FILED

U.S. Bankruptcy Appellate Panel

of the Tenth Circuit

August 5, 2015

Blaine F. Bates

Clerk

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE GARY WOODROW

FLANDERS, ind. and as officer,

director, shareholder Canyon Quarry

Co., Farmer & Merchants Bank, Great

Northern Land Co., MetroBank, N.A.,

Debtor.

BAP No. CO-14-055

GARY WOODROW FLANDERS,

Plaintiff – Appellant,

Bankr. No. 98-24779

Adv. No. 13-01456

Chapter 7

v. OPINION

*

EVELYN JANE LAWRENCE,

DANIEL A. WEST, Attorney, MOYE

WHITE LLP, and JAMES T.

BURGHARDT,

Defendants – Appellees.

Appeal from the United States Bankruptcy Court

for the District of Colorado

Submitted on the briefs:

1

Before MICHAEL, KARLIN, and HALL, Bankruptcy Judges.

This unpublished opinion may be cited for its persuasive value, but is not

*

precedential, except under the doctrines of law of the case, claim preclusion, and

issue preclusion. 10th Cir. BAP L.R. 8026-6.

The parties did not request oral argument, and after examining the briefs

1

and appellate record, the Court has determined unanimously that oral argument

would not significantly aid in the determination of this appeal. See Fed. R. Bankr.

P. 8019(b)(3). The case is therefore submitted without oral argument.

BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 1 of 21
MICHAEL, Bankruptcy Judge.

“If at first you don’t succeed, try, try, try again.”

2

There are many great American success stories built upon unflinching

stubborn determination in the face of incredible odds. Very few of them,

however, can be found in the annals of litigation history. This case will not alter

the landscape. The debtor in this now 17-year-old Chapter 7 case appeals the

bankruptcy court’s order granting summary judgment in favor of the defendants

on his adversary claims against them for violation of the discharge injunction.

The debtor’s claims relate to marital property and marital debt division orders

entered by a Colorado state court in his divorce proceedings. The bankruptcy

court concluded the debtor’s action was barred for a number of reasons, including

the Rooker-Feldman doctrine, the principle of collateral estoppel or issue

preclusion, and lack of standing. Having reviewed the record and the applicable

law, we affirm the bankruptcy court’s order.

I. INTRODUCTION

In its order granting summary judgment, the bankruptcy court noted that

“[t]his adversary proceeding results from the complicated confluence of

bankruptcy and divorce proceedings.” The Colorado court that entered the orders

3

giving rise to the debtor’s claims described the divorce proceedings as “the most

complex this Court has seen in over 25 years,” and also commented that the

4

debtor contested almost every issue in the case. Additionally, the debtor and his

5

former wife controlled numerous corporate entities involved in the bankruptcy

William Edward Hickson (1803–1870).

2

Order Granting Defendants’ Motion for Summary Judgment (“Order”) at 1,

3

in Appellant’s App. at 228, published at Flanders v. Lawrence (In re Flanders),

517 B.R. 245, 249 (Bankr. D. Colo. 2014).

Amended Final Orders at 5, in Appellees’ Supp. App. at 56.

4

Id.

5

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BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 2 of 21
proceedings that were marital assets with associated marital debt subject to

division by the divorce court. Therefore, before setting forth the specific facts of

the bankruptcy proceedings leading to this appeal, we lay some groundwork by

identifying the parties and their controlled entities, and by briefly previewing

facts that are critical to understanding the debtor’s claims against the defendants

for violation of the discharge injunction.

The plaintiff/appellant in this adversary matter is debtor Gary Woodrow

Flanders (“Flanders”). When Flanders filed his bankruptcy petition, he was

married to defendant/appellee Evelyn Jane Lawrence (“Lawrence”). Lawrence

did not join the petition. Two years after Flanders filed for bankruptcy

protection, Lawrence filed for divorce. The divorce proceedings continued in

Colorado state court for more than eight years. Flanders’ claims in this adversary

proceeding arise out of the divorce proceedings and their interaction with his

bankruptcy case.

The other defendants/appellees are: Daniel A. West (“West”), Lawrence’s

divorce attorney; James T. Burghardt (“Burghardt”), Lawrence’s bankruptcy

counsel; and Moye White LLP (“Moye White”), Burghardt’s law firm

(collectively the “Defendants”). Also involved in the underlying bankruptcy and

divorce litigation are various corporate entities controlled by Flanders and

Lawrence. The two companies wholly owned by Flanders are Great Northern

Land Company and Canyon Quarry Company (the “Flanders Entities”). The

entities wholly owned by Lawrence are Great Northern Transportation Company

(together with its seven wholly owned subsidiaries), and American Rock Products

Corporation (collectively the “Lawrence Entities,” or individually a “Lawrence

Entity”). As of the bankruptcy petition date, there was an outstanding promissory

note made by Flanders and Lawrence to a Lawrence Entity in the amount of

approximately $2 million.

