Jones v. First Bank (In Re Exquisite Designs by Castlerock & Co.)

Case: 16-20353 Document: 00513749244 Page: 1 Date Filed: 11/07/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 16-20353 November 7, 2016
Summary Calendar
Lyle W. Cayce
Clerk
In the Matter of: EXQUISITE DESIGNS BY CASTLEROCK AND
COMPANY, INCORPORATED
Debtor
------------------------------------------------------------------------------------
BRAD JONES,
Appellant
v.
FIRST BANK,
Appellee
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:16-CV-42
Before KING, DENNIS, and COSTA, Circuit Judges.
PER CURIAM:*
Appellant Brad Jones, proceeding pro se, appeals from the bankruptcy
*Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 16-20353
court’s denial of his motion to vacate an order lifting the automatic stay. The
district court dismissed Jones’s appeal because it was untimely. For the
following reasons, we REVERSE the district court’s dismissal based on
untimeliness and AFFIRM the bankruptcy court’s denial of Jones’s motion to
vacate.
I. FACTUAL AND PROCEDURAL BACKGROUND
In November 2012, Exquisite Designs by Castlerock & Co., Inc.
(“Exquisite”) filed for Chapter 11 bankruptcy. Appellant Brad Jones is the sole
shareholder, president, and director of Exquisite. Appellee First Bank holds
promissory notes executed by Exquisite and secured by deed of trust liens on
seven properties (the “Mortgaged Properties”). In September 2013, the
bankruptcy court confirmed a plan of reorganization. As part of the confirmed
plan, Exquisite was to continue payments to First Bank, and First Bank
“retain[ed] all deeds of trust liens and security interests in the property.”
In September 2014, the bankruptcy court granted a motion to convert
the proceedings to a Chapter 7 bankruptcy, and a trustee was appointed. The
trustee subsequently moved to abandon multiple properties, including the
Mortgaged Properties. In November 2014, the bankruptcy court granted the
motion to abandon property.
On February 7, 2015, First Bank moved for relief from the automatic
stay pursuant to 11 U.S.C. § 362 in order to foreclose on the Mortgaged
Properties. On March 2, 2015, the bankruptcy court entered an “Agreed Order
Lifting Automatic Stay of an Act Against Real Property (7 Vacant Lots)” (the
“March 2 Order”), which was signed as “Approved and Agreed” by Jones’s
special appellate counsel.
Subsequently, Jones initiated litigation in Texas state court and filed a
notice of lis pendens against the Mortgaged Properties. In August 2015, the
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state court action was dismissed without prejudice and an agreed order
expunging the lis pendens was entered.
On October 5, 2015, Jones filed in the bankruptcy court a “Motion to
Vacate [the March 2 Order] Due to Lack of Subject Matter Jurisdiction,” in
which he argued that the bankruptcy court did not have subject matter
jurisdiction over the abandoned Mortgaged Properties at the time that it lifted
the automatic stay in its March 2 Order. On the same day, Jones also filed a
second notice of lis pendens with Texas. In opposition, First Bank argued that
Jones failed to timely appeal the March 2 Order lifting the automatic stay and,
therefore, the motion to vacate should be denied as a Federal Rule of Civil
Procedure 60 motion. First Bank also included a cross-motion to expunge
Jones’s second lis pendens and for sanctions prohibiting Jones from filing
additional lis pendens against the Mortgaged Properties.
On December 21, the bankruptcy court entered an order (the “December
21 Order”) denying Jones’s motion to vacate without specifying the basis for its
decision. As part of the same order, the bankruptcy court granted First Bank’s
motion to expunge lis pendens and further found that Jones’s motion to vacate
and filing of lis pendens violated the automatic stay imposed by 11 U.S.C. § 362and also violated Federal Rule of Bankruptcy Procedure 9011 as (1) “being
presented for the sole and exclusive purpose of harassing First Bank and
causing unnecessary delay and causing needless increase in the cost of
litigation”; and (2) “asserting claims, defenses and other legal contentions that
are not warranted by existing law, and present frivolous arguments
unsupported by the Bankruptcy Code or applicable Texas law.” Finally, the
bankruptcy court enjoined Jones from filing further lis pendens against the
Mortgaged Properties.
