Freewood Group LLC et al v. Parkplace Motorcars Ltd.

Filing 12

Memorandum Opinion and Order: The court grants Appellant's Motion for Extension of Time to File Appellant's Brief (Doc. 5) such that its brief (Doc. 7) is deemed timely filed; overrules as moot Park Place's Objection to Freewood' s Request for Extension of Time to File Brief and denies as moot Park Place's Motion to Dismiss Appeal (Doc. 9); denies Appellant's Motion for Extension of Time to File Amended Notice of Appeal (Doc. 2); affirms the bankruptcy court's 8/13/2017 Order Granting Park Place's Motion for Attorney's Fees; and dismisses with prejudice this appeal. (Ordered by Judge Sam A Lindsay on 8/22/2018) (ykp)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
FREEWOOD GROUP, LLC,
Appellant,
v.
PARK PLACE MOTORCARS, LTD.,
Appellee.

§
§
§
§
§
§
§
§
§

Civil Action No. 3:17-CV-2435-L

MEMORANDUM OPINION AND ORDER
Appellant Freewood Group, LLC (“Freewood” or “Appellant”) appeals the bankruptcy
court’s August 13, 2017 order granting Appellee Park Place Motorcars, Ltd.’s (“Park Place” or
“Appellee”) Motion for Attorney’s Fees. Also before the court is the Motion for Extension of Time
to File Amended Notice of Appeal (Doc. 2), filed September 18, 2017; the Motion for Extension of
Time to File Appellant’s Brief (Doc. 5), filed October 30, 2017; and Park Place’s Objection to
Freewood’s Request for Extension of Time to File Brief and Motion to Dismiss Appeal (Doc. 9),
filed November 13, 2017.
After careful consideration of the parties’ appellate briefs, motions, the record, and
applicable law, the court grants Appellant’s Motion for Extension of Time to File Appellant’s Brief
(Doc. 5) such that its brief filed November 3, 2017 (Doc. 7) is deemed timely filed; overrules as
moot Park Place’s Objection to Freewood’s Request for Extension of Time to File Brief and denies
as moot Park Place’s Motion to Dismiss Appeal (Doc. 9); denies Appellant’s Motion for Extension
of Time to File Amended Notice of Appeal (Doc. 2); affirms the bankruptcy court’s August 13,

Memorandum Opinion and Order - Page 1

2017 Order Granting Park Place’s Motion for Attorney’s Fees;1 and dismisses with prejudice this
appeal.
I.

Factual and Procedural Background
Debtor Freewood Group, LLC (“Freewood”) brought this action to appeal the bankruptcy

court’s August 13, 2017 order (“Attorney’s Fees Order”) granting Park Place’s Motion for
Attorney’s Fees and awarding Park Place $33,245.25 for attorney’s fees incurred by it in connection
with the underlying bankruptcy case and adversary action. The attorney’s fees were awarded as a
sanction against Freewood, Greg Duncan (“Duncan”), and McGray Group, LLC (“McGray”)
(collectively, “Duncan Defendants”) as a result of Duncan’s bad faith conduct in initiating a Chapter
7 bankruptcy proceeding on behalf of Freewood on February 16, 2017, and removing to federal court
state court litigation brought against the Duncan Defendants by Park Place in the 116th Judicial
District Court, Dallas County, Texas. On the same date, Park Place initiated an adversary proceeding
against Freewood. On March 7, 2017, the bankruptcy case was dismissed for Freewood’s failure to
file within fourteen days of the filing of the bankruptcy petition the required documentation,
including a list of creditors and assets, bankruptcy schedules, and a financial statement.
On March 20, 2017, Freewood filed a motion to reinstate the bankruptcy case but withdrew
the motion ten days later. On April 3, 2017, Park Place moved to vacate the dismissal order or,
alternatively, to amend the dismissal order to impose sanctions against the Duncan Defendants for
the bad faith filing of the bankruptcy action. Park Place argued that, because Duncan controlled both
Freewood and McGray, monetary and injunctive sanctions should be imposed against all of the
Duncan Defendants to deter and prevent them from filing another bankruptcy case that would further

1

The Order was signed August 13, 2017, but was not entered until August 14, 2017. See App. 5.

Memorandum Opinion and Order - Page 2

delay the state court litigation. Park Place requested monetary sanctions in the form of attorney’s fees
and costs incurred by it as a result of the bankruptcy case and adversary action.
On May 1, 2017, a hearing in the bankruptcy case was held on Park Place’s motion for
sanctions.2 At the hearing, Park Place argued that Duncan’s conduct in filing the bankruptcy case,
removing the state court action, failing to file required bankruptcy documentation, and seeking to
reinstate the bankruptcy case after dismissal, only to withdraw the motion to reinstate ten days later,
demonstrated that Duncan never intended to prosecute the bankruptcy case, which he filed in bad
faith to derail a February 16, 2017 sanctions hearing against him in the state court case, delay the jury
trial in that case, and avoid testifying in the civil or bankruptcy actions before being sentenced by
United States Chief District Judge Barbara M.G. Lynn in United States v. Duncan,
3:15-CR-00484-M.
Duncan and Freewood, who were represented by the same counsel, attended the hearing but
declined to testify or put on a defense to Park Place’s motion for sanctions or refute the matters
raised in the hearing by Park Place, even though the bankruptcy court indicated that it was “leaning
towards” granting the relief sought by Park Place if its contentions and evidence were not refuted.
App. 156. Specifically, the bankruptcy court indicated that it was inclined to reinstate the bankruptcy
case or enter an amended order dismissing the Freewood bankruptcy case with prejudice to it refiling
a bankruptcy for one year to prevent it from “rush[ing] in again on the eve of trial”; barring Duncan
and McGray from filing for bankruptcy for one year; remanding the state court action with
instructions that no party can remove it again; and shifting the payment of Park Place’s attorney’s

