Court Opinion

ID: 43384
Source: CourtListenerOpinion
Date Created: 2010-04-25 21:55:24+00
Date Added: 2024-06-11T09:39:10.377889
License: Public Domain

[DO NOT PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                                                          FILED
                      ________________________ U.S. COURT OF APPEALS
                                                      ELEVENTH CIRCUIT
                                                        July 20, 2005
                            No. 04-13631
                                                       THOMAS K. KAHN
                        Non-Argument Calendar              CLERK
                      ________________________

                   D. C. Docket Nos. 03-22354-CV-AJ
                          and 03-22355-CV-AJ
                      BKC No. 97-40207 BKC-AJ

In Re: NORMAN L. BRICKELL,

                                                    Debtor.
_____________________________________________________

DOROTHEA BRICKELL,

                                                        Plaintiff-Appellant,

                               versus

MARCIA T. DUNN, Trustee,

                                                  Defendant-Appellee.
______________________________________________________

DOROTHEA BRICKELL,

                                                        Plaintiff-Appellant,

                               versus

MARKOWITZ, DAVIS, RINGEL & TRUSTY, PA,
                                                                Defendant-Appellee.
                           ________________________

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

                                   (July 20, 2005)

Before CARNES, HULL and WILSON, Circuit Judges.

PER CURIAM:

      Dorothea Brickell, proceeding pro se, appeals the district court’s order

authorizing the garnishment of her claims against the bankruptcy estate of her ex-

husband. She also appeals the district court’s denial of her motion to alter or

amend judgment pursuant to Fed. R. Civ. P. 59(e). We affirm.

                                          I.

      On December 2, 1997, Brickell’s ex-husband filed a voluntary petition for

relief under Chapter 7 of the United States Bankruptcy Code. A trustee was

appointed for his bankruptcy estate. Brickell is a creditor of her ex-husband’s

bankruptcy estate. She retained the law firm of Markowitz, Davis, Ringel, &

Trusty to represent her in the bankruptcy. On May 11, 1998 the bankruptcy court

granted the firm’s request for leave to withdraw as Brickell’s counsel.

      On February 1, 2000, the firm obtained a state-court judgment against

Brickell for unpaid legal fees in the amount of $9,736.04. The firm then filed a

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writ of garnishment in state court against the trustee, seeking to collect any

disbursements that Brickell was due from the bankruptcy estate. The state court

issued a final garnishment judgment in favor of the firm. The firm served the

garnishment judgment on the trustee.

      Meanwhile, the bankruptcy court had granted a discharge to Brickell’s ex-

husband. Brickell filed a complaint in the bankruptcy court seeking to revoke the

discharge. The bankruptcy court dismissed the complaint, and Brickell filed an

appeal in the district court. The district court affirmed the dismissal and remanded

the case to the bankruptcy court to determine whether sanctions should be imposed

against Brickell in light of her history of frivolous litigation. On August 25, 2001,

the bankruptcy court awarded Brickell’s ex-husband fees and costs in the amount

of $14,832.94 plus post-judgment interest.

      Brickell’s ex-husband then filed a motion in the bankruptcy court seeking to

recover the money through a writ of garnishment against the trustee of his

bankruptcy estate. The trustee never responded to the motion, and the bankruptcy

court issued a garnishment judgment against the trustee.

      On August 8, 2001, the trustee filed an ex parte motion with the bankruptcy

court, seeking authorization to distribute the money the estate owed Brickell to the

two garnishors. The trustee stated that, in the absence of the garnishments,

                                           3
$19,898.06 would be distributed to Brickell. The trustee asked to be allowed to

pay each garnishor his pro rata share of that amount from the distribution. The

bankruptcy court granted the trustee’s motion. A copy of the order was mailed to

Brickell.

      Brickell, proceeding pro se, then filed a motion in the bankruptcy court to

vacate the order allowing garnishment. The bankruptcy court denied the motion,

and the trustee mailed checks to the garnishors. Brickell appealed the bankruptcy

court’s garnishment order to the district court. The district court vacated the

garnishment order and the order denying Brickell’s motion to vacate. It remanded

the case to the bankruptcy court to make findings on: (1) whether a Chapter 7

trustee, who holds property of the bankruptcy estate for distribution to creditors, is

subject to garnishment by creditors of one of the debtor’s creditors; (2) whether

final judgments should be treated differently if issued by courts other than the

bankruptcy court; and (3) whether the bankruptcy court had jurisdiction to enter

orders allowing garnishment.

