Court Opinion

ID: 2793557
Source: CourtListenerOpinion
Date Created: 2015-04-14 16:01:05.049502+00
Date Added: 2024-06-11T11:13:59.835110
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 15a0269n.06

                                         No. 14-3381

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,                              )
                                                       )                            FILED
       Plaintiff,                                      )                       Apr 14, 2015
                                                       )                  DEBORAH S. HUNT, Clerk
and                                                    )
                                                       )
COMMODORE BANK; GARY E. BECKER,                        )
                                                               ON APPEAL FROM THE
                                                       )
                                                               UNITED STATES DISTRICT
       Appellants,                                     )
                                                               COURT FOR THE SOUTHERN
                                                       )
                                                               DISTRICT OF OHIO
v.                                                     )
                                                       )
GEORGE MICHAEL RILEY,                                  )
                                                       )
       Defendant-Appellee.                             )
                                                       )

BEFORE:        BOGGS and McKEAGUE, Circuit Judges; and PEARSON, District Judge.*

       BOGGS, Circuit Judge. Appellants Commodore Bank (the “Bank”) and Gary E. Becker

appeal from an order entered by the district court in the federal criminal action against George

Michael Riley, Sr. In 2009, Riley pleaded guilty to one count of making materially false

statements in a loan application, in violation of 18 U.S.C. §§ 1014 and 2. Riley’s criminal

sentence included restitution to the Bank under the Mandatory Victims Restitution Act

(“MVRA”) in the amount of $547,836, which the district court determined was satisfied prior to

sentencing. After the Bank continued to pursue Riley in Ohio state court for satisfaction of

certain civil judgments related to the loan application, Riley moved the district court in his

*
 The Honorable Benita Y. Pearson, United States District Judge for the Northern District of
Ohio, sitting by designation.
No. 14-3381, United States v. Riley

federal criminal case to find the Bank and its counsel, Becker, in contempt for allegedly violating

the district court’s sentencing order regarding restitution. The district court denied Riley’s

motion and the Bank’s responsive motion to strike, but again stressed that Riley “satisfied his

restitution obligation in this case of $547,836.00 prior to sentencing.” Therefore, the district

court asserted that “Commodore Bank and [its counsel] are barred from continuing to seek any

additional money from [Riley] as a result of the underlying conduct in this case.”

       Appellants filed this appeal “to clarify” that the district court’s order does not bar them

from pursuing the civil judgments against Riley in state court, asserting that the district court

lacked the power to determine the disposition of the state judgments in its restitution order. The

Bank asserts that criminal restitution under the MVRA is distinct from the civil liability

addressed in the state-court judgments and observes that an Ohio state court has rejected Riley’s

argument that the criminal-restitution order satisfied his debts to the Bank.

       We agree with the Bank that “[l]ower federal courts have no jurisdiction directly to

review final decisions of the courts of a state or similar jurisdiction in judicial proceedings.”

Blanton v. United States, 94 F.3d 227, 233 (6th Cir. 1996). Thus, Riley’s assertion that the

district court’s order relieved him of any obligation to fulfill state-court civil judgments is

suspect. To the extent that the Bank’s appeal invites us to address its hypothetical concerns

regarding the potential future effect of the district court’s order on state-court proceedings,

however, it goes beyond our authority, which extends only to concrete cases and controversies.

                                                 I

                   A. The Bank Loans and Resulting State Court Proceedings

       In early 2005, Appellant Commodore Bank loaned Defendant-Appellee George Michael

Riley, Sr., and the entities that Riley owned or controlled a total of $547,836. In exchange, Riley

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No. 14-3381, United States v. Riley

executed three written promissory notes in favor of the Bank. According to the Bank, Riley and

the entities subsequently defaulted on the notes and failed to repay the loans. Thus began a long

and tortuous road of legal actions—civil, criminal, and bankruptcy—in state and federal courts.

