Simu v. Carvalho (In re Carvalho), Case No. 15-00646
| Decision Date | 30 September 2019 |
| Docket Number | Adversary Proceeding No. 16-10001,Case No. 15-00646 |
| Parties | In re SHARRA NEVES CARVALHO, Debtor. TEODORA AURELIANA SIMU, Plaintiff, v. SHARRA NEVES CARVALHO, Defendant. |
| Court | United States Bankruptcy Courts. District of Columbia Circuit |
Not for publication in West's Bankruptcy Reporter.
After judgment was entered in her favor dismissing this adversary proceeding, the defendant, Sharra Neves Carvalho, filed a Motion for Sanctions (Dkt. No. 181), requesting that sanctions be levied against Matthew August LeFande, counsel for the plaintiff, Teodora Aureliana Simu, pursuant to 28 U.S.C. § 1927, and against both LeFande and Simu, jointly and severally, under this court's inherent power. However, on September 17, 2019, Carvalho requested to withdraw the request for sanctions against Simu, and the request for sanctions against Simu will be dismissed, leaving only the request for sanctions against LeFande.
Carvalho requested that the sanctions be an award to her of reasonable attorneys' fees and costs related to this adversary proceeding, in the amount of $207,453.25 and $12,165.54 respectively. The court will grant Carvalho's motion in part and deny it in part, awarding sanctions against LeFande (as to some of his conduct), and will direct the parties to address in additional filings the appropriate amount of sanctions in accordance with this memorandum decision.
Carvalho's debt to Simu (which has now been discharged) stems from a Superior Court judgment awarded to Simu against Carvalho in October 2015. On October 27, 2015, following a trial in a case captioned Teodora A. Simu v. Sharra N. Carvalho, Case No. 2014 CA 002691 B, the Superior Court of the District of Columbia entered judgment in favor of Simu against Carvalho in the amount of $90,250 plus interest. This amount consisted of a $75,000 judgment for breach of contract, a $3,250 judgment for breach of fiduciary duty, and a $12,000 judgment of punitive damages. Simu recorded this judgment with the District of Columbia Recorder of Deeds on October 29, 2015. On December 2, 2015, the Superior Court denied Carvalho's motion to stay enforcement of Simu's judgment. On December 3, 2015, Simu applied for a charging order against any amounts owed to Carvalho by Elite Insurance & Consulting Services, LLC ("Elite") and the application was uploaded to the Superior Court's electronic filing system.
Within two weeks of the filing of that application, on December 15, 2015, Carvalho filed a petition in this court, commencing a case as a debtor under Chapter 7 of the Bankruptcy Code (Case No. 15-00646). Bryan Ross became the bankruptcy trustee in the case. Simu filed the complaint commencing the above-captioned adversary proceeding soon afterwards, on January 5, 2016. The intense conflict that had already existed between Carvalho and Simu prior to that filing almost immediately presented in the proceedings attending both Carvalho's bankruptcy case and this adversary proceeding.
In this adversary proceeding, Simu unsuccessfully sought to have the court either deny Carvalho a discharge or, in the alternative, determine that Carvalho's debt to Simu is nondischargeable. The trial for this adversary proceeding began on May 8, 2017, and concluded on May 10, 2017. Judgment in Carvalho's favor was entered the next day. On September 13, 2019, Simu's appeal to the District Court was dismissed on the request of Simu.
In the 16 months that elapsed between the filing of the complaint in this adversary proceeding and the trial disposing of remaining claims in the proceeding, Simu filed four complaints and both parties filed numerous dispositive motions. The following is a basic summary of the significant events in this adversary proceeding.
Simu's initial Complaint (Dkt. No. 1) in this adversary proceeding contained 11 counts, requesting various forms of relief. On February 16, 2016, Simu filed an Amended Complaint (Dkt. No. 5), with 15 counts. On February 19, 2016, Simu filed a motion for summary judgment (Dkt. No. 7). On March 10, 2016, Carvalho filed a motion to dismiss (Dkt. No. 10), seeking dismissal of Counts II-VIII and XI-XV of the amended complaint and requesting a more definite statement regarding Counts I, IX, and X.
