Opinion
Civil Action No. 6:19-cv-00940-HMH-JDA
09-18-2019
Gregory Allen Glover, d/b/a Fresh Burger, Appellant, v. Golden Trestle, LLC, Appellee.
REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE
This matter arises from Gregory Allen Glover's ("Glover") Petition filed under Chapter 13 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of South Carolina (the "Bankruptcy Court") at case number 19-00459-HB (the "Bankruptcy Action"). See Bankruptcy Action, Doc. 1. Pending before the Court are (1) Glover's pro se appeal [Doc. 1] from an Order of the Bankruptcy Court, dated March 15, 2019, lifting the automatic stay as to Golden Trestle, LLC ("Golden Trestle") [Doc. 11-1 at 3-11], and (2) Golden Trestle's motion to dismiss the appeal [Doc. 20]. Pursuant to the provisions of 28 U.S.C. § 636(b) and Local Civil Rule 73.02(B)(2)(e), D.S.C., the undersigned United States Magistrate Judge is authorized to review all pretrial proceedings involving litigation by individuals proceeding pro se, such as this action, and submit findings and recommendations to the District Judge. Having reviewed the Parties' submissions, the undersigned recommends that the Court grant Golden Trestle's motion and dismiss Glover's appeal for mootness.
The Court takes judicial notice of the filings in the underlying Bankruptcy Action. See Philips v. Pitt Cty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (courts "may properly take judicial notice of matters of public record"); Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th Cir. 1989) ("We note that 'the most frequent use of judicial notice is in noticing the content of court records.'").
Glover was initially represented by counsel in the underlying Bankruptcy Action. However, the Bankruptcy Court granted Glover's motion to relieve counsel on March 27, 2019. See Bankruptcy Action, Doc. 22. Glover is proceeding pro se in this action.
BACKGROUND
This factual background is taken from the Bankruptcy Court's Order lifting the stay dated March 15, 2019.
In 2016, Glover, doing business as Fresh Burger, LLC, endeavored to open a restaurant at 457 South Pleasantburg Drive in Greenville, South Carolina. See Bankruptcy Action, Doc. 19 at 1. Pursuant to a lease agreement between Fresh Burger, LLC, and Golden Trestle, Glover agreed to lease the property for his restaurant from Golden Trestle for a period of ten years. Id. at 2. Under the lease agreement, Fresh Burger, LLC, was required to pay rent in the amount of $5,000 per month for the first year, with the rent increasing incrementally over the ten-year lease term. Id. However, Glover failed to pay rent each month, with the exception of an initial $5,000 deposit required by the lease agreement and three additional payments totaling only $3,000. Id. Glover claimed that he had to incur costs to repair the premises for use, which he believed should offset the rent payments due under the lease. Id. at 2-3. He also claimed that he paid rent in cash to an individual claiming to be an agent of Golden Trestle. Id. at 3. Golden Trestle, on the other hand, claimed the individual was not authorized to receive rent payments and that Golden Trestle never received the purported rent payments. Id. at 3-4.
The original parties to the lease were Golden Trestle and Quick Serve Equity, LLC. See Bankruptcy Action, Doc. 19 at 1. On September 27, 2016, the lease was amended to substitute Fresh Burger, LLC, as the tenant in place of Quick Serve Equity, LLC. Id. at 2. Glover was the sole member of Fresh Burger, LLC, and was the personal guarantor of the lease. Id.
The Bankruptcy Court appeared to question the credibility of Glover's testimony regarding the rent payments. See Bankruptcy Action, Doc. 19 at 3, 6. Indeed, the Bankruptcy Court questioned Glover's credibility on a number of issues, noting that he failed to disclose to the Bankruptcy Court the fact that he previously filed and participated in two other bankruptcy proceedings and that he has used two different Social Security Numbers in his filings. Id. at 5.