       On May 2, 2005, the Bank filed suit against Riley in the Licking County, Ohio, Court of

Common Pleas, Case No. 05-CV-00562, alleging breach of contract for failure to repay and

fraud in connection with Riley’s loan application. In December 2006, Riley and the Bank

entered into a Settlement Agreement in the Licking County case, in which Riley agreed to

transfer cash and certain equipment and property to the Bank and to execute a promissory note in

favor of the Bank in the amount of $367,000 plus interest.          Riley later claimed that the

Settlement Agreement was invalid and purportedly failed to fulfill the Agreement’s terms. The

Bank moved to enforce the Agreement, and a state magistrate judge in the Licking County case

issued an order enforcing the terms of the Agreement against Riley. This order was approved

and adopted by the Licking County Common Pleas Court judge on April 6, 2007.

       On September 18, 2007, the Bank filed another action for breach of contract and fraud

against Riley in the Perry County, Ohio, Court of Common Pleas, Case No. 07-CV-00395,

alleging that Riley failed to comply with the Settlement Agreement’s requirements that he

transfer certain equipment to the Bank and make the required payments on the $367,000

promissory note. The bank obtained a default judgment against Riley for $367,000 plus interest,

which Riley maintains was improper because the court lacked jurisdiction over him.             In

September 2008, the Perry County court entered an order holding Riley in contempt and

requiring that he pay the Bank’s attorney’s fees and costs associated with the order. Riley

allegedly failed to meet the order’s obligations, and, on February 2, 2012, the Perry County court

again held him in contempt and required him to pay additional attorney’s fees and costs. Riley

                                               -3-
No. 14-3381, United States v. Riley

filed a motion to purge his contempt, which was denied by the court on November 13, 2012.

According to the Bank, in connection with this motion, “Riley unsuccessfully argued that he

owed no debt to Commodore Bank by virtue of his federal criminal prosecution and June 24,

2009 sentencing for making a false statement on a bank loan application.” Appellants’ Br. 7.

       After his motion was denied by the Perry County court, Riled filed a petition for relief

under Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. § 701 et seq., in the United

States Bankruptcy Court for the Southern District of Ohio, Case No. 2:12-bk-60636, and the

Bank initiated a related adversary proceeding. In the bankruptcy proceedings, the parties dispute

whether Riley is entitled to a discharge and whether the Bank is truly a creditor of Riley.

                       B. The Federal Criminal Case and Restitution Order

       On August 12, 2008, while the parties were engaged in litigation over the loans in the

Ohio state courts, Riley was charged in a federal criminal indictment with three counts of making

“materially false statements in documents submitted to Commodore Bank . . . as part of an

applicatio[n] for a bank loan,” in violation of 18 U.S.C. §§ 1014 and 2. On January 21, 2009,

Riley pleaded guilty in the United States District Court for the Southern District of Ohio to one

count of bank fraud. Riley’s sentence, which was entered on June 24, 2009, included twenty-

four months in prison as well as criminal restitution to the Bank under the Mandatory Victims

Restitution Act in the amount of $547,836—the amount of the loans that the Bank initially made

to Riley—which the district court determined was “satisfied” by Riley “prior to sentence” in

light of various recoveries and garnishments by the Bank.

       During this time, the Bank continued to pursue Riley for satisfaction of the state civil

judgments against him. As a result, on March 13, 2014, Riley filed a motion in his federal

criminal case asking the district court to enter an order to show cause against the Bank and its

                                                -4-
No. 14-3381, United States v. Riley

counsel, which were involved in the criminal case only in connection with the restitution award,

“as to why they should not be held in contempt for violating” the court’s 2009 restitution order.

Specifically, Riley argued that he “does not owe Commodore Bank any further money, as [the

district court] has determined that Mr. Riley has paid Commodore Bank in full through

restitution as of June 24, 2009.” Thus, Riley maintained, the Bank’s continued efforts to collect

money from him violated the district court’s judgment that Riley satisfied his restitution

obligation prior to sentencing. Riley also asked for the district court to impose sanctions against

the Bank and its counsel for their “continual harassment” of him.

       In response, the Bank and its counsel filed a motion to strike or hold in abeyance Riley’s

motion to show cause. The Bank argued, inter alia, that: Riley lacked standing to file his motion

in light of the ongoing bankruptcy proceedings; Riley’s argument that the state civil judgments

were extinguished by the district court’s criminal-restitution order was rejected by the Ohio state

courts and therefore is barred from relitigation in federal court under the Rooker-Feldman

doctrine; and the district court lacked subject-matter jurisdiction over the separate civil claims

filed by the Bank against Riley in state court.

