U.S.A. v. Federal Insurance Company
- D.C. Cir. # 15-7045 (decided August 5, 2016)
- The district court erred in applying the pre-filing injunction to the Debtor's appeals from the bankruptcy court and the matter remanded to the district court for resolution. The two matters consolidated for appeal were dismissed for failure to state a claim .
"These consolidated appeals are the latest chapter in a long line of litigation over a bankruptcy settlement agreed to by the trustee whom the United States Trustee appointed to represent the bankruptcy estate. The debtor’s numerous, frivolous challenges to the settlement led the district court to enter a pre-filing injunction barring him from filing any new civil actions in the district court without court permission. These cases present a question about the scope of that injunction: namely, does it encompass appeals to the district court from bankruptcy court? We conclude that, as written, the injunction does not cover those appeals with sufficient clarity, and that the district court thus erred in striking these three appeals for violating the pre-filing injunction. We nonetheless affirm the dismissal of two of the three appeals on the merits, and we remand for the district court to resolve the third one".
- Procedural context:
- Debtor appealed three rulings of the U. S. District Court for the District of Columbia dismissing his actions against the Trustee (breach of fiduciary duty) and his sisters (RICO and stay violations) arising from his extenuated bankruptcy proceedings and the adverse rulings of the bankruptcy court.
Debtor Yelverton appeared in the appellate matter pro se.
- Debtor filed for relief and the trustee negotiated a resolution of a disputed interest in a family business with his sisters. Debtor took exception to this resolution in a series of challenges in the bankruptcy court followed by review in the district court..
Debtor was bound by a prior pre-filing injunction by the district court based upon prior matters related to his filings. Debtor had a lengthy history with the courts on slights arising from his petition and administration of claims.
Debtor had filed “over 40 lawsuits, adversary bankruptcy proceedings, or appeals of the bankruptcy court’s rulings,” and within those lawsuits “over 150 motions, including over 50 motions to reconsider, vacate, amend, or obtain relief from a judgment or order.” In response to Yelverton’s many frivolous challenges, the district court entered a pre-filing injunction against him on August 6, 2014. The injunction barred him from filing “any new civil action in [that] Court” without first receiving the court’s permission. The appellate court had previously reviewed and affirmed the injunction bar with respect to "new" matters.
The Court found an important distinction in his filing of the appeals from the bankruptcy court to the distinct court, in that it did not require him to file in the district court as would a "new civil" matter. The court discussed that the the injunction clearly prohibited a new filing in the District Court but not necessarily in the bankruptcy court. The court's prohibitive order did not specifically state that new bankruptcy filings were included in its ban.
The Court exercised its discretion in a de novo review and dismissed, affirming the bankruptcy court rulings, the two consolidated actions against the Debtor's sisters (RICO claims and for a violation of stay) for failures to state a claim.
- Circuit Judges Sri Srinivasan, Patricia A. Millett and Robert L. Wilkins. Judge Srinivasan authored the Opinion for the Court.
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