The opinion
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UNITED STATES BANKRUPTCY COURT ey. eB je
NORTHERN DISTRICT OF OKLAHOMA of) ct
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IN RE ) Oo LF
) Qos
RENFROW, MIRANDA KRISTIN, _ ) Case No. 17-10385-R
) Chapter 7
Debtor. )
MIRANDA KRISTIN RENFROW )
)
Plaintiff, )
)
VS. ) Adv. No. 17-1027-R
)
COURTNEY GROGAN, )
SUCCESSOR TRUSTEE OF THE _)
JOE C. COLE REVOCABLE )
TRUST, UNDER TRUST AGREE- __)
MENT DATED MARCH 28, 2002, +)
and ATKINSON, HASKINS, )
NELLIS, BRITTINGHAM, GLASS _ )
& FIASCO, P.C., )
)
Defendants. )
ORDER DENYING MOTION TO STAY
Before the Court is the Defendants’ Combined Motion to Stay Enforcement of
Judgment Pending Appeal & To Fix the Amount of Supersedeas Bond (Doc. 108)
(“Motion”) filed by Defendants/Judgment Debtors Courtney Grogan, Successor Trustee of
the Joe C. Cole Revocable Trust, Under Trust Agreement Dated March 28, 2002 (“Grogan”)
and Atkinson, Haskins, Nellis, Brittingham, Glass & Fiasco, P.C. (“AHN”) (collectively
“Movants” or “Defendants”), and the Response and Objection to Motion for Stay (Doc. 118)
filed by Plaintiff/Judgment Creditor Miranda Kristin Renfrow (“Renfrow”). At the request
of Movants, an emergency hearing was held on May 13, 2019. Movants presented oral
argument in support of their Motion, and the matter was taken under advisement.
I. Jurisdiction
The Court has jurisdiction of this proceeding pursuant to 28 U.S.C. §§ 1334, 157(a),
and 157(b)(1) and (2), and Local Civil Rule 84.1(a) of the United States District Court for
the Northern District of Oklahoma.
II. Background
Plaintiff Renfrow filed a petition for relief under Chapter 7 of the Bankruptcy Code
on March 10, 2017 (“Petition Date”). On June 15, 2017, this Court entered an order
discharging all prepetition debts and claims against Renfrow. Accordingly, claims asserted
by Grogan against Renfrow in the case of Courtney Grogan, Successor Trustee of The Joe
C. Cole Revocable Trust, under Trust Agreement dated March 28, 2002 v. Miranda K.
Renfrow, D.O., an Individual, and Envision Medical and Surgical Eye Care, P.C., an
Oklahoma Professional Corporation, Case No. CJ-2016-2033 (the “State Court Case’’), were
discharged. On August 1, 2017, Grogan, through her counsel AHN, amended her petition
in the State Court Case to reassert the prepetition claims and add a new claim against
Renfrow under the Uniform Fraudulent Transfer Act (““UFTA”).
On August 26, 2017, Renfrow, through her counsel Ron Brown, commenced this
proceeding by filing a Complaint against Grogan and AHN alleging that they violated
Renfrow’s discharge by filing the amended petition (“Discharge Violation Litigation’’).
Grogan and AHN continued prosecuting the UFTA claim against Renfrow. The State Court
Case proceeded to jury trial in December 2017, which resulted in a judgment against
Renfrow in the amount of $89,500 (“UFTA Judgment”). In January 2018, Renfrow amended
her Complaint in the Discharge Violation Litigation to assert that Grogan and AHN obtained
the UFTA Judgment in violation of the discharge injunction. After the State Court denied
Renfrow’s motion for judgment notwithstanding the verdict, Renfrow timely appealed the
UFTA Judgment and the JNOV denial to the Oklahoma Supreme Court. That appeal is
pending.’