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BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 3 of 21
The interaction of the bankruptcy and divorce proceedings leading to this

appeal results primarily from the following three events. First, the bankruptcy

trustee brought an adversary proceeding against Flanders, Lawrence, and the

Lawrence Entities, alleging various fraudulent conveyances had been made. To

conclude the adversary proceeding against her, Lawrence entered into a

settlement agreement with the trustee and executed a mutual release. Second,

after administration of the bankruptcy estate and payment of all debts in full, a

surplus remained. The Colorado divorce court was then tasked with determining

whether the bankruptcy surplus was marital property subject to division with

Lawrence. The divorce court concluded the surplus was marital property despite

Flanders’ attempt to bar any claim Lawrence might have by arguing she waived it

under the settlement agreement and mutual release in the bankruptcy trustee’s

adversary proceeding. Third, the divorce court entered a monetary judgment

against Flanders that he claims violated the discharge injunction in his bankruptcy

case. According to Flanders, the judgment is the result of the divorce court’s

treatment of a discharged debt. Flanders seriously mischaracterizes the nature

and character of the judgment.

II. BANKRUPTCY PROCEEDINGS

6

Flanders individually filed for Chapter 11 protection in 1998. After

Flanders failed to submit a confirmable Chapter 11 plan, his case was converted

to one under Chapter 7. Jeffrey L. Hill was appointed trustee (“Trustee”).

Trustee subsequently put the Flanders Entities into Chapter 7 bankruptcy and

served as trustee of those estates.

Lawrence filed for divorce from Flanders in October 2000. Shortly

thereafter, Trustee, on behalf of the Flanders and Flanders Entities estates,

Unless otherwise indicated, this factual description is taken from the

6

bankruptcy court’s Order.

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BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 4 of 21
commenced an adversary proceeding against Flanders, Lawrence, and the

Lawrence Entities, alleging fraudulent conveyances had been made (“Trustee’s

Adversary”). Trustee quickly reached settlement with Lawrence and the

Lawrence Entities. The bankruptcy court entered an order approving the

settlement agreement in April 2001 (“Settlement Agreement”). Thereafter,

Lawrence and the Lawrence Entities entered into a mutual release with Trustee

(“Mutual Release”), releasing the bankruptcy estates “from any and all claims and

causes of action that have been made or could have been made in the Adversary

Proceeding.” Flanders was not a party to the Settlement Agreement or Mutual

7

Release, but resolution of the claims against Lawrence and the Lawrence Entities

essentially resolved Trustee’s claims against Flanders.

The Colorado state court entered a divorce decree in December 2001, but

litigation over the division of marital property and marital debt continued.

Meanwhile, the bankruptcy court granted Flanders a discharge in September 2002.

After administering the estate for several years, Trustee filed his final report in

July 2006. Following liquidation of Flanders’ bankruptcy estate and payment of

his unsecured creditors in full, a surplus of approximately $230,000 remained

(“Surplus”). Trustee’s final report indicated the Surplus was to be paid to

Flanders.

The divorce court was informed of the Surplus, but by that time it had been

garnished by the United States Attorney to pay a 2005 Oklahoma federal court

judgment against Flanders in connection with his conviction for bank fraud. The

federal district court instructed the Colorado divorce court to determine whether

the Surplus was marital property. In February 2007, the divorce court entered an

order concluding the Surplus constituted marital property on the basis that

Colorado law presumes property held during marriage is marital property and

Mutual Release ¶ 2, at 2, in Appellees’ Supp. App. at 41.

7

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BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 5 of 21
Flanders had not proven any portion of the Surplus was his separate property.

The divorce court rejected Flanders’ argument that, pursuant to the Settlement

Agreement and Mutual Release executed in Trustee’s Adversary, Lawrence had

waived any claim she might have to the Surplus. Upon request, the Surplus was

transferred to the divorce court’s registry fund.

Flanders’ bankruptcy case was closed in May 2008. Nine months later, the

divorce court issued final orders dividing marital property and marital debt. It

also entered a judgment in excess of $563,000 against Flanders in favor of

Lawrence (the “Judgment”). Flanders contends the Judgment results from the

debt on the $2 million promissory note executed by Flanders and Lawrence in

favor of a Lawrence Entity (“Promissory Note Debt”) that was discharged in his

Chapter 7 case. In truth, the Judgment was comprised primarily of attorneys fees

the divorce court found Flanders should pay as a result of his bad faith litigation

and contribution to delay in the proceedings, all of which were generated postpetition.

