In Re: Lawrence N. Petricca Sr.

Filing 28

ORDER. The Decision of the Bankruptcy Judge Caryle Delano is AFFIRMED. The Clerk of the Court shall enter judgment accordingly, transmit a copy of this Order and the Judgment to the Clerk of the Bankruptcy Court, terminate the appeal, and close the file. Signed by Judge Sheri Polster Chappell on 7/14/2015. (LMF)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
IN RE: LAWRENCE N. PETRICCA, SR.

FREDERICK HUTCHINGS,
Appellant,
v.

Case No: 2:14-cv-615-FtM-38

DIANE L. JENSEN,
Appellee.
/
ORDER1
This matter comes before the Court on the Appellant, Fredrick Hutchings’ Appeal
of the Bankruptcy Court's Order (Doc. #22) filed on May 12, 2015. The Trustee Diane L.
Jensen, Esq. filed her Reply to Hutchings Brief (Doc. #25) on May 22, 2015. The
Appellant, Hutchings filed a Reply Brief to the Trustee’s Reply (Doc. #26) on May 28,
2015. The Appeal is now fully briefed and ripe for the Court’s review.
FACTS
On May 6, 2014, the Trustee filed her Report and Notice of Intention to Sell
Property of the Estate at a Private Sale. On May 21, 2014, Hutchings filed an objection
to the Trustee’s Report and Notice of Intention to Sell Property of the Estate. On June

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20, 2014, the Bankruptcy Judge, Caryl E. Delano, issued an Order overruling Hutchings’
objections to the Trustee’s sale. After Judge Delano issued her June 20, 2014 Order, the
Trustee conducted an auction in which Hutchings was the highest bidder. Hutchings
subsequently defaulted on his bid.
As a consequence of Hutchings default, the Trustee filed an Emergency Motion to
Determine Auction Procedures. Judge Delano issued an Order on July 25, 2014, granting
the Emergency Motion. (Doc. #23-5, p. 3). In her Order, Judge Delano stated that given
the history of the current litigation and Hutchings’ default on his bid, the “Trustee’s request
for a new auction is reasonable, and it would be in the best interest of the bankruptcy
estate to grant the Motion.” In Re Petricca, 9:08-bk-16204 (Doc. #444). Thereafter, based
upon the July 25, 2014 Order, the Trustee held another auction requiring all bidders to
submit their bids to the Trustee’s office by 5:00pm on August 15, 2014. On August 18,
2014, the Trustee filed her Report of Sale noting that three (3) bidders bid during the
August 15, 2014 Auction with the highest bid belonging to Legal Resolve, LLC.
On August 26, 2014, Hutchings filed an Objection to Trustee Jensen’s Report of
Sale and a Motion to Remove R.A. Realty Trust from Trustee Jensen’s List of Alleged
Assets for Sale. On September 6, 2014, Judge Delano issued an Order overruling
Hutchings’ objections and denying the Motion to remove R.A. Realty Trust from the
Trustee’s List of Assets for Sale. In Re Petricca, 9:08-bk-16204 (Doc. #469). In addition
to denying Hutchings’s Motion, Judge Delano also denied the Debtor Lawrence Petricca’s
objections and motion to bar Attorney Israel Sanchez, the objections of John Wilson, Ara
Eresian, Jr., and Rose Castro as well as a request for sanctions.