In the Discharge Violation Litigation, Grogan and AHN sought summary judgment
in their favor, arguing that (1) this Court lacked jurisdiction under the Rooker-Feldman
doctrine, (2) Renfrow was barred from relitigating whether the debt reduced to judgment was
discharged, and (3) Grogan was not liable for any discharge violation because she acted upon
advice of counsel. After careful consideration of all authorities cited by Defendants and after
considerable research, the Court issued a detailed opinion denying summary judgment.’
First, the Court confirmed that its jurisdiction was intact. In 2005, the United States
Supreme Court reversed a federal court that concluded that the Rooker-Feldman doctrine
divested it of properly assumed jurisdiction when a state court, having heard the same issue,
entered its judgment. In Exxon Mobil Corporation v. Saudi Basic Industries Corporation,
the high court clarified that “[w]hen there is parallel state and federal litigation, Rooker-
Feldman is not triggered simply by the entry of judgment in the state court. This Court has
'On May 14, 2019, Movants obtained a stay of the briefing deadlines in the UFTA
Judgment appeal pending the conclusion of Movant’s appeal of the Judgment in this case.
*Order Denying Defendants’ Motion for Summary Judgment (Doc. 66).
repeatedly held that the pendency of an action in the state court is no bar to proceedings
concerning the same matter in the Federal court having jurisdiction. . . . Disposition of the
federal action, once the state-court adjudication is complete, would be governed by
preclusion law.”
Second, this Court determined that Defendants could not establish their issue
preclusion defense. Among other things, Renfrow’s appeal of the UFTA Judgment was
pending, and therefore it was not a “final judgment” for the purposes of issue preclusion.
Third, the Court explained that “advice of counsel” has been uniformly rejected as a
defense to a civil contempt charge for discharge violations.
The day after the Court denied summary judgment, and one week before the trial in
the Discharge Violation Litigation, Defendants sought recusal of the undersigned and moved
to disqualify Brown as Renfrow’s counsel, which motions were denied. On November 29
and 30, 2018, the Discharge Violation Litigation was tried on the merits. In their closing
arguments and trial brief, Defendants reasserted their Rooker-Feldman and issue preclusion
defenses. Defendants also claimed that Renfrow lost the right to claim a discharge violation
because she asserted her discharge as a defense in the State Court Case, and that Renfrow
failed to establish that Grogan “intended” to violate the discharge.’
°544 U.S. 280, 292-93 (2005) (quotation marks and citations omitted).
“A discharged debtor is not required to prove that a creditor subjectively or
specifically intended to violate the discharge in order to establish contempt. The test is
whether the creditor knew the discharge injunction was applicable and intended the actions
that violated the injunction. See Peyrano v. Sotelo (In re Peyrano), 558 B.R. 451, 459
(Bankr. E.D. Okla. 2016), aff'd, 15-08011, 2017 WL 2731299 (B.A.P. 10" Cir. June 26,
2017); In re Slater, 573 B.R. 247 (Bankr. D. Utah 2017). See also In re Johnson, 501 F.3d
On April 23, 2019, this Court issued a Memorandum Opinion, reciting detailed
findings of fact that support the conclusion that Defendants acted in intentional or reckless
disregard of Renfrow’s discharge in proceeding with the State Court Case and in obtaining
the UFTA Judgment.’ In the opinion, the Court addressed each of Defendants’ defenses and
legal arguments, and distinguished their authorities. A Judgment was entered confirming that
the UFTA Judgment was voided by 11 U.S.C. § 524(a)(1). In order to provide complete
relief to Renfrow, Defendants were directed “to obtain an order vacating the [UFTA]
Judgment against Renfrow as void, to dismiss the [State Court Case] against Renfrow, and
to take any other action reasonably requested by Renfrow to evidence the fact that the
[UFTA] Judgment against her is and was void ab initio.” In addition, a money judgment
was entered “in favor of Renfrow and against Defendants, jointly and severally, for
compensatory damages in the amount of $104,867 and punitive damages in the amount of
$100,000.”
On May 7, 2019, Defendants filed their Notice of Appeal and Statement of Election,
electing to have their appeal heard by the United States District Court for the Northern
District of Oklahoma.’ On the same day, they filed their Motion seeking a stay of
1163, 1172-73 (10" Cir. 2007) (in the context of stay violations, “no specific intent is
required’).
