Akers v. Windward Capital Corp. (In Re Akers)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_________________________________________
:
In re: : Adversary Proceeding No. 10-10006
Martha A. Akers, :
Debtor, :
:
:
MARTHA A. AKERS, :
:
Appellant, :
:
v. : Civil Action No. 10-1300 (JEB)
:
WINDWARD CAPITAL CORPORATION, et al., :
:
Appellees. :
_________________________________________ :
MEMORANDUM OPINION
Pro se Appellant Martha A. Akers, who has been involved in lengthy bankruptcy
proceedings, appeals an order of the Bankruptcy Court denying her motion for a preliminary
injunction to halt the foreclosure of a commercial property she owned. As she offered no basis
for the Bankruptcy Court to believe she would succeed on the merits of her underlying claim, it
correctly denied her Motion. This Court will thus affirm that decision.
I. Background
As best the Court can discern from Appellant’s rather opaque pleading, she owned a
commercial building located at 1368 H St. in Northeast Washington. See Appellant Br. at 4.
“On July 26, 2000, [she] executed a promissory note in the loan amount of $63,750.00 with the
lender,” Appellee Windward Capital Corporation, and executed a Deed of Trust to secure the
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loan. Id. According to Windward and Appellee Mooring Financial Corporation, the loan
servicer, when Appellant initiated Chapter 13 Bankruptcy proceedings on December 5, 2007, she
was in default under the terms of the promissory note. See Appellees Br. at 5-6.
On January 14, 2008, as part of her amended plan of reorganization, Akers “agreed to
make direct payments to the Lender according [to] the terms of the loan in the monthly
installment amount of $468.00.” Id. at 6. Appellant thereafter defaulted and has not made a
payment since December 2008. Id. As a result, Windward filed its Motion for Relief from Stay
in January 2010 with the Bankruptcy Court, seeking to foreclose on the property. See 07-br-662,
ECF No. 232 (Motion Seeking Relief from Automatic Stay). Appellant in response filed a
Complaint for Breach of Contract against Appellees. See 10-ap-10006, ECF No. 1 (Amended
Complaint for Breach of Contract). After a hearing on February 25, 2010, the Bankruptcy Court
granted Appellees’ Motion and terminated the stay. See 07-br-662, ECF No. 253 (Order
Terminating Automatic Stay). Appellant thereafter thrice filed motions in the Bankruptcy Court
for injunctive relief to prevent the foreclosure, and each motion was denied. See 10-ap-10006,
ECF Nos. 27 (Order of May 4, 2010, denying Motion for Preliminary Injunction), 45
(Memorandum Decision and Order of June 29, 2010, denying Amended Motion for Preliminary
Injunction), 62 (Memorandum Decision and Order of July 25, 2010, denying Emergency Motion
for Preliminary Injunction). The Bankruptcy Court’s ruling on the second of these Motions is
the subject of this interlocutory appeal. See 10-ap-10006, ECF No. 47 (Notice of Appeal filed
right after denial of second motion on June 29, 2010).
The Court will thus discuss in more detail the content of Appellant’s second Motion for
Preliminary Injunction. Filed on May 26, 2010, this Motion sought to enjoin Windward’s right
to foreclose on the property. In the sole paragraph arguing her likelihood of success on the
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merits, Appellant stated, “The Defendant violated provisions of the Deed of Trust and Section 6
of RESPA (12 U.S.D. 2605) constituting an impairment of an obligation of contract prohibited
by Article 1, Section 10, Clause 1 of the United States Constitution. . . . This violates the
separation of powers principle inherent in the constitutional frame work [sic].” See 10-ap-
10006, ECF No. 35 (Motion for Preliminary Injunction) at 2. In denying the Motion, Judge
Martin Teel of the Bankruptcy Court noted first that Appellant had failed to support her Motion
with affidavits as required by LCvR 65.1. See id., ECF No. 45 (Memorandum Decision and
Order of June 29, 2010, denying Amended Motion for Preliminary Injunction) at 2. “In any
event,” continued the Opinion, “the motion . . . sets forth no basis for concluding that Akers has
a likelihood of succeeding on the merits. The motion only sets forth insufficient conclusory
assertions of wrong unsupported by any specific recitation of facts establishing a wrong.” Id. at
3. The Court also found no showing of irreparable harm. Id. at 3-4.
Appellant immediately filed a Notice of Appeal in this case on June 29. See 10-ap-
10006, ECF No. 47 (Notice of Appeal). Meanwhile, the foreclosure occurred on June 30, 2010.