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STANDARD OF REVIEW
Pursuant to 28 U.S.C. § 158(a). The United States District Court functions as an
appellate court in reviewing decisions of the United States Bankruptcy Court. In re Fish,
2013 WL 1104884, *2 (M.D. Fla. March 18, 2013) (citing In re Colortex Indus., Inc., 19
F.3d 1371, 1374 (11th Cir.1994)). This Court reviews de novo the legal conclusions of the
bankruptcy court. In re Fish, 2013 WL 1104884 at *2 (citing In re JLJ, Inc., 988 F.2d 1112,
1116 (11th Cir.1993)).
The standard of review employed by this Court in reviewing the bankruptcy court's
findings of fact is the clearly erroneous standard of review described in Federal Rule of
Bankruptcy Procedure 8013: “Findings of fact, whether based on oral or documentary
evidence, shall not be set aside unless clearly erroneous, and due regard shall be given
to the opportunity of the bankruptcy court to judge the credibility of the witnesses.” In re
Fish, 2013 WL 1104884 at *2 (citing In re Thomas, 883 F.2d 991, 994 (11th Cir.1989)). A
finding of fact is clearly erroneous when, “although there is evidence to support it, the
reviewing court on the entire record is left with the definite and firm conviction that a
mistake has been committed.” Crawford v. W. Elec. Co., Inc., 745 F.2d 1373, 1378 (11th
Cir.1984) (citing United States v. United States Gypsum Co., 333 U.S. 364, 68 S. Ct. 525,
92 L. Ed. 746 (1948)).
DISCUSSION
Hutchings now appeals Judge Delano’s Order denying his objections and his
Motion to remove R.A. Realty Trust from the list of Alleged Assets in the August 15, 2014
Auction.

In Re Petricca, 9:08-bk-16204 (Doc. #462). In his Appeal, Hutchings argues

Judge Delano erred: (1) by accepting the Trustee’s Report and Sale of the Debtor’s

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alleged assets; (2) by denying his Motion to Remove R.A. Realty Trust from the list of
Alleged Assets; (3) by denying the Motion to Disqualify Legal Resolves bid because Israel
Sanchez represented the LLC; (4) by failing to Strike the objections of Ara Eresian, Jr.
John Wilson, and Rose Castro as well as the Court’s failure to sanction Eresian; (5) by
failing to find the sale was tainted; and (6) by showing favoritism to the Trustee Diane
Jensen.
(1) Whether the Bankruptcy Court Erred by Accepting Trustee’s Report and
Sale of the Debtor’s Alleged Assets
Hutchings argues the Trustee took her List of Alleged Assets from Ara Eresian, Jr.
Hutchings argues the list should be excluded because Bankruptcy Judge Alexander L.
Paskay issued an order striking documents filed by Eresian. Bankruptcy Judge Jeffrey
Hopkins issued an order sanctioning Eresian and prohibited him from filing any more
motions in this case without the Court’s approval. Further, Judge Paskay barred Wilson
from filing any further pleadings and thus, his objection to the Court’s Order should have
been stricken. The Trustee responds that the Court’s Order of June 20, 2014, specifically
stated that the Trustee was authorized to sell all assets listed in the Report and Notice of
Intention to Sell Property of the Estate at Private Sale.
On June 19, 2014, Judge Delano held a hearing on Hutchings’ Objections. After
the hearing on June 20, 2014, Judge Delano issued an Order overruling Hutchings’
Objections and approved all of the properties listed by the Trustee for sale. The specific
property at issue in this appeal, R. A. Realty Trust, was included in the sale because it
was part of the bankruptcy estate. The Trustee merely sold the bankruptcy estate’s
interest in the property.

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Hutchings had sufficient opportunity to be heard on this issue and was present by
telephone during the hearing on the matter. In this Appeal, Hutchings presents no case
law or bankruptcy rule that would persuade the Court to overrule Judge Delano’s decision.
On July 25, 2014, Judge Delano issued a new Order governing the sale, and the Trustee’s
Auction took place on August 15, 2014. On August 18, 2014, the Trustee filed her
Trustee’s Report of Sale. Hutchings objected to the Trustee’s Report of Sale but did not
at that time or prior to the sale of the Property move the Court to stay. On September 6,
2014, Judge Delano issued an Order overruling Hutchings’ objections and approving the
sale of the Property from the August 15, 2014 Auction. In Re Petricca, 9:08-bk-16204,
(Doc. #469). Hutchings filed his Amended Notice of Appeal, appealing Judge Delano’s
Order and the sale of R.A. Realty Trust to this Court on September 11, 2014. Id. at (Doc.
#)
Once a sale is approved by the bankruptcy court and consummated by the parties,
the bankruptcy court ruling cannot be modified on appeal. In re Shoemaker, 2011 WL
1750239, *2 (N.D. Fla. May 3, 2011). Pursuant to United States Code Title 11, § 363(m):
The reversal or modification on appeal of an authorization ...
of a sale or lease of property does not affect the validity of a
sale or lease under such authorization to an entity that
purchased or leased such property in good faith, whether or
not such entity knew of the pendency of the appeal, unless
such authorization and such sale or lease were stayed
pending appeal.
Thus, a trustee has authority to sell property of the bankruptcy estate, and thereafter the
approved sale may not be invalidated unless it is stayed pending appeal. See In re
MacNeal, 308 Fed. Appx. 311, 316 (11th Cir.2009). Although Hutchings requested a stay
in his Amended Notice of Appeal on September 11, 2014, that was after the sale was
completed on August 15, 2014, the Trustee’s Report of Sale was filed on August 18, 2014,

