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In re Carvalho

United States District Court, District of Columbia

March 27, 2019




         On December 15, 2015, Sharra Neves Carvalho filed a Chapter 7 voluntary bankruptcy petition in the United States Bankruptcy Court for the District of Columbia (the “Bankruptcy Court”). See Voluntary Petition for Individuals Filing for Bankruptcy, In re Carvalho, Ch. 7 No. 15-646 (Bankr. D.D.C. Dec. 15, 2015), ECF No. 1. On July 28, 2017, Teodora Aureliana Simu, a creditor of Carvalho, requested that the Bankruptcy Court remove Bryan S. Ross as the trustee of Carvalho's estate (the “Removal Request”), and sought leave to sue Ross (the “Leave to Sue Request”). See generally Unified Motion to Dismiss Bankruptcy Case for Bad Faith[, ] Motion to Remove Estate Trustee[, ] Motion for Leave to Sue the Estate Trustee (“Unified Motion”), In re Carvalho, Ch. 7 No. 15-646 (Bankr. D.D.C. July 28, 2017), ECF No. 131.[1] On November 29, 2017, the Bankruptcy Court denied Simu's Removal Request as well as her Leave to Sue Request. See In re Carvalho, 578 B.R. 1, 14 (Bankr. D.D.C. 2017). Thereafter, Simu appealed the Bankruptcy Court's denial of both requests. See Notice of Appeal (Jan. 16, 2018). Currently pending before the Court are Ross's Motion [to] Dismiss Appeal (“Ross's Mot. to Dismiss”), and Simu's Motion for Sanctions (“Simu's Mot. for Sanctions”). Upon careful consideration of the parties' submissions, [2] the Court concludes that it must grant in part and deny in part Ross's motion to dismiss and deny Simu's motion for sanctions.

         I. BACKGROUND

         On August 11, 2017, Simu filed her brief in support of her appeal of the Bankruptcy Court's denial of her Removal Request and Leave to Sue Request, arguing that the “Bankruptcy Court erred in not finding that [Ross] made bright line violations of the Bankruptcy Code[, ] which mandated his removal.” Simu's Appeal Brief at 3. Specifically, Simu argues that the Bankruptcy Court “should have removed [Ross] and granted [Simu] leave to sue [Ross]” because Ross “eschewed his duties to the Bankruptcy Court and to [Carvalho's e]state.” Id. at 29-30. Simu further argues that Ross's “conduct demonstrates [that he] acted outside the scope of his authority and breached his fiduciary duty to preserve and liquidate [Carvalho's e]state.” Id. at 30. Thereafter, Ross filed his motion to dismiss Simu's appeal. See generally Ross's Mot. to Dismiss. After the briefing of the motion to dismiss was completed, Simu filed her motion for sanctions against Ross. See generally Simu's Mot. for Sanctions. These last two filings are the subject of this memorandum opinion.


         28 U.S.C. § 158 governs appeals from the bankruptcy courts to federal district courts. Section 158(a) provides that district courts have jurisdiction over appeals

(1) from final judgments, orders, and decrees; (2) from interlocutory orders and decrees issued under section 1121(d) of title 11 increasing or reducing the time periods referred to in section 1121 of such title; and (3) with leave of the court, from other interlocutory orders and decrees[.]

28 U.S.C. § 158(a) (2018). Section 158 also provides that “[a]n appeal under subsection[] (a) . . . of this section shall be taken in the same manner as appeals in civil proceedings generally are taken to the courts of appeals from the district courts.” Id. § 158(c)(2).

         III. ANALYSIS

         A. Motion to Dismiss

         Neither 28 U.S.C. § 158 nor Federal Rule of Bankruptcy Procedure 8013, which governs motions filed in bankruptcy appeals, addresses motions to dismiss a bankruptcy appeal, see 28 U.S.C. § 158; Fed.R.Bankr.P. 8013, and despite diligently searching, the Court has been unable to locate any cases in the District of Columbia Circuit that have set forth the standard of review for a motion to dismiss a bankruptcy appeal. Therefore, because a district court, pursuant to 28 U.S.C. § 158(c)(2), acts as an appellate court when reviewing decisions made by a bankruptcy court, see In re St. Charles Pres. Inv'rs, Ltd., 112 B.R. 469, 471 n.2 (D.D.C. 1990); see also In re Sollins, Civ. Action No. 95-0657, 1996 WL 61773, at *2 n.15 (D.D.C. Feb. 6, 1996), aff'd sub nom. Ross v. 1301 Connecticut Ave. Assocs., 99 F.3d 444 (D.C. Cir. 1996), the Court will follow this Circuit's practice with respect to motions to dismiss appeals. This Circuit construes motions to dismiss appeals as motions for summary affirmance, see, e.g., Solomon v. Supreme Court of Fla., No. 03-7002, 2003 WL 1873939, at *1 (D.C. Cir. Apr. 2, 2003), and has held that “[a] party seeking summary disposition bears the heavy burden of establishing that the merits of his case are so clear that expedited action is justified, ” Taxpayers Watchdog, Inc. v. Stanley, 819 F.2d 294, 297 (D.C. Cir. 1987). Thus, to summarily affirm a district court's order, the Circuit “must conclude that no benefit will be gained from further briefing and argument of the issues presented.” Id. at 298. Further, in reviewing a motion to dismiss an appeal or a motion for summary affirmance, the Circuit “view[s] the record and the inferences to be drawn therefrom ‘in the light most favorable to [the non-moving party].'” Id. (quoting United States v. Diebold, 369 U.S. 654, 655 (1962)).

         Under this standard of review, the Court concludes that Ross's motion to dismiss must be granted with respect to Simu's Removal Request because the merits of the parties' positions “are so clear that expedited action is justified.” Taxpayers, 819 F.2d at 297; see Montague v. Conti Mortg. Co., Civ. Action No. 00-7103, 2000 WL 1225784, at *1 (D.C. Cir. July 31, 2000) (granting a motion to dismiss a bankruptcy appeal due to mootness). Ross's motion to dismiss the appeal with respect to the Leave to Sue Request, on the other hand, must be denied because the Court would “benefit . . . from further briefing and argument of the issues presented.” Taxpayers, 819 F.2d at 298.

         1. Removal Request

         Ross argues that this appeal should be dismissed as to the Removal Request because “it is no longer possible to grant [Simu] effective relief, ” Ross's Mot. to Dismiss ¶ 4 (citations omitted). Specifically, Ross argues that, “[s]ince the perfection of the instant appeal, the Bankruptcy Court . . . closed (and reopened for a limited purpose) the underlying bankruptcy case of the Debtor, and discharged the Trustee.” Id. ¶ 2. Ross therefore contends that, “[i]nasmuch as [Simu's] Removal Request sought only to replace the Trustee ...

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