Burch v. Freedom Mortgage ( 2021 )

Case: 20-10498 Document: 00515699838 Page: 1 Date Filed: 01/08/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
January 8, 2021
No. 20-10498 Lyle W. Cayce
Summary Calendar Clerk
In the Matter of: William Paul Burch
Debtor,
William Paul Burch,
Appellant,
versus
Freedom Mortgage Corporation,
Appellee,
______________________________
In the Matter of: William Paul Burch
Debtor,
William Paul Burch,
Appellant,
versus
JP Morgan Chase Bank National Association,
Appellee,
______________________________
Case: 20-10498 Document: 00515699838 Page: 2 Date Filed: 01/08/2021
No. 20-10498
In the matter of: William Paul Burch
Debtor,
William Paul Burch,
Appellant,
versus
Hughes Waters Askanase; Michael Weems; Specialized
Loan Servicing, L.L.C.; Padfield; Stout, L.L.P.; Mark W.
Stout,
Appellees,
______________________________
In the Matter of: William Paul Burch
Debtor,
William Paul Burch,
Appellant,
versus
Homeward Residential, Incorporated,
Appellee,
______________________________
In the Matter of: William Paul Burch
Debtor,
William Paul Burch,
Appellant,
versus
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Homeward Residential, Incorporated,
Appellee,
______________________________
In the Matter of: William Paul Burch
Debtor,
William Paul Burch,
Appellant,
versus
Ocwen Loan Servicing Company,
Appellee.
Appeal from the United States District Court
for the Northern District of Texas
USDC Nos. 4:20-CV-363, 4:20-CV-364, 4:20-CV-365,
4:20-CV-366, 4:20-CV-367, 4:20-CV-369
Before Jolly, Elrod, and Graves, Circuit Judges.
Per Curiam:*
The underlying proceedings that led to this consolidated appeal began
as six separate state court actions filed by Appellant William Paul Burch
based on a Chapter 11 plan confirmed by a bankruptcy court in 2009. The
defendants in each proceeding removed those claims either directly to the
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
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Bankruptcy Court for the Northern District of Texas, or to the District Court
for the Northern District of Texas, which referred those cases to the
Bankruptcy Court for the Northern District of Texas under 28 U.S.C.
§ 157(a). The bankruptcy court denied Burch’s motions to remand each of
the cases and dismissed some of the cases under rules 12(b)(6) or 12(c).
Burch appealed each of those decisions to the district court, including in
some cases where the bankruptcy court had yet to rule on the merits. The
district court denied Burch’s request to proceed in forma pauperis (“IFP”)
and warned Burch that failure to pay the filing fee would result in dismissal.
When Burch did not timely pay the filing fee, the district court dismissed his
appeals. Burch then appealed to this court, arguing that the bankruptcy court
lacked subject-matter jurisdiction over the removed cases. We dismiss
Burch’s appeals against Homeward Residential, Inc. (“Homeward”) and
Ocwen Loan Servicing Corp. (“Ocwen”) for lack of subject-matter
jurisdiction and affirm the district court’s dismissal of the remaining
appeals.
I.
In 2006 and 2007, Burch and his wife, Juanita Burch, obtained
mortgages on several properties in Texas. Each of those mortgages was held
by the various defendant-appellants in this appeal. On December 1, 2008, the
Burches filed for chapter 11 bankruptcy (“the 2008 Bankruptcy Case”) to
prevent foreclosure on the properties. On December 9, 2009, the Bankruptcy
Court for the Northern District of Texas entered an order confirming a plan
of reorganization under chapter 11 (“2009 Chapter 11 Plan”). The order
accompanying the 2009 Chapter 11 Plan included provisions calling for the
Burches and the mortgagees to “enter into a New [] Note” for each of the
properties, and the order set the payment terms for these new notes.
