Dekom v. Nationstar Mortg. LLC

• Decision Date: 20 March 2021
• Docket Number: CASE NO. 3:20-cv-5399-MCR-MJF
• Parties: MARTIN JAMES DEKOM, SR., Appellant, v. NATIONSTAR MORTGAGE LLC, d/b/a MR. COOPER, Appellee.
• Court: U.S. District Court — Northern District of Florida

MARTIN JAMES DEKOM, SR., Appellant, v. NATIONSTAR MORTGAGE LLC,d/b/a MR. COOPER, Appellee.

CASE NO. 3:20-cv-5399-MCR-MJF

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF FLORIDA PENSACOLA DIVISION

March 20, 2021

ORDER

Through this appeal, Appellant Martin James Dekom, Sr., proceeding pro se, challenges numerous orders and findings of the Bankruptcy Court which resulted in the dismissal with prejudice of Dekom's Bankruptcy Petition. See ECF Nos. 1-7 at 1 (notice of appeal); 9 at 2-6 (corrected designation of record on appeal). The matter has been fully briefed and is ripe for a decision.¹ On full consideration, the Court affirms the Bankruptcy Court's dismissal with prejudice of Dekom's case.

I. Background

Dekom filed his Chapter 13 Petition in the Bankruptcy Court in January 2019. The proceeding was the latest chapter in a long-running, two-party dispute between Dekom and Appellee Nationstar Mortgage LLC ("Nationstar") arising from Nationstar's final judgment of foreclosure ("Foreclosure Judgment") on Dekom's only real property: a parcel of residential real property in New York (the "Property").² Dekom subsequently filed amended Chapter 13 plans, culminating with his Chapter 13 Plan, Sixth Amended (the "Sixth Plan"). On February 12, 2020, the Bankruptcy Court held a final evidentiary hearing to consider, among other things, confirmation of the Sixth Plan (the "February 12 Hearing"). See ECF No. 1-2. After the February 12 Hearing, the Bankruptcy Court entered its factual findings and conclusions of law. See ECF No. 1-2. First, the Bankruptcy Court found that Dekom "did not file his Petition nor is he seeking confirmation of the Sixth Plan in good faith" based on his "motivation to prolong litigation against Nationstar and perceptible insincerity in seeking Chapter 13 relief, his lack of sincere effort towards selling the Property or confirming a plan, and his lack of sincere effort towards selling the Property or confirming a plan, and his lack of bona fides in dealing withhis primary creditor, Nationstar." See ECF No. 1-2 at 11-21. Second, the Bankruptcy Court found that "[t]he Sixth Plan is not feasible" based on Dekom's "testimony, demeanor and actions [that] reveal that he is not motivated to sell the Property, but rather to continue his long-standing battle with Nationstar."³ See ECF No. 1-2 at 21-24. Finally, the Bankruptcy Court found that a stay of relief in favor of Nationstar was warranted because Dekom "has failed to demonstrate that an effective reorganization is possible" and instead "has amply demonstrated that he has no genuine intent to reorganize his financial affairs." See ECF No. 1-2 at 24-27. Based on these findings of fact and conclusions of law, the Bankruptcy Court granted Nationstar's motion for relief from automatic stay, see ECF No. 1-4, denied confirmation of the Sixth Plan, see ECF No. 1-5, and dismissed the case with prejudice, see id.

Additionally, after the February 12 Hearing, Dekom filed a "Notice and Motion to Disqualify" the Trustee and her Staff Attorney. See ECF No. 15 at 139-42. In his motion, Dekom accused the Trustee's Staff Attorney of being untruthful,acting as co-counsel for Nationstar, conducting ex parte communications with the Bankruptcy Court, and asking Dekom biased questions during cross-examination. To support his accusation of ex parte communications, Dekom alleged that he witnessed the Staff Attorney go in and out of a door "leading to the judge's chambers" in the Pensacola courthouse before the final evidentiary hearing:

[The Staff Attorney's] behavior at the Pensacola courthouse raises serious questions of impropriety. While waiting for the prior case to conclude, [Dekom] and his wife remained outside the courtroom. Present also were Nationstar's counsel, Elizabeth Eckhart, Nationstar's witness, Grant LaClave, and [the Staff Attorney]. Time and again, [the Staff Attorney] would confer with Eckhart and LaClave, then enter the limited access doorway next to the courtroom. Minutes later [the Staff Attorney] would emerge, and confer with them again. [The Staff Attorney] did this repeatedly. While it is unknown exactly who was behind the door leading to the judge's chambers, a reasonable person would conclude that [the Staff Attorney] was acting as a go-between for Nationstar for ex parte purposes.

ECF No. 15 at 141.

