ANN M. NEVINS, Bankruptcy Judge.
Pending before the Court are three motions filed by the pro se debtor, Alyssa S. Peterson ("Debtor" or "Ms. Peterson"), which she titles as follows:
The Motion for Reconsideration was previously granted to the extent it sought to reopen the Chapter 13 case to permit the Debtor to object to the Chapter 13 Standing Trustee's Final Report; and any additional relief sought is addressed in this Memorandum of Decision. See, ECF No. 666. In essence, Ms. Peterson asserts that the Chapter 13 Standing Trustee's Final Report ("Final Report"), ECF No. 656, contains an error because it fails to account for $25,000 of funds allegedly "received" by her Chapter 13 estate, and, the Final Report was filed with intent to harm Ms. Peterson. Ms. Peterson — having not received a Chapter 13 discharge because the Final Report indicates a shortfall in Chapter 13 Plan payments — further asserts that she should be awarded a discharge nunc pro tunc. ECF No. 660.
The First Show Cause Motion seeks an order directing the Chapter 13 Standing Trustee, her staff, and the Office of the United States Trustee to show cause: (1) why the Final Report does not account for the same $25,000; and, (2) why the former Chapter 13 Standing Trustee, Molly Whiton ("Former Trustee") failed to take action regarding the $25,000. ECF No. 662.
The Second Show Cause Motion includes the same arguments, with some additional detail, and seeks the same relief as the First Show Cause Motion. ECF No. 664.
On November 30, 2018 (the same day the case was reopened), the Court entered a Scheduling Order providing Ms. Peterson with the opportunity to file any additional documents or memoranda setting forth her arguments regarding the Final Report and the Chapter 13 Standing Trustee the opportunity to respond. ECF No. 666. While, Ms. Peterson did not file any additional documents or memoranda in support of her arguments, on January 11, 2019, the Chapter 13 Standing Trustee filed a response to Ms. Peterson's motions. ECF No. 668.
Familiarity with prior decisions in and related to this case, including adversary proceeding case number 17-2081, ECF No. 6, is assumed. The Court finds that the pending motions are amenable to resolution without further hearing. Because the Court concludes — based on the fulsome record of this more than eight (8) year old Chapter 13 case — that none of the arguments in the Motion for Reconsideration and the Show Cause Motions have merit, they are each denied.
On October 5, 2010, Ms. Peterson, proceeding pro se, filed a voluntary Chapter 13 bankruptcy petition (the "Petition Date").
A brief background regarding a pre-bankruptcy judgment obtained against a third party, Hannah Woldeyohannes ("Ms. Woldeyohannes") is important to understanding Ms. Peterson's Plan and the pending Motions.
In May of 2012, the Court (Dabrowski, J.) acting in the Woldeyohannes Case granted Ms. Peterson's motion seeking relief from the automatic stay to pursue collection of the Woldeyohannes Judgment. 11-20003, ECF Nos. 56, 61. Thereafter, in December of 2012, Ms. Peterson filed an amended motion for relief seeking permission to pursue collection of the Woldeyohannes Judgment against the assets of A to Zee, LLC. 11-20003, ECF No. 85. In her amended motion, Ms. Peterson noted that subsequent to the entry of the Woldeyohannes Judgment, she commenced an action entitled Alyssa Peterson v. Carlton Hume, Hume & Associates, LLC, J. Hanson Guest, Guest & Associates, LLC, A to Zee, LLC, Mussie Russom, Sofia Woldeyohannes, Yodit Woldeyohannes, and Isaias Woldeyohannes, bearing docket number HHD-CV-11-5035394-S (the "Carlton Hume Litigation"). See 11-20003, ECF No. 85. As part of the Carlton Hume Litigation, Ms. Peterson obtained a State Court order of prejudgment remedy attachment in the amount of One Hundred Fifty-Two Thousand ($152,000.00) Dollars against the real estate owned by A to Zee, LLC. 11-20003, ECF No. 85. Judge Dabrowski granted Ms. Peterson's amended motion seeking relief from stay to pursue the Carlton Hume Litigation, conditioned as follows:
This Order was also docketed in this case as ECF No. 215.
During the course of Ms. Woldeyohannes's Chapter 7 case, her Chapter 7 Trustee obtained approval to settle her estate's claims against Carlton Hume, Hume & Associates, LLC. 11-20003, ECF No. 151. Thereafter, over objection by Ms. Peterson, the Court approved the Chapter 7 Trustee's final report and Ms. Woldeyohannes's Chapter 7 case was closed without a bankruptcy discharge. See 11-20003, ECF Nos. 79, 172, and docket entry dated June 26, 2014. The Court subsequently denied Ms. Peterson's motion to re-open Ms. Woldeyohannes's Chapter 7 case and her request for reconsideration of that denial. See 11-20003, ECF Nos. 200, 204.