On March 10, 2016, the court held a scheduling conference at which it addressed Simu's motion for summary judgment (Dkt. No. 7). As an attorney, LeFande was required by local rules to file documents electronically. In filing the motion for summary judgment, LeFande had failed to attach in electronic form the documents upon which the motion relied.1 The court ruled that the motion for summary judgment would be denied without prejudice.2 On March 15, 2019, Simu filed a new motion for summary judgment appending exhibits in electronic form.
On May 13, 2016, the court issued a memorandum decision and order (Dkt. No. 30) regarding Carvalho's motion to dismiss and for a more definite statement, dismissing all but one portion of Count II, the entirety of Count IV, most of the claims in Count VI, all but one portion of Count VII, and the entirety of Counts VIII, XI, XII, XIII, XIV, and XV. The court also, therein, directed Simu to provide a more definite statement regarding Counts I and IX, and all but one portion of Count X. The court directed Simu to "file a second amended complaint eliminating the dismissed claims and setting forth the required more definite statements." On May 24, 2016, Simu filed a motion to reconsider that memorandum decision and order, and two days later she filed a second amended complaint. Dkt. No. 34 and 35.
LeFande, who filed the second amended complaint on behalf of Simu, failed to comply with the court's directive. The second amended complaint contained counts and specific allegations that had been dismissed by the court. It also failed to provide a more definite statement regarding the counts specified by the court in the memorandum decision and order. Carvalho filed a motion (Dkt. No. 36) to strike portions of the second amended complaint, which the court granted in part, as discussed below.
The court's modified scheduling order (Dkt. No. 52) set a deadline of October 9, 2016, to complete discovery, and a deadline of October 23, 2016, to file pretrial statements and dispositive motions. On October 22, 2016, Carvalho filed her first motion for summary judgment (Dkt. No. 65),3 which the court did not dispose of until shortly before the trial (via an oral decision discussed later).
On November 15, 2016, the court entered a memorandum decision and order (Dkt. No. 80) disposing of Carvalho's motion (Dkt. No. 36) to strike portions of Simu's second amended complaint, and a memorandum decision and order (Dkt. No. 79) granting in part and denying in part Simu's motion for reconsideration (Dkt. No. 34) of the court's memorandum decision and order (Dkt. No. 30) regarding Carvalho's motion to dismiss and for a more definite statement.
The memorandum decision and order dealing with Carvalho's motion to strike noted that courts have considerable discretion in ruling on such motions but that granting such motions is disfavored and done rarely. The court struck 12 paragraphs of Simu's second amended complaint, classifying them as "immaterial, impertinent, and scandalous" to an extent that justified striking them pursuant to Fed. R. Civ. P. 12(f). Dkt. No. 80 at 6. The court further explained (id.):
The allegations are irrelevant to the plaintiff's claims against the defendant and are unsupported by sufficiently detailed allegations. Moreover, the allegations improperly attack the character of the defendant's counsel and accuse the defendant's counsel of engaging in fraud, again without any reasonable substantiation.
In the same memorandum decision and order, the court noted that Carvalho had requested the court to impose a sanction of striking counts IX and X for Simu's failure to comply with the court's prior order to provide a more definite statement as to those counts. The court acknowledged that while Simu had filed a motion for reconsideration of that order, Simu had not requested a stay of the order requiring her to provide a more definite statement pending ruling on the motion for reconsideration. Simu's failure to provide a more definite statement denied Carvalho the information she needed to respond to those counts of Simu's Complaint. The court struck Count IX as redundant of Count I and otherwise as consisting of simply conclusory allegations. As to Count X, the court struck the portion of the § 523(a)(6) claim related to the Superior Court award for breach of contract due to Simu's failure to obey the court order to provide a more definite statement. The court allowed part of Count X to remain, namely, the portion asserting a § 523(a)(6) claim of nondischargeability of the Superior Court awards of $3,250 for breach of fiduciary duty, plus punitive damages, and attorney's fees for pursuit of the breach of fiduciary duty award.
The memorandum decision and order granting in part and denying in part Simu's motion for reconsideration reinstated Count IV of Simu's Amended Complaint, but denied the remainder of the motion for reconsideration.
In light of the two memorandum decisions of November 15, 2016, the court directed Simu to file a third amended complaint eliminating the stricken allegations, Count IX, and the specified portion of Count X, but reinstating Count IV of Simu's amended complaint. Simu filed her Third Amended Complaint (Dkt. No. 84) on November 22, 2016.
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