United States District Court, District of Columbia
IN RE LATRICIA L. HARDY, DEBTOR.
BRYAN S. ROSS, and ALL CREDIT CONSIDERED MORTGAGE, INC., Appellees. LATRICIA L. HARDY, Appellant,
G. Sullivan United States District Judge.
31, 2016, Ms. LaTricia Hardy filed a pro se,
voluntary bankruptcy petition in the United States Bankruptcy
Court for the District of Columbia (“Bankruptcy
Court”). After two years of litigation, Ms. Hardy
appeals six of the Bankrupty Court's orders. Proceeding
pro se, Ms. Hardy appeals the following: (1) the
order granting the Trustee's motion to
“turnover” her commercial real estate property,
see ECF No. 1 (Civ. No. 16-1968); (2) the order
“clarifying” that the Bankruptcy Court's
turnover order was not stayed, see ECF No. 1 (Civ.
No. 16-1969); (3) the order denying Ms. Hardy's request
to “terminat[e]  conversion to Chapter 7, ”
see ECF No. 1 (Civ. No. 16-1970); (4) the order
holding Ms. Hardy in contempt and denying her motion to
dismiss the Chapter 7 Trustee's claims, see ECF
No. 1 (Civ. No. 17-1017); (5) the order granting All Credit
Considered Mortgage, Inc.'s (“ACC”) motion
for summary judgment, see ECF No. 1 (Civ. No.
17-1316); and (6) the order granting the Chapter 7
Trustee's motion to approve a compromise with ACC,
see ECF No. 1 (Civ. No. 18-434). Also pending are
the Chapter 7 Trustee's two motions to dismiss: (1)
motion to dismiss as equitably moot Ms. Hardy's appeal as
to the turnover order, see ECF No. 18 (Civ. No.
16-1968); and (2) motion to dismiss as time-barred Ms.
Hardy's appeal of the compromise order, see ECF
No. 21 (Civ. No. 16-1968).
Court has considered all of the appeals and motions, the
responses and replies thereto, the voluminous record, and the
applicable law, and hereby AFFIRMS the
Bankruptcy Court's six orders, GRANTS
the Chapter 7 Trustee's motion to dismiss as equitably
moot, and DENIES the Chapter 7 Trustee's
motion to dismiss as time-barred.
31, 2016, Ms. Hardy filed a voluntary petition for relief
under Chapter 13 of the Bankruptcy Code. See A.R.,
ECF No. 29-1 at 5(Civ. No. 16-1698). Ms. Hardy and her mother,
Patricia White, owned a commercial real estate property
located at 1414-1416 Pennsylvania Avenue in Southeast,
District of Columbia. See A.R., ECF No. 27 at 5
(Civ. No. 16-1968). After the Chapter 13 Trustee moved to
dismiss the case, Ms. Hardy filed a motion to convert her
case to Chapter 11. A.R., ECF No. 12-1 at 26-27 (Civ. No.
16-1968). On June 24, 2016, ACC-a creditor with a purported
lien on the property-filed a motion to dismiss with prejudice
or, in the alternative, to convert the case from Chapter 11
to Chapter 7. Id. at 28-45. On July 25, 2016,
following a hearing, the Bankruptcy Court converted Ms.
Hardy's Chapter 13 case to Chapter 7 and appointed Bryan
Ross as the Chapter 7 Trustee (“the Trustee”).
See Docket, ECF No. 29-1 at 10 (Civ. No. 16-1968).
On August 30, 2016, Ms. Hardy filed a “motion
requesting termination of conversion to Chapter 7
liquidation.” A.R., ECF No. 12-1 at 152 (Civ. No.
16-1968). The Bankruptcy Court denied the motion.
Id. at 159. On September 22, 2016, Ms. Hardy noticed
her appeal of that order in this Court. ECF No. 1 (Civ. No.
August 17, 2016, the Trustee filed a motion for an order
approving the turnover of Ms. Hardy's co-owned commercial
real estate property. A.R., ECF No. 12-1 at 129-134 (Civ. No.
16-1968). The Bankruptcy Court granted the turnover motion on
September 9, 2016, ordering Ms. Hardy to “immediately
turnover” her property and authorizing the Trustee to
“take possession and control.” Id. at
154-55. On September 22, 2016, Ms. Hardy noticed her appeal
of that order in this Court. ECF No. 1 (Civ. No. 16-1968).