See Appellees’ Br. at 7. The case was initially assigned to Judge Ricardo Urbina, who retired
before ruling on the appeal. The case was then transferred to this Court in April 2012. The
Court apologizes to the parties for the delay in rendering a decision. Although the matter has
shuttled between judges, there is no justifiable reason for the length of the delay here.
II. Standard of Review
“In reviewing a preliminary injunction, we ‘exercise plenary review over the [bankruptcy
court's] conclusions of law and its application of law to the facts, but review its findings of fact
for clear error.’” Bartok v. DeAngelis, 2012 WL 664928, at *4 (D.N.J. Feb. 29, 2012) (citing In
re Vertientes, Ltd., 845 F.2d 57, 59 (3d Cir. 1988) (alteration in original)). “We review the
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[bankruptcy] court's ultimate decision to issue an injunction for abuse of discretion.” Id.(citation omitted; alteration in original); see also In re SK Foods, L.P., 2010 WL 5136187, at *4
(E.D. Cal. 2010) (“district court[s] review a bankruptcy court's decision to grant or . . . deny the
preliminary injunction and the scope of injunctive relief for an abuse of discretion”) (citing
Southwest Voter Registration Educ. Project v. Shelley, 344 F.3d 914, 918 (9th Cir. 2003)).
III. Analysis
Appellant argues on appeal that the Bankruptcy Court erred in denying her Motion for
Preliminary Injunction. In responding to her appeal, Appellees first interpose procedural
objections, arguing that Appellant’s brief was untimely filed here and that she may not appeal
from an interlocutory order. They then move to the merits, contending that the Bankruptcy
Court correctly determined that Appellant “failed to demonstrate the likelihood of prevailing on
the merits and irreparable harm.” Appellees’ Br. at 6. The Court will first discuss the two
procedural issues and then proceed to the gravamen of the case.
A. Timeliness
“When the record is complete for purposes of appeal, the clerk [of the bankruptcy court]
shall transmit a copy . . . forthwith to the clerk of the district court,” Fed. R. Bankr. P. 8007(b),
who, “[o]n receipt of the transmission[,] . . . shall enter the appeal in the docket and give notice
promptly to all parties to the judgment, order, or decree appealed from of the date on which the
appeal was docketed.” Id. The appellant “shall serve and file a brief within 14 days after entry
of the appeal on the docket pursuant to Rule 8007.” Fed. R. Bankr. P. 8009(a)(1). The district
court “may, upon motion of the appellee[s] . . . or upon its own order, dismiss the appeal for
failure to comply with Bankruptcy Rule 8009.” Local Bankr. R. 8009-1.
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Appellant here filed her Notice of Appeal on July 30, 2010, which the Clerk of Court
entered on August 3, 2010, along with the bankruptcy record. Notwithstanding her obligation to
“serve and file a brief within 14 days after entry of the appeal on the docket,” Fed. R. Bankr. P.
8009(a)(1), Appellant filed her brief on August 31, fourteen days late. Appellant claims that
“[e]vidence exists in the record that the pleadings was timely filed or a extension was requested
in lieu of [sic]” strict compliance with the 14-day deadline. Resp. to Appellees’ Br. at 1. She
does not describe or identify this evidence, and she offers absolutely no support for her assertion.
Indeed, nothing in the record establishes that “the district court . . . by local rule or by order
excuse[d] the filing of briefs or specifie[d] different time limits.” Fed. R. Bankr. P. 8009(a). Her
failure to file her brief timely, consequently, renders this appeal subject to dismissal. See, e.g.,
In re AOV Indus., Inc., 798 F.2d 491, 494 (D.C. Cir. 1986) (affirming dismissal due to
appellant’s failure to file brief timely or response to another party’s request for dismissal).