Burch filed a second bankruptcy petition on December 28, 2012, also
in the Bankruptcy Court for the Northern District of Texas. This petition
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was filed under chapter 13 but was converted to chapter 11 on December 23,
2013. The defendant-appellees in this case filed proofs of claims in the 2012
bankruptcy case, which the bankruptcy court recognized. Nothing in the
2012 bankruptcy case chapter 11 plan or confirmation order indicated that the
defendant-appellees’ secured claims were void or disallowed because of
language in the 2009 Chapter 11 Plan or because of events that took place
after confirmation of the 2009 Chapter 11 Plan. The 2012 bankruptcy case
was converted to chapter 7 on January 30, 2018, based on, among other
things, Burch’s defaults under the 2012 bankruptcy case’s chapter 11 plan.
The 2012 bankruptcy case is still pending.
In 2018, Burch began filing claims in Texas state courts against the
defendant-appellants, generally asserting that the defendant-appellants failed
to timely provide certain loan documents that he said the 2009 Chapter 11
Plan required, rendering the defendant-appellants’ liens on Burch’s
properties void. Specifically, Burch alleges that the defendant-appellees
failed to timely comply with the 2009 Chapter 11 Plan’s requirement of new
notes and mortgages on each of the properties, and this failure invalidates the
original notes and liens. The defendant-appellants each removed those cases
to federal courts based on either diversity jurisdiction—which were removed
to the district court—or as cases related to the bankruptcy proceedings under
28 U.S.C. §§ 1334 and 1452—which cases were removed directly to the
bankruptcy court.
The district court transferred the cases before it to the bankruptcy
court, where Burch moved to remand to state court and the defendants all
moved for dismissal under rules 12(b)(6) or 12(c). The bankruptcy court
denied Burch’s motions to remand in each of the cases, concluding that
“none of the Motions identify any factual or legal basis challenging the initial
removal of each case or justifying remand of any of the cases to a Texas state
court.” The bankruptcy court further concluded that Burch’s “Motion fails
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to identify any reason why this Court does not have subject matter
jurisdiction over the Plaintiff’s claims asserted in each of the Adversary
Proceedings,” and the bankruptcy court instead concluded that is has “core
matter jurisdiction” over each of the removed cases under 28 U.S.C. § 157.
The bankruptcy court determined that each removed case is premised on the
2008 chapter 11 case’s bankruptcy plan, and the “the bulk, if not all, of
Plaintiff’s claims in each of the Adversary Proceedings attempt to collaterally
attack the Court’s prior orders relating to either the 2008 Bankruptcy Case
and/or the 2012 Bankruptcy Case.” In 2019 and early 2020, the bankruptcy
court granted some of the defendant-appellees’ motions to dismiss. Burch
then appealed each of his cases to the district court, but the bankruptcy court
had entered final judgment in only some of the cases; in others it had only
denied Burch’s motions for remand.
Before the district court, Burch sought leave to proceed IFP. The
district court denied Burch’s IFP request, relying in part on the bankruptcy
court’s designation of Burch as a vexatious litigant in concluding that Burch’s
appeals were not taken in good faith. The district court also denied Burch’s
motions for reconsideration of its decisions on the IFP motion. The district
court then warned Burch that if the filing fees were not paid by May 12, 2020,
his appeals “may be dismissed.” After Burch failed to timely pay the required
filing fee, the district court dismissed his appeals. Burch now appeals to this
court, generally arguing that the bankruptcy court lacked subject-matter
jurisdiction over the removed state-law claims. At the time Burch appealed
to this court, the bankruptcy court had not entered final judgments in
Burch’s cases against defendant-appellees Homeward and Ocwen, leading
the two defendant-appellees to seek dismissal for lack of subject matter
jurisdiction. However, the bankruptcy court has since dismissed each of
Burch’s underlying cases.
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II.
We must first determine whether we have jurisdiction over each of
Burch’s appeals. Some of his appeals—the ones against Homeward and
Ocwen—came to this court while the underlying proceedings against him
were ongoing, but each of those cases has since been closed in the bankruptcy
court.
Parties to a bankruptcy proceeding may appeal all of a bankruptcy
court’s final orders to the district court as of right. Matter of Greene Cty.
Hosp., 835 F.2d 589, 591 (5th Cir. 1988). The parties may also appeal final
orders to the court of appeals as of right. Id. A district court may, in its
discretion, take jurisdiction over interlocutory appeals from the bankruptcy
court, but we have no such discretion; our jurisdiction over appeals from
cases arising in bankruptcy court extends to all “final judgments, orders and
decrees” entered by the district courts. 28 U.S.C. § 158(d), referencing
subsection 158(a); In re Greene Cnty. Hospital, 835 F.2d 589, 590 (5th Cir.