Jones appealed to the district court. In an oral ruling on May 24, 2016,
the district court dismissed Jones’s appeal. During the hearing, the district
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court highlighted the fact that the appeal was not filed until January 2016, but
the relief that Jones objected to was granted as part of the March 2 Order.
While the district court discussed several other potential grounds for
dismissing the appeal, including mootness and lack of standing, it appears that
the untimeliness of the appeal was the controlling factor. On May 27, 2016,
Jones filed a motion for reconsideration, which was denied by the district court
on May 31. Jones timely appealed to this court.
II. DISCUSSION
We first address First Bank’s argument that the appeal should be
dismissed for lack of jurisdiction. We agree with First Bank that there would
not be jurisdiction over the appeal to the extent that it purports to appeal the
March 2 Order lifting the automatic stay. In this context, we would also agree
with the district court that Jones’s notice of appeal filed on January 4, 2016,
was untimely as to the March 2 Order lifting the automatic stay and we are
without jurisdiction to address that order. See In re Berman-Smith, 737 F.3d
997, 1003 (5th Cir. 2013) (per curiam) (“[T]he failure to file a timely notice of
appeal in the district court leaves the district court, and this court, without
jurisdiction to hear the appeal.”). 1 That is because it was not filed within the
time limit required by statute. 28 U.S.C. § 158(c)(2).
However, given that Jones is proceeding pro se and that his motion to
vacate argued that the bankruptcy court lacked jurisdiction when it made the
March 2 Order, we liberally interpret his motion to vacate as a Federal Rule of
Civil Procedure 60(b)(4) motion 2 and his appeal as being from the December
1 Because an appeal from the March 2 Order lifting the automatic stay would be
untimely, we do not need to address First Bank’s alternative argument that Jones lacks
standing to appeal that order as a “person aggrieved” because he did not appear and object
at the hearing on the motion to lift the automatic stay.
2 Federal Rule of Civil Procedure 60(b)(4), which can be used to provide relief when a
prior “judgment is void,” is made applicable (except in limited situations not relevant here)
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21 Order denying his Rule 60(b)(4) motion. See Grant v. Cuellar, 59 F.3d 523,
524 (5th Cir. 1995) (per curiam); In re Bell Family Tr., 575 F. App’x 229, 232
(5th Cir. 2014) (per curiam). Under this interpretation, Jones’s appeal to the
district court from the December 21 Order was timely, 3 and his appeal to this
court from the district court’s dismissal was also timely. Therefore, Jones’s
appeal is not untimely such that it would deprive us of jurisdiction, and even
though the district court did not reach the merits of the bankruptcy court’s
denial of Jones’s Rule 60(b)(4) motion, under the circumstances of this case,
“considerations of judicial economy convince us to address these issues in this
appeal.” See In re Texas Extrusion Corp., 844 F.2d 1142, 1156–57 (5th Cir.
1988) (“This Court applies the same standard of review. No purpose would be
served in remanding this matter back to the district court—the record is
adequate for us to exercise the identical review of the order.”); cf. In re Plunk,
481 F.3d 302, 305 (5th Cir. 2007) (“We may affirm on any grounds supported
by the record, even if those grounds were not relied upon by the lower
courts.”). 4
But interpreting Jones’s motion to vacate as a Rule 60(b)(4) motion does
not provide Jones with the relief that he seeks because the bankruptcy court
did not err in denying his Rule 60(b)(4) motion. While Rule 60(b)(4) provides
that a court may grant relief from a final judgment because “the judgment is
void,” Rule 60(b)(4) only applies to a limited number of circumstances. See
to bankruptcy proceedings under Federal Rule of Bankruptcy Procedure 9024. In the
bankruptcy court, First Bank argued that Jones’s motion to vacate should be evaluated
pursuant to Rule 60.
