SNYDER v. BIROS

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

IN RE: U LOCK, INC., )

)

Debtor, )

)

SHANNI SNYDER, )

)

Appellant, )

Civil Action No. 24-478

v. )

Bankruptcy No. 22-20823

)

CHRISTINE BIROS, )

)

Appellee, )

MEMORANDUM OPINION

I. INTRODUCTION

This bankruptcy appeal involves a dispute between competing creditors in the

involuntary Chapter 7 bankruptcy of U Lock, Inc., (“U Lock”). (Docket No. 1). Appellant

Shanni Snyder (“Ms. Snyder”) appeals the Memorandum Opinion and Order of the Honorable

Gregory L. Taddonio of the United States Bankruptcy Court for the Western District of

Pennsylvania (“Bankruptcy Court”) dated February 29, 2024. (A736-A773).1 In this decision,

the Bankruptcy Court sustained the objection of Appellee Christine Biros (“Ms. Biros”) and

disallowed Ms. Snyder’s proof of claim asserting that U Lock owed her unpaid wages under the

Fair Labor Standards Act, (“FLSA”), as it was not factually or legally supported. (Id.).

Ms. Snyder argues that the Bankruptcy Court’s decision disallowing her proof of claim

should be vacated while Ms. Biros asks that it be affirmed. (Docket Nos. 7; 17). Ms. Snyder

declined to file a Reply Brief, as is authorized under the Federal Rules of Bankruptcy Procedure.

See Fed. R. Bankr. P. 8018(a)(3). As such, the appeal has been fully briefed and is now ripe for

1 The Court notes that the appendix was filed by Appellant Ms. Snyder at Docket No. 8 and is cited as “A.”

The supplemental appendix was filed by Appellee Ms. Biros at Docket No. 16 and cited as “B.”

disposition. (Id.). After careful consideration of the parties’ positions and for the following

reasons, the Bankruptcy Court’s Memorandum Opinion and Order will be AFFIRMED.

II. BACKGROUND

Because the facts are thoroughly set forth in the Bankruptcy Court’s decision, the Court

focuses on those necessary to resolve this appeal. (See A736-773). To that end, Ms. Snyder is

an experienced litigant and has been involved in numerous actions over the past 15 years,

including representing herself in several matters. (A748). She is also the sister of the majority

shareholders of U Lock, i.e., Kash and George Snyder. (A737). The brothers formed U Lock in

2015 and purchased commercial property on Route 30 in North Huntington, Pennsylvania using

a loan they obtained from Ms. Biros. (A737). U Lock was unable to develop the property as

intended but operated a small self-storage facility which generated minimal revenue over the

next few years. (A738). U Lock defaulted on the loan and in 2017, litigation ensued between

Ms. Biros and U Lock in the Court of Common Pleas of Westmoreland County. (A738). After

various proceedings in the trial court, the property was ultimately awarded to Ms. Biros in

August of 2019. (A738-739). Appeals followed which prevented Ms. Biros from taking

possession of the property at that time. (A739; B79; B86; B87).

During the state litigation, U Lock served discovery responses and presented other

evidence including testimony indicating that U Lock did not have any employees and Ms.

Snyder was not involved in the company. (A175-A280). Ms. Snyder was a party to a child

custody case in March of 2018 and declared under penalty of perjury that she was unemployed.

(A628-A632; A796-A780). A few months later, she filed a pro se petition for bankruptcy

protection under Chapter 7 and related schedules swearing that she was not employed during

2016, 2017 and 2018 and she was not owed any unpaid wages from any employer. (A806;

A811; A845; A864; A877). The Trustee in Ms. Snyder’s bankruptcy case certified that there

were no assets available for distribution and she received a discharge of her debts, with the case

being closed in July of 2019. (A652).

In May of 2021, the Superior Court of Pennsylvania affirmed the lower court’s decision

awarding the property to Ms. Biros. See Biros v. U Lock Inc., 255 A.3d 489 (Pa. Super. Ct.