2

During the same hearing, the bankruptcy court also held a status conference in the related adversary
proceeding.
Memorandum Opinion and Order - Page 3

fees to the Duncan Defendants as a sanction if it determined that Duncan or the Duncan Defendants
had acted in bad faith. Id. at 156-59. The bankruptcy court clarified that no specific amount of
attorney’s fees or costs would be included in the order entered by the court on Park Place’s motion
for sanctions because, as of that time, Park Place had not submitted or put on evidence of its
attorney’s fees. The bankruptcy court indicated that it would retain jurisdiction to address the issue
regarding the specific amount of attorney’s fees sought by Park Place and directed Park Place to file
a proposed order reflecting the bankruptcy court’s ruling on its motion for sanctions and a motion
for attorney’s fees with “[n]egative notice,” that is, pursuant to the bankruptcy court’s negative notice
procedure. Id. at 159; see also L.B.R. 9007-1 (negative notice procedure). This way, the bankruptcy
court explained, if any of the Duncan Defendants wanted to file objections to the request for
attorney’s fees, they would have 21 days to do so; if objections were filed, a hearing would be held
on the motion and objections. App. 159. On the other hand, the bankruptcy court explained that,
if no objections were filed, no hearing would be held and Park Place was to submit a proposed order
on its motion for the bankruptcy court’s consideration. Id.
As instructed, Park Place filed its Motion for Attorney’s Fees with “negative notice,”
pursuant to Local Bankruptcy Rule 9007-1, requesting $33,245.25 in attorney’s fees against the
Duncan Defendants, jointly and severally, as a sanction for the bad faith removal of the state court
action and the filing of Freewood’s bankruptcy case. In support of the motion, Park Place submitted
a declaration and heavily redacted billing records. App. 90-113. No response to the motion or
objections to the relief sought by Park Place were filed by Freewood, Duncan, or McGray. On
August 13, 2017, the bankruptcy court entered an order, without conducting a hearing, granting Park
Place’s Motion for Attorney’s Fees as a sanction against the Duncan Defendants and awarding Park

Memorandum Opinion and Order - Page 4

Place $33,245.25 for attorney’s fees it had incurred as a result of Freewood’s bankruptcy case and
the related adversary action. App. 5-6.
Only Freewood appealed the Attorney’s Fees Order, raising the following issue: whether the
“bankruptcy court abuse[d] its discretion in awarding attorney’s fees of $33,245.25 without
reviewing [Park Place’s] Declaration of Attorneys’ Fees pursuant to the lodestar calculation[.]”
Freewood Br. 5. On September 18, 2017, Freewood filed a Motion for Extension of Time to File
Amended Notice of Appeal (Doc. 2) to add Duncan and McGray as appellants to the appeal. The
motion was opposed by Park Place. On October 30, 2017, Freewood also moved for an extension
to file its appellate brief. Park Place objected to the requested extension and moved to dismiss this
appeal by Freewood as frivolous.
II.

Standard of Review
In a bankruptcy appeal, the district court generally reviews a bankruptcy court’s findings of

fact for clear error and its conclusions of law de novo. In re Dennis, 330 F.3d 696, 701 (5th Cir.
2003) (citation omitted). A bankruptcy court’s findings of fact are “clearly erroneous” only if, “on
the entire evidence, the court is left with the definite and firm conviction that a mistake has been
committed.” In re Duncan, 562 F.3d 688, 694 (5th Cir. 2009) (quoting In re Dennis, 330 F.3d at
701)). Deference is given to the bankruptcy court’s determinations regarding witness credibility.
Id. at 694 (citation omitted).
III.

Analysis
A.

Freewood’s Request for an Extension to File an Amended Notice of Appeal to
Add Duncan and McGray as Appellants (Doc. 2)

In its Motion for an Extension to File an Amended Notice of Appeal (“Motion to Amend”),
Freewood seeks leave to file an amended notice of appeal to add Duncan and McGray as appellants
Memorandum Opinion and Order - Page 5

pursuant to Rule 8002(b)(3) and (b)(4) of the Federal Rules of Bankruptcy Procedure, which,
according to Freewood, contemplates the filing of amended notices of appeal. Freewood contends
that its request to amend its notice of appeal to add Duncan and McGray as appellants should be
granted because: (1) Park Place was aware that Duncan and McGray intended to appeal the
Attorney’s Fees Order; (2) the proposed amendment would simply add two parties to the already
existing appeal without delaying the appeal; (3) Park Place may proceed to collect the attorney’s fees
awarded as a sanction by the bankruptcy court while this appeal is pending; and (4) Freewood has
“paid for a transcript of the hearing and . . . timely designated the transcript as part of the appellate
record.” Freewood Mot. to Amend 3 (citing Lackey v. Atlantic Richfield Co., 900 F.2d 202, 206 (5th
Cir. 1993); and United States v. Ramirez, 932 F.2d 374, 376 (5th Cir. 1991)).
Freewood contends that it timely appealed the bankruptcy court’s order on attorney’s fees,
and its September 18, 2017 Motion to Amend was also filed timely under Bankruptcy Rule 8002(d)
because, “[t]wenty-one days after the due date for filing [a] notice of appeal, August 28, 2017, falls
on September 18, 2017. Therefore, a motion to extend filed on or before [September 18, 2017] is
timely.” Freewood Mot. for Extension 3 & n.2. Freewood contends that, since its motion was filed
“before the deadline for filing a motion to extend time for filing a notice of appeal under Bankruptcy
Rule 8002(d)(1),” it need not show excusable neglect because, while “Rule 8002(d)(1)(B) requires
excusable neglect if an extension motion is filed after the original deadline,” its motion is “not a
motion for extension for an original notice of appeal but an extension of time to file an amended
notice of appeal.” Freewood Mot. to Amend 4. n.3. Freewood asserts that the Fifth Circuit in Lackey
concluded that the appellant in that case was not required to establish excusable neglect to amend
its notice of appeal to add a party, and its requested extension to amend its notice of appeal under

