Larry K. Alexander v. MaryJo Jensen-Carter ( 2003 )

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
No. 02-6064 MN
In re: *
*
Larry Kenneth Alexander, *
*
Debtor. *
*
Larry Kenneth Alexander, * Appeal from the United States
* Bankruptcy Court for the
Movant-Appellant, * District of Minnesota
*
v. *
*
Mary Jo A. Jensen-Carter, *
*
Trustee-Appellee, *
*
Habbo G. Fokkena, *
*
U.S. Trustee-Appellee. *
Submitted: February 4, 2003
Filed: March 13, 2003
Before HILL, SCHERMER and FEDERMAN, Bankruptcy Judges
SCHERMER, Bankruptcy Judge
Debtor Larry Kenneth Alexander (“Debtor”) appeals from the bankruptcy
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court order denying his motion to remove the trustee, denying his motion requesting
an order requiring the trustee to abandon certain real property, and enjoining him
from filing any further motions or proceedings related to such real property and/or the
trustee’s administration thereof. We have jurisdiction over this appeal from the final
order and judgment of the bankruptcy court. See 28 U.S.C. § 158(b). We affirm.
ISSUES
The first issue on appeal is whether the bankruptcy court erred when it denied
the Debtor’s motion to remove the trustee for misconduct. We conclude that the
bankruptcy court did not commit error in denying the motion. The second issue on
appeal is whether the bankruptcy court erred when it denied the Debtor’s motion for
an order requiring the abandonment of the property. We conclude that the bankruptcy
court did not err in denying the motion. The final issue on appeal is whether the
bankruptcy court erred in enjoining the Debtor from filing any further motions related
to the trustee’s administration of the bankruptcy estate and the property. We
conclude that the bankruptcy court properly issued the injunction.
BACKGROUND
On June 18, 1998,the Debtor filed a petition for relief under Chapter 13 of the
Bankruptcy Code. He asserted a homestead exemption in certain property located at
875 Laurel Avenue in St. Paul, Minnesota (the “Laurel Property”). The Chapter 13
Trustee objected to the exemption. After a hearing, the bankruptcy court ruled that
the Debtor was not entitled to an exemption in the Laurel Property and converted the
Debtor’s case to Chapter 7. The Debtor appealed the order disallowing the exemption
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The Honorable Dennis D. O’Brien, United States Bankruptcy Judge for the
District of Minnesota.
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in the Laurel Property, which order was affirmed on appeal. Alexander v. Chrysler
Fin. Corp. (In re Alexander), 242 F.3d 373 (8th Cir. 2000).
Mary Jo Jensen-Carter (“Trustee”) was appointed the Trustee in the Debtor’s
Chapter 7 case. The Trustee filed an objection to the Debtor’s asserted exemption in
the Laurel Property in the Chapter 7 case, which objection was sustained. In re
Alexander, 236 B.R. 679 (Bankr. D. Minn. 1999). The bankruptcy court’s order
sustaining the objection to the exemption was ultimately affirmed by the Eighth
Circuit Court of Appeals. Alexander v. Jensen-Carter (In re Alexander), 236 F.3d
431 (8th Cir. 2001), aff’ing 239 B.R. 911 (B.A.P. 8th Cir. 1999).
The Debtor thereafter filed a motion for reconsideration under Federal Rule of
Civil Procedure 60 seeking to exempt the Laurel Property because his wife, Georgina
Yvonne Stephens (“Stephens”), and his minor child occupy the property. The
bankruptcy court denied the motion. The Debtor appealed this order which was also
ultimately affirmed by the Eighth Circuit Court of Appeals. Alexander v. Jensen-
Carter (In re Alexander), 44 Fed. Appx. 32 (8th Cir. 2002), aff’ing 270 B.R. 281(B.A.P. 8th Cir. 2001).