On April 20, 2020, The Bankruptcy Court denied Dekom's motion to disqualify the Trustee and her Staff Attorney and imposed sanctions under Fed. R. Bank. P. 9011 based on Dekom's "unfounded, offensive, vexatious, inappropriate and sanctionable" suggestion that the Staff Attorney engaged in ex parte communications with the Bankruptcy Court. See ECF No. 1-3 at 6. The Bankruptcy Court first noted that it "ha[d] warned [Dekom] that continuing his pattern of false representations could result in sanctions, including dismissal of this case with prejudice for at least one year."⁴ ECF No. 1-3 at 8. The Bankruptcy Court then explained that Dekom's accusation of ex parte communications "crossed the line—again" because

there is no 'door leading to' this judge's chambers in the Pensacola courthouse readily accessible to the public; certainly no such door outside the courtroom where people gather in preparation for bankruptcy hearings. The Pensacola courthouse has only one courtroom available for use by judges, including the undersigned, in conducting bankruptcy hearings. The door leading to chambers is insidethe courtroom and has limited access by the judge, authorized staff and Court Security Officers. A reasonable inquiry would have shown that it would be utterly impossible for [the Staff Attorney], or any attorney, to reach the undersigned's chambers from 'a doorway next to' the Pensacola courtroom.

ECF No. 1-3 at 7-8.

The Bankruptcy Court therefore found that Dekom failed to conduct a reasonable inquiry into the factual basis supporting his motion and "had absolutely no evidence to support [his] allegations." See ECF No. 1-3 at 9-10. Based on its findings, the Bankruptcy Court concluded that "it is beyond dispute that [Dekom's] Motion violates the 'bad faith/improper' prong of Rule 9011. Accordingly, "[p]ursuant to Fed. R. Bank. P. 9011(c) and in addition to the dismissal of this case for cause pursuant to 11 U.S.C. §§ 105, 349," the Bankruptcy Court dismissed Dekom's case with prejudice and prohibited Dekom from filing another case under any chapter of the Bankruptcy Code for a period of one year in any court in the United States.⁵ See ECF No. 1-3 at 13.

The Bankruptcy Court subsequently overruled Dekom's objections to its rulings, see ECF No. 1-6, and awarded the Trustee a $600.00 administrative fee. See ECF No. 15 at 429.

Dekom now appeals the dismissal of his case, "including relevant orders and findings." See Appellant's Br. [ECF No. 19] at 4.

II. Standard of Review

In deciding a bankruptcy appeal, the Court applies the same standards as a court of appeals, reviewing the legal conclusions of the Bankruptcy Court de novo, its findings of fact for clear error, and its imposition of sanctions for an abuse of discretion. See In re Ocean Warrior, Inc., 835 F.3d 1310, 1315 (11th Cir. 2016); In re FFS Data, Inc., 776 F.3d 1299, 1303 (11th Cir. 2015). "A lower court's decision to impose sanctions will be affirmed unless the court "made a clear error of judgment, or has applied the wrong legal standard." In re Ocean Warrior, 835 F.3d at 1315 (citation omitted). "A district court may affirm a bankruptcy court order on 'any ground supported by the record.' " Martin v. Martin, 618 B.R. 326, 330 (S.D. Fla. 2020) (quoting In re Gosman, 382 B.R. 826, 839 n.3 (S.D. Fla. 2007)); see In re Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1304 (11th Cir. 2006) ("A correct judgment may be affirmed on any ground regardless of the grounds addressed, adopted or rejected by the district court.").

III. Discussion

The Bankruptcy Court did not abuse its discretion when it dismissed Dekom's case with prejudice and imposed a one-year injunction against refiling under any chapter of the Bankruptcy Code pursuant to Rule 9011, 11 U.S.C. §§ 105, 349, and its inherent authority.⁶ "Sanctions under Bankruptcy Rule 9011 are warranted when (1) the papers are frivolous, legally unreasonable or without factual foundation, or (2) the pleading is filed in bad faith or for an improper purpose." In re Mroz, 65 F.3d 1567, 1572 (11th Cir. 1995). Rule 9011 "permits sanctions only if the objectionable court paper is signed in violation of the rule." Id. "Accordingly, the court's inquiry should only focus on the merits of the pleading gleaned from the facts and law known or available to the attorney at the time of filing." Id. (citation omitted). "The court is expected to avoid using the wisdom of hindsight and should test the signer's conduct by inquiring what was reasonable to believe at the time the pleading, motion, or other paper was submitted." Id. (citation omitted). Thus, the court "must first determine whether the party's claim is objectively frivolous, in view of the law or facts, and then, if it is, whether the person signing the document should have been aware thatit was frivolous." Id. at 1573. If the signer of the document "has failed to conduct a reasonable inquiry into the matter, then the court is obligated to impose sanctions even if the [signer] had a good faith belief that the claim was sound." Id.

The Bankruptcy Court also has inherent authority to impose sanctions on parties. See In re Walker, 532 F.3d 1304, 1309 (11th Cir. 2008). "To impose sanctions under these inherent powers, the court first must find bad faith," which "is warranted where an attorney knowingly or recklessly raises a frivolous argument." Id. "Sanctions are 'especially appropriate where counsel takes frivolous legal positions supported by scandalous accusations.' " Id.; see In re Evergreen Sec., Ltd., 570 F.3d 1257, 1273-74 (11th Cir. 2009) ("If particularly egregious, the pursuit of a claim without reasonable inquiry...