8

Flanders appealed the divorce court’s final orders to the Colorado Court of

Civil Appeals, which affirmed in May 2011, except for a limited remand not

relevant to this appeal. Flanders requested rehearing, which was denied in

9

September 2011. Flanders then petitioned the Colorado Supreme Court for

certiorari, which it denied in January 2013.

Undaunted, Flanders initiated this adversary proceeding in August 2013

asserting the divorce court, at the invitation of the Defendants, made

The Judgment was made up of $513,754 in attorneys fees plus one-half of

8

the differences between assets awarded to Lawrence and those awarded to

Flanders, plus Flanders’ remaining fines and restitution owing to the United

States on account of his felony conviction, minus one-half of the value of the

remaining marital personal property. Order: Corrected Amended Final Orders

¶ 54, in Appellees’ Supp. App. at 74.

See Order ¶¶ 25-26, 517 B.R. at 253.

9

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BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 6 of 21
determinations and rulings regarding division of marital property and marital debt

that violated the discharge injunction provisions of 11 U.S.C. § 524. After

10

being granted leave by the bankruptcy court, Flanders filed his second amended

complaint (“Complaint”) specifically contending, among other things, that: 1) the

divorce court erroneously concluded the Surplus was marital property because

Lawrence waived any claim to the Surplus via execution of the Settlement

Agreement and Mutual Release in Trustee’s Adversary; 2) the divorce court

improperly treated the Promissory Note Debt as a marital debt; and 3) the divorce

court improperly treated stock in the Flanders Entities and burial plots as marital

property. Flanders argued these assets were part of his bankruptcy estate

abandoned to him when his bankruptcy case was closed.

To remedy the perceived errors on the divorce court’s part, Flanders asked

the bankruptcy court to hold the Defendants in contempt for violation of the § 524

discharge injunction. He also sought injunctive and declaratory relief that

11

would essentially void the divorce court’s orders and prevent the Defendants from

enforcing the Judgment. Flanders requested the bankruptcy court to impose

sanctions, including attorneys fees, and to award consequential damages against

Lawrence in the amount of the Surplus and the Promissory Note Debt, as well as

punitive damages.

In April 2014, Burghardt and Moye White filed a motion to dismiss the

Complaint, or in the alternative, for summary judgment. Lawrence and West

12

Unless otherwise indicated, all future statutory references in text are to the

10

Bankruptcy Code, Title 11 of the United States Code.

Apparently, in Flanders’ view, the Defendants’ pursuit and obtainment of

11

the divorce court’s orders concerning the Surplus and the division of marital

property constituted violations of the discharge injunction.

Moye White Defendants’ Motion to Dismiss Plaintiff’s Second Amended

12

Complaint Pursuant to Fed. R. Civ. P. 12(b)(6) or, in the Alternative, for

Summary Judgment, in Appellant’s App. at 170.

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BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 7 of 21
joined in the motion. The Defendants primarily argued the doctrines of issue

and/or claim preclusion required Flanders’ Complaint to be dismissed in its

entirety. The Defendants also asserted the Rooker-Feldman doctrine deprived the

bankruptcy court of jurisdiction over Flanders’ claims seeking to overturn the

divorce court’s orders, and that Flanders did not have standing to seek damages

for their alleged contempt. They further maintained the bankruptcy court should

apply the equitable doctrine of laches to the Complaint Flanders filed in 2013

because it related to the divorce court’s orders entered in 2007 and 2009, and thus

it was prejudicially untimely.

13

The bankruptcy court agreed with the Defendants that Flanders’ claims

were barred, and on September 16, 2014, entered its order granting the

Defendants’ motion for summary judgment and terminating Flanders’ adversary

proceeding (“Order”). The bankruptcy court concluded that although it could not

revisit factual issues decided by the divorce court to the extent that an exercise of

such jurisdiction would constitute an appeal of state court orders, Flanders’

alleged willful violation of the federal discharge injunction is an independent

claim which it was not barred from adjudicating by virtue of the Rooker-Feldman

doctrine. The bankruptcy court determined that to the extent success on Flanders’

contempt claims required relitigation of issues decided by the divorce court, the

result was governed by principles of issue preclusion. The bankruptcy court

14

ruled that all of the elements of issue preclusion were met. Because Flanders’

claims for violation of the discharge injunction depended upon reversal of factual

adjudications regarding marital property and marital debt by the divorce court,

Id. at 14-16, in Appellant’s App. at 183-85.

13

Order, 517 B.R. at 256-58.

14

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BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 8 of 21
Defendants were entitled to summary judgment.

15

On September 29, 2014, Flanders filed a motion for extension of time to

appeal. The bankruptcy court granted the motion, extending time until October

21, 2014. On October 20, 2014, Flanders timely filed his Notice of Appeal

seeking review by this Court.

