Floret, LLC v. Thomas J. Sendecky

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 02-1683
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In re: Thomas M. Sendecky, *
*
Debtor. *
*
Floret, LLC; Michele Lea Eggert, *
*
Plaintiffs-Appellants, *
*
v. *
* Appeal from the United States
Thomas M. Sendecky, * District Court for the
* District of Minnesota.
Defendant, *
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Thomas J. Sendecky; Gregory M. *
Hewitt; Hewitt Financial Services; *
Fredrikson & Byron, P.A.; Rick *
Petry, *
*
Defendants-Appellees. *
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Submitted: December 9, 2002
Filed: January 6, 2003
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Before WOLLMAN, HEANEY, and MELLOY, Circuit Judges.
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HEANEY, Circuit Judge.
Floret, LLC and Michele Lea Eggert appeal from a district court order
affirming the bankruptcy court's dismissal of five of the six defendants from an
adversary proceeding and the bankruptcy court's sanctioning of Floret's attorney. We
affirm.
On June 5, 2001, a state court judgment for breach of contract was entered
against Thomas M. Sendecky in the sum of $16,253.19. To collect on the judgment,
Floret served Thomas M. Sendecky with garnishment papers on June 18, 2001.
Seven days later, Thomas M. Sendecky filed for Chapter 7 bankruptcy.
Thereafter, Floret filed an adversary action against Thomas M. Sendecky and
Thomas J. Sendecky, Gregory M. Hewitt, Hewitt Financial Services, Fredrikson &
Byron PA, and Rick Petry seeking to prevent entry of the discharge pursuant to 11
U.S.C. § 727(c). The thrust of the complaint was that Thomas M. Sendecky lied on
his petition for bankruptcy in an effort to avoid paying the debt that he owed Floret
and that the other defendants had conspired with him in his efforts. The bankruptcy
court dismissed the claims against all defendants save one with prejudice. It
dismissed Floret's complaint against Thomas M. Sendecky without prejudice and
granted leave to file an amended complaint within ten days. It also awarded Hewitt
and Fredrikson & Byron their costs and fees in the sum of $3,535 pursuant to Federal
Rules of Bankruptcy Procedure 9011.
Floret filed an appeal with the United States District Court for the District of
Minnesota. The district court had difficulty discerning the basis of Floret's complaint.
It stated:
From what the Court can discern, Floret seems to allege that the
Appellees had some obligation to come forward and tell the Bankruptcy
Court that Thomas M. Sendecky did not owe them any money . . . .
Floret also seems to suggest that Appellees somehow conspired with
Thomas M. Sendecky to fabricate these false debts so that Thomas M.
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Sendecky's petition for bankruptcy would be accepted and the debts
owed to Floret would be discharged.
In re Sendecky, No. 01-42790, 2002 WL 341037, 1 (D. Minn. 2002). Floret also
alleged that the bankruptcy court should have applied the theory of equitable
subordination to its case, despite Floret’s failure to mention equitable subordination
in any of its prior briefs. The district court affirmed the bankruptcy court in all
respects before Floret had an opportunity to file a reply brief.
Floret appeals to this court. He questions the decision of the district court to
deny relief before Floret had an opportunity to file its reply brief and then argues that
the appellees had a duty to tell the court what was or was not owed to them by
Thomas M. Sendecky and that its claim against the other creditors should be
considered a claim for equitable subordination. The district court held that none of
the theories support the appellants' claim. We agree. It is clear from the complaint
and the answers that no valid cause of action was stated against the appellees. These
creditors may be appropriate witnesses in Floret's adversary proceeding, but they are
not appropriate defendants. Moreover, as the district court pointed out, Floret's claim
for equitable subordination must fail because there are no assets in the estate to
distribute. In re Danbury Square Assocs., 153 B.R. 657, 661 (Bankr. S.D.N.Y. 1993).
We find no error in the district court's decision to issue its opinion before Floret filed
its reply brief. Floret has failed to demonstrate that it had any additional arguments
that had not already been advanced in its opening brief, nor does Floret cite any case
law that suggests that the district court’s actions constitute reversible error. See City
of Los Angeles v. Santa Monica Baykeeper, 254 F.3d 882, 888 (9th Cir. 2002).
The district court also held that the bankruptcy court did not abuse its
discretion in awarding fees and costs to Hewitt and Fredrickson & Byron. We find
no abuse of discretion in this award.
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The order of the district court is affirmed in all respects.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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