Grogan et al v. Renfrow
Filing
35
OPINION AND ORDER by Magistrate Judge Susan E Huntsman ; granting 18 Motion to Stay (Re: 33 Order,,,, Ruling on Motion to Stay, ) (kah, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
In re Miranda Kristin Renfrow,
Debtor,
MIRANDA KRISTIN RENFROW,
Plaintiff-Appellee
v.
COURTNEY GROGAN, Successor
Trustee of the Joe C. Cole Revocable
Trust, Under Trust Agreement dated
March 28, 2002, and ATKINSON,
HASKINS, NELLIS, BRITTINGHAM,
GLASS & FIASCO,
Defendants-Appellants.
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Case No. 21-cv-00228-JED-SH
Appeal from Adv. Case No. 17-01027-R
Underlying Bankr. Case No. 17-10385
(Bankr. N.D. Okla.)
OPINION AND ORDER
Before the undersigned is the motion to stay enforcement of the bankruptcy court judgment
pending appeal (the “Motion”), filed by Defendants-Appellants Courtney Grogan, Successor
Trustee of the Joe C. Cole Revocable Trust (“Grogan”), and Atkinson, Haskins, Nellis,
Brittingham, Glass & Fiasco (“Atkinson Haskins”). (ECF No. 18.) Plaintiff-Appellee Miranda
Kristin Renfrow (“Renfrow”) opposes the motion in part. The matter has been briefed (ECF Nos.
18, 23, 24), and a hearing on the matter was held on October 4, 2021. For the reasons set forth
below, Defendants-Appellants’ Motion is granted.
BACKGROUND
The procedural history of this case is somewhat complex, if relatively undisputed. In 2016,
Grogan filed a state court action against Renfrow and her company, Envision Medical & Surgical
Eye Care, P.C. (“Envision”)—Courtney Grogan v. Miranda K. Renfrow, D.O., et al., No. CJ-2016-
02033, Tulsa County, Oklahoma (the “State Court Action”). As originally pled in the State Court
Action, Grogan sought, inter alia, repayment of monies owed under an asset purchase and sale
agreement and two promissory notes. (ECF No. 13-1 at 53-56.1) Grogan was represented by
counsel from Atkinson Haskins in the State Court Action. (E.g., id. at 56.)
Renfrow then filed a petition for relief under Chapter 7 of the Bankruptcy Code on March
10, 2017. (ECF No. 13-2 at 35-42.) All of Renfrow’s prepetition debts—and all claims against
Renfrow related to prepetition actions—were discharged on June 15, 2017. (ECF No. 13-1 at 7374.) Envision did not file for bankruptcy.
Following Dr. Renfrow’s discharge, on August 1, 2017, Grogan filed an amended petition
in the State Court Action. (ECF No. 13-1 at 86-91.) The amended petition added a claim that,
“after . . . Renfrow filed for bankruptcy, . . . [she] . . . caused Envision . . . to transfer substantial
assets” into her personal accounts in violation of the Oklahoma Uniform Fraudulent Transfer Act
(“UFTA”), Okla. Stat. tit. 24, §§ 112-123. (Id. at 86, 89.) Grogan also continued to assert her
original claims against Envision and, as noted below, arguably against Renfrow. (Id. at 86-88.)
On August 26, 2017, Plaintiff-Appellee Renfrow commenced the underlying Adversary
Proceeding against Defendants-Appellants (ECF No. 13-1 at 29-37), alleging the State Court
Action sought collection of prepetition debt that had been previously discharged in bankruptcy
(id.). Renfrow argued that the amended petition was still asserting the original claims on the
contract and promissory notes and that the new UFTA claims were a ruse to continue litigation
against her. (Id. at 32.)
1
Because the record includes many documents in single ECF files, all references to pages numbers
refer to the page in the ECF file, not the page on the referenced document itself.
2
Back in the State Court Action, Grogan filed a “Partial Dismissal with Prejudice,” stating
that she “confirms that [she] has not made any claims for relief against [Renfrow]” under the
paragraphs of the amended petition dealing with the contract and promissory notes; that “any such
claims that previously existed under [those paragraphs] were discharged in bankruptcy [on] June
15, 2017”; and that, therefore, any claims in those paragraphs “that could be construed as seeking
recovery from [Renfrow], individually, are hereby dismissed with prejudice.” (Id. at 298-99.) The
State Court Action then proceeded to trial against both Envision and Renfrow. The state court
instructed the jury that they could not grant judgment against Renfrow for the contract-related
claims. (Id. at 390.) Moreover, the court instructed the jury that “[i]f you choose, you may grant
judgment against Defendant Renfrow based upon the [UFTA] only for fraudulent transfers made
after March 10, 2017.” (Id. at 390.)
In closing arguments, Grogan’s attorney asked for $120,000 in damages against Renfrow.
(ECF No. 20-1 at 642.) According to his argument, this consisted of $40,000 in the value of
accounts receivable (including the $3,100 Envision collected and Renfrow transferred to her
personal account post-petition); $50,000 for goodwill; and $30,000 for equipment. (Id. at 63842.) After Renfrow’s counsel objected that this argument included pre-petition transfers (id. 644),
the state court repeated its instructions to the jury,
Again, this is closing argument, ladies and gentlemen. This is not evidence.
