Hoang v. UHY Advisors FLYS, Inc.

Filing 21

MEMORANDUM AND ORDER GRANTING Appellant's motions to proceed on appeal in forma pauperis, DISMISSING the appeals in these cases and the appeal in Civil Action No. DKC 11-3431, DENYING the pending motions in each of these cases, and DIRECTING the Clerk of Court to CLOSE these cases. Signed by Chief Judge Deborah K. Chasanow on 12/12/11 (c/m to Minh Hoang 12/12/11 sat). Associated Cases: 8:11-cv-02641-DKC, 8:11-cv-02642-DKC, 8:11-cv-02653-DKC, 8:11-cv-02654-DKC(sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
IN RE: MINH VU HOANG and
THAN HOANG
______________________________
MINH VU HOANG
Appellant
v.

:
:
:
:

UHY ADVISORS FLVS, INC.
Appellee
______________________________
MINH VU HOANG
Appellant
v.

:
:
:
:

GARY ROSEN, et al.
Appellees
______________________________
MINH VU HOANG
Appellant
v.

v.

:
:
Civil Action No. DKC 11-2653

:
:
:
:

GARY ROSEN, et al.
Appellees
______________________________

Civil Action No. DKC 11-2642

:

:

MARION A. HECHT, et al.
Appellees
______________________________
MINH VU HOANG
Appellant

Civil Action No. DKC 11-2641

Civil Action No. DKC 11-2654

:
:

MEMORANDUM OPINION AND ORDER
On May 10, 2005, Appellant Minh Vu Hoang filed a voluntary
petition under Chapter 11 of the United States Bankruptcy Code
in

the

United

States

Bankruptcy

Court

for

the

District

of

Maryland.
Gary

A.

The case was subsequently converted to Chapter 7 and
Rosen

was

appointed

as

the

Chapter

7

Trustee.

Thereafter, the Trustee commenced numerous adversary proceedings
to recover property of the estate that Appellant had attempted
to conceal through various business entities with which she was
associated.

She

failed

to

report

these

entities

on

her

bankruptcy schedules and her statement of financial affairs, and
she was criminally indicted on charges related to bankruptcy and
tax fraud.

On October 13, 2010, Appellant pleaded guilty to

conspiracy

to

defraud

an

agency

violation of 18 U.S.C. § 371.

of

the

United

States,

in

She was sentenced to a term of

imprisonment of sixty months, which she is presently serving.
Meanwhile, Appellant’s bankruptcy case, and the sixty-plus
adversary proceedings arising therefrom, continued to progress.
From approximately 2006 to 2010, Appellant did not participate
in the administration of her bankruptcy estate, but beginning in
or

around

April

2010,

repetitive filings.”

she

began

making

“numerous

and

often

(Bankr. Case No. 05-21078-TJC, ECF No.

1371, memorandum of decision, at 2).

In an opinion denying

several of those motions, the bankruptcy court summarized the
substantial

labor

and

expense

involved

in

“unravel[ling]

the

vast and tangled web of fictitious and fraudulent activities by
[Appellant]”;
distribution

found
from

there

the

was

no

estate;

and
2

chance

of

questioned

her

receiving

whether,

a

under

those

circumstances,

she

administration matters.

even

had

(Id. at 10).

standing

to

challenge

In light of the fact that

Appellant had waived discharge, the court ultimately determined
that the “bankruptcy actions could have an effect on the amount
of the nondischarged claims that [she] remains obligated to pay
once

the

automatic

stay

is

terminated.”

(Id.

Nevertheless, it issued a warning:
The [Appellant] is advised, however,
that the equities of the case weigh very
heavily against her.
In many of her
filings, she challenges the time and costs
of the Trustee’s administration.
While the
Court itself has addressed the costs of this
case with the Trustee on a number of
occasions, it does not sit well for the
[Appellant] to make this complaint.
Both
the time and cost of the case are directly
attributable to the size and scope of her
fraudulent activities.
The [Appellant] has
taken no action to assist the Trustee in his
efforts to uncover estate properties and for
four years she has raised no objection while
the Trustee has administered the case. Now,
incarcerated for actions directly related to
this case, the [Appellant] apparently has
substantial amounts of time on her hands and
has taken to making numerous repetitive and
often frivolous filings. . . . But neither
the Trustee nor the Court shall serve as the
[Appellant’s] muse.
The [Appellant] is
forewarned: While the Court will not deny
standing to the [Appellant] at this time,
frivolous
and
multiple
filings
by
the
[Appellant] may result in the Court barring
any further filings by her.
(Id.).

