Keesee v. Mitchell

• Decision Date: 30 March 2020
• Docket Number: No. 7:19-CV-134-D,7:19-CV-134-D
• Citation: 623 B.R. 402
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: Brian Keith KEESEE, Appellant, v. Kimberly Nifong MITCHELL, Appellee.

623 B.R. 402

Brian Keith KEESEE, Appellant,

v.Kimberly Nifong MITCHELL, Appellee.

No. 7:19-CV-134-D

United States District Court, E.D. North Carolina, Southern Division.

Signed March 30, 2020

Christopher A. Chleborowicz, Chleborowicz Law Firm, PLLC, Wilmington, NC, for Appellant.

Alan E. Toll, Toll and Associates, PLLC, Wilmington, NC, David J. Haidt, Ayers & Haidt, P.A., New Bern, NC, for Appellee.

ORDER

JAMES C. DEVER III, United States District Judge

On July 9, 2019, the United States Bankruptcy Court for the Eastern District of North Carolina (the "bankruptcy court") permanently enjoined Brian Keith Keesee ("Keesee" or "appellant") from pursuing claims that arose from or are related to a divorce action in state court between Keesee and his ex-wife Kimberly Nifong Mitchell ("Mitchell" or "appellee"), an equitable distribution agreement between Keesee and Mitchell, or Mitchell's chapter 11 bankruptcy proceedings [D.E. 1-1]. The bankruptcy court also specifically enjoined Keesee from litigating two state court lawsuits against Mitchell alleging, inter alia, malicious prosecution (collectively, the "State Court Actions"), and ordered Keesee to dismiss the State Court Actions. See id. at 17. On July 23, 2019, Keesee appealed [D.E. 1]. As explained below, the court affirms the bankruptcy court's order of July 9, 2019.

I.

In 2003, Keesee and Mitchell married. See [D.E. 9-1] 56. In 2009, Mitchell filed an action in New Hanover County District Court seeking equitable distribution and divorce (the "Domestic Action"). See id. at 56-57. On February 11, 2011, the parties signed an equitable distribution agreement (the "Agreement"). See [D.E. 8-2] 46–48. On November 21, 2011, Mitchell filed a voluntary petition for relief under chapter 11 of the bankruptcy code. See [D.E. 1-1] 2. When Mitchell filed the bankruptcy petition, the Domestic Action was pending in state court. See id. Because Keesee and Mitchell's Domestic Action was pending, Keesee was listed as a potential creditor in Mitchell's chapter 11 proceeding. See id. On December 6, 2012, the parties entered a consent order stating that Keesee did not have any existing claim in Mitchell's bankruptcy. See id.; [D.E. 9-1] 3. The consent order arose out of the Domestic Action and the Agreement between Keesee and Mitchell concerning equitable distribution, including the disposition of a 96.32-acre tract of property in Brunswick County. See [D.E. 1-1] 2; [D.E. 9-1] 29–32. In relevant part, the Agreement provided that Keesee would pay Mitchell $750,000 in cash upon the sale of the property to which both Keesee and Mitchell claimed ownership and which was encumbered by a deed of trust in Brunswick County, North Carolina. See [D.E. 1-1] 2–3. In exchange, the Agreement provided that the property would be allocated to Keesee. See id. In accordance with the Agreement, Mitchell executed a quitclaim deed concerning her interest in the property in favor of Keesee. See id. at 3. Following Mitchell's transfer of her interest in the property, a corporation that Keesee owned and controlled, Oak Island Building Supply, Inc. ("Oak Island"), purchased the deed of trust and promissory note associated with the property. See id.

After Oak Island purchased the deed of trust and promissory note, Keesee failed to pay Mitchell the $750,000. See id. Mitchell then filed an adversary proceeding in her chapter 11 case. See id. In essence, Mitchell claimed that Keesee conveyed the Brunswick County property to a third party without paying Mitchell the $750,000 she was due under the Agreement. See id. On March 21, 2013, the bankruptcy court granted Mitchell's petition for attachment against the property, entered an order of attachment that allowed Mitchell to file a lis pendens against the property, and permissively abstained from resolving the legal question in the proceeding under 28 U.S.C. § 1334. See id.

On April 30, 2013, the bankruptcy court confirmed Mitchell's reorganization plan. See id. at 4. On November 27, 2013, Keesee filed a motion in the Domestic Action asserting that Mitchell initiated a "wrongful bankruptcy proceeding," that certain actions of Mitchell in the bankruptcy case were wrongful, and that Keesee was entitled to indemnity or contribution from Mitchell. See id. On December 4, 2013, Mitchell moved for sanctions in the bankruptcy action against Keesee and alleged that Keesee violated the bankruptcy court's confirmation injunction imposed on all creditors through 11 U.S.C. § 1141(a). See id.; [D.E. 9-1] 23–25.

On February 18, 2014, the bankruptcy court entered an order imposing sanctions on Keesee (the "Sanctions Order"). See [D.E. 1-1] 4; [D.E. 9-1] 56. In the Sanctions Order, the bankruptcy court detailed the history of the Domestic Action and the bankruptcy action. See [D.E. 9-1] 56–58.

