Marilyn M. Moss v. Burton & Norris

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
No. 01-6016 WM
In re: *
*
Marilyn M. Moss, a/k/a Marilyn M. *
Bryant, a/k/a Marilyn Margaret *
Bryant, a/k/a Marilyn Moss Bryant, *
a/k/a M. Margaret Bryant, a/k/a *
Marilyn Wall Bryant, a/k/a Margaret *
Whitman Bryant, a/k/a Margaret *
“Peggy” Whitman, a/k/a Margaret *
Whitman “Peggy” Bryant, a/k/a *
Margaret Bryant, a/k/a Marge Bryant, *
a/k/a Mari Bryant, a/k/a Mary Bryant, *
a/k/a Anne Bryant, a/k/a Anne Whitman, *
a/k/a P.M. Whitman, a/k/a Anne *
Margaret Whitman, a/k/a Anne M. *
Whitman Bryant, a/k/a Anne Margaret *
Whitman Bryant, a/k/a Anne Margaret *
Whitman Bryant Trust, a/k/a M. *
Whitman Bryant, a/k/a M. Margaret *
Whitman Bryant, a/k/a Catherine L. *
Whitman, a/k/a Bryant Family Trust, *
a/k/a Solutions, Inc., a/k/a Santa Barbara *
Mortgage Co., Inc., a/k/a National *
Supply Corporation, a/k/a TCI *
Industries, a/k/a TCI Investments, a/k/a *
T.N. Ayrb Inv. Co., a/k/a Transpacific *
Conservancy, Inc., a/k/a M. Margaret *
Whitman Bryant Trust Dated April 18, *
1997, a/k/a M. Margaret Whitman *
Bryant Trust Dated May 18, 1997 *
*
Debtor. *
Marilyn M. Moss, *
*
Debtor - Appellant, * Appeal from the United States
* Bankruptcy Court for the Western
v. * District of Missouri
*
Burton & Norris; Gronemeier & Barker *
*
Claimants - Appellees *
Submitted: August 9, 2001
Filed: October 2, 2001
Before KRESSEL, SCHERMER and SCOTT, Bankruptcy Judges.
SCOTT, Bankruptcy Judge
I.
In 1989, the debtor sued her employer for sexual harassment, hiring as her
attorneys two law firms, Burton & Norris and Gronemeir & Barker. Several years into
the litigation, the debtor fired these firms and hired another attorney. The lawsuit went
to trial in Arizona, but while the jury was deliberating, the parties settled the case, with
the debtor receiving three million dollars. The debtor’s trial attorney received forty-
five percent of that settlement, leaving the debtor with $1,650,000. Thereafter she sued
her original attorneys for legal malpractice in the California Superior Court and the
attorneys filed a counterclaim for their fees. An arbitration panel awarded the attorneys
$600,000 plus interest, and that award was confirmed by the Superior Court, twice
appealed by the debtor, and affirmed by the state appellate court. The judgment was
2
recorded in California pursuant to California law on September 28, 1993. 1 During the
litigation in California, the debtor created numerous entities, including a trust,
transferring the vast majority of her assets, including cash, automobiles, and real
property, to those entities.
On August 6, 1998, the debtor filed a chapter 7 petition in the United States
Bankruptcy Court for the Western District of Missouri, claiming she owned virtually
no assets.2 Apparently seeking to avoid the section 341(a) meeting, she first
maneuvered a continuance. Thereafter, she requested that she be excused from the a
meeting, submitting a medical statement which claimed that she could not control her
bowels and intimated that she could not speak. She then reported herself dead.
Ultimately, she was convicted of a bankruptcy crime relating to the filing of these false
documents.3
In April 2000, the debtor filed a motion to amend her petition to show Arizona
as her residence and requested transfer of venue to that state, asserting that the
Missouri bankruptcy court no longer had jurisdiction over her chapter 7 case. The
motions to transfer venue, to amend her petition and to dismiss and stay based upon
improper venue were denied. Her interlocutory appeal resulted in those orders being
affirmed by the district court and a subsequent appeal to the Eighth Circuit the Court
of Appeals was dismissed for lack of jurisdiction.
1
The debtor filed a chapter 7 case in the State of California in which the debtor apparently
objected to the attorneys’ proof of claim. The bankruptcy court allowed the claim, applying principles
of res judicata. The chapter 7 case, later converted to chapter 11, was ultimately dismissed; the debtor
did not receive a discharge.
2
She later amended her schedules to disclose some additional information.
3
Although she pleaded guilty, she appealed. Her conviction and sentence were upheld in a per
curiam decision. United States v. Moss, 2001 U.S. App. LEXIS 16805 (8th Cir. July 26, 2001).
3
The debtor objected to the former attorneys’ proof of claim, asserting that the
claim was untimely and that the bankruptcy court for the Western District of Missouri
could not enforce the California judgment. The bankruptcy court4 overruled the
debtor’s objection to the proof of claim. The debtor appeals and we affirm.
II.
