Opinion
C/A 2:21-cv-01781-BHH-MHC
08-02-2022
Christopher James France, Appellant, v. Visions Federal Credit Union; and Kevin Campbell, Trustee, Appellees.
REPORT AND RECOMMENDATION
Molly H. Cheny, United States Magistrate Judge.
This matter is before the Court on a pro se appeal from an order entered by United States Bankruptcy Judge David R. Duncan in Appellant's Chapter 7 bankruptcy case, In re, Christopher James France, Debtor, C/A No. 20-03044-dd (D.S.C.), in the United States Bankruptcy Court for the District of South Carolina.
Pursuant to the provisions of Title 28, United States Code, Section 636(b)(1)(A), and Local Rule 73.02(B)(2)(e), D.S.C., all pretrial matters in cases involving pro se litigants are referred to a United States Magistrate Judge for consideration. For the reasons set forth below, the undersigned recommends that the Court affirm.
BACKGROUND
In July 2020, Appellant voluntarily commenced a Chapter 7 bankruptcy case by signing and filing a Chapter 7 petition pursuant to Title 11 of the United State Code. ECF No. 11-2 at 19. Kevin Campbell (hereinafter referred to as the “Trustee”) was duly appointed and is the acting Chapter 7 Trustee of this estate. See ECF No. 11-2 at 41.
On his Schedule A/B form identifying property that he has an interest in, Appellant handwrote that he was a “beneficiary” owner of (1) a 2013 Toyota Highlander valued at $12,000, (2) a 2015 Toyota Sequoia valued at $28,000, and (3) a 2016 Subaru Legacy valued at $13,000 (hereinafter the collectively “Vehicles”). ECF No. 11-2 at 58-59. Appellant's Schedule D disclosed that the Vehicles were under lien to Visions Federal Credit Union (“Visions FCU”), whose secured balance exceeded the value of the Vehicles. ECF No. 11-2 at 11.
On April 21, 2021, the Trustee filed a Notice of Settlement resolving certain issues with Visions FCU involving liens against the Vehicles. ECF No. 11-8 at 28-30. Pursuant to the agreement, Visions FCU agreed to the Trustee liquidating the Vehicles whereby Visions FCU would receive the net proceeds of sale after deducting various commissions, costs, and expenses of sale. Id. Visions FCU also would be allowed to assert a general unsecured deficiency claim. Id. The Trustee asserted that the settlement of this matter was fair and reasonable and in the best interest of the creditors of the estate. Id. According to the Trustee, in reaching this settlement, he considered the probability of success in the litigation; the collectability of a resulting judgment; the complexity, expense, inconvenience, and delay attendant to litigation; and the interests of the creditors of the estate. Id.
Appellant filed an objection to this settlement, asserting in part that the Vehicles were “the private property of the living man” and not property of the bankruptcy estate. ECF No. 11-8 at 6567. Appellant further asserted that he does not consent to the selling of his property to settle Visions FCU's claims. Id. He subsequently filed a Memorandum Opposing Turnover of Cars, arguing that the bankruptcy court “and its officers operate in the sea jurisdiction and I am in the land jurisdiction as is my private property.” Id. at 90. He further argued that the Trustee does not have “standing to demand anything of a sovereign or his private property.” Id.
The bankruptcy court held a hearing on May 25, 2021, at which the Trustee and Visions FCU appeared with counsel. ECF No. 11-8 at 118. Appellant did not appear at the hearing. Id. The Court, in its Order entered May 25, 2021, noted that “the debtor's objection relies on discredited legal theories that courts of the United States have never adopted. Based upon the debtor's failure to appear to pursue his objection and his decision to rest on faulty arguments, the debtor's objection is overruled.” Id. The bankruptcy court further noted the Trustee's representations to the Court that “this settlement and compromise is in the best interest of the creditors of the estate.” Id. at 11819. Finally, the bankruptcy court ordered that the Trustee “is authorized to settle his dispute with Visions [FCU] pursuant to the terms of settlement as more fully set forth in the application.” Id. at 119; see ECF No. 1-2.
Appellant filed a “Notice of Appeal Amended” in which he asserted that the bankruptcy court's Order Authorizing Settlement and Compromise “is another example of this court overstepping its jurisdictional boundary into the private/land jurisdiction.” ECF No. 1 at 1. He further asserted that “the automobile identification numbers listed in the order are publicly recorded on the land and the private property of the living man and cannot be sold/auctioned/confiscated without due process because they are outside the jurisdiction of this court.” Id. at 3 ¶ 6.
That notice attempted to add the appeal of the bankruptcy court's May 25, 2021 Order with a wholly unrelated appeal of a previous bankruptcy court Order involving a different creditor.
Appellant and the Trustee have each filed briefs in this case. See ECF Nos. 4 & 17. The appeal is ripe for review.
Appellant did not file a Reply Brief in this case, and his deadline to do so has expired. See ECF No. 21.