Ms. Peterson proposed to fund her Plan primarily through proceeds of settlements or the collection of judgments against various third parties. In particular, the Plan contained the following funding-related provisions:
The Plan promised to pay general unsecured creditors a 100% dividend, and despite concerns of creditors regarding feasibility, Judge Dabrowski confirmed the Plan on March 8, 2013. ECF Nos. 245, p. 7, 247.
Halfway through the 5-year plan period — on November 12, 2015 — Ms. Peterson filed a motion seeking approval of a settlement of her claims against Carlton Hume in the Carlton Hume Litigation (the "Settlement Motion").
During a hearing held on January 13, 2016 regarding the Settlement Motion, counsel representing Carlton Hume noted there was no state court judgment against A to Zee, LLC.
Following the hearing, on January 15, 2016, the Court entered an Order approving the Settlement Motion only insofar as it sought approval to settle Ms. Peterson's claims against Carlton Hume in exchange for a $60,000 payment. ECF No. 410.
On March 8, 2018, the sixty (60) month term of Ms. Peterson's Plan expired. Thereafter, on June 6, 2018, the Court issued an Order denying Ms. Peterson's motion seeking an extension of time to obtain a Chapter 13 discharge (the "Order Denying Extension of Time"). ECF No. 641. The Court noted that during a hearing held on May 16, 2018, the Chapter 13 Standing Trustee and Ms. Peterson agreed that all funds to complete the terms of the Plan had not been received by the Chapter 13 Standing Trustee, but they disagreed as to whether Ms. Peterson was required to make additional payments or whether the missing payments were to be paid by others to the Chapter 13 Standing Trustee. ECF No. 641. The Court ordered the Chapter 13 Standing Trustee to file a final report and accounting for this Chapter 13 case. ECF No. 644.
On July 31, 2018, the Chapter 13 Standing Trustee filed her Final Report stating that Ms. Peterson's Chapter 13 estate had not been fully administered. ECF No. 656. Thereafter, the Court entered the Closure Order:
The same day, on August 3, 2018, the Chapter 13 case of Ms. Peterson was closed without discharge.
Ms. Peterson's Motion for Reconsideration claims the Final Report fails to account for $25,000 — in the form of a check payable to A to Zee, LLC — that Ms. Peterson argues she made available to the prior Chapter 13 Standing Trustee by noting in her Settlement Motion that counsel for Carlton Hume proposed to pay $25,000 to A to Zee, LLC in settlement of state court litigation. ECF No. 660, p.4, ¶¶ 1, 2, 11, 12, 13. Ms. Peterson asserts that both the current Chapter 13 Standing Trustee and the Former Trustee failed to take appropriate actions to receive or acknowledge this $25,000 and, due to their failure, Ms. Peterson should be granted a Chapter 13 discharge. ECF No. 660, p. 4-5.
In the Show Cause Motions, Ms. Peterson seeks an order directing the Chapter 13 Standing Trustee, her staff, and the Office of the United States Trustee to show cause why the Final Report does not account for the $25,000 and why the Former Trustee failed to take action to receive or acknowledge the $25,000. Ms. Peterson argues that she brought the $25,000 to Former Trustee, that the Former Trustee and the Chapter 13 Standing Trustee improperly abandoned them by failing to give her a credit for those funds. ECF No. 664, p. 9.
To be clear, Ms. Peterson does not allege that anyone tendered a physical check or payment of $25,000 to the Former Trustee or the current Chapter 13 Standing Trustee.
Fed.R.Bankr.P. 9023 makes Fed.R.Civ.P. 59 applicable to bankruptcy proceedings while Fed.R.Bankr.P. 9024 makes Fed.R.Civ.P. 60 applicable to bankruptcy proceedings.
While Fed.R.Civ.P. 59 does not provide specific grounds for amending or reconsidering a judgment, it is well settled that the grounds for granting a motion for reconsideration in the Second Circuit are: "[(1)] an intervening change of controlling law; [(2)] the availability of new evidence; or [(3)] the need to correct a clear error or prevent manifest injustice." Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Tr., 729 F.3d 99, 104 (2d Cir. 2013) (citing Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992)). "Rule 59 is not a vehicle for relitigating old issues, presenting the case under new theories, securing a rehearing on the merits, or otherwise taking a `second bite at the apple'. . . ." Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012), as amended (July 13, 2012) (citing Sequa Corp. v. GBJ Corp., 156 F.3d 136, 144 (2d Cir. 1998)). "The standard for granting [a Rule 59 motion for reconsideration] is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995).