They’re going to have different interpretations.
I would just re-emphasize on this point, the Court has instructed . . . that if you
choose, you may grant judgment against Defendant Renfrow based upon the
Uniform Fraudulent Transfer Act only for fraudulent transfers made after March
10th, 2017, which is the date of the bankruptcy. It’s for you to determine what
assets those are and what date those were made.
So that’s the controversy. But counsel is correct, that is the operative date that you
look at.
3
(Id. at 646-47.) Renfrow’s counsel then began his closing argument, disputing that the assets were
fraudulently transferred. (Id. at 647-48.) Near the conclusion of his argument, Renfrow’s counsel
also stated,
Now, the last count is against Dr. Renfrow, only Dr. Renfrow, and that’s for fraud.
You have to determine she intentionally took money so the Plaintiff couldn’t get it.
That has not been proven. She did take money, $3,100. She didn’t transfer the
charts so that the Plaintiff couldn’t get the charts. She didn’t transfer any equipment
and she didn’t transfer the accounts receivable. I don’t believe that you’ll find she
intended to commit fraud. If you do, the maximum you should award on this one
is $3,100, not $120,000.
(Id. at 652.)
The jury then returned a verdict against both defendants. (ECF No. 13-1 at 350-51.) As
for Renfrow, the jury found she violated the UFTA, but it did not award the damages figure
suggested by either party, instead awarding $89,500 in damages. (Id. at 351.) As for Envision,
the jury awarded damages of $111,293.75 for Grogan’s breach of contract claim and claims
regarding one of the promissory notes. (Id. at 350-51.) Adding in other amounts owed by Envision
under the first promissory note, the state court then entered judgment in the amount of $197,892.04
against Envision and $89,500 against Renfrow on January 2, 2018 (the “State Court Judgment”).
(Id. at 375-77.) In so doing, the court specifically found that the jury had fixed Dr. Renfrow’s
damages “for fraudulent transfers occurring after March 10, 2017.” (Id. at 376.)
Renfrow immediately filed a motion with the state court for judgment notwithstanding the
verdict (“JNOV”) or for new trial (ECF No. 13-2 at 171-247), arguing that Grogan’s counsel (from
Atkinson Haskins) made improper statements in his closing argument by referencing transfers that
Renfrow asserted occurred—if they occurred at all—pre-bankruptcy (id. at 173). Renfrow’s
counsel argued “the only measure of damages the jury could award on the fraudulent transfer claim
against Renfrow would be a total of $3,100 in monies Renfrow transferred from Envision’s bank
4
account after March 10, 2017 (the date of bankruptcy filing).” (Id.) The state court denied
Renfrow’s motion on July 24, 2018 (id. at 260), and Renfrow immediately appealed to the
Oklahoma Supreme Court (id. at 261-272). That appeal is currently stayed pending resolution of
the appeal in this case.2
Meanwhile, three days after filing the state-court JNOV motion, Renfrow moved to amend
her complaint in the Adversary Proceeding, asserting the same claims that were pending before
the state court regarding counsel’s closing argument. (ECF No. 13-1 at 353-367.) The Bankruptcy
Court granted leave to amend, and the case proceeded through discovery, motions practice, and
finally trial in January 2019.
On April 23, 2019, the Bankruptcy Court issued a detailed
Memorandum Opinion and Judgment (the “Adversary Judgment”). (ECF No 3-1 at 1-81.) The
Adversary Judgment awarded compensatory damages of $104,867—consisting of $50,000 in
damages for emotional distress, $17,306 in damages for attorney fees and costs incurred in the
State Court Action, and an award of $37,561 in fees and costs for the Adversary Proceeding—plus
$100,000 in punitive damages. (Id. at 81; id. at 2.) The Bankruptcy Court also found that
“Defendants turned the UFTA claim worth, at most, $3,155 into a judgment requiring Renfrow to
repay Grogan $89,500 of the discharged Loans.” (Id. at 56.) As such, the court declared the State
Court Judgment to be void and directed Defendants-Appellants to “obtain an order vacating the
[State Court] Judgment against Renfrow as void, to dismiss the [State Court] Action against
Renfrow, and to take any other action reasonably requested by Renfrow to evidence the fact that
the [State Court] Judgment against her is and was void ab initio.” (Id. at 56-58; id. at 1-2.)
2
See https://www.oscn.net/dockets/GetCaseInformation.aspx?db=tulsa&number=CJ-20162033&cmid=2952069) (last visited October 21, 2021).
5
Defendants-Appellants immediately filed a notice of appeal with this Court (the “First
Appeal”). (ECF No. 13-4 at 627-30.) See also Notice of Appeal, Renfrow v. Grogran, No. 19-cv00248 (N.D. Okla. May 8, 2019), ECF No. 2. The First Appeal ended with an order remanding to
the Bankruptcy Court for reconsideration of its Adversary Judgment in light of the civil contempt
standard articulated by Taggart v. Lorenzen, 139 S. Ct. 1795 (2019). (ECF No. 13-4 at 882-83.)
On remand, the Bankruptcy Court affirmed its previous monetary judgment and injunctive order.
(Id. at 956-75.) This appeal followed. (ECF No. 3.)