3

at

13).

When

Appellant

approximately
months,

the

failed

fifty-three
Trustee

to

pro

heed

se

commenced

Trustee

sought

an

order

motions

the

which these four appeals arise.

this

warning,

over

adversary

the

filing

next

proceeding

six
from

In his amended complaint, the

enjoining

Appellant

from

filing

any

motions in the main bankruptcy case, in any related adversary
proceedings, and in any other state or federal court for issues
related to the property of the bankruptcy estates, the Trustee,
or any professionals retained by the estate.

Appellant answered

the complaint and additionally filed a third party complaint and
counterclaim against various parties, including the Trustee, his
counsel,

and

the

bankruptcy case.

forensic

accountants

appointed

in

the

The Trustee moved to dismiss the third party

complaint and counterclaim due, inter alia, to improper service.
When

Appellant

failed

to

oppose

the

motion

motion was granted, albeit without prejudice.

to

dismiss,

the

The Trustee then

moved for reconsideration, urging that the dismissal should have
been with prejudice.

Appellant again failed to respond, and the

bankruptcy

granted

court

reconsideration,

dismissing

the

Trustee’s

Appellant’s

third

motion
party

for

complaint

and counterclaim with prejudice, but only as to the Trustee and
his counsel.
At around the same time, Appellant filed an amended third
party

complaint

against

UHY
4

Advisors

FLVS,

Inc.

(“UHY

Advisors”), a forensic accountant appointed by the bankruptcy
court; Goodman Solutions-Forensic Litigation & Valuation, LLC
(“Goodman Solutions”), the successor to UHY Advisors FLVS, Inc.;
Goodman

&

appointed

Company,
by

the

LLP

(“Goodman

an

and

court

Co.”),
parent

company

the

accounting
of

firm

Goodman

Solutions (together, “the Goodman entities”); Marion A. Hecht,
f/k/a Marion Hecht Clay (“Hecht”), a principal of UHY Advisors;
Jeffrey K. Bernstein (“Bernstein”), a partner at Goodman Co.;
Roger Schlossberg (“Schlossberg”), counsel for the Trustee; and
the

Trustee

counterclaim
papers,

himself.
against

Appellant
Trustee

sought,

Appellant

the

as

also

and

to

filed

an

Schlossberg.

the

Goodman

amended
In

these

entities,

a

declaratory judgment that they are not legal entities and were
not

previously

estate,

as

Bernstein,

approved

required

to

under

Schlossberg,

be
11

forensic
U.S.C.

and

the

§

accountants
327.

Trustee,

As

for

to

she

the

Hecht,

sought

a

declaratory judgment that they made false statements about the
employment of the Goodman entities and their compensation, in
violation of 11 U.S.C. §§ 327 and 330.

As to the Trustee and

Schlossberg, she sought forfeiture and damages associated with
their

failure

to

file

interim

fee

applications

in

a

timely

manner and because their invoices were inconsistent, contained
irregularities,

and

included

activities

that

were

either

not

necessary or beneficial to the administration of the estate, in
5

violation of 11 U.S.C. §§ 327 and 330.
requested
forensic

that

the

evaluator

bankruptcy
to

examine

court
all

Appellant additionally
appoint

invoices

an

independent

submitted

by

the

professionals, and that any fees determined to be duplicative or
unnecessary be disgorged.

Finally, she requested a declaratory

judgment that Appellant had standing as a party in interest to
review,

examine,

and

object

to

all

interim

applications

for

compensation submitted by the Trustee and/or Schlossberg.
All

of

the

(collectively,

third

party

“Appellees”)

defendants
moved

to

and

counterclaimants

dismiss.

Appellant

responded to each of these motions and participated by telephone
in a hearing on August 9, 2011.
hearing,
third

the

party

characterized

bankruptcy
complaint

court
and

Appellant’s

At the conclusion of that

dismissed

counterclaim.
claims

as

Appellant’s
The

falling

court

later

within

three

categories:
The first category is referred to here
as the “Improper Fee Claims” in which
[Appellant]
seeks
a
determination
that
professional fees in the case are excessive,
redundant and the like, and seeks an order
disgorging fees.
The Court dismissed the
Improper Fee Claims in the Amended Third
Party Complaint for failure to state a claim
under Federal Rules of Civil Procedure
12(b)(6) because the appropriate time to
decide whether fees assessed are necessary
or beneficial to the bankruptcy estate is at
a hearing on the final fee applications. At
that time the Court can consider the
complete work of the professionals, its
6