III. APPELLATE JURISDICTION

This Court has jurisdiction to hear timely filed appeals from “final

judgments, orders, and decrees” of bankruptcy courts within the Tenth Circuit,

unless one of the parties elects to have the district court hear the appeal.

16

Neither party elected to have this appeal heard by the United States District Court

for the District of Colorado. The parties have therefore consented to appellate

review by this Court.

A decision is considered final “if it ‘ends the litigation on the merits and

leaves nothing for the court to do but execute the judgment.’” Here, the

17

bankruptcy court’s order granting the Defendants summary judgment on Flanders’

Complaint is final for purposes of review because it resolved all claims as to all

parties.

18

Id. at 260.

15

28 U.S.C. § 158(a)(1), (b)(1), and (c)(1); Fed. R. Bankr. P. 8001(e) (now at

16

Fed. R. Bankr. P. 8005, effective Dec. 1, 2014); 10th Cir. BAP L.R. 8001–3 (now

at 10th Cir. BAP L.R. 8005-1, effective Dec. 1, 2014).

Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996) (quoting Catlin

17

v. United States, 324 U.S. 229, 233 (1945)).

Order, 517 B.R. at 262.

18

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BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 9 of 21
IV. STANDARD OF REVIEW

A ruling on summary judgment is reviewed de novo, applying the same

legal standard used by the bankruptcy court. Summary judgment is appropriate

19

and can be upheld only if the pleadings, the discovery and disclosure materials on

file, and any affidavits show that there is no genuine issue as to any material fact

and that the movant is entitled to judgment as a matter of law. “In reviewing a

20

summary judgment motion, the court is to view the record ‘in the light most

favorable to the nonmoving party.’” In this appeal, it is clear there were no

21

disputed material facts. Instead, Flanders disagrees with the bankruptcy court’s

conclusions regarding the Rooker-Feldman doctrine, the principles of issue

preclusion, and standing to bring suit.

V. ANALYSIS

On appeal, Flanders argues the bankruptcy court erroneously granted the

Defendants summary judgment based on the Rooker-Feldman doctrine and issue

22

preclusion. The Defendants assert this Court may affirm the bankruptcy court’s

23

Order on the alternative basis that Flanders is barred by the doctrine of laches

from attempting, through filing this adversary proceeding in 2013, to collaterally

attack state court orders entered in 2007 and 2009.

24

E.E.O.C. v. C.R. England, Inc., 644 F.3d 1028, 1037 (10th Cir. 2011);

19

Kojima v. Grandote Int’l Ltd. Liability Co. (In re Grandote Country Club Co.),

252 F.3d 1146, 1149 (10th Cir. 2001).

Fed. R. Civ. P. 56(a), (c); Donner v. Nicklaus, 778 F.3d 857, 876 (10th Cir.

20

2015).

Grandote, 252 F.3d at 1149 (quoting Thournir v. Meyer, 909 F.2d 408, 409

21

(10th Cir. 1990)).

See Appellant’s Opening Brief at 36-49.

22

See id. at 26-35.

23

Answer Brief of Appellees James T. Burghardt and Moye White LLP

24

(“Answer Brief”) at 4. Lawrence and West both joined in this Answer Brief.

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BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 10 of 21
A. Rooker-Feldman Doctrine

The Rooker-Feldman doctrine implicates jurisdiction and federal courts are

obligated to determine they have jurisdiction before proceeding to the merits of a

case. Therefore, the bankruptcy court began its analysis by addressing the

25

impact of the Rooker-Feldman doctrine on the claims made in Flanders’

Complaint. It held that

to the extent [Flanders] seeks a finding of contempt and sanctions for

Defendants’ alleged willful violation of his discharge injunction, this

is an independent claim which this Court is not barred from

adjudicating by virtue of Rooker-Feldman. By seeking such relief,

[Flanders] is not seeking “review and rejection” of the Divorce

Court’s judgment. Instead, he seeks sanctions for alleged violations

of a federal court injunction.

26

We agree with the bankruptcy court’s conclusion.

The Rooker-Feldman doctrine prevents the “appeal” of a state court

judgment to a federal court other than the United States Supreme Court. It does

so by prohibiting litigants from bringing suit in federal court “complaining of

injuries caused by state-court judgments rendered before [federal] district court

proceedings commenced and inviting district court review and rejection of those

judgments.” But the scope of the Rooker-Feldman doctrine is narrow and

27

confined to cases of the kind from which the doctrine acquired its name: cases

brought by state-court losers that invite federal court review and rejection of the

state court’s judgments.