The Court notes this is not the first time Defendants-Appellants have attempted to defer
enforcement of the Adversary Judgment. In the First Appeal, Defendants-Appellants sought a stay
in front of the Bankruptcy Court, which that court denied, finding against movants on all four
factors. (ECF No. 13-4 at 804-18.) Defendants-Appellants then sought a stay before this Court,
which Magistrate Judge Frank H. McCarthy also denied. (Id. at 872-81.) Judge McCarthy
disagreed with the Bankruptcy Court’s findings as to two of the four applicable factors—
irreparable harm and public interest—but, nevertheless, found that Defendants-Appellants had
failed to make their required showing that all four factors weighed in favor of the stay. (Id. at 879881.)
Following the filing of the current appeal, Defendants-Appellants again moved the
Bankruptcy Court to stay its Adversary Judgment, and the Bankruptcy Court again entered an
order denying the stay. (ECF No. 23-5.) Now, as permitted by Fed. R. Bankr. P. 7062 and 8007,
Defendants-Appellants have renewed their motion to stay the Adversary Judgment pending appeal
and set a supersedeas bond.
6
ISSUE BEFORE THE COURT
As presented in their briefing and in their arguments at hearing, the only issue still before
the Court is whether to stay the injunctive portion of the Bankruptcy Court’s Adversary Judgment,
requiring Defendants-Appellants dismiss their State Court Action against Plaintiff and attempt to
void the jury award obtained in their favor.3
ANALYSIS
I.
Standard of Review
A.
New Motion to Stay vs. Appeal of Denial of Stay
The undersigned agrees with Judge McCarthy’s previous finding that this Court reviews
Defendants-Appellants’ motion to stay anew, as opposed to treating the matter as an appeal of the
Bankruptcy Court’s denial of Defendants’ prior motion. (ECF No. 23-3 at 3 (citing Lang v. Lang
(In re Lang), 305 B.R. 905 (B.A.P. 10th Cir. 2004), aff’d on other grounds, 414 F.3d 1191 (10th
Cir. 2005)).) In Lang, the Tenth Circuit BAP—applying Rule 8007’s predecessor (then, Rule
8005)—stated:
Under this rule, if the bankruptcy court denies a stay pending appeal, the request
may be made anew to the appellate court. Given the ability of a litigant to renew
(and argue de novo) his or her request for a stay, it is difficult to understand the
utility of seeking review [on appeal] of the lower court decision.
305 B.R. at 911, n.31; see also Drivetrain, LLC v. Kozel (In re Abengoa Bioenergy Biomass of
Kan., LLC), 589 B.R. 731, 741 (D. Kan. 2018) (district court owes no deference to the bankruptcy
court’s decision, although it may look to that decision to inform its analysis). This finding is
3
The Motion also requested that the Court set a supersedeas bond of $350,000 to effectuate a stay
of the monetary portion of the Adversary Judgment. (ECF No. 18 at 5.) As confirmed at the
hearing on this Motion, the parties now agree that Fed. R. Bankr. P. 7062 and Fed. R. Civ. P. 62(b)
required staying the monetary judgment upon the posting of an adequate bond, and the parties also
now agree that $350,000 is adequate. The Court has since entered an order approving the bond
and staying the monetary portion of the Adversary Judgment upon the posting of that bond. (ECF
No. 33.)
7
further in accord with the structure of Rule 8007, which assumes the reviewing court will
sometimes hear a motion to stay even where the bankruptcy court was not asked to rule, or has not
yet ruled, on the motion before it. Fed. R. Bankr. P. 8007(b)(2).4 This is also in accord with the
practice governing appeals from judgments of the district court under Fed. R. App. P. 8. See, e.g.,
Priorities USA v. Nessel, 978 F.3d 976, 982 (6th Cir. 2020) (finding an appellate court considers
motion to stay pending appeal de novo); see also F.T.C. v. Mainstream Mktg. Servs., Inc., 345 F.3d
850, 851-53 (10th Cir. 2003) (per curiam) (applying stay factors anew to grant stay following
district court denial). But see Hinrichs v. Bosma, 440 F.3d 393, 396 (7th Cir. 2006) (applying
deferential standard).
The undersigned, therefore, is not bound by the Bankruptcy Court’s ruling on the
Defendant’s most recent motion to stay and revisits the issues de novo.
B.
Showing Required for Stay
The parties agree that the traditional stay factors apply to this Court’s review of the Motion.
(ECF No. 18 at 5; ECF No. 23 at 5.) As articulated by the Supreme Court, these factors include
(1) whether the stay applicant has made a strong showing that he is likely to succeed
on the merits; (2) whether the applicant will be irreparably injured absent a stay;
(3) whether issuance of the stay will substantially injure the other parties interested
in the proceeding; and (4) where the public interest lies.
Nken v. Holder, 556 U.S. 418, 434 (2009) (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)).
There is substantial overlap between these factors and those governing preliminary injunctions,5
4
The Advisory Committee Notes further indicate that seeking a stay before the appellate tribunal
is distinct from seeking to overturn the bankruptcy court’s ruling and is not in the nature of an
appeal: “Subdivision (b) authorizes a party to seek the relief specified in (a)(1), or the vacation or
modification of the granting of such relief, by means of a motion filed in the court where the appeal
is pending . . . . Accordingly, a notice of appeal need not be filed with respect to a bankruptcy
court’s order granting or denying such a motion.” Id. advisory committee’s note to 2014 ams.
