Yelverton v. Webster (In Re Yelverton) , 526 B.R. 429 ( 2014 )


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  •                              UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF COLUMBIA
    IN RE: STEPHEN THOMAS
    YELVERTON,
    Debtor.
    STEPHEN THOMAS YELVERTON,
    Appellant,
    v.                          Case No. 1:13-cv-1544 (CRC)
    WENDELL W. WEBSTER, PHYLLIS                        Bankruptcy No. 09-00414
    EDMUNDSON, DEBORAH MARM,
    Appellees.
    OPINION AND ORDER
    Stephen Thomas Yelverton is no stranger to the courts. Since entering bankruptcy in 2009,
    he has filed over 40 lawsuits, adversary bankruptcy proceedings, or appeals of the bankruptcy
    court’s rulings. This particular matter involves appeals of three orders of the bankruptcy court
    denying various motions to reconsider the court’s order approving the Trustee’s settlement
    agreement. 1 Yelverton has also moved for sanctions against counsel for appellees—his sisters
    Phyllis Edmundson and Deborah Marm—which the Court will deny. In response to the sanctions
    motion, counsel for Edmundson and Marm request that the Court issue a pre-filing injunction
    against Yelverton for repeated instances of abusive and frivolous filings. The Court ordered the
    parties to submit briefs and record evidence regarding whether Yelverton’s actions in this and other
    courts warrant a pre-filing injunction and held a hearing on June 27, 2014. Because of the
    astounding scope of Yelverton’s abusive and frivolous filings in this and other courts, the Court
    concludes that a pre-filing injunction is warranted.
    1
    Yelverton’s appeal of the order approving the bankruptcy settlement agreement is a separate case
    before the Court, In re Yelverton, 12-1539 (D.D.C.).
    I.      Background
    The circumstances of Yelverton’s bankruptcy are well documented elsewhere. See, e.g.,
    Memorandum Opinion, Yelverton v. Senyi de Nagy-Unyom, 13-74, at 11 (D.D.C. Nov. 27, 2013).
    For purposes of this opinion, the Court will provide a brief recitation of only the most relevant
    facts. Yelverton filed for bankruptcy in 2009. His scheduled assets included land in North
    Carolina, a 2006 Mercedez Benz, and litigation claims against the owners of Yelverton Farms, Ltd.,
    a closely-held corporation that operates a pig farm in North Carolina. Bankruptcy Schedules, In re
    Yelverton, 9-414, Dkts. 22 (Bankr. D.C. May 19, 2009), 30 (May 29, 2009). Yelverton Farms is
    operated by Yelverton’s two sisters, Phyllis Edmundson and Deborah Marm; Yelverton is a
    minority stock owner. Webster v. Yelverton Farms, Ltd., 9-331, Dkt 3 (E.D.N.C. July 29, 2009).
    After the bankruptcy court converted Yelverton’s proceedings to a Chapter 7 liquidation, the
    appointed trustee negotiated a global settlement of Yelverton’s estate, which the bankruptcy court
    approved. Order, In re Yelverton, 9-414, Dkt 447 (March 20, 2012). In this appeal, Yelverton
    challenges three bankruptcy court orders that denied successive motions: one for relief from the
    order approving settlement; a second to vacate the order denying relief from the order approving
    settlement; and a third to vacate the order denying his motion to vacate. The substance of
    Yelverton’s appeal of these nesting-doll orders will be addressed in a separate opinion by the Court.
    II.     Yelverton’s Sanctions Motion
    Yelverton has moved for sanctions against counsel for Edmundson and Marm pursuant to
    28 U.S.C. § 1927, which provides that “[a]ny attorney . . . who so multiplies the proceedings in any
    case unreasonably and vexatiously may be required by the court to satisfy personally the excess
    costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” The purpose of
    Section 1927 is to “allow the court to assess attorneys’ fees against an attorney who frustrates the
    progress of judicial proceedings.” United States v. Wallace, 
    964 F.2d 1214
    , 1217 (D.C. Cir. 1992).
