Hamilton Staples et al v. Wood-Staples et al

Filing 15

OPINION AND ORDER affirming Corrective Order Confirming Debtor's Fourth Amended Plan of Reorganization for Small Business Under Chapter 11 and Scheduling Post-Confirmation Conference. The Clerk shall transmit a copy of this Opinion and Order to the Clerk of the Bankruptcy Court and close the appellate file. Signed by Judge John E. Steele on 1/6/2023. (RKR)

Case 2:22-cv-00157-JES Document 15 Filed 01/06/23 Page 1 of 10 PageID 416

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
IN RE:

HAMILTON STAPLES

HAMILTON STAPLES,
Appellant,
v.

Case No:

2:22-cv-157-JES

KIMBERLY
WOOD-STAPLES,
CHRYSLER CAPITAL, MERRICK
BANK,
Debtor,
PINNACLE
CREDIT
SERVICES,
LLC,
QUANTUM3 GROUP, LLC, SYSCO
WEST COAST, PREFAB CITY,
USA,
PROJECT
EXIT,
LLC,
INTERNAL REVENUE SERVICE,
U.S. BANK TRUST NATIONAL
ASSOICATION,
as
trustee,
SYSCO WEST COAST FLORIDA,
INC., CAVALRY SPV I, LLC,
and UNITED STATES TRUSTEEFTM,
Appellees.
OPINION AND ORDER
This matter comes before the Court on an appeal from the
Bankruptcy Court's Corrective Order Confirming Debtor's Fourth
Amended Plan of Reorganization for Small Business Under Chapter 11
and

Scheduling

Post-Confirmation

Conference

Corrective Order), issued on February 3, 2022.
his pro se Brief (Doc. #8) on May 27, 2022.
or appearances have been filed.

(Doc.

#2-2)

(the

Appellant filed

No responsive briefs

Case 2:22-cv-00157-JES Document 15 Filed 01/06/23 Page 2 of 10 PageID 417

I.
The district courts have jurisdiction to hear appeals “from
final judgments, orders, and decrees” of the U.S. Bankruptcy Court.
28 U.S.C. § 158(a).
when

reviewing

bankruptcy

“District courts sit in an appellate capacity

bankruptcy

court's

factual

court

judgments;

findings

unless

they
they

erroneous and review legal conclusions de novo.”

accept
are

the

clearly

In re NRP Lease

Holdings, LLC, 50 F.4th 979, 982 (11th Cir. 2022) (citing In re
JLJ Inc., 988 F.2d 1112, 1116 (11th Cir. 1993).

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 a
definite and firm conviction that a mistake has been committed.”
Crawford v. W. Electric Co., Inc., 745 F.2d 1373, 1378 (11th Cir.
1984) (citing United States v. U.S. Gypsum Co., 333 U.S. 364, 395
(1948)).
2008).

See also In re Walker, 515 F.3d 1204, 1212 (11th Cir.
Where a matter is committed to the discretion of the

bankruptcy court, the district court must affirm unless it finds
that the bankruptcy court abused its discretion. Amlong & Amlong,
P.A. v. Denny's, Inc., 500 F.3d 1230, 1238 (11th Cir. 2006).

A

court abuses its discretion “if it applies an incorrect legal
standard,

follows

improper

procedures

in

making

the

determination”, makes findings of fact that are clearly erroneous,
or

applies

the

law

in

an

unreasonable

or

incorrect

manner.

Collegiate Licensing Co. v. Am. Cas. Co. of Reading, Pa., 713 F.3d

- 2 -

Case 2:22-cv-00157-JES Document 15 Filed 01/06/23 Page 3 of 10 PageID 418

71, 77 (11th Cir. 2013).

“The abuse of discretion standard allows

a range of choices for the [bankruptcy] court, so long as any
choice made by the court does not constitute a clear error of
judgment.”

Id. (citation omitted).

An appellate court reads

briefs filed by a pro se litigant liberally.

Lorisme v. I.N.S.,

129 F.3d 1441, 1444 n.4 (11th Cir. 1997).
II.
On November 15, 2020, pro se debtor Hamilton Staples (Debtor
or Staples) filed a Voluntary Petition for Chapter 11 relief,
choosing to proceed as a small business debtor under Subchapter V
of Chapter 11.

A Fourth Amended Chapter 11 Plan (Bankr. #313)

(the Plan) was filed on September 7, 2021.

On February 3, 2022,

the Bankruptcy Court entered the Corrective Order (Doc. #2-2)
confirming Debtor’s Plan of reorganization.

Among other things,

the Corrective Order found that Debtor’s Plan complied with the
requirements of § 1190 of the Bankruptcy Code and was confirmed as
modified by the Corrective Order.

Objections to the Plan where

overruled, and Debtor was authorized and directed to take all steps
necessary

to

effectuate

and

implement

the

Plan.

Debtor

was

required to make the payments to creditors under the Plan, rather
than have the Trustee do so.

