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United States v. Staton

United States District Court, D. Hawaii

April 19, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
RONALD B. STATON, BRENDA STATON, NAVY FEDERAL CREDIT UNION, CAPSTEAD MORTGAGE CORPORATION, and STATE OF HAWAII, Defendants.

          ORDER DENYING DEFENDANTS RONALD AND BRENDA STATONS' MOTION FOR LEAVE TO FILE AN INTERLOCUTORY APPEAL

          Alan C. Kay Sr. United States District Judge

         For the reasons discussed below, the Court DENIES Defendants Ronald and Brenda Statons' Motion for Leave to File an Interlocutory Appeal.

         BACKGROUND

         For purposes of the current motion, the Court discusses only those facts relevant to Defendants Ronald (“Mr. Staton”) and Brenda (“Mrs. Staton” and together with Mr. Staton, the “Statons”) Statons' Motion for Leave to File an Interlocutory Appeal (the “Motion”).[1] ECF No. 328. A more complete recitation of this case's extensive factual background can be found in the Court's prior Order Confirming Sale, Approving Commissioner's Report, and Determining Order of Priority for Future Disbursements (the “April 10, 2018 Order”). ECF No. 330.

         On December 29, 2014, Plaintiff United States (the “Government”) filed a Motion for Summary Judgment on the Third Claim in the Complaint. ECF No. 109. The motion requested that the Government's federal tax liens and judgments be foreclosed and that the Statons' home (the “Residence”) be sold free and clear of all liens pursuant to the terms of the Government's Proposed Order of Foreclosure and Judicial Sale. Id.; see also ECF No. 109-1. The motion further requested that the proceeds of the foreclosure sale first be applied to the costs of sale and any outstanding property taxes on the Residence, and thereafter be distributed among the parties through a stipulation or order of the Court. ECF No. 109.

         The Court issued an order granting the Government's Motion for Summary Judgment on the Third Claim in the Complaint on August 31, 2015, ECF No. 157 (“August 31, 2015 Order”), which thoroughly set forth why the inclusion of the foreclosure of Defendants Capstead Mortgage Corporation (“Capstead”) and Navy Federal Credit Union's (“NFCU” and together with Capstead, the “Lender Defendants”) mortgage was proper, id. at 16-23. That same day, the Court issued an Order of Foreclosure and Judicial Sale (“Foreclosure Order”) of the Residence, ordering that the Residence be sold free and clear of all liens, including Lender Defendants' mortgage. ECF No. 158.

         On September 1, 2015, however, Mr. Staton filed a petition for relief under 11 U.S.C. § 301 in the United States Bankruptcy Court for the District of Hawaii. ECF No. 160-1. In view of Mr. Staton's bankruptcy petition, the Court stayed this case. ECF No. 161. The Court reinstated the Foreclosure Order on December 7, 2015, in response to the Bankruptcy Court's Order Granting United States' Motion for Relief from Automatic Stay. ECF No. 168.

         On November 16, 2016, Mr. Staton filed a second petition for relief under 11 U.S.C. § 301 in the United States Bankruptcy Court for the District of Hawaii. ECF No. 208. Again, in view of Mr. Staton's bankruptcy petition, the Court stayed this case. ECF No. 209. Mr. Staton's second petition for relief under 11 U.S.C. § 301 was dismissed, however, and on April 24, 2017, the Court reinstated its Foreclosure Order and directed the parties to proceed in accordance therewith. ECF No. 212.

         The day before the scheduled foreclosure sale auction, on June 20, 2017, Mrs. Staton filed a petition for relief under 11 U.S.C. § 301 in the United States Bankruptcy Court for the District of Hawaii. ECF No. 214. Based on Mrs. Staton's bankruptcy petition, the Court stayed this case. ECF No. 215.

         The following month, on August 7, 2017, the Government filed a Motion for Relief from Automatic Stay in the Bankruptcy Court. The Bankruptcy Court entered an order on October 6, 2017, granting the Government's Motion for Relief from Automatic Stay. Accordingly, the Court unstayed this case and reinstated its Foreclosure Order, directing the parties to proceed in accordance therewith. ECF No. 219.

         The foreclosure sale of the Residence was set for December 20, 2017. ECF No. 230. But on December 8, 2017, Mr. Staton filed an Emergency Motion to Strike Notice of Lis Pendens (NOPA), ECF No. 226, along with a Supplement to the Emergency Motion, ECF No. 227. Mr. Staton represented that he obtained financing in the amount of $1, 032, 000-sufficient to satisfy all liens on the property-with a closing date set for December 8, 2017. ECF No. 226. The Court held a hearing on this matter on December 11, 2017 and ordered the parties to have a settlement conference with Magistrate Judge Chang. ECF No. 234.