    2
    Not only are Yelverton’s accusations in his motion for sanctions plainly without merit, the
    filing itself is abusive and vexatious. He asserts that counsel for Edmundson and Marm
    misrepresented to the bankruptcy court that Wade H. Atkinson, a former business associate of
    Yelverton’s, owned Yelverton’s stock in Yelverton Farms. Appellant’s Mot. for Sanctions at 9–10.
    Yelverton has made this same accusation repeatedly to the bankruptcy court and others, and it has
    been rejected as baseless each time. See Mem. Decision, In re Yelverton, 9-414, Dkt. No. 681, at 6
    (Bankr. D.C. Aug. 8, 2014) (finding that Edmundson and Marm had not misrepresented who owned
    Yelverton Farms and that no confusion existed at the time of the settlement agreement); Mem.
    Decision, In re Yelverton, 9-414, Dkt. No. 695, at 1–5 (Bankr. D.C. Aug 27, 2014) (finding that
    Yelverton did not have grounds to file an untimely motion for reconsideration based on the same
    fraud allegations the bankruptcy court had recently rejected); Pre-Filing Injunction, Yelverton v.
    Edmundson, et al., 13-1543, at 2 n.1 (N.C. Sup. Ct, Wayne Cnty. Apr. 4, 2014) (finding it “most
    troubling” that Yelverton had made the same baseless allegations of fraud before the North Carolina
    Superior Court the day after the same claim had been rejected by the bankruptcy court).
    As Yelverton aknowledged at the hearing before the Court, he assigned his stock in
    Yelverton Farms to Atkinson as collateral on a loan of $300,000, but later sent Atkinson a letter
    revoking the stock assignment. In light of the assigment, the record is clear that Edmundson and
    Marm raised a legitimate concern in the bankruptcy proceeding about whether Yelverton owned the
    stock outright and wanted the issue resolved before negotiating with the bankruptcy trustee over
    Yelverton’s shares. None of the records Yelverton cites show that Edmundson or Marm ever
    claimed that Atkinson owned the 1,333 shares. For instance, Yelverton points to Edmundson and
    Marm’s Opposition to a Motion for a New Judgment by Yelverton in his core bankruptcy
    proceeding, In re Yelverton, Case No. 9-414 (Bankr. D.C. Sep. 15, 2010). That motion, however,
    begins by identifying Yelverton as “a minority shareholder in Yelverton Farms” and acknowledges
    3
    that “Atkinson now appears to have repudiated his ownership interest in the shares[.]” 
    Id. at 2,
    4.
    Far from proving that counsel for Edmundson and Marm maintained that Atkinson owned the
    stock, their filing directly refutes Yelverton’s assertions. 2 Yelverton’s motion for sanctions is
    denied.
    III.   Pre-Filing Injunction
    The constitutional right of access to the courts “is neither absolute nor unconditional.” In re
    Green, 
    669 F.2d 779
    , 785 (D.C. Cir. 1981). In response to a litigant who seeks to flood the courts
    with meritless claims and filings, the Court “has an obligation to protect and preserve the sound and
    orderly administration of justice.” Urban v. United Nations, 
    768 F.2d 1497
    , 1500 (D.C. Cir. 1985)
    (internal citations omitted). “[I]n fashioning a remedy to stem the flow of frivolous actions, a court
    must take great care not to ‘unduly impair . . . [a litigant's] constitutional right of access to the
    courts.’” 
    Id. (internal citations
    omitted). By the same token, if a litigant continues to abuse the
    judicial process by filing frivolous, duplicative, and harassing lawsuits, “a Court may employ
    injunctive remedies to protect the integrity of the courts and the orderly and expeditious
    administration of 
    justice.” 768 F.2d at 1500
    .