      On April 20, 2003, the bankruptcy court issued an order holding that the

trustee was subject to garnishment in these circumstances, that the identity of the

court issuing the garnishment judgment was irrelevant, and that it had jurisdiction

to enter an order allowing the trustee to comply with the garnishment judgments.

                                           4
Brickell appealed the decision to the district court, which affirmed the bankruptcy

court’s order. Brickell then filed a Fed. R. Civ. P. 59(e) motion asking the district

court to alter or amend its judgment. The district court denied that motion.

        Brickell now asks us to reverse the district court’s orders authorizing the

garnishment of her claim against the estate and denying her Rule 59(e) motion.

Brickell specifically contends that: (1) the district court and the bankruptcy court

lack jurisdiction to allow garnishment of the bankruptcy estate; (2) a Chapter 7

trustee holding property of the estate for distribution to creditors is not subject to

garnishment by persons who hold garnishment judgments against a creditor; (3) the

garnishment judgment issued by the state court is invalid; and (4) the district court

abused its discretion in denying her Rule 59(e) motion.1

                                                   II.

        “As the second court of review of a bankruptcy court’s judgment, this Court

examines independently the factual and legal determinations of the bankruptcy

court and employs the same standards of review as the district court.” Barrett

Dodge Chrysler Plymouth, Inc. v. Cranshaw (In re Isaac Leaseco, Inc.), 389 F.3d
1
          At one point, the law firm filed a motion to substitute itself for Brickell as a creditor of the
estate, pursuant to Fed. R. Bankr. P. 3001(e). The bankruptcy court entered an order granting that
motion, though the law firm had withdrawn it. Brickell challenges that order in this appeal as well.
Because we conclude that the bankruptcy court properly allowed the estate to be garnished to satisfy
Brickell’s debts to the firm, it is not necessary for us to decide whether a Rule 3001(e) substitution
was authorized in this case.

                                                    5
1205, 1209 (11th Cir. 2004) (internal marks and citations omitted). We review

legal determinations of the bankruptcy court de novo. The Securities Groups v.

Barnett (In re Monetary Group), 2 F.3d 1098, 1103 (11th Cir. 1993) (per curiam).

We review the factual findings of the bankruptcy court only for clear error. Id.

                                           III.

       “[J]urisdiction over matters allegedly related to a bankruptcy case is best

analyzed in two steps: first, the reviewing court must decide whether federal

jurisdiction exists in the district court; second, if jurisdiction does exist, it must

determine whether the bankruptcy court properly exercised its constitutionally

available powers in proceeding over the matter as a ‘core’ or ‘non-core’

proceeding.” Miller v. Kemira, Inc. (In re Lemco Gypsum, Inc.), 910 F.2d 784,

787 (11th Cir. 1990) (footnote omitted). We conclude that the district court and

the bankruptcy court had jurisdiction to enter orders on the garnishors’ motions.

       District courts have jurisdiction over “all civil proceedings arising under title

11, or arising in or related to cases under title 11.” 28 U.S.C. § 1334(b). In order

to determine whether a matter is “related to” a bankruptcy case, we ask “whether

the outcome of the proceeding could conceivably have an effect on the estate being

administered in bankruptcy.” In re Lemco Gypsum, 910 F.2d at 788 (quoting

Pacor, Inc. v. Higgins (In re Pacor, Inc.), 743 F.2d 984, 994 (3d Cir. 1984),

                                             6
overruled on other grounds by Things Remembered, Inc. v. Petrarca, 516 U.S. 124,

116 S. Ct. 494 (1995)). A matter that is “related to” a bankruptcy case “need not

necessarily be against the debtor or against the debtor’s property.” Id. (quoting

Pacor, 743 F.2d at 994). “An action is related to bankruptcy if the outcome could

alter the debtor’s rights, liabilities, options or freedom of action (either positively

or negatively) and which in any way impacts upon the handling and administration

of the bankrupt estate.” Id. (quoting Pacor, 743 F.2d at 994).

