Cournoyer v. Elansari

El ye □□ □□

SIGNED this 22nd day of April, 2022. We)

BRNJAMIN A. KAHN

UNITED STATES BANKRUPTCY JUDGE

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY COURT

MIDDLE DISTRICT OF NORTH CAROLINA

GREENSBORO DIVISION

In re: )

) Bankruptcy No. 21-10106

Tawana Williams, )

) Chapter 7

)

Debtor. )

ee)

William P. Miller, )

U.S. Bankruptcy Administrator, )

)

Plaintiff, )

)

Vv. ) Adversary Proceeding

) No. 21-02006

Amro Elansari; )

The Law Lion, LLC, )

)

Defendants. )

ee)

MEMORANDUM OPINION DENYING PETITION FOR RECONSIDERATION

This adversary proceeding is before the Court on the Petition

For Reconsideration of Order Dated 11/03/2021 filed by Amro

Elansari (“Defendant”). ECF No. 75 (the “Motion for

Reconsideration”). Defendant requests the Court reconsider its

orders granting Plaintiffs’ Motion to Dismiss Counterclaim of

Defendant and denying Defendant’s Motion for Leave to File Third

Party Complaint. ECF Nos. 66 and 67, respectively. William P.

Miller, United States Bankruptcy Administrator for the Middle

District of North Carolina, and Sarah D. Bruce, Bankruptcy Attorney

for the Office of the United States Bankruptcy Administrator, by

and through Sandra J. Hairston, Acting United States Attorney for

the Middle District of North Carolina (“Plaintiffs”), filed a

response and opposed the Motion for Reconsideration. ECF No. 78

(the “Response”).

For the following reasons, the Motion for Reconsideration is

denied.

I. JURISDICTION AND AUTHORITY

The Court has jurisdiction over the subject matter of this

case under 28 U.S.C. § 1334(a) and over this proceeding under 28

U.S.C. § 1334(b). The United States District Court for the Middle

District of North Carolina has referred this case and this

proceeding to this Court under 28 U.S.C. § 157(a) by its Local

Rule 83.11. This is a core proceeding pursuant to 28 U.S.C. §

157(b), in which this Court has statutory authority to enter final

judgments. See, e.g., In re Spence, 515 B.R. 369, 372 (Bankr.

M.D. Fla. 2014); In re Farris, 598 B.R. 411, 414 (Bankr. W.D. La.

2019). The Court has constitutional authority to enter final

judgment in this proceeding.

II. BACKGROUND

On June 9, 2021, the Bankruptcy Administrator, through Sarah

D. Bruce (“Ms. Bruce”) as counsel, commenced this adversary

proceeding by filing the Complaint of the United States Bankruptcy

Administrator for Forfeiture of Compensation, Damages, and

Injunctive Relief Pursuant to 11 U.S.C. §§ 110 and 526 against

Defendant and The Law Lion, LLC, Defendant’s company. ECF No. 1.

The Bankruptcy Administrator alleges that, among other things,

Defendants Amro Elansari and The Law Lion, LLC, violated 11 U.S.C.

§§ 110, 526, and 528 in various ways while acting as a bankruptcy

petition preparer and a debt relief agency, respectively, in the

Chapter 7 case of Tawana Williams. The Bankruptcy Administrator

seeks forfeiture, turnover of fees, damages, injunctive relief,

and fines against Defendants for such alleged violations.

In response to the Complaint, Defendant submitted an Answer

to the Complaint and Joinder of Additional Defendants. ECF Nos.

14 and 16, respectively. The Answer responds to the individual

allegations of the Complaint and asserts a Counterclaim against

the Bankruptcy Administrator and Ms. Bruce in both their official

and individual capacities. ECF No. 14. Defendant alleges that

Plaintiffs committed the torts of: Count I - fraudulent

representation, Count II - negligent misrepresentation, and Count

III - frivolous or malicious actions against the Counterclaimant.

Id. Defendant also raises Count IV which is a “Civil Action for

Deprivation of Rights and Petition for Injunctive Relief Pursuant

to 42 U.S.C. § 1983.” Id. at 22.

