff.
Having previously dismissed a number of Plaintiff's counts, the Court entered summary judgment against Plaintiff pursuant to Rule 12(b)(6) on the remaining counts brought under 42 U.S.C 1983, Md. Declaration of Rights Arts. 24 and 26 and multiple state law personal and property torts brought under the Local Government Tort Claims Act against several of the arresting officers.
The full opinion is available in PDF.
Tuesday, January 23, 2007
Halkas v. Grigsby (Maryland U.S.D.C.)(not approved for publication)
Decided January 22, 2007--Memorandum Opinion by Judge Deborah K. Chasanow (not approved for publication)
Debtor initially filed Chapter 7 bankruptcy petition in 2001 which was ultimately converted to Chapter 13 in 2002. At the time the Chapter 13 plan was confirmed, Debtor owned two residential properties. The plan called for Debtor to retain both properties while making payments to her creditors; however, in 2003, Debtor consented to sell one of the properties, the proceeds of which would be partially retained by Debtor, partially paid to Trustee for the benefit of the creditors, and partially remitted to Debtor’s former spouse who had been co-owner before the sale. In August 2005, a motion to dismiss by Trustee was pending because Debtor did not stay current on payments agreed to in a modified plan from 2004 reducing her monthly payment. Debtor moved to sell the second residential property and in October 2005 the bankruptcy court ordered that all net sale proceeds be paid directly to Trustee and disbursed to pay creditors, up to the amount required to pay all claims against Debtor’s bankruptcy estate.
After completion of sale and Trustee’s distribution of proceeds, Debtor filed a motion contesting whether Trustee had the right to retain all proceeds of the sale. The bankruptcy court denied this motion in September 2006. Debtor filed a notice of appeal and filed an emergency motion in the bankruptcy court to stay the disbursement of the sale proceeds, which motion was denied September 29, 2006. On or about September 30, 2006, Trustee disbursed all remaining funds in the bankruptcy estate pursuant to the bankruptcy court’s Orders. Trustee filed a notice of plan completion in the bankruptcy court on October 5, 2006, and the bankruptcy court granted Debtor a discharge the next day.
On Debtor’s appeal, Trustee argued for dismissal pursuant to the doctrine of equitable mootness, definining mootness as when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome. To survive an assertion that a claim is moot, a party must have suffered an actual injury that can be redressed by favorable judicial decision. Even the availability of a partial remedy is sufficient to prevent a case from being moot. Since Trustee paid out all the proceeds of the sale pursuant to the bankruptcy court’s Orders, and no creditors were parties to the appeal, it would be impossible to fashion any relief for Debtor even if she prevailed in the appeal because the nonparty creditors could not be ordered to return funds they had received. Consequently, the action was moot.
Debtor argued that the case was not moot because if she were to prevail on appeal, she could attempt to enforce a money judgment against Trustee for the distributed funds. The Court found that Debtor could not recover funds from Trustee personally because Trustee never held the proceeds from the sale for her own use and Trustee indicated that the funds were distributed pursuant to the bankruptcy court’s Orders.
Debtor relied on an unpublished opinion, Walker v. Grigsby, No. AW-06-62, slip op. at 4 (D.Md. April 11, 2006), in which the court concluded that an appeal by a debtor’s attorney contesting an order granting him only part of his requested fee was not constitutionally moot. Because the Debtor and Trustee remained parties to the case and at least one creditor continued to be subject to the bankruptcy court’s jurisdiction, the court reasoned that the attorney might have the ability to seek payment, if he succeeded on appeal, from the Debtor, the Trustee, or other creditors. The instant case, however, differs in that the Trustee alleged she had paid out all available funds to nonparty creditors pursuant to the bankruptcy court’s Orders.
The full opinion is available in PDF
Debtor initially filed Chapter 7 bankruptcy petition in 2001 which was ultimately converted to Chapter 13 in 2002. At the time the Chapter 13 plan was confirmed, Debtor owned two residential properties. The plan called for Debtor to retain both properties while making payments to her creditors; however, in 2003, Debtor consented to sell one of the properties, the proceeds of which would be partially retained by Debtor, partially paid to Trustee for the benefit of the creditors, and partially remitted to Debtor’s former spouse who had been co-owner before the sale. In August 2005, a motion to dismiss by Trustee was pending because Debtor did not stay current on payments agreed to in a modified plan from 2004 reducing her monthly payment. Debtor moved to sell the second residential property and in October 2005 the bankruptcy court ordered that all net sale proceeds be paid directly to Trustee and disbursed to pay creditors, up to the amount required to pay all claims against Debtor’s bankruptcy estate.