Memorandum Opinion and Order - Page 6

Rule 8002(d)(B) should be treated the same. Freewood maintains that the Fifth Circuit’s opinion
in Ramirez lends further support to its argument that excusable neglect is not required, as motions
to amend an existing notice of appeal are not treated like motions for extensions to file a notice of
appeal. Freewood Mot. to Amend 4, n.3. (“The appellant in Ramirez filed a motion to amend the
notice of appeal without filing for an extension; the Fifth Circuit granted the motion without
indicating that an extension motion would be necessary.”).
Park Place opposes Freewood’s request to amend its notice of appeal to add Duncan and
McGray as appellants, contending that: (1) any motion for extension under Bankruptcy Rule 8002(d)
should have been filed with the bankruptcy court; (2) neither Freewood nor its attorney has authority
to seek relief on behalf of Duncan or McGray, as Freewood’s attorney has only appeared as counsel
of record in this case for Freewood; (3) assuming Freewood can seek relief on behalf of Duncan and
McGray under Bankruptcy Rule 8002(d), it must but has not shown excusable neglect, and Duncan
and McGray cannot establish excusable neglect for failing to file timely a notice of appeal under the
standard set forth in Pioneer Investment Services Company v. Brunswick Associates Limited
Partnership, 507 U.S. 380 (1993). Park Place asserts that the cases relied on by Freewood, Ramirez
and Lackey, do not support its contention that excusable neglect is not required for Duncan’s and
McGray’s failure to file timely a notice of appeal under Bankruptcy Rule 8002, as long as it couches
its motion and requested extension as one to amend its own notice of appeal. Park Place asserts that,
because Duncan and McGray did not appeal timely the bankruptcy court’s Attorney’s Fees Order,
and neither they nor Freewood has shown excusable neglect for the failure to do so, this case is
similar to Midwest Employers Casualty Co., 161 F.3d 877, 880 (5th Cir. 1998). Regarding Pioneer’s
excusable neglect factors, Park Place further asserts that it will be:

Memorandum Opinion and Order - Page 7

prejudiced in having to defend the underlying order on appeal not only as to one
appellant, the bankruptcy debtor, but now as to three appellants who are jointly and
severally liable, but not similarly-situated. The parties have already designated the
record on appeal and appellant has already identified the issues on appeal. Adding the
McGray Group and Duncan not only potentially re-treads these steps, but could also
potentially affect proceedings in the Bankruptcy Court between the parties, including
a pending motion for civil contempt related to the sanctions order. As in Midwest
Employers Casualty, the McGray Group and Duncan here cannot and do not offer
any good reason for watching the deadline for filing a notice of appeal expire without
action. The parties were clearly on notice of the deadlines, the action being taken by
Freewood, and Park Place’s expectation of being paid pursuant to the sanctions order.
The circumstances here, like the circumstances that led to the underlying sanctions
order, do not bespeak good faith but rather, gamesmanship and delay by Duncan and
his affiliates, who ha[ve] contrived every possible scheme [to] avoid[] [Duncan]
receiving his due in a court of law.
Park Place Resp. 7 (Doc. 4). Park Place, therefore, requests that the court either strike or deny
Freewood’s request to amend its notice of appeal to add Duncan and McGray as parties to this
bankruptcy appeal.
The bankruptcy rule relied on by Freewood, Rule 8002(d)(1), provides, “[T]he bankruptcy
court may extend the time to file a notice of appeal upon a party’s motion that is filed: (A) within
the time prescribed by this rule; or (B) within 21 days after that time, if the party shows excusable
neglect.” Thus, as correctly noted by Park Place, this rule allows the bankruptcy court, not the
district court, to extend the time to file a notice of appeal. Freewood, however, did not file a motion
under Rule 8002(d)(1) with the bankruptcy court. Bankruptcy Rule 9006(b)(1) permits a district
court to enlarge the time for taking action under Rule 8002, but “only to the extent and under the
conditions stated in that rule[].” Fed. R. Bankr. P. 9006(b)(3). Rule 9006(b)(1) provides:
[W]hen an act is required or allowed to be done at or within a specified period by
these rules or by a notice given thereunder or by order of court, the court for cause
shown may at any time in its discretion (1) with or without motion or notice order the
period enlarged if the request therefor is made before the expiration of the period
originally prescribed or as extended by a previous order or (2) on motion made after

Memorandum Opinion and Order - Page 8

the expiration of the specified period permit the act to be done where the failure to
act was the result of excusable neglect.
Fed. R. Bankr. P. 9006(b)(1) (emphasis added).
Here, Duncan and McGray did not file a notice of appeal or seek leave to file a notice of
appeal by August 28, 2017, within fourteen days after the date that the bankruptcy court entered its
Attorney’s Fees Order on August 14, 2017, as required by Bankruptcy Rule 8002(1). While
Freewood filed its original notice of appeal timely on August 28, 2017, and a First Amended Notice
of Appeal on September 13, 2017,3 it did not seek leave to amend its notice of appeal to add Duncan
and McGray as appellants until September 18, 2017. As the motion for leave was filed twenty-one
days after the time for filing a notice of appeal, the motion is timely for purposes of Bankruptcy Rule
8002(d)(1), but excusable neglect must be shown because the motion was filed within the time
provided by subsection (B) of that rule. See Fed. R. Bankr. P. 8002(d)(1)(B); 9006(b)(1).
The seminal case defining excusable neglect is Pioneer Investment Services Company, which
dealt with excusable neglect in the context of Bankruptcy Rule 9006(b)(1). In Pioneer, the Supreme
Court set forth the following factors for courts to consider in determining whether excusable neglect
has been demonstrated: (1) danger of prejudice to the non-movant; (2) length of delay and its
potential impact on the judicial proceedings; (3) the reason for the delay, including whether it was
in the reasonable control of the movant; and (4) whether the movant acted in good faith. Pioneer,
507 U.S. at 395. Freewood focuses on the first two factors without addressing the third and fourth
factors. Specifically, no explanation is provided for Duncan’s and McGray’s failure to file a notice

