Quinn v. Bank of New York Mellon, The et al

Filing 28

DECISION ON APPEAL dismissing 6 Appellant's Brief; denying as moot 22 Supplemental Reply Brief and Request for Findings, Orders and Summary Judgment; denying as moot 23 Motion to Strike 22 Supplemental Reply Brief and Request for Findings, Orders and Summary Judgment. The Bankruptcy Court's orders are accordingly AFFIRMED. Signed by Chief Judge Geoffrey W. Crawford on 7/16/2018. (esb)

U.S. DiSTRICT COURT
OlSTF\!CT nr- 'jERMONT
UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT

1018 JUL I 6 AH IQ: 3 I
"\

DANIEL T. QUINN,
Appellant,
V.

THE BANK OF NEW YORK MELLON,
Appellee.

)
)
)
)
)
)
)
)
)

~'" ""':'"':·~--,
_, l
i -

,+ 'I

Case No. 5:l 7-cv-137

DECISION ON APPEAL
In this bankruptcy appeal, Appellant Daniel T. Quinn ("Quinn" or Appellant), appearing
prose, challenges the Bankruptcy Court's May 19, 2017 Order dismissing his case and denying
his motions and a June 12, 2017 Order denying his motion for rehearing. (Doc. 6.) Quinn has
also filed an "addendum memoranda" (Doc. 11) and preliminary and supplemental responses to
the Appellee' s brief in further support of his appeal that included a "renewed motion to dismiss"
and a "summary judgment" request, respectively (Docs. 14, 22). Appellee, The Bank of New
York Mellon ("BNY") has responded filing a responsive brief (Doc. 10) and a motion to strike
Quinn's supplemental reply brief and request for summary judgment (Doc. 23). Quinn opposes
the motion to strike and it is fully briefed including a sur-reply. See Docs. 24-27. For the
reasons stated below, the court affirms the Bankruptcy Court's orders and dismisses the appeal.

-.. - · - •,; \

FACTS
A. Background
The parties engaged in extended litigation in Vermont Superior Court, Windsor Civil
Division. 1 On May 3, 2013, the state court granted summary judgment to The Bank of New
York Mellon on its foreclosure claim. 2 (Doc. 10-1 at 33.) On March 12, 2014, the state court
took evidence on the amount of interest due. (Doc. 10-1 at 49-50.) On April 23, 2014, the state
court entered a Judgment and Decree of Foreclosure by Judicial Sale granting judgment to BNY
in the amount of $547,091.13, with a redemption date of October 23, 2014. (Doc. 10-1 at 53.)
On September 4, 2014, the Vermont Supreme Court denied Quinn permission to appeal. (Doc.
10-1 at 56.)
On February 20, 2015, the state court issued a certificate of non-redemption. Id. In
April, the court denied Quinn's motion to stay the foreclosure sale. Id. A foreclosure sale was
scheduled for May 7, 2015. Quinn filed for bankruptcy and the civil court issued a Notice of
Stay during bankruptcy. Id. at 57-59. Notwithstanding the filing of his bankruptcy case, which
created an automatic stay of the state court proceedings, Quinn filed a Motion for Rule 60(b)
relief on May 6, 2015. After the automatic stay was lifted, the state court denied Quinn's Rule
60(b) motion on July 14, 2016. (Doc. 10-1 at 65, 95-96.)

1

The state court litigation spanned over five years and included almost 200 motions. The
undersigned Judge Crawford--while serving as a state superior court judge prior to appointment to this
court-- decided motions to disqualify the presiding judges. This limited involvement in the state court
case presents no issue regarding disqualification in this appeal from the Bankruptcy Court's decisions.
See 28 U.S.C. § 455 (federal statute governing disqualification).
2
Quinn alleges "no evidentiary hearings have ever been held in any forum in which BNY[] met

any legal standards to foreclose." (Doc. 6 at 7.) As the state court pointed out, however, no evidentiary
hearing is needed where summary judgment is granted. (Doc. 10-1 at 48.)