Because Fresh Burger, LLC, failed to pay rent as required by the lease, Golden Trestle initiated eviction proceedings in the state court. Id. at 4. Glover then commenced the Bankruptcy Action, resulting in an automatic stay of those state court eviction proceedings. Id. at 4-5. On January 25, 2019, the same day that Glover commenced his Bankruptcy Action, he purportedly dissolved Fresh Burger, LLC, the corporation that was the party to the lease. Id. at 5. In the Bankruptcy Action, Glover proposed a plan to pay the arrearages for the unpaid rent payments over a sixty-month term. Id.
Bankruptcy Court Proceedings
Glover filed for Chapter 13 bankruptcy on January 25, 2019. See Bankruptcy Action, Doc. 1. On January 30, 2019, Golden Trestle filed a motion for relief from the automatic stay under 11 U.S.C. § 362(d)(1), so that it could pursue recovery of its real property in state court. See Bankruptcy Action, Doc. 6. Glover filed an objection to the motion for relief from stay on February 13, 2019, and the Bankruptcy Court held a hearing on February 26, 2019. See Bankruptcy Action, Docs. 14, 16. On March 15, 2019, the Honorable Helen E. Burris issued an Order granting Golden Trestle's motion for relief from stay, allowing Golden Trestle to proceed with its eviction against Glover in the state court. See Bankruptcy Action, Doc. 19. Thereafter, on March 28, 2019, Plaintiff filed a notice of appeal regarding the Bankruptcy Court's Order granting Golden Trestle's relief from the stay. See Bankruptcy Action, Doc. 23. Glover did not request a stay of the Bankruptcy Court's Order lifting the stay pursuant to Federal Rule of Bankruptcy Procedure 8007 pending his appeal to this Court. On April 5, 2019, the Chapter 13 Trustee filed a motion to dismiss the Bankruptcy Action because Glover failed to appear at a meeting of the creditors under 11 U.S.C. § 341. See Bankruptcy Action, Doc. 28. After Glover failed to file a response to the motion to dismiss, the Bankruptcy Court dismissed the underlying Bankruptcy Action by Order dated May 9, 2019, and denied Glover's motion to reconsider on July 3, 2019. See Bankruptcy Action, Docs. 32; 39.
At the hearing, Glover argued that the leased property was part of the bankruptcy estate, that he had a right of redemption in the leased premises, and that the leased property was subject to a resulting trust for the benefit of Glover. See Bankruptcy Action, Doc. 15. Golden Trestle argued that the lease was not subject to Glover's Bankruptcy Action and that the leased property was not part of the bankruptcy estate. Id. Golden Trestle also argued that the lease was in default and that the automatic stay should not apply to the pending eviction action in state court, and, in the alternative, that Defendant was entitled to relief from the automatic stay. Id.
The Court notes that, on July 9, 2019, Glover filed a second Chapter 13 Petition in the Bankruptcy Court at case number 19-03631, again in an effort to stop an imminent eviction proceeding in the state court. See In re Glover, No. 19-03631 (Bankr. D.S.C. July 9, 2019), Doc. 24 at 2.
District Court Procedural History
Glover filed his notice of appeal in the Bankruptcy Court on March 28, 2019, which was transmitted to this Court on March 29, 2019. [Docs. 1; 1-1.] By Orders dated April 17, 2019, and May 20, 2019, Glover was directed to file his Designation of Record pursuant to Federal Rule of Bankruptcy Procedure 8009, and the Parties were directed to file briefs. [Docs. 5; 9.] On May 20, 2019, the Bankruptcy Court transmitted Glover's Designation of Record to this Court. [Doc. 11.] Glover filed his brief on June 19, 2019 [Doc. 15], and Golden Trestle filed its brief on July 18, 2019 [Doc. 21].
On July 8, 2019, Glover filed a motion for temporary injunction pending this Court's disposition of his appeal, seeking to enjoin the state court's scheduled hearing on Golden Trestle's eviction action. [Doc. 16.] On July 9, 2019, the Honorable Henry M. Herlong, Jr., denied Glover's motion, finding the Bankruptcy Court had lifted the automatic stay as to the leased property that was the subject of the state court eviction action. [Doc. 18.]
