In re: Longneck Properties, LLC et al.

Filing 24

MEMORANDUM ORDER re 21 REPORT AND RECOMMENDATION is ADOPTED to the extent set forth herein. The appeal is DISMISSED WITH PREJUDICE, ***Civil Case Terminated. Signed by Judge Leonard P. Stark on 9/22/17. (ntl)

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE IN RE LONG NECK PROPERTIES, LLC, Chapter 7 Debtor. Banla. Case No. 14-11707 (KJC) ERIC S. CAMPBELL, Appellant, Civ. No. 16-229 (LPS) v. GEORGE L. MILLER, et al., Appellees. MEMORANDUM ORDER Pending before the Court is the untimely Letter Objection (D.I. 22) filed by prose appellant Eric S. Campbell with respect to the Report and Recommendation issued by Chief Magistrate Judge Thynge on June 30, 2017 (D.I. 21). For the reasons set forth herein, the Court will overrule the Letter Objection, adopt the Report and Recommendation in part, and dismiss the appeal with prejudice. I. BACKGROUND On or about July 14, 2014, Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code, and George L. Miller was appointed as the Chapter 7 Tmstee (''Trnstee"). I On September 9, 2015, Trustee filed a motion seeking sanctions against appellant for his alleged willful violations of the automatic stay pursuant to s~ction 362(k) of the Bankruptcy Code (B.D.I. 50) 1 ("Sanctions Motion"). In the Sanctions Motion, Trust~e asserted that appellant had willfully obstructed Trustee in marketing and selling; certain real property constituting the Debtor's primary asset, and had also refused to turn over estate assets, including money and a 1 The docket of the chapter 11 case, captioned In re Long Neck Properties, LLC, Case No. 1411707 (KJC) (Bankr. D. Del.), is cited herein as "B.D.I. _." 1 motor vehicle. (See id.) On September 22, 2015, the Bankruptcy Court held a hearing on the Sanctions Motion. During the hearing, Trustee and appellant reported a settlement of the dispute. The settlement resolved the Sanctions Motic;m and other issues between the parties. The I settlement generally provided that appellant was obligated to the estate in the amount of $10,000, I . but that this obligation would be deemed satisfied an~ released if appellant paid $4,000 within 30 I . days of the date of an order approving the settlement,. The terms of the parties' settlement were I I read into the record at the hearing, and the BankruptJy Court asked appellant ifhe understood I . . i and agreed to the terms of the settlement and whethe;r he could make the agreed-upon payment. Appellant answered in the affirmative. Following the hearing, the parties did not reach an I agreement regarding a form of order. (See B.D.I. 68) On October 13, 2015, the Bankruptcy. I i Court entered a short order setting forth the settlement terms read into the record at the I September 22, 2015 hearing and attaching the relevaht excerpt of the hearing transcript (B.D.I. I I i 70) ("First Settlement Order") Appellant did not appeal the First Settlement Order and also did not make the $4,000 payment. On December 15, 2015, Appellant filed a lett~r request with Bankruptcy Court seeking relief from the terms of the First Settlement Order. CB.DJ. 89) On February 5, 2016, Trustee I I i filed a response opposing any such relief. (B.D.I. 90) Following a hearing, the Bankruptcy Court denied the relief sought in the letter request, issuing an order on March 15, 2016. (B.D.I. I 93) On April 5, 2016, appellant filed a notice of app'.eal with respect to the March 15, 2016 order. (D .I. 1) Since the filing of this appeal, Judge Thynge iheld a number of teleconferences with the I parties, scheduled a mediation (which was later candelled), and had an in-person conference on I December 12, 2016. During that conference, it was bonfirmed on the record that appellant was I . I I now willing to resolve his appeal by paying Trustee $1,000.00 in weekly increments of $75.00, . I 2 I beginning December 16, 2016 and continuing until full payment of the $1,000.00 settlement. As a result of the conference, on December 14_, 2016, the Court issued an order memorializing the parties' settlement agreement (D.1..16) ("Second Settlement Order"). In accordance with the Second Settlement Order, appellant's weekly payments were to be made directly to Trustee, whose mailing address was included in the Second Settlement Order, and the Trustee was further 1 required to advise the Court when full payment had been made. (See id. at 2) Despite the agreement between the parties, ai?pellant failed to begin the weekly payments on December 16, 2016, and made only six payments between January 19, 2017 and June 1, 2017. Appellant should have completed and made full payment by early March 2017. Due to appellant's failure to comply with the payment schequle set forth in the Second Settlement Order, the Court sch_eduled additional teleconferenc~s for February 15, 2017, March 29, 2017, I and May 2, 2017. (See D.I. 17, 18, 19) The most recent teleconference was scheduled for June 26, 2017 (see D.I. 20), but appellant failed to participate, later claiming