Dorothea Brickell v. Marcia T. Dunn , 142 F. App'x 385 ( 2005 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
July 20, 2005
No. 04-13631
THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket Nos. 03-22354-CV-AJ
and 03-22355-CV-AJ
BKC No. 97-40207 BKC-AJ
In Re: NORMAN L. BRICKELL,
Debtor.
_____________________________________________________
DOROTHEA BRICKELL,
Plaintiff-Appellant,
versus
MARCIA T. DUNN, Trustee,
Defendant-Appellee.
______________________________________________________
DOROTHEA BRICKELL,
Plaintiff-Appellant,
versus
MARKOWITZ, DAVIS, RINGEL & TRUSTY, PA,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(July 20, 2005)
Before CARNES, HULL and WILSON, Circuit Judges.
PER CURIAM:
Dorothea Brickell, proceeding pro se, appeals the district court’s order
authorizing the garnishment of her claims against the bankruptcy estate of her ex-
husband. She also appeals the district court’s denial of her motion to alter or
amend judgment pursuant to Fed. R. Civ. P. 59(e). We affirm.
I.
On December 2, 1997, Brickell’s ex-husband filed a voluntary petition for
relief under Chapter 7 of the United States Bankruptcy Code. A trustee was
appointed for his bankruptcy estate. Brickell is a creditor of her ex-husband’s
bankruptcy estate. She retained the law firm of Markowitz, Davis, Ringel, &
Trusty to represent her in the bankruptcy. On May 11, 1998 the bankruptcy court
granted the firm’s request for leave to withdraw as Brickell’s counsel.
On February 1, 2000, the firm obtained a state-court judgment against
Brickell for unpaid legal fees in the amount of $9,736.04. The firm then filed a
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writ of garnishment in state court against the trustee, seeking to collect any
disbursements that Brickell was due from the bankruptcy estate. The state court
issued a final garnishment judgment in favor of the firm. The firm served the
garnishment judgment on the trustee.
Meanwhile, the bankruptcy court had granted a discharge to Brickell’s ex-
husband. Brickell filed a complaint in the bankruptcy court seeking to revoke the
discharge. The bankruptcy court dismissed the complaint, and Brickell filed an
appeal in the district court. The district court affirmed the dismissal and remanded
the case to the bankruptcy court to determine whether sanctions should be imposed
against Brickell in light of her history of frivolous litigation. On August 25, 2001,
the bankruptcy court awarded Brickell’s ex-husband fees and costs in the amount
of $14,832.94 plus post-judgment interest.
Brickell’s ex-husband then filed a motion in the bankruptcy court seeking to
recover the money through a writ of garnishment against the trustee of his
bankruptcy estate. The trustee never responded to the motion, and the bankruptcy
court issued a garnishment judgment against the trustee.
On August 8, 2001, the trustee filed an ex parte motion with the bankruptcy
court, seeking authorization to distribute the money the estate owed Brickell to the
two garnishors. The trustee stated that, in the absence of the garnishments,
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$19,898.06 would be distributed to Brickell. The trustee asked to be allowed to
pay each garnishor his pro rata share of that amount from the distribution. The
bankruptcy court granted the trustee’s motion. A copy of the order was mailed to
Brickell.
Brickell, proceeding pro se, then filed a motion in the bankruptcy court to
vacate the order allowing garnishment. The bankruptcy court denied the motion,
and the trustee mailed checks to the garnishors. Brickell appealed the bankruptcy
court’s garnishment order to the district court. The district court vacated the
garnishment order and the order denying Brickell’s motion to vacate. It remanded
the case to the bankruptcy court to make findings on: (1) whether a Chapter 7
trustee, who holds property of the bankruptcy estate for distribution to creditors, is
subject to garnishment by creditors of one of the debtor’s creditors; (2) whether
final judgments should be treated differently if issued by courts other than the
bankruptcy court; and (3) whether the bankruptcy court had jurisdiction to enter
orders allowing garnishment.
