Carmichael v. Balke (In re Imperial Petroleum Recovery Corp.)
| Decision Date | 18 August 2021 |
| Docket Number | 13-30466,Adversary 14-3375 |
| Parties | IN RE: IMPERIAL PETROLEUM RECOVERY CORPORATION, Debtor. v. THOMAS BALKE, et al., Defendants. DON B. CARMICHAEL, et al., Plaintiffs, |
| Court | U.S. Bankruptcy Court — Southern District of Texas |
Carmichael et al. and Balke et al. are again before the Court.[1] In this installment, the parties' fight centers on the viability of the Bankruptcy Court's 2018 Judgment and its attorneys' fee award. (See ECF No. 275). Defendants argue that the 2018 Judgment must be vacated in its entirety. Plaintiffs acknowledge that the 2018 Judgment's damages award can be modified, but argue that the remainder of the Judgment must be left intact-particularly, the Judgment's award of attorneys' fees.
Based on the Court's March 11, 2021 Memorandum Opinion (ECF No 692), the 2018 Judgment must be amended. Defendants are entitled to relief from portions of the prior damages award portions of the attorneys' fee award, and the prior grant of injunctive relief.
The legal world's most cliché literary reference provides a befitting description of this case Charles Dickens, Bleak House, in 1 Works of Charles Dickens 4-5 (1891). The parties to this case have now spent more than 30 days before the Court, the pages of briefing and evidence are too numerous to count, and the judges presiding over this dispute can hardly draw breath without one of the parties filing an appeal. Hopefully, this decision will bring some semblance of order to the procedural morass that is this case.
The parties' dispute stretches back to 2014, when Plaintiffs accused Defendants of stealing certain property Plaintiffs acquired from Imperial Petroleum Recovery Corporation's bankruptcy estate. In 2018, Judge Jeff Bohm (now retired) entered a judgment in favor of Plaintiffs. (See ECF No. 275). The 2018 Judgment awarded Plaintiffs: (1) $1, 957, 812.00 in actual damages; (2) $275, 880.06 in attorneys' fees; (3) $50, 794.96 in costs; (4) a declaration that Plaintiffs owned the property on which this suit centers; and (5) an injunction directing Defendants to turn over all property the court found to be owned by Plaintiffs. (ECF No. 275 at 2-3). Two memorandum opinions supported the relief granted by the 2018 Judgment. (See ECF Nos. 242, 274).
Following entry of the 2018 Judgment, Defendants filed a Rule 59 motion. Defendants asserted that the 2018 Judgment was based on manifest errors of law or fact. In 2020, the District Court sent the case back to the Bankruptcy Court with instructions to consider Defendants' Rule 59 motion on its merits. After a five-day trial, the Court issued a Memorandum Opinion disposing of Defendants' Rule 59 motion on its merits. (See ECF No. 692). The Court determined that the 2018 Judgment's damages award was based on manifest errors of law and fact, and that Plaintiffs were only entitled to $4, 000 in actual damages. (See ECF No. 692). However, because of the limited remand order, the Court did not enter a new judgment. (ECF No. 692 at 23).
Soon after the Court issued its Memorandum Opinion, Defendants asked the District Court to again remand the case to this Court with instructions to enter a new judgment based on the March 11 Memorandum Opinion. (Dist. Ct. Case No. 18-00731, ECF No. 73 at 1-4). Plaintiffs, on the other hand, filed a Notice of Appeal of the March 11 Memorandum Opinion. (See Dist. Ct. Case No. 18-00731, ECF No. 68). The District Court granted Defendants' request for remand and closed the appeal. (See Dist. Ct. Case No. 18-00731, ECF No. 75 (the "Remand Order")). The Remand Order directed this Court to "determine whether [the] court's March 11, 2021 memorandum opinion requires vacatur or modification of [the] 2018 final judgment." (Dist. Ct. Case No. 18-00731, ECF No. 75 at 1-2).
On remand, the Court directed the parties to file briefing addressing the March 11 Memorandum Opinion's effect on the 2018 Judgment. (See ECF No. 706). The parties were specifically asked to address whether the 2018 Judgment's attorneys' fee award should be reduced or vacated. (ECF No. 706 at 1).
After the parties filed the requested briefing, the Court took the matter under advisement.
The Court's jurisdiction over this adversary proceeding originated under 28 U.S.C. § 1334. Initially, this case was referred to the Bankruptcy Court pursuant to 28 U.S.C § 157(a). The Court issued its prior Memorandum Opinion on remand from the District Court consistent with Federal Rule of Bankruptcy Procedure 8008(c). Here again, this case comes to the Court on remand from the District Court. See Fed. R. Bankr. P. 8008(c).