In October, 2001, Stephens attempted to claim an exemption in the Laurel
Property in the Debtor’s bankruptcy case as a dependent of the Debtor pursuant to 11
U.S.C. § 522(l) and Federal Rule of Bankruptcy Procedure 4003(a). The bankruptcy
court denied Stephens’ motion seeking an order sustaining such homestead
exemption. Stephens appealed that order which was affirmed by the Bankruptcy
Appellate Panel for the Eighth Circuit. Stephens v. Jensen-Carter (In re Alexander),
288 B.R. 127 (B.A.P. 8th Cir. 2003).2
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This is a summary of only a portion of the litigation concerning the Laurel
Property and the respective rights of the Trustee, the Debtor, and Stephens therein.
Stephens has filed two bankruptcy petitions. Additionally, at least two separate
lawsuits are pending before the United States District Court for the District of
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On September 23, 2002, the Debtor filed his motion to remove the Trustee and
for an order requiring the abandonment of the Laurel Property. The bankruptcy court
conducted a hearing on the motion on October 22, 2002, at which time the court
entered its order denying the Debtor’s request to remove the Trustee, denying the
Debtor’s request for an order requiring the abandonment of the Laurel Property, and
enjoining the Debtor from filing any further motions or proceedings related to the
Trustee’s administration of the Debtor’s bankruptcy estate and/or the Laurel Property
and from filing a motion for reconsideration of such order. The Debtor appeals this
order.
STANDARD OF REVIEW
We review the bankruptcy court’s findings of fact for clear error and its
conclusions of law de novo. Alexander v. Jenson-Carter (In re Alexander), 239 B.R.
911, 913 (B.A.P. 8th Cir. 1999), aff’d 236 F.3d 431 (8th Cir. 2001). We review the
bankruptcy court’s issuance of an injunction for an abuse of discretion. Alexander v.
Jenson-Carter (In re Alexander), 270 B.R. 281, 286 (B.A.P. 8th Cir. 1999), aff’d 44
Fed. Appx. 32 (8th Cir. 2002).
DISCUSSION
The Debtor’s motion is is yet another attempt by the Debtor to exempt his
interest in the Laurel Property. The Laurel Property is part of the Debtor’s Chapter 7
bankruptcy estate. 11 U.S.C. § 541(a). It has been definitively determined that the
Debtor is not entitled to any exemption in the Laurel Property. Alexander v. Jensen-
Carter (In re Alexander), 236 F.3d 431 (8th Cir. 2001), aff’g 239 B.R. 911 (B.A.P. 8th
Cir. 1999), aff’g 236 B.R. 679 (Bankr. D. Minn. 1999); Alexander v. Jensen-Carter
(In re Alexander), 44 Fed. Appx. 32 (8th Cir. 2002), aff’g 270 B.R. 281 (B.A.P. 8th Cir.
Minnesota and the Minnesota state court related to the Laurel Property.
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2001). The Trustee has a duty to administer the Laurel Property as property of the
estate. 11 U.S.C. § 704. The Debtor’s motion to remove the Trustee and for an order
requiring the abandonment of the Laurel Property lacks any merit and is yet another
thinly veiled attempt to exempt the property despite numerous prior failed attempts
by both the Debtor and his non-debtor wife to prevent the Trustee from performing
her duties and administering this estate asset.
I. REMOVAL OF A TRUSTEE
Pursuant to 11 U.S.C. § 324(a), the bankruptcy court may remove a trustee for
cause. As the movant, the Debtor bears the burden of establishing cause by setting
forth specific facts which support the removal of the Trustee. In re Marvel Entm’t
Group, Inc., 140 F.3d 463, 471 (3rd Cir. 1998); In re Schultz Mfg. Fabricating Co.,
956 F.2d 686, 692 (7th Cir. 1991). A conclusory contention unsupported by specific
facts does not constitute sufficient grounds for the removal of a trustee. In re Schultz
Mfg., 956 F.2d at 692.
The Debtor failed to establish any fact supporting the removal of the Trustee.
The Debtor merely established that he believes his wife is entitled to an exemption
in the Laurel Property. The Debtor failed to articulate any fact which would support
removal of the Trustee. The Debtor is merely attempting yet again to thwart the
Trustee’s efforts to administer the Laurel Property. Without a scintilla of evidence
establishing cause to remove the Trustee, the bankruptcy court properly denied the
motion.
