In re Peterson
| Decision Date | 02 December 2019 |
| Docket Number | CIVIL NO. 3:19-CV-00249 (KAD),BANKR. NO. 10-23429 (AMN) |
| Parties | IN RE: ALYSSA S. PETERSON Debtor. |
| Court | U.S. District Court — District of Connecticut |
Pending before the Court is the appeal by debtor Alyssa S. Peterson ("Ms. Peterson" or the "Appellant") from two orders of the United States Bankruptcy Court ("Bankruptcy Court") issued in her Chapter 13 bankruptcy case.1 In the first order, issued on January 28, 2019, the Bankruptcy Court denied three related motions: the Appellant's joint motion for reconsideration of the order closing her Chapter 13 case without discharge and for relief from that judgment; the Appellant's motion for an order to show cause; and the Appellant's second motion for order to show cause ("January 28 Order"). In the second order, issued on February 8, 2019, the Bankruptcy Court denied the motion for reconsideration of and relief from the January 28 Order ("February 8 Order"). For the reasons set forth below, these orders of the Bankruptcy Court are AFFIRMED.
The Court assumes the parties' familiarity with the complex factual and the procedural history of the underlying bankruptcy case and other related proceedings. See generally In rePeterson, No. 10-23429 (AMN), 2019 WL 364261 (Bankr. D. Conn. Jan. 28, 2019); Peterson v. Wells Fargo Bank, N.A., No. 17-2081 (AMN), 585 B.R. 1 (Bankr. D. Conn. Apr. 19, 2018).
In brief, the Appellant was a debtor in a Chapter 13 bankruptcy case. The Bankruptcy Court approved a five-year plan by which the Appellant's general unsecured creditors would receive a 100 percent dividend (the "Plan"). The Plan included certain payment obligations by the Appellant and contemplated that the Plan would be funded, at least in part, with proceeds from pending litigation. The dispute on appeal centers around a proposed settlement in the amount of $25,0002 made by Carlton Hume to resolve certain claims made against him and his firm by A to Zee, LLC ("A to Zee Payment").3 The Appellant claims entitlement to the A to Zee Payment by virtue of a judgment she secured in state court against Hannah Woldeyohannes, the sole owner of A to Zee, LLC.
During the pendency of the Appellant's Chapter 13 bankruptcy case, Ms. Woldeyhonnes filed for Chapter 7 bankruptcy relief. In re Woldeyohannes, No. 11-20003 (AMN) (Bankr. D. Conn. filed Jan. 3, 2011). The Appellant filed a motion for relief from the stay in that case so that she could pursue her judgment against Ms. Woldeyhonnes, including by pursuing the assets of A to Zee, LLC. On January 17, 2013, the Bankruptcy Court (Dabrowski, J.) granted the Appellant's motion, authorizing her "to pursue recovery of her interests in [Ms. Woldeyohannes'] wholly-owned Connecticut limited liability company known as A to Zee, LLC . . . and any assets of A to Zee. . . ." In re Peterson, No. 10-23429, ECF No. 215, at 1-2 [hereinafter "Order No. 215"].4 TheBankruptcy Court further ordered that any compromise or settlement related to the Appellant's attempts to recover the assets of A to Zee, LLC must be approved by the Bankruptcy Court and any funds recovered by the Appellant must be turned over to her Trustee.
On November 12, 2015, the Appellant moved for approval of two proposed settlements made by Carlton Hume and Hume & Associates, LLC (collectively, "Hume") to resolve certain claims asserted by the Appellant and A to Zee, LLC in a state-court proceeding. Hume proposed paying $60,000 to the Appellant to resolve her claims, and he proposed paying $25,000 to A to Zee, LLC to resolve its claims. At a hearing on the motion, the Court (Nevins, J.)5 repeatedly questioned whether she had jurisdiction to approve or act on the proposed settlement with A to Zee, LLC. On January 15, 2016, the Bankruptcy Court granted the Appellant's motion but "only insofar as it seeks approval to settle the Debtor's [i.e., Ms. Peterson's] claims against Hume and [Hume & Associates], LLC." In re Peterson, No. 10-23429, ECF No. 410. Thereafter, although permitted to do so, it is undisputed that the Appellant took no steps to obtain or collect the A to Zee Payment. It is also undisputed that the trustee did not take any steps to secure the A to Zee Payment for the bankruptcy estate.