On appeal Debtor challenges the

highlighted portions of Paragraph 9 of the Corrective Order:
The distributions to Class 7 unsecured
creditors shall fluctuate based upon the
Debtor’s actual disposable income remaining

- 3 -

Case 2:22-cv-00157-JES Document 15 Filed 01/06/23 Page 4 of 10 PageID 419

after payment of senior claims during the
twenty (20) quarter plan term. Currently, the
Debtor predicts that he will have $150.00 per
quarter to distribute to Class 7 unsecured
creditors. The Debtor shall file quarterly
postconfirmation monthly operating reports on
or before the twenty-first day of the month
after the end of each calendar quarter. The
distributions to Class 7 unsecured creditors
will be based upon the Debtor’s actual
disposable
income
as
reflected
on
the
quarterly
operating
reports;
provided,
however, if the Debtor’s actual disposable
income is less than $150.00 in each quarter,
the Debtor will still distribute $150.00 pro
rata to Class 7 unsecured creditors. The
proposed schedule of pro rata distributions to
Class 7 unsecured creditors is set forth on
Exhibit A attached hereto.
(Doc. #2-2, ¶ 9.)

Exhibit A, attached to the Corrective Order,

reflects $143.96 of the $150 quarterly payments will go to Pre Fab
City,

Inc.,

but

“distributions

to

unsecured

creditors

will

fluctuate each quarter based upon the Debtor’s actual disposable
income

remaining

after

payment

of

senior

claims;

provided,

however, if the Debtor’s actual disposable income is less than
$150.00 in each quarter, the debtor will still distribute $150.00
pro rata to Class 7 unsecured creditors.”

(Doc. #2-2, Exh. A).

Debtor argues that the Bankruptcy Court erred by (1) directing
that all payments to Class 7 unsecured creditors shall be based on
actual disposable income, instead of projected disposable income,
and (2) directing the preparation and quarterly filing of monthly
reports.

Debtor argues that these requirements conflict with 11

- 4 -

Case 2:22-cv-00157-JES Document 15 Filed 01/06/23 Page 5 of 10 PageID 420

U.S.C. §§ 1191(d), 1191(c)(2)(a), and 1191(c)(2)(b), and that the
Bankruptcy Court had no legal authority to impose the requirements.
III.
Chapter 11 of the Bankruptcy Code allows a debtor to seek
reorganization under the protection of the Bankruptcy Court.

As

outlined in Auriga Polymers Inc. v. PMCM2, LLC as Tr. for Beaulieu
Liquidating Tr., 40 F.4th 1273, 1277–78 (11th Cir. 2022) (citing
11 U.S.C. § 362(a)), filing a Chapter 11 petition triggers an
automatic

stay,

suspended.
debtor

to

during

which

all

collection

are

“The automatic stay provides breathing room for the
negotiate

reorganization.”

with

its

Id. at 1278.

creditors

and

craft

a

plan

of

“These plans categorize claims

against the debtor in order of priority.”
§ 507).

activities

Id. (citing 11 U.S.C.

Filing a Chapter 11 petition also automatically creates

an “estate,” which is used to pay out the debtor's obligations.
“The estate consists of essentially all the debtor's property and
rights to property.”

Id. (citing 11 U.S.C. § 541(a)).

The Small Business Reorganization Act of 2019 (“SBRA”) became
effective on February 19, 2020 and added Subchapter V to Chapter
11 of the Bankruptcy Code “to streamline reorganizations for small
business debtors.”

In re Cleary Packaging, LLC, 36 F.4th 509, 514

(4th Cir. 2022). “The new law was enacted to help small businesses
reorganize by streamlining the cumbersome and often expensive
process of a typical Chapter 11 reorganization case. The statutory

- 5 -

Case 2:22-cv-00157-JES Document 15 Filed 01/06/23 Page 6 of 10 PageID 421

hope is that by encouraging small business reorganizations more
creditors

will

receive

greater

distributions

businesses will survive and prosper.”

and

more

small

In re Greater Blessed

Assurance Apostolic Temple, Inc., 624 B.R. 742, 744 (Bankr. M.D.
Fla. 2020) (footnotes omitted).

See also In re 218 Jackson LLC,

631 B.R. 937, 946 (Bankr. M.D. Fla. 2021).
A bankruptcy court can confirm a Chapter V plan if it “does
not discriminate unfairly, and is fair and equitable, with respect
to each class of claims or interest that is impair under, and has
not accepted, the plan.”

11 U.S.C. § 1191(b).

The statute also

provides some “rule[s] of construction” for the condition that a
plan be fair and equitable:
(c) Rule of construction.--For purposes of
this section, the condition that a plan be
fair and equitable with respect to each class
of claims or interests includes the following
requirements:
(1) With respect to a class of secured claims,
the plan meets the requirements of section
1129(b)(2)(A) of this title.
(2) As of the effective date of the plan-(A) the plan provides that all of the
projected disposable income of the debtor to
be received in the 3-year period, or such
longer period not to exceed 5 years as the
court may fix, beginning on the date that the
first payment is due under the plan will be
applied to make payments under the plan; or
(B) the value of the property to be
distributed under the plan in the 3-year
period, or such longer period not to exceed 5
years as the court may fix, beginning on the
- 6 -

Case 2:22-cv-00157-JES Document 15 Filed 01/06/23 Page 7 of 10 PageID 422

date on which the first distribution is due
under the plan is not less than the projected
disposable income of the debtor.
(3)(A) The debtor will be able to make all
payments under the plan; or
(B)(i) there is a reasonable likelihood that
the debtor will be able to make all payments
under the plan; and
(ii) the plan provides appropriate remedies,
which may include the liquidation of nonexempt
assets, to protect the holders of claims or
interests in the event that the payments are
not made.
11 U.S.C.A. § 1191(c).