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and Judge Delano had issued her Order of September 6, 2014. Hutchings failure to
obtain a stay prior to the sale being completed renders his appeal to this Court moot. See
In re The Charter Co., 829 F.2d 1054, 1056 (11th Cir.1987); In Re Coastline East Corp.,
2011 WL 3475535 *2 (M.D. Fla. August 9, 2011) (citing In Re Bleaufontaine, 634 F. 2d
1383, 1389-90 (5th Cir. Unit B 1981) (holding that failure to file a motion to stay the Sale
Order or the underlying sale it authorized is fatal to the appeal).
Further, Judge Delano specifically stated “however, the Bill of Sale shall
specifically provide that the sale is without representations or warranties as to the nature,
validity and extent of the Debtor’s interest in the Properties, and the Trustee is selling only
her interest in the Properties, to the extent of the Debtor’s interest, if any ….” In Re
Petricca, 9:08-bk-16204, (Doc. #436). The Purchaser has not objected to the sale nor
has anyone outside of Hutchings and Petricca claimed the Property did not belong in the
bankruptcy estate.

As such, the appeal is denied and the decision of the Bankruptcy

Court is affirmed.
Hutchings also quotes from the Court’s June 20, 2014 Order stating “in the event
any party wishes to make a higher bid to purchase the properties they shall provide a
$1,000.00 deposit and make a minimum $5,500.00 offer for the purchase of the
properties….” Hutchings argues that the Order was violated because Legal Resolve, LLC
did not make a $1,000.00 deposit prior to bidding in the August 15, 2014 Auction.
Hutchings was the highest bidder during auction on June 27, 2014, however, he
defaulted on his bid. After Hutchings defaulted, the Trustee filed an Emergency Motion
to Determine Auction Procedures. Judge Delano issued a new Order on July 25, 2014,
granting the Emergency Motion.

Contrary to Hutchings position, the $1,000.00 deposit

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was a requirement imposed by the June 20 2014 Order. (Doc. #23-2, Ex. A-49). The
August 15, 2014 Auction was performed under the terms of the July 25, 2014 Order which
did not require the $1,000.00 deposit. In Re Petricca, 9:08-bk-16204, (Doc. #444).
Since Hutchings’ objection is predicated upon the terms of the June 20, 2014 Order
the objection is overruled.
(2) Whether the Court Erred by not Removing R.A. Realty Trust from the List of
Alleged Assets
Hutchings argues that R.A. Realty Trust should not have been included in the list
of properties the Trustee auctioned. Hutchings claims he established that Petricca no
longer owned or benefited from R.A. Realty Trust. The Trustee states that she only sold
her interest in the asset at auction. The Court Orders of June 20, 2014, and July 25,
2014, made it clear that there were “no representations or warranties as to the assets
being sold.” Because of that language, the Trustee argues that there was no good cause
to sustain an objection to the sale. Trustee further states this is especially true in light of
the fact that the Purchaser is not objecting to the assets that were purchased.
As noted above, once a sale is approved by the bankruptcy court, and
consummated by the parties, the bankruptcy court ruling cannot be modified on appeal.
In re Shoemaker, 2011 WL 1750239, at *2. While Hutchings did move for a stay, he
waited until the sale was completed and therefore, his motion for a stay was untimely.
Hutchings’ objection is overruled.
(3) Whether the Bankruptcy Judge Erred by Failing to Disqualify Israel
Sanchez from Representing Legal Resolve, LLC
Hutchings argues that the Purchaser, Legal Resolve’s bid should have been
disqualified because Legal Resolve was represented by Attorney Israel M. Sanchez.

