Kinney v. Anderson Lumber Co. (In re Kinney)

• Decision Date: 13 January 2021
• Docket Number: Adv. Proc. No. 3:20-ap-3028-SHB,Case No. 3:20-bk-30540-SHB
• Parties: In re MARGARET ELIZABETH KINNEY Debtor MARGARET ELIZABETH KINNEY and WILLIAM KINNEY Plaintiffs v. ANDERSON LUMBER COMPANY, INC. BLUE TARP FINANCIAL, INC.; and KIZER & BLACK, ATTORNEYS, PLLC Defendants
• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Eastern District of Tennessee

In re MARGARET ELIZABETH KINNEY Debtor

MARGARET ELIZABETH KINNEY and WILLIAM KINNEY Plaintiffs
v.
ANDERSON LUMBER COMPANY, INC.
BLUE TARP FINANCIAL, INC.;
and KIZER & BLACK, ATTORNEYS, PLLC Defendants

Case No. 3:20-bk-30540-SHB
Adv. Proc. No. 3:20-ap-3028-SHB

UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF TENNESSEE

January 13, 2021

Chapter 7

MEMORANDUM OPINION ON DEFENDANTS' MOTIONS TO DISMISS

APPEARANCES:

MARGARET ELIZABETH KINNEY
WILLIAM KINNEY
2442 Allegheny Loop Road
Maryville, Tennessee 37803
Pro Se Plaintiffs

MARY D. MILLER
The Miller Law Firm, PLLC
P.O. Box 52227
Knoxville, Tennessee 37950
Attorney for Defendants Anderson Lumber Company, Inc. and Kizer & Black, Attorneys, PLLC

CLINTON EDWARD BRUSH
Butler Snow LLP
150 Third Avenue South, Suite 1600
Nashville, Tennessee 37201
Attorneys for Defendant Blue Tarp Financial, Inc.

SUZANNE H. BAUKNIGHT UNITED STATES BANKRUPTCY JUDGE

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I. PROCEDURAL POSTURE

Plaintiffs,¹ acting pro se, initiated this adversary proceeding on June 16, 2020, by the filing of a Complaint (the "Initial Complaint") [Doc. 1] against Defendants Anderson Lumber Company, Inc. ("Anderson") and Blue Tarp Financial, Inc. ("Blue Tarp"). Plaintiffs expressly requested "an order to set aside the default judgment entered on August 5, 2019," (the "Judgment") by the Blount County, Tennessee Circuit Court, case number E-24747 (the "Initial State Court Action") "based upon fraud and Fraud Upon the Court, pursuant to the Federal Rules of Bankruptcy Procedure, Rule 9024." [Doc. 1 at ¶ 1.] Plaintiffs also stated that the Initial Complaint was brought "pursuant to 28 USC §1452² to remove [to federal court] Anderson's state court" case number E-29174, filed also in Blount County Circuit Court (the "Foreclosure Action"), and "for an order to void same for violation of the automatic stay and for other reasons." [Id.] Plaintiffs also asserted in the Initial Complaint a request for declaratory judgment and an injunction and other equitable relief. [Id.]

Twenty days³ after Anderson filed a motion to dismiss⁴ the Initial Complaint for lack of subject matter jurisdiction "for failing to obtain prior certification by the United States District