3

Freewood’s First Amended Notice of Appeal was filed without leave of court after the fourteen-day deadline
for filing a notice of appeal; however, the only difference between it and Freewood’s original notice of appeal is the
signature block. See App. 1-4.
Memorandum Opinion and Order - Page 9

of appeal within the time allowed under Bankruptcy Rule 8002, and Freewood does not explain why
Duncan and McGray could not have been named as appellants in its original notice of appeal,
assuming that they are all represented by the same counsel. Moreover, the facts of this case leading
up to Freewood’s appeal of the Attorney’s Fees Order, including Duncan’s hasty decision to
personally initiate the underlying bankruptcy proceeding without assistance of counsel on the same
date a sanctions hearing was scheduled in the state court litigation; his conduct after filing the
bankruptcy; and his knowing decision to not object to the sanctions imposed or Park Place’s Motion
for Attorney’s Fees that led to the unopposed award of attorney’s fees, all suggest that this appeal
and the underlying bankruptcy proceeding were not filed in good faith but, instead, for the improper
purpose of unnecessarily delaying the state court litigation.
The court also disagrees with Freewood’s contention that the Fifth Circuit’s opinions in
Lackey and Ramirez excuse it, Duncan, or McGray from establishing excusable neglect. Lackey and
Ramirez both dealt with an extension to file an amended notice of appeal under the Federal Rule of
Appellate Procedure 3. In Lackey, the district court extended the plaintiffs’ time for filing an
amended notice of appeal under Rule 4(a)(5) “where the plaintiffs had used ‘et al.’ instead of listing
all parties,” based on its determination that “the original timely filed notice of appeal, although
insufficient to invoke appellate jurisdiction, sufficed to put the parties on notice within the prescribed
period.” Midwest Employers Cas. Co., 161 F.3d 877, 880 (citing and distinguishing Lackey, 990
F.2d at 206). On appeal, the defendants in Lackey argued that the district court erred in allowing the
plaintiffs to amend their notice of appeal. Id. On appeal, the Fifth Circuit in Lackey noted that the
Supreme Court in Torres v. Oakland Scavenger Company, 487 U.S. 312, 317-18 (1988), had rejected
the contention that use of the phrase “et. al.” was sufficient to provide the notice required by Federal

Memorandum Opinion and Order - Page 10

Rule of Appellate Procedure 3(c), and explained that “extensive authority exist[ed] for the
proposition that naming ‘plaintiffs’ in the body of a notice of appeal is insufficient.” Lackey, 990
F.2d at 206. The court in Lackey, nevertheless, affirmed the district court’s decision to allow the
plaintiffs to amend their notice of appeal, reasoning that the district court “could have properly found
that the defendants were not prejudiced by the extension because they were already on notice, within
the prescribed time period, that the plaintiffs were waging an appeal.” Id.
Contrary to Freewood’s contention, the Lackey court did not hold that the plaintiffs in that
case were excused from establishing excusable neglect in seeking to amend their notice of appeal.
The court, instead, concluded that “the district court did not abuse its discretion when it granted the
plaintiffs an extension to amend their original timely notice of appeal” because it “could have
properly found that the defendants were not prejudiced” by the requested extension in that they were
already on notice, within time prescribed for filing a notice of appeal, that the plaintiffs were
appealing. In this case, there is no indication whatsoever that Park Place was on notice, within the
time for filing a notice of appeal, that Duncan and McGray intended to appeal the bankruptcy court’s
order awarding Park Place attorney’s fees. There is no reference to Duncan or McGray in either of
Freewood’s notices of appeal and no indication that any party other than Freewood was appealing
the bankruptcy court’s Attorney’s Fees Order. Instead, both of the notices of appeal filed by
Freewood on August 28, 2017, and September 7, 2017, refer only to Freewood as the appellant and
Park Place as the appellee—(1) “[i]dentify the appellant: Freewood Group, LLC., which in this case
is the Debtor”; (2) [i]dentify the other parties to this appeal: Park Place Motorcars, Ltd.”—and both
are signed by counsel as “Attorneys for Debtor.” App. 1-4. Further, given that none of the Duncan
Defendants appealed the May 11, 2017 order (App. 79) in which the bankruptcy court concluded that

Memorandum Opinion and Order - Page 11

Park Place is “entitled to an award of sanctions against the Duncan Defendants, including attorneys’
fees and costs, in an amount to be determined following Park Place’s written submission upon
twenty-one (21) days negative notice, detailing the amounts requested,” App. 81, and did not respond
Park Place’s Motion for Attorney’s Fees or object to the amount of attorney’s fees sought it, Park
Place would have had no reason to believe, within the time for filing a notice of appeal, that any of
the Duncan Defendants was appealing the Attorney’s Fees Order.4
Freewood’s reliance on Ramirez is similarly misguided. In Ramirez, the defendant timely
appealed and sought to amend his notice of appeal to designate an order not previously identified in
the original notice of appeal, not to add appellants who were not identified in the Ramirez’s original
notice of appeal, and Ramirez’s motion to correct or amend his notice of appeal was not opposed.
Ramirez, 932 F.2d at 375-76. As explained by the court in Ramirez, the requirement that a notice of
appeal specify the parties appealing is jurisdictional and construed strictly, whereas the requirement
that a notice of appeal designate the order or judgment being appealed is construed more broadly.
Id. at 375 (citations omitted). While the Fifth Circuit in In re Case concluded that the specificity
requirement in Torres applicable to Federal Rule of Appellate Procedure 3 is “inapplicable to a
notice of appeal from a bankruptcy court judgment or order,” it makes clear that the jurisdictional
requirement that a notice of appeal contain the names of all appealing parties is no less applicable
in the bankruptcy context. 937 F.2d 1014, 1020 (5th Cir. 1991) (“Rule 8001 requires . . . that the
notices ‘contain’ the names of all parties and their attorneys. . . . We give the term ‘parties’ as used

