Armstrong v. Rushton (In Re Armstrong)

303 B.R. 213, 2004 Bankr. LEXIS 3, 2004 WL 41428
CourtBankruptcy Appellate Panel of the Tenth Circuit
DecidedJanuary 7, 2004
DocketBAP No. UT-03-015. Bankruptcy No. 02-29051
StatusPublished
Cited by30 cases

This text of 303 B.R. 213 (Armstrong v. Rushton (In Re Armstrong)) is published on Counsel Stack Legal Research, covering Bankruptcy Appellate Panel of the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Armstrong v. Rushton (In Re Armstrong), 303 B.R. 213, 2004 Bankr. LEXIS 3, 2004 WL 41428 (bap10 2004).

Opinion

OPINION

NUGENT, Bankruptcy Judge.

Appellant Donald E. Armstrong (“Appellant”) appeals from an order of the United States Bankruptcy Court for the District of Utah dismissing his Chapter 13 case for cause on the motion of Appellees Kenneth A. Rushton and Steppes Apartments, Ltd. (“Appellees”) 1 pursuant to 11 U.S.C. § 1307(c). 2 Appellant asserts that the Appellees are not creditors in his bankruptcy case and therefore lacked standing to seek the dismissal of his case. Appellant also argues that his Chapter 13 was filed in good faith and that the bankruptcy court abused its discretion in dismissing his Chapter 13 case. After careful consideration of these arguments, we reject them and AFFIRM.

Factual Background

Appellant is a familiar and frequent litigant in this Court, as well as in the Texas, Utah, and Georgia state courts, the federal courts sitting in Utah, the United States Court of Appeals for the Tenth Circuit *215 (“Tenth Circuit”), and the United States Supreme Court. While his actions and positions in these courts are numerous and varied, they ultimately arise from Appellant’s discomfiture with a 1997 final judgment entered in the Texas state court in favor of Steppes Apartments, Ltd. (“Steppes”), holding the Donald E. Armstrong Family Trust and the Donald E. Armstrong Charitable Remainder Unitrust (“Trusts”) liable for violating the Texas usury laws and levying a multimillion dollar judgment against the Trusts for actual and punitive damages (the “Texas Modified Judgment”). This judgment has been appealed and affirmed through the Texas appellate courts, and certiorari has been denied by the United States Supreme Court. 3

While the Texas Modified Judgment specifically stated that Appellant, as an individual, was not liable, his subsequent actions in transferring assets from the Trusts to himself or entities he controlled resulted in a lawsuit being filed in the United States District Court for the District of Utah. That court determined that judgment should be entered against Appellant individually, preventing Appellant from contesting that entities he controlled are alter egos, that the transfers offended the Utah Uniform Fraudulent Transfer Act, and that the transfers could be recovered by Steppes.

On March 10, 2000, after the Utah federal district court’s minute entry was docketed, but before the judgment could be memorialized in a written order, Appellant filed a Chapter 11 case in the United States Bankruptcy Court for the Southern District of California (“Chapter 11 Case”), which case was transferred to the Utah bankruptcy court due to improper venue. Appellee Rushton was appointed trustee for Appellant’s bankruptcy estate. A detailed account of the proceedings leading up to Appellant’s Chapter 11 filing and in the Chapter 11 Case itself may be found in this Court’s opinion in In re Armstrong, 294 B.R. 344 (10th Cir. BAP 2003).

It is sufficient for our purposes here to state that in the Chapter 11 Case Rush-ton’s Amended Plan was confirmed on January 31, 2002 (the “Confirmation Order”). The Confirmation Order contained extensive findings of fact and conclusions of law. The bankruptcy court approved a proposed settlement among the bankruptcy estate, Steppes, and other parties in interest pursuant to which the claims of Appellant (which became property of his bankruptcy estate upon commencement of the case) against Steppes were settled. As part of the implementation of the Steppes settlement and Confirmation Order, the Court entered a broad injunction restraining various parties, including Appellant and the Trusts, from commencing or continuing litigation related to the Steppes controversy (the “Litigation Injunction”). Neither Appellant nor any entity controlled by Appellant was to pursue any claims that were released under the confirmed plan or the Steppes settlement or that were based on the actions of any parties in effectuating either the settlement or the confirmed plan, including Steppes, Rushton, and their counsel.

Appellant appealed the Confirmation Order, but this Court dismissed that appeal as untimely. 4 Appellant then appealed this Court’s dismissal order to the Tenth *216 Circuit. 5 The Tenth Circuit has yet to decide that appeal. The Confirmation Order has not been stayed pending appeal.

After the entry of the Confirmation Order and Litigation Injunction, Appellant continued to actively challenge both the Texas Modified Judgment entered in favor of Steppes and the actions of Rushton in implementing the confirmed plan. When Rushton sought to have Appellant held in contempt for these violations of the Litigation Injunction, Appellant filed this Chapter 13 Case on June 3, 2002.

Appellant provided this Court with an extensive record on appeal, but omitted copies of his petition and schedules. Nonetheless, his other activities in the case make clear his intentions in filing it. According to the docket in the Chapter 13 Case, Appellant immediately sought leave of the bankruptcy court to proceed before the United States Supreme Court with his challenge to the validity of the Texas Modified Judgment. Additionally, between June 3 and July 26, 2002, Appellant filed the following pleadings in the Chapter 13 Case:

1. Ex parte motions for Fed. R. Bankr.P. 2004 examinations of Steppes’s counsel as well as the bankruptcy judge who presided over Appellant’s Chapter 11 Case;
2. Subpoenas duces tecum of Steppes’s counsel and the Chapter 11 Case bankruptcy judge;
3. Motions to recuse both the Chapter 11 Case bankruptcy judge (who did, in fact, recuse from the Chapter 13 Case) and the bankruptcy judge subsequently assigned to hear the Armstrong matters;
4. A “Motion for Hearing on Excessive Penalties and Due Process” apparently seeking the bankruptcy court’s determination that the Texas Modified Judgment violated the United States Constitution;
5. A motion for permission to file an adversary complaint against Rush-ton, Steppes, and their counsel;
6. A motion, without leave of court, for contempt and sanctions against Rushton; and
7. A motion to transfer the Chapter 13 Case out of the Tenth Circuit.

Finally, on July 29, 2003, Appellant filed in the Chapter 11 Case an adversary proceeding against Rushton, seeking to revoke the Confirmation Order.

On June 7, 2002, Rushton filed a motion to dismiss the Chapter 13 Case for cause under § 1307(c), specifically for violation of the Chapter 11 Confirmation Order and for abuse of the bankruptcy process (ie. bad faith). 6

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Cite This Page — Counsel Stack

Bluebook (online)
303 B.R. 213, 2004 Bankr. LEXIS 3, 2004 WL 41428, Counsel Stack Legal Research, https://law.counselstack.com/opinion/armstrong-v-rushton-in-re-armstrong-bap10-2004.