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Court for the Eastern District of Tennessee,⁵" or in the alternative, "to abstain from hearing [Plaintiffs'] claims" [Doc. 3 at pp. 1-2], Plaintiffs filed an Amended Complaint. [Doc. 9.] The Amended Complaint reflects a change in the caption of the case removing Anderson as a named defendant, leaving Blue Tarp as a defendant, and adding Kizer & Black, Attorneys, PLLC ("K&B")⁶ as a defendant. [Id.] Although Plaintiffs omitted Anderson from the case caption, they assert that the Amended Complaint "is also a formal objection to Anderson's claim⁷ pursuant to Rule 3007(b) and 11 U.S.C. 502(a) on the ground that it did not contain any supporting documentation and is therefore unenforceable against the debtor." [Doc. 9 at ¶ 3.] Plaintiffs state that the Amended Complaint seeks "to determine the validity or extent of a lien, and to avoid the lien on the property [at issue] under § 522(f)." [Id. at ¶ 4.] The Amended Complaint also seeks to determine the dischargeability of a debt and states that it is an action for abuse of process and for sanctions under 11 U.S.C. § 105(a). [Id. at ¶¶ 5-6.] Although the Amended Complaint contains rambling allegations of chronologically disjointed events relating to the Initial State Court Action, it expressly identifies four counts: (1) "Fraud, Fraud Upon the Court"; (2) "False Claim, Abuse of Process"; (3) "Blue Tarp Fraud, Fraudulent Concealment, Fraud Upon the Court"; and (4) "Violation of the Automatic Stay." [Doc. 9.]

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A. Anderson's Motion to Dismiss

In response to the Amended Complaint, Anderson filed a Motion to Dismiss Complaint, for Judgment on the Pleadings, or to Remand Case to Blount County Circuit Court or, in the Alternative, Motion for Abstention on behalf of Anderson Lumber Co., Inc. ("Anderson's Motion to Dismiss"). [Doc. 29.] In it, Anderson notes that the removal of it from the caption of the Amended Complaint creates ambiguity about Anderson's role as a defendant in this action. [Id. at 2.] Anderson, thus, filed the Motion to Dismiss "out of an abundance of caution." [Id.] Anderson incorporates its arguments raised in its initial motion to dismiss filed in response to the Initial Complaint [Doc. 5] and asserts additional arguments targeted at the Amended Complaint.

On September 15, 2020, Anderson supplemented its Motion to Dismiss to argue that neither Debtor nor Mr. Kinney can bring any claim regarding the dischargeability of the debt owed to Anderson. [Doc. 44.] Finally, on September 25, 2020, Anderson again supplemented its Motion to Dismiss to incorporate the claims, defenses, and arguments raised by K&B in its motion to dismiss and related filings. [Doc. 74.] Plaintiffs responded to Anderson's Motion to Dismiss (as supplemented⁸) on September 23, 2020 [Docs. 69, 70.]

B. K&B's Motion to Dismiss

On September 4, 2020, the Court granted K&B's motion to extend the time to respond to the Amended Complaint, allowing until September 21, 2020, for K&B to file an answer or pleading responsive to the Amended Complaint. [Doc. 36.] On September 21, K&B filed its Motion to Dismiss Complaint, or, in the Alternative, Motion for Abstention and Request for the Court to Take Judicial Notice, on Behalf of Kizer & Black, Attorneys, PLLC ("K&B's Motion to

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Dismiss") [Doc. 49], with supporting brief and exhibits [Docs. 50, 68].⁹ Plaintiffs responded in opposition to K&B's Motion to Dismiss on October 15, 2020. [Doc. 95.]

C. Blue Tarp's Motion to Dismiss

Blue Tarp sought and obtained an extension to file responsive pleadings [Docs. 82, 83] and filed Blue Tarp Financial, Inc.'s Motion to Dismiss the Amended Complaint ("Blue Tarp's Motion to Dismiss") [Doc. 101] on October 29, 2020, with supporting brief and exhibit [Doc. 102]. With Plaintiffs' response in opposition to Blue Tarp's Motion to Dismiss, filed on November 23, 2020 [Doc. 115], Defendants' motions, collectively, became ripe for adjudication.