2

B. Bankruptcy Court Case

Quinn initiated a Chapter 13 bankruptcy case on May 4, 2015, represented by counsel.
The Bankruptcy Court held a final confirmation hearing on November 20, 2015, at which Quinn
testified he understood the terms of his plan, his obligation to sell his residential real property,
and his payment obligations. The court entered an order confirming his Chapter 13 Plan on
December 9, 2015. It required monthly payments of $1,200 for twelve months and a lump sum
payment of $260,000 from the sale of Quinn's real property by May 1, 2016.
On October 22, 2016, the Chapter 13 Trustee filed a notice of delinquency alleging Quinn
was in default of plan payments in the amount of $264,800, equivalent to four monthly payments
and the lump sum. On December 12, the Trustee filed a motion to dismiss the case alleging
Quinn was in arrears on his plan payments in the amount of $281,019. The Trustee subsequently
withdrew that motion for reasons that are unclear from the record.
In January 2017, Quinn's counsel moved to withdraw and the Bankruptcy Court granted
the motion. In February 2017, Mr. Quinn, representing himself, requested an extension of time
to file additional motions and briefs for the Bankruptcy Court's consideration. The Court,
construing the letter as a motion for extension of time, granted 45 days and scheduled a status
hearing for March 30, 2017. (Doc. 6-1 at 34.)
On the day of the status hearing, Quinn filed a motion objecting to a proof of claim,
seeking a determination of the nature, extent, and validity of a lien, seeking relief from the stay,
and/or seeking a modification of his mortgage. At the hearing, Mr. Quinn stated he intended to
retain an attorney and would file an amended plan and make plan payments by May 19, 201 7.
After warning Quinn the case would be dismissed if he did not file an amended plan and

3

recommence plan payments by May 19, the Bankruptcy Court continued the hearing to May 19.
(Doc. 6-1 at 34.)
On April 19, 2017, Quinn filed a motion seeking to dismiss creditors Shellpoint and Bank
of New York Mellon from the case for lack of standing and failure to contest his motions. The
Bankruptcy Court set a hearing on the motion for May 19. On May 4, Quinn filed a motion for
summary judgment and a motion to continue the May 19 hearing based on his failure to retain an
attorney. On May 8, Quinn's motion to continue and motion for summary judgment were
denied. (Doc. 6-1 at 34-35.)
Quinn then objected to Bank of New York Mellon's notice of appearance in the case,
asserting the court should dismiss or deny the notice since the creditor lacked standing. He also
renewed his motion to continue the May 19 hearing, renewed his motion for summary judgment,
and requested reconsideration of the order denying a continuance of the May 19 hearing. Lastly,
he requested that the Bankruptcy Court direct BNY to prove its legitimacy as a creditor. The
court set the motions for hearing on May 19, 201 7. (Doc. 6-1 at 35.)
On May 19, the motion hearing at which Mr. Quinn represented himself. On that day, he
filed additional documents reiterating his requests for the Bankruptcy Court to direct BNY to
prove its legitimacy as a creditor. He also requested an additional extension of time to retain
counsel and to file a modified plan. The Chapter 13 Trustee reported that the last plan payment
Quinn made was in February 2016 and he was "clearly in default of his obligations under the
confirmed plan." (Doc. 6-1 at 35.) The Bankruptcy Court issued a written Memorandum of
Decision-dismissing Quinn's bankruptcy case and denying his pending motions as moot. The
court found that there was cause to dismiss the case based on Quinn's:

failure to make any plan payments for over a year, failure to consummate the sale
of real property by May 1, 2016 as required by the confirmed Chapter 13 plan ...
4

and his failure to comply with this Court's order to retain counsel and file a
modified plan by May 19 th .
Id.

On June 1, 2017, Quinn filed motions to disqualify the bankruptcy judge and for a
rehearing. On June 12, the bankruptcy court denied both motions. Quinn filed a notice of
interlocutory appeal to which BNY objected and on July 19, the court held a hearing and denied
the requested relief.
This timely appeal followed. On appeal, Quinn purports to raise five issues for review.
First, whether the Constitution applies in bankruptcy proceedings, in particular, due process and
equal protection standards regarding property rights. Second, whether BNY's failure to prove
standing to foreclose in state court prevents it from being a valid creditor in bankruptcy. Third,
whether the bankruptcy court erred "when it failed to abide by 11 U.S.C. § 105 ... after [Quinn]
provided proof Bank of New York, Mellon ... never proved standing to foreclose in state
superior court." (Doc. 6 at 3.) Fourth, whether BNY rendered the debt "null and void" when it
transferred the note and mortgage to a third party while the bankruptcy case was pending. And
lastly, whether the "trial court" committed reversible error when it issued rulings and orders after
Quinn filed a motion to recuse. Id. He also requests oral argument. Id. at 2.

SCOPE OF REVIEW
This court has jurisdiction over this appeal under 28 U.S.C. § 158(a)(l) to hear appeals
from final judgments, orders, and decrees of a bankruptcy court. Federal Rule of Bankruptcy
Procedure 8013 establishes the standard governing a district court's review of a bankruptcy
court's order and states that a district court functions as an appellate court and may affirm,
modify, reverse, or remand an order with instructions for further proceedings. Fed. R. Bankr. P.
8013. "Generally, in bankruptcy appeals, the district court reviews the bankruptcy court's

5

factual findings for clear error and its conclusions of law de novo." In re Charter Commc 'ns,
Inc., 691 F.3d 476, 482-83 (2d Cir. 2012) (citing Fed. R. Bankr. P. 8013). The determination to

dismiss is committed to the discretion of the bankruptcy court and reviewed for abuse of
discretion. In re Blaise, 219 B.R. 946, 949-50 (B.A.P. 2d Cir. 1998); see also Howard v.
Lexington Investments, Inc., 284 F.3d 320, 322 (1st Cir. 2002). A bankruptcy court's decision to

grant or deny a motion to reopen shall not be disturbed absent an abuse of discretion. In re
Smith, 645 F.3d 186, 189 (2d Cir. 2011).

