Court Opinion

ID: 4272350
Source: CourtListenerOpinion
Date Created: 2018-05-03 17:00:36.38599+00
Date Added: 2024-06-11T14:33:11.373343
License: Public Domain

Case: 17-13280   Date Filed: 05/03/2018   Page: 1 of 7

                                                     [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 17-13280
                        Non-Argument Calendar
                      ________________________

                 D.C. Docket No. 1:15-cv-22414-KMW,
                      Bkcy No. 14-28856-bkc-AJC

In re:

ALI ASGHAR MIRZATAHERI,
SOLEDAD MIRZATAHERI,

                                        Debtors.
______________________________________________________

ALI ASGHAR MIRZATAHERI,
SOLEDAD MIRZATAHERI,

                                             Plaintiffs - Appellants,

versus

TRUSTEE MARCIA T. DUNN,
FM EAST DEVELOPERS, LLC,
KINGCADE AND GARCIA,
Consolidated Appellee,

                                             Defendants - Appellees.
                Case: 17-13280        Date Filed: 05/03/2018       Page: 2 of 7

                               ________________________

                      Appeal from the United States District Court
                          for the Southern District of Florida
                            ________________________

                                        (May 3, 2018)

Before MARTIN, JILL PRYOR and BLACK, Circuit Judges.

PER CURIAM:

       Ali Asghar Mirzataheri and Soledad Mirzataheri appeal the district court’s

order affirming certain decisions made by the bankruptcy court. Specifically, the

Mirzataheris contest: (1) the bankruptcy court’s finding that their bankruptcy

petition was filed in bad faith; (2) whether the bankruptcy court had jurisdiction to

order sanctions against them in connection with a motion brought under 11 U.S.C.

§ 707; (3) the bankruptcy court’s decision to deny their motion to disgorge fees

from the law firm that allegedly advised the Mirzataheris to file the bankruptcy

petition; and (4) whether the bankruptcy court had jurisdiction to “expand upon or

alter its [sanctions] ruling by the threat of contempt for failing to pay the

judgment.” After review, 1 we affirm the district court’s affirmance of the

bankruptcy court’s orders and judgment.

       1
          “In a bankruptcy appeal, we sit as the second court of review of the bankruptcy court’s
judgment. Like the district court, we review a bankruptcy court’s findings of fact for clear error
and its conclusions of law de novo.” In re Piazza, 719 F.3d 1253, 1260 (11th Cir. 2013) (citation
omitted).

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       The parties are familiar with the facts and procedural history of the case,

which were summarized by the district court.

                                       I. DISCUSSION

A. Bad Faith2

       The Mirzataheris first contend their bankruptcy was not filed in bad faith

because filing bankruptcy to avoid liability for the rejection of an executory

contract is a legitimate practice. This argument is waived because it was not

presented to the district court. See Access Now, Inc. v. Sw. Airlines Co., 385 F.3d
1324, 1332 (11th Cir. 2004). Rather, before the district court, the Mirzataheris

advanced a different argument: that it is not “[i]nherently bad faith to file a

bankruptcy petition with the primary reason being to extricate oneself from having

to specifically perform a contract.” Or, put differently, “there is no automatic

presumption of bad faith in filing a bankruptcy petition that merely seeks to

discharge financial liabilities” arising from backing out of an executory contract.

       That argument would have been unavailing even if it were repeated on

appeal because it incorrectly assumes the bankruptcy court’s finding of bad faith

was based on an automatic presumption arising from the Mirzataheris’ desire to

avoid the consequences of their contract with FM East Developers, LLC (FM).
       2
         We review a determination that a bankruptcy petition was filed in bad faith for clear
error under the totality of the circumstances. Id. at 1273. “A factual finding is clearly erroneous
only when this Court, after reviewing all of the evidence, is left with the definite and firm
conviction that a mistake has been committed. Such a conviction arises only when there has
been a manifest disregard of right and reason.” Id. (quotations and citation omitted).
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The bankruptcy court never suggested its decision was based solely on the

Mirzataheris’ desire to avoid the consequences of their deal with FM. On the

contrary, the record reveals the bankruptcy court based its decision on additional

factors, including the Mirzataheris’ solvency at the time they requested Chapter 7

relief and Ali Mirzataheri’s lack of candor in his testimony before the court.

      Furthermore, even if the Mirzataheris had preserved a more general

challenge to the bankruptcy court’s finding of bad faith, it would fail because the

record does not demonstrate the finding was clearly erroneous. In fact, the

Mirzataheris’ counsel acknowledged before the bankruptcy court: “I don’t think I

would have filed [the bankruptcy]. I think there are arguments why it isn’t bad

faith, but I think I would not have filed it under that fear.” He added that “most

attorneys [he knew] of would have, if not all others, would have shied them away

from filing, given the particular facts that they were facing.” At best, it would be

inconsistent for that same counsel to suggest on appeal the bankruptcy court

clearly erred by finding bad faith.

