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Burgess v. Powers

United States District Court, N.D. Texas, Dallas Division

December 20, 2019

JUSTIN DALE BURGESS, Appellant/Debtor,
v.
THOMAS POWERS and ALTA RESIDENTIAL, Appellees.

          MEMORANDUM OPINION AND ORDER

          JANE J. BOYLE UNITED STATES DISTRICT JUDGE

         Before the Court is Appellant Justin Dale Burgess's Emergency Request for Injunction (Doc. 3). The Court DENIES his request.

         I. BACKGROUND

         In this case, Mr. Justin Dale Burgess appeals a bankruptcy court order dismissing his Chapter 13 case with prejudice to refiling another case for five years. Doc. 1-1, Notice of Appeal, 4-5 (bankruptcy court order). Burgess filed his Chapter 13 petition on July 5, 2019. Doc. 5, Appellee's Resp., 1. The Chapter 13 Trustee Thomas Powers filed a motion to dismiss Burgess's case on August 22, 2019. Id. The bankruptcy court held a hearing on this motion on October 29, 2019. Id. Burgess did not appear at the hearing. Id. Instead, on the day that the bankruptcy court called docket on the motion to dismiss, Burgess filed a motion to convert his Chapter 13 case to a Chapter 11 case. See Doc. 6, Creditor's Resp., ¶ 6. The bankruptcy court proceeded with the hearing.

         The court dismissed the case with prejudice to refiling a case under any chapter of Title 11 of the United States Code for five years from the entry of the order. Doc. 1-1, Notice of Appeal, 5.

         In so doing, the bankruptcy court made the following findings of fact:

(1) the Debtor's real property was foreclosed on in 2016; (2) the Debtor filed nine (9) bankruptcy cases since 2003; (3) the Debtor has not made a mortgage payment to a secured lender since 2008; (4) the Debtor did not appear at the pre-hearing conference and final hearing of the Trustee's motion to dismiss; (5) the Debtor has made only 1 payment under his Chapter 13 Plan to the Trustee; (6) the Debtor has not filed a Chapter 13 Plan that complies with the procedures of the Northern District of Texas; and (7) the Debtor filed a Notice of Conversion to Chapter 11 after the Court called its docket today.

Id. at 4-5. The court concluded, based on these findings, that Burgess's bankruptcy case was filed in bad faith. Id. at 5. The court also ordered that all debts due and owing creditors as of the date of the order were not discharged or affected in any manner by the order. Id.

         On November 14, 2019, the bankruptcy clerk transmitted to this Court Burgess's notice of appeal of the bankruptcy court's dismissal order. Doc. 1, Notice of Appeal, 1. Subsequently, on December 9, 2019, Burgess filed an emergency “Request for Injunction” (Doc. 3). In this motion, Burgess argues that his case was improperly dismissed because the motion to convert his case to a Chapter 11 took effect immediately upon its filing. Doc. 3, Request for Inj., 4-8. Thus, Burgess asserts, the bankruptcy court should not have dismissed his Chapter 11 case on the motion to dismiss his Chapter 13 case, which he argues “no longer existed.”Id. at 7-8. Burgess claims that he will be irreparably injured by this error because: (1) his vehicle that he has pledged as collateral on an unspecified loan will be sold on December 10, 2019; (2) a county court set a hearing for December 9, 2019, on an appeal bond related to a property at issue in his bankruptcy case; and (3) creditors are “harassing” him with letters and calls. Id. at 5. For relief, Burgess asks the Court to temporarily reinstate his Chapter 11 case, as well as the associated automatic stay, until either hearing on his Chapter 11 petition or resolution of this appeal.

         Two responses to Burgess's motion have been filed. Appellee/Trustee Thomas Powers filed the first. Doc. 5, Appellee's Resp. In opposition to the request, Powers first argues that Burgess has not followed the appropriate procedures to request injunctive relief-specifically, Powers asserts that Burgess should have filed a complaint pursuant to Federal Rule of Bankruptcy Procedure 7001. Id. at 1. Powers argues that Burgess's request is better construed as a motion to stay the underlying bankruptcy court order pending appeal. Id. at 2. Powers proceeds to note that such motions are governed by Federal Rule of Bankruptcy 8007, but that Burgess's filing fails to meet the Rule's requirements. Id. Specifically, Powers points out that because Burgess did not first request a stay from the bankruptcy court, Burgess must show this Court why such a request would have been impracticable. Id. at 2 (citing Fed.R.Bankr.P. 8007(b)(2)(A)). Further, Powers argues that Burgess has not supported his motion with affidavits, sworn statements, or relevant portions of the record. Id. (citing Fed.R.Bankr.P. 8007(3)(B)-(C)). Finally, Powers asserts that Burgess did not provide all parties with reasonable notice of the request. Id. (citing Fed.R.Bankr.P. 8007(4)).

         The second response comes from a creditor in the underlying bankruptcy proceeding. Doc. 6, Creditor's Resp. The creditor, Alta Residential Solutions, [1] purchased a property formerly owned by Burgess at a foreclosure sale in September 2016. Id. at 2. After the sale, Alta alleges that Burgess started a “protracted” litigation process to avoid eviction, which ultimately lead to the underlying bankruptcy proceeding here. Id. During that proceeding, Alta moved for relief from the automatic stay to proceed with Burgess's eviction, and the court granted its motion on August 19, 2019. Id.[2]

         Later, Burgess started an adversary case against Alta in the bankruptcy proceeding. Id. Alta alleges that in this proceeding Burgess was merely rehashing claims that had previously been litigated in different forums. Id. at 2-3. Ultimately, Burgess's adversary complaint was dismissed for lack of jurisdiction at the hearing on Power's motion to dismiss. Id. at 3. Before the hearing, Alta filed an unopposed response to the motion to dismiss, arguing that Burgess was not acting in good faith. Id. Alta argued that Burgess was using “the State and Federal Court system to delay the turnover of Alta's property.” Id. Alta further asserted that Burgess had been enjoying the benefit of the property as a tenant in sufferance since the foreclosure sale in September 2016, while Alta was paying taxes and insurance premiums on the property to protect its security interest. Id.

         With respect to Burgess's Chapter 11 conversion argument, Alta responds that the rules provide for conversion only after notice and hearing on such a motion. Id. at 4 (citing 11 U.S.C. § 1307(d)). Further, Alta argues that the conversion is in the court's discretion. Id. (“[T]he court may convert a case under this chapter to a case under chapter 11 or 12 of this title.” (quoting 11 U.S.C. § 1307(d))). Thus, Alta concludes that Burgess is incorrect that his case automatically converted to a Chapter 11 case when he filed his motion, and that there was no need for notice and hearing on Burgess's motion because the bankruptcy court had already dismissed the matter. Id.

         II. ...


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