amended

benefit to the estate, and the other matters
identified in 11 U.S.C. § 330.
The Court
explained that since there will be a final
fee application hearing that will adjudicate
all issues regarding the invoices of the
forensic accountants, all of the allegations
raised by [Appellant] should be raised at
that time.
In other words, the allegations
were premature and therefore did not state a
ripe claim for relief, nor were they brought
in the proper procedural proceeding.
The
second
category
of
issues
is
referred to here as the “Improper Retention
Issues”
in
which
[Appellant]
raises
challenges to the employment of the forensic
accountants, including issues of whether
their employment was approved by the Court
or whether they are legitimate businesses.
The Court dismissed the Improper Retention
Issues because [Appellant] raised all of
these allegations in the main bankruptcy
case separate and apart from this adversary
proceeding.
See Docket Nos. 1591, 1592,
1602, 1604, 1606, 1625, 1627, and 1649, Case
No.
05-21078-TJC.
Those
matters
were
addressed by the Court at a hearing on May
2, 2011.
And as explained further below,
these same claims have been the subject of
post-hearing filings by these parties in
contested matters in the bankruptcy case,
have been resolved by the Court, and are the
subject of a separate appeal by [Appellant].
Because the Improper Retention Issues in the
adversary proceeding were redundant of the
very same claims raised by [Appellant] in
the main bankruptcy case, and the Improper
Retention Issues as raised in the main
bankruptcy case were further along than in
this
adversary
proceeding,
the
Court
dismissed these claims in the adversary
proceeding.
The
third
category
of
referred
to
herein
as
the
Negligence Issues,” in which
contends that the Trustee and
7

issues
is
[“]Trustee
[Appellant]
Schlossberg

engaged in willful misconduct, and breached
their fiduciary duties to the estate.
The
Court upheld its previous order dismissing
the third party complaint and counterclaim
with prejudice.
The Court ruled that it
provided [Appellant] with ample time to
respond to the motion to dismiss and the
reconsideration motion.
The Trustee filed
his original motion to dismiss the complaint
on March 21, 2011. Docket No. 13. He filed
his reconsideration motion on May 19, 2011.
Docket No. 46.
Thus, [Appellant] failed to
file any response to the motions for two
full months. Moreover, the Court found that
the motion did not provide any grounds for
amending its order under Fed. R. Civ. P. 59
or 60, applicable in bankruptcy by Federal
Rules of Bankruptcy Procedure 9023 or 9024.
(ECF No. 17, at 5-6).
10,

2011,

the

By four separate orders entered August

bankruptcy

court

dismissed

the

third

party

complaint against UHY Advisors; dismissed the counterclaim and
third party complaint against Rosen and Schlossberg; dismissed
the

third

party

complaint

against

Bernstein,

the

Goodman

entities, and Hecht; and denied Appellant’s second motion for
reconsideration

of

the

order

granting

the

motion

for

reconsideration filed by the Trustee and Schlossberg.
On August 18 and 19, 2011, Appellant filed in the adversary
proceeding a separate notice of appeal with respect to each
order and, on September 8, moved for leave to proceed on appeal
in forma pauperis, attaching a declaration in support and a
certified

copy

of

her

Federal

account.

The notices of appeal were transmitted to this court

8

Bureau

of

Prisons

trust

fund

on September 15 and 16.

On December 1, the bankruptcy court

issued a certification under 11 U.S.C. § 1915 that the appeals
were not taken in good faith.

The bankruptcy court attached to

the certification Appellant’s motion for leave to proceed in
forma pauperis and Appellees’ opposition thereto.

On the same

date, Appellant’s motion to proceed on appeal in forma pauperis
was docketed, along with the bankruptcy court’s certification
and Appellees’ opposition papers, in the four above-captioned
appeals.

(Civ. No. DKC 11-2641, ECF No. 17-1; Civ No. DKC 11-

2642, ECF No. 11-1; Civ. No. DKC 11-2653, ECF No. 16-1; Civ. No.
DKC

11-2654,

ECF

No.

10-1).

Those

motions

are

presently

pending.
Subject to certain limitations, “any court of the United
States may authorize the commencement, prosecution or defense of
any suit, action or proceeding, civil or criminal, or appeal
therein, without prepayment of fees or security therefor, by a
person who submits an affidavit that includes a statement of all
assets such [person] possesses [and] that the person is unable
to

pay

such

1915(a)(1).

fees

or

give

security

therefor.”

28

U.S.C.

§

There appears to be some disagreement as to whether

a bankruptcy court is considered a “court of the United States”
for purposes of this section.

