Court Opinion

ID: 9769782
Source: CourtListenerOpinion
Date Created: 2023-08-29 15:02:11.761355+00
Date Added: 2024-06-11T15:44:53.499205
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

 IN RE: Skybridge Spectrum Foundation,                       Civil Action No. 21-cv-1551 (TSC)

                 Warren Havens, Petitioner                   Bankruptcy No. 21-bk-5-ELG

                                  MEMORANDUM OPINION

       Pro se Petitioner-Appellant Warren Havens (“Petitioner”) appeals the dismissal of an

involuntary bankruptcy petition he filed against Skybridge Spectrum Foundation (“Skybridge”),

in the United States Bankruptcy Court for the District of Columbia. Appeal, ECF No. 1.

Petitioner also moves for Summary Reversal of the Bankruptcy Court’s decision. Mot. for

Summ. Reversal, ECF No. 13. Respondent-Appellee Susan L. Uecker (“Respondent”) opposes

the appeal and the Motion for Summary Reversal. Appellee’s Brief, ECF No. 12; Mem. Op.,

ECF No. 15. For the reasons set forth below, the court will DENY the appeal and DENY the

motion.

                  I.     BACKGROUND AND PROCEDURAL HISTORY

       For over twenty years, Petitioner and Arnold Leong have been involved in litigation

regarding the ownership and control of two entities holding licenses issued by the Federal

Communications Commission (FCC). Leong v. Havens, No. 2002-070640 (Cal. Super. Ct. Nov.

16, 2015). On November 16, 2015, the Alameda County Superior Court appointed Respondent

as the receiver to “take control and possession of all property and assets of [the Receivership

Entities]; as well as all FCC licenses owned or controlled by [Petitioner] as an individual.” Id. at

13.

       In March 2016 Petitioner filed a voluntary Chapter 11 bankruptcy petition in the United

States Bankruptcy Court for the District of Delaware on behalf of Skybridge Spectrum

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Foundation. In re Skybridge Spectrum Foundation, 1:16-bk-10626 (Bankr. D. Del.). The

Delaware court dismissed the voluntary petition, holding that the receivership order issued by the

Alameda County Superior Court left Petitioner without corporate authority to put Skybridge into

bankruptcy. Id.

        On January 5, 2021, Petitioner filed an involuntary bankruptcy petition against

Skybridge a/k/a SkyTel Joint Venture, which he claimed included Skybridge Spectrum

Foundation, Verde Systems LLC, Telesaurus Holdings GB LLC, Environmentel LLC,

Environmentel-2 LLC, Intelligent Transportation & Monitoring Wireless LLC, V2G LLC, and

ATLIS Wireless LLC (“Receivership Entities”). See Request to Accept Amendment 1 of Jan.

20, 2021 to Form 205 Attached Statements at 8 (Jan. 20, 2021), ECF No. 2-3. Petitioner alleged

that Skybridge owed him for debts including: (1) $70,000 allegedly advanced by Petitioner to

Skybridge for attorney fees in a voluntary Chapter 11 case in the District of Delaware, (2)

$80,000 for salaries and rent owed to him individually and “other,” and (3) $80,000 for claims

assigned by Petitioner to Polaris PNT 1, PB LLC, and Polaris PNT, PBC, and then reassigned to

him prior to the filing of the involuntary petition. Petition at 3, ECF No. 2-2; D.C. Bankruptcy

Order at 9, ECF No. 15-1. Respondent moved to dismiss, arguing that Skybridge is a non-profit

and therefore could not be subject to an involuntary petition under Section 303 of the Bankruptcy

Code. See D.C. Bankruptcy Order at 16. The United States Bankruptcy Court for the District of

Columbia granted the motion to dismiss, finding that (1) Skybridge is “not a moneyed, business,

or commercial corporation,” and (2) Petitioner’s claims against it are “the subject of a bona fide

dispute as to liability or amount.” Id. at 19.

       Between the D.C. Bankruptcy Court’s hearing on the motion to dismiss and the final

order, Petitioner “continue[d] to file pleadings on the matter under advisement and issue baseless

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discovery that appear[ed] calculated to harass other parties in th[e] Case and the Court” despite

“clear order(s) of the Court with respect to post-hearing briefs and limitations on submission.”

Order of Dismissal at 1, In re Skybridge Spectrum Foundation (“Skybridge I”), 21-cv-1011

(D.D.C.), ECF No. 13. Consequently, this court entered a temporary injunction barring

Petitioner from “making any further filings in th[e] Case related in any way to the Motion to

Dismiss, the hearing on the Motion to Dismiss, or any matter related thereto, without prior leave

of Court.” Id. at 2. Petitioner appealed the temporary injunction in Skybridge I and separately

appealed the D.C. Bankruptcy Court’s order granting Respondent’s motion to dismiss in this

case. In re Skybridge Spectrum Foundation (“Skybridge II”), 21-cv-1551 (D.D.C.), ECF No. 1.

The temporary injunction terminated once the D.C. Bankruptcy Court dismissed the action and

this court consolidated the two appeals. See Order of Dismissal, Skybridge I.