JURISDICTION
Under 28 U.S.C. § 158(a), United States district courts have jurisdiction to hear appeals from final judgments, orders, and decrees of bankruptcy courts. “Orders in bankruptcy cases qualify as ‘final' when they definitively dispose of discrete disputes within the overarching bankruptcy case.” Ritzen Grp. Inc. v. Jackson Masonry, LLC, 140 S.Ct. 582, 586 (2020) (citing Bullard v. Blue Hills Bank, 575 U.S. 496, 501 (2015)); see In re Daufuskie Island Props., Inc., 441 B.R. 49, 55 (Bankr. D.S.C. 2010) (“Final orders are those that resolve the litigation, decide the merits, settle liability, establish damages, or determine the rights of the parties.”) (citing In re Looney, 823 F.2d 788, 790 (4th Cir. 1987)). The district court also has jurisdiction to hear appeals from interlocutory orders and decrees of the bankruptcy court, provided the district court grants the appellant leave to appeal. 28 U.S.C. § 158(a)(3).
This Court has jurisdiction over this appeal, as it disposes of a “discrete issue” within the bankruptcy case, see Ritzen Grp., 140 S.Ct. at 586, and involves an order approving settlement and sale of a debtor's property, see In re Douglas J. Roger, M.D., Inc., APC, 393 F.Supp.3d 940, 956 (C.D. Cal. 2019) (collecting cases and explaining that “orders approving a sale of a debtor's property . . . are considered final decisions and immediately appealable”).
STANDARD OF REVIEW
On appeal from the bankruptcy court, the district court acts as an appellate court and reviews the bankruptcy court's findings of fact for clear error, while it generally reviews conclusions of law de novo. Devan v. Phoenix Am. Life Ins. Co. (In re Merry-Go-Round Enters., Inc.), 400 F.3d 219, 224 (4th Cir. 2005); Kielisch v. Educ. Credit Mgmt. Corp. (In re Kielisch), 258 F.3d 315, 319 (4th Cir. 2001).
However, an order approving settlement is reviewed only for abuse of discretion. See In re Douglas J. Roger, M.D., 393 F.Supp.3d at 961; see also Sharp Farms v. Speaks, 917 F.3d 276, 299 (4th Cir. 2019) (“This Court affords the district court's decision substantial deference, reversing only upon a clear showing that the district court abused its discretion in approving the settlement.”) (internal quotation marks omitted). “Under abuse of discretion review, the district court will not reverse the bankruptcy court unless its conclusion was guided by erroneous legal principles or rests upon a clearly erroneous factual finding.” In re Yellow Poplar Lumber Co., Inc., 598 B.R. 833, 836 (W.D. Va. 2019). “However, even if the bankruptcy court applies the proper legal principles to supported facts, the district court may reverse if it holds a definite and firm conviction that the bankruptcy court committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors.” Mack v. Yankah (In re Yankah), 514 B.R. 159, 163-64 (E.D. Va. 2014).
DISCUSSION
Rule 9019(a) of the Federal Rules of Bankruptcy Procedure provides that “[o]n motion by the trustee and after notice and a hearing, the court may approve a compromise or settlement.” Fed.R.Bankr.P. 9019(a). All compromises and settlements “must be ‘fair and equitable.'” In re Alpha Nat. Res. Inc., 544 B.R. 848, 857 (Bankr. E.D. Va. 2016) (quoting Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968)). “The Trustee, as proponent of the proposed settlement, has the burden of establishing that the settlement is fair and equitable and should be approved by the Court.” In re Final Analysis, Inc., 417 B.R. 332, 341-42 (Bankr. D. Md. 2009). “A court may approve a settlement over objections unless the proposed settlement falls below the ‘lowest point in the range of reasonableness.'” U.S. ex rel. Rahman v. Oncology Assocs., P.C., 269 B.R. 139, 149 (D. Md. 2001), aff'd sub nom. U.S. ex rel. Rahman v. Colkitt, 61 Fed.Appx. 860 (4th Cir. 2003).
Appellant's only argument on appeal is that the bankruptcy court lacks jurisdiction over Appellant and over his Vehicles. See ECF No. 1 at 1 and ¶ 6; see also ECF Nos. 4 & 4-2. Upon review of the Designated Bankruptcy Record (ECF No. 11) and the parties' briefs, the undersigned is unpersuaded.
Pursuant to 28 U.S.C. § 1334(d), “the district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction of all of the property . . . of the debtor as of the commencement of such case, and of the property of the estate.” 28 U.S.C. § 1334(d). Section 301 of the Bankruptcy Code states that a “voluntary case under a chapter of this title is commenced by the filing with the bankruptcy court of a petition under such chapter by an entity that may be a debtor under such chapter.” 11 U.S.C. § 301(a). “Thus[,] the filing of the petition commences the case, which has the effect under 28 U.S.C. § 1334(d) of vesting exclusive jurisdiction over the property of the debtor and of the estate in the district court, and hence the bankruptcy court, in which the petition is filed.” In re Garnett, 303 B.R. 274, 277 (E.D.N.Y. 2003); see 28 U.S.C. § 157(a) (“Each district court may provide that any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11 shall be referred to the bankruptcy judges for the district.”).