1988) (noting that “28 U.S.C. § 158 limits circuit court jurisdiction to ‘final’
orders of district courts”). Accordingly, our jurisdiction over bankruptcy
appeals is more limited than that of district courts—for us, the issue of
finality is central.
If a district court’s remand order requires extensive further
proceedings in the bankruptcy court, then this court does not view the district
court’s order as final, and thus it is not appealable. See In re Caddo Parish–
Villas S., Ltd., 174 F.3d 624, 628 (5th Cir. 1999) (“A long, unbroken line of
cases establishes the general rule in this circuit that a district court order is
not a final order under section 158(d) where that order reverses an order of
the bankruptcy court and remands the case to the bankruptcy court for
significant further proceedings.”). “In determining what constitutes
‘significant further proceedings,’ we distinguish between those remands
requiring the bankruptcy court to perform ‘judicial functions’ and those
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requiring mere ‘ministerial functions.’” In re Cortez, 457 F.3d 448, 453 (5th
Cir. 2006) (citation omitted). A remand order is not final when it requires a
bankruptcy court to perform judicial functions or requires the exercise of
judicial discretion. Cortez, 457 F.3d at 453 (“Remands that require the
bankruptcy court to perform judicial functions, such as additional fact-
finding, are not final orders and, therefore, are not appealable to this court.”
(citing In re Aegis Specialty Mktg., Inc., 68 F.3d 919, 921 (5th Cir. 1995))).
Turning to this case, the notices of appeal in three of the cases below
involving Homeward and Ocwen were from the bankruptcy court’s denial of
Burch’s motion for remand, and so, when the district court dismissed those
appeals, the underlying proceedings were still live, with significant motions
pending before the bankruptcy court. “The district court’s order [in those
cases] is therefore not a final order, and as such, it is not appealable to this
Court.” In re Yazoo Pipeline Co., L.P., 746 F.3d 211, 216 (5th Cir. 2014). The
bankruptcy court, however, has since entered final judgment in Burch’s cases
against Homeward and Ocwen. But Burch did not appeal those decisions to
the district court. Accordingly, in those cases, Burch appeals not the district
court’s dismissal of Burch’s appeals, but rather the bankruptcy court’s
dismissal of the underlying actions. Accordingly, neither § 1452 nor
§ 158(d)(1), which confers appellate jurisdiction only over final decisions of
the district court, affords us subject-matter jurisdiction over the Homeward-
Ocwen appeals. See Gomez, 404 F. App’x at 855. 1
The only remaining potential basis for our jurisdiction over the
Homeward-Ocwen appeals—§ 158(d)(2)—is inapplicable. See 28 U.S.C.
1
A bankruptcy court’s decision not to remand, based not on equitable grounds but
rather on subject-matter jurisdiction, is reviewable by the court of appeals. See In re
Bissonnet Investments LLC, 320 F.3d 520, 525 (5th Cir. 2003). But no statute authorizes an
appeal to this court from a bankruptcy court’s denial of a remand motion before the
bankruptcy court has entered a final order.
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§ 158(d)(2)(A) (giving circuit courts discretion to hear a direct appeal from a
bankruptcy court decision in the event the bankruptcy court, the district
court, a bankruptcy appellate panel, or all appellants and appellees acting
jointly make a statutory certification). Burch’s failure to satisfy the statutory
certification requirement concludes our jurisdictional inquiry. See Bowles v.
Russell, 551 U.S. 205, 213 (2007) (stating that when an “appeal has not been
prosecuted in the manner directed, within the time limited by the acts of
Congress, it must be dismissed for want of jurisdiction”). And even if Burch
had tried to invoke § 158(d)(2)(A), certification would not have been proper
given the straightforward legal issues before the bankruptcy court regarding
the interpretation of its own orders in the 2009 Chapter 11 Plan. Accordingly
we dismiss for want of jurisdiction Burch v. Homeward, Adv. No. 19-04075-
mxm (district court case No.4:20-cv-366-A); Burch v. Homeward, Adv. No.
