Gibbs et al v. Anderson

Filing 18

OPINION AND ORDER denying 15 Motion for Reconsideration and 17 Motion for Injunction. Signed by Judge William S. Duffey, Jr on 2/10/2014. (anc)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
IN RE:
SAMUEL L. DANIELS, and
BETTER QUALITY HOMES, INC.,

SAMUEL L. DANIELS, BETTER
QUALITY HOMES, INC. and M.
EUGENE GIBBS,

1:12-cv-4181-WSD

Appellants,
v.
GUY G. GEBHARDT,
United States Trustee, Region 21,
Appellee.

OPINION AND ORDER
This matter is before the Court on Samuel L. Daniels (“Daniels”), Better
Quality Homes, Inc. (“Better Quality Homes”), and M. Eugene Gibbs’s (“Gibbs”)
(collectively, “Appellants”) “Motion for Rehearing/Reconsideration” (“Motion for
Rehearing”) [N.D. Ga. 15] of the Court’s May 16, 2013, Order [N.D. Ga. 13]
dismissing Appellants’ appeal from orders of the United States Bankruptcy Court
for the Northern District of Georgia in In re Samuel L. Daniels and Better Quality

Homes, Inc., 10-70078-jem.1 Also before the Court is Appellants’ Emergency
Motion for Injunction [N.D. Ga. 17].
I.

BACKGROUND
On April 5, 2010, Daniels filed a voluntary petition for relief under

Chapter 11 of the Bankruptcy Code [Bankr. 1].
On May 20, 2011, Better Quality Homes, Daniels’ wholly-owned company,
filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code
[Bankr. 133].2
On July 6, 2011, the bankruptcy court ordered that Daniels’ and Better
Quality Homes’ (together, “Debtors”) cases be jointly administered under Rule
1015(b) of the Federal Rule of Bankruptcy Procedure [Bankr. 134].
On March 5, 2012, the bankruptcy court, pursuant to 11 U.S.C. § 363,
approved the auction sale of Debtors’ real property located at 2129 Kristen
Channel, Florence, South Carolina (the “Property”) [Bankr. 168].
On May 24, 2012, Debtors filed an emergency motion to amend the
March 5, 2012, order, because they learned that Gibbs had asserted a lien against
the Property [Bankr. 180].
1

The Court uses “[N.D. Ga. ]” to refer to documents filed with the Court in
this appeal, and “[Bankr. ]” to refer to documents filed with the bankruptcy court
in In re Samuel L. Daniels and Better Quality Homes, Inc., 10-70078-jem.
2
In re Better Quality Homes, Inc., No. 11-65085-pwb.
2

On May 31, 2012, the bankruptcy court amended its order and directed that
Gibbs’ lien would attach to the proceeds from the sale of the Property, subject to a
determination of the validity of his lien [Bankr. 186].
On June 6, 2012, Debtors moved for authorization to open a separate debtorin-possession (“DIP”) bank account to hold the net proceeds of the sale of the
Property (the “DIP interest bearing account”). Debtors, who maintained another
DIP bank account “to conduct its daily affairs,” stated that they “[did] not wish to
deposit the Net Proceeds [from the sale of the Property] into its ongoing DIP
Account [sic].” (Debtors’ Mot. to Open a Separate DIP Bank Account [Bankr.
189] at ¶ 5).
On June 11, 2012, the bankruptcy court granted Debtors’ motion and
ordered that the funds remain in the DIP interest bearing account until further order
of the bankruptcy court [Bankr. 190].
On August 3, 2012, Daniels, without prior authorization, wrote two checks
from the DIP interest bearing account: (1) in the amount of $98,408, payable to
Gibbs; and (2) in the amount of $94,372.30, payable to himself.
On September 18, 2012, the United States Trustee moved to appoint a
Chapter 11 trustee under 11 U.S.C § 1104(a)(1) and (2), based on Daniels’ alleged

3

breach of fiduciary duty and self-dealing in writing the checks to Gibbs and
himself [Bankr. 208].
On September 19, 2012, the bankruptcy court conducted a hearing and
granted the United States Trustee’s motion to appoint a trustee [Bankr. 210].
On September 24, 2012, Daniels moved pro se to vacate the bankruptcy
court’s September 19th Order appointing a trustee [Bankr. 214].
On September 25, 2012, the bankruptcy court appointed Robert Anderson as
trustee [Bankr. 215].
On October 1, 2012, Daniels filed a second pro se motion to vacate the
appointment [Bankr. 218].
On October 12, 2012, the bankruptcy court conducted a hearing on Daniels’
motions [Bankr. 250]. On October 15, 2012, the bankruptcy court entered its order
denying Daniels’ motions to vacate the appointment of the trustee [Bankr. 227].
On October 31, 2012, Appellants3 filed a notice appealing (1) “the
[bankruptcy court’s] September 25, 2012, order appointing Mr. Anderson as
3

