Carroll v. Abide

• Decision Date: 02 August 2016
• Docket Number: No. 3:16-CV-00218-JWD-RLB,3:16-CV-00218-JWD-RLB
• Parties: WILLIAM DOUGLAS CARROLL ET AL., Appellants, v. SAMERA L. ABIDE, Appellee.
• Court: U.S. District Court — Middle District of Louisiana

WILLIAM DOUGLAS CARROLL ET AL., Appellants, v. SAMERA L. ABIDE, Appellee.

No. 3:16-CV-00218-JWD-RLB

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

August 2, 2016

RULING AND ORDER ON APPEAL OF ORDER AND MEMORANDUM OPINION ISSUED BY THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF LOUISIANA

I. INTRODUCTION

Before the Court is the Appeal of the Memorandum Opinion of the United States Bankruptcy Court for the Middle District of Louisiana, Case No. 08-10756, ("Appeal"), (Doc. 5),¹ filed by Mr. William D. Carroll, Jr. ("William") and Mrs. Carolyn K. Carroll ("Carolyn"), as well as Mses. Cynthia G. O'Neal ("Cynthia") and Pamela K. Alonso ("Pamela") (collectively, "Carrolls," "Debtors," or "Appellants"), who have expanded their central arguments for reversal in the Motion for Relief from Bankruptcy Court Order Labelling the Appellants as Vexatious Litigants and $49,432 Sanctions Against William D. Carroll, Jr. and Carolyn K. Carroll Personally ("Motion for Relief"), (Doc. 7), and a substantively identical Motion to Reverse aBankruptcy Court Order Issued March 16, 2016 Against William D. Carroll, Jr., and Carolyn K. Carroll, Pamela K. Alonso and Cytnhia (sic) G. O'Neal Based Upon Appellee, Samera A. Abide's Failure to File a Timely Reply Brief Pursuant to FRBP Rule 8009 (a)(2) ("Motion to Reverse"), (Doc. 11).² Ms. Samera A. Abide ("Abide," "Trustee," or "Appellee"), in her capacity as the trustee ultimately appointed to administer the estate created by the Debtors' filing of a voluntary petition for relief ("Petition") pursuant to Chapter 13³ of United States Code's eleventh title ("Bankruptcy Code" or "Code"),⁴ has opposed the Appeal with the Brief of Appellee, Samera L. Abide ("Appellee's Brief"). (Doc. 9.) Separately, she has responded to the Motion for Relief and Motion to Reverse with, among other documents, the Appellee's Memorandum in Opposition to Motion for Relief from Bankruptcy Court Order Labelling the Appellants as Vexatious Litigants and $49,432 Sanctions Against William D. Carroll, Jr. and Carolyn K. Carroll Personally [Doc. 7] ("Appellee's Memorandum"), (Doc. 8), and Appellee's Memorandum in Opposition to Appellant's Motion for District Court to Reverse a Bankruptcy Court Order Dated March 16, 2016 [Doc. 11] ("Opposition to Appeal"), (Doc. 13).⁵ In the Carrolls' long-running saga, this appeal is but the latest one filed by Appellants.

At the heart of this morass of crisscrossing and multiplying filings tendered by Appellants and Appellee (collectively, "Parties"), one question lies:⁶ whether this Court should reverse the Order ("Order"), (Doc. 746, No. 08-bk-10756⁷), as supported by a lengthy Memorandum Opinion ("Opinion"), (Doc. 747, No. 08-bk-10756),⁸ of the Honorable Douglas D. Dodd of the United States Bankruptcy Court for the Middle District of Louisiana ("Bankruptcy Court"), rendered on March 16, 2016. This Order, issued pursuant to 28 USC §1651 ("All Writs Act")⁹ and §105, sanctioned Appellants due to their history of vexatious and frivolous litigation for nearly fifteen years. Specifically, in the Order, the Bankruptcy Court enjoined Appellants and "anyone acting on their behalf from filing any pleading or document in this case or its associated cases or adversary proceedings, and from filing any future cases in th[e] Bankruptcy C]ourt, without first obtaining . . . [its] permission." (Doc. 1-2 at 21-22.) It also sanctioned William and Carolyn personally for $49,432 in attorneys' fees spent by the Trustee on defending two motions and one complaint. (Id.)

In brief, Appellants argue that, though mistakes were made, no bad faith ever animated their actions, and the Order must be reversed so as to avoid potential harm to Pamela and Cynthia as well as the imposition of harsh and burdensome monetary sanctions on William and Carolyn. Conversely, Appellee maintains that the record and well-settled law compels this Courtto affirm, the Appellee having been bombarded with abusive and bad-faith filings for more than a decade.

In light of a well-documented history and ample precedent, this Court discerns no error in the Bankruptcy Court's factual findings and concurs with its legal analysis. For more than a decade, Appellants have sought to invoke the Code's protection from sundry creditors. Yet, for more than a decade, by means of endless filings in multiple courts, they have attempted to evade many of the obligations imposed upon those who pursue a fresh start, the Code's greatest privilege. Such proven misconduct, when its motivating obstreperousness is apparent, deprives them of membership in "the class of honest but unfortunate debtor[s] that the bankruptcy laws were enacted to protect." Marrama v. Citizens Bank, 549 U.S. 365, 374, 127 S. Ct. 1105, 1111, 166 L. Ed. 2d 956, 966 (2007). For these reasons, as more fully explained below, this Court AFFIRMS the Order and DENIES the Motion for Relief and the Motion to Reverse.