September 19, 2016, the Bankruptcy Court also issued an order
“clarifying that no stay of the Court's turnover
order is in place pending disposition of the motion for a
stay” that Ms. Hardy had filed. A.R., ECF No. 12-1 at
160 (Civ. No. 16-1968); see also A.R., ECF No. 29-1
at 14 (Civ. No. 16-1968). In so doing, the Bankruptcy Court
emphasized that “the turnover order has
not been stayed by the filing of a motion to
stay” and that Ms. Hardy “remains obligated to
comply with it.” A.R., ECF No. 12-1 at 160 (Civ. No.
16-1968)(emphasis in original). The Bankruptcy Court
subsequently denied Ms. Hardy's motion for a stay of the
turnover order. See A.R., ECF No. 29-1 at 16 (Civ.
No. 16-1968). On September 22, 2016, Ms. Hardy noticed an
appeal in this Court of the clarifying order, but not the
denial of her motion to stay. ECF No. 1, (Civ. No. 16-1969).
November 21, 2016, Ms. Hardy filed a motion for an emergency
temporary restraining order in this Court, which the Court
construed as a motion to stay the Bankruptcy Court's
orders denying her motion to “terminate” the
conversion from Chapter 13 to Chapter 7 and granting the
Trustee's turnover motion pending appeal. See
TRO Mot., ECF No. 10 (Civ. No. 16-1968); Mem. Op., ECF No. 17
at 2 (Civ. No. 16-1968). The Court denied Ms. Hardy's
motion on December 29, 2016. See Order, ECF No. 16
(Civ. No. 16-1968). In so doing, the Court allowed the
Chapter 7 bankruptcy case to proceed.
Trustee-having been authorized to sell the
property- filed a motion to sell. However, Ms.
Hardy purportedly refused to comply with the turnover order
and vacate the premises. Therefore, on April 28, 2017, the
Trustee filed a motion to show cause why Ms. Hardy should not
be held in contempt. See A.R., ECF No. 29-1 at
115-21 (Civ. No. 16-1968). The Trustee alleged that Ms. Hardy
rented the property to at least two tenants and refused to
leave, in violation of the turnover order. Id. at
117-20. On May 25, 2017, after a hearing, the Bankruptcy
Court granted the Trustee's motion and held Ms. Hardy in
contempt. A.R., ECF No. 29-2 at 5-11 (Civ. No. 16-1968).
Finding that Ms. Hardy failed to comply with its turnover
order, the Bankruptcy Court directed her to produce all
leases and lessees' contact information and immediately
cease leasing the property. Id. at 10. It also
voided any leases and authorized the Trustee or the United
States Marshal to evict any tenants and occupants.
Id. at 11. On May 26, 2017, Ms. Hardy noticed an
appeal of that order in this Court. ECF No. 1, (Civ. No.
days later, the Bankruptcy Court approved and ratified the
sale of the property over Ms. Hardy's opposition. A.R.,
ECF No. 29-2 at 18-26 (Civ. No. 16-1968). The Bankruptcy
Court ordered the Trustee to pay the liens attached to the
property, including ACC's claims. Id. at 22. It
also ordered the Trustee to pay Ms. White her one-half share
in the remaining property. Id. The sale was
finalized on July 5, 2017, when the Trustee executed the
deed. A.R., ECF No. 29-3 at 20-24 (Civ. No. 16-1968).
Ms. Hardy had been litigating the validity of ACC's lien
in the Superior Court for the District of Columbia. See
ACC v. Hardy, 2014 CA 4580; A.R., ECF No. 12-1 at 58-65
(Civ. No. 16-1968). In September 2015, Superior Court Judge
Stuart Nash entered summary judgment in ACC's favor,
finding that it had a valid, enforceable claim to Ms.
Hardy's property. Id. at 60.
on April 10, 2017, Ms. Hardy objected to the validity of
ACC's lien in Bankruptcy Court. A.R., ECF No. 4 at 4-9
(Civ. No. 17-1316). In response, ACC filed a motion for
summary judgment, seeking to establish that it had a valid
lien. A.R., ECF No. 29-3 at 25-26 (Civ. No. 16-1968). Ms.
Hardy opposed that motion and filed a cross-motion for
summary judgment. See Id. at 37-40. On June 17,
2017, the Bankruptcy Court granted ACC's motion for
summary judgment, finding that its lien was indeed valid.
Id. at 50-69. On June 30, 2017, Ms. Hardy noticed an
appeal of that summary judgment order in this Court.
See ECF No. 1 (Civ. No. 17-1316).
the Bankruptcy Court found that ACC had a valid lien, a
dispute arose over the amount that ACC was owed from the
turnover sale. See A.R., ECF No. 29-4 at 6-11 (Civ.