28

In its 2005 decision in Exxon Mobil Corp. v. Saudi Basic Indus. Corp., the

29

United States Supreme Court reformulated the Rooker-Feldman doctrine. They

Lance v. Coffman, 549 U.S. 437, 439 (2007).

25

Order, 517 B.R. at 256.

26

Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005).

27

Id.; Skinner v. Switzer, 562 U.S. 521, 531-32 (2011).

28

544 U.S. 280 (2005).

29

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BAP Appeal No. 14-55 Docket No. 78 Filed: 08/05/2015 Page: 11 of 21
did so, in part, because broad construction by some courts had the effect of

“overriding Congress’ conferral of federal-court jurisdiction concurrent with

jurisdiction exercised by state courts,” as well as “superseding the ordinary

application of preclusion law pursuant to 28 U.S.C. § 1738.” The Supreme

30

Court explained that “[i]f a federal plaintiff ‘present[s] some independent claim,

albeit one that denies a legal conclusion that a state court has reached in a case to

which he was a party . . . , then there is jurisdiction and state law determines

whether the defendant prevails under principles of preclusion.’”

31

Following the Exxon Mobil decision, the United States Court of Appeals for

the Tenth Circuit (“Tenth Circuit”) again emphasized the narrowness of the

Rooker-Feldman doctrine. In Campbell v. City of Spencer, the Tenth Circuit

32

held that when the state-court judgment is not itself at issue, the Rooker-Feldman

doctrine does not prevent a suit in federal court regarding the same subject

matter, or even the same claims, as those presented in the state-court action.

33

Rooker-Feldman does not bar an action just because it seeks relief inconsistent

with, or even ameliorative of, a state-court judgment. It bars claims

34

complaining of injuries caused by wrongfully entered state-court judgments. As

35

this Court has previously stated, when determining whether the Rooker-Feldman

doctrine applies, “[t]he fundamental and appropriate question to ask is whether

the injury alleged by the federal plaintiff resulted from the state court judgment

Id. at 283.

30

Id. at 293 (quoting GASH Assocs. v. Rosemont, 995 F.2d 726, 728 (7th Cir.

31

1993)).

682 F.3d 1278 (10th Cir. 2012).

32

Id. at 1283.

33

Id. at 1282.

34

Id. at 1283.

35

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itself or is distinct from that judgment.”

36

In our case, Flanders’ Complaint is long and complicated with eleven

different claims for relief. However, all of Flanders’ claims can be fairly read as

allegations that, at the invitation of the Defendants, the divorce court took actions

in violation of the automatic stay and discharge injunction provisions contained in

the United States Bankruptcy Code. That being the case, Flanders’ Complaint

states independent federal claims, and the Rooker-Feldman doctrine does not bar

federal-court jurisdiction over a state-court judgment that modifies a discharge in

bankruptcy.

37

Rooker-Feldman is not the only doctrine that potentially bars Flanders’

claims. As the bankruptcy court correctly determined, “[t]o the extent that

success on [Flanders’] contempt claims seeks relitigation of issues decided by the

Divorce Court, principles of preclusion will govern the result.” Therefore, we

38

must proceed to analyze whether the bankruptcy court correctly ruled Flanders’

claims were barred under the rules of issue preclusion.

B. Issue Preclusion

The judicially-created, equitable doctrine of issue preclusion “prevents a

party that has lost the battle over an issue in one lawsuit from relitigating the

same issue in another lawsuit.” It “is intended to relieve parties of the cost and

39

vexation of multiple lawsuits, conserve judicial resources, and, by preventing

Hill v. Putvin (In re Putvin), 332 B.R. 619, 623 (10th Cir. BAP 2005)

36

(quoting State of Mo. ex rel. Nixon v. Audley (In re Audley), 275 B.R. 383, 390

(10th Cir. BAP 2002)).

Hamilton v. Herr (In re Hamilton), 540 F.3d 367, 369 (6th Cir. 2008); In re

37

Pavelich, 229 B.R. 777, 783 (9th Cir. BAP 1999); In re Dabrowski, 257 B.R. 394

(Bankr. S.D.N.Y. 2001). But cf. In re Ferren, 203 F.3d 559 (8th Cir. 2000).

Order, 517 B.R. at 256.

38

Melnor, Inc. v. Corey (In re Corey), 583 F.3d 1249, 1251 (10th Cir. 2009).

39

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inconsistent decisions, encourage reliance on adjudication.” Pursuant to the full

40

faith and credit statute, in order to determine the preclusive effect of a state

41

court judgment, a federal court must refer to the preclusion law of the state in

which such judgment was rendered. Here, Colorado law controls the effect of

42

the divorce court’s orders.

