In Re: Linda A. Hawkins and Gregory L. Hawkins

Filing 16

MEMORANDUM OPINION. Signed by Judge Sue L. Robinson on 12/20/13. (mdb)

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

In re:
LINDA A. HAWKINS AND GREGORY
HAWKINS,
Debtors.
ELVA D. ALLEN,
Appellant,
v.
MICHAEL B. JOSEPH,
United States Trustee,
Appellee.

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Chapter 13
Bankr. No. 05-13987(BLS)

Civ. No. 13-526-SLR

Elva D. Allen, Millsboro, Delaware; Pro Se Appellant.
Michael B. Joseph, Esquire, Ferry, Joseph & Pearce, P.A., Wilmington, Delaware;
Counsel for Appellee.

MEMORANDUM OPINION

Dated: December Jb ,2013
Wilmington, Delaware

Ho~Udge

I. INTRODUCTION
Appellant Elva D. Allen filed this bankruptcy appeal on March 1, 2013. She
appears pro se and has paid the filing fee. The appeal is taken from In re Hawkins,
Bankr. No. 05-13987-BLS (Bankr. D. Del. Feb. 28,2013) ("Bankr. No. 05-1397-BLS").

(ld. at 0.1. 83, 84) For the reasons discussed below: (1) the motion to strike (0.1. 14)
will be denied as moot; and (2) the appeal will be dismissed for lack of standing.

II. PROCEDURAL AND FACTUAL BACKGROUND
On October 14, 2005, debtors Linda A. Hawkins ("Linda") and Gregory L.
Hawkins ("Gregory") ("together debtors") filed a Chapter 13 joint voluntary petition in this
District's bankruptcy court. (Bankr. No. 05-13987-BLS at 0.1. 1) Appellee Michael B.
Joseph is the standing Chapter 13 trustee ("trustee" or "appellee"). Debtors' plan was
confirmed by the bankruptcy court on April 17, 2006. (Id. at 0.1. 34) The bankruptcy
case was closed on November 2,2010.
On January 8, 2013, Elva D. Allen ("appellant" or "Allen") filed a motion to reopen
the bankruptcy proceeding, on behalf of herself and Dr. James Robert Conaway ("Dr.
Conaway"), Ernest E. Conway ("Ernest"), and Mabel H. Conaway ("Mabel") (collectively,
"the Conaways") as creditors. The motion was opposed by appellee, debtors, and
attorneys Jeffrey M. Weiner ("Weiner") and D. Stephen Parsons ("Parsons"). (/d. at 0.1.
72, 75-78; 0.1. 93 at 4) Only Allen signed the motion to reopen. (Id. at 0.1. 72)
A 1.92 acre parcel of property originally owned by Robert Conaway, see
Conaway v. Griffin, 970 A.2d 256 (Del. 2009) (table), was the foclJs of the motion to
reopen, appellant asserting that it should not have been included in the bankruptcy

estate. The property and its sale or transfer were the subject of proceedings in the
Court of Chancery of the State of Delaware. See id.; Conaway v. Hawkins, 2011 WL
3444567 (Del. Ch. July 29,2011); Conaway v. Hawkins, 2010 WL 403313 (Del. Ch.
Feb. 4, 2010). Appellant moved to reopen the bankruptcy proceeding on the grounds
that she and the Conaways were intentionally omitted from the bankruptcy schedules,
and the debt was nondischargeable based upon fraud or false pretenses. (Bankr. No.
05-13987-BLS at 0.1. 72)
During the pendency of the bankruptcy proceeding, Joseph received a call from
appellant on April 28, 2006, in connection with the bankruptcy proceeding, followed by
appellant's letter dated April 29, 2006. (0.1. 11, ex. A) Appellant indicated that Linda
owned an interest in the real property at issue, that the property was sold, that Linda
received a portion of the sale proceeds on December 16, 2005, and that Linda's
interest in the property was not disclosed in the debtors' joint petition or any subsequent
filings. (ld.) Thereafter, Joseph sought, and received, approval from the bankruptcy
court to conduct a Rule 2004 examination of debtors to investigate the allegations
made by appellant. (Bankr. No. 05-1397-BLS, 0.1. 42, 44) On August 2,2006, Joseph
examined debtors, demanded and reviewed pertinent documents, and reported his
findings to the Office of the United States Trustee.