The Notice of Appeal is signed by Daniels and Gibbs. It states that “the
issues appealed are in direct violation of DIP’s rights and responsibilities to Better
Quality Homes,” and that Gibbs “joins this Appeal for the purpose of challenging
venue and jurisdiction, as these issues relate to the improper appointments.”
(Notice of Appeal at 1). Daniels appears to refer to himself as “DIP.” The Court
notes that Gibbs’ filings are nearly identical to the arguments raised by Daniels and
do not address the alleged “venue and jurisdiction” issues.
4

[t]rustee,” and (2) “the order affirming said appointment, after a hearing noting
DIP’s objections, held on or about the 19th day of October 2012.” (Notice of
Appeal, N.D. Ga. [1] at ¶¶ 2-3).4 Appellants argued that the bankruptcy court
failed to defer to Daniels’ decisions regarding use of funds in the DIP interest
bearing account. Appellants asserted that Daniels acted within “the course of
business practices” by paying Gibbs from the DIP interest bearing account because
the bankruptcy court “failed and neglected to properly address [Gibbs’ lien],” and
Daniels “paid a dept [sic] that was due and owed and had to be paid to avoid legal
consequences in the State of South Carolina.” (Appellants’ Br. in Supp. of Appeal
[N.D. Ga. 4] at 4, 6). Appellants claimed that the check Daniels drew from the
DIP interest bearing account, payable to himself, was “to set forth the construction
of a trailer park to generate income,” id. at 6, and that construction of a trailer park
is a generally accepted business practice in the construction industry, id. at 2.
On May 16, 2013, the Court dismissed Appellants’ appeal. The Court found
that, because Appellants failed to file their appeal within 14 days after the entry of
4

The record does not reflect that a hearing was held on October 19, 2012.
The bankruptcy court docket reflects a hearing on October 12, 2012, on Daniels’
motions to vacate, and that on October 15, 2012, the bankruptcy court entered an
order denying the motions to vacate. The Court construes the Appeal as
challenging the bankruptcy court’s October 15, 2012, denial of the motion to
vacate appointment of a trustee. The October 15th Order is the last order entered
before the Appeal.
5

the latest order from which they appeal, the Court lacked jurisdiction to consider
Appellants’ appeal. The Court found further that, even if it had jurisdiction, the
Appeal would be dismissed as moot because Debtors’ case was converted from
Chapter 11 to Chapter 7, and the trustee’s appointment as a Chapter 11 trustee
cannot now be vacated and Daniels cannot be restored to debtor-in-possession
status. Last, the Court found that, even if it had jurisdiction, and even if the
Appeal were not moot, the Appeal would be denied on the merits because the
bankruptcy court did not abuse its discretion in appointing a trustee under 11
U.S.C. § 1104(a). The Court found that the bankruptcy court was not required to
defer to Daniels’ judgment regarding his business decisions because Daniels was
not acting “in the ordinary course of business” when, in violation of the bankruptcy
court’s order, he wrote checks totaling more than $190,000 payable to Gibbs and to
himself from the DIP interest bearing account. The Court found that Daniels
violated his fiduciary duty to the creditors of the bankruptcy estate through his selfdealing and gross mismanagement, and the Court concluded that appointment of a
trustee was necessary to safeguard the interests of all the creditors—not just
Gibbs—and the bankruptcy estate.
On June 14, 2013, Appellants filed their Motion for Rehearing.
On July 9, 2013, Appellees filed their Emergency Motion for Injunction,

6

seeking to “preserve the jurisdiction of this Court” and to “enjoin the trustee and
lower court from any and all intimidation tactics including further arrest and
threats of arrest.”5
II.

DISCUSSION
A.

Legal Standard

Rule 8015 of the Federal Rules of Bankruptcy Procedure provides:
Unless the district court or the bankruptcy appellate panel by local
rule or by court order otherwise provides, a motion for rehearing may
be filed within 14 days after entry of the judgment of the district court
or the bankruptcy appellate panel. If a timely motion for rehearing is
filed, the time for appeal to the court of appeals for all parties shall
run from the entry of the order denying rehearing or the entry of
subsequent judgment.
Fed. R. Bankr. P. 8015. Rule 8015 does not provide a standard for evaluating a
motion for rehearing. Courts in this Circuit have “applied the same standard to
motions for rehearing under Bankruptcy Rule 8015 as is applied to motions for
reconsideration.” In re Steffen, 405 B.R. 486, 488 (M.D. Fla. 2009) (citing In re