         On December 18, 2017, Magistrate Judge Chang held the settlement conference, which he ended when the Statons could not produce a loan commitment from the lender for the above-described financing. ECF No. 244. The Statons filed an Emergency Motion Regarding Foreclosure and Request for a Hearing and Stay Pending Hearing later that day. ECF No. 241. And- still on December 18, 2017-the Court held a hearing on the Statons' motion, concluding that once again the Statons failed to obtain a loan commitment which would pay off all the liens on the Residence and that the foreclosure of the Residence would proceed on December 20, 2017. ECF No. 243.

         The day before the foreclosure sale, on December 19, 2017, the Statons filed a Notice Re: Conditional Loan Approval Letter and requested a stay of the foreclosure sale.[2] ECF No. 245. The Court held a hearing the morning of December 20, 2017 regarding the Statons' Notice, [3] at which the Court denied the Statons' request for a stay and ordered the foreclosure sale to proceed. ECF No. 251.

         The foreclosure sale occurred on December 20, 2017 around 12:00 p.m. on the steps of the United States District Court for the District of Hawaii. Following the foreclosure sale, on December 21, 2017, the Commissioner filed a Notice of Sale, informing the Court that the Residence was sold one day earlier for $1, 135, 000.00, subject to confirmation by the Court. ECF No. 254.

         On December 21, 2017, however, the Government filed a Notice of Defendant Ronald Staton's Bankruptcy Case, which stated that: (1) Mr. Staton filed a new bankruptcy case on December 20, 2017 and (2) the Government intended to seek relief from the stay in that case so that the Commissioner's sale could be confirmed. ECF No. 253.

         On December 22, 2017, Mrs. Staton filed a notice of lis pendens, asserting that she was contesting the validity of the foreclosure sale as having been filed in violation of Mr. Staton's bankruptcy, which she contended was filed at 11:54 a.m. before the foreclosure sale. ECF No. 255. She also asserted that the foreclosure sale failed “to protect defendant interests in the property.” ECF No. 255 at 2. The Court entered a minute order on January 5, 2018, setting a hearing on Mrs. Staton's claim for January 31, 2018 and directing the parties to file briefs. ECF No. 258.

         The Bankruptcy Court granted the Government's Motion for Relief from Automatic Stay on January 31, 2018, and applied the lifting of the stay retroactively to December 20, 2017.[4]

         This Court continued the hearing on Mrs. Staton's claim originally scheduled for January 31, 2018 until February 16, 2018 because the Government: (1) did not seek a waiver of the 14-day stay provided under Fed.R.Bankr.P. 4001(a)(3) in Mr. Staton's bankruptcy case; and (2) failed to record the Bankruptcy Court's Order in Mrs. Staton's prior bankruptcy case granting relief from the stay, which provided for “‘in rem' relief, i.e. this order is binding with respect to the subject property for 240 days after the date of the entry of this order in any other bankruptcy case that has been or may be filed.” ECF No. 268. The Government subsequently recorded the Bankruptcy Court's in rem Order with the Hawaii Bureau of Conveyances. ECF No. 296 at 3 (citing ECF No. 294-1).

         On February 12, 2018, Mr. Staton filed a Motion to Vacate, Alter, or Amend Order Granting Relief from Automatic Stay Retroactive to December 20, 2017 in the Bankruptcy Court. On February 15, 2018, the Bankruptcy Court denied this Motion. That same day, Mr. Staton filed a Notice of Appeal of the Bankruptcy Court's Order and its subsequent denial of his Motion to Vacate, Alter, or Amend.

         The Court held a hearing on February 16, 2018 (after expiration of the 14-day stay provided under Fed.R.Bankr.P. 4001(a)(3)) to consider Defendant Brenda Staton's assertion that there has been a failure “to protect defendant interests in the property.” Following the February 16, 2018 hearing, the Court entered an Order Finding Defendant Brenda Staton's Claim that the Foreclosure Sale Fails to Protect Her Interest in the Property to be Without Merit. ECF No. 276.

         The Court also entered a minute order on February 16, 2018, setting a briefing schedule and hearing dates on the issues of whether the foreclosure sale should be confirmed, the order of priority, and the disbursement of the foreclosure sale proceeds. ECF No. 275.

         On March 19, 2018, Mrs. Staton filed a notice of appeal, ECF No. 297, appealing from the Court's February 16, 2018 Order, ECF No 276. The Court entered a minute order on March 21, 2018, construing Mrs. Staton's notice of appeal as a motion for leave to file an interlocutory appeal, as well as setting a briefing schedule and hearing on the motion. ECF No. 299. The Government filed its Opposition on March 23, 2018, ECF No. 303, to which the Lender Defendants and Defendant State of Hawaii joined, ECF Nos. 304, 305. The Statons filed a Memorandum in Support of Brenda L. Staton's Motion to Certify Interlocutory Appeal on March 27, 2018. ECF No. 312. Lender Defendants filed an opposition to Mrs. Staton's memorandum on March 29, 2018. ECF. No. 317.