Plaintiffs maintain, however, that this Court lacks jurisdiction to carry out the District Court's remand directive for two reasons. First, Plaintiffs argue that their Notice of Appeal of this Court's Memorandum Opinion, (see ECF No. 694), deprived this Court of jurisdiction to act on the Remand Order. Second, according to Plaintiffs, Defendants waived their right to have this Court reconsider the 2018 Judgment's attorneys' fee award.
As support for their contention that their Notice of Appeal deprived this Court of jurisdiction, Plaintiffs cite no authority. A first principle of appellate practice is that only "judgments, not statements in opinions," are appealable. California v. Rooney, 483 U.S. 307, 311 (1987) (quoting Black v. Cutter Lab'ys, 351 U.S. 292, 297 (1956)) (internal quotation marks omitted); United States v. Fletcher ex rel. Fletcher, 805 F.3d 596, 602 (5th Cir. 2015); see also 28 U.S.C. § 158(a) (2020). Because the Court only issued a Memorandum Opinion, not a judgment, Plaintiffs' Notice of Appeal was premature. Unsurprisingly, the District Court "closed" Plaintiffs' appeal. (Dist. Ct. Case No. 4:18-cv-00731, ECF No. 75 at 2). Under Bankruptcy Rule 8008(c), the closing of Plaintiffs' appeal terminated the District Court's jurisdiction and reinstated this Court's jurisdiction over the matter. See Fed. R. Bankr. P. 8008(c) . In sum, Plaintiffs' Notice of Appeal of the Memorandum Opinion did not deprive this Court of jurisdiction to carry out the District Court's remand directive.[2]
Moreover, this Court is duty-bound to implement the District Court's remand directive. In the unlikely event that there is fault with the District Court's Remand Order, it cannot be corrected by this lower Court. Plaintiffs must direct their concerns to the District Court.
Plaintiffs argue (also with little authoritative support) that Defendants waived their right to review of the prior attorneys' fee award. Plaintiffs' argument is unavailing. The Judgment's attorneys' fee award rested on a finding that Plaintiffs established their entitlement to actual damages and costs under 11 U.S.C. § 362(k). (See ECF No. 242 at 78, 80). Once it found that Plaintiffs were entitled to attorneys' fees under the mandatory provisions of § 362(k), the court had to determine the reasonable amount fees to award. (ECF No. 242 at 78). Plaintiffs are correct, Defendants did not challenge this reasonableness analysis. (Compare ECF No. 274 with ECF No. 282 at 1-3). However, Defendants' failure to challenge the independent findings and conclusions underlying the reasonableness of Plaintiffs' fee award does not deprive this Court of jurisdiction to reconsider the fee award.
A court's review of a Rule 59 motion is not confined to the issues raised in the motion. See EEOC v. United Ass'n of Journeymen & Apprentices of the Plumbing & Pipefitting Indus., 235 F.3d 244, 250 (6th Cir. 2000) (quoting Charles v. Daley, 799 F.2d 343, 347 (7th Cir. 1986)) ; see also Wright & Miller, 11 Fed. Prac. & Proc. Civ. § 2817 (3d ed. 2021) (). This broad power of review allows trial courts to "correct [their] own errors," thereby reducing the burden on appellate courts. Charles, 799 F.2d at 348 (citing United States v. Dieter, 429 U.S. 6, 8 (1976)).
Here, the substantially reduced damages award, (see ECF No. 692 at 20-23), undermines the correctness of the attorneys' fee award. The fee award's apparent infirmity stems from its statutory basis. That is, the fee award was predicated on a finding that Defendants violated the automatic stay, which entitled Plaintiffs to "recover actual damages, including costs and attorneys' fees." 11 U.S.C. § 362(k). Yet the "actual damages" Plaintiffs were found to have suffered are now just over 1% of the attorneys' fees awarded to Plaintiffs. Such drastic disparity begs for reconsideration under Rule 59. Cf. Charles, 799 F.2d at 345-47 (); see also West v. Nabors Drilling USA, Inc., 330 F.3d 379, 395 (5th Cir. 2003) ( a damages award and remanding to the district court for consideration of the prior attorneys' fee award in light of the damages' reversal).[3]
Consistent with the District Court's order, this Court will determine whether, based on its prior Memorandum Opinion, the 2018 Judgment should be modified or vacated. (See Dist. Ct. Case No....
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