Smith-Scott v. U.S. Tr., Civil Action No. ELH-17-267
| Decision Date | 25 January 2018 |
| Docket Number | Civil Action No. ELH-17-267 |
| Parties | ARLENE A. SMITH-SCOTT Appellant, v. U.S. TRUSTEE Appellee. |
| Court | U.S. District Court — District of Maryland |
This bankruptcy matter is before the Court on an appeal filed by Arlene A. Smith-Scott, the self-represented debtor, pursuant to 28 U.S.C. § 158. ECF 1 (Notice of Appeal); ECF 2 (Amended Notice of Appeal). Smith-Scott challenges three orders of the United States Bankruptcy Court for the District of Maryland (the "Bankruptcy Court") issued in January and February 2017. These orders entered summary judgment and final judgment against Smith-Scott in an adversary proceeding filed by Judy A. Robbins, the United States Trustee ("U.S. Trustee") (ECF 1-1; ECF 2-3), resulting in an order denying Smith-Scott's discharge under 11 U.S.C. § 727(a)(6). ECF 2-2.
Both Smith-Scott, as appellant, and the U.S. Trustee, as appellee, designated voluminous portions of the record of the Bankruptcy Court proceedings as the record on appeal. See ECF 3 ("Appellee's Designation of Record on Appeal"); ECF 4 ("Appellant's Designation of Record on Appeal"). Several weeks later than ordered (see ECF 9), Smith-Scott filed "Appellant's Brief." ECF 10. It was not supported by an appendix, in contravention of Fed. R. Bankr. P. 8018(b)(1).1The U.S. Trustee filed "Appellee's Brief" (ECF 13), supported by a four-volume appendix ("UST App'x").2 Appellant did not reply.
The Court is mindful of its obligation to construe liberally the pleadings of a pro se litigant, which are "held to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007); see also White v. White, 886 F.2d 721, 722-23 (4th Cir. 1989). I note, however, that although Smith-Scott is self-represented, she is an attorney and a member of the Maryland Bar. See UST App'x at 26.
No hearing is necessary to resolve the appeal. See Local Rule 105.6. For the reasons that follow, I shall affirm all three orders of the Bankruptcy Court.
Smith-Scott commenced Chapter 11 bankruptcy proceedings in September 2014. See Case JFS-14-25022;3 UST App'x at 1, 8. At the time, she owned three investment properties in Maryland. Id. at 8. In early 2015, one of Smith-Scott's creditors, Patapsco Bank, filed a motion under 11 U.S.C. § 1112(b) to convert Smith-Scott's Chapter 11 bankruptcy to a Chapter 7 bankruptcy. UST App'x at 55-56. The Bankruptcy Court granted this motion (id.), and Smith-Scott appealed the conversion order. This Court affirmed the conversion. Id. at 642-56, 57; see Smith-Scott v. Patapsco Bank, RDB-15-1013, at ECF 10. Smith-Scott filed a motion to reconsider, which the Bankruptcy Court denied. See id. at 658-68. Thereafter, Smith-Scott appealed the denial of the motion to reconsider to this Court, which affirmed. See id. at 852-59,860-61; see Smith-Scott v. Howard Bank, RDB-15-3423, at ECF 15. Then, Smith-Scott appealed to the Fourth Circuit, which also affirmed. See id. at 1333-38; see Smith-Scott v. Howard Bank et al., Case 16-1325, at ECF 40-2.
As part of the Chapter 7 bankruptcy, Smith-Scott was required to turn over the investment properties to the bankruptcy estate, pursuant to 11 U.S.C. § 541. The Chapter 7 trustee filed two motions to compel Smith-Scott to turn over the properties. See UST App'x at 59-66, 824-51. Both motions were granted. See id. at 67-69 ("First Turnover Order"); id. at 867-68 ("Second Turnover Order"). Smith-Scott moved for reconsideration of the Second Turnover Order, which required her to give possession of two of the investment properties to the Chapter 7 trustee. See id. at 867-68, 869-79. The Bankruptcy Court denied her motion. Id. at 1359-62.
It appears that Smith-Scott did not comply with the Second Turnover Order. As a result, the Chapter 7 trustee filed a motion for civil contempt. UST App'x at 881-88. The Bankruptcy Court found Smith-Scott in contempt, and ordered her to turn over the property and pay related fines and costs until she did. Id. at 1180-81. Smith-Scott appealed the contempt order (id. at 1185-86), and Judge Bennett of this Court affirmed. Id. at 1352-58; see Smith-Scott v. Howard Bank et al., RDB-16-1572, at ECF 9.
Nevertheless, Smith-Scott did not comply with the Second Turnover Order, and the Bankruptcy Court ordered the U.S. Marshal to assist the Chapter 7 trustee in taking possession of the properties. Id. at 1329-30 ("U.S. Marshal Order"). In the U.S. Marshal Order, the Bankruptcy Court made a finding that Smith-Scott was "willfully disregarding court orders and refusing to allow the Trustee to undertake his statutory function to administer the assets of the estate." Id. Smith-Scott appealed the U.S. Marshal Order (id. at 1331), but the appeal wasdismissed for failure to prosecute. Id. at 1363-64; see Smith-Scott v. Liebmann, GLR-16-2658, at ECF 9.
