United States District Court, D. Columbia.
IN RE: STEPHEN THOMAS YELVERTON, Debtor. STEPHEN THOMAS YELVERTON, Appellant,
WENDELL W. WEBSTER, et al., Appellees
Bankruptcy No. 09-00414.
Stephen Thomas Yelverton (1:12cv1539), Appellant, Pro se, Washington, DC.
For Wendell W. Webster, Chapter 7 Trustee (1:12cv1539), Appellee: Linda M. Correia, LEAD ATTORNEY, WEBSTER, FREDRICKSON, CORREIA & PUTH, PLLC, Washington, DC; Natalie S. Walker, LEAD ATTORNEY, WEBSTER & FREDRICKSON, PLLC, Washington, DC.
Alexandra Senyi DE Nagy-Unyom (1:12cv1539), Appellee, Pro se, Washington, DC.
Stephen Thomas Yelverton (1:13cv454), Appellant, Pro se, Washington, DC.
For Wendell W. Webster (1:13cv454), Appellee: Linda M. Correia, LEAD ATTORNEY, WEBSTER, FREDRICKSON, CORREIA & PUTH, PLLC, Washington, DC.
Stephen Thomas Yelverton (1:13cv1544), Appellant, Pro se, Washington, DC.
For Wendell W. Webster (1:13cv1544), Appellee: Natalie S. Walker, LEAD ATTORNEY, WEBSTER & FREDRICKSON, PLLC, Washington, DC.
For Phyllis Edmundson, Deborah Marm (1:13cv1544), Appellees: Jeffrey L. Tarkenton, LEAD ATTORNEY, WOMBLE CARLYLE SANDRIDGE & RICE, PLLC, Washington, DC.
CHRISTOPHER R. COOPER, United States District Judge.
In these three related cases, Debtor Stephen Thomas Yelverton has appealed a series of orders of the bankruptcy court approving a settlement agreement between the bankruptcy Trustee and Yelverton's two sisters, Phyllis Edmundson and Deborah Marm, and denying Yelverton's requests to exempt his stock in the family's poultry farm from the bankruptcy estate. Because the Trustee adequately justified the terms of the settlement and Yelverton improperly sought to exempt property, the Court affirms each of the bankruptcy court's orders.
Yelverton filed a Chapter 11 Voluntary Petition for bankruptcy in May 2009.
In re Yelverton, 9-414 (" Bankruptcy Proceeding" )
Dkt. 1 (Bankr. D.C. May 14, 2009). After Yelverton proposed five plans for the reorganization of his debts, the bankruptcy court in 2010 converted the case to a Chapter 7 liquidation and appointed Wendell W. Webster as trustee. Id. Dkts. 336, 1,323. Yelverton's initial bankruptcy schedule listed, as his solely-owned property, 1,333 shares of Yelverton Farms, Ltd., a closely-held North Carolina corporation. Id. Dkt. 22.
In July 2009, Yelverton filed suit in the Eastern District of North Carolina against Yelverton Farms and his two sisters, Edmundson and Marm, the majority stock holders. The suit alleged breach of contract and malicious interference with a contract and sought judicial dissolution of Yelverton Farms or a mandatory buyout, as well as $3,000,000 in damages. Webster v. Yelverton Farms, Ltd., 9-331, Dkt. 3 (E.D.N.C. July 29, 2009). In March 2011, the district court entered an order finding that Yelverton lacked standing to bring the case because his claims were the property of the bankruptcy estate and directed the Trustee to file a notice of substitution, which he did on March 15, 2011. Id. Dkts. 120, 122.
Yelverton also filed two adversary proceedings in bankruptcy court in January 2010. The first sought a transfer of 1,333 shares of stock in Yelverton Farms from Edmundson, her husband, and the company. Webster v. Edmundson, 10-10003, Dkt. 1 (Bankr. D.C. Jan. 14, 2010). The Trustee was substituted as plaintiff in December 2010. Id. Dkt. 57. The second proceeding sought to prevent Marm and her husband from selling a 276-acre tract of land in Wayne County, North Carolina. Yelverton v. Marm, 10-10004, Dkt. 1 (Bankr. D.C. Jan 14, 2010). The bankruptcy court granted summary judgment against Yelverton, id. Dkt. 36; this Court upheld that decision, In re Yelverton, 10-1494, Dkt. 10, (D.D.C. Apr. 5, 2011); and the D.C. Circuit stayed review of that decision pending approval bye this Court of the settlement agreement discussed below, id. Dkt. 21.
The Trustee then entered into negotiations with Edmundson, Marm, their spouses, and Yelverton Farms on behalf of the bankruptcy estate. The parties reached a settlement agreement on March 23, 2012, dismissing all claims brought by Yelverton and transferring the bankruptcy estate's 1,333 shares of Yelverton Farms to Edmundson and Marm in exchange for a lump sum payment of $110,000. Bankruptcy Proceeding Dkt. 451 Ex. 1. The Trustee moved for approval of the settlement by the bankruptcy court on May 4, 2012. Id. Dkt. 451.
The bankruptcy court subsequently held an evidentiary hearing in which the Trustee explained his determination that the $110,000 settlement payment for Yelverton's share of the company and his litigation claims was in the best interests of the bankruptcy estate and its creditors because Yelverton had overvalued both the stock and claims. Id. Dkt. 546 at 30:14-31:2. The Trustee relied on a North Carolina appraiser's informal estimate that the business would be worth no more than
$400,000 because Yelverton Farms owned the swine facility it operated but only leased the underlying land from Edmundson. Id. at 35:9-15; 39:9-40:1. Yelverton contested that valuation based on a 2003 appraisal that valued the business at $900,000. The Trustee discounted Yelverton's appraisal because the appraiser was specifically instructed not to consider the lease in valuing the business and instead valued the land and business together. Id. at 36:7-37:9. The Trustee did not order a formal appraisal because, in his view, the costs would outweigh any potential benefit. Id. at 40:2-10. Although Yelverton claimed his stock amounted to a one-third ownership interest in the company, the Trustee found Yelverton's ownership interest to be in dispute because Yelverton Farm's tax records all reflected that Yelverton only owned a one-fourth interest after an apparently valid stock issuance by the company. Id. at 124:2-21. The Trustee also explained that he obtained counsel in North Carolina in order to determine the probability of success in Yelverton's litigation efforts against Edmundson, Marm, and Yelverton Farms. Id. at 37:14-38:7. The North Carolina counsel opined that discovery alone on Yelverton's common law claims could cost as much as $25,000, while the bankruptcy estate had no cash on hand to pursue litigation. Id. at 40:11-41:5. Moreover, the Trustee determined that the value of Yelverton's various litigation claims aside from recovering his stock was minimal because they lacked evidentiary support and were likely barred by a number of defenses. Id. at 41:16-46:6. On the basis of the testimony at the evidentiary hearing, the bankruptcy court approved the settlement agreement the next day. Id. Dkt 477.
Yelverton moved to have the Trustee abandon certain of the claims in the North Carolina District Court case on June 3, 2012, and amended the motion on July 5, 2012. Id. Dkts. 481, 484. The bankruptcy court rejected the motion on August 7, 2012. Id. Dkt. 505. Yelverton filed a motion to vacate the order approving the settlement on July 3, 2012, which the bankruptcy court rejected on August 8, 2012. Id. Dkts. 483, 506. Yelverton then filed a motion for relief from judgment, also seeking to reverse the order approving the settlement, on July 14, 2013, which the bankruptcy court denied on August 8, 2013. Id. Dkts. 666, 682. He filed a motion to vacate that order on August ...