HRN Group, LLC v. Aldridge Pite, LLP
OPINION AND ORDER: The bankruptcy court's orders are AFFIRMED. The Clerk is DIRECTED to DISMISS this appeal and close the case. Signed by Judge Steven D. Grimberg on 2/18/2021. (jed)
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 1 of 15
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
In re HRN GROUP, LLC,
HRN GROUP, LLC,
ALDRIDGE PITE, LLP,
Civil Action No.
OPINION AND ORDER
HRN Group, LLC (HRN) appeals [ECF 1] from an order of the Northern
District of Georgia Bankruptcy Court dismissing Appellee Aldridge Pite, LLP (AP)
from an adversary proceeding initiated by HRN (the Dismissal Order) and
(the Reconsideration Order).1 For the following reasons, this Court AFFIRMS the
bankruptcy court’s rulings.
On August 7, 2018, HRN filed a voluntary petition for Chapter 7
bankruptcy.2 On October 1, 2019, HRN initiated an adversary proceeding against
ECF 1-1, at 12–26 (Dismissal Order); ECF 1-2 (Reconsideration Order).
Bankr. Case No. 18-63282-wlh (Bankr. N.D. Ga.) (Bankr. Docket), ECF 1.
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 2 of 15
various parties—including AP (a law firm)—seeking “relief from mortgage loan
foreclosure/sale/eviction/ejection activity” at numerous parcels of real property
located in Lithonia, Georgia and Hempstead, New York.3 The allegations against
AP in the adversary action are as follows.
In Count 1, HRN alleged that AP and Wells Fargo sought relief from the
automatic bankruptcy stay in order to conclude a dispossessory proceeding on
real property located on Meadow Creek Path, Lithonia, Georgia.4 The bankruptcy
judge granted the request in favor of Wells Fargo.5 HRN did not appeal that order.6
In the adversary complaint, HRN contended that the bankruptcy court’s order
lifting the stay as to Wells Fargo was in violation of various laws including the
Sherman Antitrust Act.7
ECF 5-1, at 4 ¶ 1.
Id. at 5, ¶ 7.
In fact, the motion seeking relief from the stay was filed by AP as counsel for
Wells Fargo. AP did not seek relief on its own behalf. Id. at 19–21.
Id. at 5, ¶ 8. See also Bankr. Docket ECF 27 (Oct. 2, 2018 order granting Wells
Fargo relief from stay).
See generally Bankr. Docket.
ECF 5-1, at 5 ¶ 8.
According to the bankruptcy court’s dismissal order, Wells Fargo had
foreclosed on the property before HRN initiated its bankruptcy proceeding
and the issue to be resolved was possession. ECF 5-51, at 2.
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 3 of 15
HRN also alleged in Count 3 that, on behalf of Carrington Mortgage Services
and Wilmington Savings Fund Society, AP scheduled a foreclosure sale on real
property located on Katelyn Park in Lithonia, despite knowing that the property
was part of the bankruptcy estate.8 HRN further contended that AP sought relief
from the automatic bankruptcy stay, but that Carrington and Wilmington were
not legitimate creditors.9 HRN appealed the bankruptcy court’s order lifting the
stay as to Wilmington, which order was ultimately affirmed by this Court.10
On December 18, 2019, the bankruptcy court dismissed the claims against
AP.11 On December 30, HRN filed its “Affidavi[t] of Plaintiffs’ Opposition to Order
for Motion to Dismiss Aldridge Pite, LLP, Demand to Set Aside Order, No Fair
Trial Without Discovery and Denial of Substantive Due Process of Law and Notice
to Void Order.”12 The bankruptcy court treated that filing as a motion for
reconsideration under Rule 59(e) or to alter the judgment under Rule 60(b) and, on
ECF 5-1, at 9 ¶ 16.
Id. ¶ 17.
The motion seeking relief from the stay was filed by AP as counsel for
Wilmington. AP did not seek relief on its own behalf. Id. at 78–80.
Case No. 1:19-cv-05011-SDG (N.D. Ga.), ECF 24.
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February 13, 2020, denied it.13
Because of the motion for reconsideration, HRN’s notice of appeal (which
had been filed on December 30, 2019) was treated as having been filed once the
bankruptcy court issued its order denying reconsideration.14 HRN filed its
appellant’s brief on September 24, 2020.15 AP responded on October 26.16 HRN
replied on November 9.17
APPLICABLE LEGAL STANDARDS
Scope of the appeal
This Court has jurisdiction over HRN’s appeal under 28 U.S.C. 158(a), which
provides that district courts may hear appeals from final judgments, orders, and
decrees of bankruptcy judges. Under Federal Rule of Bankruptcy Procedure
See generally ECF 1; Fed. R. App. 4(a)(4)(A)(iv).