The court is mindful of its obligation to afford "special solicitude" to pro se litigants: it is
required to read a prose plaintiff's pleadings liberally and to construe it to raise the strongest
arguments it suggests. Harris v. Miller, 818 F.3d 49, 56-57 (2d Cir. 2016) (per curiam). While
prose litigants in bankruptcy proceedings "are generally afforded some latitude, they are
nonetheless required to learn and comply with procedural rules." In re Truong, 388 B.R. 43, 45
(S.D.N. Y. 2008).
ANALYSIS

Notwithstanding the issues raised by Quinn, to dispose of this appeal, it is sufficient to
address the narrow issue of whether the bankruptcy court abused its discretion when it dismissed
Quinn's petition for, among other reasons, his failure to comply with the court's orders to file a
modified plan by May 19, 2017, and subsequently denied his motions for rehearing and recusal.
A bankruptcy court abuses its discretion when the district court finds that no reasonable person
could agree with the decision. In re Integrated Res., Inc., 157 B.R. 66, 72 (S.D.N.Y. 1993).
Such is not the case here.
Under§ 1307(c) of the Bankruptcy Code, a bankruptcy court may dismiss a Chapter 13
case for a variety ofreasons. One of the reasons is "material default by the debtor with respect to

6

a term of a confirmed plan." 11 U.S.C. § 1307(c)(6). Section 1307(c) requires the motion of a
party in interest or the United States trustee. § 1307(c). Here, the Trustee had withdrawn her
motion to dismiss and the record does not show that BNY moved to dismiss.
Section 1307(c ), however, is not the only source of authority for dismissal. Section 105
of the Bankruptcy Code clearly authorizes a bankruptcy court to take any action necessary to
carry out the provisions of the code and specifically provides:
No provision of this title providing for the raising of an issue by a party in interest
shall be construed to preclude the court from, sua sponte, taking any action or
making any determination necessary or appropriate to enforce or implement court
orders or rules, or to prevent an abuse of process.
11 U.S.C. § 105 (emphasis added). Accordingly, § 105 authorizes a bankruptcy court to dismiss
a case under§ 1307(c). Howard, 284 F.3d at 323.
The Bankruptcy Court issued multiple warnings that Quinn's continued failures to file a
modified plan and to recommence plan payments would result in dismissal of his case. After
Quinn missed his extended deadline for filing a modified plan, the court provided legitimate
reasons for dismissing the case including: (1) failure to make any plan payments for over a year;
(2) failure to timely consummate the sale of real property as required by the confirmed Chapter
13 plan; and (3) failure to timely comply with the order to retain counsel and file a modified
plan.
The record supports the Bankruptcy Court's decision and there is no abuse of discretion
in its decision to dismiss Quinn's case without prejudice. 3 At the May 19, 2017 hearing, Quinn
appeared without counsel and did not submit a modified plan. The Trustee reported he had not
made a plan payment since February 2016 and there was no dispute Quinn was in default of his
3

The Supreme Court has explained the "meaning of 'dismissal without prejudice,' ... is dismissal without
barring plaintiff from returning later, to the same court, with the same underlying claim." Semtek Int'! Inc. v.
Lockheed Martin Corp., 531 U.S. 497, 505 (2001).

7

payment obligations under the confirmed plan. Section 1307(c) specifically provides for
dismissal of a Chapter 13 petition in the event of material default by the debtor with respect to a
term of a confirmed plan. § 1307(c)(6). Failure to make plan payments is such a material
default. Bethune v. Reiber, No. 04-CV-6430, 2006 WL 1007621, at *2 (W.D.N.Y. Apr. 14,
2006) (citing In re Davis, 64 B.R. 358, 359 (Bankr. S.D.N.Y. 1986)). Under the circumstances,
given that Quinn was in default of his plan obligations and had not complied with the court's
orders within the time allotted, it was not an abuse of discretion for the court to dismiss the
Chapter 13 petition. See Howard, 284 F.3d at 321 (holding debtor's non-compliance with
bankruptcy court's order to file state tax returns by a specified date provided an adequate ground
for the court to dismiss Chapter 13 petition); see also In re Brown, 399 B.R. 162, 165 (Bankr.
W.D. Va. 2009) ("A bankruptcy court may dismiss a chapter 13 case sua sponte or on the motion
of a party in interest pursuant to sections 105(a) and 1307(c) of the Bankruptcy Code.").
The Bankruptcy Court also did not abuse its discretion in denying Quinn's motion to
reinstate the Chapter 13 case. The Bankruptcy Court construed Quinn's post-judgment motion
as a motion for relief from dismissal. In a thorough Order, the court rejected his argument that
his counsel was ineffective, explaining Quinn agreed he understood his obligations as a pro se
party and was willing to undertake them. Quinn's argument that the court failed to consider
pending objections by BNY and his responses was unavailing because review of those filings
was not necessary to determine whether Quinn was fulfilling his responsibilities under the
confirmed plan. Because he was not, dismissal was appropriate under Section 105, with
consideration of Section 1307(c). Lastly, the court addressed Quinn's contention--raised in this
court as well--that BNY committed fraud in the foreclosure action. The argument failed because
Quinn voluntarily entered bankruptcy, subjecting his--and BNY's--rights to be governed by the