4

Freewood notes in its Motion to Amend that it, Duncan, and McGray “intend to file soon a Rule 60 motion
directed to the original May 12, 2017 order on motion to vacate [that] imposed the sanctions and invited Park Place to
tender evidence of attorney’s fees.” Freewood Mot. to Amend 3, n.1. This notice provided by Freewood’s September
18, 2017 Motion to Amend and any Rule 60 motion filed after this date, however, could not have put Park Place on
notice, during the preceding fourteen-day period for filing a notice of appeal, that Duncan or McGray intended to appeal
the Attorney’s Fees Order.
Memorandum Opinion and Order - Page 12

in Rule 8001 its ordinary and plain meaning. Rule 8001 uses the term ‘parties’ to refer to the litigants
involved in the particular judgment.”).
Another important distinction between Lackey and Ramirez and this case is that Lackey and
Ramirez both involved appeals from a district court’s decision to grant extensions to amend notices
of appeal, which were reviewed under an abuse of discretion standard. As explained by the Fifth
Circuit in Midwest, appellate courts “often give more leeway to a district court’s decision to grant
an extension than they give to a district court’s refusal to do so.” Midwest Employers Cas. Co., 161
F.3d at 879. Accordingly, the affirmance of the orders in those cases does not necessarily support
Freewood’s contention that it is relieved from establishing excusable neglect or that its Motion for
Extension of Time to File Amended Notice of Appeal to add Duncan and McGray as appellants
should be judged under a more lenient standard. Thus, even assuming that Freewood or its attorney
has authority to seek relief on behalf of Duncan or McGray in this case, the court determines that
consideration of the Pioneer factors do not weigh in favor of a finding of excusable neglect, and that
Freewood’s motion should be and will be denied for failure to establish excusable neglect for
Duncan’s and McGray’s failure to file timely a notice of appeal or, alternatively, for Freewood’s
failure to include Duncan and McGray as appellants in its original notice of appeal.
B.

Freewood’s Request for an Extension to File its Appellate Brief (Doc. 5) and
Park Place’s Objection and Motion to Dismiss Appeal as Frivolous (Doc. 9)

In its Motion for Extension of Time to File Appellant’s Brief (Motion for Extension”), filed
October 30, 2017, Freewood requests an extension from October 30, 2017, to November 3, 2017,
to file its appellate brief, pursuant to Bankruptcy Rule 8018(a)(1). Freewood asserts that the
requested extension is needed because its attorneys “were engaged in preparing for a hearing on Park
Place Motorcars’ motion for contempt in the underlying [bankruptcy] case, cause no. 17-30589-SGJMemorandum Opinion and Order - Page 13

7, which was held October 24, 2017,” and drafting a response to a motion to dismiss due on October
27, 2017, in another case. Freewood contends that Park Place will not be prejudiced by the four-day
extension. On November 3, 2017, before briefing on the motion was complete, Freewood filed its
appellate brief.
Park Place objects to the requested extension and moves to dismiss Freewood’s appeal as
frivolous. Park Place’s attorney asserts that it is not his normal practice to object to a request for
extension of time or seek dismissal of an appeal as frivolous, “but the circumstances of this appeal
fall well outside the norm.” Park Place Resp. to Mot. for Extension 2. Park Place contends that “this
is the rare case in which the Court should deny Freewood’s request for extension of time and dismiss
this appeal” because:
[t]he appeal by Freewood, an entity whose sole member and manager is the admitted
felon Greg Duncan, marks this Honorable District Court as the third judicial forum
Duncan and Freewood seek to abuse. This appeal followed Duncan and Freewood
(i) deceiving Freewood’s bankruptcy counsel into initiating the bankruptcy filing to
help Duncan stop a trial in the 116th Judicial District, Dallas County, Texas (the
“State Court Action”), (ii) consenting in open Court to a finding by Judge Jernigan
that the Free[]wood bankruptcy filing and Duncan’s removal of the State Court
Action w[ere] in bad faith . . . , and (iii) waiving any opposition to Park Place’s
attorney’s fees request and allowing Judge Jernigan to enter an Order imposing
monetary sanctions. The arguments presented by Freewood are fatuous and in bad
faith, and the facts presented are lacking in candor. Now on approximately his
twentieth lawyer, Duncan has but one transparent purpose – causing unwarranted
delay and legal expense while Duncan tries to hide millions in ill-gotten gains
purportedly transferred earlier this year to his so-called “ex-wife.”
Park Place Resp. 2 to Mot. for Extension. Park Place contends that the sanctions order, in which
Freewood’s bankruptcy proceeding was found to have been filed in bad faith, was a final,
nonappealable order because, during the May 1, 2017 hearing, Duncan, who was accompanied by
counsel, declined to take the stand to offer any defense of his conduct after conferring with his
counsel and, through counsel, Duncan and Freewood agreed to the following remedy proposed by
Memorandum Opinion and Order - Page 14