5

Appellants’ request for injunctive relief appears to be based on the
bankruptcy court’s June 11, 2013, order holding Daniels in contempt for failing to
comply with his statutory duties under the Bankruptcy Code and directing the
United States Marshal Service to apprehend and bring Daniels before the
bankruptcy court for examination, pursuant to Rules 2004 and 2005 of the Federal
Rules of Bankruptcy [Bankr. 330]. On June 17, 2013, the bankruptcy court issued
its order authorizing Daniels’ release from custody [Bankr. 331].
7

Envirocon Int’l Corp., 218 B.R. 978, 979 (M.D. Fla. 1998); Cover v. Wal-Mart
Stores, Inc., 148 F.R.D. 294, 295 (M.D. Fla. 1993)).6
A motion for reconsideration is appropriate only where there is: (1) newly
discovered evidence; (2) an intervening development or change in controlling law;
or (3) a need to correct a clear error of law or fact. See Jersawitz v. People TV,
71 F. Supp. 2d 1330, 1344 (N.D. Ga. 1999); Pres. Endangered Areas of Cobb’s
History, Inc. v. U.S. Army Corps of Eng’rs, 916 F. Supp. 1557, 1560 (N.D. Ga.
1995), aff’d, 87 F.3d 1242 (11th Cir. 1996). A motion for reconsideration should
not be used to present the Court with arguments already heard and dismissed, or to
offer new legal theories or evidence that could have been presented in the
previously-filed motion. See Arthur v. King, 500 F.3d 1335, 1343 (11th Cir.
2007); Bryan v. Murphy, 246 F. Supp. 2d 1256, 1259 (N.D. Ga. 2003); see also
Pres. Endangered Areas, 916 F. Supp. at 1560 (“A motion for reconsideration is
not an opportunity for the moving party and their counsel to instruct the court on
6

Other courts have considered Rule 40 of the Federal Rules of Appellate
Procedure 40 (“Rule 40”) when applying Rule 8015. See In re Fowler, 394 F.3d
1208, 1214-15 (9th Cir. 2005) (district court did not abuse its discretion by looking
to Rule 40 for guidance in applying a reasonable standard to a motion for
rehearing); In re Minh Vu Huang, 484 B.R. 87, 96 (D. Md. 2012) (citing Baumhaft
v. McGuffin, No. 4:06-cv-3617-RBH, 2007 WL 3119611, at *1 (D.S.C. Oct. 22,
2007)); see also 10 Collier on Bankruptcy ¶ 8015.01 (16th ed. 2011). Rule 40
states that “a petition for panel rehearing” following entry of judgment “must state
with particularity each point of law or fact that the petitioner believes the court has
overlooked or misapprehended.” Fed. R. App. P. 40(a)(2).
8

how the court ‘could have done it better’ the first time.”). Whether to grant a
motion for reconsideration is within the sound discretion of the district court. See
Region 8 Forest Serv. Timber Purchasers Council v. Alcock, 993 F.2d 800, 806
(11th Cir. 1993).
B.

Analysis

Appellants move for rehearing on the Court’s May 16, 2013, Order. Thus,
the fourteen-day period within which to move for rehearing expired on May 20,
2013. See Fed. R. Bank. P. 8015 (motion for rehearing must be filed within
fourteen days after entry of judgment); Fed. R. Bankr. P. 9006(a) (when a period is
stated in days, count every day, including intermediate Saturdays, Sundays, and
legal holidays); In re Reynolds, 215 B.R. 89, 91 (Bankr. N.D. Ga. 1997)
(Additional three days provided by Rule 9006(f) are available only when a
deadline runs from the date of service of an order or pleading, not when a deadline
runs from the date of entry of an order or judgment.). Because Appellants filed
their Motion for Rehearing on June 14, 2013, twenty-nine (29) days after entry of
the Court’s May 16th Order dismissing their appeal, their motion is untimely under
Rule 8015. Appellants’ Motion for Rehearing may be denied for this reason
alone.7
7

To the extent Appellants seek “reconsideration” of the Court’s May 16th
9

Even if Appellants’ motion were timely, Appellants do not rely on any
newly discovered evidence, intervening development or change in controlling law,
or need to correct a clear error of law or fact. Appellants’ Motion for Rehearing
fails to even address the basis for denial of their Appeal—that the Court lacks
jurisdiction to consider Appellants’ Appeal because it was untimely.8 Appellants
simply reiterate the same arguments asserted in their Appeal, and claim that “the