II. LITIGATION HISTORY BETWEEN THE PARTIES

Central to Plaintiffs' claims before this Court are their assertions of numerous improprieties by Defendants and the Blount County Circuit Court in the Initial State Court Action. As alleged by Plaintiffs in the Amended Complaint, the Initial State Court Action was filed by Anderson against Plaintiffs' youngest son, Christopher Kinney ("Christopher"), who died in December 2015; Christopher's business, Kinney Custom Interiors; and Debtor. [Doc. 9 at ¶¶ 10, 11, 19.] Plaintiffs assert that K&B failed to serve Debtor with process in the Initial State Court Action and that she was precluded by K&B's false representation to the state court from raising the issue at a hearing in 2013. [Id. at ¶ 19.] Plaintiffs complain of irregularities and false representations concerning summary judgment and discovery motions in 2013. [Id. at ¶¶ 20-21.] Plaintiff William Kinney became a party to the Initial State Court Action in 2014 (although Plaintiffs dispute that he was a proper party defendant in that action), and Plaintiffs assert that Anderson and K&B failed to provide adequate notice to Mr. Kinney. [Id. at ¶ 23.] Plaintiffs also assert lack of notice for key hearings in 2017 and 2018, which Plaintiffs say resulted in dismissal

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of their counterclaims. [Id. at ¶¶ 25, 26.] With that background, Plaintiffs assert that on July 22, 2019, the state court improperly denied Plaintiffs' motion to disqualify or recuse and, ignoring Tennessee procedural rules, proceeded to hold a "sham trial" the next day, on July 23, 2019, resulting with the Judgment, which also was entered contrary to required court procedures. [Id. at ¶¶ 24, 29.]

The following chronological table summarizes relevant and voluminous court filings¹⁰ in state and federal cases¹¹ between Plaintiffs and Defendants (or any of them).

Court & Case; No.	Date of; Filing	Summary	Record; Location
Blount Co.; Circuit; E-24747	11/21/12	Anderson's Complaint against Debtor and; Chris Kinney d/b/a Kinney Custom Interiors,; seeking to recover a debt of $34,765.98	Docs. 68-5,; pp. 31-32; 68-912
Blount Co.; Circuit; E-24747	1/4/13	Debtor's "Responsive Pleadings" to; Anderson's Complaint	Doc. 68-12
Blount Co.; Circuit; E-24747	5/6/2014	Anderson's Amended Complaint against; Plaintiffs13 and Chris Kinney d/b/a Kinney; Custom Interiors	Doc. 68-5,; pp. 33-34; see Doc. 68-; 9, p. 6
Blount Co.; Circuit; E-24747	12/11/14	Order denying William Kinney's motion to; dismiss	Doc. 68-7
Tenn. Ct. App.; E2015-01139-; COA-WRM-CV	6/16/15	Plaintiffs' petition for writ of mandamus on; appeal of Blount Co. Circuit case E-24747	Doc. 68-5,; pp. 44-45

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Court & Case; No.	Date of; Filing	Summary	Record; Location
Tenn. Ct. App.; E2015-01139-; COA-WRM-CV	6/22/15	Order denying Plaintiffs' petition for writ of; mandamus	Doc. 68-5,; p. 46
E.D. Tenn.; 3:15-cv-324	7/28/15	Plaintiffs attempted to remove the Initial State; Court Action to federal court	ECF No. 1
Tenn. Sup. Ct.; E2015-01139-; SC-R11-CV	7/25/15	Plaintiffs' petition for writ of certiorari on; Tenn. Ct. App. Order	Doc. 68-5,; pp. 47-48
Tenn. Sup. Ct.; E2015-01139-; SC-R11-CV	9/16/15	Tenn. Sup. Ct.'s order denying Plaintiffs'; permission to appeal	Doc. 68-5,; p. 49
E.D. Tenn.; 3:15-cv-324	2/2/16	Federal district court remanded the Initial; State Court Action because the claims were; solely based in state law and diversity; jurisdiction was lacking	ECF Nos. 7-; 8
E.D. Tenn.; 3:16-cv-78	2/16/16	Plaintiffs filed federal complaint against; Anderson; Blue Tarp; K&B; McDonald, Levy; & Taylor ("MLT"); and Jason Rose	ECF No. 1
Blount Co.; Circuit; E-24747	4/8/16	Order granting Anderson's request to dismiss; Chris Kinney	Doc. 68-5,; p. 57
E.D. Tenn.; 3:15-cv-324	4/15/16	Federal district court denied Plaintiffs' motion; for reconsideration	ECF No. 13
Blount Co.; Circuit; E-24747	5/23/16	Plaintiffs moved for

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