Nero v. Waage
Filing
27
OPINION AND ORDER: The Bankruptcy Court's June 4, 2018 dismissal and bar order is affirmed. Signed by Judge Steven D. Merryday on 8/26/2019. (BK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
In Re: TERENCE PETER NERO
CASE NO. 8:18-bk-1320-CPM
____________________________________/
TERENCE PETER NERO,
Appellant,
v.
CASE NO. 8:18-cv-1520-T-23
JON WAAGE, et al.,
Appellees.
____________________________________/
ORDER
After Terence Nero petitioned for bankruptcy protection three times to delay
foreclosure, failed to receive pre-petition credit counseling, and failed to disclose
aliases, other residences, and a bankruptcy action in the Southern District of Florida,
the United States Trustee moved to dismiss Nero’s third bankruptcy action and to
bar Nero for two years from petitioning for bankruptcy. After the Trustee moved
to dismiss, The Florida Bar suspended for thirty days Nero’s bankruptcy attorney.
During the pendency of the attorney’s suspension, the bankruptcy court held a
hearing on the motion to dismiss. Neither Nero nor his attorney attended the
hearing, at which the bankruptcy court dismissed Nero’s third bankruptcy action
and barred Nero for two years from petitioning for bankruptcy.
Appearing pro se, Nero appeals (Doc. 1) and argues that the bankruptcy court
deprived Nero of due process by holding a hearing during the pendency of the
attorney’s suspension. Because a bankruptcy debtor possesses no right to counsel,
because Nero received notice of the hearing, and because the bankruptcy court’s
dismissal and bar order enjoys substantial evidentiary support, Nero’s appeal lacks
merit and the bankruptcy court’s order commends affirmance.
BACKGROUND
In 2012, Jennifer McClean sued in state court to foreclose her interest in
property owned by Nero. McClean v. Nero, Case No. 2012-CA-10683 (13th Judicial,
Circuit Hillsborough County, Florida). Brandon Kolb, a lawyer, appeared on behalf
of Terence Nero and identified Nero by six aliases.1 On December 31, 2015, the state
court entered a judgment of foreclosure against Nero’s property. (Doc. 4-32 at 1)
The same day, Nero moved for emergency relief from foreclosure. (Doc. 4-32 at 1)
In February 2016, Nero petitioned in the Middle District of Florida for chapter
13 bankruptcy protection. In re Nero, Case No. 8:16-bk-01281-CPM. Attempting to
halt foreclosure, Nero filed in state court a copy of the bankruptcy petition. (Doc.
4-30 at 2) On February 20, 2016, the state court denied Nero’s emergency motion for
relief from judgment. (Doc. 4-32 at 1) About a year later, the bankruptcy court
dismissed Nero’s bankruptcy action because Nero failed to remit payments in accord
with the proposed chapter 13 plan. (Doc. 4-2 at 2)
1
(1) Terrence Nero, (2) Terrence P. Nero, (3) Terence Nero, (4) Terence P. Nero,
(5) Terance Nero, and (6) Terry Nero.
-2-
About two weeks after dismissal of Nero’s bankruptcy, Nero petitioned in the
Southern District of Florida for chapter 13 bankruptcy protection. (Doc. 4-2 at 2; In
re Nero, Case No. 17-12225-RBR (Bankr. S.D. Fla. Feb. 24, 2017)). In the petition,
Nero states that he lived in Hollywood, Florida, but — unlike Nero’s first bankruptcy
petition — Nero failed to disclose that he had lived in Tampa, Florida. (Doc. 4-30
at 3) Again attempting to halt foreclosure, Kolb filed in state court a copy of the
second bankruptcy petition. (Doc. 4-30 at 3) On May 22, 2017, the Southern
District of Florida denied confirmation and dismissed Nero’s second bankruptcy.
