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In re Hylton

United States District Court, E.D. Missouri, Eastern Division

May 9, 2018

In re Jacqueline C. Hylton, Debtor,
v.
JACQUELINE C. HYLTON, Appellee. CHRISTOPHER LEE PROSSER, Appellant,

          MEMORANDUM AND ORDER

          JEAN C. HAMILTON UNITED STATES DISTRICT JUDGE.

         Before the Court is the appeal from the decision of the United States Bankruptcy Court, Eastern District of Missouri, filed by Appellant Christopher Lee Prosser. ECF 1. The Matter is fully briefed and ready for disposition.

         I.

         BACKGROUND

         Appellee Jacqueline C. Hylton filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Eastern District of Missouri, (the Bankruptcy Court), Case Number 17-42383, on April 6, 2017. Appellant was listed as a creditor in the amount of $25, 000 for an investment loan in the Chapter 7 proceedings.

         On June 9, 2017, Appellant, who was pro se and a prisoner incarcerated in the State prison system, filed an adversary pleading in Appellee's Chapter 7 proceedings in which he sought to have his debt declared non-dischargeable on the basis of fraud under 11 U.S.C. § 523(a)(2), (4) and (6).[1] (Bankruptcy Court Adversary Proceeding, 17-4089 (BR) ECF 1). The Bankruptcy Court's June 12, 2017 Scheduling Order set Appellant's adversary proceeding for trial on September 19, 2017, at 11:00 a.m. (BR ECF 3). As relevant, the Scheduling Order also stated that motions for summary judgment should be filed no later than August 22, 2017, and set forth the pre-trial compliance requirements, including that witness and exhibit lists be submitted no later than five days prior to trial. (BR ECF 3 at 1-2).

         On June 23, 2017, Appellant filed a Motion to Stay or Set Aside the Scheduling Order of June 12, 2017, in which Motion he asserted that the Scheduling Order was “inadequate” regarding the amount of time to “conduct discovery, take depositions, submit document requests, interrogatories and admission requests, as well as to file a summary judgment motion.” (BR ECF 8 at 1-2). On July 21, 2017, Appellant filed subpoenas for production of documents from third parties, including St. John's Bank. (BR ECF 31-38). On July 24, 2017, Appellee filed a Motion to Quash the St. John's Bank subpoena (BR ECF 39) and, on July 25, 2017, filed Objections to Appellant's First Set of Interrogatories and First Request for Production of Documents and a Motion to Quash Appellee's Second and Third Set of Interrogatories and Request for Admissions. (BR ECF 40-43). On August 8, 2017, the Bankruptcy Court set a hearing on Appellant's Motions to Quash and related matters for August 24, 2017. (BR ECF 83). On August 9, 2017, Appellant again filed a Motion to Stay the Adversary Proceedings in which he sought to stay the matter pending an interlocutory appeal regarding his “motions with the District Court to withdraw its referral and to transfer the adversary proceedings to the District Court.” (BR ECF 108 at 1). On August 11, 2017, Appellant filed a Request to Modify the Scheduling Order, in which he asked the Bankruptcy Court to grant him an additional forty-five days to conduct discovery, “thereafter adjusting all other matters according to the discovery modification.” (BR ECF 87 at 11).

         On August 16, 2017, Appellant filed a Motion for Writ of Habeas Corpus Ad Testificandum, in which he sought to appear at the August 24, 2017 hearing on the Motions to Quash. (BR ECF 94). By Order, dated August 17, 2017, the Bankruptcy Court declined to certify a recommendation to the district court that a writ of habeas corpus ad testificandum issue. (BR ECF 100). Appellant's August 9, 2017 Motion requesting a stay was denied on August 22, 2017. (BR ECF 112). On August 24, 2017, the Bankruptcy Court conducted a hearing regarding Appellee's Motions to Quash and related matters, at which Appellant was not present, and, granted, in part, and denied, in part, the Motions. (BR ECF 115).

         Also, on August 24, 2017, the Bankruptcy Court received, from Appellant, a “Motion for an Additional Twenty (20) Days to File Written Exceptions and Objections to the Order From the August 24, 2017 Hearing on [Appellant's] Motions to Quash.”[2] (BR ECF 120). In an August 30, 2017 Order denying Appellant's Motion seeking an additional twenty days, the Bankruptcy Court considered that, although Appellant had not appeared at the August 24, 2017 hearing, he “filed responses and other documents in connection with the matters heard, which the Court considered.”[3] The Bankruptcy Court also considered that Appellant was seeking an extension of time for something to which he was not entitled because “one does not object to an order, ” because “exceptions are not part of federal court practice, ” and because “[o]bjections are assumed to be preserved for purposes of appeal.” The Bankruptcy Court further considered that, at the time Appellant's Motion for an Additional Twenty Days was “written, ” the August 24, 2017 hearing had not yet occurred, and no order following that hearing had been entered, and that he was “free to request that a copy [of the transcript of the hearing] be prepared and pay for the costs associated with such preparation.” (BR ECF 121 at 1-2). On September 14, 2017, the Bankruptcy Court memorialized its bench ruling regarding the Motions and Objections considered at the August 24, 2017 hearing, specifically denying Appellee's Motion to Quash the subpoena to St. John's Bank, with the exception that certain personal information be redacted, and granting, in part, and denying, in part, the other Motions and Objections before the court. (BR ECF 123).