5
See Diné Citizens Against Ruining Our Env’t v. Jewell, 839 F.3d 1276, 1281 (10th Cir. 2016).
8
because similar concerns arise in both circumstances. Id. However, “a stay achieves this result
by temporarily suspending the source of authority to act—the order or judgment in question—not
by directing an actor’s conduct. A stay ‘simply suspend[s] judicial alternation of the status quo,’
while injunctive relief ‘grants judicial intervention . . . .’” Id. at 428-429 (quoting Ohio Citizens
for Responsible Energy, Inc. v. Nuclear Regul. Comm’n, 479 U.S. 1312, 1312 (1986)).
The power to hold an order in abeyance while the Court assesses its legality is inherent and
a matter of discretion, id. at 426 & 433, but a stay is still viewed as an “intrusion into the ordinary
processes of administration and judicial review,” id. at 427 (quoting Va. Petroleum Jobbers Ass’n
v. Fed. Power Comm’n, 259 F.2d 921, 925 (D.C. Cir. 1958) (per curiam)). Thus, a stay will only
be granted when the movant has met their “burden of showing that the circumstances justify an
exercise of that discretion.” Id. at 433-434. “A stay is not a matter of right, even if irreparable
injury might otherwise result.” Id. at 433 (quoting Virginian Ry. Co. v. United States, 272 U.S.
658, 672 (1926)).
Therefore, only when the movant has satisfied all four factors should a court grant their
motion to stay. Id. at 435 (“Once an applicant satisfies the first two factors, the traditional stay
inquiry calls for assessing the harm to the opposing party and weighing the public interest.”); see
also id. at 438 (Kennedy, J., concurring) (“Under the Court’s four-part standard, the [movant] must
show both irreparable injury and a likelihood of success on the merits, in addition to establishing
that the interests of the parties and the public weigh in his or her favor.”); In re Abengoa Bioenergy
Biomass of Kan., LLC, No. 16-10446, 2018 WL 1613667, at *3 (Bankr. D. Kan. Mar. 29, 2018)
(applying this standard to stay pending appeal from bankruptcy court). The first two factors are
the “most critical.” Nken, 556 U.S. at 434.
9
The Court finds, for the reasons explained below, that Defendants-Appellants have made
a showing regarding all four factors sufficient to justify granting the Motion to stay the injunctive
portion of the Adversary Judgment.
II.
Defendants-Appellants Satisfied All Four Factors
A.
Likelihood of Success on the Merits
1.
Applicable Standard
In order to succeed under this factor, Defendants-Appellants must demonstrate that there
is more than a mere possibility of relief on appeal. Id. It is “not enough that the chance of success
on the merits be better than negligible.” Id. (internal quotations omitted). Defendants-Appellants
must be able to demonstrate they are likely to succeed on the merits. Diné Citizens, 839 F.3d at
1282 (emphasis added) (applying preliminary injunction test).
Defendants-Appellants cite a series of older cases for the proposition that a “relaxed”
likelihood-of-success standard should be applied when the other three factors are met. (See, e.g.,
ECF No. 18 at 6 (citing Colo. Pub. Utils. Comm’n v. Yellow Cab Co-op. Ass’n (In re Yellow Cab
Co-op. Ass’n), 192 B.R. 555, 557 (D. Colo. 1996); McClendon v. City of Albuquerque, 79 F.3d
1014, 1020 (10th Cir. 1996)).) As it relates to the test for preliminary injunctions, that standard
has explicitly been abrogated in this Circuit. See Diné Citizens, 839 F.3d at 1282. In Diné, the
Tenth Circuit noted that the Supreme Court had previously overruled a test that relaxed the
irreparable harm factor and found, under that rationale, that any “modified test which relaxes one
of the prongs for preliminary relief and thus deviates from the standard test is impermissible.” Id.
(citing Winter Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008)). As a result, the Tenth Circuit
rejected prior precedent that allowed an applicant to meet a relaxed standard for likelihood of
success when the other three requirements tipped heavily in her favor. Id. at 1281-82.
10
As noted above, the standards governing the instant motion to stay overlap with those
governing preliminary injunctions. Indeed, in making this observation, the Supreme Court cited
Winter and its rejection of a more lenient standard for irreparable harm for preliminary injunctions.
Nken, 556 U.S. at 434-35. The undersigned, therefore, agrees with those courts who have extended
Diné (and, therefore, Winter) to the review of motions to stay on appeal. See Pueblo of Pojoaque
v. New Mexico, 233 F. Supp. 3d 1021, 1092-93 (D.N.M. 2017) (district court appeal); Abengoa,
2018 WL 1613667, at *3 (bankruptcy court appeal). Defendants-Appellants cannot meet this
factor by simply raising “questions going to the merits so serious, substantial, difficult and
doubtful, as to make the issues ripe for litigation and deserving of more deliberate investigation.”
McClendon, 79 F.3d at 1020 (quoting Walmer v. U.S. Dep’t of Def., 52 F.3d 851, 854 (10th Cir.
