In Re: Skybridge Spectrum Foundation ( 2023 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
IN RE: Skybridge Spectrum Foundation, Civil Action No. 21-cv-1551 (TSC)
Warren Havens, Petitioner Bankruptcy No. 21-bk-5-ELG
MEMORANDUM OPINION
Pro se Petitioner-Appellant Warren Havens (“Petitioner”) appeals the dismissal of an
involuntary bankruptcy petition he filed against Skybridge Spectrum Foundation (“Skybridge”),
in the United States Bankruptcy Court for the District of Columbia. Appeal, ECF No. 1.
Petitioner also moves for Summary Reversal of the Bankruptcy Court’s decision. Mot. for
Summ. Reversal, ECF No. 13. Respondent-Appellee Susan L. Uecker (“Respondent”) opposes
the appeal and the Motion for Summary Reversal. Appellee’s Brief, ECF No. 12; Mem. Op.,
ECF No. 15. For the reasons set forth below, the court will DENY the appeal and DENY the
motion.
I. BACKGROUND AND PROCEDURAL HISTORY
For over twenty years, Petitioner and Arnold Leong have been involved in litigation
regarding the ownership and control of two entities holding licenses issued by the Federal
Communications Commission (FCC). Leong v. Havens, No. 2002-070640 (Cal. Super. Ct. Nov.
16, 2015). On November 16, 2015, the Alameda County Superior Court appointed Respondent
as the receiver to “take control and possession of all property and assets of [the Receivership
Entities]; as well as all FCC licenses owned or controlled by [Petitioner] as an individual.” Id. at
13.
In March 2016 Petitioner filed a voluntary Chapter 11 bankruptcy petition in the United
States Bankruptcy Court for the District of Delaware on behalf of Skybridge Spectrum
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Foundation. In re Skybridge Spectrum Foundation, 1:16-bk-10626 (Bankr. D. Del.). The
Delaware court dismissed the voluntary petition, holding that the receivership order issued by the
Alameda County Superior Court left Petitioner without corporate authority to put Skybridge into
bankruptcy. Id.
On January 5, 2021, Petitioner filed an involuntary bankruptcy petition against
Skybridge a/k/a SkyTel Joint Venture, which he claimed included Skybridge Spectrum
Foundation, Verde Systems LLC, Telesaurus Holdings GB LLC, Environmentel LLC,
Environmentel-2 LLC, Intelligent Transportation & Monitoring Wireless LLC, V2G LLC, and
ATLIS Wireless LLC (“Receivership Entities”). See Request to Accept Amendment 1 of Jan.
20, 2021 to Form 205 Attached Statements at 8 (Jan. 20, 2021), ECF No. 2-3. Petitioner alleged
that Skybridge owed him for debts including: (1) $70,000 allegedly advanced by Petitioner to
Skybridge for attorney fees in a voluntary Chapter 11 case in the District of Delaware, (2)
$80,000 for salaries and rent owed to him individually and “other,” and (3) $80,000 for claims
assigned by Petitioner to Polaris PNT 1, PB LLC, and Polaris PNT, PBC, and then reassigned to
him prior to the filing of the involuntary petition. Petition at 3, ECF No. 2-2; D.C. Bankruptcy
Order at 9, ECF No. 15-1. Respondent moved to dismiss, arguing that Skybridge is a non-profit
and therefore could not be subject to an involuntary petition under Section 303 of the Bankruptcy
Code. See D.C. Bankruptcy Order at 16. The United States Bankruptcy Court for the District of
Columbia granted the motion to dismiss, finding that (1) Skybridge is “not a moneyed, business,
or commercial corporation,” and (2) Petitioner’s claims against it are “the subject of a bona fide
dispute as to liability or amount.” Id. at 19.
Between the D.C. Bankruptcy Court’s hearing on the motion to dismiss and the final
order, Petitioner “continue[d] to file pleadings on the matter under advisement and issue baseless
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discovery that appear[ed] calculated to harass other parties in th[e] Case and the Court” despite
“clear order(s) of the Court with respect to post-hearing briefs and limitations on submission.”
Order of Dismissal at 1, In re Skybridge Spectrum Foundation (“Skybridge I”), 21-cv-1011
(D.D.C.), ECF No. 13. Consequently, this court entered a temporary injunction barring
Petitioner from “making any further filings in th[e] Case related in any way to the Motion to
Dismiss, the hearing on the Motion to Dismiss, or any matter related thereto, without prior leave
of Court.” Id. at 2. Petitioner appealed the temporary injunction in Skybridge I and separately
appealed the D.C. Bankruptcy Court’s order granting Respondent’s motion to dismiss in this
case. In re Skybridge Spectrum Foundation (“Skybridge II”), 21-cv-1551 (D.D.C.), ECF No. 1.
The temporary injunction terminated once the D.C. Bankruptcy Court dismissed the action and
this court consolidated the two appeals. See Order of Dismissal, Skybridge I.
Subsequently, this court set a briefing schedule for Petitioner’s appeal from the D.C.