         Appellee appeared before the Bankruptcy Court, on September 19, 2017, in person and with counsel, for trial, and testified under oath. (BR ECF 132). Appellant did not appear in person or by counsel. On September 20, 2017, Appellant filed a “Motion to Amend the Scheduling Order to Allow an Additional 45 Days for Discovery” (BR ECF 133), and, on September 22, 2017, he filed a “Motion For an Extension of Time to File a Motion for Summary Judgment, Trial Brief, Exhibit List, Stipulation of Uncontroverted Fa[c]t, and Exhibits” (BR ECF 134). On September 25, 2017, the Bankruptcy Court issued a Judgment (BR ECF 136) and Memorandum Opinion and Order (BR ECF 137), dismissing Appellant's Complaint, with prejudice, based on Appellant's failure to prosecute and “thereby abandon[ing] his Complaint and any claims therein, ” and, alternatively, based on Appellant's failure to meet the evidentiary burden at trial because he “offered no evidence at trial in support of his claims.” On September 26, 2017, Appellant filed a “Motion to Reconsider Order Granting in Part and Denying in Part [Appellee's] Motion to Quash the Subpoena to St. John's Bank.” (BR ECF 140).

         On September 27, 2017, the Bankruptcy Court issued an Amended Judgment (BR ECF 142) and Amended Memorandum Opinion and Order (BR ECF 143), dismissing Appellant's Complaint, with prejudice, for the same reasons stated in its previous Judgment and Memorandum Opinion and Order. The Amended Memorandum Opinion and Order differed only from the original Memorandum Opinion and Order in regard to Footnotes 3 and 4 which more thoroughly detailed the procedural history of the case. (BR ECF 143 at 1 n.1). Specifically, in its Amended Memorandum Opinion and Order, the Bankruptcy Court held, in regard to Appellant's failure to appear at the September 19, 2017 trial, that: Appellant “did not request a re-setting, even though he had been aware of the trial date since June 2017”; he did not comply with pretrial compliance as set forth in the June 2017 Scheduling Order; he did not request a writ of habeas corpus ad testificandum for purposes of appearing at trial; Appellant had the burden to seek a re-setting, of being prepared for trial, and of requesting an extension of the trial date and pre-trial compliance and his pro se status did not relieve him of this burden; and Appellant had demonstrated, in the course of the case, his “familiarity with deadlines, ” orders, and “the process for requesting extensions of time.” (BR ECF 143 at 2-3). Given Appellant's failures to “comply with any pre-trial compliance requirements, ” “request or obtain a continuance of the trial date, ” and “appear at trial either through counsel or in person, ” the Bankruptcy Court held that it was proper to dismiss Appellant's Complaint, with prejudice. As such, the Bankruptcy Court ordered that Appellant's Complaint be dismissed based on his failure to prosecute and, thereby, abandoning the claims he made in the Complaint. (BR ECF 143 at 3-4).

         The Bankruptcy Court alternatively found that, because Appellant offered no evidence at trial in support of his claims, he failed to meet his evidentiary burden under 11 U.S. § 523(a), and that Appellee's testimony, which was the only evidence before the Bankruptcy Court, did not establish Appellant's case. As such, the Bankruptcy Court held that judgment in favor of Appellee was proper. (BR ECF 143 at 4).

         Appellant filed a Motion for New Trial, on October 5, 2017 (BR ECF 158), which was denied, on October 6, 2017 (BR ECF 160), and an Amended Motion for New Trial, on October 10, 2017 (BR ECF 163), which was denied that same date (BR ECF 164).

         On Appeal, Appellant argues that the Bankruptcy Court “abused its discretion in dismissing the Complaint, with prejudice, ” in failing to grant him a new trial, and in refusing to recuse itself. (ECF 34 at 2-3, 9-10, 26-35). Appellant, alternatively, asks the Court to determine the merits of the claims he made in the Complaint in that he asks the Court to determine that Appellee's debt is non-dischargeable. (ECF 34 at 10, 35-50). Appellant additionally asks for Oral Argument. (ECF 34 at 3).

         II.

         STANDARD OF REVIEW

         “‘When a bankruptcy court's judgment is appealed to the district court, the district court acts as an appellate court and reviews the bankruptcy court's legal determinations de novo and findings of fact for clear error.'” First Sec. Bank and Trust Co. v. Vegt, 511 B.R. 567, 577 (N.D. Iowa 2014) (quoting In re Falcon Prods., Inc., 497 F.3d 838, 841 (8th Cir. 2007) (other quotations and citations omitted). The district court “must accept the bankruptcy court's factual findings unless they are clearly erroneous, and give due regard to the bankruptcy court's opportunity to judge the credibility of the witnesses.” In re Englander, 95 F.3d 1028, 1030 (11th Cir. 1996). The district court may not “make independent factual findings.” Id.

         “A district court reviews the bankruptcy court's interpretation of the bankruptcy code de novo.” First Security Bank, 511 B.R. at 577 (quoting In reZahn,526 F.3d 1140, 1142 (8th Cir. 2008); In re Farmland Indus., Inc.,397 F.3d 647, 650 (8th Cir. 2005)). “Where issues are committed to the bankruptcy court's discretion, review is for abuse of discretion.” First Security Bank, 511 B.R. At 577 (citing In re Zahn, 526 F.3d at 1142). “The bankruptcy court abuses its discretion when it fails to apply the proper legal standard or bases its order on findings of fact that are clearly erroneous.” First Security Bank, 511 B.R. at 577 (quoting In reZahn, 526 F.3d at 1142) (other citation omitted). Under the clearly erroneous standard, a court overturns a factual finding “only if it is not supported by substantial evidence in the record, if it is based on an erroneous view of the law, ” or if the ...


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