In re Moser, 112310 FED6, 09-8067

Docket Nº:09-8067, 09-8068
Opinion Judge:STEVEN W. RHODES, Bankruptcy Appellate Panel Judge.
Party Name:In re: JOSEPH MOSER v. JOSEPH MOSER and DEVON GROVE-MERRITT n/k/a DEVON DULLAGHAN, Appellees. and In re: DEVON GROVE-MERRITT n/k/a DEVON DULLAGHAN, Debtors. CHRISTO LASSITER, Appellant,
Attorney:Christo Lassiter, Cincinnati, Ohio, for Appellant. Joseph H. Moser, Mason, Ohio, Devon L. Dullaghan, Mason, Ohio, for Appellees.
Judge Panel:Before: FULTON, RHODES, and SHEA-STONUM, Bankruptcy Appellate Panel Judges.
Case Date:November 23, 2010
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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In re: JOSEPH MOSER

and

In re: DEVON GROVE-MERRITT n/k/a DEVON DULLAGHAN, Debtors.

CHRISTO LASSITER, Appellant,

v.

JOSEPH MOSER and DEVON GROVE-MERRITT n/k/a DEVON DULLAGHAN, Appellees.

Nos. 09-8067, 09-8068

United States Court of Appeals, Sixth Circuit

November 23, 2010

Appeal from the United States Bankruptcy Court for the Southern District of Ohio Case Nos. 05-38518 and 07-31887

COUNSEL

ON BRIEF:

Christo Lassiter, Cincinnati, Ohio, for Appellant.

Joseph H. Moser, Mason, Ohio, Devon L. Dullaghan, Mason, Ohio, for Appellees.

Before: FULTON, RHODES, and SHEA-STONUM, Bankruptcy Appellate Panel Judges.

OPINION

STEVEN W. RHODES, Bankruptcy Appellate Panel Judge.

Christo Lassiter ("Lassiter") appeals an order of the bankruptcy court finding him in contempt and imposing sanctions against him for violating the discharge injunctions of two chapter 7 debtors. For the reasons stated below, the bankruptcy court's order is affirmed.

I. ISSUES ONAPPEAL

1.Whether the bankruptcy court erred in finding that Lassiter violated the debtors' discharge injunctions.

2. Whether the bankruptcy court abused its discretion in imposing sanctions and awarding damages to the debtors.

II. JURISDICTION ANDSTANDARDOFREVIEW

We have jurisdiction to decide this appeal. The United States District Court for the Southern District of Ohio has authorized appeals to the Panel, and neither party has timely elected to have this appeal heard by the district court. 28 U.S.C. §§ 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). For purposes of appeal, a final order "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S.Ct. 1494, 1497 (1989) (citations omitted). The bankruptcy court's finding of contempt and imposition of sanctions is a final order. B-Line, LLC v. Wingerter (In re Wingerter), 394 B.R. 859, 862 (B.A.P. 6th Cir. 2008), rev'd on other grounds, 594 F.3d 931 (6th Cir. 2010).

The court's findings of fact, including the amount of damages awarded as sanctions, are reviewed under the clearly erroneous standard. Riverview Trenton R.R. Co. v. DSC, Ltd. (In re DSC, Ltd.), 486 F.3d 940, 944 (6th Cir. 2007); TranSouth Fin. Corp. v. Sharon (In re Sharon), 234 B.R. 676, 679 (B.A.P. 6th Cir. 1999). "A finding of fact is clearly erroneous 'when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" Id. (quoting Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573, 105 S.Ct. 1504 (1985)).

The bankruptcy court's legal conclusions, including whether Lassiter's state court lawsuit is barred by the discharge injunction, are reviewed de novo. Gen. Elec. Credit Equities, Inc. v. Brice Rd. Develops., LLC (In re Brice Rd. Develops., LLC), 392 B.R. 274 (B.A.P. 6th Cir. 2008); Hassanally v. Republic Bank (In re Hassanally), 208 B.R. 46, 48 (B.A.P. 9th Cir. 1996). "De novo means that the appellate court determines the law independently of the trial court's determination." Treinish v. Norwest Bank Minn., N.A. (In re Periandri), 266 B.R. 651, 653 (B.A.P. 6th Cir. 2001) (citations omitted).