On September 24, the United States filed a Notice of

Substitution, substituting the United States as a party in lieu of

the Bankruptcy Administrator and Ms. Bruce. ECF No. 46 (the

“Notice of Substitution”). Finding Defendants were acting within

their official capacities and within the scope of employment of

the United States at the time of the alleged conduct, the United

States was substituted for the Bankruptcy Administrator and Ms.

Bruce as the sole Counter-Defendant for purposes of Counts I

through III, but not Count IV. ECF No. 55.

Also, on September 24, the United States and Plaintiffs filed

a Motion to Dismiss the Counterclaim, ECF No. 47 (“Motion to

Dismiss the Counterclaim”), and supporting brief, ECF No. 48,

arguing that Counts I through III should be dismissed for lack of

subject matter jurisdiction, and Count IV should be dismissed for

failure to state a claim.

On September 27, Defendant filed a Motion for Leave to File

Third Party Complaint. ECF No. 50 (the “Motion for Leave to File

Third Party Complaint”). In response, Plaintiffs filed an

objection to the motion. ECF No. 57.

On November 3, the Court held a hearing on the Motion to

Dismiss the Counterclaim and Motion for Leave to File Third Party

Complaint. Based on the hearing, the Court entered an order

dismissing Defendant’s counterclaim. ECF No. 66 (the “Order

Granting Motion to Dismiss Counterclaim”). Additionally, the

Court entered an Order denying the Motion for Leave to File Third

Party Complaint. ECF No. 67 (the “Order Denying Motion for Leave

to File Third Party Complaint”).

On November 15, Defendant filed a Petition For

Reconsideration of Order Dated 11/03/2021. ECF No. 75. Defendant

argues that this Court should exercise supplemental jurisdiction

to hear his state-law tort claims. Id. Additionally, he argues

that he has grounds for reconsideration because of judicial economy

and efficiency. Id.

Finally, Defendant urges this Court to construe his claims

“as Bivens claims and [allow] them to proceed, rather than

dismissing them on the technicality error made by a pro se

litigant[.]” Id. This Court liberally construed the Motion for

Reconsideration as a motion to reconsider both orders, the Order

Granting Motion to Dismiss Counterclaim and the Order Denying

Motion for Leave to File Third Party Complaint (ECF Nos. 66 and

67). ECF No. 76. On November 29, Plaintiffs filed a response in

opposition to the Motion for Reconsideration. ECF No. 78.

Plaintiffs argue that this Court lacks subject matter jurisdiction

to hear Counts I through III. Id. Further, they argue that Count

IV is barred by prosecutorial immunity, and it fails to state a

Bivens claim. Id.

III. STANDARD OF REVIEW

Defendant seeks relief from an order. A litigant may seek

relief from an order under Rule 9023, 9024, or 7054. Both Fed. R.

Civ. P. 59, made applicable to this adversary proceeding by Fed.

R. Bankr. P. 9023, and Fed. R. Civ. P. 60, made applicable to this

adversary proceeding by Fed. R. Bankr. P. 9024, are inapplicable

to the orders at issue here because these rules only apply to final

orders. Fayetteville Inv'rs v. Commercial Builders, Inc., 936

F.2d 1462, 1472 (4th Cir. 1991) (“[M]otion for reconsideration

could not be treated under Rules 60 or 59, as these rules apply

only to final judgments.”). “Judgments are generally only final

where they adjudicate and resolve all claims as to the parties.”

Moore v. Lightstorm Entm't, Civil Action No. RWT-11-3644, 2013

U.S. Dist. LEXIS 112366, at *8 (D. Md. Aug. 8, 2013); see Porter

v. Zook, 803 F.3d 694 (4th Cir. 2015); see also Fox v. Balt. City

Police Dep't, 201 F.3d 526 (4th Cir. 2000).

In this case, the Order Granting Motion to Dismiss

Counterclaim and Order Denying Motion for Leave to File Third Party

Complaint are not final orders because they do not dispose of all

the claims in the case. “An order dismissing fewer than all claims

is not a final judgment for which a Rule 60(b) or 59(e) motion is

appropriate, but rather an interlocutory motion that may be

contested under Rule 54(b).” Moore, 2013 U.S. Dist. LEXIS at *8

(citing Quigley v. United States, 865 F. Supp. 2d 685, 699 (D. Md.

2012); Crouch v. City of Hyattsville, Md., DKC 09-2544, 2010 U.S.

