Court Opinion

ID: 4177127
Source: CourtListenerOpinion
Date Created: 2017-06-13 18:03:43.36279+00
Date Added: 2024-06-11T14:39:00.264722
License: Public Domain

Case: 16-20744          Document: 00514030920              Page: 1      Date Filed: 06/13/2017

                IN THE UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT        United States Court of Appeals
                                                                                                  Fifth Circuit

                                                                                                 FILED
                                          No. 16-20744                                       June 13, 2017
                                        Summary Calendar                                     Lyle W. Cayce
                                                                                                  Clerk

In the Matter of: CLEVELAND IMAGING & SURGICAL HOSPITAL, L.L.C.
also known as Doctors Diagnostic Hospital,

                  Debtor

------------------------------------------------------------------------------------------------------------

CAMIL KREIT, Medical Doctor,

                 Appellant

v.

CHRISTOPHER L. QUINN,

                 Appellee

                      Appeal from the United States District Court
                           for the Southern District of Texas
                                USDC No. 4:16-CV-2135

Before STEWART, Chief Judge, and CLEMENT and SOUTHWICK, Circuit
Judges.
       Case: 16-20744    Document: 00514030920         Page: 2    Date Filed: 06/13/2017

                                      No. 16-20744
PER CURIAM:*
        Appellant Dr. Camil Kreit appeals the district court’s denial of his
motion to extend the court’s filing deadline and the court’s subsequent denial
of his motion for leave to file out of time. We affirm.
                                 I.     BACKGROUND
        Dr. Kreit is a member and manager of Cleveland Imaging & Surgical
Hospital, LLC (the “Hospital”). Following a dispute among the Hospital’s
doctors in Texas state court, the court appointed a receiver, Douglas Brickley,
to manage the Hospital and its assets. Pursuant to the power the receivership
order specifically granted him, Brickley filed for Chapter 11 bankruptcy on the
hospital’s behalf, triggering the automatic stay provisions found in 11 U.S.C. §
362.     After a series of unsuccessful bids, the bankruptcy court ultimately
approved the Hospital’s sale to CISH Acquisition, LLC (“Acquisition”) over Dr.
Kreit’s objection. The bankruptcy court entered an order, the “Acquisition Sale
Order,” approving the asset purchase agreement on August 21, 2015. Because
no party appealed the bankruptcy court’s order, it became final and
nonappealable on September 8, 2015.
        Approximately two months later, on November 1, 2015, Dr. Kreit sent
letters to the U.S. Deputy Attorney General, the U.S. Attorney’s Office, and
the Office of Policy and Coordination of the Federal Trade Commission,
alleging that Dr. Kreit’s fellow Hospital member, Dr. Ravi Kunar Moparty, had
“divert[ed] funds,” “embezzle[d] or conver[ted]” the Hospital’s assets, and
“engaged in a hostile acquisition of [the Hospital],” thereby “unlawfully
depleting [the Hospital’s] operating capital . . . [and] driving [it] into

        *Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.