The bankruptcy court's imposition of sanctions is reviewed for an abuse of discretion. B-Line, LLC v. Wingerter (In re Wingerter), 594 F.3d 931, 936 (6th Cir. 2010); In re Sharon, 234 B.R. at 679. An abuse of discretion is established when the reviewing court is left with a definite and firm conviction that the court below committed a clear error of judgment. Mich. Div.-Monument Builders of N. Am. v. Mich. Cemetery Ass'n, 524 F.3d 726, 739 (6th Cir. 2008). "'An abuse of discretion occurs only when the [trial] court relies upon clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous legal standard.'" Kaye v. Agripool, SRL (In re Murray, Inc.), 392 B.R. 288, 296 (B.A.P. 6th Cir. 2008) (quoting Volvo Commercial Fin. LLC the Americas v. Gasel Transp. Lines, Inc. (In re Gasel Transp. Lines, Inc.), 326 B.R. 683, 685 (B.A.P. 6th Cir. 2005)). In determining whether an abuse of discretion has occurred, we ask "'whether a reasonable person could agree with the bankruptcy court's decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion.'" Id. (quoting Mayor and City Council of Baltimore, Md. v. West Virginia (In re Eagle-Picher Indus., Inc.), 285 F.3d 522, 529 (6th Cir. 2002).

III. CHRONOLOGY 1

The debtors in these consolidated appeals, Joseph Moser ("Moser") and Devon Grove-Merritt n/k/a Devon Dullaghan ("Dullaghan"), were once married. During their marriage, Moser was a Petty Officer in the U.S. Navy. Also during the marriage, Dullaghan attended and graduated the University of Cincinnati College of Law. At some point, Moser filed a complaint with the Board of Corrections of Naval Records ("BCNR") for reasons that are unclear. While attending law school, Dullaghan attempted to handle Moser's BCNR complaint. In 2003, however, Dullaghan approached one of her law school professors, Christo Lassiter ("Lassiter"), and asked him to handle Moser's BCNR complaint. Lassiter agreed and formally took over the representation of Moser before the BCNR. At some point during Lassiter's representation of Moser, Lassiter and Dullaghan began a romantic relationship.

After graduating law school in 2003, Dullaghan began a part-time law practice out of her home. In that capacity, she represented Lassiter in a personal injury claim. According to Lassiter's allegations, Moser worked as Dullaghan's paralegal giving him access to client files, including Lassiter's. In December, 2003, Dullaghan considered divorce from Moser and, according to Lassiter, ceased employing Moser as her paralegal. Moser and Dullaghan separated in February, 2004, and Dullaghan filed for divorce. During the time that Moser worked as Dullaghan's paralegal, and after, the romantic relationship between Lassiter and Dullaghan continued and they exchanged numerous romantic emails.2

On April 26, 2004, the BCNR denied Moser's request for relief. On May 5, 2004, Lassiter wrote to Moser advising him that he was withdrawing as Moser's lawyer, and that Moser would need to seek the assistance of another lawyer if he wished to pursue the case further. On May 12, 2004, Lassiter wrote to Moser on behalf of Dullaghan advising that she was seeking a divorce, presenting what she wished the terms of the divorce to be, and offering to draft a divorce agreement for the parties. The divorce became final in September, 2005.

At some point, in an apparent attempt to seek justice for Lassiter's "misconduct as his attorney and [for] engaging in an adulterous relationship with his client's wife [Dullaghan]" Moser contacted the Office of Disciplinary Counsel of the Supreme Court of Ohio, the University of Cincinnati College of Law, and other agencies. It appears, although it is not entirely clear, that Moser sent copies of the romantic email exchanges between Lassiter and Dullaghan, in addition to other documents, to these agencies in an attempt to have Lassiter disbarred and fired from the University of Cincinnati. On March 15, 2005, in response to Moser's actions, Lassiter and Dullaghan filed a lawsuit against Moser in the Warren County Common Pleas Court ("2005 lawsuit"). The 2005 lawsuit alleged that Moser, while working as Dullaghan's paralegal, stole correspondence, electronic mail and other documents regarding Lassiter from Dullaghan's office and published them to various persons and agencies. The suit included counts for violation of a temporary restraining order, conversion, unwarranted invasion of privacy, breach of fiduciary duty and theft. The suit sought monetary damages, return of documents, and an order prohibiting future use of the documents.

On August 22, 2005, Moser filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code. Lassiter was listed as a creditor in that petition. As a result of the bankruptcy filing, the 2005 lawsuit was stayed. While Lassiter did not further pursue the case, it is unclear whether the 2005 lawsuit was formally dismissed. Moser received his discharge on January 21, 2006.

On January 22, 2007, Lassiter again filed suit in state court ("2007 lawsuit").3 The 2007 lawsuit again alleged the theft of documents from Dullaghan's office by Moser "including, but not limited to the period February 2004 through March 2004" and resulting conversion, invasion of privacy, breach of fiduciary duty, and theft. The suit also asserted that since his discharge from bankruptcy, Moser had filed a complaint with the Office of Disciplinary Counsel for the Supreme Court of Ohio on November 14, 2006, that included stolen documents. Finally, Lassiter again prayed for monetary damages in addition to injunctive relief.

On March 3, 2007, Dullaghan filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code. There were two adversary proceedings in Dullaghan's bankruptcy...

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