On April 20, 2003, the bankruptcy court issued an order holding that the
trustee was subject to garnishment in these circumstances, that the identity of the
court issuing the garnishment judgment was irrelevant, and that it had jurisdiction
to enter an order allowing the trustee to comply with the garnishment judgments.
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Brickell appealed the decision to the district court, which affirmed the bankruptcy
court’s order. Brickell then filed a Fed. R. Civ. P. 59(e) motion asking the district
court to alter or amend its judgment. The district court denied that motion.
Brickell now asks us to reverse the district court’s orders authorizing the
garnishment of her claim against the estate and denying her Rule 59(e) motion.
Brickell specifically contends that: (1) the district court and the bankruptcy court
lack jurisdiction to allow garnishment of the bankruptcy estate; (2) a Chapter 7
trustee holding property of the estate for distribution to creditors is not subject to
garnishment by persons who hold garnishment judgments against a creditor; (3) the
garnishment judgment issued by the state court is invalid; and (4) the district court
abused its discretion in denying her Rule 59(e) motion.1
II.
“As the second court of review of a bankruptcy court’s judgment, this Court
examines independently the factual and legal determinations of the bankruptcy
court and employs the same standards of review as the district court.” Barrett
Dodge Chrysler Plymouth, Inc. v. Cranshaw (In re Isaac Leaseco, Inc.), 389 F.3d
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At one point, the law firm filed a motion to substitute itself for Brickell as a creditor of the
estate, pursuant to Fed. R. Bankr. P. 3001(e). The bankruptcy court entered an order granting that
motion, though the law firm had withdrawn it. Brickell challenges that order in this appeal as well.
Because we conclude that the bankruptcy court properly allowed the estate to be garnished to satisfy
Brickell’s debts to the firm, it is not necessary for us to decide whether a Rule 3001(e) substitution
was authorized in this case.
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1205, 1209 (11th Cir. 2004) (internal marks and citations omitted). We review
legal determinations of the bankruptcy court de novo. The Securities Groups v.
Barnett (In re Monetary Group), 2 F.3d 1098, 1103 (11th Cir. 1993) (per curiam).
We review the factual findings of the bankruptcy court only for clear error. Id.
III.
“[J]urisdiction over matters allegedly related to a bankruptcy case is best
analyzed in two steps: first, the reviewing court must decide whether federal
jurisdiction exists in the district court; second, if jurisdiction does exist, it must
determine whether the bankruptcy court properly exercised its constitutionally
available powers in proceeding over the matter as a ‘core’ or ‘non-core’
proceeding.” Miller v. Kemira, Inc. (In re Lemco Gypsum, Inc.), 910 F.2d 784,
787 (11th Cir. 1990) (footnote omitted). We conclude that the district court and
the bankruptcy court had jurisdiction to enter orders on the garnishors’ motions.
District courts have jurisdiction over “all civil proceedings arising under title
11, or arising in or related to cases under title 11.” 28 U.S.C. § 1334(b). In order
to determine whether a matter is “related to” a bankruptcy case, we ask “whether
the outcome of the proceeding could conceivably have an effect on the estate being
administered in bankruptcy.” In re Lemco Gypsum, 910 F.2d at 788 (quoting
Pacor, Inc. v. Higgins (In re Pacor, Inc.), 743 F.2d 984, 994 (3d Cir. 1984),
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overruled on other grounds by Things Remembered, Inc. v. Petrarca, 516 U.S. 124,
116 S. Ct. 494 (1995)). A matter that is “related to” a bankruptcy case “need not
necessarily be against the debtor or against the debtor’s property.” Id. (quoting
Pacor, 743 F.2d at 994). “An action is related to bankruptcy if the outcome could
alter the debtor’s rights, liabilities, options or freedom of action (either positively
or negatively) and which in any way impacts upon the handling and administration
of the bankrupt estate.” Id. (quoting Pacor, 743 F.2d at 994).