2021). Ms. Snyder next proceeded to federal court and filed a pro se complaint against U Lock

seeking $131,351.00 in unpaid wages and overtime for alleged violations of the FLSA. (B9-

B17); see also Snyder v. U Lock, Inc., Civ. A. No. 21-907, Docket No. 1 (W.D. Pa. Jul. 14,

2021). She alleged that she worked for U Lock “monitor[ing] video surveillance and cameras”

every day from January 1, 2016 through February 15, 2020 between the hours of 5:00 p.m. and

3:00 a.m. (B9-B17). She claimed that she was entitled to $7.25 per hour as well as overtime

compensation throughout that period and that U Lock had promised to pay but repeatedly told

her that it was deferring her payments until a mortgage could be obtained on the property. (Id.).

Ms. Biros had an acquaintance serve the complaint on one of the principals of U Lock—her

brother George. (A618).

U Lock did not respond to Ms. Snyder’s FLSA Complaint and she moved for default

judgment. (B20). A brief hearing was held before the Honorable Robert J. Colville of this Court

at which time only Ms. Snyder appeared, and she stated under oath that she worked the hours

claimed in her Complaint. (B18-26). However, she did not disclose to Judge Colville that: she

had been awarded a discharge in bankruptcy and that a portion of her claim was necessarily part

of her bankruptcy estate; she had previously stated in declarations filed in other courts that she

was unemployed during 2016, 2017 and 2018 and was not due any unpaid wages; and her

brothers were the principals of U Lock.2 (Id.). At the conclusion of the hearing, the District

Court entered a default judgment against U Lock in the amount of $262,702.00, including unpaid

wages, overtime and liquidated damages. (A4; B24-B25). She then made no effort at that time

to inform the Trustee of her bankruptcy case that she had obtained the default judgment. (A652).

But, over the next few months, Ms. Snyder registered the judgment in state court, had the

Prothonotary in Westmoreland County index a lis pendens against the property, and filed an

involuntary Chapter 7 bankruptcy petition against U Lock.3 (A6; B27-B29; A659).

As in the FLSA wage case, U Lock did not contest the filing of the bankruptcy petition.

(A6). On May 27, 2022, Ms. Snyder filed the instant proof of claim seeking $263,100.00 for the

alleged FLSA violations and attached the prepetition judgment for support. (A-3). She once

again did not disclose to the Court her own bankruptcy nor that the Trustee of her case had an

interest on the proof of claim form. (A652). Instead, Ms. Biros raised the issue in a motion to

dismiss the U Lock bankruptcy case. See In re U Lock, Inc., Bank. Case No. 22-20823-GLT,

Docket No. 14 (Bankr. W.D. Pa. May 20, 2022). Although that motion was denied, the

Bankruptcy Court questioned Ms. Snyder at a hearing at which time she admitted that she failed

to disclose her own bankruptcy or advise the Trustee for her case and claimed ignorance of the

need to do so. See Trans. 6/8/22 hearing at 18-19; In re U Lock, Inc., Bank. Case No. 22-20823-

GLT, Docket No. 38 (W.D. Pa. Jun. 8, 2022).

At the Bankruptcy Court’s direction, Ms. Snyder moved to reopen her own bankruptcy

case and eventually, she and the Trustees of both cases entered into a stipulation pursuant to

2 This Court expects candor from pro se litigants and counsel at all times. See Wharton v. Superintendent

Graterford SCI, 95 F.4th 140, 149 (3d Cir. 2024) (quoting Me. Audubon Soc'y v. Purslow, 907 F.2d 265, 268 (1st

Cir. 1990)) (“Candor is especially critical when proceedings are non-adversarial. At ex parte hearings, for instance,

‘the customary checks and balances do not pertain—and the court is entitled to expect an even greater degree of

thoroughness and candor.’”).

3 Judge Taddonio has presided over U Lock’s bankruptcy case from the outset, commenting that the matter

has been “unreasonably contentious,” while noting the considerable acrimony between the parties, and the

“senselessness” of their various disputes. (A742).

which they all agreed that any recovery based on Ms. Snyder’s proof of claim against U Lock

would be split, i.e., the first $32,500.00 would go to Ms. Snyder’s creditors and she could retain

the balance. (A651-A652); see also In re U Lock, Bankr. Case No. 22-20823-GLT, Docket No.