Given the appearance of counsel on HRN’s behalf in this appeal, the Court
treats the notice of appeal as having been timely even though the filing was
not made by an attorney. Davis v. Shepard (In re Strickland & Davis Int’l, Inc.),
612 F. App’x 971, 976 (11th Cir. 2015) (“[O]ur binding precedent instructs that
a court facing such a circumstance should afford a corporation the opportunity
to obtain counsel before dismissing its appeal.”) (footnote omitted) (citations
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 5 of 15
8003(a)(3), a notice of appeal must—among other things—be accompanied by the
order that is being appealed. Further, the notice of appeal must be filed within
14 days after entry of the order from which appeal is taken. Fed. R. Bankr. P.
8002(a)(1). See also 28 U.S.C. § 158(c)(2).
The only orders included with the notice of appeal were the Dismissal Order
and the Reconsideration Order.18 AP is the only appellee identified in the notice.19
Despite this, HRN’s Appellant’s Brief also identifies numerous other entities and
individuals as “appellees.”20 Although some of them may be appellees in separate
appeals filed by HRN, only AP is an appellee here.21 Moreover, the vast majority
of HRN’s opening brief appears unrelated to the orders that are actually the subject
of this appeal.22 For instance, HRN’s statement of jurisdiction suggests that this
appeal concerns the bankruptcy court’s orders staying pretrial deadlines in the
ECF 1-1, at 12–26; ECF 1-2.
ECF 1-1, at 1.
ECF 26, at 2.
Compare Case Nos. 1:19-cv-05011-SDG, 1:20-cv-00699-SDG, 1:20-cv-00702-SDG
See generally ECF 26.
The Court notes that HRN has separately appealed other orders of the
bankruptcy court. Case Nos. 1:20-cv-0699-SDG and 1:20-cv-0702-SDG. To the
extent HRN’s arguments may relate only to the matters at issue in those
appeals, the Court expresses no opinion on them here.
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 6 of 15
adversary proceeding and dismissing all named defendants from that action.23 The
statement of issues, among other things, (1) contends “Appellees” are not true
creditors of HRN; (2) seeks rescission of all orders entered by the bankruptcy
court; and (3) insists that “Appellees should be compelled to fulfill” HRN’s
discovery requests propounded under Georgia state law.24 HRN’s brief then
expounds upon those issues.25 The brief also devotes a large section to alleged
misconduct in connection with a proceeding in the United States Bankruptcy
Court for the Eastern District of New York.26 Only the Dismissal and the
Reconsideration Orders, however, are the subject of this appeal.
Standard of review
In a bankruptcy appeal, this Court “functions as an appellate court” and is
not authorized “to make independent factual findings.” Equitable Life Assurance
Soc’y v. Sublett (In re Sublett), 895 F.2d 1381, 1383–84 (11th Cir. 1990) (citations
omitted). It reviews determinations of law de novo and applies clearly erroneous
review to factual determinations. Id. at 1383. See also Graupner v. Nuvell Credit Corp.
ECF 26, at 5. See also id. at 6.
Id. at 7.
See, e.g., id. at 7–16.
See, e.g., ECF 26, at 11–14.
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 7 of 15
(In re Graupner), 537 F.3d 1295, 1299 (11th Cir. 2008) (“The factual findings of the
bankruptcy court cannot be set aside unless they are clearly erroneous; however,
conclusions of law made by either the bankruptcy court or the district court are
subject to de novo review.”) (citing Sublett, 895 F.2d at 1383).
The bankruptcy court correctly dismissed the adversary
proceeding as to AP.27
HRN’s brief makes numerous new factual arguments about the propriety of
AP’s (and others’) conduct. But the Dismissal Order considered the sufficiency of
the allegations that were actually made in the adversary complaint, not what HRN
might wish it had pleaded.
The adversary complaint did not satisfy federal pleading
Federal Rule of Civil Procedure 8(a)(2) requires a pleading to contain a
“short and plain statement of the claim showing that the pleader is entitled to
relief.” While this standard does not require “detailed factual allegations,” the
Supreme Court has held that “labels and conclusions” or “a formulaic recitation
The Court would generally consider jurisdictional questions, including
whether the bankruptcy court properly concluded it would abstain from
hearing this case, first. However, given the other compelling reasons to affirm
the Dismissal and Reconsideration Orders and the fact that the parties did not
brief these jurisdictional issues, the Court declines to address them here.