After completion of sale and Trustee’s distribution of proceeds, Debtor filed a motion contesting whether Trustee had the right to retain all proceeds of the sale. The bankruptcy court denied this motion in September 2006. Debtor filed a notice of appeal and filed an emergency motion in the bankruptcy court to stay the disbursement of the sale proceeds, which motion was denied September 29, 2006. On or about September 30, 2006, Trustee disbursed all remaining funds in the bankruptcy estate pursuant to the bankruptcy court’s Orders. Trustee filed a notice of plan completion in the bankruptcy court on October 5, 2006, and the bankruptcy court granted Debtor a discharge the next day.
On Debtor’s appeal, Trustee argued for dismissal pursuant to the doctrine of equitable mootness, definining mootness as when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome. To survive an assertion that a claim is moot, a party must have suffered an actual injury that can be redressed by favorable judicial decision. Even the availability of a partial remedy is sufficient to prevent a case from being moot. Since Trustee paid out all the proceeds of the sale pursuant to the bankruptcy court’s Orders, and no creditors were parties to the appeal, it would be impossible to fashion any relief for Debtor even if she prevailed in the appeal because the nonparty creditors could not be ordered to return funds they had received. Consequently, the action was moot.
Debtor argued that the case was not moot because if she were to prevail on appeal, she could attempt to enforce a money judgment against Trustee for the distributed funds. The Court found that Debtor could not recover funds from Trustee personally because Trustee never held the proceeds from the sale for her own use and Trustee indicated that the funds were distributed pursuant to the bankruptcy court’s Orders.
Debtor relied on an unpublished opinion, Walker v. Grigsby, No. AW-06-62, slip op. at 4 (D.Md. April 11, 2006), in which the court concluded that an appeal by a debtor’s attorney contesting an order granting him only part of his requested fee was not constitutionally moot. Because the Debtor and Trustee remained parties to the case and at least one creditor continued to be subject to the bankruptcy court’s jurisdiction, the court reasoned that the attorney might have the ability to seek payment, if he succeeded on appeal, from the Debtor, the Trustee, or other creditors. The instant case, however, differs in that the Trustee alleged she had paid out all available funds to nonparty creditors pursuant to the bankruptcy court’s Orders.
The full opinion is available in PDF
Monday, January 22, 2007
Jacob v. Didlake (Maryland U.S.D.C.)(not approved for publication)
Decided January 19, 2007 – Opinion by Judge Deborah Chasanow (not approved for publication)
In this employment discrimination case, the Court considered Defendant Didlake Corporation’s motion for summary judgment.
Plaintiff Ronni Jacob sued Didlake for employment discrimination and a hostile work environment based on her disability from muscular dystrophy, diabetes, and certain cognitive disabilities. Prior to terminating Jacob, Defendant Didlake had sent her a memorandum documenting that she had been verbally warned on multiple occasions about several work related issues. Jacob subsequently requested certain accommodations for her disability. She was terminated after evaluation for those accommodations had begun, but before they were completed.
The Court considered but could not resolve whether certain duties for which the Plaintiff had sought accommodation were essential. Ultimately, however, the Court concluded that regardless of whether those duties were essential, the uncontroverted evidence showed that Didlake had provided reasonable accommodation. The Court further concluded that conflicting evidence produced by Jacob on the existence of a hostile work environment was insufficient to create a triable issue of fact on that issue. Thus the Court granted summary judgment to Didlake on those issues.
On the issue of whether Jacob was subjected to disparate terms and conditions of employment, the Court determined that that some evidence revealed that Jacob was not meeting some of Didlake’s undeniably legitimate expectations. Other evidence, however, suggested that Jacob’s inability to meet additional physical expectations may also have been considered in the decision to terminate her. Therefore summary judgment for Didlake on that issue was denied.
The full opinion is available in PDF.