No. 16-1968). In order to avoid further litigation, the
Trustee and ACC proposed a settlement agreement whereby ACC
would accept a “short” payment-less than the
amount it was allegedly owed-and, in exchange, the Trustee
would release ACC of all claims against it. See Id.
at 9 ¶¶ 19-20. On October 23, 2017, the Bankruptcy
Court approved the Trustee's proposed compromise, despite
Ms. Hardy's objections. Id. at 51-56. In so
doing, the Bankruptcy Court authorized the Trustee to pay ACC
and Ms. White the amounts both were owed under the agreement.
Id. at 54-55. On November 6, 2017, Ms. Hardy noticed
an appeal of that approval order in this Court. See
ECF No. 1 (Civ. No. 18-434).
Ms. Hardy's appeals are now ripe for review.
Standard of Review
Court has jurisdiction over Ms. Hardy's appeals pursuant
to 28 U.S.C. § 158, which provides that: “(a) The
district courts of the United States shall have jurisdiction
to hear appeals (1) from final judgments, orders, and decrees
. . . of bankruptcy judges.”
appellate court, this Court reviews legal questions and
conclusions de novo and reviews findings of fact
under a clearly erroneous standard. See In re
Chreky, 450 B.R. 247, 251-52 (D.D.C. 2011); see also
In re WPG, Inc., 282 B.R. 66, 68 (D.D.C. 2002) (citing
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384,
405 (1990)). “A finding [of fact] is clearly erroneous
when, although there is evidence to support it, the reviewing
court on the entire evidence is left with the definite and
firm conviction that a mistake has been committed.”
In re Johnson, 236 B.R. 510, 518 (D.D.C.
1999)(quoting United States v. U.S. Gypsum Co., 333
U.S. 364, 395 (1948)). As the Seventh Circuit vividly
described, “[t]o be clearly erroneous, a decision must
. . . strike us as wrong with the force of a five week old,
unrefrigerated dead fish.” Parts & Elec.
Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 228, 233
(7th Cir. 1988). Finally, the Court reviews a bankruptcy
court's evidentiary rulings under the abuse of discretion
standard. See Haarhuis v. Kunnan Enter., Ltd., 177
F.3d 1007, 1015 (D.C. Cir. 1999). “[A]n abuse of
discretion occurs when the [bankruptcy] court relies on
clearly erroneous findings of fact, fails to consider a
relevant factor, or applies the wrong legal standard.”
Pigford v. Johanns, 416 F.3d 12, 23 (D.C. Cir.
2005). The party seeking to reverse the bankruptcy
court's ruling bears the burden of proof and may not
prevail by showing “simply that another conclusion
could have been reached.” In re Johnson, 236
B.R. at 518 (quotations omitted).
Hardy appeals six of the Bankruptcy Court's orders. The
Trustee filed two motions to dismiss at least three of those
appeals. The Court addresses each in turn.
The Bankruptcy Court's Turnover Order is
Hardy argues that the Bankruptcy Court erred when it granted
the Trustee's motion for a turnover order. See
Appellant's Br., ECF No. 9 (Civ. No. 16-1968). She
contends that a turnover order is only appropriate when there
is no legitimate dispute over what is owed to the debtor.
See Id. at 19. Therefore, she argues that the
turnover order was not appropriate because she disputes the
validity of ACC's purported deed of trust lien. See
Id. at 10-12, 19. The Trustee responds by arguing that
the Bankruptcy Court correctly ordered the turnover because
the amount owed to Ms. Hardy is not in dispute.
Appellee's Br., ECF No. 12 at 10-12, 21-28 (Civ. No.
addition, the Trustee argues that Ms. Hardy's appeal is
equitably moot now that the property at issue has been sold
to a third party. Appellee's Mot., ECF No. 18 ¶ 8
(Civ. No. 16-1968); see also Appellee's Br., ECF
No. 21 at 12-14 (Civ. No. 17-1017). Ms. Hardy contends that
her appeal should not be dismissed as moot because the
illegality of the bankruptcy proceeding would affect the
distribution of the proceeds from the sale of the property.
Appellant's Opp'n, ECF No. 20 (Civ. No. 16-1968).
the bankruptcy code, the sale of property to a good faith
purchaser cannot be overturned on appeal unless that sale was
stayed pending appeal.” In re Hope 7 Monroe St.