Bankruptcy Court’s final order. 11/12/21 Minute Order. Petitioner mistakenly filed his opening
brief in Skybridge I and thus moved to have his opening brief filed nunc pro tunc in Skybridge II.
Mot. for Leave to File Nunc Pro Tunc, ECF No. 10. Petitioner also included in that filing a
motion to suspend the case and to extend his time for filing an opening brief. Mot. to Suspend,
ECF No. 10-1; Petitioner’s Opening Brief, ECF No. 10-2. Then, Petitioner moved for Summary
Reversal. The court granted Petitioner’s Motion for Leave to File Nunc Pro Tunc and denied his
Motion to Suspend and Extend Time on filing his Opening Brief. 9/4/22 Minute Order. The
main issues in Petitioner’s brief and motion for reversal are whether the D.C. Bankruptcy Court
erred in finding that 1) Respondent had the authority to file a motion to dismiss Petitioner’s
involuntary petition against Skybridge, and 2) Skybridge is a non-profit and consequently
ineligible to be an involuntary debtor.
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II. LEGAL STANDARD
Federal district courts have subject matter jurisdiction to review the final judgments of the
bankruptcy courts in their judicial district. See 28 U.S.C. § 158(a). The district court reviews the
bankruptcy court’s factual findings for clear error and its legal conclusions de novo. Yelverton v.
District of Columbia, 529 B.R. 1, 3 (D.D.C. 2014). The burden of proof is on the party seeking to
reverse the bankruptcy court’s holding. Anderson v. Bessemer City, 470 U.S. 564, 573-574 (1985).
That party must show that the bankruptcy court’s holding was clearly erroneous in its assessment
of the facts or erroneous in its interpretation of the law, and not simply that another conclusion
could have been reached. Id. Clear error exists only when the reviewing court “is left with the
definite and firm conviction that a mistake has been committed.” Moore v. Robbins, 24 F. Supp.
3d 88, 94 (D.D.C. 2014) (internal quotation mark omitted). “If the [fact-finding] court’s account
of the evidence is plausible in light of the record viewed in its entirety, the [reviewing court] may
not reverse it even though convinced that had it been sitting as the trier of fact, it would have
weighed the evidence differently.” Anderson, 470 U.S. at 573-74.
Summary reversal is an extraordinary remedy, for which the petitioner bears the heavy
burden of demonstrating both that the remedy is proper and that the merits of the claim so clearly
warrant relief as to justify expeditious action. Vietnam Veterans Against The War/Winter Soldier
Org. v. Morton, 506 F.2d 53, 56 (D.C. Cir. 1974); Grant v. Shanahan, No. 19-5011, 2019 WL
2156344, at *1 (D.C. Cir. 2019).
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III. ANALYSIS
A. Receiver’s Authority to Move to Dismiss on Behalf of Debtors
In his motion for summary reversal, Petitioner contends that Respondent had no standing
to move to dismiss his involuntary petition because custodians/receivers are prohibited from
answering involuntary petitions. See Mot. for Summ. Reversal at 2.
A “custodian” includes a “receiver or trustee of any of the property of the debtor,
appointed in a case or proceeding” not under the Bankruptcy Code. See 11 U.S.C. § 101(11)(A).
While the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure explicitly permit a
debtor to answer or contest an involuntary petition, they are silent on whether a receiver may do
the same. See 11 U.S.C. § 303(d) (“the debtor or a general partner ... that did not join in the
petition, may file an answer”); Fed. R. Bankr. P. 1011(a) (the “debtor named in an involuntary
petition may contest the petition.”). However, precedent suggests a receiver can answer if the
debtor has not done so. To determine whether a receiver may file an answer, courts consider
various factors, including whether the debtor filed an answer, the language of the state
receivership statute, and the receiver’s powers under the receivership order. See In re Starlite
Houseboats, Inc., 426 B.R. 375, 381 (Bankr. D. Kan. 2010) (finding receiver’s motion to dismiss
was properly filed because Kansas’s receivership statute gave him the authority to “prosecute
and defend” against all claims); see also In re A & B Liquidating, Inc., 18 B.R. 922, 925 (Bankr.
E.D. Va. 1982) (finding debtor did not file answer and that an assignee for the benefit of
creditors was a proper party to answer an involuntary petition).
In re 318 Retail, LLC, 640 B.R. 407 (Bankr. N.D. Ill. 2022) held that an alleged debtor’s
failure to answer an involuntary petition supported allowing the receiver to seek dismissal, but
not to answer or contest the petition. The court also found that the broad language of both the
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state receivership statute and the receivership order suggested the receiver should have the right
to file a responsive pleading. Id. at 412.
Relying on In re 318 Retail, Petitioner argues that Respondent improperly answered or
contested the involuntary petition when she moved to dismiss it. See Mot. for Summ. Reversal
at 2. But Petitioner mischaracterizes that case’s holding, which distinguishes a motion to
dismiss/responsive pleading from an answer. In re 318 Retail found that receivers are permitted
to file the former but not the latter.