Although “[b]oth Bankruptcy Rule 8001 and Local Rule 8009-1 authorize district courts
in this jurisdiction to dismiss bankruptcy appeals when appellants fail to file briefs on time,”
English-Speaking Union v. Johnson, 353 F.3d 1013, 1020-21 (D.C. Cir. 2004) (citations
omitted), summary dismissal on procedural grounds is disfavored in this Circuit. Id. at 1022.
Ordinarily the district court should “consider[ ] the circumstances before [it] and explain[ ] why
it is in the interest of justice to dismiss rather than to proceed to the merits.” Id. (noting that a
court, as a first measure, usually issues an order to show cause when a party fails to timely file a
brief); see also Canady v. Erbe Elektromedizin GmbH, 307 F. Supp. 2d 2, 9 (D.D.C. 2004)
(noting D.C. Circuit’s “preference for an adjudication on the merits and a corresponding disfavor
for resolving litigation by default”).
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This is not a situation where, for example, Appellant repeatedly has disobeyed the
Court’s orders to file a brief. See Coleman v. Countrywide Home Loans, Inc., 429 B.R. 387,
392-93 (D.D.C. 2010) (dismissing appeal for appellant’s failure to file his brief within time
period set forth in Fed. R. Bankr. P. 8009 and, ten months later, his failure to file a response to
court order directing him to either file a brief or face dismissal). Given the lack of any indication
of flagrant or repeated failures to comply with this Court’s orders or procedural rules, the Court
will not dismiss the appeal as untimely.
B. Interlocutory Appeal
Appellees next argue that the Bankruptcy Court’s Order is not appealable. A district
court may “hear appeals . . . from final judgments, orders, and decrees” of a bankruptcy judge
and may hear, “with leave of the court, [appeals] from . . . interlocutory orders and decrees.” 28
U.S.C. § 158(a). “In a bankruptcy case, if a particular adversary proceeding has been finally
resolved, the outcome constitutes an appealable final decision,” Turshen v. Chapman, 823 F.2d
836, 839 (4th Cir. 1987) (internal quotation marks and citations omitted), and “[f]inality in the
sense of 28 U.S.C. § 1291 is not required . . . for purposes of appeal . . . [of] bankruptcy court
rulings.” Id. at 839-40 (citation omitted); cf. Saravia v. 1736 18th Street, N.W., Ltd. P’ship, 844
F.2d 823, 826 n.1 (D.C. Cir. 1988) (per curiam) (acknowledging authority for but declining to
resolve argument “that interlocutory orders may be appealed under [28 U.S.C.] § 158(d) if the
nature of the ruling and the factual circumstances suggest that, for purposes of the particular
matter resolved in the order, it is in substance final”).
“[B]ankruptcy court orders and judgments regarding claims whose resolution is
separable from all other matters in dispute in the overall proceeding need not await an
adjudication of the entire action before they may be appealed.” In re Premier Operations, 290
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B.R. 33, 40-41 (S.D.N.Y. 2003). As Appellant’s challenge is an effort to reverse the Bankruptcy
Court’s last word on foreclosure – that is, to avoid the foreclosure made possible upon the
issuance of its order lifting the automatic stay – the ruling is final for purposes of pursuing an
appeal to this Court. See In re Computer Learning Ctrs., Inc., 407 F.3d 656, 660 (4th Cir. 2005)
(“orders in bankruptcy cases may be immediately appealed if they finally dispose of discrete
disputes within the larger case”) (citation omitted). The Court thus declines to dismiss this
appeal on the ground that it is interlocutory.
C. Merits
Simply because Appellant may have the right to appeal the denial of her Motion for
Preliminary Injunction does not mean that she necessarily prevails. A preliminary injunction “is
an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is
entitled to such relief.” Winter v. Natural Res. Def. Council, Inc., 129 S. Ct. 365, 376 (2008).