II. ABANDONMENT OF PROPERTY
Pursuant to 11 U.S.C. § 554(b), on request of a party in interest and after notice
and a hearing, the court may order the trustee to abandon any property of the estate
that is burdensome to the estate or that is of inconsequential value and benefit to the
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estate. The party seeking abandonment must establish that the property is either
burdensome or of inconsequential benefit and value.
With respect to the Laurel Property, the Trustee testified that she believes the
value to be $300,000 based on the tax statement value of “over $300,000.”
(Transcript, p. 36.) The Debtor testified that he believed the property was worth less
than $200,000 on the date he filed his bankruptcy petition. (Transcript, p. 33.) The
undisputed evidence established that the mortgage indebtedness encumbering the
property is $30,000. It has already been conclusively established that neither the
Debtor nor his wife are entitled to any exemptions in the property. The record thus
supports the conclusion that the Laurel Property has value for the estate.
The Debtor argues that Stephens is entitled to a $200,000 homestead exemption
in the property because she is his wife. The Debtor presented no evidence to support
his belief. Nonetheless, even if his wife were entitled to $200,000 from the proceeds
of the sale of the Laurel Property, the property still has value and benefit to the estate.
The evidence supports the conclusion that the property has a value of $300,000 which
is sufficient to satisfy the $30,000 mortgage and any $200,000 interest of the wife
with $70,000 remaining for the Debtor’s bankruptcy estate. The Debtor did not meet
the burden of establishing that the property is burdensome or of inconsequential value
and benefit to the estate. The bankruptcy court properly denied the motion for
abandonment.
III. INJUNCTIVE RELIEF
Upon the Trustee’s request, the bankruptcy court enjoined the Debtor from
filing any more motions or proceedings with the bankruptcy court related to the
Trustee’s administration of the estate and/or the Laurel Property and enjoined him
from filing a motion to reconsider his latest order. Pursuant to 11 U.S.C. § 105(a),
the bankruptcy court is authorized to issue any order, process, or judgment that is
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necessary or appropriate to carry out the provisions of the Bankruptcy Code. The
issuance of an injunction under 11 U.S.C. § 105(a) is appropriate to protect the assets
of the debtor’s estate. NLRB v. Superior Forwarding, Inc., 762 F.2d 695, 698 (8th Cir.
1985).
The bankruptcy court properly considered the request for injunctive relief,
heard arguments, and determined that it has been definitively established that the
Laurel Property is property of the Debtor’s bankruptcy estate and that the Trustee is
entitled to administer the asset. The court considered the fees and costs continuing
to accrue as the Trustee is forced to relitigate the same issues with the Debtor and his
wife and the negative impact thereof on the estate and its creditors. The court limited
the injunction to any further proceedings in the bankruptcy court. The court did not
enjoin the Debtor from pursuing any rights he may have with respect to the Laurel
Property in any other forum, including the state courts of Minnesota and the United
States District Court for the District of Minnesota where lawsuits related to the
property were pending at the time. Nor did the court enjoin the Debtor from
appealing its order. Rather, the court narrowly drafted the injunction to prevent yet
another attempt by the Debtor to assert an exemption in the Laurel Property and thus
relitigate issues which have been previously decided by the Eighth Circuit Court of
Appeals and are now governed by the law of the case. Graven v. Fink (In re Graven),
186 F.3d 871, 872 (8th Cir. 1999). The bankruptcy court did not abuse its discretion
in entering the injunction.
CONCLUSION
The bankruptcy court properly denied the Debtor’s motion to remove the
Trustee and for an order compelling abandonment of the Laurel Property.
Furthermore, the bankruptcy court did not abuse its discretion in enjoining the Debtor
from further litigation before the bankruptcy court related to the Laurel Property.
Accordingly, we AFFIRM.
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A true copy.
Attest:
CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR THE
EIGHTH CIRCUIT
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