(Id. at 0.1. 93 at 32)

Joseph determined that Linda had transferred her interest in the property at
issue and had received net proceeds in the amount of $44,043.07. On October 27,
2006, Joseph filed a motion to dismiss the bankruptcy case, opposed by debtors. (Id.
at 0.1. 53, 54) The parties agreed to a stipulation to resolve the motion to dismiss. The
stipulation tolled the limitations period for the time to object to discharge, for any
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purpose, until Joseph filed his final report; debtors continued to carry out their
confirmed plan which contemplated that allowed claims would receive a 100% dividend.

(Id. at 0.1. 56, 57) Debtors performed their obligations under their plan and were
granted a discharge on October 25,2010. (Id. at 68) Appellee filed his final report on
October 29,2010, a final decree was entered on November 1, 2010, and the
bankruptcy case was closed on November 2,2010. (ld. at 0.1. 70, 71)
A hearing was held on the motion to reopen on February 26, 2013. (Id. at 0.1.
82, 93) During the hearing, appellant identified herself and the Conaways as creditors
of debtors who were intentionally omitted from the bankruptcy proceeding. (Id. at 0.1.
93 at 16) Appellant testified that she is not an attorney, and that she appeared on
behalf of other parties named as movants pursuant to powers of attorney. (ld. at 0.1. 93
at 4, 16) Appellant is the Conaways' typist and secretary. (/d. at 0.1. 93 at 16-17)
Appellant testified that she did not have an ownership interest in the property at issue,
and she acknowledged during the hearing that she first became aware of the
bankruptcy proceeding on March 14,2006. (Id. at 0.1. 93 at 9, 16) Neither appellant
nor her principles filed claims in the bankruptcy proceeding. (/d. at 0.1. 93 at 33)
Objections were raised to appellant's appearance on behalf of others. Said
objections were overruled by the bankruptcy court for the limited purposes associated
with the motion to reopen and the February 26,2013 hearing. (/d. at 0.1. 83 n.1) The
bankruptcy judge stated that he considered appellant's motion and argument on the
merits as is the practice in his court. (Id. at 0.1. 93 at 19)
On February 28, 2013, the bankruptcy court denied the motion to reopen
finding that it was not timely filed under 11 U.S.C. § 1328(e). (ld. at 0.1. 83) In addition,

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the bankruptcy court struck appellant's rebuttal brief pursuant to an oral motion. (Id. at
0.1. 93 at 30) This appeal followed. (Id. at 0.1. 84)
Appellant raises the following issue for review: whether the bankruptcy court
erred when it denied the motion to reopen in light of the far-reaching bankruptcy fraud
and continuous violations of the automatic stay. (O.l. 9) Appellee responds that
appellant lacks standing to bring this appeal and, with regard to the merits, the
bankruptcy court's order was proper and should be affirmed. (0.1. 11)
III. STANDARD OF REVIEW
This court has jurisdiction over the appeal from the bankruptcy court's February
28,2013 order pursuant to 28 U.S.C. § 158{a) which provides in relevant part: "The
district courts of the United States shall have jurisdiction to hear appeals from final
judgments, orders and decrees ... of bankruptcy judges entered in cases and
proceedings referred to the bankruptcy judges under section 157 of this title. An appeal
under this subsection shall be taken only to the district court for the judicial district in
which the bankruptcy judge is serving."
In reviewing a determination of the bankruptcy court, the district court subjects
the bankruptcy court's legal determinations to plenary review, reviewing its factual
findings for clear error, and considering its exercise of discretion for abuse thereof. In
re United Healthcare SY8., Inc., 396 F.3d 247, 249 (3d Cir. 2005). Under the

Bankruptcy Code, "[a] case may be reopened in the court in which such case was
closed to administer assets, to accord relief to the debtor, or for other cause." 11
U.S.C. § 350{b). The court reviews a bankruptcy court's decision to deny a motion to

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reopen for abuse of discretion. Donaldson v. Bernstein, 104 F.3d 547,551 (3d Cir.