the bankruptcy court: to dismiss with prejudice Freewood’s bankruptcy; remand the adversary
proceeding with conditions to prevent removal prior to resolution of the state court litigation; impose
sanctions in the form of attorney’s fees against the Duncan Defendants; and retain jurisdiction to
determine the amount of attorney’s fees to be awarded. Park Place asserts that Freewood waived any
objection to its request for attorney’s fees by failing to file a response in opposition to its Motion for
Attorney’s Fees, which was filed on “negative notice” in accordance with the bankruptcy court’s
instructions; that Freewood never sought a stay of the Attorney’s Fees Order pending appeal or
claimed any prejudice, yet Duncan and McGray have failed to pay the attorney’s fees ordered and
have asserted an “inability to pay” defense in response to a motion for civil contempt filed by Park
Place in the bankruptcy court; that Freewood failed to file timely its appellate brief; and that such
defense is a scam, as Duncan has transferred millions of his net worth to his wife since 2013.
Park Place, therefore, contends that dismissal of this appeal is appropriate under Bankruptcy
Rule 8018(a)(4) for Freewood’s bad faith appeal of the Attorney’s Fees Order and failure to file
timely its appellate brief. According to Park Place, “[t]his appeal is yet another layer in the Duncan
Defendants’ continuing abuse of the judicial system and such conduct should not be rewarded by this
Court”; that Freewood’s lateness is unjustified; and that dismissal is warranted, given the Duncan
Defendants’ pattern of “obstinately dilatory conduct.” Park Place Resp. to Mot. for Extension 6
(quoting In re CPDC, Inc., 221 F.3d 693, 699 (5th Cir. 2000)). Finally, Park Place contends that
Freewood’s argument that Park Place will not be prejudiced because it can collect on the attorney’s
fees awarded as a sanction “rings hollow” given its “inability to pay” defense asserted in the
bankruptcy proceeding. Park Place Resp. to Mot. for Extension 6.

Memorandum Opinion and Order - Page 15

Under Bankruptcy Rule 8018(a)(1), “[t]he appellant must serve and file a brief within 30 days
after the docketing of notice that the record has been transmitted or is available electronically.” The
bankruptcy record transmission notice was filed with the court on September 28, 2017, making
Freewood’s appellate brief due on October 30, 2017. Because Freewood sought a four-day extension
of this deadline on October 30, 2017, before expiration of its deadline under rule 8018(a)(1), it need
not establish excusable neglect. See Fed. R. Bankr. P. 9006(b)(1).
That the extension was allegedly needed to prepare for a contempt hearing held as a result
of Duncan’s and McGray’s failure to comply with the bankruptcy court’s order compelling the
Duncan Defendants to pay Park Place $33,245.25 in attorney’s fees as a sanction for the bad faith
filing of Freewood’s bankruptcy case does not cast a good light on the Duncan Defendants or
Freewood’s requested extension that is attributable to Duncan’s and McGray’s conduct. The court,
nevertheless, determines that Park Place will not be prejudiced if Freewood is granted a four-day
extension to file its appellate brief because, while Park Place contends that it will be prejudiced given
Duncan and McGray’s “inability to pay” defense to its motion for contempt, the docket in the
bankruptcy proceeding indicates that this issue was resolved by the bankruptcy court in Park Place’s
favor. Specifically, the bankruptcy court entered an order on November 30, 2017, granting Park
Place’s motion to hold Duncan and McGray in contempt and ordered Duncan and McGray to either
pay Park Place $33,245.25 by 4 p.m. on November 30, 2017, or deposit an amount totaling
$40,144.30 into the court’s registry. The bankruptcy court further ordered that the amount deposited
would be paid immediately to Park Place upon resolution of this appeal, unless the Attorney’s Fees
Order was reversed by this court. It is also apparent from the bankruptcy court’s May 11, 2017
sanctions order that the state court action was remanded as a result of that order such that the four-

Memorandum Opinion and Order - Page 16

day extension requested by Freewood in this appeal will not delay the state court litigation if granted.
Moreover, the length of extension requested by Freewood is brief.5
Thus, although the court agrees that there is abundant support for the bankruptcy court’s bad
faith finding and May 11, 2017 sanctions order, which was not appealed and is not the subject of this
appeal, it will grant Appellant’s Motion for Extension of Time to File Appellant’s Brief (Doc. 5)
such that Freewood’s appellate brief (Doc. 7), filed November 3, 2017, will be deemed filed timely.
As this ruling moots Park Place’s objection and motion to dismiss, the court will overrule and deny
as moot Park Place’s objection and motion to dismiss (Doc. 9).
C.

Appeal of Order Granting Park Place’s Motion for Attorney’s Fees

Freewood asserts that it “does not dispute that the [bankruptcy court has the authority to
award attorneys’ fees as sanctions for bad faith to deter such actions in the future” but “its discretion
in awarding attorney’s fees is not unlimited,” and “any such award of attorneys’ fees should be
subject to the lodestar calculation.” Freewood Br. 7 (Doc. 7). Freewood contends, based on the
following reasoning, that the bankruptcy court abused its discretion in this case by awarding the
entire amount of fees requested by Park Place without conducting a lodestar analysis to determine
if the fees sought were reasonable and necessary:
The Fifth Circuit adopted the “lodestar” in determining the amount to be awarded
as attorneys’ fees. The calculations of the lodestar in assessing attorneys’ fees
require that those fees be reasonable and necessary, and that the calculation thereof

5

A district court may take judicial notice of bankruptcy court records and facts that “cannot reasonably be
questioned” in deciding a bankruptcy appeal. In re Base Holdings, LLC, No. 3:13-CV-1584-D, 2014 WL 895403, at
*1 n.5 (N.D. Tex. Mar. 5, 2014) (citations omitted); In re Royce Homes LP, 466 B.R. 81, 91 n.2 (S.D. Tex. 2012)
(citations omitted); Huddleston v. Nelson Bunker Hunt Tr. Estate, 102 B.R. 71, 73 n.2 (N.D. Tex. 1989) (citing Aloe
Creme Labs., Inc. v. Francine Co., 425 F.2d 1295, 1296 (5th Cir. 1970), for the proposition that a district court may
judicially notice its own files and records).