"A motion for relief from judgment is generally not favored and is properly granted only upon a showing of exceptional circumstances." McInnis v. Town of Weston, 458 F.Supp.2d 7, 11 (D. Conn. 2006) (citing United States v. Int'l Broth. of Teamsters, 247 F.3d 370, 391 (2d Cir. 2001) (discussing Rule 60(b))). Under Rule 60, "[t]he burden of proof is on the party seeking relief." Int'l Broth. of Teamsters, 247 F.3d at 391. "Whether to grant a motion for relief under Rule 60(b) is within the discretion of the court." Stevens v. Miller, 676 F.3d 62, 67 (2d Cir. 2012) (citing Montco, Inv. v. Barr (In re Emergency Beacon Corp.), 666 F.2d 754, 760 (2d Cir. 1981)).
After consideration of Ms. Peterson's arguments the Court finds them unpersuasive. Ms. Peterson failed to meet her burden to provide or identify evidence of an error in the Chapter 13 Standing Trustee's Final Report. Rather, Ms. Peterson attempts to re-define what it means to "receive" funds or to "bring" funds into the estate. Through her various motions Ms. Peterson asks the Court to conclude that the $25,000 was "received" by the Chapter 13 Standing Trustee or "brought into the Estate" when Ms. Peterson advised that $25,000 in settlement proceeds were going to be paid to A to Zee, LLC in her Settlement Motion. The record of this case, as previously noted, does not support such a conclusion. The Court did not grant the portion of Ms. Peterson's Settlement Motion requesting the Court exercise its jurisdiction over the $25,000 A to Zee, LLC settlement proceeds. See ECF No. 410. The Court notes that — as Ms. Peterson admits in ¶ 11 of the Motion for Reconsideration — the $25,000 was in the form of a check payable to A to Zee, LLC, not a check payable to Ms. Peterson or to her Bankruptcy Estate. ECF No. 660, ¶11. This $25,000, besides simply being mentioned as existing, was simply not brought into Ms. Peterson's Chapter 13 estate in a manner that paid the money to the Chapter 13 Standing Trustee as a payment under Ms. Peterson's Plan.
Ms. Peterson also argues that the Order granting her relief from stay to pursue the assets of Ms. Woldeyohannes and Ms. Woldeyohannes's interest in A to Zee, LLC acted as an order pursuant to 11 U.S.C. § 542, compelling any assets of Ms. Woldeyohannes or A to Zee, LLC to be turned over for the benefit of Ms. Peterson's Chapter 13 case. ECF No. 660, ¶13. This mischaracterizes Judge Dabrowski's Order and, in any case, the underlying motion did not seek relief under § 542. While the Order permitted Ms. Peterson to exercise whatever non-bankruptcy rights or remedies she might have against Ms. Woldeyohannes and/or her interest in A to Zee, LLC, it did not direct turnover pursuant to 11 U.S.C. § 542. It also did not direct the Chapter 13 Trustee to collect assets. The Court acknowledges that Ms. Peterson takes the position that any assets of A to Zee, LLC, including any bank accounts or settlement proceeds such as the $25,000 insurance proceeds, should automatically be determined to be assets of Ms. Woldeyohannes and, by virtue of the Woldeyohannes Judgment, automatically turned over to Ms. Peterson. The Court does not adopt Ms. Peterson's position. To the extent Ms. Peterson believed that she was entitled to receive the $25,000 paid to A to Zee, LLC, she could have exercised her non-bankruptcy, state law remedies, including obtaining a bank levy on the personal property of A to Zee, LLC, such as accounts, checks, cash or cash equivalents. The Court notes that Ms. Woldeyohannes did not receive a Chapter 7 bankruptcy discharge of any debt — including the debt owed to Ms. Peterson — and nothing prevents Ms. Peterson from taking further action in a non-bankruptcy forum to pursue collection against A to Zee, LLC.
