Liebmann v. Goden
| Decision Date | 21 September 2022 |
| Docket Number | Civil Action CCB-21-2887,CCB-21-3170,CCB-21-3171,Bankruptcy NVA-14-22934 |
| Parties | George W. Liebmann and Luis Janer Rullan Appellants v. Jill K. Goden Appellee |
| Court | U.S. District Court — District of Maryland |
This dispute involves a decades-long conflict between Luis Rullan and various members of the Goden family. Years of scorched-earth litigation between the parties have engulfed the judiciary. From state to federal courts, trial to appellate courts, judicial forums of all shapes and sizes have touched this dispute in some fashion. Little progress has been made.
Pending before the court is Luis Rullan's appeal of several orders entered by the United States Bankruptcy Court for the District of Maryland, one of the many courts involved in the widespread litigation. Over Rullan's objection, the bankruptcy court (1) dismissed debtor Jill Goden's bankruptcy case, (2) denied Rullan's motion for sanctions against Goden, and (3) “constructively denied” Trustee George Liebmann's motion to employ counsel. Rullan asks this court to reverse.the bankruptcy court's decision and reassign the case to a different bankruptcy judge on remand. The parties have fully briefed the issues and the court heard oral argument on April 8, 2022.
For the reasons below, the court affirms: (1) the bankruptcy court's order dismissing Goden's bankruptcy; (2) the bankruptcy court's order denying Rullan's motion for sanctions (3) the bankruptcy court's “constructive denial” of the Trustee's then-outstanding motions. The court also denies Rullan's request for reassignment as moot.[1]
BACKGROUND[2]
In 1990, Luis Rullan-only six years old at the time-traversed the winding country roads of the Shenandoah Mountains to attend a camp owned and operated by Jill Goden and her family. (ECF 4-1, Compl., at ¶ 19.) Over the next twenty years, Rullan and his siblings continued to attend the camp as campers or counselors. (Id.) Rullan grew close with the Godens during this time, even considering them “like family” at one point. (Id. at ¶ 20.)
In 2010, Jill Goden and her father, Fred Greenberg, allegedly offered Rullan the opportunity to join Goden as a partner in managing the camp. (Id. at ¶ 21.) Rullan agreed, and the parties allegedly entered into a partnership agreement and a securities purchase agreement. (Id. at ¶ 2.) The partnership agreement addressed the ownership and management of the entities historically constituting the camp: Timber Ridge, Inc. (“TRI”), Youth World Ltd. (“YWL”) and Youth World International Company, Ltd. (“YWI”). (Id.)
The problem, according to Rullan, was that Goden concealed and misstated information about the financial health of the camp. (Id. at ¶¶ 25-27.) Allegedly, Rullan alone contributed $55,000 to YWI, which was supposed to be funded by both Rullah and Goden. (Id. at ¶ 35.) And despite Goden contributing nothing to YWI, she allegedly received a 50% interest in the entity. (Id.) Further, Goden allegedly enticed Rullan to lend money to the camp several times without disclosing the extent of the financial issues plaguing the camp. (Id. at ¶¶ 39-41.)
The once family-like relationship soon became adversarial. On August 14, 2012, Rullan filed a complaint in this court, the United States District Court for the District of Maryland (“District Court”), naming Jill Goden, Fred Greenberg, and the various summer camp entities as defendants. (ECF 1, Compl., Rullan v. Goden, 1:12-cv-02412-CCB (“2012 Litigation”).) In the 2012 Litigation, Rullan asserted the following claims against Goden: (1) breach of contract; (2) negligence; (3) breach of fiduciary duty; (4) quantum meruit/unjust enrichment; (5) financial accounting; (6) conversion of property and invasion of property; (7) fraud and fraudulent inducement; and (8) shareholder oppression. (ECF 146, Am. Compl., Rullan v. Goden et al., 1:12-cv-02412-CCB.)
As the 2012 Litigation progressed into the discovery stage, Rullan was about to depose Goden. On August 14, 2014, just two days before her scheduled deposition, Goden filed a voluntary petition for bankruptcy under chapter 13 of 11 U.S.C. § 101. On August 18, 2014, Ms. Goden filed two dissolution actions in the Baltimore County Circuit Court.[3]
Soon after Goden filed for bankruptcy, Rullan filed an adversary proceeding in the bankruptcy court. Rullan's complaint in the adversary proceeding alleged that Goden should be denied a discharge, that his claims are non-dischargeable, and that Goden fraudulently conveyed assets in violation of state law. The bankruptcy petition had the effect of automatically freezing other proceedings between Goden and Rullan. For example, the 2012 Litigation was automatically stayed subject to 11 U.S.C. § 362(a). Rullan recognized that he would not be entitled to recovery in the bankruptcy court unless he received a favorable judgment in the District Court. So Rullan . sought permission from the bankruptcy court to pursue the 2012 Litigation.[4] On November 17, 2014, the bankruptcy court entered a stipulation and consent order that modified the automatic stay to allow Rullan to litigate the 2012 Litigation to judgment in the District Court. (ECF 4-14, Stipulation, at 2.)