Ltd. P'ship, 743 F.3d 867, 872 (D.C. Cir. 2014)
(citing 11 U.S.C. § 363(m)). As articulated in
Advantage Health Plan, Inc. v. Potter, “the
doctrine of equitable mootness provides that a bankruptcy
appeal may ‘be dismissed as moot when, [although not
constitutionally moot and although] effective relief could
conceivably be fashioned, implementation of that relief would
be inequitable.'” 391 B.R. 521, 542 (D.D.C. 2008)
(quoting In re Metromedia Fiber Network, Inc., 416
F.3d 136, 143 (2d Cir. 2005); citing In re AOV Indus.,
Inc., 792 F.2d 1140, 1147-48 (D.C. Cir. 1986)). The
Court of Appeals for the District of Columbia Circuit
(“D.C. Circuit”) has “dismissed as moot
appeals where the operation of § 363(m) has left us
unable to fashion a remedy to address appellants'
asserted injury.” In re Hope 7 Monroe St., 743
F.3d at 872 (citing Allen v. Wells Fargo Bank Minn.,
No. 03-7152, 2004 WL 2538492 (D.C. Cir. Nov. 9, 2004);
Hicks v. Pearlstein (In re Magwood), 785 F.2d 1077,
1080-81 (D.C. Cir. 1986)).
sale of Ms. Hardy's property was not stayed pending
appeal. Indeed, this Court denied Ms. Hardy's emergency
motion for a stay of the turnover order. See Order,
ECF No. 16 (Civ. No. 16-1968); see also Mem. Op.,
ECF No. 17 (Civ. No. 16-1968). Further, the property was sold
to a third party and the sale was finalized when the Trustee
executed the deed on July 5, 2017. A.R., ECF No. 29-3 at
20-24 (Civ. No. 16-1968). Thus, the bankruptcy plan and
turnover sale were “substantially implemented, ”
precluding effective remedy. In re AOV Indus., Inc.,
792 F.2d at 1147 (finding the appeal moot because the
bankruptcy had been “substantially implemented, ”
including stock sold, settlements completed, and payments
made to creditors).
Hardy appears to argue that the doctrine of equitable
mootness does not prevent the Court from reversing the order
approving the distribution of funds. See
Appellant's Opp'n, ECF No. 20 at 2 (Civ. No.
16-1968); Appellant's Reply, ECF No. 22 at 6-7 (Civ. No.
17-1017). She is correct. See In re Hope 7 Monroe
St., 743 F.3d at 873 (“Section 363 does not grant
to a claimant that has received a distribution the same
protections it gives to a good faith purchaser of the
estate's property. The policy underlying § 363(m)
ensures the bankruptcy estate obtains maximum value through
its sale of property by providing a bona fide purchaser
assurances of finality.”). However, by appealing the
Bankruptcy Court's orders granting the turnover sale and
not staying the turnover, Ms. Hardy is not appealing
her distribution of funds, if any. See Notices of
Appeal, ECF No. 1 (Civ. No. 16-1968); ECF No. 1 (Civ. No.
16-1969). Instead, Ms. Hardy appeals the Bankruptcy
Court's decision to allow her property to be sold. In so
appealing, she requests that the Court “reopen the sale
of [her] real property.” In re Hope 7 Monroe
St., 743 F.3d at 873. As a matter of law, the Court may
not do so. See id.
even if Ms. Hardy's appeals regarding the turnover order
were not moot, the Bankruptcy Court did not err in granting
the Trustee's turnover motion. As a preliminary matter,
Ms. Hardy did not file an opposition to the Trustee's
turnover motion in the Bankruptcy Court, despite receiving
“notice of an opportunity to object to turnover”
on August 17, 2016. See A.R., ECF No. 29-1 at 12-14
(Civ. No. 16-1968)(no opposition filed between August 17,
2016 motion and September 9, 2016 approval). The notice sent
to Ms. Hardy explained that the Trustee filed a motion for
turnover of real property and warned that failure to respond
within twenty-one days may result in the Bankruptcy Court
“deem[ing] any opposition waived, treat[ing] the motion
as conceded, and issu[ing] an order granting the relief
without further notice of hearing.” Bankr. No. 16-280,
ECF No. 64. By not asserting any arguments in opposition to
the turnover motion below, Ms. Hardy waived the arguments she
musters on appeal. Cf. District of Columbia v. Air
Florida, Inc., 750 F.2d 1077, 1084 (D.C. Cir.
1984) (“It is well settled that issues and legal
theories not asserted at the District Court level ordinarily
will not be heard on appeal.”).
Hardy not waived her arguments, her appeal nonetheless would
have been unsuccessful. The turnover provision of the