In re Skybridge Spectrum Found.

1

IN RE Skybridge Spectrum Foundation, Warren Havens, Petitioner

Civil Action No. 21-cv-1551 (TSC)

Bankruptcy No. 21-bk-5-ELG

United States District Court, District of Columbia

August 29, 2023

MEMORANDUM OPINION

TANYA S. CHUTKAN, UNITED STATES DISTRICT JUDGE.

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 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 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.

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).

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 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...