Heghmann v. Indorf (In Re Heghmann)

324 B.R. 415, 54 Collier Bankr. Cas. 2d 210, 2005 Bankr. LEXIS 767, 2005 WL 1039079

• Court: Bankruptcy Appellate Panel of the First Circuit
• Decided: May 5, 2005
• Docket: BAP No. NH 03-073, Bankruptcy No. 03-12162-MWV
• Status: Published

Opinions

HILLMAN and CARLO, U.S. Bankruptcy Appellate Panel Judges.

Before the Bankruptcy Appellate Panel (the “Panel”) is Beatrice Heghmann’s Motion for Leave to Proceed In Forma Pau-peris before the United States Court of Appeals for the First Circuit.¹ On November 17, 2004, Beatrice Heghmann (the “Debtor”) appealed to the Court of Appeals from the Panel’s decision affirming the bankruptcy court’s order regarding her Motion for Contempt against Ronald Indorf and Djamel Hafíani, and her Motion for an Order Implementing the Automatic Stay.

BACKGROUND

The Debtor appealed to the Panel from the bankruptcy court’s August 19, 2003 order regarding her Motion for Contempt against Ronald Indorf and Djamel Hafía-ni, and her Motion for an Order Implementing the Automatic Stay. In the first motion, the Debtor sought a finding of contempt against Djamel Hafíani and his attorney, Ronald Indorf, for alleged violations of the automatic stay. The second motion sought an order allowing the Debt- or to return to her previous residence and requiring that her possessions be returned to her by her previous landlord, Djamel Hafíani. The bankruptcy court concluded that Mr. Hafíani (but not Attorney Indorf) had violated the automatic stay by selling some of the Debtor’s property at post-petition yard sales and ordered him to pay actual damages of $1,200 under 11 U.S.C. § 362(h). The bankruptcy court also denied the Debtor’s request to return to her previous residence. The Panel affirmed.

A. Eviction Proceedings and Robert Heghmann’s Chapter 13 Petition

The Debtor and her husband, Robert Heghmann, leased residential property owned by Djamel Hafíani. In February 2003, Mr. Hafíani filed an eviction proceeding against the Heghmanns in the Portsmouth, New Hampshire District Court (the “State Court”) for failure to pay rent. On March 3, 2003, after a hearing, the State Court ordered the Heghmanns to pay rental arrears of $5,700 to Mr. Hafíani by March 15, 2003, or a writ of possession would issue as of March 17, 2003, without further hearing.

The Heghmanns neither paid the $5,700 nor appealed the judgment. Instead, on March 13, 2003, Robert Heghmann filed a voluntary Chapter 13 petition. Notwithstanding the filing of the bankruptcy petition, on March 17, 2003, the State Court issued a Notice of Default Judgment and a Writ of Possession in accordance with its March 3rd order.

On May 19, 2003, Robert Heghmann filed a motion in the State Court to quash the writ of possession, alleging that the writ was void because it issued in violation of the automatic stay. However, on May 21, 2003, the bankruptcy court dismissed Robert Heghmann’s Chapter 13 case for failure to file the required bankruptcy schedules and Chapter 13 plan. Accordingly, on May 23, 2003, the State Court denied the Motion to Quash and issued a new Writ of Possession in accordance with its March 3rd order. The next day, the Heghmanns were evicted from the premises. The Heghmanns did not appeal.

On May 22, 2003, the Heghmanns filed a complaint in the United States District Court for the District of New Hampshire alleging violations of the automatic stay by Mr. Hafiani and seeking a temporary restraining order. On May 28, 2003, the district court issued an order sua sponte dismissing the complaint, finding that it lacked subject matter jurisdiction. The Heghmanns did not appeal.

On June 2, 2003, Robert Heghmann filed two motions with the bankruptcy court: (1) a motion to “set aside” the dismissal of his bankruptcy petition, and (2) a motion for contempt against Mr. Hafiani and his counsel, Attorney Ronald Indorf, for alleged violations of the automatic stay. The bankruptcy court denied both motions, concluding that Robert Heghmann had not established sufficient grounds to overturn the dismissal and that dismissal rendered moot the motion for contempt. Robert Heghmann did not appeal these orders, nor did he appeal the dismissal of his Chapter 13 case.