During the pendency of this appeal, the debtor sought and obtained three
extensions of time to file her brief. After the debtor’s brief was filed, creditors sought
and obtained an order permitting them to file their responsive brief out of time, by one
day. The debtor moved for an order reconsidering that extension of time. In addition,
the debtor has requested that this court disqualify the trustee and the trustee’s
attorneys from appearing or making any argument in this appeal.
The first motion objecting to the one day extension of time, under the
circumstances is mean spirited and we decline to reconsider the order permitting the
creditor to file its brief in this appeal. The second motion is rather more difficult
because the basis for the motion is unintelligible. Indeed, upon a review of the record
the court can discern no basis for debtor’s concern that the trustee will interject
himself into this dispute between the debtor and one of her creditors.5 Inasmuch as
this motion does not presented a justiciable issue, it is denied.
4
The Honorable Jerry W. Venters, Bankruptcy Judge, United States Bankruptcy Court for the
Western District of Missouri.
5
The debtor has five appeals before the bankruptcy appellate panel and, for the ease of the
court, the trustee filed a single appendix, listing each of the appeals. While this may be the source of
her concern, none of the documents in the trustee’s appendix concern this contested matter or its
appeal.
4
III.
We review the bankruptcy court’s findings of fact for clear error and its
conclusions of law de novo. Blackwell v. Laurie (In re Popkin & Stern), 223 F.3d
764, 765 (8th Cir. 2000).
IV.
The debtor raises numerous arguments, all of which simply highlight, despite,
apparently, a law school education, her lack of understanding of the federal legal
system.
A.
The debtor’s primary argument appears to be that the bankruptcy court for the
Western District of Missouri lacks subject matter jurisdiction because her primary
creditor, purportedly the only creditor to file a proof of claim, did not register its
judgment in the state of Missouri.
Jurisdiction and procedure in the federal courts is governed by title 28.
Jurisdiction over bankruptcy cases, proceedings and property is conferred by 28
U.S.C. § 1334(a), (b), and (e), and bankruptcy court authority and procedure is
governed by 28 U.S.C. § 157(a), (b). Neither the Federal Rules of Bankruptcy
Procedure nor a state statute confer jurisdiction or limit the bankruptcy court’s
jurisdiction to hear and determine cases and proceedings. Moreover, the validity or
collectibility of a particular obligation of an individual who is a debtor under title 11 has
no impact upon whether the bankruptcy court has jurisdiction over a case or a
contested matter within the case. The allowability of a claim is part of the claims
process and does not affect jurisdiction.
Thus, the debtor’s arguments that state statutes, asserting jurisdiction over
property governing collection methods, somehow deprives the bankruptcy court of
jurisdiction to hear either a case or contested matter is without merit. The fact that
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there exist Arizona, New Mexico, Kansas or Oklahoma statutes governing how to
enforce a foreign judgment does not override the federal bankruptcy scheme. Indeed,
28 U.S.C. § 1334(e) provides for exclusive federal jurisdiction over property of the
debtor wherever located and property of the estate, and 11 U.S.C. § 541 defines
property of the estate. To assert that a state statute preempts federal law also ignores
the Supremacy Clause of the United State Constitution, and is, as the trustee asserts,
a frivolous argument.
The mere fact that a judgment creditor, who holds a valid judgment issued by
a court in another state, does not register the judgment in the bankruptcy forum does
not render the claim invalid or subject to disallowance. Although Missouri law,
V.A.M.S. § 551.760, and federal law, 28 U.S.C. § 1963, provide for a judgment holder
to register a judgment, there is no requirement under the law that a judgment be
registered in order for it to constitute a valid, allowable claim under the Bankruptcy
Code. 6 Although section 502(b) provides for disallowance of a claim if the claim is
unenforceable, the fact that it is not registered in the forum where the bankruptcy court
is located does not render it unenforceable. Rather, registering a judgment simply
gives a judgment creditor more collection options in the foreign jurisdiction, including
imposition of a lien in the jurisdiction.
It is also of no importance to the validity of the judgment that Rule 7069
provides for enforcement of judgment pursuant to the laws of the forum state. The
enforcement provisions of Rule 7069 simply provide for methods by which a creditor
may collect a judgment. The failure to register the judgment in a foreign jurisdiction
does not render the judgment invalid or otherwise unenforceable within the bankruptcy
context. The bankruptcy court thus properly overruled the debtor’s objection to the
attorneys’ claim.
6
In any event, once the bankruptcy case is commenced, the automatic stay precludes a
judgment creditor from registering the foreign judgment in any forum. 11 U.S.C. § 362(a).
6
B.
Second, the debtor asserts that the creditors are “not the real parties in interest”
entitled to file a claim in her chapter 7 case because she did not hire the partnerships
as her attorneys. The bankruptcy court was, properly, not concerned with whom she
dealt in 1989 when she hired attorneys to conduct her sexual harassment lawsuit. The
record discloses that the firms of Gronemeir & Barker and Burton & Norris filed a
proof of claim. Since those two entities were the holders of a claim in this chapter 7
case when the chapter 7 case was filed, 11 U.S.C. § 101, those entities were entitled
to, and did, file a proof of claim. The fact that a legal directory published by a private
firm indicates that the members of the partnership may have changed since 1989 does
not alter the partnerships’ right to file a proof of claim for a debt owed to them. In any
event, the record is devoid of any indication that, at trial, the debtor offered any
evidence that the law partnerships were not the holders of the claim, as she now
appears to assert.