      The garnishment authorization order in this case has a direct impact on the

bankruptcy estate because it partially determines how the estate will be distributed.

The garnishment proceedings are clearly “related to” the bankruptcy case, and the

district court has jurisdiction over them.

      The bankruptcy court had jurisdiction to authorize the garnishment of the

estate, because it has jurisdiction over all cases under title 11 and over all core

proceedings arising under title 11 or arising in a case under title 11. 28 U.S.C.

§ 157(b)(1). The bankruptcy court may exercise “full judicial power” over core

proceedings but may exercise “only limited power” over non-core proceedings. In

re Lemco Gypsum, 910 F.2d at 787. Core proceedings include, but are not limited

to, matters concerning the administration of the bankruptcy estate, the allowance or

disallowance of claims against the estate, proceedings affecting the adjustment of

                                             7
the debtor-creditor relationship, and determinations of the validity, extent, or

priority of liens against the estate. 28 U.S.C. § 157 (b)(2).

      The trustee’s request to give effect to the garnishment judgments is a matter

concerning the administration of the estate. It is also a matter affecting the

adjustment of the debtor-creditor relationship because it determines which holders

of claims will receive a distribution. The jurisdiction of a bankruptcy court to

address issues arising out of the transfer of claims to third parties, pursuant to Fed.

R. Bankr. P. 3001(e), has not been challenged. Garnishing the bankruptcy estate in

favor of a third party has the same impact on the estate as does transferring a claim

from a creditor to a third party. Because the garnishment directly affects the

manner in which the bankruptcy estate is administered and distributed, it is a core

proceeding over which the bankruptcy court may exercise “full judicial power,” In

re Lemco Gypsum, 910 F.2d at 787.

                                          IV.

      The Bankruptcy Code and the Federal Rules of Bankruptcy Procedure are

silent about whether a trustee is subject to garnishment. There is nothing in either

the Code or the Rules, however, which prohibits garnishment of the trustee.

Conversely, the bankruptcy court is given the flexibility necessary to effectuate its

purposes. The Bankruptcy Code states that “[t]he court may issue any order,

                                           8
process, or judgment that is necessary or appropriate to carry out the provisions of

this title.” 11 U.S.C. § 105(a). Federal Rule of Civil Procedure 69(a), which

applies to adversarial bankruptcy proceedings by virtue of Fed. R. Bankr. P. 7069,

states that “[p]rocess to enforce a judgment for the payment of money shall be a

writ of execution, unless the court directs otherwise.”

      Where “the language of the Code is silent, and the statute and legislative

history indicate no clear intent to abrogate prior law, we look to the prior law.”

Varsity Carpet Servs., Inc. v. Richardson (In re Colortex Indus., Inc.), 19 F.3d
1371, 1384 (11th Cir. 1994). Most of the case law addressing whether a trustee is

subject to garnishment predates the enactment of the Bankruptcy Code, and the

results are split. Compare, e.g., Grant v. Burns (In re American Elec. Tel. Co.),

211 F. 88 (7th Cir. 1914) (disallowing garnishment), with In re Kranich, 182 F.
849 (E.D. Pa. 1910) (allowing garnishment).

      The pre-Code cases refusing to allow garnishment focused on the

impediment to efficiency that the introduction of garnishment into the bankruptcy

process would cause. See In re American Elec. Tel. Co., 211 F. at 91. At the time

these cases were decided, garnishment was often used as a pre-judgment remedy.

Allowing garnishment of the trustee could therefore seriously delay the bankruptcy

proceedings because the estate could not be closed and distributed until the

                                           9
underlying action giving rise to the garnishment had been resolved. See Priestly v.

Hilliard & Tabor (In re Argonaut Shoe Co.), 187 F. 784, 787 (9th Cir. 1911)

(disallowing garnishment of the trustee because garnishment would cause the

bankruptcy proceedings to “be stayed or prevented by the process of a state court,

the object of which is to withhold a dividend from a creditor entitled thereto for the

security of a plaintiff pending litigation”).

