Opinion
Case No. 03-45034-HJB.
May 10, 2004
ORDER DENYING STAY PENDING APPEAL
Before the Court is the "Debtors [sic] Motion to Stay Proceedings Pending Appeal" (the "Stay Motion"). Specifically, the Stay Motion seeks a stay of all proceedings in this case pending appeal of this Court's Order of April 7, 2004, overruling the Debtor's objections to the claims of the United States of America (the "United States") and the Commonwealth of Massachusetts.
The Debtor filed the within Chapter 13 case on August 29, 2003 and filed his Chapter 13 plan on September 15, 2003. The plan neither listed nor treated claims of the United States or the Commonwealth of Massachusetts. On September 18, 2003, the United States filed a proof of claim, consisting of a secured claim of $2,200, an unsecured priority claim of $27,000 and a general unsecured claim of $41,600.89. These claims were based on estimates, the Debtor not having filed tax returns since 1992. On November 5, 2003, the Commonwealth of Massachusetts filed its proof of claim, in the amount of $25,062.41, consisting of a priority claim of $3,993.78 and a general unsecured claim of $21,068.63. These claims were based on estimates as well, the Debtor not having filed tax returns since 1993.
The Debtor was originally represented by counsel. That counsel subsequently withdrew, with leave of the Court. The Debtor is now pro se.
The plan actually listed no claims whatsoever, other than a substantial arrearage owed to the first mortgagee on the Debtor's residence, Fairbanks Mortgage Capital Corp. ("Fairbanks").
On October 17, 2003, the Debtor filed an objection to the claims of the United States, stating as grounds therefor that he was "not subject to the provisions of the Federal Tax Code." The United States filed its response on November 14, 2003, providing the contrary view. The objection was scheduled for hearing on December 17, 2003. On November 5, 2003, the Commonwealth of Massachusetts filed its objection to confirmation of the Debtor's Plan, complaining that the Debtor had not filed tax returns for the years 1993-2002. That objection was scheduled for non-evidentiary hearing on November 26, 2003, but continued to December 17, 2003 on the joint motion of the Debtor and the Commonwealth of Massachusetts. However, on December 17, 2003, coincident with the withdrawal of counsel for the Debtor, the aforesaid objection to the United States proof of claim was withdrawn without prejudice, and the Debtor was ordered to file any new objections to claims on or before January 31, 2004.
On February 2, 2004, the Debtor filed an objection to the claims of the United States and the Commonwealth of Massachusetts, accompanied by:
No party has raised the Debtor's failure to adhere to the deadline for filing objections to claims.
1. Verified Affidavit of Citizenship and Domicile Demand for Proof of Jurisdiction Claim Points and Authorities Supporting Debtor Is Citizen Not Liable in Relationship to United States and the Commonwealth of Massachusetts;
2. Debtor's Reply and Supporting Memorandum of Law to United States of America's and the Commonwealth of Massachusetts Response to Debtor's Objection to Proof of Claim and Objection to Confirmation of Chapter 13 Plan;
3. Affidavit of Preservation of All Unalienable Rights under the Constitution of the United States and All Remedies and Redress under Equity and Common Law; and
4. Affidavit of Revocation of Signatures and Rescission of Previously Filed W-4 Forms, 1040 Forms, and State Income Tax Forms, et al.
In summary, the Debtor's objections maintained that neither the United States nor the Commonwealth of Massachusetts were constitutionally empowered to tax citizens of the United States or to require them to file income informational returns. Although providing several pages of extensive citations, the arguments made reflected an absence of cogency. The objections were set for hearing on April 7, 2004 with a response date of April 1, 2004. The Commonwealth of Massachusetts and the United States responded on March 23, 2004 and March 24, 2004, respectively. Each cited its jurisdictional grants of authority. The merits of the arguments made by each governmental unit are without reasonable dispute.
The Chapter 13 trustee's objection to confirmation was also scheduled to be heard on that day but on grounds unrelated to the dispute with the taxing authorities.
On April 1, 2004, the Debtor requested a continuance of the April 7, 2004 hearing, requesting additional time within which to respond to the responses of the United States and the Commonwealth of Massachusetts. The taxing authorities opposed on the grounds that the Debtor had already been provided an extensive period of time within which to prepare for the hearing based on his own arguments. The Court denied the request for a continuance on April 6, 2004.
On April 7, 2004, the Court held a hearing on the Debtor's objections to the claims of the United States and the Commonwealth of Massachusetts and overruled those objections, citing as grounds therefor the arguments made by each respondent in its respective opposition.
On April 19, 2004, the Debtor filed his Notice of Appeal of this Court's April 7, 2004 order, together with the instant Stay Motion. That motion complains that this Court's order of April 7, 2004: 1) is incorrect; 2) did not afford the Debtor with an opportunity for discovery or proper preparation, thereby denying him both due process and equal protection of the laws; and 3) did not provide the Debtor with his right to a jury trial.
It is well settled that, on request of an appellant, a court should grant a stay of the order subject to appeal if:
(1) there is a likelihood of success on the merits of the appeal;
(2) the moving party will suffer irreparable harm if a stay is not granted;
(3) the harm to the moving party if the stay is not granted is greater than the injury to the opposing party if the stay is granted; and
(4) the public interest would not be adversely affected by the issuance of the stay.
In re Miraj, 201 B.R. 23, 26 (Bankr. D. Mass. 1996); In re Froment, 171 B.R. 170, 172 (Bankr. D. Mass. 1994); In re Public Serv. Co., 116 B.R. 347, 348 (Bankr. D.N.H. 1990); In re Great Barrington Fair and Amusement, Inc., 53 B.R. 237, 239 (Bankr. D. of the foregoing factors, at least in some degree. In re Miraj, 201 B.R. at 26. Furthermore, application by the trial court of the first factor (likelihood of success on the merits of the appeal) is best understood as a determination that the movant has a "substantial case" or a "strong case on appeal" Id. at 26-27.
The Debtor has failed to meet the first test. He does not have a "substantial" or "strong case on appeal." First, this Court believes that its findings underlying its April 7, 2004 order are well-supported by existing law. The arguments made by the Debtor in his claim objections are frivolous. Second, the order which denied the Debtor an extension of time within which to prepare for the April 7, 2004 hearing was made and entered on April 6, 2004, not April 7, 2004. Accordingly, notwithstanding the merits of the April 6, 2004 order (the Debtor not having complained to the response and hearing dates when set and then having asked for additional time to respond to arguments he himself extensively raised), it was not appealed (and, if appealed on April 19, 2004, would have been untimely). Only the April 7, 2004 order was appealed. And third, with respect to the demand for a jury trial, it was not timely raised. Moreover, even if the appeal had been timely raised, it would have been inapplicable. A debtor, having filed a Chapter 7 case calling upon the bankruptcy court's equitable jurisdiction, waives any right to a jury trial in connection with claim allowance. In re Auto Imports, Inc., 162 B.R. 70, 72 (Bankr. D.N.H. 1993). Further, the Debtor's objections were all based on legal rather than factual arguments; legal arguments are always reserved for the court. Matter of Hallihan, 936 F.2d 1496, 1504-05 (7th Cir. 1991).
This Court finds and rules that the Debtor is unable to meet the first test of the four required to obtain an stay pending appeal. Accordingly, the Court need not determine the existence of any of the other three.
For the foregoing reasons, the Debtor's Motion To Stay Pending Appeal is DENIED.