In this employment discrimination case, the Court considered Defendant Didlake Corporation’s motion for summary judgment.
Plaintiff Ronni Jacob sued Didlake for employment discrimination and a hostile work environment based on her disability from muscular dystrophy, diabetes, and certain cognitive disabilities. Prior to terminating Jacob, Defendant Didlake had sent her a memorandum documenting that she had been verbally warned on multiple occasions about several work related issues. Jacob subsequently requested certain accommodations for her disability. She was terminated after evaluation for those accommodations had begun, but before they were completed.
The Court considered but could not resolve whether certain duties for which the Plaintiff had sought accommodation were essential. Ultimately, however, the Court concluded that regardless of whether those duties were essential, the uncontroverted evidence showed that Didlake had provided reasonable accommodation. The Court further concluded that conflicting evidence produced by Jacob on the existence of a hostile work environment was insufficient to create a triable issue of fact on that issue. Thus the Court granted summary judgment to Didlake on those issues.
On the issue of whether Jacob was subjected to disparate terms and conditions of employment, the Court determined that that some evidence revealed that Jacob was not meeting some of Didlake’s undeniably legitimate expectations. Other evidence, however, suggested that Jacob’s inability to meet additional physical expectations may also have been considered in the decision to terminate her. Therefore summary judgment for Didlake on that issue was denied.
The full opinion is available in PDF.
Tuesday, December 26, 2006
Hart v. Winter (Maryland U.S.D.C.)(not approved for publication)
Decided December 21, 2006--Opinion by Judge Deborah K. Chasanow (not approved for publication)
Plaintiff filed a formal administrative complaint of discrimination with the EEOC alleging he was denied the position of Executive Housekeeping Officer due to racial discrimination and reprisal for having previously filed an equal employment opportunity complaint. Plaintiff received his EEOC decision on October 20, 2004 finding no discrimination and advising him that he had 90 days after receipt of the decision to file a civil action. Plaintiff affirmed receipt of the EEOC letter by October 24, 2004.
On February 17, 2005, the EEOC issued an errata letter to the plaintiff stating in its entirety:
On January 27, 2005, 94 days after the initial limitations period began, the plaintiff filed his appeal. The civil action was filed in the U.S. District Court for the District of Columbia.
Defendant filed an a motion to dismiss for untimeliness, a motion to dismiss or transfer for improper venue or, in the alternative, for summary judgment pursuant to Rule 56. The U.S. District Court for the District of Columbia transferred the case on May 8, 2006 to the U.S. District Court for Maryland, stating that it was for the Maryland Court to decide whether plaintiff's case was timely filed.
Plaintiff argued that his complaint was timely filed because the EEOC reissued its final decision via the February 17, 2005, errata letter. However, the language the plaintiff relied on specified "the applicable filing period for complainant to request reconsideration begins to run five days after February 17[,2005]." However, the 90 day limitation period to file suit in federal court beings to run after receipt of a final EEOC decision.
The Court found that, had the plaintiff requested reconsideration, his limitations period to file an appeal in the district court would have restarted once the EEOC issued its decision on his request for reconsideration. Because the plaintiff did not exercise his right to request a reconsideration, the errata notice had no impact on the limitations period to file a judicial appeal. The appeal was thus filed untimely.
Equitable tolling is not appropriate here because the EEOC decision on October 20 adequately advised plaintiff of his right to bring suit in federal court. The reissued decision could not have misled plaintiff during the initial 90 day period because it was not issued until long after the period elapsed and, in fact, after plaintiff filed suit.
Plaintiff filed a formal administrative complaint of discrimination with the EEOC alleging he was denied the position of Executive Housekeeping Officer due to racial discrimination and reprisal for having previously filed an equal employment opportunity complaint. Plaintiff received his EEOC decision on October 20, 2004 finding no discrimination and advising him that he had 90 days after receipt of the decision to file a civil action. Plaintiff affirmed receipt of the EEOC letter by October 24, 2004.
On February 17, 2005, the EEOC issued an errata letter to the plaintiff stating in its entirety:
The above captioned decision did not correctly list all of complainant's rights on appeal. A new decision with the corrected language, including complainant's right to request reconsideration, is attached. Please note that the applicable filing period for complainant to request reconsideration begins to run five days after receipt of this revision.The decision attached to the errata notice was dated October 20, 2004, the same date as the original decision.