    In determining whether sanctions are appropriate for abusive filings, this Court considers
    the “number and content” of the filings and their effect on parties and the courts. In re Powell, 
    851 F.2d 427
    , 433–34 (D.C. Cir. 1988); accord Butler v. DOJ, 
    492 F.3d 440
    (D.C. Cir. 2007). Before
    barring a pro se litigant from future filings, the district court must provide an opportunity for a
    hearing, develop a factual record, and “make substantive findings as to the frivolousness of
    numerous actions” and “any pattern constituting harassment.” 
    Powell, 851 F.2d at 431
    . The
    2
    Yelverton also claims that counsel for Edmundson and Marm fraudulently maintained that
    Yelverton Farms was worthless, but he provides no support for this accusation. Even if taken as
    true, Yelverton’s assertions amount to nothing more than a disagreement between the parties over
    the value of the company.
    4
    district court may only consider pending cases “for the limited purpose of determining whether the
    litigant has filed similar claims or for analyzing the prospective effect of the claims[.]” 
    Id. The Court
    notified the parties by order on May 21, 2014, to submit briefing on whether a
    pre-filing injunction was warranted. All parties to the case filed memoranda and exhibits in
    response to the Court’s order, and a hearing with all parties was held June 27, 2014. Based upon
    the hearing, the parties’ filings and the public record in Yelverton’s many cases, a pre-filing
    injunction against Yelverton for abusive and frivolous filings is more than justified.
    The number of Yelverton’s filings clearly indicates his penchant for unduly burdening the
    court system. In another of Yelverton’s cases filed before this Court, Judge Wilkins denied
    Yelverton leave to file his appeal of bankruptcy court orders in forma pauperis, finding he was an
    abusive litigant. Judge Wilkins catalogued 38 cases or appeals—excluding his core bankruptcy
    proceeding—filed by Yelverton from 2009 to 2013. Memorandum Opinion, Yelverton v. Senyi de
    Nagy-Unyom, 13-cv-74, at 11 (D.D.C. Nov. 27, 2013). Since then, Yelverton has filed at least two
    additional cases in this Court and the Eastern District of North Carolina, along with two new
    adversary proceedings in bankruptcy court. Twelve of his cases have been dismissed for lack of
    standing and he has not succeeded in any of his appeals of bankruptcy and district court orders
    against him. 
    Id. at 13–15.
    In these 40-plus cases, Yelverton has filed over 150 motions, including
    over 50 motions to reconsider, vacate, amend, or obtain relief from a judgment or order. In this
    Court alone, Yelverton has filed or intervened in 18 cases since 2010 and has filed approximately
    72 motions. A particularly striking example of his penchant for abusive filings is Yelverton v. Fox,
    13-314 (D.D.C.), where Yelverton sued the counsel for the District of Columbia Court of Appeals
    who had sat on the Hearing Committee that heard ethics charges against him. In that case,
    Yelverton filed, among other papers, eleven motions to amend or supplement his filings, four
    motions for preliminary injunctive relief, and seven motions or supplements to motions to
    5
    reconsider the Court’s order dismissing the case. This Court has imposed pre-filing injunctions
    against plaintiffs who have filed a similar number or fewer frivolous filings. See Caldwell v.
    Obama, 
    2013 WL 6094237
    , at *11–12 (D.D.C. Nov. 20, 2013) (five cases involving over 100 court
    filings regarding the identical frivolous allegations); Kaufman v. IRS, 
    787 F. Supp. 2d 27
    , 29–30
    (D.D.C. 2011) (15 pro se cases filed in federal courts over a ten year period, almost all of which
    had been dismissed); Anderson v. District of Columbia Pub. Defender Serv., 
    881 F. Supp. 663
    , 665
    (D.D.C. 1995) (33 complaints “against a variety of prosecutors, defense counsel (including the
    Public Defender), judges, [and] the Bar Counsel of the District of Columbia Bar”); Stich v. United
    States, 
    773 F. Supp. 469
    (D.D.C. 1991) (15 cases in the District Court for the District of Columbia
    over a five year period).