(Doc. 4-2 at 2)
In January 2018, Nero filed an emergency motion to stay the state foreclosure
pending appeal. (Doc. 4-32) In the motion, Nero states that he had unsuccessfully
attempted twice to obtain relief in bankruptcy because Nero lacked the ability to
remit regular payments in accord with the proposed plan. (Doc. 4-30 at 4) Nero
stated that he “is literally too broke to file Bankruptcy.” (Doc. 4-30 at 4) In February
2018, the state court denied the motion to stay, which denial the appellate court
approved. (Doc. 30 at 4)
Three days after the state court denied Nero’s motion to stay, Nero filed in
the Middle District of Florida a third petition for chapter 13 bankruptcy. (Doc. 4-7;
In re Nero, 8:18-bk-01320-CPM) The petition and accompanying documents failed to
disclose (1) that Nero had petitioned earlier in the Southern District of Florida,
(2) that Nero had employed at least six aliases, and (3) that Nero had lived in
-3-
Hollywood, Florida. Further, although Nero had earlier received credit counseling,
the petition falsely states that Nero had received credit counseling within 180 days
before filing the petition. (Doc. 4-7 at 5)
On April 10, 2018, the Trustee moved (Doc. 4-30) to dismiss with prejudice
Nero’s third bankruptcy petition and requested an injunction barring Nero from
petitioning for further bankruptcy. The Trustee argued that Nero had devised a
scheme to frustrate foreclosure by filing serial bankruptcy petitions and by
purposefully omitting from the third petition (1) Nero’s aliases, (2) the bankruptcy
action in the Southern District of Florida, and (3) Nero’s failure to receive credit
counseling within 180 days before filing the third petition for bankruptcy. (Doc. 4-30
at 1–3) Responding (Doc. 4-36) to the motion to dismiss, Nero argued that he had
improved his financial circumstance before the third petition and that he had
inadvertently omitted the bankruptcy in the Southern District of Florida. The next
day, the clerk of the bankruptcy court scheduled (Doc. 4-37) for May 9, 2018, a
hearing on the motion to dismiss and the request for an injunction.
On April 22, 2018, Nero supplemented (Doc. 4-41) the response to the motion
to dismiss and stated (Doc. 4-39) that he had received on April 16, 2018 — six days
after the Trustee moved to dismiss — the credit counseling required by 11 U.S.C.
§ 109(h). The same day, Kolb, on behalf of Nero, moved (Doc. 4-39) to stay the
bankruptcy action because The Florida Bar had suspended from Kolb from April 21,
-4-
2018, to May 21, 2018.2 The next day, the bankruptcy court scheduled for May 9,
2018, a hearing on Nero’s motion to stay and directed Kolb to serve interested parties
with notice of the hearing. (Doc. 4-2 at 7) Kolb failed to timely serve notice of the
hearing, and the bankruptcy court canceled the hearing on the motion to stay only.
(Doc. 4-2 at 9) The hearing on the Trustee’s motion to dismiss and the request for a
bar order remained scheduled for May 9, 2018.
Neither Nero nor Kolb attended the May 9, 2018 hearing.3 (Doc. 7 at 3–4)
At the hearing, the bankruptcy court determined that, because Nero failed to receive
mandatory credit counseling within 180 days before petitioning for bankruptcy, Nero
was not a “debtor” under 11 U.S.C. § 109(h) and was ineligible for bankruptcy
protection. (Doc. 7 at 9–11) Further, the bankruptcy court determined that “welldocumented” facts demonstrated Nero’s bad faith and declared that “Mr. Nero will
not be welcome in my Court or any other Bankruptcy Court in the world before
May 9th, 2020.” (Doc. 7 at 10) A June 4, 2018 order (Doc. 4-71) dismisses Nero’s
action with prejudice for “the reasons stated orally and recorded in open court,” finds
Nero“an abusive serial bankruptcy filer,” and bars Nero from petitioning for
bankruptcy until May 9, 2020. (Doc. 4-71 at 1)
2
The Florida Bar determined that in another action Kolb (1) had frivolously and repeatedly
asserted in state court that a company formed by Nero possessed an ownership interest in certain
property despite the expiration of the lease and the failure to exercise an option to purchase the
property and (2) had filed on behalf of a client a transparently defective eviction notice. (Doc. 4-33
at 1–11)
3
At the hearing, counsel for the Trustee stated that counsel had talked with Kristine Feher,
The Florida Bar’s inventory attorney assigned to offer representation for Kolb’s bankruptcy clients
during the pendency of Kolb’s suspension. (Doc. 7 at 3–4) Counsel for the Trustee reported that
Nero and Feher could not agree to representation. (Doc. 7 at 4)
-5-
DISCUSSION
Appealing pro se, Nero argues (1) that the bankruptcy court deprived Nero of
due process by holding the hearing during Kolb’s suspension, (2) that the bankruptcy
court erred by dismissing the bankruptcy because of Nero’s failure to receive credit
counseling, and (3) that the bankruptcy court erred by determining that Nero’s serial
bankruptcy petitions warranted a bar order.4
1. Whether the unavailability of counsel deprived Nero of due process.
Nero accuses the Trustee of intentionally requesting that the bankruptcy court
schedule the hearing during Kolb’s suspension and argues that the bankruptcy court
“forced [Nero] to proceed]” despite Kolb’s suspension.5 A civil litigant generally has
no constitutional right to counsel except in limited circumstances in which the
litigant might suffer a deprivation of physical liberty. In re Fitzgerald, 167 B.R. 689,
691 (Bankr. N.D. Ga. 1994) (Anderson, J.) (citing Dean v. Barber, 951 F.2d 1210
(11th Cir. 1992); Poole v. Lambert, 819 F.2d 1025, 1028 (11th Cir. 1987)). A debtor
enjoys no constitutional right to obtain a bankruptcy discharge, and bankruptcy
protection is not a fundamental right. United States v. Kras, 409 U.S. 434, 445 (1973).