8

Bankruptcy Code and bound by the terms of the confirmation order, and never contested the
issue while represented by counsel prior to the confirmation order. At the final confirmation
hearing, Quinn testified he understood the terms of his plan, his obligation to sell his residential
real property and to pay the Trustee from the proceeds, and fulfill his monthly payment
obligations. The court found his raising of the issue over a year later to be untimely and
insufficient to warrant reconsideration or vacatur of the dismissal of his Chapter 13 petition.
This court cannot find the Bankruptcy Court's determinations or Order to be an abuse of
discretion.
Lastly, the Bankruptcy Court did not abuse its discretion in denying Quinn's motion for
recusal. "The decision to grant or deny a recusal motion is a matter left to the discretion of the
court." Livecchi v. Gordon, 544 B.R. 57, 60 (W.D.N.Y. 2015) (citing Apple v. Jewish Hosp. &
Med. Ctr., 829 F.2d 326, 333 (2d Cir. 1987)). Bankruptcy Court Judge Colleen Brown analyzed

Quinn's motion under§ 455(a)4, which provides: "Any justice, judge, or magistrate judge of the
United States shall disqualify himself in any proceeding in which his impartiality might
reasonably be questioned." 28 U.S.C. § 455(a). Further, a judge must disqualify himself
"[w]here he has a personal bias or prejudice concerning a party." Id. § 455(b)(l).
Quinn's argument that the Bankruptcy Court committed reversible error when it issued
rulings and orders after his motion to recuse was filed is unavailing. (Doc. 6 at 6.) Neither
28 U.S.C. § 144 or§ 455, the federal recusal statutes, requires the recusal of a judge from a case
at the mere filing of a motion. The content of the recusal motion demonstrates that, in essence,

4

Quinn did not file the affidavit required by§ 144 and, even if he had, as a prose party he could
not have submitted the required certificate of counsel ofrecord. See Williams v. NYC. Haus. Auth.,
287 F. Supp. 2d 247, 248 (S.D.N.Y. 2003) (holding petitioner's "affidavit which is submitted prose and
without a certificate of counsel of record, fails on this threshold matter").

9

Quinn disagreed with Judge Brown's legal decisions. See Doc. 10-1 at 112-13 ("Debtor
respectfully requests that she recuse herself .... Comments she made from the bench, her
dismissal without request for BNY[] and allowing objections from BNY[] months after time had
expired, indicate a bias and predisposition Debtor cannot over come." (emphasis omitted)).
Disagreement with her decisions is not sufficient to require recusal because "judicial rulings
alone almost never constitute a valid basis for a bias or partiality motion." LoCascio v. United
States, 473 F.3d 493, 495 (2d Cir. 2007) internal quotation marks and citation omitted). The

court cannot find the Bankruptcy Court abused its discretion in denying Quinn's motion to
recuse, filed after the dismissal of his bankruptcy petition.
Accordingly, the Bankruptcy Court's orders must be affirmed and Quinn's appeal must
be dismissed. Because the bankruptcy court properly dismissed the Chapter 13 proceeding and
its orders must be affirmed, Quinn's request for findings, orders and summary judgment in this
court (Doc. 22) and BNY's motion to strike that filing (Doc. 23) are moot.
CONCLUSION

For the reasons set forth above, the court concludes the Bankruptcy Court did not abuse
its discretion. The Bankruptcy Court's orders are accordingly affirmed and Quinn's appeal
(Doc. 6) is DISMISSED. Quinn's request for findings, orders and summary judgment (Doc. 22)
and BNY's motion to strike that filing (Doc. 23) are DENIED AS MOOT.
SO ORDERED.
Dated at Rutland, in the District of Vermont, this

~ day o':!.!f~w:,-,,~

Geoffrey W. Crawford, Chief Judge
United States District Court

10