Thereafter, Smith-Scott filed a motion under 11 U.S.C. § 324(a) to remove the Chapter 7 trustee, as well as a motion asking Judge Schneider of the Bankruptcy Court to recuse himself. See UST App'x at 673-98, 891-905. Both motions were denied. Id. at 1339-42, 1345-48, 1349-50. Smith-Scott appealed the denials, and Judge Russell of this Court affirmed in August 2017. See Smith-Scott v. Liebmann, GLR-16-3074, at ECF 8.
On June 20, 2016, the U.S. Trustee filed a Complaint to Deny or Revoke Discharge (the "Discharge Action"), under 11 U.S.C. § 727 and Rules 4004 and 7001(4) of the Federal Rules of Bankruptcy Procedure. See U.S. Trustee v. Smith-Scott, JFS-16-297; UST App'x at 1365-72. The Complaint alleged five independent bases to support the denial of a bankruptcy discharge. UST App'x at 1365-72. Count I, Count Three, and Count Four4 alleged that Smith-Scott had refused to comply with a court order, under 11 U.S.C. § 727(a)(6). UST App'x at 1368-71. Of those, Counts Three and Four referred to Smith-Scott's failure to comply with the Turnover Orders. Id. at 1369-71. Counts 2 and Five alleged that Smith-Scott transferred or concealed property of the bankruptcy estate with the intent to hinder, delay, or defraud a creditor or the trustee, under 11 U.S.C. § 727(a)(2). UST App'x at 1368-69, 1371. On October 26, 2016, the U.S. Trustee filed a motion for summary judgment, reciting as support the facts underlying Counts Three and Four of the Complaint, i.e. Smith-Scott's failure to comply with the Turnover Orders. Id. at 1374-77.
On January 19, 2017, the Bankruptcy Court held a hearing on the motion for summary judgment. See UST App'x at 1659-82. Smith-Scott had filed a response in opposition to themotion, but only on the morning of the hearing. See id. at 1388-1400. At the hearing, Smith-Scott argued with Judge Schneider and left the courtroom before the close of the Bankruptcy Court's oral ruling. See id. at 1678. Neither Smith-Scott nor the U.S. Trustee presented any evidence or examined any witnesses. However, during the hearing, Smith-Scott stated: Id. at 1670.
The Bankruptcy Court found that Smith-Scott had not obeyed court orders (UST App'x at 1678), and had disobeyed willfully (id. at 1681), and granted summary judgment to the U.S. Trustee. Id. On January 23, 2017, the Bankruptcy Court entered a formal order granting the motion for summary judgment. Id. at 1648-49. On February 10, 2017, it entered a judgment denying Smith-Scott a discharge (id. at 1652-53) and an order certifying the judgment as final. Id. at 1654-55. Smith-Scott timely filed a notice of appeal as to the summary judgment order (id. at 1650), and amended it to add an appeal of the judgment denying a discharge and the order certifying the judgment as final. Id. at 1656-57. The appeal is now pending before this Court.
In general, the standard of review of a bankruptcy appeal in district court is the same standard used when an appellate court reviews a district court proceeding. See 28 U.S.C. § 158(c)(2) (); see also Conrad v. Schlossberg, 555 B.R. 514, 515-16 (D. Md. 2016) (citing 28 U.S.C. § 158(c)(2)); Craddock Washabaugh v. Miller, No. 1:16-CV-694, 2016 WL 4574690, at *1 (M.D.N.C. Sept. 1, 2016) (same); Engell v. Sheetz, No. 2:16-CV-5-BR, 2016 WL 3579011, at *1 (E.D.N.C. June 24, 2016) (same). "On an appeal the district court or bankruptcy appellate panel may affirm,modify, or reverse a bankruptcy court's judgment, order, or decree or remand with instructions for further proceedings." Harman v. Levin, 772 F.2d 1150, 1153 n.3 (4th Cir. 1985) (internal quotations omitted); see also In re LightSquared, Inc., 534 B.R. 522, 525 (S.D.N.Y. 2015) ().
The district court reviews the bankruptcy judge's findings of fact under the "clear error" standard. In re Taneja, 743 F.3d 423, 429 (4th Cir. 2014); Mort Ranta v. Gorman, 721 F.3d 241, 250 (4th Cir. 2013). A finding of fact is clearly erroneous when the record demonstrates convincingly to the reviewing court that "a mistake has been committed." United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948); see, e.g., Andrews v. America's Living Centers, LLC, 827 F.3d 306, 312 (4th Cir. 2016); United States v. Hall, 664 F.3d 456, 462 (4th Cir. 2012). And, the bankruptcy court's conclusions of law are subject to de novo review. In re Taneja, 743 F.3d at 429; In re Kirkland, 600 F.3d 310, 314 (4th Cir. 2010); In re Biondo, 180 F.3d 126, 130 (4th Cir. 1999).
Pursuant to Fed. R. Bankr. P. 7056, Rule 56 of the Federal Rules of Civil Procedure applies to adversary proceedings. Under Fed. R. Civ. P. 56(a), summary judgment is appropriate only "if the movant shows that there is no genuine...
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