      The Mirzataheris’ contention that the bankruptcy court did not hold an

evidentiary hearing, as required under 11 U.S.C. § 707, also lacks merit. As we

acknowledged in In re Piazza, the Bankruptcy Code requires only such notice or

hearing “as is appropriate in the particular circumstances.” 719 F.3d 1253, 1272

n.8 (11th Cir. 2013) (quoting 11 U.S.C. § 102(1)(A) (emphasis added)). Here, the

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bankruptcy court stated at the outset of the hearing on May 5, 2015, that it would

address the pending motion to dismiss for bad faith. At the conclusion of that

hearing, and after Ali Mirzataheri presented evidence concerning the alleged

settlement agreement, the bankruptcy court asked the Mirzataheris’ counsel, “Are

we finished? Anything else, Mr. Russo?” Counsel replied, “No, Your Honor.”

The court then announced its conclusions. At no time did the Mirzataheris object

that additional evidence was needed on the issue of bad faith. 3 They cannot now

claim the bankruptcy court’s findings must be rejected on appeal because they

were not provided an adequate evidentiary hearing. See id.

B. Sanctions 4

         Next, the Mirzataheris assert the bankruptcy court lacked jurisdiction to

order sanctions against them, because the motion to dismiss was brought under 11

U.S.C. § 707. This argument lacks merit for the reasons explained by the district

court.

         3
         The Mirzataheris’ contention that the hearing was expressly limited to presenting
evidence on the issue of whether to enforce the alleged settlement agreement also lacks merit.
That argument is based on two exchanges between the bankruptcy court and FM’s counsel.
After review, neither of those exchanges suggests the court limited the parties to presenting
evidence on the settlement-enforcement issue. On the contrary, the court agreed to begin the
hearing by discussing the settlement-enforcement issue and then later confirmed its
understanding—based on FM’s counsel’s clarification to a question posed by the court—that FM
did not wish to present any additional evidence on that issue. Neither FM’s counsel nor the court
suggested all evidence at the hearing would be confined to the settlement-enforcement issue.
         4
        We review questions of law, such as whether a bankruptcy court has jurisdiction to
award sanctions under a particular statutory provision, de novo. In re Piazza, 719 F.3d at 1260.

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C. Disgorgement5

       The Mirzataheris also contend the bankruptcy court clearly erred by not

finding that their former law firm—which filed the bankruptcy petition on their

behalf—failed to provide “any meaningful benefit” and was thus required to

disgorge all fees it received in the case. This argument also fails for the reasons

explained by the district court.

D. Contempt6

       Finally, the Mirzataheris contend the bankruptcy court “overreached its

jurisdictional authority by expanding upon its order requiring the debtors to pay the

Trustee’s fees and costs.” Although it is not entirely clear, the Mirzataheris appear

to be arguing the bankruptcy court lacked authority to enter a judgment against

them after threatening them with contempt for ignoring the order to pay the

trustee’s fees. This argument, too, lacks merit.

       At the show-cause hearing, the Mirzataheris’ counsel argued:

       Of course, again, it’s our position they should never have been
       ordered to pay it, and if they were ordered to pay it, it had to be in the
       form of a judgment, that the only proper action of the Court, even at
       this point, would only be to reduce it to a judgment, and let execution
       enter on it, but not to enforce it by way of contempt.

       5
          We review a bankruptcy court’s factual findings, such as the reasonable value of legal
services, for clear error. Id.
       6
        We review for abuse of discretion an order granting a motion for civil contempt. Afro-
Am. Patrolmen’s League v. City of Atlanta, 817 F.2d 719, 723 (11th Cir. 1987).
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The bankruptcy court then sustained the order to show cause and stated: “[I]t

appears that the debtors are in contempt, but at this time, the Court will reserve

jurisdiction, but issue a final judgment in favor of the trustee, on which you can

execute . . . .” In other words, the bankruptcy court did precisely what the

Mirzataheris’ counsel suggested was appropriate—it reduced its previous order to

a judgment on which execution could issue. Even if we were to assume the

validity of the Mirzataheris’ premise that the bankruptcy court could not enter a

final judgment on sanctions as part of contempt proceedings, that argument is not

available on appeal. See United States v. Brannan, 562 F.3d 1300, 1306 (11th Cir.

2009) (“Where a party invites error, the Court is precluded from reviewing that

error on appeal.” (quoting United States v. Harris, 443 F.3d 822, 823–24 (11th Cir.

1998))).

                                 II. CONCLUSION

      We affirm the district court’s affirmance of the bankruptcy court’s orders

and judgment.

      AFFIRMED.

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