Dist. LEXIS 123896, at *2 (D. Md. Nov. 23, 2010)).

Accordingly, Fed. R. Civ. P. 54, made applicable to this

adversary proceeding by Fed. R. Bankr. P. 7054, governs Defendant’s

request for reconsideration. Under Rule 54, “any order or other

decision, however designated, that adjudicates fewer than all the

claims or the rights and liabilities . . . does not end the action

as to any of the claims or parties and may be revised at any time

before the entry of a judgment adjudicating all the claims and all

the parties' rights and liabilities.” A motion for reconsideration

under Rule 54(b) is appropriate “(1) to account for an intervening

change in controlling law; (2) to account for newly discovered

evidence; or (3) to correct a clear error of law or prevent

manifest injustice." Hatch v. Demayo, No. 1:16CV925, 2018 U.S.

Dist. LEXIS 195973, at *3 (M.D.N.C. Nov. 15, 2018) (quoting South

Carolina v. United States, 232 F. Supp. 3d 785, 793 (D.S.C. 2017)).

Courts have held that “reconsideration is ‘an extraordinary remedy

which should be used sparingly, and a motion for reconsideration

is not intended to allow a party to relitigate matters the court

has previously heard.’” In re TP, Inc., 486 B.R. 698, 700 (Bankr.

E.D.N.C. 2013) (quoting In re L.L. Murphrey Co., No. 12-03837-8-

JRL, 2012 Bankr. LEXIS 4768, at *2 (Bankr. E.D.N.C. Oct. 11,

2012)). Such motions "should not be used to rehash arguments the

court has already considered" or "to raise new arguments or

evidence that could have been raised previously." South Carolina,

232 F. Supp. 3d at 793.

The first two grounds under Rule 54(b) are inapplicable to

this case. Defendant must show that there is a clear error to

correct or that injustice would occur without reconsideration.

The Court finds there is no justification for the Court to

reconsider its previous orders.

IV. CONCLUSIONS OF LAW

A. This Court does not have jurisdiction over Counts I through

III because this Court cannot exercise supplemental

jurisdiction.

The Court considers jurisdiction before deciding the merits

of the case. Whitmore v. Arkansas, 495 U.S. 149, 154 (1990)

(“[B]efore a federal court can consider the merits of a legal

claim, the person seeking to invoke the jurisdiction of the court

must establish the requisite standing to sue.”).

1. This Court cannot exercise supplemental jurisdiction

under 11 U.S.C. § 1367.

Defendant urges the Court to use supplemental jurisdiction to

hear Counts I through III. Even if the Court found that Defendant

exhausted his administrative remedies, this Bankruptcy Court

cannot exercise supplemental jurisdiction. It is settled that

“Congress has never expressly authorized bankruptcy courts to

exercise supplemental jurisdiction.” In re Gaitor, AP No. 14-

9059, 2015 WL 4611183, *7 (Bankr. M.D.N.C. July 13, 2015).

Additionally, “neither the Supreme Court nor the Fourth Circuit

has determined whether bankruptcy courts may exercise supplemental

jurisdiction.” Id. This Court held that bankruptcy courts “lack

statutory authority to exercise supplemental jurisdiction under 28

U.S.C. § 1367.” Id. Therefore, this Court lacks supplemental

jurisdiction under 28 U.S.C. § 1367.

Defendant further argues that judicial economy and efficiency

should encourage this Court to use supplemental jurisdiction to

hear Defendant’s claims. However, “[w]here a bankruptcy court has

no statutory or constitutional authority to hear a claim, the

interest of judicial economy cannot create jurisdiction.” Id. at

*26-27 (citing Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.

1984)). Cf., Gaitor, 2015 WL 4611183 at *8 (“The fact that it

might be convenient for the [litigant] to adjudicate his state law

claims alongside his claim for violation of the discharge

injunction has no effect on this Court’s jurisdiction. * * * Where

a bankruptcy court has no statutory or constitutional authority to

hear a claim, the interest of judicial economy cannot create

jurisdiction.”).

This Court does not have statutory or constitutional

authority to use supplemental jurisdiction to hear Counts I through

III. Since the Order Granting Motion to Dismiss Counterclaim

reached the same conclusion, there is no clear error of law to be

corrected. The Court finds no reason to reconsider its previous

decision dismissing Counts I through III.

