Smith-Scott v. Howard Bank et al

Filing 9

MEMORANDUM OPINION. Signed by Judge Richard D. Bennett on 9/20/2016. (bmhs, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
ARLENE A. SMITH-SCOTT,

*

Appellant,

*

v.

*

GEORGE W. LIEBMANN, TRUSTEE,

*

Appellee.
*

*

*

Civil Action No. RDB-16-1572
Bankruptcy No. 14-25022

*
*

*

*

*

*

*

*

*

*

*

MEMORANDUM OPINION
Debtor Arlene A. Smith-Scott appeals from United States Bankruptcy Judge James F.
Schneider’s May 17, 2016 Order Granting Trustee’s Motion for Civil Contempt and
Sanctions Against Debtor and Strategic Law Group, LLC for Failure to Comply with Court’s
Order Compelling Turnover of Real Estate (“Contempt Order”) (ECF No. 5-1, B.R. Doc.
380). Currently pending before this Court are Appellee George W. Liebmann, Chapter 7
Trustee’s Motion to Dismiss Appeal (“Appellee’s Motion”) (ECF No. 5) and Appellant’s
Brief (ECF No. 7).1
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 158(a), as SmithScott’s appeal arises from a final order entered by the United States Bankruptcy Court for
the District of Maryland and is brought pursuant to Local Rule 404(1)(a) (D. Md. 2014).
Oral argument is deemed unnecessary because the facts and legal arguments are adequately
presented in the briefs and record, and the decisional process would not be significantly

1 In light of the result reached herein, it is unnecessary to await the filing of Appellee’s reply to rule on the
pending Motion.

1

aided by oral argument. See Fed. R. Bankr. P. 8019(b)(3); see also Local Rule 105.6 (D. Md.
2014).

For the reasons stated below, Appellee’s Motion to Dismiss (ECF No. 5) is

GRANTED and the Order of Bankruptcy Judge James F. Schneider (ECF No. 5-1, B.R.
Doc. 380) is AFFIRMED.

BACKGROUND
On March 22, 2016, Bankruptcy Judge Schneider issued an Order Compelling Debtor
[Smith-Scott] and Strategic Law Group, LLC and Debtor T/A Smith-Scott Property
Management and Development, Inc. to Turn Over Real Property and All Possessory and
Tenancy Interests in Real Property (“Turn Over Order”) (ECF No. 5-2, B.R. Doc. 352).
Pursuant to the Turn Over Order, counsel for Appellee attempted to enter a parcel of
commercial property controlled by Appellant and Strategic Law Group, LLC (“SLG”) on
April 12, 2016. See Appellant’s Brief, ECF No. 7 at 18-19. See also ECF No. 2-28 at 3-4.
Counsel for Appellee determined at that time that Appellant and SLG had not complied
with the Turn Over Order. Id. Accordingly, Appellee filed a Motion for Civil Contempt
and Sanctions (“Contempt Motion”) (ECF No. 2-28, B.R. Doc. 359). The Contempt
Motion was granted on May 17, 2016. (ECF No. 5-1, B.R. Doc 380.) Appellee filed a
Notice of Appellant’s Non-Compliance with the Contempt Order on May 19, 2016. (ECF
No. 2-64, B.R. Doc. 381.) Appellant noted her appeal from the Contempt Order on May 20,
2016. See Notice of Appeal, ECF No. 1.

2

STANDARD OF REVIEW
This appeal is brought pursuant to Rule 8001 of the Federal Rules of Bankruptcy
Procedure. On appeal from the United States Bankruptcy Court, this Court acts as an
appellate court and reviews the Bankruptcy Court’s findings of fact for clear error and
conclusions of law de novo. In re Merry–Go–Round Enterprises, Inc., 400 F.3d 219, 224 (4th Cir.
2005); In re Kielisch, 258 F.3d 315, 319 (4th Cir. 2001). A factual finding is clearly erroneous
“when although there is evidence to support it, the reviewing court on the entire evidence is
left with a firm and definite conviction that a mistake has been committed.” United States v.
U.S. Gypsum Co., 333 U.S. 364, 395 (1948). “Under the clearly erroneous standard, if the
bankruptcy court’s factual findings are plausible in light of the record viewed in its entirety, a
reviewing court may not reverse even if it would have weighed the evidence differently.” In
re Frushour, 433 F.3d 393, 406 (4th Cir. 2005) (internal citation omitted).

ANALYSIS
“Civil contempt is willful disobedience of a lawful order of a court with competent
jurisdiction over the subject matter. The purpose of a civil contempt order is to coerce
compliance with the court’s order or to compensate another party for the violation.” 1
Norton Bankr. L. & Prac. 3d § 13:5.