B. Beatrice Heghmann’s Bankruptcy Proceedings

On June 19, 2003, Robert Heghmann filed a voluntary Chapter 13 petition on behalf of his wife, Beatrice Heghmann.² Thereafter, the Debtor filed three motions: (1) a Motion for Order Implementing Automatic Stay (the “Motion to Implement Stay”), (2) a Motion for Contempt, and (3) an Application for Partial Relief from Stay (the “Motion for Partial Stay Relief’). The Motion to Implement Stay sought an order allowing the Debtor to return to her previous residence and requiring Mr. Haf-iani to return the Debtor’s possessions. The second motion, although styled as a motion for contempt, alleged violations of the automatic stay by Mr. Hafiani and Attorney Indorf and sought punitive and compensatory damages.³ The Motion for Partial Stay Relief sought relief from the automatic stay to allow the Debtor to pursue a federal civil action against Mr. Hafia-ni and Attorney Indorf.

On August 12, 2003, the bankruptcy court held a hearing on the three motions, at which Robert Heghmann and Mr. Haf-iani apparently testified.⁴ On August 19, 2003, the bankruptcy court entered one order with respect to both the Motion for Contempt and the Motion to Implement Stay (the “Order”). On that same day, the bankruptcy court also issued an order denying the Motion for Partial Relief without further discussion.

In the Order, the bankruptcy court refused to consider any pre-petition stay violations.⁵ Rather, the bankruptcy court focused on post-petition actions taken by Mr. Hafiani as landlord in handling the Debt- or’s personal property. The bankruptcy court concluded that Mr. Hafiani had “pleaded” with the Heghmanns to pick up their personal property, making numerous telephone calls to the Heghmanns and even leaving the premises open several times. Finding Mr. Hafiani’s testimony to be credible, the bankruptcy court concluded that there were no stay violations until Mr. Hafiani sold some of the Debtor’s property at yard sales on July 12 and 19, 2003. Accordingly, the bankruptcy court ordered him to pay damages of $1,200. The bankruptcy court also concluded that although Mr. Hafiani’s actions were taken on the advice of his counsel, Attorney In-dorf did not violate the automatic stay as he did not take any actions against the estate.

The Debtor appealed to the Panel. The Panel ultimately affirmed the decision of the bankruptcy court. On November 17, 2004, the Debtor appealed the Panel’s decision to the United States Court of Appeals for the First Circuit.

DISCUSSION

I. Authority to Consider In Forma Pauperis Relief

The question before the Panel is whether the Debtor’s appellate filing fees may be waived. The authority to proceed in forma pauperis is found in 28 U.S.C. § 1915(a), providing that “any court of the United States” may:

authorize the commencement, prosecution or defense of any suit, action or proceeding, civil or criminal, or appeal therein, without prepayment of fees or security therefor, by a person who submits an affidavit that .... the person is unable to pay such fees or give security therefor.

28 U.S.C. § 1915(a).⁶

In 1973, however, the U.S. Supreme Court ruled that 28 U.S.C. (a) does not allow waiver of fees for filing a bankruptcy petition, holding that no constitutional right to discharge debts in bankruptcy exists, and further holding that bankruptcy fee requirements do not violate due process or equal protection rights. United States v. Kras, 409 U.S. 434, 93 S.Ct. 631, 34 L.Ed.2d 626 (1973); see also In re Garland, 428 F.2d 1185, 1187 (1st Cir.1970) (requiring payment of fees in order to obtain discharge not a violation of due process); In re Red Barn, 23 B.R. 593 (Bankr.D.Me.1982) (requiring payment of fee to file a complaint for relief from stay does not violate any fundamental right). The Bankruptcy Reform Act of 1978,11 U.S.C. §§ 101, et seq., codified the Kras holding, expressly excepting fees associated with the commencement of bankruptcy cases from the operation of 28 U.S.C. § 1915(a):

Notwithstanding section 1915 of this title, the parties commencing a case under title 11 shall pay to the clerk of the district court or the clerk of the bankruptcy court ... the following filing fees

28 U.S.C. § 1930(a) (emphasis added). Some courts read § 1930(a) expansively, holding that it prohibits a party from proceeding in forma pauperis in all bankruptcy proceedings. See In re Woodman, 213 B.R. 53, 56 (Bankr.D.Conn.1997) (holding that even though administrative fees are not explicitly excluded from waiver it was intended that these fees be paid in all cases); In re Rogers, 147 B.R. 16, 17 (Bankr.E.D.Va.1992) (debtors may not proceed in forma pauperis on appeal because the right to proceed in forma pauperis does not exist in bankruptcy); Harris v. M.E.I. Diversified, Inc., 156 B.R. 814, 815 (Bankr.E.D.Mo.1993) (holding that creditor may not proceed in forma pauperis because § 1930 removes bankruptcy proceedings from the ambit of § 1915).