       On April 4, 2014, the district court denied the motions filed by Riley and the Bank. In its

order (the “Order”), the court reiterated its prior statement from Riley’s sentencing that Riley

“satisfied his restitution obligation of $547,836.00 prior to sentencing,” noting the government’s

“agreement” that “Riley does not owe any additional money in restitution in his criminal case.”

The court refused Riley’s request to impose sanctions on the Bank and its counsel after stressing

that “they are not parties to the criminal case before the Court.” In conclusion, the district court

stated that Riley “satisfied his restitution obligation in this case of $547,836.00 prior to

                                                  -5-
No. 14-3381, United States v. Riley

sentencing. [Therefore,] Commodore Bank and [its counsel] are barred from continuing to seek

any additional money from [Riley] as a result of the underlying conduct in this case.”

       On appeal, the Bank seeks “to clarify” the district court’s “vague admonition” in the

Order that the Bank is barred from continuing to seek additional money from Riley. Appellants’

Br. 10. In the Bank’s view, the Order means only “that no further action can be taken to collect

those components of debt which comprised Riley’s criminal restitution order,” ibid. (emphasis

added), and not that the Bank is barred from satisfying the balance of its civil judgments against

Riley. In its brief, the Bank argues that the district court’s Order should be vacated because of

alleged “jurisdictional defects” regarding the district court’s power—or lack thereof—to

determine the disposition of state civil judgments against Riley. It seems that in the Bank’s

view, jurisdictional problems would arise only if the Order were interpreted to bar the Bank’s

efforts to “continue to pursue Riley to satisfy the balance of Commodore Bank’s civil judgments

against him [in Ohio], which are separate matters” from the federal criminal case.             Ibid.

(emphasis added). Thus, “[o]ut of an abundance of caution,” the Bank filed this appeal “to

clarify” that it can continue to pursue the civil judgments in state court. Id. at 3, 10.

                                                  II

                                                  A

       The Bank requests that we vacate or clarify the district court’s Order because of a risk

that it will be relied upon to deny the Bank recovery in Ohio state court. Thus, it appears that the

Bank wants this court to determine that it would be improper if the Ohio courts were to rely on

the district court’s Order to frustrate the Bank’s efforts to enforce the civil judgments against

Riley. In this respect, the Bank’s appeal itself raises jurisdictional concerns. “Article III of the

United States Constitution empowers the federal courts to hear only ‘cases or controversies,’

                                                  -6-
No. 14-3381, United States v. Riley

U.S. Const. art. III, § 2, cl. 1, a cradle-to-grave requirement that must be met in order to file a

claim in federal court and that must be met in order to keep it there.” Fialka-Feldman v.

Oakland Univ. Bd. of Trustees, 639 F.3d 711, 713 (6th Cir. 2011). Thus, while this court has

jurisdiction to hear an appeal from the final decision of a district court pursuant to 28 U.S.C.

§ 1291, the appeal must itself present an actual, ongoing case or controversy.1

       On appeal, the Bank does not challenge the nature or the amount of the ordered

restitution, but wishes that we “clarify” that the district court’s Order will not impact the Bank’s

efforts to pursue Riley for civil judgments in state court.2 However, “federal appellate courts . . .

[do] not review lower courts’ opinions, but their judgments.” Jennings v. Stephens, 135 S. Ct.

793, 799 (2015); see also ibid. (“A prevailing party seeks to enforce not a district court’s

reasoning, but the court’s judgment.”). Nor do we have the authority to “render advisory

opinions or decide abstract propositions.” Boswell v. McGinnis, 1997 WL 428965, at *3 (6th

Cir. July 29, 1997) (quoting Church of Scientology of Hawaii v. United States, 485 F.2d 313, 314