1997); see also In re Lockings, 308 F. App'x 583, 584 (3d Cir. 2008) (unpublished).

IV. DISCUSSION
Appellee argues that the appeal must be dismissed on the ground that appellant
lacks standing. Appellant responds that she and Mabel filed the motion to reopen the
bankruptcy case and that she and Mabel initiated this appeal. Appellant also argues
that she and Mabel have a federal right to litigate claims in bankruptcy and federal
court. In addition, in the reply brief, appellant now claims that she does not appear in
court on behalf of the Conaways but as an heir along with Mabel. 1 (D.1. 13)
The parties did not address the issue of the Conaways' standing. Nonetheless,
the court is required to raise issues of standing sua sponte if such issues exist. See
Steele v. Blackman, 236 F.3d 130, 134 n.4 (3d Cir. 2001). Appellant has no interest in
the property at issue. In addition, despite notice of the bankruptcy proceeding, neither
appellant, nor the Conaways, filed claims in the bankruptcy proceeding.
Standing to appeal an order of a bankruptcy court is limited to persons aggrieved
by that order. In re Combustion Eng'g, Inc., 391 F.3d 190,214 (3d Cir. 2004). The
standard is more restrictive than normal Article III standing. Id. at 215. Appellant and
the Conaways must show that the bankruptcy court's February 28, 2013 order
diminishes their property, increases their burdens, or impairs their rights. Id. at 214.
U[O]nly those persons whose rights or interests are directly and adversely affected

1This position is contrary to appellant's testimony during the hearing on the
motion to reopen wherein she stated that she appeared on behalf of the Conaways by
reason of their power of attorney.

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pecuniarily by an order of the bankruptcy court may bring an appeal." In re PWS

Holding Corp., 228 F.3d 224, 249 (3d Cir. 2000) (internal quotation marks and citation
omitted); see also In re Dykes, 10 F.3d 184, 187 (3d Cir. 1993) (finding that an
individual who never filed a formal or informal proof of claim lacked standing to
challenge an order of distribution). A showing of potential harm incidental to the order
is not enough. In re Combustion Eng'g, 391 F.3d at 215. Whether a litigant has
standing to appeal a bankruptcy court order is ordinarily a question of fact to be
resolved by the district court. In re Fryer, 235 F. App'x 951, 954 (3d Cir. 2007)
(unpublished) (citing In re Dykes, 10 F.3d at 187).
The order at issue denied the motion to reopen the bankruptcy proceeding, the
motion's stated purpose being to vacate the debtors' discharge and file a non­
dischargeability complaint against debtors. The record does not reflect that this order
had a direct, pecuniary effect upon appellant or the Conaways. The order does not
order any administration of the estate. Rather, it recognizes that the estate has been
fully administered and that the motion to reopen was filed well outside the one-year
statutory time-frame set forth in 11 U.S.C. § 1328(e). In addition, appellant admittedly
has no interest in the property at issue and, further, neither she, nor the Conaways,
filed a proof of claim even though they were aware of the bankruptcy proceeding.
Accordingly, neither appellant nor the Conaways had a pecuniary interest in the
proceeds from the sale of the property at issue.

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The court finds that appellant and the Conaways are not "persons aggrieved"
and, therefore, they have no standing to bring this appeal. Therefore, the appeal will be
dismissed. 2

V. CONCLUSION
For the foregoing reasons, the court (1); will deny as moot the motion to strike
(0.1. 14); and (2) will dismiss the appeal for lack of standing.

2The court will not address the other issues raised, given that appellant and the
Conaways lack standing.

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