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In re Smith

United States District Court, D. Colorado

May 21, 2019

IN RE DAVID LEE SMITH, and MARY JULIA HOOK, Debtors.
v.
DENNIS W. KING, Trustee, and COLORADO DEPARTMENT OF REVENUE, Appellees. DAVID LEE SMITH, and MARY JULIA HOOK, Appellants,

          ORDER

          RAYMOND P. MOORE United States District Judge

         This matter is before the Court on Appellants' “Emergency Motion to Enjoin Sale of Home Pending Appeal of Closure of Chapter 7 Bankruptcy Case” (the “Motion”) (ECF No. 27) seeking to enjoin the sale of certain property commonly known as 5800 East 6th Avenue, Denver, Colorado 80220 (the “Property”). Upon consideration of the Motion and relevant parts of the court record, and being otherwise fully advised, the Motion is DENIED.[1]

         I. BACKGROUND

         This matter arises from Appellants' appeal of adverse rulings issued in their bankruptcy case (No. 17-16354-TBM) and in Adversary Proceeding No. 18-01265-TBM (the “Adversary Proceeding”). In the Motion before the Court, Appellants seek to enjoin the sale of the Property pursuant to an Order of Foreclosure and Judicial Sale entered by this Court in Civil Action No. 14-cv-00955-RM-SKC (the “Foreclosure Order”). Appellants support this Motion[2] with assertions of what allegedly transpired in Civil Action No. 14-cv-00955 and in the cases before the Bankruptcy Court, [3] providing select excerpts of filings made in some of these cases.

         As to the bankruptcy case, Appellants assert (1) the Bankruptcy Trustee filed a Final Report; (2) Appellants objected; and (3) the Bankruptcy Court accepted the Trustee's Final Report. Specifically, in its Order of July 17, 2018, setting a non-evidentiary hearing on the Final Report and Appellants' Objection, the Bankruptcy Court stated:

The record before the Court reveals a bankruptcy estate that is hopelessly insolvent. Thus, the Debtors' standing to object to the administration of the case and the Trustee's Final Report is in serious doubt.

(ECF No. 11-3, p. 51.) After hearing and briefing, the Bankruptcy Court overruled the Appellants' Objection and accepted the Trustee's Final Report. Among other things, the Bankruptcy Court found the estate was insolvent and Appellants failed to meet their burden of showing they have standing to object. (ECF No. 11-1, p. 30.) Appellants assert the Bankruptcy Court's rulings on these issues are erroneous.

         As to the Adversary Proceeding, Appellants appeal the Bankruptcy Court's Order granting the Colorado Department of Revenue's (“CDOR”) motion to dismiss. In its Order of February 5, 2019, the Bankruptcy Court found, among other things, that Appellants failed to present sufficient factual allegations to state any plausible claim for relief.

         This appeal followed the Bankruptcy Court's issuance of its various orders.

         II. LEGAL STANDARD

         Before injunctive relief may be had, the movant must establish: “‘(1) a substantial likelihood of prevailing on the merits; (2) irreparable harm unless the injunction is issued; (3) that the threatened injury outweighs the harm that the preliminary injunction may cause the opposing party; and (4) that the injunction, if issued, will not adversely affect the public interest.'” Diné Citizens Against Ruining our Environment v. Jewell, 839 F.3d 1276, 1281 (10th Cir. 2016) (quoting Davis v. Mineta, 302 F.3d 1104, 1111 (10th Cir. 2002)). The Tenth Circuit no longer applies a “modified test”[4] for determining preliminary injunctive relief, finding it inconsistent with the Supreme Court's decision in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008). Diné Citizens, 839 F.3d at 1282.

         In addition, three types of preliminary injunction are disfavored: “(1) preliminary injunctions that alter the status quo; (2) mandatory preliminary injunctions; and (3) preliminary injunctions that afford the movant all the relief that it could recover at the conclusion of a full trial on the merits.” Fundamentalist Church of Jesus Christ of Latter-Day Saints v. Horne, 698 F.3d 1295, 1301 (10th Cir. 2012) (citation omitted). Should a preliminary injunction fit within one of these types, the injunction “must be more closely scrutinized to assure that the exigencies of the case support the granting of a remedy that is extraordinary even in the normal course.” O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 389 F.3d 973, 975 (10th Cir. 2004) (en banc). “Because a preliminary injunction is an extraordinary remedy, the movant's right to relief must be clear and unequivocal.” Diné Citizens, 839 F.3d at 1281 (citation and quotation marks omitted).

         III. DISCUSSION

         A. ...


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