“A plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed on the
merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that
the balance of equities tips in his favor, and [4] that an injunction is in the public interest.” Id. at
367-68. This same standard is applied by bankruptcy courts. See, e.g., In re Woodside Group,
LLC, 427 B.R. 817, 835-36 (Bankr. C.D. Cal. 2010); In re National Century Financial
Enterprises, Inc., 407 B.R. 895, 900 (Bankr. S.D. Ohio 2009).
Before the Supreme Court’s decision in Winter, courts weighed the preliminary
injunction factors on a sliding scale, allowing a weak showing on one factor to be overcome by a
strong showing on another. See Davenport v. Int’l Bhd. of Teamsters, 166 F.3d 356, 360-61
(D.C. Cir. 1999). This Circuit, however, has suggested, without deciding, that Winter should be
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read to abandon the sliding-scale analysis in favor of a “more demanding burden” requiring
Plaintiffs to independently demonstrate both a likelihood of success on the merits and irreparable
harm. Sherley v. Sebelius, 644 F.3d 388, 392 (D.C. Cir. 2011); see also Davis v. Pension Benefit
Guar. Corp., 571 F.3d 1288, 1292 (D.C. Cir. 2009).
Whichever way Winter is read, it is clear that a failure to show a likelihood of success on
the merits is alone sufficient to defeat a preliminary injunction motion. In Arkansas Dairy Co-op
Ass’n, Inc. v. U.S. Dept. of Agr., 573 F.3d 815 (D.C. Cir. 2009), a case that postdates Winter, the
court decided that it “need not proceed to review the other three preliminary injunction factors”
because the plaintiff had “shown no likelihood of success on the merits.” Id. at 832; see also
Apotex, Inc. v. FDA, 449 F.3d 1249, 1253 (D.C. Cir. 2006) (pre-Winter case holding no need to
address other preliminary injunction factors where plaintiff had little likelihood of succeeding on
merits); Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 304 (D.C. Cir. 2006)
(“[A] preliminary injunction will not issue” upon showing of irreparable harm unless plaintiffs
also satisfy other three preliminary injunction factors; “Unsupported or undeveloped allegations
of government establishment, for example, while sufficient to make out irreparable injury, will
not withstand scrutiny concerning the movant’s likelihood of success on the merits, thereby
defeating a request for a preliminary injunction.”). It follows that, upon finding that a plaintiff
has failed to show a likelihood of success on the merits, the Court may deny a motion for
preliminary injunction without analyzing the remaining factors.
In contending in the Bankruptcy Court that she would likely succeed on the merits, the
only support Appellant mustered was the following: “The Defendant violated provisions of the
Deed of Trust and Section 6 of RESPA (12 U.S.D. 2605) constituting an impairment of an
obligation of contract prohibited by Article 1, Section 10, Clause 1 of the United States
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Constitution. . . . This violates the separation of powers principle inherent in the constitutional
frame work [sic].” 10-ap-10006, ECF No. 35 (Motion for Preliminary Injunction) at 2. Such an
argument is woefully inadequate.
“RESPA” refers to the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq.
Section 2605, which Appellant cites, requires, inter alia, that lenders disclose at the time of the
loan whether the servicing of the loan may be assigned to another. How this statute entitles
Appellant to prevail on her underlying claim is not apparent and never discussed. Nor is there
any explanation of how the constitutional provision prohibiting states from passing laws
“impairing the [o]bligation of [c]ontracts,” see U.S. Const., art. I, § 10, has any relevance at all
here. The separation-of-powers argument is similarly baffling. The Bankruptcy Court was thus
entirely correct when it held that “the motion . . . sets forth no basis for concluding that Akers
has a likelihood of succeeding on the merits. The motion only sets forth insufficient conclusory
assertions of wrong unsupported by any specific recitation of facts establishing a wrong.” See
10-ap-10006, ECF No. 45 (Memorandum Decision and Order of June 29, 2010, denying
Amended Motion for Preliminary Injunction) at 3.
IV. Conclusion
The Court, accordingly, will issue an Order that affirms the decision of the Bankruptcy
Court and dismisses this case.
JAMES E. BOASBERG
United States District Judge
November 7, 2012
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