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 8 of 15
of the elements of a cause of action will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
To withstand a motion to dismiss for failure to state a claim under Federal
Rule of Civil Procedure 12(b)(6), “a complaint must now contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1289 (11th Cir. 2010) (quoting
Twombly, 550 U.S. at 570). A complaint fails to state a claim when it does not “‘give
the defendant fair notice of what the . . . claim is and the grounds upon which it
rests.’” Twombly, 550 U.S. at 555–56 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957))
(noting that “[f]actual allegations must be enough to raise a right to relief above
the speculative level,” and the complaint “‘must contain something more . . . than
. . . a statement of facts that merely creates a suspicion [of] a legally cognizable
right of action’”) (alteration in original) (footnote omitted) (quoting 5 Charles A.
Wright, et al., FEDERAL PRACTICE AND PROCEDURE § 1216, at 235–36 (3d ed. 2004)).
See also Iqbal, 556 U.S. at 680–85; Oxford Asset Mgmt. v. Jaharis, 297 F.3d 1182, 1187–
88 (11th Cir. 2002) (stating that “conclusory allegations, unwarranted deductions
of facts[,] or legal conclusions masquerading as facts will not prevent dismissal”).
A complaint is plausible on its face when a plaintiff pleads sufficient factual
content for the court to draw the reasonable inference that the defendant is liable
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for the conduct alleged. Am. Dental Ass’n, 605 F.3d at 1289 (citing Twombly, 550 U.S.
at 556). “A complaint does not state a facially plausible claim for relief if it shows
only a sheer possibility that the defendant acted unlawfully.” Waters Edge Living,
LLC v. RSUI Indem. Co., 355 F. App’x 318, 322 (11th Cir. 2009) (internal quotation
marks omitted) (citation omitted). “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a
defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. A complaint must also
present sufficient facts to “‘raise a reasonable expectation that discovery will
reveal evidence’ of the claim.” Am. Dental Ass’n, 605 F.3d at 1289 (quoting Twombly,
550 U.S. at 556).
At the motion to dismiss stage, “all well-pleaded facts are accepted as true,
and the reasonable inferences therefrom are construed in the light most favorable
to the plaintiff.” FindWhat Inv’r Grp. v. FindWhat.com, 658 F.3d 1282, 1296
(11th Cir. 2011) (quoting Garfield v. NDC Health Corp., 466 F.3d 1255, 1261
(11th Cir. 2006)). This principle, however, does not apply to legal conclusions.
Iqbal, 556 U.S. at 678.
Even reading the adversary complaint’s allegations against AP broadly, the
pleading at most suggests that AP sought to lift the automatic bankruptcy stay for
improper purposes. The complaint does not contain a “short and plain statement”
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 10 of 15
explaining why HRN is entitled to relief against counsel for entities that sought
relief from the stay. The allegations are full of labels and conclusions, without any
specific identification of how AP’s conduct violated any law or gives HRN a cause
of action. There are no plausible allegations that, by seeking (or obtaining) relief
from the stay on behalf of its clients, AP engaged in any improper behavior.
Despite numerous warnings, HRN insisted on attempting to
proceed without counsel.
As the Supreme Court noted nearly three decades ago,
It has been the law for the better part of two centuries, for
example, that a corporation may appear in the federal
courts only through licensed counsel. As the courts have
recognized, the rationale for that rule applies equally to
all artificial entities.
Rowland v. Cal. Men’s Colony, Unit II Men’s Advisory Council, 506 U.S. 194, 201–02
(1993) (emphasis added) (citations omitted). See also Davis v. Shepard (In re
Strickland & Davis Int’l, Inc.), 612 F. App’x 971, 976 (11th Cir. 2015) (per curiam)
(citing cases). Accordingly, limited liability companies must be represented by
attorneys-at-law authorized to practice in the relevant court. Palazzo v. Gulf Oil
Corp., 764 F.2d 1381, 1385 (11th Cir. 1985).
The Dismissal Order describes in detail the numerous steps the bankruptcy
court took to advise HRN that it had to be represented by counsel, to allow
Danitta-Ross Morton to speak in court on HRN’s behalf even though she is not an
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 11 of 15
attorney, and to provide HRN with additional time to obtain counsel.28 Nothing
about that court’s recitation of these facts is clearly erroneous. Equitable Life
Assurance, 895 F.2d at 1383. In spite of the bankruptcy court’s repeated
admonitions, no attorney ever appeared as counsel of record for HRN in the
adversary proceeding.29 Under these circumstances, the bankruptcy court had
little option but to conclude that HRN could not pursue the adversary proceeding
against AP. United States v. High Country Broad. Co., 3 F.3d 1244 (9th Cir. 1993)
(per curiam) (upholding entry of default judgment against corporate entity after it
failed to retain counsel despite warning); Sermor Inc. v. United States, 13 Cl. Ct. 1
(Cl. Ct. 1987) (similar).