4
Nero has waived arguments (2) and (3) because Nero asserts these arguments in reply only.
Regardless, the arguments lack merit.
5
Also, Nero attaches (Doc. 14 at 19) to his opening brief two emails between the bankruptcy
court and counsel for the Trustee. The email shows that in response to a scheduling request from the
bankruptcy court, counsel for the Trustee stated that “[t]he 10th would be acceptable—although
Attorney Kolb will be under suspension at that date. It is unlikely that the Court could provide
adequate notice and due process prior to the effective date of the suspension order.” The attached
email pertains to a different matter, does not appear in the bankruptcy record, and was sent before
Kolb moved on behalf of Nero to stay the bankruptcy action. Consideration of extra-record evidence
on appeal is impermissible, and the evidence is irrelevant.
-6-
Accordingly, a debtor “clearly has no constitutional right to court-appointed
counsel.” In re Fitzgerald, 167 B.R. at 691 (citing In re Martin-Trigona, 737 F.2d 1254,
1260–61 (2d Cir. 1984)). Because Nero has no right to court-appointed bankruptcy
counsel, Nero suffered no deprivation of due process because of counsel’s inability to
attend the hearing.
And the hearing otherwise comported with the requirements of due process
and the bankruptcy code. Under 11 U.S.C. § 1307(c), a bankruptcy court may
dismiss a bankruptcy action after “notice and a hearing,” which 11 U.S.C. § 102(1)
defines as “such notice as is appropriate in the particular circumstances, and such
opportunity for a hearing as is appropriate in the particular circumstances.” Nero
received twenty-two days’ notice of the hearing and twice objected to the motion to
dismiss. Instead of securing alternate counsel, appearing pro se at the hearing, or
requesting a continuance,6 Nero refused to attend the hearing. The notice provided
complies with 11 U.S.C. § 1307. Regardless, any error by the bankruptcy court was
harmless because the dismissal order enjoys — as demonstrated below — substantial
evidentiary support.
2. Whether the bankruptcy court erred by dismissing the bankruptcy action.
Nero argues that the bankruptcy court erred by dismissing the bankruptcy
based on Nero’s failure to receive prepetition credit counseling. Under 11 U.S.C.
§ 109(h)(1), “an individual may not be a debtor . . . unless such individual has”
6
Although Kolb moved on behalf of Nero to stay the bankruptcy action, Kolb failed to
comply with the notice requirements established by the bankruptcy court. Accordingly, the
bankruptcy court properly declined to consider the motion to stay.
-7-
received credit counseling within 180 days before petitioning for bankruptcy.7
Although section 109(h) is not a jurisdictional requirement, the bankruptcy court
may dismiss a bankruptcy action if the putative debtor failed to receive prepetition
credit counseling. Vexler v. Baruch, 564 B.R. 424, 429 (M.D. Fla. 2016) (Whittemore,
J.) (citing In re Zarnel, 619 F.3d 156, 169 (2d Cir. 2010) (“The restrictions of . . .
section 109(h) are not jurisdictional, but rather elements that must be established to
sustain a voluntary bankruptcy proceeding.”)); In re Davenport, 335 B.R. 218, 220–21
(Bankr. M.D. Fla. 2005) (May, J.) (holding that a putative debtor’s failure to receive
prepetition credit counseling warrants dismissal of the bankruptcy action).
Nero argues that, because the requirement to receive credit counseling is
waivable, the bankruptcy court abused discretion by dismissing the bankruptcy
action. Although the requirement is waivable, no waiver occurred because the
Trustee expeditiously moved to dismiss Nero’s bankruptcy action because of the
failure to receive prepetition credit counseling. In re Littlejohn, 2019 Bankr. LEXIS
1573, at *7 (Bankr. N.D. Ga. May 23, 2019) (Baisier, J.) (holding that “[w]aiver
requires the ‘intentional and voluntary relinquishment of a known right’” and finding
that the Trustee timely objected to the putative debtor’s failure to comply with
109(h)). And although Nero received credit counseling after petitioning for
bankruptcy, “an individual must establish that a request was made for credit
7
Section 109(h)(1) states that “an individual may not be a debtor under this title unless
such individual has, during the 180-day period ending on the date of filing of the petition by
such individual, received from an approved nonprofit budget and credit counseling agency. . . an
individual or group briefing (including a briefing conducted by telephone or on the Internet) that
outlined the opportunities for available credit counseling and assisted such individual in performing
a related budget analysis.”