Here, as in In re 318 Retail, the alleged Debtor did not answer the involuntary petition.
And the Receivership Order’s language is similarly broad. The California Superior Court
ordered and authorized Respondent to “do all the things, and incur the risks and obligations,
ordinarily done or incurred by owners, managers, and operators of businesses and property
similar to that possessed by the receiver, except the receiver shall not make any capital
improvements to the property without court approval.” D.C. Bankruptcy Order at 8 (citing
Receivership Order at ¶ 14). As in In re Starlite, the California receivership statute includes
broad language permitting a receiver to “bring and defend actions.” Cal. Code of Civ. Proc. §
568. These factors suggest that Respondent had the authority to file a motion to dismiss the
involuntary petition. Petitioner has not provided any evidence to the contrary and thus failed to
meet the heavy burden for a motion for summary reversal. Vietnam Veterans Against The
War/Winter Soldier Org., 506 F.2d at 56. Accordingly, the motion is denied.
B. Non-profit Exemption from Involuntary Bankruptcy Proceedings
Petitioner argues that the D.C. Bankruptcy Court erred in finding that Skybridge is a non-
profit, which is exempt from involuntary petitions. Petitioner’s Opening Brief at 11. As
previously mentioned, the court may not disturb the D.C. Bankruptcy Court’s finding unless it is
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clearly erroneous. Advantage Healthplan, Inc. v. Potter, 391 B.R. 521, 537 (D.D.C. 2008), aff’d
sub nom. Greater Se. Cmty. Hosp. Found., Inc. v. Potter, 586 F.3d 1 (D.C. Cir. 2009).
Involuntary petitions may be brought against a “person, except . . . a corporation that is
not a moneyed, business, or commercial corporation, that may be a debtor under the chapter
under which such case is commenced.” 11 U.S.C. § 303(a). “The § 303(a) formulation of
‘moneyed, business, or commercial corporation’ embraces only corporations organized for
profit.” In re Capitol Hill Healthcare Grp., 242 B.R. 199, 202 (Bankr. D.D.C. 1999).
In determining whether a corporation is organized for profit, courts review the
corporation’s organization under state law as well as the activities it engages in—i.e., whether
the corporation is “operated for pecuniary gain.” Id.; In re MAEDC Mesa Ridge, LLC, 334 B.R.
197, 200 (Bankr. N.D. Tex. 2005) (citing Strassburger, McKenna, Gutnick & Potter v. Quinn (In
re Grace Christian Ministries, Inc.), 287 B.R. 352, 355 (W.D. Pa. 2002)). Merely participating
in commercial activity does not make a non-profit corporation a “moneyed, business, or
commercial corporation.” MAEDC Mesa Ridge, 334 B.R. at 201 (citing Grace Christian
Ministries, 287 B.R. at 357 (“It is a non sequitur to conclude that a corporation is a “moneyed,
business, or commercial corporation” merely because it charges and is paid a fee for its
services.”)); see also Capitol Hill Healthcare, 242 B.R. at 201-02 (finding that the business
operations, transactions, and payments made by a non-profit hospital did not constitute
operations for pecuniary gain).
Formed in 2006, Skybridge is a 501(c)(3) tax exempt non-profit, non-stock Delaware
corporation that seeks to promote public safety, environmental protection, and the preservation
and sound use of scarce public resources. See D.C. Bankruptcy Order at 22 (citing Tr. 4:11-5:7,
Skybridge Delaware (Bankr. D. Del. July 27, 2016)). Petitioner concedes that Skybridge was
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originally organized as a non-profit but claims that it transformed into a for-profit entity during
Respondent’s receivership because she used Skybridge for her “private inurement and profit.”
See Petitioner’s Opening Brief at 11. He claims the D.C. Bankruptcy Court avoided evidence
showing that Respondent took over Skybridge in 2016 and subsequently destroyed the
organization. See Petitioner’s Opening Brief at 9. Petitioner requests that this court review
Skybridge’s operations “as it is actually conducted,” id., but provides no evidence to establish
that Skybridge is currently operating for profit or ever did. The D.C. Bankruptcy Court
considered the fact that Skybridge is a validly incorporated non-profit corporation under
Delaware law and that Petitioner is involved in ongoing litigation in which he argues that
Skybridge is a non-profit. See D.C. Bankruptcy Order at 22. In his appeal, Petitioner provided
no evidence rebutting the D.C. Bankruptcy Court’s conclusion. Given the highly deferential
standard of review, the court finds that the D.C. Bankruptcy Court did not clearly err, and agrees
with its finding that “Skybridge is, and always has been, a non-profit corporation against which
an involuntary petition may not be filed.” See D.C. Bankruptcy Order at 42. Accordingly, the
court affirms the D.C. Bankruptcy Court’s Order.
IV. CONCLUSION
For the reasons set forth above, the court denies Petitioner’s appeal, ECF No. 1, and
Motion for Summary Reversal, ECF No. 13.
Date: August 29, 2023
Tanya S. Chutkan
TANYA S. CHUTKAN
United States District Judge
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