19-04074-mxm (district court case No. 4:20-cv-00367-A); and Burch v.
Ocwen, Adv. No. 19-04039-mxm (district court case No. 4:20-cv-369-A).
III.
Turning to the remaining cases, Burch’s arguments are frivolous. He
argues that the bankruptcy court lacked subject-matter jurisdiction over
Burch’s removed state-law claims. We review whether “a district or
bankruptcy court possessed subject matter jurisdiction over a bankruptcy
case de novo.” In re KSRP, Ltd., 809 F.3d 263, 266 (5th Cir. 2015). “A
bankruptcy court’s jurisdiction extends to all civil proceedings arising under
title 11, or arising in or related to cases under title 11.” In Matter of Galaz, 841
F.3d 316, 322 (5th Cir. 2016). A bankruptcy court also maintains
“jurisdiction to interpret and enforce its own prior orders.” Galaz, 841 F.3d
at 322. “Subject matter jurisdiction remains in the bankruptcy court, even
after a bankruptcy case is closed, to assure that the rights afforded to a debtor
by the Bankruptcy Code are fully vindicated.” Id. A bankruptcy court
maintains “jurisdiction to interpret and enforce its own prior orders.”
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Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009). “Subject matter
jurisdiction remains in the bankruptcy court, even after a bankruptcy case is
closed, ‘to assure that the rights afforded to a debtor by the Bankruptcy Code
are fully vindicated.’” In Matter of Galaz, 841 F.3d 316, 322 (5th Cir. 2016)
(quoting Padilla v. Wells Fargo Home Mortg., Inc. (In re Padilla), 379 B.R. 643,
652 n.4 (Bankr. S.D. Tex. 2007)).
Regarding a district court’s transfer of a proceeding to a bankruptcy
court, 28 U.S.C. § 157(a) provides that “each district court may provide that
proceedings arising under title 11 as core proceedings or arising in or related
to a case under title 11, shall be referred to the bankruptcy judges for the dis-
trict.” A proceeding is “core” if “it invokes a substantive right provided by
title 11 or if it is a proceeding that, by its nature, could arise only in the context
of a bankruptcy case.” In re Wood, 825 F.2d 90, 97 (5th Cir. 1987). The dis-
trict court may also refer a case to the bankruptcy judge if the case is related
to a bankruptcy case. Wood, 825 F.2d at 93. A case is “related” to a bank-
ruptcy proceeding if “the outcome of [the non-bankruptcy] proceeding could
conceivably have any effect on the estate being administered in bankruptcy.”
Id. (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3rd Cir. 1984)).
Burch’s removed state-law claims plainly fit within these definitions.
Each of Burch’s state-court claims is premised on his interpretation of a
Chapter 11 bankruptcy order, and so each arises from or is related to his Title
11 bankruptcy proceedings. Specifically, Burch alleges that the 2009 Chapter
11 Plan required the defendants to issue new mortgage notes within six
months, and so the defendants’ alleged failure to do so renders invalid their
mortgage liens on his properties. Additionally, in the 2012 bankruptcy pro-
ceedings, the bankruptcy court entered additional orders pertaining to the
properties and the continued validity of the notes and liens at issue. See Burch
v. Freedom Mort. Corp., 4:18-CV-01015-O-BP, 2019 WL 3021176, at *1 (N.D.
Tex. July 2, 2019), report and recommendation adopted, 4:18-CV-01015-O-BP,
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2019 WL 3006535 (N.D. Tex. July 10, 2019). The state law causes of action
that Burch asserts bear on the interpretation and execution of the 2009 Chap-
ter 11 Plan. Further, the removed cases would “conceivably affect” the bank-
ruptcy estate by potentially negating the defendant-appellees secured claims,
Wood, 825 F.2d at 93 (cleaned up), and so the district court properly trans-
ferred the removed cases to the bankruptcy court. Alternatively, the bank-
ruptcy court and the district court also had diversity jurisdiction over Burch’s
suit against JP Morgan Chase Bank. Burch is a citizen of Texas, while JP Mor-
gan Chase is a citizen of Ohio, and Burch expressly sought monetary damages
from JP Morgan Chase in excess of $75,000.00. See 28 U.S.C. § 1332. Ac-
cordingly, both the district court and the bankruptcy court had jurisdiction
over the removed cases.