1
  While “[i]t is rare that a valid case or controversy may be presented to the lower courts but not
to a court of appellate review,” that situation may arise because “[t]he ‘case-or-controversy
requirement subsists through all stages of federal judicial proceedings, trial and appellate.’” In
re GF Corp., 1993 WL 239062, at *2 (6th Cir. June 30, 1993) (quoting Lewis v. Continental
Bank Corp., 494 U.S. 472, 477 (1990)). Although no party has raised the issue of appellate
jurisdiction, “[i]f there is no case or controversy, this court lacks subject matter jurisdiction to
hear th[e] appeal even [if] the parties agreed below that the case was ripe for adjudication;
agreement of the parties cannot establish subject matter jurisdiction.” State of Mich. v. Meese,
853 F.2d 395, 397 (6th Cir. 1988).
2
  See Appellants’ Br. 1 (“In this appeal, Appellants . . . challenge the order entered in this federal
criminal action on April 4, 2014 . . . which may restrict Appellants from seeking and/or
collecting civil damages under Ohio state law . . . .”) (emphasis added); id. at 22–23 (“[T]o the
extent it bars or limits Appellants from seeking to collect on . . . Ohio judgments against Riley in
the future, the District Court’s Restitution Order should be vacated.”) (emphasis added). We
note that if the Bank were concerned only with clarifying the scope of the district court’s Order,
it could have filed a motion for clarification with the district court.

                                                 -7-
No. 14-3381, United States v. Riley

(9th Cir.1973)); see also Commodities Exp. Co. v. Detroit Int’l Bridge Co., 695 F.3d 518, 525

(6th Cir. 2012) (“We have no power to offer an advisory opinion, based on hypothetical facts.”).

        The district court has never attempted to stay or otherwise interfere with any specific

state-court proceeding or impose sanctions on the Bank for continuing to pursue state-court

remedies. Moreover, the Ohio courts to our knowledge have never relied on the district court’s

Order to deny the Bank’s efforts to satisfy any civil judgments against Riley. Indeed, under the

Bank’s own theory of judicial power, even if the district court’s Order were interpreted to cover

the state civil judgments at issue, it would apparently have no effect on the Bank’s efforts to

collect the sums that Riley purportedly owes to it pursuant to the Ohio judgments.             Cf.

Appellants’ Reply Br. 12 (“[I]t is a mystery how the District Court’s assessment of Riley’s

criminal restitution could possibly foreclose the Ohio state courts’ ability to enter and enforce

civil judgments against Riley . . . .”).

        Under these circumstances, granting the Bank’s request to vacate the district court’s

Order would provide only speculative redress of a hypothetical injury that the Bank has not

suffered. “To satisfy the Article III case or controversy requirement,” however, “a litigant must

have suffered some actual injury that can be redressed by a favorable judicial decision.” Iron

Arrow Honor Soc’y v. Heckler, 464 U.S. 67, 70 (1983); cf. In re GF Corp., 1993 WL 239062,

at*3 (6th Cir. June 30, 1993) (dismissing appeal for lack of jurisdiction where posture of the

appeal left the court “without the means to provide a remedy”). In the event that an Ohio court

relies upon the district court’s Order in the manner the Bank fears, the Bank’s recourse would be

to raise arguments before the state courts—fora with clear jurisdiction over the civil judgments at

issue—similar to those that it attempts to raise here.

                                                 -8-
No. 14-3381, United States v. Riley

                                                B

       Our ruling does not decide the question whether the civil debts that Riley purportedly

owes pursuant to the state-court judgments have been satisfied. The Bank stresses that the Perry

County Court rejected Riley’s contention that the criminal-restitution order “satisfied his debt to

the [Bank] in full” and maintained that the judgments against Riley in that court “are valid

[c]ourt [o]rders” that “were never appealed.” This is a dispute for the Ohio courts to address, as

lower federal courts do not have the “authority to review final judgments of a state court in

judicial proceedings.” D.C. Court of Appeals v. Feldman, 460 U.S. 462, 482 (1983).

                                                III

       As far as the MVRA is concerned, Riley’s criminal-restitution obligation has been

satisfied. On this much the parties seem to agree. Nevertheless, the Bank maintains that it still

entitled to collect on civil judgments against Riley in Ohio state court for separate and distinct

damages. Riley, of course, disagrees, and instead argues that the Bank has received all it is

entitled to and more. If this fight is to go on, it must be waged (for now, at least) in the Ohio

courts. For the foregoing reasons, we DISMISS the appeal for lack of jurisdiction.

                                                -9-