-8-
counseling before the petition was filed.” In re Davenport, 335 B.R. at 221 (dismissing
a bankruptcy action despite the putative debtor’s receiving credit counseling two days
after petitioning for bankruptcy). Because Nero admittedly failed to receive credit
counseling within 180 days before Nero petitioned for bankruptcy, the bankruptcy
court properly granted the Trustee’s motion to dismiss.
Also, the bankruptcy court correctly dismissed the bankruptcy action after
determining that Nero petitioned in bad faith. Under 11 U.S.C. § 1307(c), a party
may move to dismiss a bankruptcy action “for cause,” which exists if the debtor
petitioned in bad faith. In re Gros, 173 B.R. 774, 776 (Bankr. M.D. Fla. 1994) (Funk,
J.); In re McGovern, 297 B.R. 650, 655–56 (S.D. Fla. 2003) (Hurley, J.); see also In re
Piazza, 719 F.3d 1253, 1262 (11th Cir. 2013) (holding that bad faith constitutes cause
to dismiss a chapter 7 case under section 707(a)). And bad faith exists if the debtor
petitions for bankruptcy “only for the purpose of inhibiting or forestalling a
foreclosure action without the intention of financial rehabilitation.” In re Earl,
140 B.R. 728, 739 (N.D. Ind. Jan. 10, 1992). Nero thrice petitioned for bankruptcy
during the pendency of the foreclosure action and asserted in state court days before
filing the third petition that Nero was “literally too broke to file Bankruptcy.”
Accordingly, the bankruptcy court correctly found that Nero petitioned for
bankruptcy to stall foreclosure and that Nero lacked a genuine intent to remedy his
financial circumstance. Further, Nero falsely stated in the petition that (1) he had
received pre-petition credit counseling; (2) he had lived in Tampa, Florida, only
within the last three years; (3) he had not employed an alias within the last eight
-9-
years; and (4) he had not petitioned for bankruptcy protection in the Southern
District of Florida. The bankruptcy court’s determination that Nero petitioned in
bad faith was clearly not erroneous.
3. Whether the bankruptcy court abused discretion by barring Nero for two years
from petitioning for bankruptcy protection.
Under 11 U.S.C. § 349(a), a bankruptcy court may “for cause” bar a debtor
from filing a subsequent petition.8 In re Leavitt, 171 F.3d 1219, 1225 (9th Cir. 1999);
In re Casse, 198 F.3d 327, 339 (2d Cir. 1999); In re Tomlin, 105 F.3d 933, 938 (4th Cir.
1997); Dietrich v. Nob-Hill Stadium Properties, 2007 WL 579547, at *5 (6th Cir. Feb. 15,
2007). Although the bankruptcy code contains no definition for “cause,” in Section
707(a), which governs the dismissal of a chapter 7 bankruptcy, “cause” means
“adequate and sufficient reason,” which includes bad faith. Piazza, 719 F.3d at 1262.
And “cause” under Section 349 includes bad faith. In re Stathos, 163 B.R. 83, 88
(N.D. Tex. 1993) (imposing a two-year bar because the debtor petitioned in bad
faith); Lerch v. Federal Land Bank of St. Louis, 94 B.R. 998, 1002 (N.D. Ill. 1989)
(same); In re Stump, 280 B.R. 208, 217 (Bankr. S.D. Ohio 2002) (same). The
bankruptcy court’s determination that Nero petitioned in bad faith enjoys substantial
evidentiary support, and the bankruptcy court did not abuse discretion by barring
Nero for two years from petitioning for bankruptcy protection.
8
Section 349(a) states, “Unless the court, for cause, orders otherwise, the dismissal of a
cause under this title does not bar the discharge, in a later case under this title, of debts that were
dischargeable in the case dismissed; nor does the dismissal of a cause under this title prejudice the
debtor with regard to the filing of a subsequent petition under this title . . . .”
- 10 -
CONCLUSION
The issues raised by Nero’s appeal lack merit, the bankruptcy court’s
determination enjoys substantial evidentiary support, and the bankruptcy court did
not abuse discretion. The June 4, 2018 dismissal and bar order is AFFIRMED.
ORDERED in Tampa, Florida, on August 26, 2019.
- 11 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?