IV.
The bankruptcy court dismissed Burch’s claims under rule 12(b) and
12(c), and the district court dismissed Burch’s appeals from the bankruptcy
court for failure to pay the filing fee after the district court denied Burch’s
request to proceed IFP. Burch argues that the bankruptcy court’s rule 12
dismissals violate his Seventh Amendment rights. But a bankruptcy court’s
dismissal of claims pursuant to a valid 12(b)(6) motion does not violate a
plaintiff’s right to a jury trial under the Seventh Amendment. See Haase v.
Countrywide Home Loans, Inc., 748 F.3d 624, 631 n.5 (5th Cir. 2014);
McFarland v. Leyh, 52 F.3d 1330, 1339 (5th Cir. 1995) (“No right to a jury
trial arises if no jury issue is presented to the court.”); King v. Fidelity Nat.
Bank of Baton Rouge, 712 F.2d 188, 192-93 (5th Cir. 1983).
Finally, although Burch now contests the bankruptcy court’s
jurisdiction, he does not contest the district court’s dismissal of his appeal
for failure to pay the filing fee or the district court’s denial of his motion to
proceed in forma pauperis. While “the denial by a District Judge of a motion
to proceed in forma pauperis is an appealable order,” Roberts v. U.S. Dist.
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Ct., 339 U.S. 844, 845 (1950) (per curiam), Burch forfeited this issue by
failing to brief it. See, e.g., United States v. Elashyi, 554 F.3d 480, 494 (5th Cir.
2008). This court liberally construes pro se litigants’ briefing, but even pro
se litigants must brief their arguments to avoid forfeiture. See Grant v.
Cuellar, 59 F.3d 523, 524 (5th Cir. 1995); Yohey v. Collins, 985 F.2d 222, 225
(5th Cir. 1993).
In any case, even if Burch did not waive this issue, the district court
did not abuse its discretion in dismissing Burch’s appeals. This court
“review[s] actions taken by the district court in its appellate role for an abuse
of discretion.” In re CPDC Inc., 221 F.3d 693, 698 (5th Cir. 2000). The
district court did not abuse its discretion in denying Burch’s IFP motion or
in dismissing Burch’s appeal. A litigant seeking IFP status must submit an
affidavit identifying all assets she possesses, as well as a statement that she is
unable to pay the necessary fees of bringing a federal civil action. 28 U.S.C.
§ 1915(a)(1). “In proceedings brought in forma pauperis, the district court
has discretion to dismiss the case if the allegation of poverty is untrue. 28
U.S.C. § 1915(d).” Lay v. Justices-Middle Dist. Court, 811 F.2d 285, 285 (5th
Cir. 1987). Here, Burch submitted no affidavit, but instead provided a brief
narrative about his social security income. The district court accordingly did
not abuse its discretion in denying Burch’s IFP motion. As for its subsequent
dismissal for Burch’s failure to pay the filing fees, this court has affirmed a
district court’s dismissal of a bankruptcy appeal for failure to pay the filing
fees after denial of an IFP request. In re Valentine, 733 F. App’x 184, 187 (5th
Cir. 2018) (per curiam); In re Hall, 354 F. App’x 842, 843 (5th Cir. 2009)
(per curiam) (finding “no error in the dismissal of the [appellant’s] appeal
from the bankruptcy court on account of his failure to pay the filing fees”).
V.
We dismiss Burch’s appeals against Homeward and Ocwen for want
of jurisdiction, and we otherwise affirm the district court’s dismissal of
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Burch’s remaining appeals. We also note that, after Burch filed a series of
baseless motions, the bankruptcy court deemed Burch a vexatious litigant.
Burch has continued his pattern of filing excessive and frivolous motions
before this court. We warn Burch that any further frivolous or abusive filings
in this court, the district court, or the bankruptcy court will invite the
imposition of sanctions, including dismissal, monetary sanctions, and/or
restrictions on his ability to file pleadings in this court and any court subject
to this court’s jurisdiction.
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