      In situations where garnishment posed no impediment to the bankruptcy

process, garnishment was sometimes allowed. See In re Kranich, 182 F. at 850

(permitting garnishment of the trustee where the validity and amount of the

garnishment judgment had been conclusively established prior to the time of

distribution from the estate). In allowing garnishment of the trustee, the district

court stated:

      The garnishee is an officer of this court, and has more than enough money in
      his hands to satisfy the judgment; and, while the state tribunal could not
      compel him to pay over the money, he himself has made no objection either
      to the judgment or to the order that is now asked for by the creditor. Under
      such circumstances I see no reason why this court should not pay due respect
      to a tribunal of the state, and recognize a claim that has thus been
      conclusively proved . . . .

Id.

      The only post-Code case on point, NVLand, Inc. v. Vogel (In re Ocean

Downs Racing Ass’n., Inc.), 164 B.R. 249 (Bankr. D. Md. 1993), refused to allow

                                            10
garnishment of the trustee. The bankruptcy court in Ocean Downs relied heavily

on In re American Elec. Tel. Co. and concluded that “to permit a garnishment to be

taken against a bankruptcy trustee would impede and frustrate the policy of

promoting the orderly and expeditious administration of the debtors’ estates.” Id.

at 254. Though the bankruptcy court concluded that garnishment would impede

the bankruptcy process, it failed to describe any impediment that garnishment

might actually cause. It also neglected to distinguish the pre-judgment

garnishment at issue in In re American Elec. Tel. Co. from the post-judgment

garnishment before it. For these reasons, we find the holding in Ocean Downs

unpersuasive.

      We see no reason to impose a per se ban on the garnishment of bankruptcy

trustees. The bankruptcy system recognizes the substitution of creditors. See Fed.

R. Bankr. P. 3001(e) (allowing a claim against the bankruptcy estate to be

transferred from a creditor of the estate to a third-party). While garnishment

should not be allowed if it unnecessarily complicates the administration of the

bankruptcy estate, the only burden on the trustee in this case was the substitution of

one creditor’s name and address for another. The claims giving rise to the writs of

garnishment had been reduced to final judgments, and the garnishment judgments

had been issued before the distribution of the debtor’s estate had begun.

                                          11
Furthermore, the trustee did not object to complying with the garnishments. Given

all of these circumstances, we conclude that the district court did not act

improperly in allowing the garnishments.

                                          V.

      Brickell contends that the garnishment judgment issued by the state court is

invalid. She argues that, as a state judgment, the garnishment is not enforceable in

bankruptcy court. She also attacks the underlying basis of the state court

judgment, arguing that the state court erred when it ruled against her.

      First, the identity of the court issuing the writ of garnishment is irrelevant.

Claims against a bankruptcy estate are often based on judgments obtained in state

court. For example, Brickell’s claim against her ex-husband’s estate arose out of a

state-court determination that she was entitled to alimony. Second, this Court

cannot revisit the merits of the underlying state judgment. The Rooker-Feldman

doctrine prevents us from reviewing a final judgment entered by a state court. See

Goodman ex rel. Goodman v. Sipos, 259 F.3d 1327, 1332 (11th Cir. 2001).

                                          VI.

      We review the denial of a Rule 59(e) motion to alter or amend judgment for

abuse of discretion. Mays v. U.S. Postal Serv., 122 F.3d 43, 46 (11th Cir. 1997)

                                          12
(per curiam). “The only grounds for granting [a Rule 59(e)] motion are

newly-discovered [previously unavailable] evidence or manifest errors of law or

fact.” Kellogg v. Schreiber (In re Kellogg), 197 F.3d 1116, 1119 (11th Cir. 1999).

Rule 59(e) may not be used to relitigate a claim or to present arguments or

evidence that could have been raised prior to the entry of judgment. Mincey v.

Head, 206 F.3d 1106, 1137 n.69 (11th Cir. 2000). Brickell’s motion does not

expose any errors of law or fact or present any newly discovered or previously

unavailable evidence. Accordingly, the district court did not abuse its discretion in

denying the motion.

      AFFIRM.

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