See In re Perroton, 958 F.2d 889,

896 (9th Cir. 1992) (answering in the negative); In re Richmond,
247 Fed.Appx. 831, 833 (7th Cir. 2007) (expressly not deciding).
9

A

number

of

courts

have

found

that

bankruptcy

courts

may

nevertheless play an important role in the determination of a
motion

for

leave

to

appeal

in

forma

pauperis.

This

is

so

because “[a]n appeal may not be taken in forma pauperis if the
trial court certifies in writing that it is not taken in good
faith.”

28 U.S.C. § 1915(a)(3); see In re Heinze, 455 B.R. 452,

454 (Bankr.M.D.N.C. July 29, 2011) (certifying that appeal was
frivolous and, therefore, not taken in good faith); In re Price,
410 B.R. 51, 58 (Bankr.E.D.Cal. 2009) (finding bankruptcy court
may be a “trial court” for purposes of this provision); Hobby v.
Beneficial

Mortgage

Co.

of

Va.,

Inc.,

Civil

Action

No.

2:05cv110, 2005 WL 5409003, at *3 (E.D.Va. June 3, 2005) (“The
bankruptcy

court

should

review

any

.

.

.

in

forma

pauperis

filing to determine if it is in good faith.”) (internal marks
and citation omitted).
certification

that

At least one court has suggested that a

an

appeal

is

not

taken

in

good

faith

precludes not just the granting of in forma pauperis relief, but
also consideration of the underlying frivolous appeal.

See In

re Perry, 223 B.R. 167, 169 (Bankr.8th Cir. 1998) (“a request for
leave to proceed in forma pauperis must first be made to the
trial court and an appeal may not be taken if the trial court
certifies
faith”).

in

writing

Other

1915(e)(2)(B)(i),

that

courts
a

the

have

frivolous

appeal

is

recognized
appeal
10

not

that,

filed

by

taken

in

pursuant
an

in

good
to

§

forma

pauperis litigant is subject to summary dismissal.

See In re

Asheru, Civil Action No. 3:09-CV-0978-G, 2009 WL 3097719, at *1
(N.D.Tex. Sept. 25, 2009) (denying in forma pauperis petition
based

on

§

1915(a)(3)

and

dismissing

appeal

as

frivolous

pursuant to § 1915(e)(2)); In re Evans, No. 3:06cv547/MCR/EMT,
2007

WL

1430264,

recommendation

of

at

*2

(N.D.Fla.

magistrate

May

judge,

9,

after

2007)

(report

bankruptcy

and

court’s

certification that appeal was not taken in good faith, that in
forma pauperis

relief be granted for the limited purpose of

dismissing under § 1915(e)(2)), 2007 WL 2020166, at *1 (N.D.Fla.
July

9,

2007)

(district

court

adopting

report

and

recommendation, dismissing appeal as frivolous).
Here, the court is satisfied – based on the declaration
attached

to

Appellant’s

motion

and

the

fact

that

she

is

presently incarcerated and in bankruptcy – that Appellant is
impecunious.

Furthermore, based on a review of the record in

these cases, including the motion papers and orders from which
Appellant seeks to appeal, the court agrees with the bankruptcy
court’s determination that the appeals are frivolous for the
reasons stated in the certification.
these

cases,

the

most

prudent

Under the circumstances of

course

is

to

grant

in

forma

pauperis relief and dismiss the appeals as frivolous, pursuant
to 28 U.S.C. § 1915(e)(2).

11

Accordingly, it is this 12th day of December, 2011, by the
United

States

District

Court

for

the

District

of

Maryland,

ORDERED that:
1.

Appellant’s

motions

to

proceed

on

appeal

in

forma

pauperis (Civ. No. DKC 11-2641, ECF No. 17-1; Civ No. DKC 112642, ECF No. 11-1; Civ. No. DKC 11-2653, ECF No. 16-1; Civ. No.
DKC 11-2654, ECF No. 10-1) BE, and the same hereby ARE, GRANTED;
2.

Because the appeals in these cases and the appeal in

Civ. No. DKC 11-3431 are frivolous, they are hereby DISMISSED
sua sponte pursuant to 28 U.S.C. § 1915(e)(2)(B)(i);
3.

The pending motions in each of these cases BE, and the

same hereby ARE, DENIED as moot; and
4.
Memorandum

The

clerk

Opinion

is
and

directed
Order

to

transmit

directly

to

copies

Appellant

of
and

this
to

counsel for Appellees and CLOSE these cases.

________/s/_________________
DEBORAH K. CHASANOW
United States District Judge

12