II. BACKGROUND

A. Factual and Procedural History

Appellants filed the Petition on May 21, 2008. (Doc. 1-2 at 2; Doc. 4 at 2; Doc. 4-3 at 1; Doc. 4-6 at 9.) The Petition was initially filed under Chapter 13 but was subsequently converted into a Chapter 11 case on August 5, 2008, (Doc. 4 at 9; Doc. 4-6 at 9), and a Chapter 7 one on August 27, 2008, (Doc. 1-2 at 2; Doc. 4 at 13; Doc. 4-3 at 1; Doc. 4-6 at 9). At that time, Abide was added as trustee of the Carroll's bankruptcy estate. (Docs. 4 at 13, 4-3 at 1, 4-6 at 1.) As the Trustee, Abide was authorized to act as attorney for the estate pursuant to 11 U.S.C. §327. (Doc. 4-1 at 1.) On July 2, 2008, RedPen Properties L.L.C., whose membership consists solely of the Debtors, filed a Chapter 7 petition. (Doc. 4-6 at 2; Doc. 4-6 at 16.) The cases were consolidatedin October of 2014. (Doc. 4-6 at 2; Doc. 4-6 at 16.) According to the Trustee, during the course of the consolidated bankruptcy proceedings, Appellants filed a number of unnecessary and frivolous filings and appeals and conducted a number of personal attacks against her before ultimately trying to strip her of her role as trustee of the estate. (Doc. 1-2 at 4-5.) Thus, Trustee filed a Motion Seeking Relief Under 28 U.S.C. § 1651 and 11 U.S.C. §105 ("Motion for Relief"). (Doc. 4-4 at 1-2.)

In doing so, she sought a declaratory judgment finding the Appellants to be "vexatious litigants." She also sought the imposition of sanctions prohibiting Appellants from "filing any further pleadings, complaint, motions, applications, petitions, lawsuits, and/or memoranda, in any judicial or non-judicial forum, against Samera L. Abide, individually and/or as Trustee of the estates of William D. Carroll, Jr., Carolyn Carroll, RedPen Properties, and/or any other entity owned by, or affiliated or associated with [the individuals mentioned above], without first obtaining leave of the United States Bankruptcy Court or the United States District Court, Middle District of Louisiana . . . . ." (Doc. 4-4 at 1-2.) The Appellants were served with a copy of this motion on October 5, 2015. (Doc. 4-5 at 1.) At that point, the Trustee moved for a special hearing to be set. (Doc. 4-8 at 1.) An order was issued by the Bankruptcy Court on October 5, 2015, setting the hearing for October 28, 2015 at 2:00 p.m. (Doc. 4-11 at 1.) On October 20, 2015, the Appellants filed an objection and memorandum in opposition to the Trustee's motion, serving a copy on the Trustee. (Doc. 4-27; Doc. 4-28.)

During the special hearing, in accordance with well-established precedent,¹⁰ the Bankruptcy Court took judicial notice of "all suit records in the U.S. Bankruptcy Court and theU.S. District Court," and the consolidated bankruptcy matters. (Doc. 4 at 118.) These suits bear the following case numbers: 08-CV-00673; 08-CV-00728; 08-CV 00788; 08-CV-01110; 08-01132, 09-00120; 11-00437; 11-00368; 11-00684, 11-00702; 12-00637; 14-00637; 14-00503; 15-00508; 15-0106708; 08-10756; and 08-10933. (Id.) Following the special hearing, a Post-Hearing Memorandum was submitted by the Trustee and her special counsel, Mr. Steven Paul Lemoine ("Lemoine"), in support of the Motion for Relief. (Docs. 4 at 119, 4-25 at 1-47.) Having offered no new evidence during the special hearing itself, the Debtors filed a Post Hearing Memorandum in Opposition on December 11, 2015. (Doc. 4-27 at 1-116.)

On February 25, 2016, the Bankruptcy Court entered an order granting the Motion for Relief. (Doc. 4 at 120.) On March 16, 2016, that court issued the Memorandum and Order. (Doc. 1-2 at 1; Doc. 1-3 at 1-2; Doc. 1-4 at 1; Doc. 4 at 120; Doc. 4-34 at 1.) The court reasoned that "the ensuing months and years saw [Appellants'] relentless and invariably unsuccessful attempts to prevent creditors from reaching their assets through an astounding number of unnecessary filings—many of them duplicative—both in [the bankruptcy court] and also the United States District Court for the Middle District of Louisiana." (Docs. 1-2 at 2, 4-33 at 2.) Having so concluded, the Order declared the Appellants "vexatious litigants" and enjoined them from filing any pleading or document absent the permission of the court. (Doc. 1-2 at 1; Doc. 1-3 at 1-2; Doc. 1-4 at 1; Doc. 4 at 120; Doc. 4-34 at 1.) In addition, it imposed on William and Carolyn a pecuniary sanction in the amount of $49,432 to be paid to the Trustee for violation of § 105. (Doc. 1-4 at 1; Doc. 4 at 120; Doc. 4-34 at 1.) In assessing these sanctions, the Bankruptcy Court recounted the following facts, each one supported by an expansive and extensive record.

1. Sales Related to 5-Acre Track

In September of 2008, the Trustee petitioned for permission to sell property belonging to a limited liability company owned by the Carrolls. (Doc. 1-2 at 5; Doc. 4-33 at 5.) The sale was approved; however, the Carrolls appealed the sale order. (Doc. 1-2 at 5; Doc. 4-33 at 5.) Although the meritless appeal was later dismissed, it caused significant delay, which ultimately resulted in the abandonment of the transaction. (...