C.
The debtor continues to assert that, since venue is improper, the bankruptcy
court in Missouri has no jurisdiction over her case or the proceedings brought therein
and that she is entitled to claim California exemptions. The propriety of the venue in
the Western District of Missouri has been extensively litigated, and we need not repeat
all of the debtor’s arguments nor the rather obvious reasons for rejecting them. 7 See
generally, In re Moss, 249 B.R. 200 (Bankr. W.D. Mo. 2000), aff’d, In re Moss, slip
op. No. 00-0671-CV-W-4 (W.D. Mo. Nov. 15, 2000), appeal dismissed, No. 00-4020
(8 t h Cir. Feb. 6, 2001); see In re Moss, 258 B.R. 427 (Bankr. W.D. Mo. 2001).
Rather, we confine ourselves to noting that venue is not jurisdictional, Neirbo v.
Bethlehem Shipbuilding Corp., 308 U.S. 165 (1939), is entirely waivable, see Fed. R.
7
In this context, the debtor has again requested that this court take judicial notice of various
documents, including her Arizona driver’s license (under one of her numerous aliases) and other
documents. We decline to do so for the reasons stated in a related appeal, Moss v. Block (In re
Moss), 2001 WL 1028362 (B.A.P. 8th Cir. September 10, 2001).
7
Civ. P. 12(b); Hoffman v. Blaski, 363 U.S. 335 (1960), and that a debtor waives any
defect in venue by filing the case in the forum of choice, In re Fishman, 205 B.R. 147(Bankr. E.D. Ark. 1997); see St. Louis & S.F. Ry Co. V. McBride, 141 U.S. 127 (1891).
Secondly, the bankruptcy court previously determined the issues regarding exemptions
and, inasmuch as the debtor’s arguments are, in essence a collateral attack on that
determination which we have previously affirmed, In re Moss, 2001 WL 1028362(B.A.P. 8th Cir. Sept. 10, 2001), we do not repeat the ruling here.
D.
Finally, the debtor asserts that the proof of claim was untimely. Section 501 of
the Bankruptcy Code permits a creditor to file a proof of claim and Rule 3002, Federal
Rules of Bankruptcy Procedure, complements that section by establishing the time
requirements for filing a proof of claim. Pursuant to Rule 3002, a nongovernmental
creditor in a chapter 7 case must file a proof of claim:
not later than 90 days after the first date set for the meeting of creditors
called under § 341(a) of the Code, except as follows: ****
(5) If notice of insufficient assets to pay a dividend was
given to creditors pursuant to Rule 2002(e), and
subsequently the trustee notifies the court that payment of
a dividend appears possible, the clerk shall notify the
creditors of that fact and that they may file proofs of claim
within 90 days after the mailing of the notice.
Fed. R. Bankr. Pr. 3002(c)(5).
When a chapter 7 bankruptcy case is commenced, a notice to that effect is sent
to all creditors. The notice explains the import of the automatic stay, gives notice of
the dates for filing complaints objecting to discharge and dischargeability. and the
dates for filing proofs of claim. As a general rule, however, it is assumed that the
chapter 7 case is a no-asset case and, when the notice of commencement of the case
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is issued, rather than stating a date for filing proofs of claim, the notice indicates the
parties should not file a proof of claim. The procedure followed in this case was no
different and the Notice of Commencement of In re Moss states: “Please Do Not File
A Proof of Claim Unless You Receive a Notice to Do So.” Notice of Chapter 7
Bankruptcy Case (August 7, 1998).
Rule 3002(c)(5), Federal Rules of Bankruptcy Procedure, specifically
contemplates that the bankruptcy clerk may issue this notice and that the time limits of
the rule do not apply if this notice is given. Only in the event that the clerk issues a
notice to the creditors that there may be assets from which claims may be paid does
the 90 day time limitation of Rule 3002 take effect.
In this case, the notice of the commencement of the case advised creditors not
to file a proof of claim. On April 7, 2000, the clerk issued a notice of possible assets
which required that proofs of claim were to be filed no later than July 6, 2000. Since
the creditor filed the proof of claim on July 3, 2000, three days before the deadline, the
proof of claim was timely.
Finally, we note that there is no requirement that a creditor anticipate that the
trustee will request that a notice of assets be sent by the clerk request that creditors
and file a proof of claim despite the notice not to do so. Indeed, that could cause
administrative problems for the Court as well as the trustee. The creditors are entitled
to rely upon the rules and the notices issued by the clerk.
V.
The debtor’s arguments being without merit, we affirm the bankruptcy court’s
decision overruling the debtor’s objection to the proof of claim filed by Gronemeir &
Barker and Burton & Norris.
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A true copy.
Attest:
CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR THE
EIGHTH CIRCUIT
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