Given the ongoing litigation in the District Court, on March 20, 2015, the bankruptcy court granted Goden's motion to suspend “all proceedings” in the bankruptcy case and Rullan's adversary proceeding until after the final resolution of Rullan's 2012 District Court Case. (ECF 16-1, at ¶ 0001). Rullan continued to move the gravitational center of the litigation beyond the bankruptcy court. On October 11, 2017, Rullan decided that the fraudulent conveyance claim (“Fraudulent Conveyance Action”) should be heard in the District Court, and the bankruptcy court granted Rullan's motion to that effect. After severing the Fraudulent Conveyance Action, the only issue remaining in the Adversary Proceeding was Rullan's request for a denial of discharge. The . Fraudulent Conveyance Action is pending before the District Court. (See Rullan v. Goden et al., 1:17-cv-03741-CCB.)
Rullan, however, became more interested in the bankruptcy court as a forum for litigation after discovering that Goden had allegedly committed a series of bad acts. On December 31,2019, Mr. Rullan filed a motion for sanctions seeking attorneys' fees, a permanent injunction prohibiting Goden from filing for bankruptcy, and a denial of discharge. Broadly speaking, the motion alleged that Goden had filed for bankruptcy in bad faith, concealed assets, perjured herself, and fraudulently conveyed assets. (ECF 16-11, at ¶ 1197.)
As for her bankruptcy schedules, Rullan alleged Goden failed to disclose her inherited jewelry, which was appraised at $143,400, while also failing to disclose that she had transferred $188,000 from the camp's operating company to her husband's company. (ECF 16-7, at ¶ 0870, AA0924-25.) Moreover, Rullan alleges Goden failed to disclose her interest in other corporate entities, such as the Timber Ridge Camp, Inc., while also failing to disclose transfers to companies that her husband owned, such as Cacapon River Camps Inc. and Cacapon Camps Inc. (ECF 16-1, atAA0095.)
Rullan also alleges Goden committed other bad acts, such as seeking to dissolve certain . corporate entities without the Trustee's permission, misrepresenting her tax liabilities, embezzling estate funds through the camp, and using estate funds to pay for her personal expenses. Finally, Rullan alleges Goden misrepresented to the bankruptcy court the fact that she had lined up a “short sale” of one of her properties while also impermissibly retaining rents for her property in violation of a bankruptcy court order. (ECF 15, Appellant's Br., at 11-14.) The Trustee also became concerned with Goderi's actions during this time. On March 3,2021, the Trustee moved to employ Rullan's counsel as special counsel to help identify fraudulently conveyed or concealed assets. (ECF 16-9, at ¶ 0980.)
On July 7,2020, the bankruptcy court modified the suspension to allow Rullan to.prosecute his motion for sanctions. (ECF 16-4, at ¶ 0382). Even assuming the factual basis for Rullan's allegations, the bankruptcy court ultimately denied the motion on September 15, 2021 (ECF 1611, at ¶ 1167.) After several years of litigation, the bankruptcy court grew concerned that Goden's bankruptcy lacked a proper bankruptcy-related purpose. (Id. at ¶ 1201.) The bankruptcy court found that “the case ha[d] become little more than a battleground” for Goden and Rullan “to play out their hostilities[.]” (Id. at ¶ 1186.) On July 27, 2021, the bankruptcy court issued an Order to Show Cause Why Case Should Not Be Dismissed. (Id. at ¶ 1135.) Rullan opposed dismissal, (id. atAA1144), as did the Trustee, (id. at ¶ 1138). Goden supported dismissal. (Id. atAA1154.), On November 12, 2021, the bankruptcy court dismissed the bankruptcy case after reviewing the parties' responses to the order to show cause. (Id. atAA1186.) Rullan and the Trustee filed the present appeal.
This court reviews the bankruptcy court's findings of fact for clear error and its conclusions' of law de novo. In re: Dornier Aviation (N. Am.), Inc., 453 F.3d 225, 231 (4th Cir. 2006). Generally, a bankruptcy court has the discretion to dismiss a case for cause under Section 707(a). In re Murray, 900 F.3d 53, 58-59 (2d Cir. 2018) (citing In re Smith, 507 F.3d 64, 73 (2d Cir. 2007)). On appeal, courts “review the bankruptcy court's sanctions order for abuse of discretion.” In re Jemsek Clinic, P.A., 850 F.3d 150,156 (4th Cir. 2017). “[T]he decision of a bankruptcy court ‘must be affirmed if the result is correct' even if the lower court relied upon ‘a wrong ground or gave a wrong...
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