Szanto v. Szanto

• Decision Date: 19 August 2022
• Docket Number: 3:19-cv-2043-SI,Bankr. Ct. Case 16-33185-pcm7
• Parties: PETER SZANTO, Appellant, v. EVYE SZANTO, et al., Appellees. Adv. Pro. No. 16-3114-pcm
• Court: U.S. District Court — District of Oregon

PETER SZANTO, Appellant,
v.
EVYE SZANTO, et al., Appellees.

Adv. Pro. No. 16-3114-pcm

No. 3:19-cv-2043-SI

Bankr. Ct. Case No. 16-33185-pcm7

United States District Court, D. Oregon

August 19, 2022

Peter Szanto, Appellant Pro Se.

Nicholas J. Henderson, MOTSCHENBACHER & BLATTNER LLP, Of Attorneys for Appellees Evye Szanto, Victor Szanto, Nicole Szanto, Kimberley Szanto, Mariette Szanto, Anthony Szanto, Austin Bell, and Barbara Szanto Alexander.

OPINION AND ORDER

Michael H. Simon, United States District Judge.

This case comes to the District Court as an appeal from the Memorandum Opinion/Report and Recommendation issued by the U.S. Bankruptcy Court for the District Oregon after a bench trial on Appellees' counterclaims^[1] in an adversary proceeding involving

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Appellant Peter Szanto (Appellant)^[2] and Appellees Evye Szanto, Victor Szanto, Nicole Szanto, Kimberley Szanto, Mariette Szanto, Anthony Szanto, Austin Bell, and Barbara Szanto Alexander (Appellees).^[3] Instead of filing a reply memorandum in support of his appeal, Appellant filed a “Motion for Writ Relief” requesting a writ vacating the opinion and judgment of the Bankruptcy Court. Appellant asserts that the Bankruptcy Court did not have jurisdiction, which also is one of Appellant's grounds of appeal. For the reasons below, the Court affirms in part the Bankruptcy Court's Memorandum Opinion, adopts in part the Bankruptcy Court's Report and Recommendation, and denies Appellant's motion for writ.

PROCEDURAL BACKGROUND

On August 16, 2016, Appellant filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. This started Bankruptcy Case No. 16-bk-33185-pcm11 (Main Bankruptcy Case). The Bankruptcy Court later converted that case, over Appellant's objection, to a proceeding under Chapter 7 (changing the case number to 16-bk-33185-pcm7). On September 21, 2016, Appellant filed a complaint against Appellees, beginning Case No. 16-ap-3114 (the Adversary Proceeding), the case that is the subject of this appeal.

Appellees filed an ex parte motion for extension of time to respond to the complaint filed in the adversary proceeding. The Bankruptcy Court granted that motion. Appellees filed a motion to dismiss with supporting documentation in response to the complaint, which the

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Bankruptcy Court treated as a motion for summary judgment. In response, Appellant filed an Amended Complaint. Appellees responded first with another motion to dismiss, and later with an answer and counterclaims.

The parties engaged in discovery and litigated several motions in the Adversary Proceeding, including motions to strike, motions to dismiss, and discovery motions. On August 15, 2017, Appellant filed a motion for partial summary judgment against Appellees' counterclaim for wrongful initiation of civil proceedings. On August 25, 2017, Appellees filed a motion for partial summary judgment, moving defensively against all of Appellant's claims and offensively in favor of their counterclaim for wrongful initiation of civil proceedings.

On September 6, 2017, Appellant filed a “Notice of Withdrawal of Consent to Entry of Final Judgment in the Bankruptcy Court.” Appellant stated that to the extent he had given consent to the Bankruptcy Court to issue a final judgment in the Adversary Proceeding, he withdrew that consent. On September 16, 2017, U.S. Bankruptcy Court Judge McKittrick sent and docketed a letter to the parties explaining that because Appellant's notice of withdrawal of consent did not include a motion, the Bankruptcy Court was taking no action on the notice. Judge McKittrick further explained that if Appellant wanted the Court to take action, Appellant would need to file a motion. Appellant subsequently filed a notice on April 16, 2018 electing the U.S. District Court to enter final judgment. On April 25, 2018, the Bankruptcy Court issued an order reiterating that because this notice, like Appellant's earlier notice, contained no motion, the Bankruptcy Court would take no action on Appellant's notice. The Bankruptcy Court also explained that to the extent Appellant was requesting to withdraw his consent to the Bankruptcy court's jurisdiction, the Bankruptcy Court would deny that request. The Bankruptcy Court described that Appellant had expressly consented to the Bankruptcy Court's jurisdiction at a

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pretrial conference on January 31, 2017. The Bankruptcy Court also noted that Appellant waived objection to consent by failing to object to the Bankruptcy Court's jurisdiction in his complaint and through his actions in litigating the adversary proceeding for a year before objecting.