As the bankruptcy court correctly found, Appellant voluntarily initiated his chapter 7 bankruptcy liquidation case in the bankruptcy court in 2020. The Record shows that on July 27, 2020, Appellant filed a “Voluntary Petition for Individuals Filing for Bankruptcy” pursuant to Chapter 7 of title 11 of the United States Code. See ECF No. 11-2 at 1-9. Plaintiff listed all three Vehicles on his Schedule A/B form identifying property that he has an interest in, and his Schedule D disclosed that the Vehicles were under lien to Visions FCU. ECF No. 11-2 at 11, 58-59. As such, the bankruptcy court properly concluded that it has jurisdiction over the property of Appellant, as the debtor, including the Vehicles. See 28 U.S.C. § 1334(d); In re Garnett, 303 B.R. at 277; see also 28 U.S.C. § 157(a).
Moreover, the bankruptcy court properly concluded that it has personal jurisdiction over Appellant. The jurisdictional arguments asserted in Appellant's Notice of Appeal and Opening Brief are difficult to understand. See ECF Nos. 1, 4, 4-2. Although Appellant argues that he is not claiming to be a “sovereign citizen,” see ECF No. 4-2 at ¶ 36, he raises arguments that sound in that theory. See, e.g., ECF No. 4-2 at ¶¶ 4-5 (arguing that his name, in all caps, represents not “the living man” but only an “Incorporated Entity or Decedent Estate” that “has a trust account associated with it that can be used to settle all claims”); at ¶ 11 (“since I am one of the living people, any attempt to Unlawfully Convert ‘me,' the living man into a ‘civilly dead' Incorporated Entity against my will is evidence of ‘Personation/Impersonation'”); at ¶ 19 (averring “that I am not now, nor have I ever functioned as a ‘Legal Person' or a ‘Natural Person,'”). Plaintiff raised similar arguments before the bankruptcy court. See ECF No. 11-8 at 65-67 (asserting that the Vehicles were “the private property of the living man”); Id. at 90 (arguing that the bankruptcy court “operate[s] in the sea jurisdiction and I am in the land jurisdiction as is my private property,” and that the Trustee does not have “standing to demand anything of a sovereign or his private property”).
The bankruptcy court rejected Appellant's objection, finding that it “relies on discredited legal theories that courts of the United States have never adopted.” ECF No. 1-2 at 1. Plaintiff has not demonstrated that the Bankruptcy Court erred in this regard, and there is ample support for the bankruptcy court's conclusions. See United States v. Benabe, 654 F.3d 753, 767 (7th Cir. 2011) (“Regardless of an individual's claimed status of descent, be it as a ‘sovereign citizen,' a ‘secured-party creditor,' or a ‘flesh-and-blood human being,' that person is not beyond the jurisdiction of the courts. These theories should be rejected summarily, however they are presented.”); see also Walker v. Florida, 688 Fed.Appx. 864, 865 (11th Cir. 2017) (“[C]ourts have repeatedly rejected as frivolous arguments that people are ‘sovereign citizens' who are not subject to the jurisdiction of any courts.”); In re Hardee, No. 18-67130-BEM, 2021 WL 1186477, at *2 (Bankr. N.D.Ga. Mar. 26, 2021) (finding that bankruptcy court has personal jurisdiction over the debtor and rejecting debtor's arguments asserting “that he is a trust, a church and an indigenous person,” as well as arguments relating to maritime law); Cartman v. United States, No. 110CR512ELRLTW1, 2018 WL 1148138, at *8 (N.D.Ga. Jan. 19, 2018) (“While Movant may not have spoken or written the phrase ‘sovereign citizen' in this case, his jurisdictional arguments mirror those of people who claim to be sovereign citizens[.]”), report and recommendation adopted, No. 110CR512ELRLTW1, 2018 WL 1126734 (N.D.Ga. Mar. 1, 2018). Accordingly, the undersigned finds no error in the bankruptcy court's conclusion that it has jurisdiction over Appellant.
Appellant has failed to argue or demonstrate that the bankruptcy court abused its discretion in approving the settlement. The undersigned has reviewed the record on appeal from the bankruptcy court and finds no clear error in the findings of fact below. Moreover, after a de novo review of the bankruptcy court's conclusions of law, the undersigned also agrees with the legal conclusions set forth in the bankruptcy court's Order. Therefore, the undersigned concludes that the bankruptcy court's Order should be affirmed.
CONCLUSION
For the reasons set forth above, it is RECOMMENDED that the Bankruptcy Court's Order be AFFIRMED.
The parties are referred to the Notice Page attached hereto.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
Post Office Box 835
Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).