Under Colorado law,

[t]he doctrine [of issue preclusion] applies to bar subsequent

litigation only if (1) the issue sought to be precluded is identical to an

issue actually and necessarily determined in the prior proceeding; (2)

the party against whom estoppel is asserted has been a party to or is

in privity with a party to the prior proceeding; (3) there is a final

judgment on the merits in the prior proceeding; and (4) the party

against whom the doctrine is asserted had a full and fair opportunity

to litigate the issue in the prior proceeding.

43

Additionally, the Colorado Supreme Court has indicated that “[e]ven if not

explicitly determined, an issue is nevertheless considered to have been ‘actually’

determined for purposes of collateral estoppel if its resolution is necessarily

implied in an actual determination.”

44

The bankruptcy court correctly concluded the principles of issue preclusion

prevent Flanders from collaterally attacking determinations of the divorce court.

Three of the four issue preclusion requirements set forth above are clearly met

and require only brief discussion. First, Flanders, the party whom the Defendants

assert is estopped, was a party to the prior proceedings. Second, addressing the

definition of finality, the Colorado Supreme Court has concluded that “in order to

Nichols v. Board of Cty. Comm’rs, 506 F.3d 962, 967 (10th Cir. 2007)

40

(quoting Bebo Constr. Co. v. Mattox & O’Brien, P.C., 990 P.2d 78, 84 (Colo.

1999) (citations and internal quotation marks omitted)).

28 U.S.C. § 1738.

41

Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380 (1985);

42

Nichols, 506 F.3d at 967.

Reynolds v. Cotten, 274 P.3d 540, 543 (Colo. 2012).

43

Id. at 544.

44

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be accorded preclusive effect, a judgment must be ‘sufficiently firm’ in the sense

that it was not tentative, the parties had an opportunity to be heard, and there was

an opportunity for review.” Here, there is no longer an appeal pending with

45

respect to the divorce court’s orders, and the Colorado Court of Appeals

remanded on a very limited issue not relevant to this appeal. Thus, the divorce

court’s determinations and orders that Flanders seeks to attack are final and can

be given preclusive effect.

Third, with respect to a “full and fair opportunity to litigate,” the Colorado

Supreme Court has held that such requirement inquires

whether the remedies and procedures in the first proceeding are

substantially different from the proceeding in which collateral

estoppel is asserted, whether the party in privity in the first

proceeding has sufficient incentive to vigorously assert or defend the

position of the party against which collateral estoppel is asserted, and

the extent to which the issues are identical.

46

Here, Flanders had sufficient incentive, and did in fact, vigorously litigate all

issues of classification and division of marital property and marital debt before

the divorce court. In its orders, the divorce court stated that “Flanders’ actions in

contesting almost every motion contributed virtually nothing to the marital

estate,” and some of his “actions have been taken in bad faith as he has continued

to present arguments and take up court time with arguments that had been

previously rejected.”

47

Having easily established the presence of three of the four issue preclusion

requirements, we turn our attention to the final requirement: that the issue sought

to be precluded is identical to an issue actually and necessarily determined in the

prior proceeding. This critical requirement is also met here because Flanders’

Rantz v. Kaufman, 109 P.3d 132, 141 (Colo. 2005) (quoting Carpenter v.

45

Young, 773 P.2d 561, 568 (Colo. 1989)).

McNichols v. Elk Dance Colorado, LLC, 139 P.3d 660, 669 (Colo. 2006).

46

Amended Final Orders ¶ 47, at 17-18, in Appellees’ Supp. App. at 68-69.

47

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claims for violation of the bankruptcy discharge injunction are dependent upon

arguments already adjudicated by the divorce court. One of the major factual

issues underlying Flanders’ claims is the effect of Lawrence’s execution of the

Settlement Agreement and Mutual Release in the Trustee’s Adversary. Flanders

argues the divorce court incorrectly designated the Surplus as marital property

subject to division because Lawrence waived any claim she potentially had

pursuant to the terms of the Settlement Agreement and Mutual Release. As the

bankruptcy court correctly found, that factual issue was carefully considered and

ruled on by the divorce court. The divorce court specifically concluded that

48

Lawrence did not waive any claim she may have to the Surplus by executing the

Settlement Agreement and Mutual Release. Therefore, Flanders was not entitled

49

to litigate the issue again before the bankruptcy court.

A second disputed factual underpinning of Flanders’ claims is the effect of

the divorce court’s classification of the Promissory Note Debt as “marital debt.”

Flanders argues his liability on the debt was discharged in his bankruptcy case,

and somehow believes that its classification as “marital debt” by the divorce court

resulted in an “offset” of a debt as a personal liability of the debtor in violation of

the discharge injunction. He further asserts this classification gave rise to the

50

Order, 517 B.R. at 259-60.

48

Id.