The bankruptcy court concluded that "[i]t is in the best interests of [Mitchell] and bankruptcy estate that Keesee be permanently enjoined from pursuing damages, claims or related actions arising from or related to any matter in existence as of April 30, 2013, including all matters related to the Lawsuit and [Mitchell's] bankruptcy proceeding." Id. at 58. The bankruptcy court defined the "Lawsuit" as the Domestic Action. Id. at 56. The bankruptcy court then ordered that Keesee pay Mitchell $5,000 in sanctions and that "Keesee shall be permanently enjoined from initiating or pursuing any claim or action against Mitchell that arises from, or relates to, the Lawsuit or [Mitchell's] bankruptcy proceeding." Id. at 58. The bankruptcy court also ordered that it "shall retain jurisdiction over the matters addressed in this [Sanctions] Order." Id.

On July 31, 2014, Mitchell filed a complaint in Brunswick County Superior Court that, in essence, sought to enforce the Agreement's provisions concerning the Brunswick County property. Specifically, Mitchell claimed that Keesee breached the Agreement, committed fraud, was unjustly enriched, and that Mitchell should be allowed to pierce the corporate veil of Keesee's corporation (i.e., Oak Island) to recover proceeds from the sale of the Brunswick County property in the amount due to her under the Agreement. See [D.E. 1-1] 4–5. On June 29, 2015, the Brunswick County Superior Court dismissed Mitchell's claims for lack of standing and subject-matter jurisdiction. Mitchell appealed the Brunswick County Superior Court order, but on November 2, 2015, Mitchell voluntarily dismissed her appeal. See id. at 5.

On July 11, 2016, Keesee filed a complaint against Mitchell in Brunswick County Superior Court alleging abuse of process, malicious prosecution, and slander to title of real estate. See id. Keesee based his complaint on the following: (1) Mitchell's December 16, 2013 motion in the Domestic Action for attachment concerning the Brunswick County property, to hold Keesee in contempt, and attorney's fees; (2) Mitchell's July 31, 2014 state court action; (3) Mitchell's July 31, 2014 filing of a lis pendens; (4) Mitchell's motion on July 14, 2015, to hold Keesee in contempt; and (5) Mitchell's filing of a notice of appeal in Mitchell's state court action. See id.

In November 2016, Keesee sent a letter to Mitchell demanding that Mitchell assist him in the sale of a separate, unrelated property under the Agreement. See id. On December 20, 2016, Keesee moved for contempt in the Domestic Action for Mitchell's failure to comply with the terms of the demand letter. See id. On January 10, 2017, Mitchell moved for Keesee to show cause concerning his alleged violations of the bankruptcy court's orders and to sanction Keesee for violating the automatic stay and confirmation injunction. See id. at 6. On January 24, 2017, Keesee responded. See id. On March 9, 2017, the bankruptcy court held a hearing on Mitchell's motion and referred the parties to mediation. See id. Mediation was unsuccessful. See id. On July 12, 2017, the bankruptcy court held a hearing. See id. On July 13, 2017, the bankruptcy court ordered the parties to address whether Mitchell's claim for $750,000 under the Agreement from the sale of the Brunswick County property was viable. See id. On September 9, 2017, Mitchell moved to reopen the adversary proceeding to address her claim for $750,000 under the Agreement. See id. On November 13, 2017, Keesee responded. See id. On December 17, 2017, the bankruptcy court held a hearing. See id. On March 29, 2018, the court denied Mitchell's motion to reopen the adversary proceeding because Mitchell's state court proceedings precluded the bankruptcy court from addressing the claim for $750,000 within the bankruptcy. See id.

On December 4, 2017, Mitchell filed a supplement to her show cause motion related to texts Keesee sent to Mitchell. See id. at 6–7. On August 20, 2018, Mitchell filed another supplement. See id. at 7. According to this supplement, on August 3, 2018, Keesee filed a lawsuit against Mitchell in Brunswick County Superior Court asserting the same claims and factual bases for those claims that Keesee alleged in his 2016 state court lawsuit. See id. On August 22, 2018, the bankruptcy court ordered Keesee to show cause. See id. On January 16, 2019, Mitchell supplemented the show cause motion with Keesee's texts and letters concerning "bankruptcy fraud." Id.; see [D.E. 9-1] 67–70. On January 17, 2019, the bankruptcy court held an extensive hearing on the motion and took the motion under advisement. See [D.E. 10]. On July 1, 2019, Mitchell filed another supplement to her show cause motion alleging that after the bankruptcy court's January 2019 hearing, Keesee filed "extensive discovery requests" in Keesee's 2016 state court action. [D.E. 1-1] 7.

On July 9, 2019, the bankruptcy court issued its order (the "Bankruptcy Court Order"). See id. at 1. In the Bankruptcy Court Order, the bankruptcy court held that Keesee violated the automatic stay because the State Court Actions are a judicial proceeding to recover a claim that "arose before the commencement" of the bankruptcy...