The garnishment authorization order in this case has a direct impact on the
bankruptcy estate because it partially determines how the estate will be distributed.
The garnishment proceedings are clearly “related to” the bankruptcy case, and the
district court has jurisdiction over them.
The bankruptcy court had jurisdiction to authorize the garnishment of the
estate, because it has jurisdiction over all cases under title 11 and over all core
proceedings arising under title 11 or arising in a case under title 11. 28 U.S.C.
§ 157(b)(1). The bankruptcy court may exercise “full judicial power” over core
proceedings but may exercise “only limited power” over non-core proceedings. In
re Lemco Gypsum, 910 F.2d at 787. Core proceedings include, but are not limited
to, matters concerning the administration of the bankruptcy estate, the allowance or
disallowance of claims against the estate, proceedings affecting the adjustment of
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the debtor-creditor relationship, and determinations of the validity, extent, or
priority of liens against the estate. 28 U.S.C. § 157 (b)(2).
The trustee’s request to give effect to the garnishment judgments is a matter
concerning the administration of the estate. It is also a matter affecting the
adjustment of the debtor-creditor relationship because it determines which holders
of claims will receive a distribution. The jurisdiction of a bankruptcy court to
address issues arising out of the transfer of claims to third parties, pursuant to Fed.
R. Bankr. P. 3001(e), has not been challenged. Garnishing the bankruptcy estate in
favor of a third party has the same impact on the estate as does transferring a claim
from a creditor to a third party. Because the garnishment directly affects the
manner in which the bankruptcy estate is administered and distributed, it is a core
proceeding over which the bankruptcy court may exercise “full judicial power,” In
re Lemco Gypsum, 910 F.2d at 787.
IV.
The Bankruptcy Code and the Federal Rules of Bankruptcy Procedure are
silent about whether a trustee is subject to garnishment. There is nothing in either
the Code or the Rules, however, which prohibits garnishment of the trustee.
Conversely, the bankruptcy court is given the flexibility necessary to effectuate its
purposes. The Bankruptcy Code states that “[t]he court may issue any order,
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process, or judgment that is necessary or appropriate to carry out the provisions of
this title.” 11 U.S.C. § 105(a). Federal Rule of Civil Procedure 69(a), which
applies to adversarial bankruptcy proceedings by virtue of Fed. R. Bankr. P. 7069,
states that “[p]rocess to enforce a judgment for the payment of money shall be a
writ of execution, unless the court directs otherwise.”
Where “the language of the Code is silent, and the statute and legislative
history indicate no clear intent to abrogate prior law, we look to the prior law.”
Varsity Carpet Servs., Inc. v. Richardson (In re Colortex Indus., Inc.), 19 F.3d
1371, 1384 (11th Cir. 1994). Most of the case law addressing whether a trustee is
subject to garnishment predates the enactment of the Bankruptcy Code, and the
results are split. Compare, e.g., Grant v. Burns (In re American Elec. Tel. Co.),
211 F. 88 (7th Cir. 1914) (disallowing garnishment), with In re Kranich, 182 F.
849 (E.D. Pa. 1910) (allowing garnishment).
The pre-Code cases refusing to allow garnishment focused on the
impediment to efficiency that the introduction of garnishment into the bankruptcy
process would cause. See In re American Elec. Tel. Co., 211 F. at 91. At the time
these cases were decided, garnishment was often used as a pre-judgment remedy.
Allowing garnishment of the trustee could therefore seriously delay the bankruptcy
proceedings because the estate could not be closed and distributed until the
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underlying action giving rise to the garnishment had been resolved. See Priestly v.
Hilliard & Tabor (In re Argonaut Shoe Co.), 187 F. 784, 787 (9th Cir. 1911)
(disallowing garnishment of the trustee because garnishment would cause the
bankruptcy proceedings to “be stayed or prevented by the process of a state court,
the object of which is to withhold a dividend from a creditor entitled thereto for the
security of a plaintiff pending litigation”).