       Subsequently, this court set a briefing schedule for Petitioner’s appeal from the D.C.

Bankruptcy Court’s final order. 11/12/21 Minute Order. Petitioner mistakenly filed his opening

brief in Skybridge I and thus moved to have his opening brief filed nunc pro tunc in Skybridge II.

Mot. for Leave to File Nunc Pro Tunc, ECF No. 10. Petitioner also included in that filing a

motion to suspend the case and to extend his time for filing an opening brief. Mot. to Suspend,

ECF No. 10-1; Petitioner’s Opening Brief, ECF No. 10-2. Then, Petitioner moved for Summary

Reversal. The court granted Petitioner’s Motion for Leave to File Nunc Pro Tunc and denied his

Motion to Suspend and Extend Time on filing his Opening Brief. 9/4/22 Minute Order. The

main issues in Petitioner’s brief and motion for reversal are whether the D.C. Bankruptcy Court

erred in finding that 1) Respondent had the authority to file a motion to dismiss Petitioner’s

involuntary petition against Skybridge, and 2) Skybridge is a non-profit and consequently

ineligible to be an involuntary debtor.

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                                   II.    LEGAL STANDARD

       Federal district courts have subject matter jurisdiction to review the final judgments of the

bankruptcy courts in their judicial district. See 28 U.S.C. § 158(a). The district court reviews the

bankruptcy court’s factual findings for clear error and its legal conclusions de novo. Yelverton v.

District of Columbia, 529 B.R. 1, 3 (D.D.C. 2014). The burden of proof is on the party seeking to

reverse the bankruptcy court’s holding. Anderson v. Bessemer City, 470 U.S. 564, 573-574 (1985).

That party must show that the bankruptcy court’s holding was clearly erroneous in its assessment

of the facts or erroneous in its interpretation of the law, and not simply that another conclusion

could have been reached. Id. Clear error exists only when the reviewing court “is left with the

definite and firm conviction that a mistake has been committed.” Moore v. Robbins, 24 F. Supp.

3d 88, 94 (D.D.C. 2014) (internal quotation mark omitted). “If the [fact-finding] court’s account

of the evidence is plausible in light of the record viewed in its entirety, the [reviewing court] may

not reverse it even though convinced that had it been sitting as the trier of fact, it would have

weighed the evidence differently.” Anderson, 470 U.S. at 573-74.

       Summary reversal is an extraordinary remedy, for which the petitioner bears the heavy

burden of demonstrating both that the remedy is proper and that the merits of the claim so clearly

warrant relief as to justify expeditious action. Vietnam Veterans Against The War/Winter Soldier

Org. v. Morton, 506 F.2d 53, 56 (D.C. Cir. 1974); Grant v. Shanahan, No. 19-5011, 2019 WL

2156344, at *1 (D.C. Cir. 2019).

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                                       III.      ANALYSIS

       A. Receiver’s Authority to Move to Dismiss on Behalf of Debtors

       In his motion for summary reversal, Petitioner contends that Respondent had no standing

to move to dismiss his involuntary petition because custodians/receivers are prohibited from

answering involuntary petitions. See Mot. for Summ. Reversal at 2.

       A “custodian” includes a “receiver or trustee of any of the property of the debtor,

appointed in a case or proceeding” not under the Bankruptcy Code. See 11 U.S.C. § 101(11)(A).

While the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure explicitly permit a

debtor to answer or contest an involuntary petition, they are silent on whether a receiver may do

the same. See 11 U.S.C. § 303(d) (“the debtor or a general partner ... that did not join in the

petition, may file an answer”); Fed. R. Bankr. P. 1011(a) (the “debtor named in an involuntary

petition may contest the petition.”). However, precedent suggests a receiver can answer if the

debtor has not done so. To determine whether a receiver may file an answer, courts consider

various factors, including whether the debtor filed an answer, the language of the state

receivership statute, and the receiver’s powers under the receivership order. See In re Starlite

Houseboats, Inc., 426 B.R. 375, 381 (Bankr. D. Kan. 2010) (finding receiver’s motion to dismiss

was properly filed because Kansas’s receivership statute gave him the authority to “prosecute

and defend” against all claims); see also In re A & B Liquidating, Inc., 18 B.R. 922, 925 (Bankr.

E.D. Va. 1982) (finding debtor did not file answer and that an assignee for the benefit of

creditors was a proper party to answer an involuntary petition).

       In re 318 Retail, LLC, 640 B.R. 407 (Bankr. N.D. Ill. 2022) held that an alleged debtor’s

failure to answer an involuntary petition supported allowing the receiver to seek dismissal, but

not to answer or contest the petition. The court also found that the broad language of both the

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state receivership statute and the receivership order suggested the receiver should have the right

to file a responsive pleading. Id. at 412.

        Relying on In re 318 Retail, Petitioner argues that Respondent improperly answered or

contested the involuntary petition when she moved to dismiss it. See Mot. for Summ. Reversal

at 2. But Petitioner mischaracterizes that case’s holding, which distinguishes a motion to

dismiss/responsive pleading from an answer. In re 318 Retail found that receivers are permitted

to file the former but not the latter.