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Judge Paskay issued an Order disqualifying Atty. Sanchez from representing any party
in the Debtor’s bankruptcy. Indeed, Judge Paskey stopped Attorney Sanchez from filing
motions or representing any party in this case, but nothing would prevent him from
purchasing assets from the bankruptcy estate.

In fact, Judge Delano, the presiding

Bankruptcy Judge at this present time, issued an order specifically stating that Attorney
Sanchez was not prevented from buying property from the bankruptcy estate. In Re
Petricca, 9:08-bk-16204, (Doc. #469, pp. 1-2).
Hutchings again raises the fact that Legal Resolve did not deposit $1,000.00 with
the Trustee prior to making its bid. The $1,000.00 deposit was a requirement in the June
20, 2014 Order. Judge Delano issued a new Order on July 25, 2014, granting the
Emergency Motion for New Procedures for the Sale. The August 15, 2014 Auction was
performed under the terms of the July 25, 2014 Order which did not require the $1,000.00
deposit. The objection is overruled.
(4) Whether the Bankruptcy Court Erred by not Striking the Objections of Ara
Eresian, Jr. John Wilson, and Rose Castro as well as the Court’s failure to
Sanction Ara Eresian
Hutchings argues that Judge Delano erred when she did not strike objections filed
by Ara Eresian, Rose Castro, and John Wilson. He further alleges that Eresian drafted
all three objections and therefore, they should be stricken and Eresian sanctioned. The
Trustee responds that Judge Delano had no need to strike the objections because she
withdrew the objected to Report and filed an Amended Report, so the matter is moot. The
Trustee further states no evidence was presented that established that Eresian drafted
the objections filed by Castro and Wilson.

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Hutchings’ objection is not well taken. As Judge Delano stated in her September
6, 2014 Order, there was no need to strike the objections to a report that had been
withdrawn. In Re Petricca, 9:08-bk-16204, (Doc. #468). Further, while Judge Paskay and
Judge Hopkins may have sanctioned Eresian, Judge Delano is the presiding judge over
the bankruptcy case now, and it is at her discretion whether or not anyone should be
sanctioned in this case. As such, Hutchings’ objection is overruled.
(5) Whether the Sale was Tainted
Hutchings argues the sale was tainted and committed in violation of at least five
(5) court orders because Legal Resolve, LLC, the Purchaser, was represented by
Attorney Israel Sanchez who had been disqualified from representing any parties in this
case. Hutchings continued that Legal Resolve did not make the $1,000.00 deposit which
was required by Judge Delano’s Order before making its bid, and the auction was held in
bad faith.
Regarding the $1,000.00 deposit—as noted above—the Order directing that
$1,000.00 be deposited prior to a bid being submitted was part of the June 20, 2014,
Order of Sale. After that sale was completed, Hutchings defaulted on his winning bid of
$59,500.00.

After Hutchings defaulted, the Trustee filed an Emergency Motion to

Determine Auction Procedures. Judge Delano issued a new Order on July 25, 2014,
granting the Emergency Motion.

Contrary to Hutchings position, the $1,000.00 deposit

was not a requirement imposed by the July 25, 2014 Order. The August 15, 2014 Auction
was conducted pursuant to the July 25, 2014 Order which did not require a deposit. (Doc.
#23-2, Ex. A-49). Therefore, Legal Resolve was not required to submit a $1,000.00
deposit.

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Hutchings argues the Trustee sold the Property without consideration for value
which is bad faith. However, in her Emergency Motion to Determine Auction Procedures,
the Trustee informed the Court that after Hutchings defaulted on his bid she went to the
next highest bidder, Venetis. Venetis bid $6,500.00 and offered to send the funds that
day. Later that same day, another bidder, Gibson, offered $20,000.00 for the property.
The Trustee then communicated to all three (3) bidders who were in attendance at the
auction that she had a fiduciary duty to get the highest value for the Property. She then
moved the Bankruptcy Court for an Emergency Motion to Determine Auction Procedures.
The Court granted the Motion for new procedures stating that it was a reasonable
request. The Trustee then held the August 15, 2014 Auction in order to obtain a better
price than the one she would have received by accepting lower bids after Hutchings
defaulted. The Trustee acted in good faith and in compliance with her fiduciary duty by
holding a new auction and seeking a better price to get the most money possible for the
bankruptcy estate.
Hutchings also claims the sale was tainted because Atty. Israel Sanchez
represented Legal Resolve. While Judge Paskay stopped Attorney Sanchez from filing
motions or representing any party in this case, nothing would prevent Atty. Sanchez from
purchasing assets from the bankruptcy estate.