Through the Motion for Reconsideration and the Show Cause Motions, Ms. Peterson also argues that the Chapter 13 Standing Trustee and the Former Trustee had a duty to obtain or take some undefined sort of action regarding the $25,000 A to Zee, LLC settlement proceeds and that their failure entitles Ms. Peterson to a Chapter 13 discharge. Ms. Peterson previously argued in adversary proceeding case number 17-02081 that the Chapter 13 Standing Trustee and the Former Trustee had a duty to assist in the collection of the Woldeyohannes Judgment. See AP-ECF No. 6 in case number 17-02081. The Court previously considered and rejected Ms. Peterson's arguments on this point finding the argument — that the Chapter 13 Standing Trustee or the Former Trustee had a duty to collect or retrieve Plan assets — to be without merit. See 17-02081, ECF No. 31 (the "Dismissal Decision"). Ms. Peterson's arguments in this regard are another attempt to present arguments considered and rejected in the Dismissal Decision. The Court adopts and incorporates the reasoning set forth in the Dismissal Decision and concludes, for the same reasons, that neither the Chapter 13 Standing Trustee nor the Former Trustee had any duty to obtain or collect the $25,000 A to Zee, LLC settlement proceeds. The Court also rejects Ms. Peterson's arguments that the Chapter 13 Trustee or the Former Trustee improperly abandoned estate assets.
Ms. Peterson's arguments appear to stem from a misinterpretation of her obligations under her Plan. As noted above, the Plan proposed to be funded through nominal payments by Ms. Peterson of $200 a month and by Ms. Peterson's recovery of or collection of judgments in various lawsuits. From these sources, Ms. Peterson proposed to pay her general unsecured creditors a 100% dividend. Based upon Ms. Peterson's arguments, she believes that she could either make the called-for $200 a month payments or contribute funds from judgments not listed in her Plan, and her obligations under the Plan would be satisfied. See ECF No. 664, p.1. In a similar vein, Ms. Peterson also believes that she did not bear any risk or obligation to perform if she was unable to obtain or collect the estimated amounts from the lawsuits noted in the Plan. The Court disagrees. The responsibility for funding a Chapter 13 plan lies with the debtor. 11 U.S.C. § 1322. "The Court [observes] that nothing in the Bankruptcy Code obligates anyone other than the debtor to fulfill the requirements of a confirmed plan." In re Ladieu, 548 B.R. 49, 61 (Bankr.D.Vt. 2016) (citing In re Malewicz, 457 B.R. 1, 7 (Bankr.E.D.N.Y. 2010).
While Ms. Peterson proposed to fund her Plan, in part, from proceeds of litigation claims which had yet to be received, nothing in her Plan relieved her of the commitment to pay her general unsecured creditors a 100% dividend. "The provisions of a confirmed plan bind the debtor and each creditor." 11 U.S.C. § 1327(a). If Ms. Peterson was unable to realize the amounts from the various lawsuits set forth in her Plan, the burden was on Ms. Peterson to take action to 1) either fund the missing amounts needed to pay her general unsecured creditors 100% as bargained in exchange for a discharge; or 2) seek to modify the terms of the confirmed plan to account for the lower amounts received from the lawsuits;
In light of the conclusion that there was no failure on the part of the Chapter 13 Standing Trustee or the Former Trustee, there is no other basis to grant Ms. Peterson's Motions or to conclude that Ms. Peterson completed her obligations under the Plan. The circumstances that existed at the time of the entry of the Closure Order continue to exist presently because: (1) the Plan was not fully funded; (2) no application for hardship discharge has been filed; and, (3) the case has not been fully administered in accordance with the confirmed Plan.
Ms. Peterson asserts that the case of In re Klass, 858 F.3d 820 (3d Cir. 2017) provides authority for allowing the sixty (60) month term of her plan to be extended to resolve matters in her case. However, the Klass case is factually distinguishable. In Klass, the Chapter 13 Trustee filed a motion to dismiss the case sixty-one months after the entry of the plan confirmation order, notifying the debtors of a shortfall in the amount needed to fully fund the Chapter 13 plan. In re Klaas, 858 F.3d at 824. Within sixteen (16) days after the Chapter 13 Trustee's motion, the debtors cured the deficit. In re Klaas, 858 F.3d at 824. The Court of Appeals for the Third Circuit concluded that the Bankruptcy Court did not abuse its discretion in denying the motion to dismiss and granting the debtors a discharge as nothing in the Bankruptcy Code mandated dismissal or prevented the Court from allowing a brief grace period for a late curative payment. In re Klaas, 858 F.3d at 833. Here, however, Ms. Peterson is not proposing that she can or will make a curative payment to fund the amount needed to fully fund the Plan. Rather, she is seeking more time to argue that the Chapter 13 Standing Trustee or the Former Trustee was responsible for turning the information that there was a $25,000 check payable to A to Zee, LLC into funds that could be paid to creditors under the Plan. Nothing presented by Ms. Peterson supports granting any of her various Motions.