    The volume of filings alone would not be determinative if his arguments and assertions were
    generally colorable, but Yelverton repeatedly makes the same arguments before various courts,
    despite prior resolution against him. The fraud allegations in the motion for sanctions at issue here
    are a prime example. The bankruptcy court determined that neither Edmundson and Marm nor their
    counsel made any misrepresentations to the bankruptcy court or the trustee regarding whether
    Atkinson owned Yelverton Farms stock. Yet Yelverton made the same allegation in the North
    Carolina Superior Court, which again rejected it. Undeterred by the prior resolution of this issue,
    he repeats the same allegation before this Court in both his motion for sanctions and other filings.
    This Court, as have others before, has reviewed the substance of his allegations and finds them
    completely lacking in merit, as discussed above.
    Likewise, Yelverton has filed numerous lawsuits in an attempt to claw-back his stock in
    Yelverton Farms from bankruptcy. He has filed six suits in the Eastern District of North Carolina,
    the United States Bankruptcy Court for the District of Columbia, and the Superior Court of Wayne
    County, North Carolina, all claiming breaches of fiduciary duties by Edmundson and Marm and
    6
    seeking to force a transfer of stock or distributions. Yelverton v. Yelverton Farms, Ltd., 9-331
    (E.D.N.C.); Yelverton v. Yelverton Farms, 14-365 (E.D.N.C.); Yelverton v. Edmundson, 10-10003
    (Bankr. D.C.); Yelverton v. Edmundson, 10-10004 (Bankr. D.C.); Yelverton v. Marm, 14-10024
    (Bankr. D.C.); Yelverton v. Edmundson, 13-1543 (N.C. Sup. Ct, Wayne Cnty.). Three of five the
    current appeals pending before this Court involve various orders by the bankruptcy court regarding
    this same property. In re Yelverton, 12-1539 (D.D.C.); In re Yelverton, 13-454 (D.D.C.); In re
    Yelverton, 13-1544 (D.D.C.).
    Yelverton has also filed cases and motions for no other apparent purpose than harassment.
    Exhibit A is the sanctions motion in this case, which seeks sanctions against counsel for
    Edmundson and Marm, including counsel not even involved in the case, based on fanciful
    allegations of fraud that have been rejected repeatedly by this and other courts. Yelverton filed a
    case in bankruptcy court claiming fraud and breach of fiduciary duties by the bankruptcy trustee
    and counsel for Edmundson and Marm based on these same or similar frivolous allegations. Ex rel.
    Yelverton, 14-10014 (Bankr. D.C.). As stated above, he sued counsel for the D.C. Court of
    Appeals for determining that Yelverton’s abusive conduct warranted disciplinary measures. Filings
    such as these, aimed at nothing more than harassing the individuals involved in cases with
    Yelverton, are appropriate grounds for a pre-filing injunction. See Caldwell, 
    2013 WL 6094237
    , at
    *11–12 (issuing pre-filing injunction against plaintiff for making “repetitive filings of meritless
    claims against federal officials, federal judges and private parties” who issue rulings against him or
    are opposing parties or counsel).
    This is not the first time that a court has issued a pre-filing injunction against Yelverton.
    The bankruptcy court sanctioned Yelverton by relieving other parties from the obligation to respond
    to his filings unless so ordered by the court. Mem. Decision, In re Yelverton, 9-414 (Bankr. D.C.
    Sep. 10, 2013). The Superior Court of Wayne County, North Carolina issued a “Gatekeeper Order”
    7
    restricting Yelverton from filing any additional documents with the court, Pre-Filing Injunction,
    Yelverton v. Edmundson, et al., 13-1543, at 6 (N.C. Sup. Ct, Wayne Cnty. Apr. 4, 2014), and
    noting the other pre-filing injunctions imposed upon Yelverton, including one in D.C. Family
    Court. 
