Shoemaker v. Hillen (In re JLJ Farms, LLC)

Decision Date15 December 2021
Docket Number20-00713-BPH,Adv. 21-06002-BPH
CourtU.S. Bankruptcy Court — District of Idaho
PartiesIn re JLJ FARMS, LLC, Debtors. v. THE HONORABLE NOAH G. HILLEN, an individual, ZIONS BANCORPORATION, N.A., F/K/A ZB, N.A., D/B/A ZIONS FIRST NATIONAL BANK, a National Banking Association; SAG INTERMOUNTAIN, a division of Zions Bancorporation, N.A.; CLINT NEF, an individual; DAVID H. LEIGH, an individual; MICHAEL D. MAYFIELD, an individual, RAY QUINNEY & NEBEKER P.C., a Utah professional corporation; PATRICK GEILE, an individual, FOLEY FREEMAN PLLC, an Idaho professional limited liability company; D. BLAIR CLARK, an individual; and LAW OFFICES OF D. BLAIR CLARK P.C., an Idaho professional corporation, GARY RAINSDON, an individual, and SUZANNE HICKOK, an individual, Defendants. LAURIEANN SHOEMAKER, an individual, and JOSEPH E. BEUMELER, an individual, Plaintiffs,


Chapter 12



I. Introduction

Plaintiffs Laurie Ann Shoemaker ("Shoemaker") and Joe Beumeler ("Beumeler"), managing members of Debtor JLJ Farms an Idaho LLC ("JLJ"), filed this adversary action asserting a series of "complaints" premised on events that occurred in JLJ's chapter 12[2]bankruptcy. Shoemaker and Beumeler allege that JLJ's bankruptcy was tainted by conspiracy and bankruptcy fraud and that each of the defendants, either directly or through complicity conspired to harm JLJ during its bankruptcy. Shoemaker and Beumeler allege the professionals in the case are incompetent, failed to adhere to applicable ethical standards, or both.

Defendants[3] have moved to dismiss the operative complaint for a litany of reasons, including Plaintiffs' lack of standing, the Court's corresponding lack of jurisdiction, and Plaintiffs' failure to state a claim for relief. Sorting through the operative Complaint and analyzing whether this action should be dismissed for any of the myriad reasons put forth by Defendants has been challenging because Shoemaker and Beumelers' Complaint ("Complaint") employs language that is hyperbolic, making it difficult to ascertain the precise harm they allegedly suffered in their individual capacities and the relief they are seeking for purposes of standing.

While tempting to focus on the Complaint's exaggerated language and treat the Complaint curtly, the impulse to do so is tempered by the Court's duty to construe pro se parties' pleadings liberally. In re Cedar Funding, Inc., 419 B.R. 807, 816 (B.A.P. 9th Cir. 2009). Further, the serious nature of the allegations against counsel and the presiding judge merit scrutiny. The Court has taken judicial notice of the proceedings, including specific orders in JLJ's bankruptcy case.[4] Having considered the allegations in the Complaint, JLJ's bankruptcy, and the pending motions to dismiss by Defendants, the Court has concluded the Complaint is subject to dismissal.

II. Procedural Background and Allegations in Complaint
A. Procedural Background

As explained, this adversary proceeding stems from JLJ's dismissed chapter 12 case. JLJ filed its petition for chapter 12 relief on July 31, 2020.[5] JLJ's case was dismissed on February 10, 2021, after it failed to comply with this Court's directive to retain new counsel pursuant to Idaho LBR 9010.1.[6] On January 27, 2021, shortly before JLJ's case was dismissed, Plaintiffs initiated this action by filing a fifty-page document that asserted nine "complaints" against one or multiple Defendants.[7] On February 25, 2021, Plaintiffs filed forty-one pages of "Amendments to Complaints."[8] On March 18, 2021, Plaintiffs filed the present Complaint.[9] Each of the Defendants moved to dismiss the Complaint over the course of the next month.[10] Plaintiffs filed a Response to the motions to dismiss on May 11, 2021.[11] Defendants filed Replies in support of their various motions over the course of the following week.[12]

Despite the pending motions to dismiss and the Court's efforts to sort through the various filings to issue a decision on the same, Plaintiffs used the ensuing months to file a litany of documents requesting various relief and/or leveling accusations against various parties, many of whom are not named in this action. Although most of these filings lacked any basis in law or fact, the Court considered each. It ultimately elected to hold them in abeyance pending a dispositive ruling on Defendants' motions to dismiss.[13] Largely, the Court's decision to that effect did not dissuade Plaintiffs, who not only continued to file various documents in this action, but also pursued an appeal of an interlocutory order to the Bankruptcy Appellate Panel for the Ninth Circuit Court of Appeals ("BAP") that was ultimately dismissed after the BAP determined Plaintiffs failed to establish that leave to appeal was warranted.[14]