         In light of Mrs. Staton's notice of appeal, the minute order entered on March 21, 2018 also stated that the hearing on whether the foreclosure sale should be confirmed (originally scheduled for March 23, 2018, ECF No. 275) would be combined with the hearing on the issues of priority and disbursement of the foreclosure sale proceeds. ECF No. 299. The Court set the combined hearing for Friday, April 6, 2018. Id.

         On March 26, 2018, however, the Statons filed a Motion for Continuance of Hearings Scheduled for March 29, 2018 and April 6, 2018. ECF No. 307. The Government filed an opposition on March 28, 2018, ECF No. 309, to which Lender Defendants joined, ECF No. 314. The Court entered a minute order on March 28, 2018, denying the Statons' motion for a continuance and directing that the hearings set for March 29, 2018, and April 6, 2018, would be held as scheduled. ECF No. 311. The Court granted Mrs. Staton permission to appear at the March 29, 2018 and April 6, 2018 hearing by telephone. Id.; ECF No. 322. The Courtroom Manager contacted Mrs. Staton the day before the March 29, 2018 hearing to confirm these details and arrange Mrs. Staton's appearance by telephone.[5]

         On March 29, 2018, the Court held the hearing on Mrs. Staton's motion for leave to file an interlocutory appeal. Despite the Courtroom Manager's prior coordination with Mrs. Staton, she was unable to reach Mrs. Staton by telephone after several attempts. ECF No. 318. However, Mr. Staton, who appeared at the March 29, 2018 hearing in person, stated that he represented Mrs. Staton and would present their joint statement. Id. On April 3, 2018, the Court issued a written order denying Mrs. Staton's motion for leave to file an interlocutory appeal (the “April 3, 2018 Order”). ECF No. 321.

         Pursuant to the minute order entered on March 21, 2018, ECF No. 299, the Court held a hearing on April 6, 2018 on whether the foreclosure sale should be confirmed, the Commissioner's Report approved, and the issues of priority and disbursement of the foreclosure sale proceeds. ECF No. 327. Mr. Staton appeared at the hearing in person, while Mrs. Staton appeared by telephone. At the conclusion of the April 6, 2018 hearing, the Court announced that it would enter a written order granting the Government's Motion for an Order Confirming Sale, Approving Commissioner's Report and Distributing Proceeds to the extent that it would: (1) confirm the sale; (2) approve the Commissioner's Report; and (3) approve the Government's proposed order of priority for future disbursements. See ECF No. 327.

         The Court also stated that it would reserve consideration of the disbursement of sale proceeds pending the resolution of several outstanding issues, including the determination of: (1) the reasonable amount of attorneys' fees and costs to which the Lender Defendants are entitled, which has been referred to Magistrate Judge Kevin Chang for a Findings and Recommendation; and (2) the amount of accrued interest and any penalties to which the Government is entitled. Id. The Court announced that it would rule on the ultimate amount of sale proceeds to be distributed to each party, and order the appropriate distribution, following a separate hearing. Id.

         Hours after the April 6, 2018 hearing, the Statons filed a hand-written notice of appeal. ECF No. 328. The notice of appeal cited no statutory or legal authority and appealed from the Court's “Order Confirming Sale, Approving Commissioner's Report and Distributing Proceeds. . . .” Id.[6]

         On April 10, 2016, the Court entered a minute order stating that it would construe the Statons' April 6, 2018 notice of appeal as a motion to permit an interlocutory appeal under 28 U.S.C. § 1292. ECF No. 329. The minute order scheduled a hearing on the motion for Wednesday, April 18, 2018, and directed the parties to file any memoranda in support or opposition by Friday, April 13, 2018. Id.

         That same day, on April 10, 2018, the Court issued an Order Confirming Sale, Approving Commissioner's Report, and Determining Order of Priority for Future Disbursements. April 10, 2018 Order, ECF No. 330. In the April 10, 2018 Order, the Court explicitly “reserve[d] jurisdiction to address any appropriate issues that remain, including [(1) the reasonable attorneys' fees and costs to which Lender Defendants' are entitled and (2) the accrued interest and any penalties to which the Government is entitled], as well as the possible entry of a deficiency judgment in favor of” the Government. Id. at 28. The April 10, 2018 Order also stated, among other things, that it was “not a final judgment pursuant to Rule 54 of the Federal Rules of Civil Procedure.” Id.

         Special Considerations for Pro Se Litigants

         The Court reiterates that, notwithstanding that it appears the Statons have received advice from an undisclosed attorney during the course of this proceeding, the Court has nevertheless treated the Statons as pro se parties and analyzed their position as being pro se. The Ninth Circuit has explained that pro se pleadings and briefs are to be construed liberally.

         Balisteri v. Pacifica Police Dep't., 901 F.2d 696 (9th Cir. 1990). When pro se litigants technically violate a rule, the court should act with leniency toward them. Motoyama v. Haw. Dep't of Transp., 864 F.Supp.2d 965, 975 (D. Haw. 2012); Draper v. Coombs, 792 F.2d 915, 924 (9th Cir. 1986). Pro se litigants, however, must ...


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