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                                 No. 16-20744
bankruptcy.” Dr. Kreit also sent a similar letter to Chip Roy, a First Assistant
Attorney General for the State of Texas, making similar allegations and
stating that Dr. Moparty “conspired with [Iberia Bank] by participating in
fraudulent bidding, fixing a bid,” engaging in “unlawful accommodation
bidding,” and effectively “eliminating” any competition in the bidding process.
Dr. Kreit closed each letter by requesting “any available administrative
remedy.”
      On November 16, 2015, Dr. Kreit e-mailed Christine March, the attorney
for the U.S. Trustee, attaching a copy of each of the letters and restating his
allegations.     March then forwarded Dr. Kreit’s e-mail to the Hospital’s
attorney.      Consequently, the Hospital filed a show cause motion in the
bankruptcy court on November 18, 2015, asking the court to hold Dr. Kreit in
contempt for violating § 362(a)(3) and for his collateral attack on the court’s
prior orders, namely the Receivership Order and the Acquisition Sale Order.
After a three day hearing, the bankruptcy court agreed with the Hospital and
found that Dr. Kreit’s letters violated § 362(a)(1), (3) and constituted an
impermissible collateral attack on the court’s prior orders.
      On June 2, 2016, the bankruptcy court held another hearing on the
amount of damages the Hospital incurred as a result of Dr. Kreit’s conduct. At
the hearing, Dr. Kreit’s and the Hospital’s counsel informed the court that they
had reached an agreement; specifically the parties agreed that
      (1) the amount of damages incurred by the [Hospital] as a result of
      the Receiver spending time responding to Dr. Kreit’s allegations
      totals $18,571.68; (2) the amount of attorneys’ fees incurred by the
      [Hospital] for having to prosecute the Show Cause Motion is
      $26,428.32; (3) Dr. Kreit shall pay these sums by no later than
      August 2, 2016; and (4) if he fails to make payment by August 2,
      2016, then he shall be liable to The Claro Group[, of which the
      Receiver is a principal,] for the amount of $24,742.50 and to [the
      Hospital’s] counsel in the amount of $35,209.67.

