In re Waldo
| Decision Date | 30 December 2019 |
| Docket Number | Bankruptcy No. 08-23583 |
| Parties | In re: Charles Coulson Waldo and Ethanne S. Waldo, Debtor(s). |
| Court | U.S. Bankruptcy Court — District of Utah |
Honorable William T. Thurman
This matter came before the Court by way of the Debtor's Motion to Reopen Case Requesting the Court to Use Its Inherent Power to Set Aside Summary Judgment Pursuant to Federal Rules of Civil Procedure 60(d)(3) Due to Fraud upon the Court [Docket No. 203]. The Court conducted oral argument on the matter, the Honorable William T. Thurman, presiding. Charles C. Waldo and Ethanne S. Waldo (collectively the "Waldos") appeared pro se. No other parties entered an appearance or filed a response. The Court reviewed the relevant pleadings and heard argument from the Debtors and incorporates its findings of fact and conclusions of law in this memorandum.
The jurisdiction of the Court is properly invoked under 28 U.S.C. §§ 157(b) and 1334. This motion is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(D). The jurisdiction of this Court is not disputed and is hereby determined to be present.
Venue is determined by the Court to be proper pursuant to the provisions of 28 U.S.C. §1408. Venue is laid in the United States Bankruptcy Court for the District of Utah.
The Court notes that while it set this motion for a hearing and noticed out the hearing sua sponte, the Waldos did not attempt to notice other parties of interest; thus, notice may not have been complete on the part of the movants. The Court believes that it can still make a ruling on the motion to reopen despite notice being an issue because the motion to reopen a bankruptcy case, for which is the only issue which the Court will address outside of the waiving of filing fees, does not directly affect other parties' interests.
The Waldos lost their house to foreclosure in 2009. Since 2006, they have vigorously challenged various aspects of the foreclosure in multiple legal proceedings against Ocwen Loan Servicing, LLC (herewithin "Ocwen"), which services the senior mortgage loan held by The Bank of New York Mellon Trust Company, NA (herewithin "Bank of New York") as Indenture Trustee for the IMC Home Equity Loan Owner Trust 1998-7. After previous Utah state court rulings that were averse to the Waldos' positions, they again challenged the validity of the Bank of New York's mortgage interest in their 2008 bankruptcy case filed under chapter 13 of the United States Bankruptcy Code. Shortly after the Waldos bankruptcy case commenced Ocwen filed a claim on behalf of the Bank of New York, the Waldos filed an objection Ocwen's proof of claim alleging,among other things, that Ocwen and the Bank of New York engaged in misrepresentation, deception, and fraud. See Objection to Claim Number 4, Docket No. 20. In turn, the Bank of New York and Ocwen filed a motion for relief of stay and a motion for summary judgment as to the objection of claim issue. See Motion to Amend for Summary Judgment, Docket No. 91. The Court consolidated these matters and set them for a hearing. The Court conducted the hearing and granted summary judgment in favor of the Bank of New York and Ocwen. Further, the Court found that the Waldos' 2008 Chapter 13 petition was part of a scheme to delay, hinder, or defraud Ocwen and the Bank of New York, and the automatic stay was terminated in rem, pursuant to 11 U.S.C. § 362(d)(4). Order Granting Summary Judgment, Docket. No. 116.
The Waldos filed a motion to reconsider the Court's summary judgment decision and reopen their bankruptcy case on December 8, 2008; however, the Waldos' bankruptcy case was open at the time the motion was filed. Motion to Reconsider: Regarding Claim No. 4 and Motion to Reopen, Docket No. 121. The bankruptcy case was ultimately dismissed at a confirmation hearing on December 11, 2008. Order Denying Confirmation and Dismissing Case, Docket No. 126. The Court subsequently denied the Waldos' motion to reconsider and reopen on December 23, 2008. Order Denying Debtors' Motion to Reopen and Denying Debtors' Motion for Reconsideration, Docket No. 130. The Waldos then appealed the Court's ruling for dismissing their bankruptcy case at the United State District Court for the District of Utah. While the Waldos appealed the Court's order dismissing the case, the District Court noted that what the Waldos actually sought to appeal was this Court's summary judgment ruling. With that, the District Court dismissed the Waldos' appeal for lack of jurisdiction for not being timely filed. Charles Coulson Waldo v. Bank of New York Mellon Trust Company NA, et al. 2009 WL 334440 (D. Utah 2009). In addition to appealing the Court's order dismissing the Case, the Waldos moved in the DistrictCourt for a temporary restraining order to stop the foreclosure on their home. The District Court denied their request for a temporary restraining order, and the house was foreclosed on shortly thereafter. See Charles Coulson Waldo v. Bank of New York Mellon Trust Company NA, et al. 2009 WL 197653 (D. Utah 2009).
