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

Environmental Integrity Project v. Mirant Corp. (Maryland U.S.D.C.)(not approved for publication)

Informal Memorandum Opinion and Order--January 3, 2007 by Judge J. Frederick Motz (not approved for publication)

Through an informal memo to counsel, the Court granted Defendant's motion to dismiss based on lack of subject matter jurisdiction but denied Defendant's request for attorneys fees because the Court found the instant action not "frivolous, groundless, pursued in bad faith, or maintained after its baselessness became apparent."

Plaintiffs sought to rebut the presumption of diligence by asserting that (1) the process by which the consent decree came into being suggests a lack of diligence, (2) the penalties imposed by the consent decree are trivial and actually discouraged compliance by making it cheaper to continue to violate opacity standards, (3) the consent decree does not require Defendant to switch from oil to natural gas, and (4) the terms of the consent decree do not require compliance with federal and state opacity standards.

Defendants conceded that a 60-day notice letter was "the catalyst for an accelerated evaluation of emissions from fossil-fuel fired electric generating units at power plants in Maryland and the resulting negotiations ended in a consent decree filed in P.G. County just one day before Plaintiff’s could file suit pursuant to an order entered separately by the U.S. Bankruptcy Court for the Northern District of Texas." The Court found that §7604(b)(1) recognizes that citizens’ notice may provide the catalyst for regulatory action and regulatory agencies must be given 60 days to decide whether to take action. Consequently, there must be other indicia that a consent decree was entered into collusively in order for a lack of diligence to be found on the basis of allegedly tainted process.

The Court further rationed that, economic benefit analyses aside, the fact that state proceedings result in the imposition of minimal penalties is not itself a basis for finding that the state prosecutions were not diligent, particularly where the consent decree requires the defendant to incur substantial capital costs in complying with its terms and where the state court retains jurisdiction to enforce the decree.

The Plaintiffs seemed to suggest that the "requiring compliance" element of defendants’ subject matter jurisdiction defense is separate and apart from the "diligent prosecution" element of that defense. The court found that position lacked merit based, in part, on Clean Air Council, 2003 WL 1785879, at *5-6, wherein while considering the "requiring compliance" issue, indicated that the relevant question is whether the regulatory prosecution was "totally unsatisfactory,’ not whether it required the remedy which the [plaintiffs] would have preferred." The standard of review in Clean Air Council is the proper one because the inquiry into whether a consent decree is reasonably designed to require a polluter’s compliance with applicable standards is part and parcel of the inquiry into whether state regulatory authorities have diligently prosecuted an action against the polluter. Accordingly, the views and actions of the regulatory authorities are entitled to deference.

The full opinion is available in PDF.

Berkowitz v. U.S. Army (Maryland U.S.D.C.)(not approved for publication)

Filed December 21, 2006--Opinion by Judge J. Frederick Motz (not approved for publication)

Defendant United States Army's motion to dismiss a non-tort monetary claim for lack of subject matter jurisdiction denied. Defendant suggested that transfer of the matter to the Court of Federal Claims would be inappropriate given the significant statute of limitations issues and motioned for dismissal by the District Court for lack of subject matter jurisdiction.

The Court transferred the action to the Court of Federal Claims pursuant to 28 U.S.C. §1631 based on the lack of subject matter jurisdiction and consequent impropriety for any District Court ruling on the statute of limitation issues.

The opinion did not describe the precise nature of the claim.

The full opinion is available in PDF