        Here, as in In re 318 Retail, the alleged Debtor did not answer the involuntary petition.

And the Receivership Order’s language is similarly broad. The California Superior Court

ordered and authorized Respondent to “do all the things, and incur the risks and obligations,

ordinarily done or incurred by owners, managers, and operators of businesses and property

similar to that possessed by the receiver, except the receiver shall not make any capital

improvements to the property without court approval.” D.C. Bankruptcy Order at 8 (citing

Receivership Order at ¶ 14). As in In re Starlite, the California receivership statute includes

broad language permitting a receiver to “bring and defend actions.” Cal. Code of Civ. Proc. §

568. These factors suggest that Respondent had the authority to file a motion to dismiss the

involuntary petition. Petitioner has not provided any evidence to the contrary and thus failed to

meet the heavy burden for a motion for summary reversal. Vietnam Veterans Against The

War/Winter Soldier Org., 506 F.2d at 56. Accordingly, the motion is denied.

        B. Non-profit Exemption from Involuntary Bankruptcy Proceedings

        Petitioner argues that the D.C. Bankruptcy Court erred in finding that Skybridge is a non-

profit, which is exempt from involuntary petitions. Petitioner’s Opening Brief at 11. As

previously mentioned, the court may not disturb the D.C. Bankruptcy Court’s finding unless it is

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clearly erroneous. Advantage Healthplan, Inc. v. Potter, 391 B.R. 521, 537 (D.D.C. 2008), aff’d

sub nom. Greater Se. Cmty. Hosp. Found., Inc. v. Potter, 586 F.3d 1 (D.C. Cir. 2009).

       Involuntary petitions may be brought against a “person, except . . . a corporation that is

not a moneyed, business, or commercial corporation, that may be a debtor under the chapter

under which such case is commenced.” 11 U.S.C. § 303(a). “The § 303(a) formulation of

‘moneyed, business, or commercial corporation’ embraces only corporations organized for

profit.” In re Capitol Hill Healthcare Grp., 242 B.R. 199, 202 (Bankr. D.D.C. 1999).

       In determining whether a corporation is organized for profit, courts review the

corporation’s organization under state law as well as the activities it engages in—i.e., whether

the corporation is “operated for pecuniary gain.” Id.; In re MAEDC Mesa Ridge, LLC, 334 B.R.

197, 200 (Bankr. N.D. Tex. 2005) (citing Strassburger, McKenna, Gutnick & Potter v. Quinn (In

re Grace Christian Ministries, Inc.), 287 B.R. 352, 355 (W.D. Pa. 2002)). Merely participating

in commercial activity does not make a non-profit corporation a “moneyed, business, or

commercial corporation.” MAEDC Mesa Ridge, 334 B.R. at 201 (citing Grace Christian

Ministries, 287 B.R. at 357 (“It is a non sequitur to conclude that a corporation is a “moneyed,

business, or commercial corporation” merely because it charges and is paid a fee for its

services.”)); see also Capitol Hill Healthcare, 242 B.R. at 201-02 (finding that the business

operations, transactions, and payments made by a non-profit hospital did not constitute

operations for pecuniary gain).

       Formed in 2006, Skybridge is a 501(c)(3) tax exempt non-profit, non-stock Delaware

corporation that seeks to promote public safety, environmental protection, and the preservation

and sound use of scarce public resources. See D.C. Bankruptcy Order at 22 (citing Tr. 4:11-5:7,

Skybridge Delaware (Bankr. D. Del. July 27, 2016)). Petitioner concedes that Skybridge was

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originally organized as a non-profit but claims that it transformed into a for-profit entity during

Respondent’s receivership because she used Skybridge for her “private inurement and profit.”

See Petitioner’s Opening Brief at 11. He claims the D.C. Bankruptcy Court avoided evidence

showing that Respondent took over Skybridge in 2016 and subsequently destroyed the

organization. See Petitioner’s Opening Brief at 9. Petitioner requests that this court review

Skybridge’s operations “as it is actually conducted,” id., but provides no evidence to establish

that Skybridge is currently operating for profit or ever did. The D.C. Bankruptcy Court

considered the fact that Skybridge is a validly incorporated non-profit corporation under

Delaware law and that Petitioner is involved in ongoing litigation in which he argues that

Skybridge is a non-profit. See D.C. Bankruptcy Order at 22. In his appeal, Petitioner provided

no evidence rebutting the D.C. Bankruptcy Court’s conclusion. Given the highly deferential

standard of review, the court finds that the D.C. Bankruptcy Court did not clearly err, and agrees

with its finding that “Skybridge is, and always has been, a non-profit corporation against which

an involuntary petition may not be filed.” See D.C. Bankruptcy Order at 42. Accordingly, the

court affirms the D.C. Bankruptcy Court’s Order.

                                      IV.    CONCLUSION

       For the reasons set forth above, the court denies Petitioner’s appeal, ECF No. 1, and

Motion for Summary Reversal, ECF No. 13.

       Date: August 29, 2023

                                                  Tanya S. Chutkan
                                                  TANYA S. CHUTKAN
                                                  United States District Judge

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