in an email that he ! forgot. (See D.I. 21 at 2) Based on appellant's email request for an accounting to finalize payment, however, Judge Thynge issued an email to the parties on June 29, 2017, which I required counsel for Trustee. to confirm, on or befor~ July .7, 2017, the total amount remaining I I and due and to advise the Court and appellant by em~il of same. (See D.I. 21 at 3) It also ! ·provided for appellant to make the final payment, as ~e indicated in prior emails that he intended and desired to do, by July 21, 2017. (See id.) The e*1ail order also required Trustee to confirm I whether final payment was made, whether settlemenl is complete, and whether this appeal may I be dismissed. (See id.) In response to this email orcJ;er, appellant immediately advised that he I did not intend to comply. (See id.) I On June 30, 3017, the Report and Recommendation was issued. Judge Thynge I recommends that, based on appellant's noncompliance with the Second Settlement Order, the 3 I I I I Court enter an order (1) affi~ing the March 15, 201~ Bankruptcy Court order and dismissing ~ . . the appeal with prejudice, and (2) ordering appellant to pay the fees and costs incurred by Trustee for the appeal. (See id. at 4) On July24, 20~ 7, appellant filed a Letter Objection to the Report and Recommendations. (D.I. 22) 2 II. PARTIES' CONTENTIONS I Appellant purports that he has no further obligations because "the Trustee, Mr. Miller, I I has informed me that the settlement agreement, under which payments were to be made, has I been quashed and rescinded." (D.I. 22 at 1) Appellant appears to rely on a letter dated May 23, I 201 7 to the Court, which included a letter dated Mayi 17, 201 7 from Trustee to appellant, defau1~ of the settlement, the settlement was null and void. (See D.l. 21 at 3) Appellant takes the pos~tion that because Trustee has threatened advising that since appellant was in continued further litigation, appellant has no further obligation ~nder the Second Settlement Order. (See I id.) Appellant further argues that the Trustee cannot proceed directly to litigation without first proving appellant has been "properly notified of a perceived breach" and has been "provided an . I I opportunity to cure." (See D.I. 22 at 2) Trustee file4 no response to the Letter Objection. ! III. LEGAL STANDARDS Rule 72 of the Federal Rules of Civil Proc~dure permits magistrate judges to conduct proceedings on dispositive pretrial matters without thLonsent of the parties. Fed. R Civ. P. 72(b). ! Any portion of a report and recommendation on dispositive matters, to which a timely objection i I has been made, is reviewed de novo. 28 U.S.C. § 636(b)(l); Fed. R. Civ. P. 72(b). The Court, I I ! I 2 The Letter Objection also enclosed a check and inslcted the Clerk's Office to hold the funds "in escrow status." (See D.I. 22 at 2). The Letter otijection stated: "If [the Trustee] rescinds his threat to litigate, I'll cut a final check to pay the obli~ation clear. If [the Trustee] wants to litigate, then you'll need to return my check and we'll proceed with suit." (Id.) On July 25, 2017, the check was returned to appellant with a lett6r foforming appellant that the Clerk's Office cannot hold funds in escrow absent a court oraer. (See D.I. 23) 4 ho~ever, is not required to review the factual findings or legal conclusions of the magistrate judge as to which no proper objections are interposed. See Gusler v. City ofLong Beach, 823 F. Supp. 2d 98, 109 (E.D.N.Y. 2011). To accept the report and recommendation of a magistrate judge to which no timely objection has been made, the district judge need only be satisfied that there is no clear error on the face of the record. See Fed. R. Civ. P. 72(b) (Advisory Committee Notes); Gusle~, 823 F. Supp. 2d at 109. Whether or not proper objections have been filed, the Court may accept, reject, or modify any of the magistrate judge's findings or recommendations. See 28 U.S.C. § 636(b)(l); Fed. R. Civ. P. 72(b). The Court may also receive further evidence or return the matter to the magistrate judge with instructions for proceeding. Id. Finally, "[appellant] proceeds prose, and accordingly, we construe his pleadings liberally." Laughlin v. Peck, 552 Fed. App'x 188, 190 (3d Cir. 2014) (citing Haines v. Kerner, 404 U.S. 519, 520-21 (1972)). IV. DISCUSSION Appellant failed to timely object to the Report and Recommendation. Federal Rule of Civil Procedure 72(b)(2) provides that, "[w]ithin 14 ~ays after being served with a copy of the recommended disposition, a party may serve and file specific written objections to the proposed findings and recommendations." The Report and Re'commendation was issued on June 30, 2017, and the docket entry indicated that appellant's objections, if any, were required to be filed no later than July 17, 2017. (See D.I. 21 (allowing three additional days)) Appellant's Letter Objection, which is dated July 19, 2017, was received by the Court on July 24, 2017. (See D.I. 22). The Court finds no clear error