1995)). Rather, the movants must make a strong showing they are likely to succeed on the merits.
2.
Defendants-Appellants Have Made a Strong Showing of Likelihood of
Success
Applying the test for likelihood of success, the Court finds this factor weighs in
Defendants-Appellants’ favor.
The Court makes no final determinations about any party’s
ultimate success on appeal, or their likelihood of success as to the monetary portion of the
Adversary Judgment. Rather, the Court looks solely at the Bankruptcy Court’s mandatory
injunction ordering that Defendants-Appellants seek to void a judgment purportedly awarding
damages solely for post-petition acts. In this regard, the Court finds Defendants-Appellants are
likely to succeed on the merits.
Pursuant to 11 U.S.C. § 524(a)(1), a discharge in bankruptcy “voids any judgment at any
time obtained, to the extent that such judgment is a determination of the personal liability of the
debtor with respect to any debt discharged under section 727 . . . .” Id. (emphasis added). Section
727(b) operates as a discharge “from all debts that arose before the date of the order for relief,” 11
11
U.S.C. § 727(b) (emphasis added), which is the date the Chapter 7 petition was filed, Paul v.
Iglehart (In re Paul), 534 F.3d 1303, 1306 n.4 (10th Cir. 2008). As post-petition debt is not
discharged, it follows that judgments for post-petition debts are not void to the extent they do not
determine the personal liability of a debtor for previously discharged debt.6 See Paul, 534 F.3d at
1306 (“Liabilities for post-petition conduct are not discharged, and thus do not implicate the
discharge injunction.” (footnote omitted)); see also Hobbs v. Netreit, Inc. (In re Hobbs), No. 0921496 ABC, 2012 WL 137506, at *4 (Bankr. D. Colo. Jan. 18, 2012) (dismissing complaint for
violation of discharge based on alleged post-petition fraudulent transfers).
The Bankruptcy Court’s Memorandum Opinion (ECF No. 3-1 at 56 n.162) cites Egleston
v. Egleston (In re Egleston), 448 F.3d 803, 809 (5th Cir. 2006), as an example of a court—like the
Bankruptcy Court here—that declared void a state court judgment under 11 U.S.C. § 524(a)(1) for
reaching debt previously discharged in bankruptcy. Egleston, however, also stands for the
proposition that the reach of section 524 is limited—only those portions of a state court judgment
that violate the bankruptcy discharge are void, not the portions arising from post-petition debts or
actions. Egleston, 448 F.3d at 809 (“Congress has not provided bankruptcy courts with the general
authority to annul state court orders.”).7 In Egleston, the Fifth Circuit attempted to answer the
following question: “To what extent are the state court’s judgments void under section 524(a)(1)?”
Id. The court reasoned that the focus of its review was “whether the amounts awarded by the state
court represent ‘a determination of the personal liability of the debtor with respect to any debt
6
The Paul court further emphasized the need for the bankruptcy court to avoid “usurping the
adjudicative role of the state court” and noted that the bankruptcy court’s analysis “should not
entail resolving the merits of a claim pending in another court . . . .” Id. at 1311 & n.8.
7
The state court orders at issue in Egleston were determinations of damages and alimony resulting
from a state court divorce settlement. Egleston, 448 F.3d at 805. There was no jury verdict and
no trial. Id.
12
discharged under section 727.’ If so, then the judgment is void to that extent.” Id. (emphasis added)
(citation omitted). The court then discussed every state court order at issue to determine whether
it violated section 524(a)(1) by awarding damages for discharged debts. Id. at 810-15. Portions
of awards for non-discharged debt were upheld, while damage awards for debt that was discharged
were voided. Id. In instances where the bankruptcy court had voided the state court’s judgments
in full due to the awards’ mingling of discharged and non-discharged debt, the Court remanded for
further proceedings, noting that “the state court judgment . . . is void [only] to the extent that those
[] fees were incurred in the determination of [plaintiff’s] liability with respect to discharged debt.”
Id. at 811-812, 814. The Court of Appeals reiterated that for “portions of the state court’s
judgments to be void, they must represent [Plaintiff’s] liability for discharged debt. In other words,
[Defendant’s] claims to these amounts must have arisen pre-petition.” Id. at 812.