B. The Complaint[15]

Since the Court has been called upon to consider dismissal under different legal theories, including a facial attack on the Complaint, familiarity with the pleading is essential to the analysis. Within the Complaint, Defendants are divided into defined groups. The Complaint totals 98 pages and includes 22 subsections, each of which sets forth a different "complaint" against a defined group of Defendants, or in the case of the broader conspiracy claims, all Defendants. The Defendant subgroups are: "Idaho Bankruptcy Court," "Zions," and the "Idaho Bankruptcy Debtors Lawyers". Judge Hillen and Hickok comprise the Idaho Bankruptcy Court Defendant group. The Zions Defendant group is comprised of: (1) Zions Bancorporation, N.A. f/k/a/ ZB, N.A. dba Zions First National Bank; (2) Clint Nef; (3) SAG Intermountain; (4) David H. Leigh; (5) Michael D. Mayfield; and (6) Ray Quinney & Nebeker, P.C. Last, Geile, Foley Freeman, Clark and Clark P.C. make up the Idaho Bankruptcy Debtors Lawyers Defendant group.

The final ten pages of the Complaint set forth the relief Shoemaker and Beumeler seek. Shoemaker and Beumeler summarize the relief they are seeking as follows:

For now, Plaintiffs believe that the right thing to do here is to 'erase' the JLJ Farms past bankruptcy entirely, make JLJ Farms related entities and Plaintiffs 'whole again' as of October 2019, sanction wrongdoers, and award damages where applicable and arguable by law and precedent, including punitive damage and emotional distress damage awards. Again, Plaintiffs will soon find the legal words for all of these.[16]
III. Parties' Position on Dismissal.

Defendants each responded to the Complaint. Defendants Zions and Idaho Bankruptcy Debtors Lawyers challenged Plaintiffs' standing to bring claims in the adversary proceeding, this Court's jurisdiction to hear such claims, and the inability of the claims alleged in the Complaint to survive a motion to dismiss. The Idaho Bankruptcy Court Defendants asserted judicial immunity as an affirmative defense.

A. The Idaho Bankruptcy Court's Response.[17]

Defendants Judge Hillen and Hickok both responded in similar fashion. Their response to the Complaint included two components: (1) Judge Hillen and Hickok urge the Court to exercise its discretion and retain jurisdiction even though the bankruptcy case has been dismissed; and (2) Judge Hillen and Hickok argue that judicial immunity bars the suit against them. Accordingly, the Idaho Bankruptcy Court argues dismissal is appropriate under Civil Rule 12(b)(6).

B. Zions' Response.[18]

Zions' response states three grounds upon which dismissal of Plaintiffs' Complaint is appropriate. First, Zions argues that Plaintiffs lack standing to assert any claims relating to the dismissal of JLJ Farms bankruptcy. Zions notes that Plaintiffs are not licensed attorneys yet continue to represent a corporate entity. As such, Zions asserts Plaintiffs are in violation of local rules and binding precedent. Zions also contends that since the Bankruptcy Code generally protects only the debtor, not persons or entities related to or connected with the Debtor, Plaintiffs lack standing. To have standing, Zions argues, a party must assert its own legal rights and interests and cannot rest its claim to relief on the legal rights or interests of third parties. As a result, Plaintiffs lack standing to seek relief for alleged harms suffered by JLJ. Second, Zions argues that with the exception of an alleged stay violation, this Court lacks subject matter jurisdiction over each of Plaintiffs' complaints. Zions further asserts that even if the Court finds subject matter jurisdiction exists, it should abstain from exercising its jurisdiction in this case. Third, Zions contends that the Complaint fails to state a claim upon which relief may be granted.

C. The Idaho Bankruptcy Debtors' Lawyers' Response.[19]

The Idaho Bankruptcy Debtors Lawyers filed two separate responses. First, Blair and Clark P.C. renewed their Motion to Dismiss[20] filed in response to Plaintiff's initial Complaint. Blair and Clark P.C. urge this Court to dismiss the adversary complaint on jurisdictional grounds, explaining that because the bankruptcy case was dismissed, this Court lacks jurisdiction to proceed with the adversary case.[21]

Geile and Foley Freeman filed a response including four arguments. First, Geile and Foley Freeman argue that Plaintiffs do not have standing to bring the adversary proceeding. Plaintiffs are not the proper parties to bring the claims in their Complaint and, therefore, the Complaint is subject to dismissal. Second, even if Plaintiffs had standing, Geile and Foley Freeman contend that the claims alleged in the Complaint should not be considered in an adversary proceeding under Rule 7001. Rule 7001 is an exhaustive list of designated matters for adversary proceedings, and Plaintiffs' claims do not fall under any of them....

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