49

According to Flanders,

50

The irrelevant conclusion of the divorce court and the convoluted

manner in which that conclusion was applied against the value of an

asset of the marital estate constituted the collection of a discharged

debt against Flanders by an unlawful offset and as such, the divorce

court’s Order in that regard is void ab initio. The Divorce Court

judgment has therefore “modified” the Bankruptcy Court’s Discharge

regarding Flanders’ former debt to Ms. Lawrence and GNTC, and

said order is therefore void ab initio.

Opening Brief at 19.

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divorce court’s Judgment against him. The bankruptcy court found the divorce

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court considered the effect of Flanders’ discharge and determined the Promissory

Note Debt was a marital debt that could be considered in determining the division

of marital assets. As a result, the bankruptcy court correctly concluded Flanders

was precluded from relitigating the classification of the Promissory Note Debt as

marital debt in his attempt to establish a discharge violation by the Defendants.

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Even if the requirements of issue preclusion were not met here, Flanders’

assertion that there has been a violation of the provisions of § 524(a)(2) is wholly

without merit. The Promissory Note Debt may have been discharged, but

contrary to Flanders’ contentions, the divorce court’s orders did not make

Flanders “responsible” in any way for this debt. There is nothing in the divorce

court’s orders that would allow Lawrence or the Lawrence Entity to enforce the

Promissory Note Debt against Flanders, or that has that effect. Instead, the

53

divorce court only determined that the Promissory Note Debt was “marital debt”

54

for purposes of dividing marital property.

55

Appellant’s Opening Brief at 16.

51

Order, 517 B.R. at 260.

52

Again, Flanders’ suggestion that there was an offset of the Promissory Note

53

Debt that resulted in the Judgment is fiction. The Judgment consists primarily of

the divorce court’s imposition of attorneys fees for his bad faith litigation

conduct.

Under Colorado law, marital liabilities include all debts that are acquired

54

and incurred by a husband and wife during their marriage. In re Marriage of

Jorgenson, 143 P.3d 1169, 1172 (citing In re Marriage of Speirs, 956 P.2d 622

(Colo. App. 1997)). Therefore, the Promissory Note Debt constituted a marital

debt regardless of whether Flanders ever had any personal liability because

Lawrence remained liable on the debt, and the divorce court stated it was

convinced that the $1,900,000 in funds procured from the loan was used by the

parties for marital expenses. Amended Final Orders ¶ 19, at 9, in Appellees’

App. at 60.

The bankruptcy court discusses this alternative merits ruling in a footnote

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of its Order:

(continued...)

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C. Lack of Standing

The bankruptcy court also addressed Flanders’ assertion that because the

Surplus was property of the bankruptcy estate, the divorce court’s order directing

the funds to be paid to its registry constituted a violation of the automatic stay

provisions of § 362. The bankruptcy court first noted that the Surplus was not

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property of the estate when the divorce court issued its order, and therefore

pursuant to § 362(c)(1), the automatic stay was no longer applicable. At the time

the divorce court entered its order, the Surplus had been actually or constructively

distributed to Flanders in that it was being held in the registry of the United

States District Court after being garnished for payment of Flanders’ criminal

judgment. The bankruptcy court then ruled that, assuming “for the purpose of

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the [Defendants’] motion for summary judgment, the [bankruptcy estate surplus]

funds had not been distributed to [Flanders] and remained estate property,

[Flanders] has no standing to request an order declaring the Bankruptcy Surplus

(...continued)

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The application of the doctrine of issue preclusion is a matter of

equity and a court may decline to apply the doctrine even when the

elements for its application are present. Even had this Court

determined not to apply the doctrine, Debtor would lose on the merits

of this claim. Debtor’s discharge of personal liability on the

promissory note to GNTC only barred collection of the note as a

personal liability of the Debtor. 11 U.S.C. § 524(a)(2). It did not

bar the Divorce Court from characterizing the debt as a marital debt.

The Divorce Court’s analysis of the marital nature of the debt, as

well as the overall property division between Ms. Lawrence and

Debtor, was clearly within the broad discretion of the Divorce Court

to make an equitable distribution of marital property after

considering all relevant factors, including the contributions of each

spouse, the value of property set apart to each spouse, the economic

circumstances of each spouse, and any increase, decrease, or

depletion in the value of any separate property during the marriage.

Order, 517 B.R. at 260-61, n.6 (citation omitted).

It does not appear that Flanders made this argument as a “claim for relief”

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in his Complaint. Instead his contention is part of his “Factual Allegations

Common to All Counts.” See Complaint ¶ 45, at 10, in Appellant’s App. at 149.

Order, 517 B.R. at 261.