In Defendants-Appellants’ Motion, they argue the Bankruptcy Court did not have the
authority to reach the state court jury verdict and determine it violated the bankruptcy discharge,
especially considering that (1) Plaintiff allegedly admitted taking money from her company’s bank
account after the date of discharge and (2) the jury was instructed to only award damages for postpetition transfers of property. (ECF No. 18 at 10-11.) Although Plaintiff does not admit that any
post-petition transfers were fraudulent, both she and the Bankruptcy Court acknowledge there
exists a colorable UFTA claim. (See, e.g., ECF No. 23 at 9 (complaining that DefendantsAppellants grossly inflated their UFTA claims by “turn[ing] a UFTA claim worth at most $3,155
into a judgment against Dr. Renfrow in the amount of $89,500”); ECF No. 3-1 at 100 (“Renfrow
and Brown [Plaintiff’s attorney] accepted that Renfrow’s withdrawals might support a colorable
UFTA claim for recovery of $3,100 and that was the claim they defended.”).) The Bankruptcy
Court even acknowledged that “Defendants were entitled to and did proceed to trial on that
13
[$3,100] claim.” (ECF No. 3-1 at 100.) At the hearing on the instant motion, counsel for the
parties agreed that the Bankruptcy Court would not have been able to declare a judgment on the
$3,100 claim void.8
The problem the Bankruptcy Court had with Defendants-Appellants’ conduct, however,
was that it believed Defendants-Appellants used the state court UFTA claim as an artifice to
recover inflated damages from Plaintiff, the majority of which were for pre-petition debts. (See
generally ECF No. 3-1.) That very well may be the case. But the fact that the Bankruptcy Court
determined that a large portion of the jury award was improper does not mean it could force
Defendants-Appellants to void the portion of the award that may have been for actions Plaintiff
took post-petition. As outlined above, judgments are void under 11 U.S.C. § 524(a)(1) only to the
extent they violate the bankruptcy discharge. It may be true that, having determined Renfrow
acted fraudulently, and despite being instructed to grant judgment only for “fraudulent transfers
[Plaintiff-Appellee] made after March 10, 2017” (ECF No. 13-1 at 390), the jury in the State Court
Action became enflamed (or was deceived) and awarded damages based on pre-petition debt. The
Court need not decide that issue now, nor need the Court decide whether the Bankruptcy Court
could make such a finding in the face of the explicit jury instructions to the contrary and the Tenth
Circuit’s admonition that it avoid usurping the adjudicative role of the state court. It is sufficient
for now that, regardless of such findings, the Bankruptcy Court lacked the power to declare a
judgment for post-petition debts void, and Defendants-Appellants are likely to succeed on their
claim that such an amount—however small in comparison to the state court award as a whole—
may not be entirely voided by the Bankruptcy Court.
8
Plaintiff, however, disputed at hearing whether the jury verdict in the State Court Action was for
the post-petition $3,100 transfer.
14
The undersigned does not reach Defendants-Appellants other arguments regarding
likelihood of success on the merits at this time. The majority of these arguments go toward
Defendants-Appellants’ likelihood of success in overturning the monetary portion of the
Adversary Judgment (ECF No. 18 at 10-13) and therefore do not need to be addressed in this
Order. As such, for the reasons discussed above, the Court finds Defendants-Appellants are likely
to succeed on the merits and holds that this factor weighs in their favor.
B.
Irreparable Injury to Defendants-Appellants
The threat of irreparable injury weighs strongly in favor of Defendants-Appellants.
Under this factor, the Court assesses the threat of irreparable harm that will be suffered if
the stay is not granted. McClendon, 79 F.3d at 1020. The Supreme Court is clear that the mere
possibility of irreparable injury is not enough to satisfy this factor; the “possibility standard is too
lenient,” as the injury must be likely. Nken, 556 U.S. at 434-35; see also In re Stewart, 604 B.R.
900, 907-08 (Bankr. W.D. Okla. 2019) (bankruptcy stay). The factor “is met [only] if a plaintiff
demonstrates a significant risk that he or she will experience harm that cannot be compensated
after the fact by monetary damages.” Greater Yellowstone Coal. v. Flowers, 321 F.3d 1250, 1258
(10th Cir. 2003) (preliminary injunction) (quoting Adams v. Freedom Forge Corp., 204 F.3d 475,
484-85 (3d Cir. 2000)). It is “well settled that simple economic loss usually does not, in and of
itself, constitute irreparable harm; such losses are compensable by monetary damages.” Heideman
v. S. Salt Lake City, 348 F.3d 1182, 1189 (10th Cir. 2003) (preliminary injunction) (also noting
that the injury must be certain, great, actual, and not theoretical).
However, that is not to say that irreparable harm cannot arise from issues regarding
economic injuries. On its face, the loss Defendants-Appellants will suffer by vacating the State
15
Court Judgment is primarily a monetary one,9 but it falls within a small category of monetary
losses that are unrecoverable and, therefore, irreparable. An unrecoverable economic loss flies in
the face of the reasoning courts have given for monetary damages not constituting irreparable
injury. See, e.g., Stewart, 604 B.R. at 908 (“The prospect of recovering monetary damages for any
such pre and post-petition transfers strongly militates against the extraordinary injunctive remedy
of granting a stay.”). As a result, “[i]mposition of monetary damages that cannot later be recovered
for reasons such as sovereign immunity constitutes irreparable injury.” Chamber of Com. of U.S.
v. Edmondson, 594 F.3d 742, 770-71 (10th Cir. 2010); see also Bd. of Educ. v. Maez, No. 16-CV1082, 2017 WL 3610546, at *4-6 (D.N.M. Jan. 18, 2017) (finding irreparable harm where there is
no mechanism to recoup the monies lost by complying with administrative order).
In the matter at hand, if the jury award in favor of Defendants-Appellants in the State Court
Action is vacated “as void,” it is unrecoverable. Plaintiff has pointed the Court toward no
mechanism by which such a jury award, once vacated, may be compensated by monetary damages
(ECF No. 23 at 10-11), and this Court knows of none. Indeed, at the hearing on the Motion,
counsel for Plaintiff admitted that he could not think of a way to revive the State Court Judgment
if Defendants-Appellants comply with the Adversary Judgment.10 Plaintiff’s counsel further stated
9
The Court notes that the judgment in the State Court Action has non-monetary effects as well.