On July 18, 2019, Golden Trestle filed a motion to dismiss the instant appeal as moot. [Doc. 20.] The next day, the Court filed an Order pursuant to Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), advising Glover of the motion to dismiss procedure and of the possible consequences if he failed to adequately respond to the motion. [Doc. 23.] Glover did not file a response to the motion to dismiss. Accordingly, by Order dated August 27, 2019, the Court again directed Glover to file a response to the motion to dismiss and advised Glover that if he failed to respond, this action could be subject to dismissal for failure to prosecute and for failure to comply with this Court's orders, pursuant to Federal Rule of Civil Procedure 41(b). [Doc. 25.] However, Glover failed to file any response, and the time set forth in the Court's Order has lapsed. Accordingly, the matter is ripe for review.
APPLICABLE LAW
Liberal Construction of Pro Se Pleadings
Glover brought this action pro se, which requires the Court to liberally construe his pleadings. Erickson v. Pardus, 551 U.S. 89 (2007); Estelle v. Gamble, 429 U.S. 97, 106 (1976). Pro se pleadings are held to a less stringent standard than those drafted by attorneys. Haines v. Kerner, 404 U.S. 519, 520 (1972) (per curiam); Gordon v. Leeke, 574 F.2d 1147, 1151 (4th Cir. 1978). The mandated liberal construction means only that if the court can reasonably read the pleadings to state a valid claim on which an appellant could prevail, it should do so. Barnett v. Hargett, 174 F.3d 1128, 1133 (10th Cir. 1999). A court may not construct the appellant's legal arguments for him. Small v. Endicott, 998 F.2d 411, 417-18 (7th Cir. 1993). Nor should a court "conjure up questions never squarely presented." Beaudett v. City of Hampton, 775 F.2d 1274, 1278 (4th Cir. 1985).
Review of Bankruptcy Court Order
Under 28 U.S.C. § 158(a)(1), United States District Courts have jurisdiction to hear appeals of final judgments, orders, and decrees of bankruptcy courts. "In bankruptcy, a district court sits as an appellate court." In re Ketaner, 154 B.R. 467, 470 (E.D. Va. 1993). "Thus, the general rule is that a district court must accept the factual findings of the bankruptcy court unless they are clearly erroneous, and the district court may not engage in additional fact-finding." Id. (citing Fed. R. Bankr. P. 8013; In re Neis, 723 F.2d 584, 589 (7th Cir. 1983)); see also Grubbs v. Nat'l Bank of S.C., 114 B.R. 450, 451 (D.S.C. 1990) ("On appeal from the bankruptcy court, [the district court] may set aside findings of fact only if they are clearly erroneous."). "A district court reviews the bankruptcy court's findings of fact for clear error, and its legal conclusions de novo." In re Legacy Dev. SC Grp., LLC, 551 B.R. 209, 213 (D.S.C. 2015); see also In re Harford Sands Inc., 372 F.3d 637, 639 (4th Cir. 2004). The district court may affirm, modify, or reverse a bankruptcy judge's order, or remand with instructions for further proceedings. See Fed. R. Bankr. P. 8013.
"The law is well-settled that a bankruptcy court's discretionary determination on whether to lift an automatic stay will be overturned only upon a showing of abuse of that discretion." In re McCullough, 495 B.R. 692, 694 (W.D.N.C. 2013); see also In re Robbins, 964 F.2d 342, 345 (4th Cir. 1992) ("A decision to lift the automatic stay under section 362 of the Code is within the discretion of the bankruptcy judge and this decision may be overturned on appeal only for abuse of discretion."); In re Mitchell, 546 B.R. 339, 344 (Bankr. D.S.C. 2016) ("A decision to lift the automatic stay is within the discretion of the bankruptcy judge.").