In situations where garnishment posed no impediment to the bankruptcy
process, garnishment was sometimes allowed. See In re Kranich, 182 F. at 850
(permitting garnishment of the trustee where the validity and amount of the
garnishment judgment had been conclusively established prior to the time of
distribution from the estate). In allowing garnishment of the trustee, the district
court stated:
The garnishee is an officer of this court, and has more than enough money in
his hands to satisfy the judgment; and, while the state tribunal could not
compel him to pay over the money, he himself has made no objection either
to the judgment or to the order that is now asked for by the creditor. Under
such circumstances I see no reason why this court should not pay due respect
to a tribunal of the state, and recognize a claim that has thus been
conclusively proved . . . .
Id.
The only post-Code case on point, NVLand, Inc. v. Vogel (In re Ocean
Downs Racing Ass’n., Inc.), 164 B.R. 249 (Bankr. D. Md. 1993), refused to allow
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garnishment of the trustee. The bankruptcy court in Ocean Downs relied heavily
on In re American Elec. Tel. Co. and concluded that “to permit a garnishment to be
taken against a bankruptcy trustee would impede and frustrate the policy of
promoting the orderly and expeditious administration of the debtors’ estates.” Id.
at 254. Though the bankruptcy court concluded that garnishment would impede
the bankruptcy process, it failed to describe any impediment that garnishment
might actually cause. It also neglected to distinguish the pre-judgment
garnishment at issue in In re American Elec. Tel. Co. from the post-judgment
garnishment before it. For these reasons, we find the holding in Ocean Downs
unpersuasive.
We see no reason to impose a per se ban on the garnishment of bankruptcy
trustees. The bankruptcy system recognizes the substitution of creditors. See Fed.
R. Bankr. P. 3001(e) (allowing a claim against the bankruptcy estate to be
transferred from a creditor of the estate to a third-party). While garnishment
should not be allowed if it unnecessarily complicates the administration of the
bankruptcy estate, the only burden on the trustee in this case was the substitution of
one creditor’s name and address for another. The claims giving rise to the writs of
garnishment had been reduced to final judgments, and the garnishment judgments
had been issued before the distribution of the debtor’s estate had begun.
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Furthermore, the trustee did not object to complying with the garnishments. Given
all of these circumstances, we conclude that the district court did not act
improperly in allowing the garnishments.
V.
Brickell contends that the garnishment judgment issued by the state court is
invalid. She argues that, as a state judgment, the garnishment is not enforceable in
bankruptcy court. She also attacks the underlying basis of the state court
judgment, arguing that the state court erred when it ruled against her.
First, the identity of the court issuing the writ of garnishment is irrelevant.
Claims against a bankruptcy estate are often based on judgments obtained in state
court. For example, Brickell’s claim against her ex-husband’s estate arose out of a
state-court determination that she was entitled to alimony. Second, this Court
cannot revisit the merits of the underlying state judgment. The Rooker-Feldman
doctrine prevents us from reviewing a final judgment entered by a state court. See
Goodman ex rel. Goodman v. Sipos, 259 F.3d 1327, 1332 (11th Cir. 2001).
VI.
We review the denial of a Rule 59(e) motion to alter or amend judgment for
abuse of discretion. Mays v. U.S. Postal Serv., 122 F.3d 43, 46 (11th Cir. 1997)
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(per curiam). “The only grounds for granting [a Rule 59(e)] motion are
newly-discovered [previously unavailable] evidence or manifest errors of law or
fact.” Kellogg v. Schreiber (In re Kellogg), 197 F.3d 1116, 1119 (11th Cir. 1999).
Rule 59(e) may not be used to relitigate a claim or to present arguments or
evidence that could have been raised prior to the entry of judgment. Mincey v.
Head, 206 F.3d 1106, 1137 n.69 (11th Cir. 2000). Brickell’s motion does not
expose any errors of law or fact or present any newly discovered or previously
unavailable evidence. Accordingly, the district court did not abuse its discretion in
denying the motion.
AFFIRM.
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