°Memorandum Opinion (Doc. 101).
°Judgment (Doc. 102).
"d.
‘Doc. 106.
enforcement of the Judgment under Bankruptcy Rule 8007(a)(1)(A), and the approval of a
supersedeas bond in the amount of $300,000 under Bankruptcy Rule 8007(a)(2)(B).
Specifically, Defendants request (1) a stay of enforcement of the money judgment and (2)
a stay of the mandatory injunction requiring Defendants to obtain an order from the State
Court vacating the UFTA Judgment and dismissing the State Court Case. Renfrow opposes
staying any part of the Judgment pending appeal.
III. Discussion
Under Bankruptcy Rule 8007, granting a stay pending appeal is discretionary,’ and
“I t]he propriety of its issue is dependent upon the circumstances of the particular case.’”’'® In
determining whether a stay pending appeal is appropriate, courts consider the traditional
four-part standard applicable to preliminary injunctions, namely “(1) whether the stay
applicant has made a strong showing that he is likely to succeed on the merits; (2) whether
the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will
substantially injure the other parties interested in the proceeding; and (4) where the public
interest lies.”'’ The burden is on the Movants to establish these factors in their favor. A
“stay pending appeal is an extraordinary remedy and requires a substantial showing on the
part of the movant.”
Otero Rivera v. Lake Berkley Resort Master Assn, Inc. (Inre Otero Rivera), 532 B.R.
425, 426 (Bankr. D. P.R. 2015).
'Nken v. Holder, 556 U.S. 418, 433 (2009) (quotation marks and citation omitted).
"'Nken, 556 U.S. at 434.
"Otero Rivera, 532 B.R. at 427.
A. Likelihood of success on appeal
Movants have not made a strong showing that they are likely to succeed on appeal.
In their Motion, Movants argue that the “Judgment involves numerous unsettled questions
of law, including without limitation whether the Court has jurisdiction over this matter under
the Rooker-Feldman doctrine and principles of comity and federalism.”’? In the Exxon
Mobil case cited above, the United States Supreme Court noted the frequent misapplication
of the Rooker-Feldman doctrine by lower courts, and clearly and succinctly explained that
when a federal court exercises concurrent jurisdiction with a state court on a particular
matter, the entry of the state court judgment does not divest the federal court of its
jurisdiction.'* Renfrow commenced the Discharge Violation Litigation prior to the entry of
the UFTA Judgment, so under settled Supreme Court authority that is directly on point, the
Rooker-Feldman doctrine is simply inapplicable.
The unpublished Tenth Circuit case relied upon by Defendants in support of their
Rooker-Feldman argument, Flanders v. Lawrence, is distinguishable on its facts because
unlike Renfrow, the debtor in that case did not complain of a discharge violation in federal
court until after the state court judgment was entered and after that judgment was affirmed
on appeal. The Tenth Circuit recently reiterated that “‘[f]ederal jurisdiction is not barred by
the Rooker-Feldman doctrine if [the federal] suit “was filed before the end of the state courts’
Motion to Stay at 7, § 23.
“Exxon Mobil, 544 U.S. at 292-93.
appeal process.”’”!> Because Renfrow’s appeal of the UFTA Judgment to the Oklahoma
Supreme Court remains pending, this Court’s jurisdiction over whether the UFTA Judgment
infringed on Renfrow’s discharge is not barred by Rooker-Feldman.
Exxon Mobil is settled law that is precisely applicable to the circumstances of this
case. Movants have no likelihood of succeeding on their Rooker-Feldman defense.