This correction in no way alters the substantive findings of the decision.
On January 27, 2005, 94 days after the initial limitations period began, the plaintiff filed his appeal. The civil action was filed in the U.S. District Court for the District of Columbia.
Defendant filed an a motion to dismiss for untimeliness, a motion to dismiss or transfer for improper venue or, in the alternative, for summary judgment pursuant to Rule 56. The U.S. District Court for the District of Columbia transferred the case on May 8, 2006 to the U.S. District Court for Maryland, stating that it was for the Maryland Court to decide whether plaintiff's case was timely filed.
Plaintiff argued that his complaint was timely filed because the EEOC reissued its final decision via the February 17, 2005, errata letter. However, the language the plaintiff relied on specified "the applicable filing period for complainant to request reconsideration begins to run five days after February 17[,2005]." However, the 90 day limitation period to file suit in federal court beings to run after receipt of a final EEOC decision.
The Court found that, had the plaintiff requested reconsideration, his limitations period to file an appeal in the district court would have restarted once the EEOC issued its decision on his request for reconsideration. Because the plaintiff did not exercise his right to request a reconsideration, the errata notice had no impact on the limitations period to file a judicial appeal. The appeal was thus filed untimely.
Equitable tolling is not appropriate here because the EEOC decision on October 20 adequately advised plaintiff of his right to bring suit in federal court. The reissued decision could not have misled plaintiff during the initial 90 day period because it was not issued until long after the period elapsed and, in fact, after plaintiff filed suit.
The full opinion is available in PDF.
Friday, December 15, 2006
Branigan v. Kahn & Kranigan v. Bateman (Maryland U.S.D.C.)(not approved for publication)
Filed December 14, 2006--Opinion by Judge Deborah K. Chasanow (not approved for publication)
Chapter 13 Trustee appealed orders of the bankruptcy court denying his motions to dismiss and confirming the plans of the debtors. Where each debtor obtained a discharge in bankruptcy within a certain interval of filing and as a result, each is ineligible to obtain a discharge, the sole issue is whether 11 U.S.C. §1328(f), which prohibits a second discharge under certain circumstances, also prohibits the filing of a chapter 13 petition.
In rejecting the Trustee's contention that the ineligibility to obtain a discharge should mean that the debtor is also ineligible to file the petition at all and that the filing is, ipso facto, in bad faith the court held:
While there are some limitations on that general grant of eligibility, see, e.g., §109(g), there is no prohibition based on the inability to be granted a discharge or the fact that the debtor is a serial filer. Indeed, the Supreme Court long ago found that serial filing was not necessarily barred.
Congress has expressly prohibited various forms of serial filings. The absence of a like prohibition on serial filings of Chapter 7 and Chapter 13 petitions, combined with the evident care with which Congress fashioned these express prohibitions, shows that Congress did not intend categorically to foreclose the benefit of Chapter 13 reorganization to a debtor who previously has filed for Chapter 7 relief.
The full opinion is available in PDF.
Chapter 13 Trustee appealed orders of the bankruptcy court denying his motions to dismiss and confirming the plans of the debtors. Where each debtor obtained a discharge in bankruptcy within a certain interval of filing and as a result, each is ineligible to obtain a discharge, the sole issue is whether 11 U.S.C. §1328(f), which prohibits a second discharge under certain circumstances, also prohibits the filing of a chapter 13 petition.
In rejecting the Trustee's contention that the ineligibility to obtain a discharge should mean that the debtor is also ineligible to file the petition at all and that the filing is, ipso facto, in bad faith the court held:
While there are some limitations on that general grant of eligibility, see, e.g., §109(g), there is no prohibition based on the inability to be granted a discharge or the fact that the debtor is a serial filer. Indeed, the Supreme Court long ago found that serial filing was not necessarily barred.
Congress has expressly prohibited various forms of serial filings. The absence of a like prohibition on serial filings of Chapter 7 and Chapter 13 petitions, combined with the evident care with which Congress fashioned these express prohibitions, shows that Congress did not intend categorically to foreclose the benefit of Chapter 13 reorganization to a debtor who previously has filed for Chapter 7 relief.
The full opinion is available in PDF.
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