Additionally, the statute provides a

definition of ‘disposable income:”
(d) Disposable income.--For purposes of this
section, the term “disposable income” means
the income that is received by the debtor and
that is not reasonably necessary to be
expended-(1) for-(A) the maintenance or support of the debtor
or a dependent of the debtor; or
(B) a domestic support obligation that first
becomes payable after the date of the filing
of the petition; or
(2) for the payment of expenditures necessary
for
the
continuation,
preservation,
or
operation of the business of the debtor.
11 U.S.C.A. § 1191(d).

Finally, “[i]n a small business case, a

trustee or the debtor in possession, in addition to the duties
provided in this title and as otherwise required by law, shall”,
among other duties, “file all postpetition financial and other

- 7 -

Case 2:22-cv-00157-JES Document 15 Filed 01/06/23 Page 8 of 10 PageID 423

reports required by the Federal Rules of Bankruptcy Procedure or
by local rule of the district court.”

11 U.S.C. § 1116(4).

See

also 11 U.S.C. § 1187(b) (requiring compliance with 1116(4) and
(7)).
IV.
Debtor argues that the highlighted portions of paragraph 9 of
the

Corrective

Order

conflict

with

11

U.S.C.

§§

1191(d),

1191(c)(2)(a), and 1191(c)(2)(b), the Bankruptcy Court had no
legal authority to impose the requirements, and therefore the
Bankruptcy Court abused its discretion in doing so.

The Court

finds that these arguments are without merit.
Initially, paragraph 9 of the Corrective Order does not
conflict with § 1191(d) because that statutory section is simply
a definition of “disposable income.”

Paragraph (2)(A) of the

Rules of Construction, 11 U.S.C. § 1191(c), simply requires that
a plan provide that all projected disposable income be applied to
make the distribution payments under the law, while Paragraph
(2)(B) requires that the value of the property to be distributed
is not less than the projected disposable income.
1191(c)(2)(A), 1191(c)(2)(B).

11 U.S.C. §

Requiring all the actual disposable

income to be reported and distributed does not violation these
statutory rules of construction.
Additionally,

these

requirements

of

paragraph

9

of

the

Corrective Order are well within the authority of the Bankruptcy

- 8 -

Case 2:22-cv-00157-JES Document 15 Filed 01/06/23 Page 9 of 10 PageID 424

Court.

The All Writs Act provides: “The Supreme Court and all

courts established by Act of Congress may issue all writs necessary
or

appropriate

in

aid

of

their

respective

jurisdictions

agreeable to the usages and principles of law.”
1651(a).
that

the

judgment

and

28 U.S.C. §

Additionally, a bankruptcy-specific statute provides
Bankruptcy
that

is

Court

“may

necessary

provisions of this title.”

or

issue

any

appropriate

order,
to

11 U.S.C. § 105(a).

process,

carry

out

or
the

“Under § 105(a),

a bankruptcy court can enter ‘any order’ necessary or appropriate
to carry out the provisions of the Bankruptcy Code.”

In re Le

Ctr. on Fourth, LLC, 17 F.4th 1326, 1337 (11th Cir. 2021) (internal
quotation marks and citation omitted).

“[T]he bankruptcy court

can exercise authority provided by both the All Writs Act, see In
re Fundamental Long Term Care, Inc., 873 F.3d 1325, 1338-41 (11th
Cir. 2017), and 11 U.S.C. § 105(a), which provides that the court
‘may issue any order, process, or judgment that is necessary or
appropriate to carry out the provisions of this title.’”

Rohe v.

Wells Fargo Bank, N.A., 988 F.3d 1256, 1268 (11th Cir. 2021).

The

challenged provisions of paragraph 9 were clearly necessary and
appropriate under the facts of this case.
Accordingly, it is hereby
ORDERED:
The Bankruptcy Court's Corrective Order Confirming Debtor's
Fourth Amended Plan of Reorganization for Small Business Under

- 9 -

Case 2:22-cv-00157-JES Document 15 Filed 01/06/23 Page 10 of 10 PageID 425

Chapter
affirmed.

11

and

Scheduling

Post-Confirmation

Conference

is

The Clerk shall transmit a copy of this Opinion and

Order to the Clerk of the Bankruptcy Court and close the appellate
file.
DONE and ORDERED at Fort Myers, Florida, this
January 2023.

Copies:
U.S. Bankr. Ct.
Appellant
Counsel of Record

- 10 -

6th

day of