Appellant later moved to withdraw the reference and appealed to this Court the Bankruptcy Court's denial of that motion. This Court affirmed. Szanto v. Santo, 2019 WL 1932366 (D. Or. May 1, 2019). In so doing, this Court held that Appellant failed to provide good cause to withdraw his express consent to the final jurisdiction of the Bankruptcy Court at the stage of the litigation at which he attempted to do so. Id. at *4-6.

On May 17, 2018, the Bankruptcy Court denied Appellant's motion for summary judgment on Appellees' counterclaim, granted Appellees' motion for summary judgment on Appellant's claims, and denied Appellees' motion for summary judgment on their counterclaim. In ruling on these motions, the Bankruptcy Court also denied Appellant's request to amend his complaint to add a new claim. This left only Appellees' counterclaims for trial. The Bankruptcy Court entered partial judgment on the dismissed claims under Rule 54(b) of the Federal Rules of Civil Procedure. On December 18, 2020, this Court affirmed the Bankruptcy Court's decision.

While Appellant's appeal of the Bankruptcy Court's summary judgment ruling was pending, the Bankruptcy Court moved forward with its trial on Appellees' counterclaims for wrongful use of civil proceedings and request for a nationwide injunction or designation of Appellant as a vexatious litigant. The Bankruptcy Court held a three-day bench trial beginning on August 26, 2019. The Bankruptcy Court issued its opinion on November 25, 2019. See App'x (ECF 26-1) 1-49. The Bankruptcy Court dismissed the claims against Appellant by Appellee Mariette Szanto. The Bankruptcy Court denied as untimely Appellees request for punitive damages, raised for the first time during closing arguments. The court rejected on the merits

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Appellant's defense that he had a constitutional right to bring all the various lawsuits and proceedings against Appellees, even if duplicitous or without merit. The Bankruptcy Court found Appellant's defense that Appellees' claims are barred by the statute of limitations, a defense first raised by Appellant during his case in chief at trial, to be untimely and waived. Judge McKittrick also noted that the facts presented by the parties contradicted one another and that generally he found Appellees more credible than Appellant.

For Appellees' claim of wrongful use of civil proceedings, the Bankruptcy Court summarized ten proceedings filed in various courts by Appellant, and one case filed by Susan Szanto that the court found was actually filed by Appellant. The Bankruptcy Court noted that none of these proceedings had been filed against Austin Bell, Nicole Szanto, or Kimberley Szanto, and thus dismissed this claim by those Appellees. The Bankruptcy Court found that six actions were terminated in favor of Appellees, allowing them to serve as the basis of a wrongful use of civil proceeding claim. Finally, the Bankruptcy Court found that the remaining four Appellees (Victor Szanto, Evye Szanto, Anthony Szanto, and Barbara Szanto Alexander) proved that Appellant lacked probable cause to initiate all six actions and filed the actions with malice. The court denied Appellees' request for damages in the amount of attorney's fees and expenses defending the underlying lawsuits as insufficiently proven, and awarded the four Appellees emotional distress damages, based on an amount for each action filed against each Appellee.

For Appellees' second claim, they requested that Appellant be required to obtain a prefiling order before filing any claim against them in federal bankruptcy or district court and that the bankruptcy court issue an injunction limiting Appellant from filing any action against Appellees in any bankruptcy court or district court nationwide. The Bankruptcy Court concluded that the first request was subsumed by the second and only addressed the second.

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The Bankruptcy Court stated that before restraining a party's fundamental right to access to the courts, the Bankruptcy Court must

(1) give litigants notice and an opportunity to oppose the order before it is entered; (2) compile an adequate record for appellate review, including a listing of all the cases and motions that led the district court to conclude that a vexatious litigant order was needed; (3) make substantive findings of frivolousness or harassment; and (4) tailor the order narrowly so as to closely fit the specific vice encountered.

App'x 34 (quoting In re Bertran, 2018 WL 1704306, *6 (9th Cir. BAP Apr. 6, 2018) (unpublished) (quoting Ringgold-Lockhart v. Cnty. of L.A., 761 F.3d 1057, 1062 (9th Cir. 2014)). The Bankruptcy Court identified five factors the Ninth Circuit has established for evaluating whether conduct was sufficiently frivolous and the order sufficiently narrow:

(1) the litigant's history of litigation and in particular whether it entailed vexatious, harassing or duplicative lawsuits; (2) the litigant's motive in pursuing the litigation, e.g., does the litigant have an objective good faith expectation of prevailing?; (3) whether the litigant is represented by counsel; (4) whether the litigant has caused needless expense to other parties or has posed an unnecessary burden on the courts and their personnel; and (5) whether other sanctions would be adequate to

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