Likewise, applicable preclusion law is not unsettled. Oklahoma preclusion law
applies to judgments, like the UFTA Judgment, entered by Oklahoma state courts.'® The
Oklahoma Supreme Court has set forth four elements that must be established before a
litigant is precluded from litigating an issue in a subsequent proceeding. The first element
is the existence of a “valid, final judgment.”"” A final judgment is one “in which a timely and
properly perfected appeal has been acted on by the highest court whose review has been
sought.”'* Renfrow’s appeal of the UFTA Judgment has not yet been “acted on” by the
Oklahoma Supreme Court, and therefore it is not a final judgment for the purposes of issue
preclusion under Oklahoma law. Accordingly, Movants cannot establish even the first
element required to succeed on appeal of this Court’s rejection of their issue preclusion
defense.
'SMontero v. Tulsa Airport Improvements Trust, No. 18-5011 (10 Cir. May 20, 2019)
at 3, quoting Chapman v. Oklahoma, 472 F.3d 749 (10" Cir. 2006) (quoting Guttman v.
Khalsa, 446 F.3d 1027, 1029 (10" Cir. 2006)).
‘See Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380 (1985).
Salazar v. City of Oklahoma City, 1999 OK 20, 976 P.2d 1056, 1060 n.7.
'’Nealis v. Baird, 1999 OK 98, 996 P.2d 438, 459.
Relatedly, Movants argue that this Court erred in finding that the UFTA Judgment
violated the discharge injunction because the jury in the State Court Case was instructed not
to award damages for prepetition transfers.'? Because it is impossible for Movants to
establish preclusion, however, Renfrow was not precluded from offering, and the Court was
not precluded from admitting and considering, evidence relevant to the timing of the
supposed fraudulent transfers to determine whether the UFTA claim had been discharged.
Movants also argue, without any authority, that the Court erred in applying federal
bankruptcy law to determine whether Grogan’s claims for alleged fraudulent transfers arose
prepetition (discharged) or postpetition (not discharged).”” The law is settled in the Tenth
Circuit that for the purpose of determining whether a claim or debt arose prepetition, and thus
is discharged, “a [prepetition] claim will exist if some pre-petition conduct has occurred that
will give rise to liability.”’! Movants contend that the Oklahoma UFTA governs when a
“transfer” is made, and in this case, the UFTA would deem the transfers Grogan sought to
recover to have been made “immediately before the commencement” of their UFTA action,”
i.e., on August 1, 2017, the date they amended the petition to add the UFTA claim in the
State Court Case.”* The UFTA does not purport to establish when a “claim” arises for the
Motion at 7, § 24.
*°Motion at 7-8, J 24.
*lTIn re Parker, 264 B.R. 685, 697 (B.A.P. 10" Cir. 2001), aff'd, 313 F.3d 1267 (10"
Cir. 2002).
24 O.S. § 118(1)(b) and (2).
Under Movants’ theory, any creditor possessing a UFTA claim against a debtor
based upon a prepetition transfer could, after the claim was discharged, commence a post-
purpose of determining whether the claim is discharged in bankruptcy, however. The timing
of the conduct giving rise to the claim governs whether a claim is discharged. The fictional
transfer created by the UFTA does not supersede settled bankruptcy law. Movants have not
shown that they are likely to prevail on their appeal of this issue.
Movants complain that the Court “refused to allow Defendants to have discovery on
[Renfrow’s] pre-existing mental health conditions.” In the Discharge Violation Litigation,
Renfrow sought, as an element of compensatory damages, compensation for the anxiety,
stress, and emotional anguish suffered as a result of Movants’ post-discharge reanimation of
the State Court Case. Defendants sought to compel Renfrow to sign a blanket release of her
HIPAA privacy protections to allow Defendants to obtain all medical, prescription drug, and
mental health records for three years preceding the Discharge Violation Litigation, as well
as records created thereafter, arguing such information was relevant to causation. Defendants
failed to justify their overbroad and intrusive discovery requests, however. Renfrow
voluntarily waived her patient/therapist privilege and allowed Defendants access to the
therapist she visited after Defendants amended the petition in the State Court Case and
provided them with treatment records. The Court found that any perceived benefit to
compelling Renfrow to waive HIPAA protections and produce three years of medical and
mental health records was grossly outweighed by the potential harm to Renfrow’s privacy
discharge UFTA action to recover the same transfer by asserting that under Oklahoma
UFTA, the prepetition transfer is deemed to have occurred postpetition. It should go without
saying that state law cannot revive discharged claims.