On the other hand, 28 U.S.C. § 1930(b), allowing the Judicial Conference of the United States to prescribe other fees in bankruptcy cases, does not contain any language removing these fees from the operation of § 1915. Most bankruptcy courts that have addressed the § 1930 issue in published opinions hold that § 1930(a) applies only to the filing of a bankruptcy petition and does not apply to fees, as set from time to time by the Judicial Conference pursuant to § 1930(b), for other proceedings in bankruptcy. See Benoit v. Lassina (In re Lassina), 261 B.R. 614, 616 (Bankr.E.D.Pa.2001) (holding that section 1930(b) fees may be waived by bankruptcy courts); Burrell v. Letterlough (In re Burrell), 150 B.R. 369, 373 (Bankr.E.D.Va.1992) (concluding that appeal fees and costs are not explicitly excepted from waiver under the in forma pauperis statute); In re Moore, 86 B.R. 249, 251 (Bankr.W.D.Okla.1988) (holding that debt- or could proceed in forma pauperis on appeal); Weakland v. Avco Fin. Servs., Inc. (In re Weakland), 4 B.R. 114, 115 (Bankr.D.Del.1980) (concluding that debtors could proceed in forma pauperis in adversary proceeding to avoid lien); In re Palestino, 4 B.R. 721, 722 (Bankr.M.D.Fla. 1980) (explaining that section 1915 applies in all bankruptcy proceedings except the filing of an original bankruptcy petition). Thus, debtors filing new cases must pay filing fees while other parties, more incidentally involved in bankruptcy proceedings, may be able to proceed in forma pauperis. Because appeal fees are not explicitly excepted from waiver by § 1930, we conclude that we may consider the Debtor’s § 1915 request to proceed in for-ma pauperis on appeal to the United States Court of Appeals for the First Circuit.

II. The Debtor’s Motion for Leave to Appeal In Forma Pauperis

28 U.S.C. § 1915 provides that a petition to proceed in forma pauperis is granted or denied at the discretion of the court. However, the court’s discretion is limited to determinations of poverty and objective good faith. Kinney v. Plymouth Rock Squab Co., 236 U.S. 43, 46, 35 S.Ct. 236, 59 L.Ed. 457 (1915). Good faith is demonstrated when an applicant seeks appellate review of any issue that is not frivolous. Coppedge v. United States, 369 U.S. 438, 445, 82 S.Ct. 917, 8 L.Ed.2d 21 (1962). Thus, a determination as to whether the Debtor’s application to proceed in forma pauperis on appeal should be granted turns on two factors: (1) a showing by affidavit that he is unable to pay the filing fees, see Adkins v. E.I. DuPont de Nemours & Co., 335 U.S. 331, 339-40, 69 S.Ct. 85, 93 L.Ed. 43 (1948), and (2) a showing that the proposed proceedings are not frivolous or malicious, see 28 U.S.C. § 1915(e).

We are satisfied that the Debtor has met the requisite showing of poverty. The Debtor’s affidavit indicates that she and her husband have a negative net cash flow of at least $200 per month. Accordingly, we turn to an examination of the merits of the appeal to ensure that judicial and public resources are not expended needlessly on an appeal which has no basis in law or fact. See Neitzke v. Williams, 490 U.S. 319, 325-29, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989); Forte v. Sullivan, 935 F.2d 1, 3 (1st Cir.1991). Probable success on the merits need not be shown. Where any nonfrivolous or colorable issue on appeal exists, the court is required to grant a motion for leave to file in forma pauperis.⁷ Forte, 935 F.2d at 3; Fredyma v. AT & T Network Sys., Inc., 935 F.2d 368 (1st Cir.1991). Dismissal of an in forma pauperis complaint is appropriate when the claim is based on “indisputably meritless legal theory or factual allegations are clearly baseless.” Forte, 935 F.2d at 3; see also Denton v. Hernandez, 504 U.S. 25, 31-33, 112 S.Ct. 1728, 118 L.Ed.2d 340 (1992).

The Debtor and her husband have been litigants in numerous actions in state and district court and in prior bankruptcy proceedings seeking damages relating to their eviction. In these cases, the Heghmanns have repeatedly litigated (and attempted to relitigate) their claims that various defendants violated the provisions of the automatic stay. They currently have at least three appeals pending in the Court of Appeals, all of which they seek to pursue in forma pauperis. When the various orders of those courts are examined, however, it becomes apparent that the Heghmanns’ efforts to relitigate the same issues seeking the same relief from the same parties is nothing short of frivolous. See, e.g., Heghmann v. Town of Rye, 2005 WL 637928, 2005 U.S. Dist. LEXIS 4255 (D.N.H.2005) (holding that Heghmann’s lawsuit was frivolous, groundless, and wholly without merit and awarding costs and fees to defendants); Heghmann v. Town of Rye, 2004 WL 2526417, 2004 U.S. Dist. LEXIS 22790 (D.N.H.2004) (granting motions to dismiss Heghmann’s complaint for failure to state viable claims for damages for violations of the automatic stay and violations of his rights to due process and equal protection).