57

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Order void ab initio.” The bankruptcy court explained that the trustee, as

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representative of the estate, is the proper party to seek redress for an alleged

violation of the automatic stay. The bankruptcy court also ruled that the

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automatic stay was not in effect as to actions to collect from Flanders because,

pursuant to § 362(c)(2), it had terminated some four years earlier when Flanders

was granted his Chapter 7 discharge.

60

In his Opening Brief on appeal, Flanders generally asserts the bankruptcy

court “erred in its conclusion that Debtor is precluded from arguing all of the

issues that he raised in his Complaint.” However, other than such assertion,

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Flanders does not make any specific argument regarding the bankruptcy court’s

determination that he did not have standing to pursue alleged violations of the

automatic stay. As a result, Flanders is deemed to have waived this issue on

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appeal.

63

Id.

58

Id. at 261-62.

59

Id. at 262.

60

Appellant’s Opening Brief ¶ 9, at 2.

61

Flanders does argue on appeal that the bankruptcy court erred in concluding

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that the divorce court had subject matter jurisdiction to issue orders regarding

after-acquired property. Opening Brief at 54-59. However, the substance of this

argument appears to be simply another incarnation of Flanders’ contention that

the divorce court erroneously interpreted the Settlement Agreement and Mutual

Release, an argument that has already been determined to be subject to issue

preclusion principles.

In re Taylor, 737 F.3d 670, 682 n.9 (10th Cir. 2013) (arguments

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perfunctorily or inadequately briefed are waived); In re Repine, 536 F.3d 512,

518, n.5 (5th Cir. 2008) (issues not adequately briefed are waived); Sw. Pa.

Growth Alliance v. Browner, 121 F.3d 106, 122 (3d Cir. 1997) (“appellate courts

generally should not address legal issues that the parties have not developed

through proper briefing”).

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D. Laches

In their Answer Brief, the Defendants argue this Court may affirm the

bankruptcy court’s Order on the alternative basis that Flanders is barred by the

doctrine of laches from attempting, through filing this adversary proceeding in

2013, to collaterally attack the Colorado state court orders entered in 2007 and

2009. Derived from the principle that “equity aids the vigilant and not those

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who slumber on their rights,” the laches defense bars a party’s dilatory claim,

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when there is: “(1) lack of diligence by the party against whom the defense is

asserted, and (2) prejudice to the party asserting the defense.” Whether the

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doctrine of laches bars a particular action or claim is a decision primarily

addressed to the discretion of the trial court.

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The Defendants raised the issue of laches before the bankruptcy court, but

the Order granting summary judgment does not discuss laches. Thus, the

bankruptcy court rejected, at least implicitly, the doctrine of laches as a basis for

barring Flanders’ Complaint. Given that this Court may not disturb a bankruptcy

court’s ruling on laches in the absence of abuse of discretion, and having

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already determined that Flanders’ claims are barred by the principles of issue

preclusion, we decline the Defendants’ invitation to address the laches issue on

appeal.

Answer Brief of Appellees James T. Burghardt and Moye White LLP

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(“Answer Brief”) at 4. Lawrence and West joined in this Answer Brief.

Biodiversity Conservation All. v. Jiron, 762 F.3d 1036, 1091 (10th Cir.

65

2014) (quoting Kansas v. Colorado, 514 U.S. 673, 687 (1995) (quotations

omitted)).

Id. (citing Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 121-22

66

(2002) (quotations omitted)).

Id. at 1090 (quoting Burnett v. New York Cent. R.R. Co., 380 U.S. 424, 435

67

(1965)).

Id. (quoting Brunswick Corp. v. Spinit Reel Co., 832 F. 2d 513, 523 (10th

68

Cir. 1987)).

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VI. CONCLUSION

The Rooker-Feldman doctrine does not prevent the bankruptcy court from

exercising jurisdiction over Flanders’ claims against the Defendants for violation

of the discharge injunction. However, to the extent that a debtor’s claim for

violation of the discharge injunction depends on facts already adjudicated by a

state court, the principles of issue preclusion apply to prevent him from

relitigating them in federal court, thereby maintaining the integrity of the state

court’s orders. In this case, issue preclusion bars Flanders’ causes of action

because the facts essential to his claims have been litigated and adjudicated by the

divorce court. Accordingly, the bankruptcy court’s Order is affirmed.

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Also pending before this court are the Moye White Defendants’ Motion to

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Strike Selected Statements in Appellant’s Reply Brief as Unsupported by the

Record (Docket No. 53 filed on June 11, 2015), Appellant’s Motion for Leave to

File Sur-Reply (Docket No. 70, filed on July 8, 2015), as well as numerous

responses and replies to those documents. In light of our decision, we deny the

Motion to Strike and the Motion for Leave as moot.

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