“Motion at 8, 4 25.
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interests.”> Courts have wide discretion in handling pretrial discovery disputes, and appellate
courts review discovery rulings for abuse of discretion.*° Movants have not made any
showing that the Court abused its discretion in denying Defendants’ motion to compel
discovery.
The Movants complain that the undersigned committed error in failing to recuse from
hearing this matter. The denial of a motion to recuse is reviewed for an abuse of discretion.”’
For the reasons stated in the Order Denying Defendants’ Motion to Disqualify,’”* Movants
are unlikely to show that the Court abused its discretion. Applying settled Tenth Circuit law,
the Court concluded it was not required to recuse for bias or partiality if the judge’s opinion
is based solely on information obtained during the course of judicial proceedings. Movants
failed to establish that any opinion the Court may have had of any of the litigants or counsel
was derived from an extrajudicial source. In addition, the Movants’ motion to recuse, having
been filed a week before trial, was untimely.
Likewise, Movants have not demonstrated a likelihood that the Court abused its
discretion in denying their motion to disqualify Ron Brown as counsel for Renfrow on the
ground that he was also a witness.” Notwithstanding that Movants knew for months that
>See Transcript of Hearing on Defendants’ Motion to Strike Plaintiff's Emotional
Distress Claim or, Alternatively, Motion to Compel (Doc. 65) (bench ruling).
*6>Willner v. Univ. of Kansas, 848 F.2d 1023, 1029 (10" Cir. 1988).
“Id. at 1026.
Doc. 74.
°°See Motion at 8, § 25.
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Brown intended to testify, they waited until the week before trial to seek his
disqualification.*° Again, Movants’ motion was not timely asserted, and granting the motion
would have caused substantial prejudice to Renfrow.
Movants have not made “a strong showing” that they are likely to succeed on the
merits of their appeal. Nor have they raised “questions going to the merits so serious,
substantial, difficult and doubtful as to make them a fair ground for litigation and thus for
more deliberate inquiry.”*! Accordingly, the Judgment should not be stayed pending their
meritless appeal.
B. Will Movants be irreparably harmed in absence of a stay?
Movants contend that “denial of a stay of the Court’s Judgment ordering Defendants
to vacate the [UFTA Judgment] and dismiss the [State Court Case] pending appeal will
effectively deny Defendants their appeal of this Court’s Judgment; thus, Defendants will be
irreparably harmed.” They argue that if they must vacate the UFTA Judgment, they will
have “irrevocably lost that judgment and will not be able to revive it or enforce it, and the
appeal will have been for naught because Defendants will not be able to get their judgment
back.’* They also complain they would suffer “significant financial loss for costs and fees
*°See Order Denying Defendants’ Motion to Disqualify Ron Brown (Doc. 81).
*'Motion at 4, § 10, guoting McClendon v. City of Albuquerque, 79 F.3d 1014, 1020
(10" Cir. 1996).
Motion at 4, ¥ 11.
Motion at 5, § 13. The Court notes that AHN does not have a judgment against
Renfrow. The UFTA Judgment was entered solely in favor of the Trust of which Grogan is
trustee.
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expended taking the Grogan Action to trial, obtaining the [UFTA Judgment], and then
defending that judgment on appeal.”** Thus, Movants argue that in absence ofa stay pending
appeal, their appeal of the Judgment will be moot.*°
An appeal becomes moot only if the appellate court “cannot grant any effectual relief
whatever in favor of the appellant. The available remedy, however, does not need to be fully
satisfactory to avoid mootness. To the contrary, even the availability of a partial remedy is
sufficient to prevent [a] case from being moot.”*° The Judgment includes both injunctive and
monetary components. While they contend that the UFTA Judgment could not be reinstated,
the Movants have not established that the appellate court could not fashion any effectual
relief if they prevailed on appeal.*’
