In re Armstrong, BAP No. UT-03-061.

• Citation: 309 B.R. 799
• Decision Date: 20 May 2004
• Docket Number: Bankruptcy No. 00-26592.,BAP No. UT-03-061.
• Parties: In re Donald E. ARMSTRONG, Debtor. Donald E. Armstrong, Appellant, v. Kenneth A. Rushton, Trustee, Appellee.
• Court: Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Tenth Circuit

309 B.R. 799

In re Donald E. ARMSTRONG, Debtor Donald E. Armstrong, Appellant, v. Kenneth A. Rushton, Trustee, Appellee.

BAP No. UT-03-061.

Bankruptcy No. 00-26592.

United States Bankruptcy Appellate Panel of the Tenth Circuit.

May 20, 2004.

Submitted on the briefs: ^*

Donald E. Armstrong, pro se.

Lon A. Jenkins, Mark W. Dykes, LeBoeuf, Lamb, Greene & MacRae, L.L.P., Salt Lake City, Utah, for Appellee.

Before NUGENT, BROWN, and McNIFF, Bankruptcy Judges.

OPINION

NUGENT, Bankruptcy Judge.

The debtor Donald Armstrong (Armstrong) appeals the July 28, 2003 Order of the United States Bankruptcy Court for the District of Utah imposing filing restrictions upon him (the "Filing Restrictions Order") pursuant to 11 U.S.C. § 105 and 28 U.S.C. § 1651(a). Finding no abuse of discretion, we AFFIRM.

As discussed in Section V, infra, we also enter, sua sponte, filing restrictions conditioning Armstrong's future litigation in this Court.¹

I. Statement of Jurisdiction

The Bankruptcy Appellate Panel has jurisdiction over this timely appeal. ² The parties have consented to this Court's jurisdiction by not electing to have this appeal heard by the United States District Court for the District of Utah.³

II. Standard of Review

We review the Order for an abuse of discretion.⁴ We will not disturb the ruling of the bankruptcy court absent "a definite and firm conviction that the lower court made a clear error of judgment or exceeded the bounds of permissible choice in the circumstances." ⁵

III. Summary of Case

Donald E. Armstrong is a frequent litigant, not only in the Utah Bankruptcy Courts, but also in the District Courts sitting in Utah and other states, the state courts of Utah and Texas, the United States Court of Appeals for the Tenth Circuit, and this Bankruptcy Appellate Panel. Nearly all of this litigation springs from a decision in a case in Texas state court wherein business interests controlled by Armstrong were found to have charged usurious interest on a promissory note made by Steppes Apartments, Ltd. in violation of the Texas usury laws (the "Texas Modified Judgment").⁶ Armstrong appealed this judgment through the Texas appellate courts and, failing at that level, petitioned the United States Supreme Court for a writ of certiorari. The Supreme Court has denied his petition for certiorari.⁷

Nevertheless, Armstrong has repeatedly challenged the Texas Modified Judgment in the bankruptcy court, notwithstanding the Supreme Court's refusal to take his case. In addition, Armstrong has continued his collateral attacks on the Confirmation Order entered in his bankruptcy case on January 31, 2002, even though his appeal of the Confirmation Order is pending before the Tenth Circuit and he has failed to secure a stay of the Confirmation Order pending that appeal.⁸ These continued challenges, as well as the staggering quantity of other suits and motions filed by Armstrong, place both the trustee and Steppes in the unfortunate and costly position of continually having to respond, even when the pleadings are repetitive and frivolous.

In response, the trustee filed his Motion for Entry of Order Imposing Vexatious Litigant Filing Restrictions and Other Procedural Limitations on Debtor Donald E. Armstrong (hereafter the "Motion"). Steppes joined in the trustee's Motion but does not participate in this appeal.⁹ The trustee's Motion recited a lengthy list of proceedings to which he and Steppes have been subjected by Armstrong. By July 28, 2003, when the bankruptcy court entered the Filing Restriction Order, and in addition to many matters filed there, Armstrong had filed eighteen civil actions in the United States District Court for the District of Utah, nine actions in this Court, and ten actions before the Tenth Circuit. As the bankruptcy court noted, "[t]hese actions have ranged from appeals, writs of mandamus, and original actions. The essence of these actions has been to collaterally attack the Texas Modified Judgment or the Confirmation Order." ¹⁰ Moreover, the bankruptcy court found that Armstrong had sought and obtained the recusal of eleven federal and state judges in various proceedings. Indeed, Armstrong has sued six present or former judges of this Court and has filed judicial complaints with the Tenth Circuit concerning the bankruptcy judge currently assigned to his bankruptcy case as well as two Utah district judges. He has filed motions to recuse all of the bankruptcy judges sitting in this Circuit from hearing his case. In short, the federal courts sitting in Utah, the Tenth Circuit, and this Court have been deluged with filings, most of which require Appellee and Steppes to incur the time and expense of responding.