Over two years later, on March 8, 2018, the five-year term of the Plan expired. On July 31, 2018, the trustee filed a final report stating that the Appellant's Chapter 13 estate had not been fully administered ("Final Report"). On August 3, 2018, the Bankruptcy Court issued an order closing the case without discharge. On August 13, 2018, the Appellant filed a motion for reconsideration of the closure of her case without discharge and a motion for relief from that judgment ("motion for reconsideration"). The Appellant argued that the Final Report failed toaccount for the A to Zee Payment, which had been "received" by her bankruptcy estate when she brought the existence of this settlement and her interest in it to the attention of the trustee. On August 16, 2018, the Appellant filed a motion for order to show cause, in which she challenged the trustee's failure to account for the A to Zee Payment in the Final Report. On October 5, 2018, the Appellant filed a second request for order to show cause, in which she challenged the trustee's improper decision to abandon the A to Zee Payment without following the procedures set forth in 11 U.S.C. § 554 for abandoning property of an estate.
On January 28, 2019, the Bankruptcy Court issued a memorandum of decision denying the motion for reconsideration and the two motions for order to show cause ("January 28 Order"). In re Peterson, No. 10-23429 (AMN), 2019 WL 364261 (Bankr. D. Conn. Jan. 28, 2019). The Bankruptcy Court found that the A to Zee Payment had not been brought into or received by the Appellant's bankruptcy estate. Id. at *7. The Bankruptcy Court rejected the Appellant's argument that, by operation of Order No. 215, the A to Zee Payment was automatically an asset of her bankruptcy estate. Id. Rather, the Bankruptcy Court explained that "[t]o the extent Ms. Peterson believed that she was entitled to receive the [A to Zee Payment] she could have exercised her non-bankruptcy, state law remedies, including obtaining a bank levy on the personal property of A to Zee, LLC. . . ." Id. Finally, the Bankruptcy Court rejected the Appellant's arguments that the trustee had any duty to obtain or collect the A to Zee Payment and that the trustee improperly abandoned an estate asset. Id. at *7-*8.6
On February 7, 2019, the Appellant filed a motion for reconsideration of and motion for relief from the Bankruptcy Court's January 28, 2019 decision ("motion for reconsideration"). Therein, the Appellant continued to dispute the import of the A to Zee Payment to the resolution of her bankruptcy case. On February 8, 2019, the Bankruptcy Court denied the motion for reconsideration ("February 8 Order"). On February 19, 2019, 2019, the Appellant filed the instant appeal of the January 28 Order and the February 8 Order.
Courts "review the bankruptcy court's findings of fact for clear error and its legal determinations de novo." In re Anderson, 884 F.3d 382, 387 (2d Cir. 2018). For a factual finding to be clearly erroneous, it "must strike [the court] as more than just maybe or probably wrong; it must . . . strike [the court] as wrong with the force of a five-week-old, unrefrigerated dead fish." In re Haworth, No. 3:06-cv-00403(CFD), 2008 WL 4755851, at *3 (D. Conn. Oct. 29, 2008) (Droney, J.) (quoting In re Reilly, 245 B.R. 768, 772 (2d Cir. BAP 2000), aff'd without opinion 242 F.3d 367 (2d Cir. 2000)), aff'd, 356 Fed. Appx. 529 (2d Cir. 2009) (summary order).
On appeal, the Appellant seeks review of the orders denying her motions for reconsideration pursuant to Rule 59 of the Federal Rules of Civil Procedure, motions for relief from judgment pursuant to Rule 60(b) of the Federal Rules of Civil Procedure,7 and motions for an order to show cause. A bankruptcy court's ruling on such motions is reviewed for abuse of discretion.8 Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (motion for reconsideration); Lawrence v. Wink (In re Lawrence), 293 F.3d 615, 623 (2d Cir. 2002)(motion for relief from judgment); see In re Emmerline, 223 B.R. 860, 864 (2d Cir. 1997) (); In re Smith, 426 B.R. 435, 440 (E.D.N.Y. 2010) (same). This standard of review is a "deferential" one. In re Vivendi, S.A. Sec. Litig., 838 F.3d 223, 263 (2d Cir. 2016). An abuse of discretion "occurs when (1) the court's decision rests on an error of law (such as application of the wrong legal principle) or clearly erroneous factual finding, or (2) its decision — though not necessarily the product of a legal error or a clearly erroneous factual finding — cannot be located within the range of permissible decisions." McDaniel v. Cty. of Schenectady, 595 F.3d 411, 416 (2d Cir. 2010) ().
When reviewing the denial of a motion for reconsideration, the Court is mindful that "[t]he standard for granting [a motion for reconsideration] is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked — matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). Similarly, "[a] movant under Rule 60(b) must demonstrate 'exceptional circumstances' justifying the extraordinary relief requested." Emp'r Mut. Cas. Co. v. Key Pharm., 75 F.3d 815, 824-25 (2d Cir. 1996).
Lastly, the Court is mindful that submissions by pro se litigants, such as the Appellant, are "construed liberally and interpreted to raise the strongest arguments that they suggest." Triestman v. Fed. ...
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