To this day, Renfrow strenuously denies that she ever acted with any intent to defraud, even as to
the $3,100 she admits transferring to her own account. If you are Renfrow—as noted below—the
very existence of such a judgment is harmful to your reputation and something you do not want
others to “find out.” (ECF No. 3-1 at 46.) If you are Grogan (and the Adversary Judgment is
reversed), however, it represents a vindication of your assertion that Renfrow threatened to “finish
you” and that, through fraud, “Envision was wiped clean.” (ECF No. 20-1 at 654.) Such
considerations are generally irrelevant to the merits—a judgment is either valid or it is not—but
they may explain the vociferousness of each party’s representation in these cases.
10
Plaintiff’s counsel did mention the possibility that Grogan might dismiss the State Court Action
and re-file within one year under Oklahoma’s savings statute—however, even if such a dismissal
constituted compliance with the Adversary Judgment, it is not possible here. Oklahoma law allows
16
that Plaintiff was not amenable to posting a bond for the amount of the State Court Judgment, even
were such a solution were feasible. Thus, if Defendants-Appellants are forced to comply with the
Bankruptcy Court’s mandatory injunction, they will forever forfeit their right to the State Court
Judgment.
Premature compliance with the Bankruptcy Court’s injunctive order risks the
possibility of an untenable result. If Defendants-Appellants are successful on appeal, they may
avoid paying additional funds to Renfrow, but they will never be able to recover what they have
lost—a judgment finding that Renfrow defrauded them and $89,500 (or even $3,100) in damages.
The Court finds this factor weighs in Defendants’ favor.
C.
Substantial Injury to Plaintiff
Plaintiff argues she will suffer significantly if the injunctive portion of the Bankruptcy
Court’s judgment is stayed—maintaining she will sustain reputational harm, emotional harm, and
financial harm. (ECF No. 23 at 11.) Moreover, she contends she will continue to suffer harm by
being denied the proper discharge of her bankruptcy. (Id.) Although some of these contentions
may be true, much of the alleged harm will not be avoided by the stay, nor will Plaintiff be
substantially injured by the denial of the stay. This factor also weighs in favor of DefendantsAppellants.
First, Plaintiff’s contention that she will suffer financial harm—as “[t]he costs of appeal
are overwhelming” (id.)—does not weigh in her favor. The State Court Action has been stayed
for over two years and remains stayed pending resolution of this appeal. Plaintiff’s counsel has
represented that no fees are being incurred on the state court matter at this time. At the hearing on
a plaintiff to dismiss without prejudice “before the final submission of the case to the jury” and in
other limited circumstances. Okla. Stat. tit. 12, § 683(1)-(5). “In all other cases, upon the trial of
the action, the decision must be on the merits.” Id. § 683(6). And, even if dismissal were possible,
there is no mechanism for a plaintiff to recover the costs of its dismissed action from the defendant.
17
the Motion, Plaintiff’s counsel further argued that Renfrow is harmed by having to pay him to
defend this appeal. This will not be remedied by denying Defendants-Appellants’ Motion. The
above-captioned appeal will be alive and well whether the stay is granted or not. Therefore, the
Court does not find Plaintiff’s purported financial harm prohibitive to granting DefendantsAppellants’ Motion.
Second, although the Court does not dispute that Plaintiff may suffer reputational and
emotional harm by the continued existence of the underlying state court judgment and jury verdict
against her, Defendants-Appellants have agreed to refrain from enforcing this judgment (ECF No.
18 at 9). Moreover, the existence of an adverse judgment pending appeal—here, pending appeal
in two cases—is not an especially unique harm and is suffered by all parties carrying adverse
judgments against them through the appellate process. Further, much of the harm asserted by
Plaintiff arises from the very existence of the fraud judgment itself,11 which was issued over three
years ago. This stay is about whether that existence continues into future months; it is not at all
clear that such incremental harm is substantial.
Third, the Court recognizes that Plaintiff should be given the full benefit of her discharge
in bankruptcy, but the harm done to Plaintiff’s interest in failing to reap the benefits of her
discharge do not outweigh the other factors in this evaluation. This is particularly true when the
Bankruptcy Court has also awarded Plaintiff compensatory and punitive damages based upon the
entry of the very judgment she seeks to vacate—an award that is fully secured. Any additional
11
The parties have also admitted that—had the State Court Judgment of fraud been for only the
$3,100 post-petition transfer—it would not have been voidable. Given this fact, it is not clear to
what extent Plaintiff’s claimed harm arises from the existence of the State Court Judgment, as
opposed to any judgment of fraud.
18
harm Plaintiff might suffer by not immediately obtaining the benefit of her discharge is not
substantial.
D.
Public Interest
Lastly, the Court considers whether the public interest weighs in favor of granting
Defendants-Appellants’ Motion. The undersigned finds that it does. Particularly, the Court finds
that the public interest favors preserving a party’s ability to enforce state court judgments—to the
extent they are valid under 11 U.S.C. § 524(a)(1)—and favors upholding the mechanisms available
to determine the validity of such judgments.