We find the present appeal to be in the same vein. Through this appeal, the Heghmanns are attempting to relitigate the State Court proceedings which resulted in the eviction. As the Panel stated in its opinion of November 3, 2004, the Debt- or is barred from challenging the State Court proceedings by the doctrine of res judicata and/or the Rooker-Feldman doctrine. Accordingly, the Debtor’s claims are manifestly frivolous. Relitigating a frivolous claim is not only plainly frivolous but patently without good faith.

Accordingly, the Debtor’s request to proceed in forma pauperis is DENIED.

1 . Fed. R.App. P. 24(a) requires that a party to a district court action who desires to appeal in forma pauperis must file a motion in the district court. Fed. R.App. P. 6(b)(1)(C) provides that when an appeal is from a bankruptcy appellate panel, the term "district court," as used in any applicable rule, means "appellate panel." Thus, the Debtor's application to proceed in forma pauperis must first be acted on by the Panel.

2 . Robert Heghmann is a licensed attorney and represents Beatrice Heghmann in this matter.

3 . The Debtor argued that Mr. Hañani and Attorney Indorf repeatedly violated the automatic stay in their efforts to execute the Writ of Possession during the course of Robert Heghmann's bankruptcy case and in evicting the Heghmanns after Robert Heghmann's case was dismissed. As noted above, the Heghmanns were evicted on May 24, 2003, prior to the commencement of the instant case. Consequently, the majority of the actions at issue occurred prior to the commencement of the instant case.

4 . The Debtor did not provide the Panel with a transcript of the hearing.

5 . The bankruptcy court stated:

1. An alleged violation of the automatic stay may not be prosecuted in a subsequent bankruptcy case.

2. The debtors in the two cases are different.

3. The ten day stay provided in Bankruptcy Rule 7062 is not applicable to an order dismissing the case. See Fed. R. Bankr.P. 9014, which provides that Bankruptcy Rule 7062 is not applicable to a contested matter. Thus, this eviction was in place prior to the filing of the instant petition and is not subject to challenge in this proceeding.

See App. at 37.

6 . Considerable difference of opinion exists as to whether bankruptcy courts are "courts of the United States” and thus able to grant § 1915 relief at all. Compare Perroton v. Gray (In re Perroton), 958 F.2d 889, 896 (9th Cir.1992) (concluding that bankruptcy court is not "court of United States” and therefore lacks authority to waive fees under § 1915(a)) with Matter of Anderson, 130 B.R. 497 (Bankr.W.D.Mich.1991) (citing Freytag v. C.I.R., 501 U.S. 868, 111 S.Ct. 2631, 115 L.Ed.2d 764 (1991)) (concluding that bankruptcy courts are “courts of the United States”); see also Burrell v. Letterlough (In re Burrell), 150 B.R. 369, 372 n. 3 (Bankr.E.D.Va.1992) (collecting cases). Bankruptcy courts in this circuit have either found authority to apply § 1915 on other grounds, see McGinnis v. McGinnis (In re McGinnis), 155 B.R. 294, 295-96 (Bankr.D.N.H.1993) (explaining that adversary proceeding is within the jurisdiction of the bankruptcy court as delegated under 28 U.S.C. (a), and because motion to proceed in forma pauperis is incidental to the adversary proceeding, bankruptcy court has authority under 28 U.S.C. § 157(b) to decide it), or assumed authority to decide the issue, see In re Red Bam, 23 B.R. 593 (Bankr.D.Me.1982); Newton v. Fontaine (In re Fontaine), 10 B.R. 175 (Bankr.D.R.I.1981). We assume without deciding that under appropriate circumstances a bankruptcy court can apply 28 U.S.C. § 1915.

7 . The standard for dismissal under § 1915(d) is more rigorous than the standard for dismissal under Fed.RXiv.P. 12(b)(6). See Street v. Fair, 918 F.2d 269, 273 (1st Cir.1990) (finding that complaint that failed to state a claim under Fed.R.Civ.P. 12(b)(6) was not "frivolous” under § 1915(d), as deficiencies might be cured by an amended complaint).