After the District Court dismissed the filed appeal, the Waldos filed various motions to reconsider, reopen, or set aside the summary judgment decision pursuant to Federal Rule of Civil Procedure 60(b)(3)&(6) on similar grounds. Motion to Set Aside Order Granting Summary Judgment and Order Dismissing Ch. 13 Case, Docket No. 144; Motion to Reopen Case, Docket No. 174; Motion to Reconsider, Docket No. 175. These motions were denied. The Waldos then filed a suit in the District Court against Ocwen alleging violation of the Fair Debt Collection Practices Acts, wire fraud in violation of 18 U.S.C. § 1343, and causes for "irreparable harm" and "emotional distress." The Waldos alleged Ocwen committed similar fraudulent activities with regards to their mortgage loan. Without reaching the merits of the Waldos' arguments, the District Court dismissed the case on the basis claim preclusion and the Tenth Circuit Court of Appeals affirmed the ruling. See Waldo v. Ocwen Loan Servicing, LLC, 483 Fed. Appx. 424 (10th Cir. 2012).
The Waldos' 2008 bankruptcy case sat dormant for over nine years without any activity. On October 18, 2019, the Waldos filed another motion to reopen their bankruptcy case in order to obtain relief from summary judgment decision pursuant to Federal Rule of Civil Procedure 60(d)(3) due to alleged fraud perpetuated on the Court. The Waldos request the Court to reopen their bankruptcy case, allow extensive discovery, and have the Court conduct an evidentiary hearing. Additionally, the Waldos seek a waiver of filing fees because fraud upon the Court effected their discharge. The Court held a hearing on December 4, 2019 on the Waldos' motions.The Waldos represented themselves pro se, with no other parties present at the hearing. With no other parties being present, the Court limited the matter only to the issue of reopening the Waldos' bankruptcy case and whether to waive filing fees incurred by the filing of this motion. Any relief from the Court's summary judgment decision would be premised on the Court reopening the bankruptcy case and would need to be addressed at an evidentiary hearing if the Court reopened the case. The Court took the matter of reopening the Waldos' bankruptcy case under advisement as well as the issue of waiving filing fees.
Section 350(b) of the Bankruptcy Code provides that a case may be reopened "to administer assets, to accord relief to the debtor, or for other cause." "[A]lthough the bankruptcy court has discretion in many instances whether to reopen a bankruptcy case, it is the duty of the court to reopen a case whenever prima facie proof is made that the estate has not been fully administered." Riazuddin v. Schindler Elevator Corp. (In re Riazuddin), 363 B.R. 177, 183-84 (10th Cir. BAP 2007). The Waldos do not seek to administer assets or accord relief to the debtor, so their motion must establish "other cause" to reopen the case under § 350(b). A bankruptcy court's discretion to reopen "must be tethered to the parameters of § 350(b) or it is an abuse of discretion." In re Alpex Computer Corp., 71 F.3d 353, 356 (10th Cir. 1995). Regardless of the reason, the decision to reopen a case is committed to the sound discretion of the bankruptcy court. See In re Petroleum Production Management, Inc., 282 B.R. 9, 13 (10th Cir. BAP 2002).
Bankruptcy courts consider a number of factors in deciding whether or not to reopen a closed case. Included in those factors are: (1) the length of the time that the case was closed; (2) the nature of the parties' dispute; (3) whether a non-bankruptcy forum has the ability to determinethe issues submitted for consideration; (4) whether any parties would be prejudiced if the case were or were not reopened; (5) the extent of the benefit to any party by reopening; and (6) whether it is clear at the outset that no relief would be forthcoming if the motion to reopen is granted. In re Soldier Summit Rec. & Dev. Co., L.L.C., 2014 WL 98701 (Utah Bankr. 2014); see also In re Atari, Inc., 2016 WL 1618346 (S.D.N.Y Bankr. 2016). These are alternative basis for considering a motion to reopen and one may be compelling while another may be of lesser importance. A heavier consideration of one is sufficient to grant or deny the motion. The moving party has the burden of persuading the Court that there is a compelling reason to reopen a bankruptcy case. See In re Soldier Summit Rec. & Dev. Co., L.L.C., 2014 WL 98701 (Bankr. D. Utah 2014) (). Accordingly, the Court will consider these factors as it determines whether it should reopen the Waldos' bankruptcy case.
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