Generally, federal courts give full faith and credit to state court judgments. See 28 U.S.C.
§ 1738; see also Pohl v. U.S. Bank, 859 F.3d 1226, 1229 (10th Cir. 2017). While it is true there
are limits—federal courts “need not give full faith and credit to state court judgments to the extent
that they are void under § 524(a)(1)”—it is also true that “bankruptcy court[s], of necessity, must
be able to ascertain the extent to which the [state court] judgment is void under § 524(a)(1) as an
essential element of determining whether the § 524(a)(2) discharge injunction has been violated.”
Pavelich v. McCormick (In re Pavelich), 229 B.R. 777, 782 (B.A.P. 9th Cir. 1999). As noted
supra, a state court’s judgment is only void to the extent it touches discharged debts, as opposed
to post-petition activity. Id.12
This is evident in the authority cited by the Bankruptcy Court in denying DefendantsAppellants’ Motion:
One of the primary purposes of the Bankruptcy Act is to “relieve the honest debtor
from the weight of oppressive indebtedness, and permit him to start afresh free from
12
“Statutory voidness and the statutory injunction under § 524(a) are limited to the discharge itself
. . . If the state court construes the discharge correctly, its judgment will be enforced . . . . If,
however, the state court construes the discharge incorrectly, then its judgment may be void to the
extent it offends the discharge and subject to collateral attack in federal court.” Pavelich, 229 B.R.
at 782 (emphasis added).
19
the
obligations
and
responsibilities
consequent
upon
business
misfortunes.” [citation omitted]. This purpose of the act has been again and again
emphasized by the courts as being of public as well as private interest, in that
it gives to the honest but unfortunate debtor who surrenders for distribution the
property which he owns at the time of bankruptcy, a new opportunity in life and a
clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.
(ECF No. 23-5 at 16 (citing Loc. Loan Co. v. Hunt, 292 U.S. 234, 244 (1934)) (second emphasis
added).) The Supreme Court, however, did not opine that the purpose of bankruptcy is to grant
debtors a life that is “unhampered by the pressure and discouragement” of debt incurred after
bankruptcy. Loc. Loan Co., 292 U.S. at 244. Such a reading would be too broad.
[T]he concept of “fresh start” is just a general gloss on the purpose of § 524(a); it
is not a license for courts to go beyond the particular prohibitions specified in the
statute to shield debtors from adverse contingencies. However well-intentioned the
effort in trying to facilitate a debtor’s fresh start, a bankruptcy court may not enjoin
and sanction a creditor with respect to conduct that does not violate § 524(a).
Paul, 534 F.3d at 1307 (10th Cir. 2008). A restrained reading of Local Loan Co. emphasizes the
partitioned nature of state and federal concurrent jurisdiction that has been historically promoted
by the Supreme Court. See, e.g. Covell v. Heyman, 111 U.S. 176, 182 (1884).13 Allowing
bankruptcy courts to enforce 11 U.S.C. § 524(a)(1), but only within the parameters set forth by
statute, promotes traditional policies underlying state and federal interaction.14 Accordingly, the
13
“The forbearance which courts of co-ordinate jurisdiction, administered under a single system,
exercise towards each other, whereby conflicts are avoided, by avoiding interference with the
process of each other, is a principle of comity with perhaps no higher sanction than the utility
which comes from concord; but between state courts and those of the United States, it is something
more. It is a principle of right and of law, and therefore of necessity. It leaves nothing to discretion
or mere convenince.” Covell, 111 U.S. at 182.
14
For example, regarding preemption of state law by federal bankruptcy law, some courts have
recognized the necessity for such preemption to be interpreted narrowly. See, e.g. Penn Terra Ltd.
v. Dep’t of Env’t Res., 733 F.2d 267, 272-73 (3d Cir. 1984) (“[p]roper respect, therefore, for the
independent sovereignty of the several States requires that federal supremacy be invoked only
20
Court finds that public interest weighs in favor of upholding state court judgments to the extent
they are valid under federal law, and keeping in place the mechanisms by which parties may
ascertain the validity of these judgments, whether it be by appealing to a higher state court, or
preserving the object of the appeal pending resolution in federal court as Defendants-Appellants
seek to do here.
CONCLUSION
Based on the foregoing discussion, the Court finds Defendants-Appellants have made a
substantial showing that all four factors weigh in favor of granting a stay.
IT IS THEREFORE ORDERED that Defendants-Appellants’ Renewed Combined Motion
to Stay Enforcement of Judgment Pending Appeal & To Fix the Amount of Supersedeas Bond
(ECF No. 18) is GRANTED. The undersigned incorporates its order set forth in ECF No. 33 as if
contained herein.
IT IS FURTHER ORDERED that the injunctive portion of the judgment entered in Adv.
Case No. 17-01027-R (Bankr. N.D. Okla.) is STAYED pending resolution of the appeal brought
in the above-captioned matter.
ORDERED this 21st day of October, 2021.
SUSAN E. HUNTSMAN, MAGISTRATE JUDGE
UNITED STATES DISTRICT COURT
where it is clear that Congress so intended” and that “[s]tatutes should . . . be construed to avoid
pre-emption, absent an unmistakable indication to the contrary”).
21
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