    Id. at 2–5
    & nn.2–3. And in this Court, Judge Wilkins issued a pre-filing injunction in one
    of Yelverton’s bankruptcy appeals because Yelverton had filed numerous supplemental pleadings
    after the appeal had been fully briefed. Order, In re Yelverton 12-1539 (D.D.C. Dec. 12. 2012)
    (“Yelverton shall refrain from filing additional documents without first seeking leave of Court”).
    Yelverton’s motions for reconsideration of that order were denied, as was his interlocutory appeal
    to the D.C. Circuit. Mandate, In re Yelverton, 12-1539 (D.D.C. Oct. 16. 2013). After he proceeded
    to violate the order repeatedly, the Court issued a second order “warn[ing him] that further abuses
    may result in sanctions, including dismissal with prejudice.” Order, In re Yelverton, 12-1539, at 2
    (D.D.C. Jan. 9. 2014). Undeterred, Yelverton proceeded to file five additional motions in that
    case—all of which either sought reconsideration of the Court’s orders or presented additional
    arguments in support of his bankruptcy appeal—in direct violation of the Court’s multiple orders.
    After the Court struck his subsequent motions as being in violation of the prior orders, Minute
    Order, In re Yelverton, 12-1539 (D.D.C. June 3. 2014), Yelverton proceeded to move for leave to
    certify another interlocutory appeal and for reconsideration of all three orders.
    Sadly, Yelverton’s history of abusive filing is not confined to his bankruptcy proceeding.
    Yelverton was suspended from the practice of law before the D.C. Court of Appeals and the Federal
    Court of Appeals for the D.C. Circuit for similar vexatious and frivolous filings. Order of
    Suspension, In re Yelverton, 13-8520 (D.C. Cir. Feb. 19, 2014); Order, In re Yelverton, 13-844
    (D.C. Ct. of App. Sept. 17, 2013). While representing an alleged victim in a criminal bench trial,
    Yelverton moved for a mistrial after the Superior Court judge’s not guilty verdict, then moved to
    vacate the denial of his motion, then moved to vacate the order disposing of that motion, then
    8
    moved for recusal, then appealed, and then moved for reconsideration when he lost the appeal.
    Report and Recommendation, In re Yelverton, 11-069, at 2–5 (D.C. Bd. of Prof. Resp. July 30,
    2013). In response to resulting ethics charges against him, Yelverton asserted ethical violations by
    another lawyer in the case and the Assistant Bar Counsel. 
    Id. at 5–6.
    The Board of Professional
    Responsibility found that Yelverton’s frivolous filings had improperly burdened the court system.
    
    Id. at 11–12.
    In sum, the record amply demonstrates that a pre-filing injunction is warranted in light of
    Yelverton’s long history of vexatious and harassing filings. He has clogged the court system with
    frivolous filings and has abused the judicial process. This relief is therefore necessary to ensure
    “the orderly and expeditious administration of justice.” 
    Urban, 768 F.2d at 1500
    .
    IV.     Conclusion
    For the reasons stated above, it is hereby
    ORDERED that Appellant’s [10] Motion for Sanctions is denied. It is further
    ORDERED that Appellant’s [17] Motion for Reconsideration is denied. It is further
    ORDERED that Appellant’s [18] Motion for Leave to Present New Information is granted.
    It is further
    ORDERED that Appellant shall seek leave of this Court before filing any new civil action
    in this Court by filing a separate motion for leave to file, not to exceed three pages. In seeking
    leave to file any new complaint, the plaintiff must explain what new matters are raised to warrant
    the filing of a new complaint. It is further
    ORDERED that Appellant is hereby enjoined from filing further submissions in his
    bankruptcy appeals pending before this Court without leave of Court. The Appellant must include a
    separate motion for leave to file, no more than three pages, explaining why the filing is necessary,
    not duplicative, and timely to the extent it seeks to supplement his arguments or factual assertions
    9
    in his appellate briefs. All factual assertions in such a motion must be supported by documentary
    evidence in the form of exhibits.
    SO ORDERED.
    CHRISTOPHER R. COOPER
    United States District Judge
    Date:          August 6, 2014
    10