Order, when, as here, a district court is acting as an appellate court in a bankruptcy
case, “Rule 8015 offers litigants the only means for challenging district court
bankruptcy appellate orders.” English-Speaking Union v. Johnson, 353 F.3d 1013,
1019 (D.C. Cir. 2004); see also In re Butler, Inc., 2 F.3d 154, 155 (5th Cir. 1993)
(although titled “motion to set aside judgment and for new trial because of newly
discovered evidence,” motion seeking review of district court appellate order in
bankruptcy case is a motion for rehearing required to be filed within time
proscribed by Bankruptcy Rule 8015); 10 Collier on Bankruptcy ¶ 8015.01 (16th
ed. 2011) (“Rule 8015 is the exclusive vehicle for seeking a rehearing when a
district court has acted in its appellate capacity.”). Even if it were permitted as a
motion for reconsideration, Appellants’ motion, filed twenty-nine (29) days after
the entry of the Court’s May 16th Order, is untimely under the Court’s Local
Rules. See LR 7.2E, NDGa. (A motion for reconsideration “shall be filed with the
clerk of court within twenty-eight (28) days after entry of the order or judgment.”).
8
Appellants conclusorily assert that the Trustee “represents the United States
of America and as such-in [sic] his capacity as a party to the litigation, extends the
time for the filing of a notice of appeal to sixty (60) days, not the fourteen (14)
days alluded to by this Court.” (Mot. for Rehearing at 1-2). Although unclear, and
without citation to any legal authority, Appellants appear to be referring to Rule 4
of the Federal Rules of Appellate Procedure, which does not apply to Appellants’
Appeal of the bankruptcy court’s orders to this Court. See 28 U.S.C. § 158(c)(2)
(appeal of a final order of the bankruptcy court must be filed “in the time provided
by Rule 8002 of the Bankruptcy Rules.”); Fed. R. Bankr. P. 8002(a) (“The notice
of appeal shall be filed with the clerk within 14 days of the entry of the judgment,
order, or decree appealed from.”).
10

facts of this case cannot be determined by standard practices and law.”9 Appellants
fail to present any grounds upon which to support granting them relief from the
Court’s May 16th Order. Appellants’ Motion for Rehearing is denied. Because
the Court lacks jurisdiction over their Appeal, Appellants’ Emergency Motion for
Injunction “to preserve the jurisdiction of this Court” and to “enjoin the trustee and
lower court from any and all intimidation tactics,” is denied.10
9

Appellants argue again that Daniels acted within “the course of business
practices” by writing checks to Gibbs and himself from the DIP interest bearing
account, including because the bankruptcy court “failed and neglected to properly
address [Gibbs’ lien],” because Daniels would be exposed to criminal and civil
litigation arising from nonpayment of Gibbs’ lien, and because Daniels wished to
develop a trailer park. The Court has already rejected Appellants’ arguments and
found that appointment of a trustee was necessary to safeguard the interests of all
the creditors, not just Gibbs, and the bankruptcy estate. (See May 16th Order at 913). That Appellants’ Motion for Rehearing is nearly identical to Appellants’ Brief
and reiterates the same arguments, based on the same facts, does not support
granting Appellants relief from the Court’s May 16th Order. See, e.g., Arthur, 500
F.3d at 1343; Pres. Endangered Areas, 916 F. Supp. at 1560 (“A motion for
reconsideration is not an opportunity for the moving party and their counsel to
instruct the court on how the court ‘could have done it better’ the first time.”).
10
Appellants’ Emergency Motion for Injunction is required to be denied also
because Appellants did not submit an affidavit describing the nature of the
emergency and they do not state why the motion should not be remanded to the
bankruptcy judge for consideration. See Fed. R. Bankr. P. 8011(d) (A motion for
emergency relief “shall be accompanied by an affidavit setting forth the nature of
the emergency. The motion shall state whether all grounds advanced in support
thereof were submitted to the bankruptcy judge and, if any grounds relied on were
not submitted, why the motion should not be remanded to the bankruptcy judge for
reconsideration.”); In re Zahn Farms, 206 B.R. 643 (2d Cir. 1997) (denying
emergency motion for failure to comply with Rules 8005 and 8011(d); where
debtors did not first present motion to bankruptcy court and failed to submit
11

III.

CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that Appellants’ “Motion for

Rehearing/Reconsideration” [15] is DENIED.
IT IS FURTHER ORDERED that Appellants’ Emergency Motion for
Injunction [17] is DENIED.

SO ORDERED this 10th day of February, 2014.

required affidavit, debtors “denied [appellate court] the benefit of the views of the
[j]udge who is familiar with the issues pertaining to any purported emergency”);
cf. Fed. R. Bankr. P. 8005 (“A motion for . . . other relief pending appeal must
ordinarily be presented to the bankruptcy judge in the first instance. . . . A motion
for such relief . . . may be made to the district court or the bankruptcy appellate
panel, but the motion shall show why the relief, modification, or termination was
not obtained from the bankruptcy judge.”).
12