3 Jones’s notice of appeal to the district court specifically references that he is
appealing the December 21 Order.
4 “This court applies the same standard of review to the decisions of a bankruptcy
court as does the district court.” In re Plunk, 481 F.3d at 305. The denial of a Rule 60(b)(4)
motion is reviewed de novo. Callon Petroleum Co. v. Frontier Ins. Co., 351 F.3d 204, 208 (5th
Cir. 2003).
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United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 270 (2010) (“‘A
judgment is not void,’ for example, ‘simply because it is or may have been
erroneous.’” (quoting Hoult v. Hoult, 57 F.3d 1, 6 (1st Cir. 1995))). Here, the
bankruptcy court did not err in denying Jones’s Rule 60(b)(4) motion because
the March 2 Order does not raise one of the limited situations in which Rule
60(b)(4) can be used to grant relief. Importantly, Jones cannot use a Rule
60(b)(4) motion simply as “a substitute for a timely appeal.” Id. Jones had
notice of, and an opportunity to participate in, the bankruptcy court’s March 2
Order lifting the automatic stay. Indeed, Jones’s special appellate counsel at
the time signed the March 2 Order. Jones did not appeal the March 2 Order
lifting the automatic by arguing that the bankruptcy court lacked jurisdiction
and, thus, cannot now use a Rule 60(b)(4) motion to challenge the bankruptcy
court’s jurisdiction as a substitute for an untimely appeal from the March 2
Order. See Picco v. Global Marine Drilling Co., 900 F.2d 846, 850 (5th Cir.
1990) (applying the principle of res judicata to a court’s prior determination of
its own jurisdiction when “the challenging party was before the court when the
order in question was entered and had notice of it and had a full and fair,
unimpeded opportunity to challenge it, and the court’s jurisdiction, by
appeal.”); In re Bell Family Tr., 575 F. App’x at 232–33 (“A district court’s
exercise of subject-matter jurisdiction, even if erroneous, is res judicata and is
not subject to collateral attack through Rule 60(b)(4) if the party seeking to
void the judgment had the opportunity previously to challenge jurisdiction and
failed to do so.”). This is not a situation where there is no “arguable basis” of
jurisdiction or where there is a “clear usurpation of power” or “total want of
jurisdiction.” See United Student Aid Funds, 559 U.S. at 271 (quoting
Nemaizer v. Baker, 793 F.2d 58, 65 (2d Cir. 1986)); Picco, 900 F.2d at 850 & n.6
(quoting Nemaizer, 793 F.2d at 65).
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Separately, Jones argues that the bankruptcy court improperly granted
First Bank’s cross-motion to expunge lis pendens. However, Jones did not
make this argument on appeal to the district court, and therefore, it is waived.
See In re Bouchie, 324 F.3d 780, 782 n.6 (5th Cir. 2003) (per curiam).
Additionally, Jones argues that First Bank does not have standing as an
appellee because it has since sold the Mortgaged Properties to a third party.
Even assuming arguendo that it is possible for First Bank to lose standing as
an appellee here, we would still reach the same conclusion that the bankruptcy
court did not err in denying Jones’s motion to vacate. Cf. Legault v.
Zambarano, 105 F.3d 24, 26 (1st Cir. 1997) (“The issue on this appeal is not
the identity of the proper appellee, but whether the district court abused its
discretion in awarding sanctions against the appellants.”). 5
III. CONCLUSION
For the foregoing reasons, we REVERSE the district court’s dismissal of
the appeal based on untimeliness and AFFIRM the bankruptcy court’s denial
of Jones’s motion to vacate.
5 While Jones also raises several other issues on appeal, he has failed to adequately
brief how those issues relate to the denial of his motion to vacate. Cf. In re Bell Family Tr.,
575 F. App’x at 232 n.1 (“To the extent [the pro se litigant] attempts to raise other issues
through this appeal, we do not decide those issues because they were inadequately briefed.”).
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