C. Will Renfrow be substantially injured by imposition of a stay pending appeal?
By virtue of this Court’s discharge order, Grogan’s claims against Renfrow were
discharged in June 2017. She has not had the benefit of that relief since August 1, 2017, the
day Grogan revived the State Court Case. Renfrow has been forced to litigate against
“Motion at 5,9 14. Movants also argue that not staying the Judgment will put AHN
in the ethical dilemma of having to advise Grogan to vacate the UFTA Judgment
notwithstanding AHN’s belief in its validity. Motion at 6, § 16. The Court notes that Grogan
need not look to AHN for advice on whether she should comply with the Judgment because
she is represented in the Discharge Violation Litigation, and in taking this appeal, by the
Franden Farris firm. If that firm perceives a conflict in its representation of Grogan and
AHN, it should advise them to seek separate counsel.
Motion at 5, § 15.
*°Calderon v. Moore, 518 U.S. 149, 150 (1996) (quotation marks and citations
omitted).
*’Movants have not argued irreparable harm if the monetary judgment is not stayed.
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Grogan and AHN on numerous fronts to defend her discharge. In the Discharge Violation
Litigation, she established, by clear and convincing evidence, that transfers that Defendants
argued were fraudulently made to Renfrow could only have occurred prepetition and thus
claims for recovery of such transfers were discharged, and that Movants acted in reckless
indifference to Renfrow’s discharge in obtaining the UFTA Judgment. The UFTA Judgment
continues to offend the discharge order and injunction, and moreover, its existence remains
a stain on Renfrow’s reputation, credit, and ability to obtain permanent employment. The
evidence provided at trial established that every day the UFTA Judgment is outstanding is
harmful to Renfrow — delaying its vacation and dismissal of the State Court Case pending
the conclusion of the appeal in this case, which may be years, constitutes substantial harm.
Further, staying enforcement of the monetary judgment against AHN, who has
insurance coverage, would be inequitable and harmful to Renfrow. Although Movants have
offered a bond to secure payment of the Judgment if they lose their appeal, Renfrow must
continue to invest time and money, and suffer the inherent stress and anxiety of continued
litigation, over the course of the appeal. The appeal itself deprives Renfrow of the benefit
of her discharge; two years after her discharge, she has not had a fresh start. Depriving her
of the benefit of the Judgment, too, while Movants pursue an appeal that is unlikely to
succeed, will only intensify the harm to Renfrow, and paradoxically, will place Movants back
in the position they were before the Court found them to be in contempt of the discharge
injunction. Movants have not established that the equities weigh in their favor.
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D. Where the public interest lies.
As the United States Supreme Court held in one of its most cited bankruptcy cases,
One of the primary purposes of the Bankruptcy Act is to “relieve the honest
debtor from the weight of oppressive indebtedness, and permit him to start
afresh free from the obligations and responsibilities consequent upon business
misfortunes.” [citation omitted]. This purpose of the act has been again and
again emphasized by the courts as being of public as well as private interest,
in that it gives to the honest but unfortunate debtor who surrenders for
distribution the property which he owns at the time of bankruptcy, a new
opportunity in life and a clear field for future effort, unhampered by the
pressure and discouragement of pre-existing debt.**
Respect for the bankruptcy discharge is diminished if it is not vigorously protected and
enforced by the courts. Suspending the protection of the discharge to allow a creditor to
appeal a judgment that holds the creditor in contempt of the discharge order and statutory
injunction is against public interest.
IV. Conclusion
“A stay is not a matter of right, even if irreparable injury might otherwise result.
Instead it is an exercise of judicial discretion and the propriety of its issue is dependent upon
the circumstances of the particular case.’”*’ Under the circumstances of this case, after
assessing the four factors and balancing the equities, the Court concludes that Movants have
not made the substantial showing necessary to warrant a stay pending appeal. The Motion
is therefore denied.
SO ORDERED this 22” day of May, 2019.
DANA L. RASURE, CHIEF JUDGE
UNITED STATES BANKRUPTCY COURT
**Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934) (emphasis added).
*Nken, 556 U.S. at 433.
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