B. The Court finds no reason to reconsider its decision on Count

IV because the Court did not make an error of law and a Bivens

claim is futile.

For the first time, Defendant argues that Count IV should be

construed as a Bivens claim. In Count IV, Defendant alleges that

Plaintiffs filed the Complaint with fraudulent and false

accusations against him that lacked any basis in fact. ECF No.

14, ¶¶ 45 & 46. In so doing, Defendant now asserts that such

actions violated his due process rights under the Fifth and

Fourteenth Amendments and gave rise to a Bivens claim.

The Supreme Court has held that “a pro se complaint, ‘however

inartfully pleaded,’ must be held to ‘less stringent standards

than formal pleadings drafted by lawyers.’” Estelle v. Gamble,

429 U.S. 97, 106 (1976) (quoting Haines v. Kerner, 404 U.S. 519

(1972)); Jackson v. Lightsey, 775 F.3d 170, 178 (4th Cir. 2014)

(noting that a pro se complaint should be liberally construed).

Because Defendant is pro se, this Court has liberally construed

Count IV and considered the Motion for Reconsideration as a motion

for leave to amend Count IV to assert a Bivens claim.

Under Fed. R. Civ. P. 15(a)(2), “[a] party may amend its

pleading only with the opposing party’s written consent or the

court’s leave.”1 Under Fed. R. Bankr. P. 9013, and unless made

during a hearing, “a request for leave to amend must be made by

motion.” Zinn v. Mortg. Lender of Am. & Co. (In re Zinn), Nos.

13-14270-LSS (Chapter 13), 13-00708-LSS, 2017 Bankr. LEXIS 154, at

*49 (Bankr. D. Md. Jan. 17, 2017). The leave to amend should be

denied “only when the amendment would be prejudicial to the

opposing party, there has been bad faith on the part of the moving

party, or the amendment would be futile.” Johnson v. Oroweat Foods

Co., 785 F.2d 503, 509 (4th Cir. 1986) (citing Foman v. Davis, 371

U.S. 178, 182 (1962)). “A proposed amendment is futile when it is

‘clearly insufficient or frivolous on its face’ or if the claim it

presents would not survive a motion to dismiss.” Save Our Sound

OBX, Inc. v. N.C. DOT, 914 F.3d 213, 228 (4th Cir. 2019); see

Johnson, 785 F.2d at 510; Perkins v. United States, 55 F.3d 910,

917 (4th Cir. 1995).

Defendant fails to assert a Bivens claim, and the proposed

amendment would be futile. In Bivens v. Six Unknown Fed. Narcotics

Agents, 403 U.S. 388 (1971), the Supreme Court “held that the

Fourth Amendment guarantee against ‘unreasonable searches and

seizures’ was a constitutional right which Bivens could enforce

through a private cause of action, and that a damages remedy was

an appropriate form of redress.” Davis v. Passman, 442 U.S. 228,

1 Plaintiffs do not consent to the amended pleading.

234 (1979) (citing Butz v. Economou, 438 U.S. 478 (1978)). Thus,

the Court recognized an implied damages remedy “to compensate

persons injured by federal officers who violated the prohibition

against unreasonable search and seizures.” Ziglar v. Abbasi, 137

S. Ct. 1843, 1854 (2017).

The Court has expanded Bivens remedies in a Fifth Amendment

gender-discrimination case, Davis, 442 U.S. at 228, and in an

Eighth Amendment Cruel and Unusual Punishments Clause

case, Carlson v. Green, 446 U.S. 14 (1980). Abbasi, 137 S. Ct. at

1848. After these cases, however, “the Court has made clear that

expanding the Bivens remedy is now a ‘disfavored’ judicial

activity.” Id. at 1857 (quoting Ashcroft v. Iqbal, 556 U.S. 662,

675 (2009)). A Bivens remedy “has not been extended to new

contexts for the past 30 years.” Doe v. Meron, 929 F.3d 153, 168

(4th Cir. 2019) (citing Abbasi, 137 S. Ct. at 1857). Furthermore,

“the [United States Supreme] Court has generally expressed doubt

about its authority to recognize causes of action not expressly

created by Congress.” Hernandez v. Mesa, 140 S. Ct. 735, 739

(2020).