Memorandum Opinion and Order - Page 17

is the number of hours expended by the prevailing party, multiplied by the
prevailing rate in the community for similar work.
The Fifth Circuit has traditionally used the lodestar method to calculate
“reasonable” attorneys’ fees under § 330. In re Fender, 12 F.3d 480, 487 (5th Cir.
1994). A court computes the lodestar by multiplying the number of hours an
attorney would reasonably spend for the same type of work by the prevailing hourly
rate in the community. Shipes v. Trinity Indus., 987 F.2d 311, 319 (5th Cir. 1993).
A court then may adjust the lodestar or down based on the factors contained in § 330
and its consideration of the twelve factors listed in Johnson v. Georgia Highway
Express, Inc., 488 F.2d 714, 717-719 (5th Cir. 1974), abrogated on other grounds,
489 U.S. 87 (1989). See Fender, 12 F.3d at 487. While the bankruptcy court has
considerable discretion in applying these factors, In re First Colonial Corp. of
America, 544 F.2d 1291, 1298 (5th Cir. 1977), it must explain the weight given to
each factor that it considers and how each factor affects its award. Fender, 12 F.3d
at 487; In re Evangeline Refining Co., 890 F.2d 1312, 1327-1328 (5th Cir. 1989).
(“If a court awards fees but fails to explain why compensation was awarded at the
level it was given, it is difficult, if not impossible, for an appellate court to engage
in meaningful review of a fee award.”).
In this case, counsel for Appellees filed a Declaration that stated the
attorneys’ fees requested were reasonable and necessary. The total amount of hours
expended is nowhere to be found, nor is the hourly rate for each partner or associate
attorney working on the case. Further, while the standards for awarding fees to
professionals does not include the award of attorneys’ fees in a sanctions case,
Appellant asserts that those considerations should have been included in the court’s
award of attorneys’ fees to Appellees in this matter as set forth pursuant to 11
U.S.C. 330. The Declaration in this case lacks information sufficient to allow
meaningful review by this Court.
Freewood Br. 7-10 (emphasis added). Freewood, therefore, contends that the bankruptcy court’s
order awarding Park Place attorney’s fees as a sanction for its bad faith conduct should be vacated
and remanded to the bankruptcy court for further proceedings.
Park Place responds that Freewood waived its argument regarding the amount of attorney’s
fees awarded as a sanction by the bankruptcy court by failing to respond to Park Place’s Motion for
Attorney’s Fees and object to the amount sought. In support of its waiver argument, Park Place
asserts as follows:

Memorandum Opinion and Order - Page 18

On May 1, 2017, the Court held a hearing which a representative of Freewood
and its counsel attended. See Appendix, Vol. 2 at 000153, Transcript of May 1, 2017
Hearing at p. 27, ll: 12-13. After conferring with Freewood’s counsel, Freewood’s
representative, Greg A. Duncan, declined the Bankruptcy Court’s invitation to take
the stand and offer any defense of his actions. See Appendix, Vol. 2 at 000158-159,
Transcript of May 1, 2017 Hearing at p. 32, ll: 16-22 and p. 33, ll: 1-7. Through
counsel, Freewood consented to the relief the Court stated it was going to grant, i.e.
dismissal of the bankruptcy with prejudice, remand of the adversary proceeding with
prejudice, and sanctions in the form of attorneys’ fees. Id. The Bankruptcy Court then
entered an order imposing sanctions against Freewood, Duncan and an affiliated
entity, the McCray Group, LLC, for bad faith. See Appendix, Vol. 2 at 000079, May
12, 2017 Order [Bankruptcy Case Docket No. 17]. The Bankruptcy Court retained
jurisdiction to determine the amount of an attorneys’ fees award and directed that any
motion for attorneys’ fees be filed and set based on a negative notice procedure. Id.
Appellee filed its motion for attorneys’ fees as sanctions (the “Sanctions
Motion”) on June 23, 2017. See Appendix, Vol. 2 at 000182, Motion for Attorneys’
Fees [Bankruptcy Case Docket No. 21]. The Sanctions Motion properly included
negative notice and set a deadline to file an objection no less than 24 days from filing.
Id.
Freewood did not object or file any response to the Sanctions Motion. The
Bankruptcy Court granted the Sanctions Motion on August 14, 2017 (the “Sanctions
Order”). See Appendix, MiniRecord, Vol. 1 at 000005, August 14, 2017 Order
[Bankruptcy Case Docket No. 23].
Despite choosing to waive any objection to the Sanctions Motion, Freewood
filed this appeal. See Appendix, MiniRecord, Vol. 1 at 000003, Notice of Appeal
[Bankruptcy Case Docket No. 24].
Park Place Br. 3-4.
Park Place further asserts that “the Bankruptcy Court [was not] required to consider the
Lodestar Analysis in imposing sanctions against Freewood in the form of attorneys’ fees” because
“[a] sanctions award is not subject to the reasonableness requirement dictated by other bases for
awarding attorneys’ fees, such as Section 330 of the Bankruptcy Code or Rules 11 and 37 of the
Federal Rules of Civil Procedure.” Park Place Br. 8 (citing Wells Fargo Home Mortg. v. Rodriguez,
Case No. 2012 WL 393319, n. 27 (Dist. W.D. La. 2012)). According to Park Place, the amount of
attorney’s fees awarded as a sanction must, instead, relate to the purpose of the sanctions. Park Place
Memorandum Opinion and Order - Page 19