The bankruptcy court correctly declined to reconsider its dismissal
of AP from the adversary proceeding.
As it had done throughout the adversary proceeding, HRN filed its
“Affidavi[t] of Plaintiffs’ Opposition to Order for Motion to Dismiss Aldridge Pite,
LLP, Demand to Set Aside Order, No Fair Trial Without Discovery and Denial of
Substantive Due Process of Law and Notice to Void Order” (i.e., the
ECF 5-51, at 3–5.
This Court also warned HRN about its initial failure to appear on appeal
through counsel. ECF 16.
ECF 1-1, at 27–42.
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 12 of 15
Reconsideration Motion) on a “pro se” basis—without counsel.30 For the reasons
already discussed above, this was improper and the bankruptcy court could
justifiably have declined to consider the request for reconsideration on this basis
alone. High Country Broad. Co., 3 F.3d 1244; Sermor Inc., 13 Cl. Ct. 1.
In order for a court to reconsider a prior ruling under Federal Rule of Civil
Procedure 59(e), a party must show that 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.” Bryan v. Murphy, 246 F. Supp. 2d 1256, 1258–59
(N.D. Ga. 2003). Rule 59 applies to actions in the bankruptcy court. Fed. R. Bankr.
P. 9023. A motion for reconsideration may not be used to show the court how it
“could have done better,” to present arguments already heard and dismissed, to
repackage familiar arguments, or to offer new legal theories or evidence that could
have been presented with the previous motion or response. Bryan, 246 F. Supp. 2d
at 1259 (citing 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);
Brogdon ex rel. Cline v. Nat’l Healthcare Corp., 103 F. Supp. 2d 1322, 1338 (N.D. Ga.
2000); Adler v. Wallace Computer Servs., Inc., 202 F.R.D. 666, 675 (N.D. Ga. 2001)).
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 13 of 15
Review of the denial of a motion under Rule 59 is for abuse of discretion. Lawson
v. Singletary, 85 F.3d 502, 507 (11th Cir. 1996) (per curiam) (decision to alter or
amend judgment is committed to sound discretion of judge), overruled on other
grounds by City of Boerne v. Flores, 521 U.S. 507 (1997). “An abuse of discretion
occurs when a court uses an incorrect legal standard, applies the law in an
unreasonable or incorrect manner, misconstrues its proper role, follows improper
procedures in making a determination, or makes clearly erroneous findings of
fact.” Bagwell v. Bank of Am., N.A. (In re Bagwell), 741 F. App’x 755, 758 (11th Cir.
2018) (citation omitted).
Nothing in the Reconsideration Motion presented new evidence,
demonstrated a change in the law, or showed an error of law or fact in the
Dismissal Order. Rather, the motion was a textbook example of a party arguing
how the bankruptcy court “could have done better” the first time around.31
Nor did HRN establish a basis for reversing the Dismissal Order under Rule
60(b), which is made applicable to bankruptcy actions under Federal Rule of
Bankruptcy Procedure 9024. Under Rule 60(b), a court may relieve a party from a
final judgment or order for (among other reasons) (1) mistake; (2) newly
See generally ECF 1-2, at 4–8.
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 14 of 15
discovered evidence; (3) fraud; (4) a void judgment; (5) satisfaction; or (6) any
other reason that justifies relief. Fed. R. Civ. P. 60(b)(1)–(6). Review of a denial of
relief under Rule 60(b) is also for abuse of discretion. Cano v. Baker, 435 F.3d 1337,
1342 (11th Cir. 2006) (per curiam) (“[I]t is not enough that a grant of the [Rule 60(b)]
motions might have been permissible or warranted; rather, the decision to deny
the motions . . . must have been sufficiently unwarranted as to amount to an abuse
of discretion.” (quoting Griffin v. Swim–Tech Corp., 722 F.2d 677, 680 (11th Cir. 1984)
(alterations and omissions in original)). The bankruptcy court did not abuse its
discretion in concluding that HRN had not demonstrated any of these reasons.32
There was no error of fact or law in the Dismissal Order or Reconsideration
Order that undermines their ultimate conclusion: that AP was due to be dismissed
from the adversary proceeding. Any arguments presented by HRN that are not
specifically addressed in this Order are not sufficiently cogent to merit discussion
or to demonstrate any impropriety in AP’s dismissal from the adversary
proceeding. Accordingly, the bankruptcy court’s orders are AFFIRMED.
Id. at 8–9.
Case 1:20-cv-00704-SDG Document 32 Filed 02/18/21 Page 15 of 15
The Clerk is DIRECTED to DISMISS this appeal and close the case.
SO ORDERED this the 18th day of February 2021.
Steven D. Grimberg
United States District Court Judge
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