DISCUSSION
The Parties' Positions
As noted, this action involves an appeal from the Bankruptcy Court's Order lifting the automatic stay as to Golden Trestle. Glover identified five issues in his appeal. See Bankruptcy Action, Doc. 30. First, Glover contends the Bankruptcy Court erred in ruling that he had not paid the correct amount of rent, claiming instead that he paid Golden Trestle's agent and Golden Trestle later stopped working with that agent. Id. at 1. Second, Glover contends that he had no way to contact Golden Trestle, which Glover describes as an "absentee Landlord living overseas." Id. Third, Glover contends that the Bankruptcy Court erred in finding he did not disclose his prior Bankruptcy filings, claiming instead that he was advised that his prior Chapter 11 petitions did not need to be disclosed. Id. Fourth, Glover contends that the Bankruptcy Court erred in lifting the stay, claiming instead that he is entitled to protection under the Bankruptcy Code to "work out a plan." Id. at 2. Fifth, Glover contends that he relied on his attorney "to aid and correct any concerns the court had prior to court proceedings" but that his attorney provided ineffective assistance. Id.
In response to Glover's appeal, Golden Trestle contends that the first four issues identified above address "alternative factual findings that [Glover] desires the appellate court to adopt." [Doc. 21 at 2.] According to Golden Trestle, Glover's asserted facts are outside the record and are not properly considered in this appeal, and, to the extent those facts are contrary to the Bankruptcy Court's findings, the Record on Appeal is devoid of any evidence showing the Bankruptcy Court's Order is clearly erroneous. [Id.] As to Glover's fifth argument, concerning the ineffectiveness of his counsel's assistance, Golden Trestle argues that Glover did not raise the issue in the Bankruptcy Court and, therefore, it should not be considered on appeal. [Id.] Finally, Golden Trestle contends the Bankruptcy Court's Order should be affirmed because the appeal is moot as the automatic stay ceased to apply when the Bankruptcy Action was dismissed. [Id. at 3.]
Golden Trestle has also filed a motion to dismiss, again arguing that Glover's appeal should be dismissed as it is moot. [Doc. 20 at 2.] According to Golden Trestle, the automatic stay is no longer enforceable because the underlying bankruptcy case that is the subject of this appeal has been dismissed. [Id.]
Glover's Appeal Is Moot
The Court agrees and finds that the instant appeal is moot as the underlying Bankruptcy Action has been dismissed. "[A] case is moot when the issues presented are no longer 'live' or the parties lack a legally cognizable interest in the outcome." City of Erie v. Pap's A.M., 529 U.S. 277, 287 (2000) (internal quotation marks omitted). "Federal courts lack jurisdiction to decide moot cases because their constitutional authority extends only to actual cases or controversies." Iron Arrow Honor Soc'y v. Heckler, 464 U.S. 67, 70 (1983). "The dismissal of a bankruptcy case 'normally results in dismissal of related proceedings because federal jurisdiction is premised upon the nexus between the underlying bankruptcy case and the related proceedings.'" In re Melo, 496 B.R. 253, 256 (B.A.P. 1st Cir. 2013) (internal quotation marks omitted).
Here, when the Bankruptcy Court dismissed the Chapter 13 Bankruptcy Action, Glover "lost the protections granted by the automatic stay," regardless of whether the stay was properly lifted by the Bankruptcy Court. Constructivist Found., Inc. v. Bonner, 254 B.R. 863, 865 (D. Md. 2000) (citing 11 U.S.C. § 349(b)(3)); see also In re Stith, 139 F.3d 892 (4th Cir. 1998) (unpublished table decision) (explaining that evaluation of whether a stay was properly lifted is rendered moot where it was terminated when the bankruptcy proceeding was dismissed); In re Mullins, 877 F.2d 60 (4th Cir. 1989) (unpublished table decision) ("The issue whether the stay was properly lifted in this case is moot because, even if the stay should have remained in effect, it terminated when the bankruptcy proceeding was dismissed."). Thus, the undersigned finds that the instant appeal should be dismissed because the Bankruptcy Action that is the subject of this appeal has been dismissed, rendering the automatic stay no longer enforceable.
RECOMMENDATION
In light of all the foregoing, the undersigned recommends that Golden Trestle's motion to dismiss be GRANTED.
IT IS SO RECOMMENDED.
s/ Jacquelyn D. Austin
United States Magistrate Judge September 18, 2019
Greenville, South Carolina
Plaintiff's attention is directed to the important notice on the next page.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. "[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must 'only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'" Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); see Fed. R. Civ. P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
300 East Washington Street, Room 239
Greenville, South Carolina 29601
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).