Bankruptcy courts in the Fourth Circuit are

empowered to punish civil contempt. In re Rood, DKC 09-0186, 2009 WL 3614851, at *2 (D.
Md. Oct. 27, 2009); In re Walters, 868 F.2d 665, 669–70 (4th Cir.1989). Federal Rule of
Bankruptcy Procedure 9020 simply provides that motions for orders of contempt must be
made in accordance with Rule 9014, which requires that “reasonable notice and opportunity

3

for hearing shall be afforded the party against whom relief is sought.” Fed. R. Bankr. P.
9014(a).
In this case, Bankruptcy Judge Schneider complied with the procedural requirements
of Rule 9020, holding a hearing on Appellee’s Contempt Motion on May 16, 2016. See
Notice of Hearing on Contempt Motion, B.R. Doc. 369. Appellant participated in this
hearing and refers to purported hearing testimony in her Brief. (ECF No. 7 at 32-33.)
Appellant now argues that because Appellee’s representations in the Contempt
Motion and at the hearing “amount[] to perjury,” the Contempt Order should not be upheld.
(ECF No. 7 at 32-42.) Appellant cites no facts which would support her contentions, but
appears to rely upon the sheer audacity of her allegations.2

Absent any documented

evidence of the alleged false statements,3 the Court does not find that the Bankruptcy
Court’s determination that Appellant had failed to comply with the Turn Over Order was
clearly erroneous. The Court also finds that the Bankruptcy Court’s legal conclusions were
sound, as (1) the power to order contempt sanctions is within the Bankruptcy Court’s
powers and (2) Appellant failed to comply with the Bankruptcy Court’s Turn Over Order.
See ECF No. 2-28, B.R. Doc. 359.
Appellant also argues that Judge Schneider’s warning to Appellant that failure to
comply with the Turn Over Order could result in her incarceration violated the Eighth
Amendment’s prohibition on “cruel and unusual punishments.” U.S. Const. Amend. VIII.
(ECF No. 7 at 54-56.) To be clear: Appellant has not been incarcerated in conjunction with

2 Indeed, Appellant’s allegations are contradicted by signed submissions to the Court by counsel for Appellee.
See, e.g., Notice of Appellant’s Non-Compliance with the Contempt Order, ECF No. 2-64, B.R. Doc. 381.
3

Appellant has not filed a transcript of the hearing to identify the allegedly false statements.

4

this case, and her Brief does not allege that she was. Rather, Appellant argues that Judge
Schneider violated her Eighth Amendment rights by stating during the hearing on the
Contempt Motion: “Do you understand that you are going to be asked, not asked, told to
vacate the premises? And that if you don’t do that, you’re going to be subject to sanctions,
and those sanctions might include incarceration. Do you understand that?” (Id. at 55.) As
the threatened action has not been imposed, Appellant’s claim that her Eighth Amendment
rights have been violated is premature.4
The balance of Appellant’s Brief addresses matters which are beyond the scope of
this Court’s review of the Contempt Order. First, Appellant seeks to re-litigate matters
pertaining to the core bankruptcy proceeding which have already been resolved and which
ultimately gave rise to the Turn Over Order. (ECF No. 7 at 27-32, 43-51.) Even if the
issues giving rise to the Turn Over Order were before the Court at this procedural posture,
Appellant’s argument is unpersuasive for the reasons previously set forth in Smith-Scott v.
Patapsco Bank, RDB-15-1013, 2015 WL 5921028 (D. Md. Oct. 8, 2015), Smith-Scott v.
Liebmann, RDB-15-3637, 2016 WL 1084127 (D. Md. Mar. 18, 2016), and Smith-Scott v.
Howard Bank, RDB-15-3423, 2016 WL 1077126 (D. Md. Mar. 18, 2016), aff’d in part, appeal
dismissed in part sub nom. ARLENE A. SMITH-SCOTT, Debtor - Appellant, v. HOWARD

4 The Court notes that Appellant’s continued flouting of the Turn Over and Contempt Orders may warrant
an imposition of the sanction threatened by the bankruptcy court. See In re Abell, No. 13-13847-PM, 2013
WL 1788048, at *3 (Bankr. D. Md. Apr. 26, 2013). Nor can it be said that the penalty of incarceration would
be “cruel and unusual” so long as Appellant, by choosing not to comply with the Turn Over Order, “carries
the keys of [her] prison in [her] own pockets.” Turner v. Rogers, 564 U.S. 431, 442, 131 S. Ct. 2507, 2516, 180
L. Ed. 2d 452 (2011) (quoting Hicks v. Feiock, 485 U.S. 624, 638, n. 9, 108 S.Ct. 1423, 99 L.Ed.2d 721 (1988))
(internal quotation marks omitted); Abell, 2013 WL 1788048, at *3.

5

BANK; U.S. BANK NATIONAL ASSOCIATION; GEORGE W. LIEBMANN,
TRUSTEE, Defendants - Appellees, No. 16-1325, 2016 WL 4174380 (4th Cir. Aug. 8, 2016).
In addition, Appellant argues that Bankruptcy Judge Schneider should have
disqualified himself from the case. (ECF No. 7 at 52-53.) Appellant cites no action or
conflict which would warrant judicial disqualification—indeed, she alleges no facts involving
Judge Schneider at all—but, again, relies only upon the audacity of her allegations. This
argument is thus unpersuasive. Accordingly, the pending appeal must be dismissed.

CONCLUSION
For the reasons set forth above, Appellee George W. Liebmann, Chapter 7 Trustee’s
Motion to Dismiss Appeal (ECF No. 5) is GRANTED, and United States Bankruptcy Judge
James F. Schneider’s May 17, 2016 Order Granting Trustee’s Motion for Civil Contempt and
Sanctions Against Debtor and Strategic Law Group, LLC for Failure to Comply with Court’s
Order Compelling Turnover of Real Estate (“Contempt Order”) (ECF No. 5-1, B.R. Doc.
380) is AFFIRMED, and this case is DISMISSED.
A separate Order follows.

Date: September 20, 2016

/s/
Richard D. Bennett
United States District Judge

6

_