In this case, Defendant is not seeking remedy under the Fourth

Amendment, under the Fifth Amendment for a gender discrimination

claim, or under Eighth Amendment for cruel and unusual punishment.

Defendant argues that Plaintiffs’ false allegations violate his

Fifth and Fourteenth Amendment due process rights. ECF No. 75.

The Court must use a two-step inquiry when considering whether

to extend Bivens. The first inquiry asks “whether the request

involves a claim that arises in a new context or involves a new

category of defendants.” Hernandez, 140 S. Ct. at 739 (internal

quotations omitted)(citation omitted). “If the case is different

in a meaningful way from previous Bivens cases decided by this

Court, then the context is new.” Id. (citing Abbasi, 137 S. Ct.

at 1859). “A claim may arise in a new context even if it is based

on the same constitutional provision as a claim in a case in which

a damages remedy was previously recognized.” Id. at 743.

This case presents a new Bivens context. While Defendant is

claiming a violation of his Fifth Amendment right, this is

different from a Fifth Amendment gender discrimination claim.2 No

Court has treated a Fifth Amendment nor Fourteenth Amendment due

process right violation as a Bivens claim.3 Thus, this case offers

a new Bivens context.

For the second inquiry, if a new context or new category has

arisen, then the Court asks “whether there are any ‘special factors

[that] counse[l] hesitation’ about granting the extension.”

Hernandez, 140 S. Ct. at 739; (citing Abbasi, 137 S. Ct. at 1857).

2 The Fourth Circuit Court of Appeals recognized that “Bivens has never ‘been

extended to a Fifth Amendment due process claim.’” Annappareddy v. Pascale,

996 F.3d 120, 134 (4th Cir. 2021).

3 Furthermore, the Fourteenth Amendment due process clause does not apply to

this case because it applies to only to the states. Since there are no state

actors here, the clause is irrelevant.

If there are special factors, the request for extending Bivens

must be rejected. Id. at 743 (finding that “[i]f there are

[special factors that counsel hesitation]—that is, if we have

reason to pause before applying Bivens in a new context to a new

class of defendants—we reject the request”). The Supreme Court

has “not attempted to ‘create an exhaustive list’” of the special

factors but has explained that separation of powers principles is

central to the analysis. Hernandez, 140 S. Ct. at 735 (citation

omitted). “[T]he inquiry must concentrate on whether the

Judiciary is well suited, absent congressional action or

instruction, to consider and weigh the costs and benefits of

allowing a damages action to proceed.” Abbasi, 137 S. Ct. at 1857-

58 (2017). In most instances, Congress is in better position to

make such determination.

In this case, special factors are present that prohibit

recognizing the proposed new Bivens claim. One factor is the

available alternative remedies. The Supreme Court has held that

“if there is an alternative remedial structure present in a certain

case, that alone may limit the power of the Judiciary to infer a

new Bivens cause of action.” Abbasi, 137 S. Ct. at 1858; see

Annappareddy, 996 F.3d at 137. There are sufficient remedies under

the Federal Rules of Bankruptcy Procedure with respect to litigants

filing false or frivolous pleadings. A Bivens claim is not the

sole way that Defendant can seek a remedy.

Another factor is “the length of time Congress has gone

without statutorily creating a Bivens-type remedy for this

context.” Cantu v. Moody, 933 F.3d 414, 423 (5th Cir. 2019). The

Supreme Court has stated that “for almost 40 years, [the U.S.

Supreme Court has] consistently rebuffed requests to add to the

claims allowed under Bivens.” Hernandez, 140 S. Ct. at 743.

Factual disputes are ubiquitous in the federal courts, and remedies

exist for frivolous and contumacious litigation. No court has

expanded Bivens to these contexts.

Therefore, Defendant fails to assert a Bivens claim.4 Thus,

there is no clear error of law to be corrected, Defendant will not

be granted leave to amend his counterclaim, and the Motion for

Reconsideration is denied.

V. CONCLUSION

For the reasons set forth above, the Court will enter its

order denying the Motion for Reconsideration.

[END OF DOCUMENT]

4 Because the proposed amendment fails to state a Bivens claim, the Court does

not need to consider or address prosecutorial immunity.

PARTIES TO BE SERVED

Case No. 21-02006

All parties to this Adversary Proceeding.