on the face of the record in Judge Thynge's determination that appellant failed to comply with the Second Settl~ment Order. Appellant does not contest reaching a settlement to resolve his appeal, nor does !appellant contest the terms of that settlement I I I as set forth on the record at the December 12, 2016 hearing, in the Second Settlement Order, and I 5 ·in the Report and Recommendation. Appellant offers no argument or evidence_to contest the timing and amounts of the payments set forth in the ~eport. and Recommendation, nor does appellant contest Judge Thynge's report that he has failed to comply with the terms of the Second Settlement Order from the outset and ·remain~ in default. (See D.I. 22 at 1 ("So that we .. . I . . are clear, I do NOT deny owing the Trustee a small balance.")). Appellant merely asserts that, . . I . having failed to comply with the terms of the Seconcl Settlement Order over the course of many I I months, further payments became impossible follow~ng the Trustee's communications in May I . thatthe settlement was null and void. (See· id.) Ho~ever, appellant also-claims to have sent two . . I . . additional payment in late June, long after the commjunications from Trustee and counsel in May. I (See D .I. 21 at 4) ·The Court finds no error on the faGe of the record that appellant has reneged . . I . . on his representations to the Court and his settlement with Trustee and failed to comply with the I Second Settlement Order. . Judge Thynge recommends dismissal of the abeal with prejudice and an award of costs to . I Trustee in connection with the appeal. Appellant has merely responded that . such a recommendation "is without any legal foundation." l(See D.I. 22 at 2) The Court disagrees. The Court finds that, in light of the history of these proceedings, dismissal of the appeal is not an abuse I of discretion, nor is the recommendation to dismiss Based on a clear error of law or fact. I . I I To the contrary, dismissal is appropriate based on consideration of the "Paulis factors." See Poulis v. State Farm Fire & Cas. Co., 747 F.2d '863, 868 (3d Cir. 1984). Regarding the first Poulis factor, the extent of the party's personal re~ponsibility, appellant proceeds pro se and, i therefore, is personally responsible for his actions. See Emerson v. ·Thiel Coll., 296 F .3d 184, 190 . I I (3d. Cir. 2002). Second, regarding prejudice to th~ adversary, Trustee has been prejudiced by appellant's noncompliance with two separate settljent agreements, and the estate has continued I . to incur costs and fees to resolve this matter. ThirdJ there is a history of dilatoriness. Appellant I 6 I I . has repeatedly failed to comply with Judge Thyngt's orders, including, inter alia, the Second Settlement Order, the May 2, 2017 oral order setting the June 26, 2017 teleconference, and the June 29, 2017 email order. With respect to the fou~h Poulis factor, the conduct of appellant, the Court declines to find appellant's noncompliance to be willful or in bad faith, but notes the many I - . . I . · inappropriate personal insults levied against Judge irhynge and Trustee in the Letter Objection. • I I I With respect to the fifth Poulis factor, monetary san~tions will not likely be effective in this case, I . considering that appellant proceeds pro se and has ttepeatedly claimed economic hardship.· (See I D.I. 3, .6, 7) The final Paulis factor is the meritoriLsness of appellant's claims, which weighs against appellant, based on appellant's consent to thl First Settlement Order, clearly set forth on the record at the September 22, 2015 hearing, and Js failure to appeal the First Settlement .Order . . I (B.D.I. 70), from which terms relief is ultimately sotlght in this appeal. . I Nor is there error, or an abuse of discretion, ib the recommendation to award Trustee costs I I and fees. Nevertheless, considering the matter de noto, the Court will not require appellant to pay Trustee's costs and fees. Given appellant's financi~ condition, given that the Court is dismissing the appeal, and given that it is well past time for this lJtigation to be completed, the Court concludes I . . I that the appropriate exercise of its discretion in the citcumstances here is not to enter another order (which may lead to further noriccimpliance and nlcessitate further enforcement proceedings) I requiring appellant to pay Trustee even more money! 3 - . I NOW THEREFORE, IT IS HEREBY ORDERED that: · 1. Appellant's Lett~ Objection (D.1. 221 is OVERRULED. I 2. The Report and Recommendation (~.I. 21) is ADOPTED to the extent set .forth I herein. 3 It may be that Trustee's decision not to file a respoi;ise to appellant's objections indicates that Trustee is not interested in incurring more litigation expenses in this matter. . . 7 I I . 3. The appeal is DISMISSED WITH PREJUDICE. 4. The Clerk is directed to CLOSE Civ. No. 16-229 (LPS). LP-~~~-b September 22, 201 7 HON. LEONARD P. STARK UNITED STATES DISTRICT JUDGE 8

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