Br. 8 (citing F.D.I.C. v. Maxxam, Inc., 523 F.3d 566, 595 (5th Cir. 2008)). Park Place asserts that,
in this case, the bankruptcy court awarded attorney’s fees to compensate it and deter the Duncan
Defendants for a period of time from filing for bankruptcy and removing the state court litigation
again in bad faith. Park Place contends that section 330 of the Bankruptcy Code referenced by
Freewood is inapplicable, as it applies to professionals employed to assist the bankruptcy estate,
whereas, Park Place was not the debtor in the underlying bankruptcy case; Park Place’s attorneys
were not employed to assist the bankruptcy estate; and the bankruptcy court did not award attorney’s
fees to it under section 330 but, instead, as sanctions for the Duncan Defendants’ bad faith conduct.
In this circuit, it is well established that, in a bankruptcy appeal, a district court cannot
consider issues and arguments that were not initially presented to the bankruptcy court. See Barron
v. Countryman, 432 F.3d 590, 594 n.2 (5th Cir. 2005); In re Ginther, 238 F.3d 686, 689 (5th Cir.
2001); In re Fairchild Aircraft Corp., 6 F.3d 1119, 1128 (5th Cir. 1993); In re Gilchrist, 891 F.2d
559, 561 (5th Cir. 1990); In re Moody, 849 F.2d 902, 905 (5th Cir. 1988). “To preserve an
argument, it ‘must be raised to such a degree that the trial court may rule on it.’” XL Specialty Ins.
Co. v. Kiewit Offshore Servs., Ltd., 513 F.3d 146, 153 (5th Cir. 2008) (quoting In re Fairchild
Aircraft Corp., 6 F.3d at 1128)); see also Vogel v. Veneman, 276 F.3d 729, 733 (5th Cir. 2002).
In this case, the record establishes, and Freewood does not dispute, that it did not file a
response in opposition to Park Place’s Motion for Attorney’s Fees and did not object to the amount
of attorney’s fees sought by Park Place. Moreover, Duncan, who owns or controls Freewood and
McGray, attended the sanctions hearing held on May 1, 2017, was accompanied by counsel, and
agreed during that hearing to the entry of the sanctions order. Although no specific amount of
attorney’s fees was discussed during that hearing or addressed in the sanctions order, the bankruptcy

Memorandum Opinion and Order - Page 20

court directed Park Place during the hearing to file its Motion for Attorney’s Fees on “negative
notice” and advised that, if no objections to the motion were made, it would grant the motion without
conducting a hearing. In accordance with Local Bankruptcy Rule 9007-1, the first page of Park
Place’s Motion for Attorney’s Fees also states in bold and all caps as follows:
NO HEARING WILL BE CONDUCTED HEREON UNLESS A WRITTEN
RESPONSE IS FILED . . . BEFORE THE CLOSE OF BUSINESS ON JULY
17, 2017, WHICH IS AT LEAST 24 DAYS FROM THE DATE OF SERVICE
. . . IF NO HEARING ON NOTICE OR MOTION IS TIMELY REQUESTED,
THE RELIEF REQUESTED SHALL BE DEEMED TO BE UNOPPOSED,
AND THE COURT MAY ENTER AN ORDER GRANTING THE RELIEF
SOUGHT OR THE NOTICED ACTION MAY BE TAKEN.
App. 82.
Further, to apply the lodestar method in this case, the bankruptcy court would have had to
calculate the number of hours reasonably expended by Park Place’s attorneys and multiply that
number by a reasonably hourly rate. Freewood contends that the declaration submitted by Park Place
in support of its Motion for Attorney’s Fees does not contain sufficient information from which the
bankruptcy court could have made the foregoing calculation because it does not specify the total
amount of hours expended or the hourly rate for each attorney. It is readily apparent, however, based
on only a quick glance at the declaration and supporting documentation, that this information is
lacking and the billing records are heavily redacted, which is all the more reason this issue could
have been raised and presented to the bankruptcy court in response to Park Place’s Motion for
Attorney’s Fees, rather than on appeal for the first time. Because its lodestar argument was not
presented to the bankruptcy court, the court determines that Freewood waived any appeal of the
Attorney’s Fees Order based on this issue. Accordingly, the court will affirm the bankruptcy court’s
August 13, 2017 Order Granting Park Place’s Motion for Attorney’s Fees and need not address the

Memorandum Opinion and Order - Page 21

parties’ remaining contentions as to whether the lodestar method or section 330 of the Bankruptcy
Code apply to the attorney’s fees awarded by the bankruptcy court as a sanction against the Duncan
Defendants.
IV.

Conclusion
For the reasons herein explained, the court grants Appellant’s Motion for Extension of Time

to File Appellant’s Brief (Doc. 5) such that its brief filed November 3, 2017 (Doc. 7) is deemed
timely filed; overrules as moot Park Place’s Objection to Freewood’s Request for Extension of
Time to File Brief and denies as moot Park Place’s Motion to Dismiss Appeal (Doc. 9); denies
Appellant’s Motion for Extension of Time to File Amended Notice of Appeal (Doc. 2); affirms the
bankruptcy court’s August 13, 2017 Order Granting Park Place’s Motion for Attorney’s Fees; and
dismisses with prejudice this appeal. The clerk of court is directed to prepare, sign, and enter
judgment in accordance with this Memorandum Opinion and Order pursuant to Rule 8016(a) of the
Federal Rules of Bankruptcy Procedure.
It is so ordered this 22nd day of August, 2018.

_________________________________
Sam A. Lindsay
United States District Judge

Memorandum Opinion and Order - Page 22