The Filing Restriction Order was entered after hearing which took place on June 23, 2003. Several matters were scheduled for that date, including a hearing on the Motion as well as a hearing on Armstrong's objections to the trustee's settlement and compromise of certain causes of action held by Armstrong's bankruptcy estate.¹¹ A transcript of the hearing is a part of the record on appeal. It appears that Armstrong failed to file a timely response to the Motion. Instead, after the June 16, 2003, objection deadline had passed, he filed a motion for leave to object out of time and a proposed objection to the Motion, but did not issue a notice of hearing on his motion for additional time. When the bankruptcy judge asked Armstrong why he had failed to make a timely response to the Motion, Armstrong replied that he was out of the state of Utah on June 17 and 18, and overlooked the passage of the deadline on June 16. The bankruptcy court found Armstrong's "excuse" to be legally insufficient and denied his motion for additional time.¹²

At the hearing, the bankruptcy court received into evidence 105 exhibits and heard a brief statement from the trustee's counsel to the effect that those documents, all of which were pleadings and judgments from various courts, represented a sufficient record upon which the bankruptcy court could conclude that Armstrong was a vexatious litigant. The trustee also conceded that he was only seeking filing restrictions in the bankruptcy court. The bankruptcy court then offered Armstrong an opportunity to be heard. Armstrong made the following statement:

Well, basically, Your Honor, I think Mr. Jenkins [trustee's counsel] addressed any concern I have that the order can only effect [sic] issues in this Court, and I think there is [sic] due process and all kinds of arguments in defense, but I'm not going to belabor the Court with that today.... Just as long as the order is only relating to what goes on in this Court.¹³

The record reflects that Armstrong expressed no objection to the restrictions so long as the restrictions entered by the bankruptcy court did not apply to his activities and proceedings in other courts.

Steppes's counsel then rose and orally joined in the Motion at which time Armstrong asserted that it would be "unconstitutional" for the court to allow Steppes to deny Armstrong the right to appear and be heard.¹⁴ Thereupon, the court stated it would take the matter under advisement and, on July 28, 2003, the Filing Restriction Order issued, granting the trustee's Motion and imposing various limitations on Armstrong's ability to litigate in the Utah bankruptcy court.

The bankruptcy court's restrictions require Armstrong to include a statement under penalty of perjury in all future pleadings that contains the following information:

(a) the legal basis for the pleading;

(b) the specific factual basis for the pleading;

(c) a statement that the issues raised in the proposed pleading have never been finally disposed of by any federal or state court and are not, to the best of Mr. Armstrong's knowledge, barred by the doctrines of res judicata or collateral estoppel;

(d) a statement that the legal or factual arguments raised by the pleading are not frivolous or made in bad faith; that to the best of Mr. Armstrong's knowledge, they are warranted by existing case law; that the intent of the pleading is not improper and not intended to delay or cause a needless increase in costs or to void the Orders of this Court; and

(e) a statement that Mr. Armstrong will comply with the rules of bankruptcy procedure and the local rules of this Court.¹⁵

The bankruptcy court further provided in the Filing Restrictions Order that it would screen all such pleadings submitted by Armstrong for compliance with these requirements before allowing them to be docketed. Armstrong timely appealed from this Filing Restrictions Order.

In support of his appeal, Armstrong supplied this Court with an appendix by compact disc containing some 205 documents and lengthy opening and reply briefs.¹⁶ The only documents included in Armstrong's appendix that are relevant to this appeal are the Motion,¹⁷ the transcript of the June 23 hearing,¹⁸ and the Filing Restrictions Order.¹⁹ The majority of the documents included in his appendix have nothing to do with the Filing Restrictions Order being appealed here. Among the documents Armstrong included in the appendix are the Texas Modified Judgment (Ex. 5); the Texas Court of Appeals decision on the Texas Modified Judgment (Ex. 9); the Confirmation Order (Ex. 21); a December 1996 transcript of a Texas state court hearing on a motion to modify or motion for a new trial concerning the Texas Modified Judgment (Ex. 22); and the dockets (Ex. 101-145) from numerous, but not all, bankruptcy adversary proceedings (7), federal court cases (18), BAP appeals (9), and Tenth Circuit appeals (10). Armstrong's opening brief is 45 pages long. Construed in its best light, no more than 5 pages of this opening brief are devoted to the propriety of the Filing Restrictions Order.²⁰

Armstrong raises six points on appeal, summarized below.

1. That the bankruptcy court has stripped Armstrong of his "post-bankruptcy petition rights and assets."

This is a challenge to...