In fact, Judge Delano, the presiding

Bankruptcy Judge at the present time, issued an order specifically stating that Atty.
Sanchez was not prevented from buying property from the bankruptcy estate. In Re
Petricca, 9:08-bk-16204, (Doc. #469, pp. 1-2).
While Petrica states that he believes fraud occurred, neither Sanchez nor Venitis
were prevented from bidding on or purchasing the property in this case. And no bids

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were submitted by Eresian.

In his brief, Hutchings offers no proof other than an

unsupported conclusory allegation that Legal Resolve was not a good faith purchaser.
Bankruptcy Appeals are subject to the requirements of Fed. R. Civ. P. 9(b). See In Re
Taylor Bean & Whitaker Mortgage Corporation, 2012 WL 2369342 *2 (Bankr. M.D. Fla.
March 22, 2012) (stating that Rule 9(b) was made applicable by Fed. R. Bankr. R. 7009).
Rule 9(b) requires a party alleging fraud to state with particularity the circumstances
constituting fraud. Here, Hutchings merely alleges that Legal Resolve is a straw man for
Eresian who has been barred from this case. However, Hutchings has not presented any
evidence to support his allegation. Without more, Hutchings’ allegation of fraud is nothing
more than a conclusory statement unsupported by facts. Consequently, the Court finds
no fraud was committed by the Trustee when she sold the Property. Hutchings’ objection
is overruled.
(6) Whether Judge Delano Favored the Trustee in Her Rulings
Hutchings claims that Judge Delano failed to uphold five (5) orders previously
issued by the Bankruptcy Court in favor of the Trustee. Hutchings does not state which
five (5) orders were not followed nor does he state how Judge Delano failed to follow said
orders by ruling in favor of the Trustee. One would assume he was referring to the Orders
of Judge Paskay and Hopkins preventing Atty. Sanchez from representing a party in the
case and the orders preventing Ara Eresian from filing motions or pleadings in this case.
Based upon the record before the Court, Atty. Sanchez did not represent a party in this
sale, instead he represented Legal Resolve, LLC the Purchaser of the Property. Nothing
in the prior Orders of this case prevented Atty. Sanchez from buying the Property.
Moreover, Eresian did not file any documents in this regard.

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Hutchings further argues that Judge Delano’s mind was made up before the
hearing which shows bias in favor of the Trustee’s position. The Trustee responds there
is nothing improper about a judge reading the parties’ briefs and formulating an opinion
prior to the commencement of a hearing based upon those briefs.
The Court cannot determine what was on Judge Delano’s mind prior, during, or
after the hearing. Hutchings was given the opportunity to brief and argue his point of view
and his motion and/or objection was denied. The mere fact that Judge Delano made an
adverse ruling against Hutchings does not indicate bias in favor of the Trustee. Adverse
rulings by a court are judicial in nature. Santana v. RCSH Operations, LLC, 2012 WL
414357, *2 (S.D. Fla. February 8, 2012). “Judicial rulings alone almost never constitute
a valid basis for a bias or partiality motion.” Id. (quoting Liteky v. U.S., 510 U.S. 540, 555,
114 S. Ct. 1147, 127 L.Ed.2d 474 (1994)). Thus, the objection that Judge Delano’s rulings
were tainted is overruled.
Accordingly, it is now
ORDERED:
The Decision of the Bankruptcy Judge Caryle Delano is AFFIRMED. The Clerk of
the Court shall enter judgment accordingly, transmit a copy of this Order and the
Judgment to the Clerk of the Bankruptcy Court, terminate the appeal, and close the file.
DONE and ORDERED in Fort Myers, Florida this 13th day of July, 2015.

Copies: All Parties of Record
Honorable Caryle Delano

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