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                                 No. 16-20744
      The bankruptcy court concluded that Dr. Kreit had knowingly and
willfully disregarded the automatic stay and the court’s prior orders and
imposed the stipulated damages.
      On June 16, 2016, Dr. Kreit appealed the bankruptcy court’s imposition
of sanctions to the U.S. District Court for the Southern District of Texas. On
September 14, 2016, the day before his appellate brief was due, Dr. Kreit
moved to extend the filing deadline, which the district court denied.        On
October 7, 2016, three weeks past the deadline, Dr. Kreit moved for leave to
file his appellate brief out of time. The district court again denied Dr. Kreit’s
motion and granted Appellee Christopher Quinn’s motion to dismiss pursuant
to Federal Rule of Bankruptcy Procedure 8018(a)(4). Dr. Kreit now appeals.
                               II.   DISCUSSION
      On appeal, Dr. Kreit challenges this court’s jurisdiction to consider the
the case. He also contends that the district court abused its discretion in
denying his motion to extend the filing deadline and his motion to file out of
time. We address each issue in turn.
                                       A.
      Dr. Kreit challenges this court’s jurisdiction to consider the bankruptcy
court’s sanctions order, arguing that the Texas state court that appointed
Brickley as receiver over the Hospital lacked the authority to give him
managerial authority. According to Dr. Kreit, although the Texas court had
authority to appoint a property receiver, it did not have the authority to
appoint Brickley as a rehabilitating or liquidating receiver, thereby depriving
him of the ability to file for bankruptcy. Therefore, Dr. Kreit argues, because
Brickley lacked the authority to file for Chapter 11 bankruptcy on the
Hospital’s behalf, neither the bankruptcy court, the district court, nor this
court have jurisdiction over the case. Quinn counters, arguing that the Rooker-
Feldman doctrine deprives this court of jurisdiction to review a state court
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                                 No. 16-20744
judgment. See Aguiluz v. Bayhi (In re Bayhi), 528 F.3d 393, 402 (5th Cir. 2008)
(“Under the Rooker-Feldman doctrine, the . . . federal courts are without any
authority/power/jurisdiction to modify or reverse a judgment rendered by a
state court . . . . [T]he state court’s judgment—correct or not—is immunized
by that doctrine from vacatur or any other restraints by the bankruptcy court,
the district court, and this court.”). Dr. Kreit responds by arguing that the ab
initio exception to the Rooker-Feldman doctrine applies to this case, as his
challenge to the Texas court’s judgment is jurisdictional, and, therefore, does
not ask this court to question a valid state court judgment.
      This court has neither endorsed nor rejected the ab initio exception. See
Houston v. Queen, 606 F. App’x 725, 732–33 (5th Cir. 2015). Our sister circuits
are split on the issue. See Keeler v. Acad. of Am. Franciscan History, Inc. (In
re Keeler), 273 B.R. 416, 421 (D. Md. 2002) (“There is a split among the circuits
as to whether there is a narrow exception to Rooker-Feldman for state
judgments that are void ab initio.”); compare James v. Draper (In re James),
940 F.2d 46, 52 (3d Cir. 1991) (recognizing the ab initio exception) and
Singleton v. Fifth Third Bank of W. Ohio (In re Singleton), 230 B.R. 533, 538
(B.A.P. 6th Cir. 1999) (same) and Lake v. Capps (In re Lake), 202 B.R. 751, 758
(B.A.P. 9th Cir. 1996) (same), with Schmitt v. Schmitt, 324 F.3d 484, 487 (7th
Cir. 2003) (“acknowledg[ing]” but “not endors[ing]” the void ab initio exception)
and Ferren v. Searcy Winnelson Co. (In re Ferren), 203 F.3d 559–60 (8th Cir.
2000) (per curiam) (declining to create a void ab initio exception to the Rooker-
Feldman doctrine when a state court allegedly interfered with bankruptcy
court jurisdiction) and Casale v. Tillman, 558 F.3d 1258, 1261 (11th Cir. 2009)
(declining to adopt a void ab initio exception based on the state court’s lack of
jurisdictional authority) and In re Thomas, No. 04-26010, 2006 WL 5217796,
at *3 (Bankr. D. Md. Feb. 21, 2006) (“The Fourth Circuit has not addressed a
void ab initio exception to the Rooker-Feldman doctrine.”).
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                                  No. 16-20744
      We do not reach this issue, however, because it is clear that the Texas
court had jurisdiction over the Hospital and its assets. Under Texas law,
“[w]here a trial court ha[s] jurisdiction of both the parties and the subject
matter, the order appointing a receiver is not void.” Sclafani v. Sclafani, 870
S.W.2d 608, 612–13 & n.4 (Tex. App.—Hous. [1 Dist.] 1993, writ denied). Here,
even assuming arguendo that the Texas court lacked the ability to create a
particular kind receivership, that the court had the authority to create a
receivership in general is indisputable. See TEX. BUS. ORGS. CODE § 11.402 (“A
court that has subject matter jurisdiction over specific property of a domestic
or foreign entity that is located in this state and is involved in litigation has
jurisdiction to appoint a receiver for that property . . . .”); Whitaker Oil Co. v.
Ward, 396 S.W.2d 158, 162 (Tex. Civ. App.—Tyler 1965, no writ) (“The fact
that [the receivership] was made improvidently, or issued on insufficient
evidence does not nullify an order appointing a receiver.”). Moreover, the
Texas court specifically vested Brickley with the authority to file for
bankruptcy on the Hospital’s behalf. See TEX. BUS. ORGS. CODE § 11.406(a)(5)
(“A receiver appointed under this chapter . . . has the powers and duties that
are stated in the order appointing the receiver.”). Concluding that this court
has jurisdiction over the appeal, we address the merits of Dr. Kreit’s claims.
                                        B.
      “Our review of the actions of the district court in its appellate role is for
an abuse of discretion.” In re Kelly Oil Co., 46 F.3d 66, 66 (5th Cir. 1995) (citing
In re Braniff Airways, Inc., 774 F.2d 1303, 1305 (5th Cir. 1985) (per curiam)).
Here, the district court did not abuse its discretion in dismissing the appeal for
Appellant’s failure to file a timely brief. See In re Braniff Airways, Inc., 774
F.2d at 1305 (“Bankruptcy appeals have frequently been dismissed for the
appellant’s failure to comply with the duty of diligent prosecution, and we have

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                                 No. 16-20744
dismissed civil appeals for failure of prosecution when the appellant’s brief was
not timely filed.”). Accordingly, we AFFIRM.
                              III.   CONCLUSION
      For the aforementioned reasons, we AFFIRM the district court’s
judgment in full.

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