228 (Bankr. W.D. Pa. Dec. 1, 2022). The Trustee in Ms. Snyder’s own bankruptcy case also

agreed that she had standing to pursue the proof of claim against U Lock. (Id.). Judge Taddonio

approved this stipulation after a hearing on January 27, 2023 and noted that:

[b]y approving this stipulation, the Court makes no findings that

are binding in the bankruptcy case of In re Shanni Sue Snyder,

Case No. 18-21983-CMB other than to recognize and acknowledge

that the parties to this proceeding (including Shanni Snyder and

Trustee Zebley) consent to giving Christine Biros relief from the

automatic stay in Shanni’s case for the sole purpose of pursuing an

objection to her proof of claim (including Claim No. 1-1) in the U

Lock, Inc. bankruptcy case.

See In re: U Lock, Inc., Bankr. Case No. 22-20823-GLT, Doc. No. 305 (Bankr. W.D. Pa. Jan. 27,

2023). As part of this proceeding, Ms. Snyder also agreed to remove the lis pendens against the

property she had filed in Westmoreland County and conceded that her proof of claim was not

secured on any of the tangible or intangible assets of U Lock. (A-103). The Bankruptcy Court

also recognized that the Trustee had “given up whatever right he had to avoid [the default]

judgment under the avoiding powers pursuant to the Stipulation.” (Id.). Thereafter, on February

24, 2023, Ms. Biros filed her objection to the proof of claim, wherein she expressly pled that she

“is a creditor and party-in-interest in [the U Lock bankruptcy] case and thus has standing to

object to the claim pursuant to 11 U.S.C. § 502” and that the claim should be disallowed under §

502(b)(1) because it is allegedly “unenforceable under any agreement or applicable law.” (A-161

at ¶¶ 3, 15). Ms. Snyder submitted a response to the objection on March 27, 2023 and then later

filed a motion to withdraw the reference, wherein she asked that the District Court resolve the

parties’ disputes. (See A-455; A-517). Ms. Snyder did not challenge Ms. Biros’ standing to

object to the proof of claim in either of these submissions. (Id.).

A preliminary hearing regarding Ms. Biros’ objections and other issues was held before

Judge Taddonio in April 2023, at which time “the [Bankruptcy] Court found that Ms. Snyder’s

default judgment was not entitled to preclusive effect and scheduled an evidentiary hearing.”

(A744). The Bankruptcy Court authorized the parties to conduct discovery, directed them to file

briefs on a jurisdictional issue raised by Ms. Snyder, convened a hearing on July 14, 2023 at

which time the parties presented evidence, and accepted post-hearing briefs from the parties.

(A744; B89-118). The Bankruptcy Court issued a Memorandum Opinion and Order on February

29, 2024 disallowing Ms. Snyder’s proof of claim and issuing a rule to show cause directing Ms.

Snyder to show cause why sanctions should not be imposed. (A736-A773). Most relevant here,

Ms. Snyder and her brothers Kash and George testified at the hearing and the Bankruptcy Court

determined that “none of them testified credibly in support of Ms. Snyder’s claim. Frankly, all

that was offered was an implausible, self-serving narrative littered with discrepancies and

contradicted by prior sworn statements.” (A744). The Bankruptcy Court extensively discussed

the demeanor of each of these witnesses and the content of their testimony as well as examined

the evidence supporting the assessment that they all lacked credibility. (A744-751).

Among other things, Judge Taddonio found that: Ms. Snyder’s claim was a sham

unsupported by any documentary evidence and undermined by her prior contemporaneous sworn

statements in court proceedings; she lied about having worked at U Lock and pursued the claim

as part of an effort to continue an ongoing dispute over commercial property that U Lock had

hoped to develop but had lost in state court litigation; and she committed fraud on both the

Bankruptcy Court during the underlying proceedings and on the District Court when she

obtained a prepetition default judgment against U Lock. (A763-773). The Bankruptcy Court

also held, in the alternative, that Ms. Snyder’s claim failed as a matter of law because she did not

demonstrate that she was entitled to either “individual coverage” or “enterprise coverage” under

the FLSA. (A758-763).

The Bankruptcy Court stayed its show cause order pending any appeal regarding its order

sustaining Ms. Biros’ objection and disallowing Ms. Snyder’s proof of claim. (A773, n.244).

The District Court then dismissed her motion to withdraw the reference, as moot. See Snyder v.

Biros, Civ. A. No. 23-979-RJC, Docket No. 8 (W.D. Pa. Mar. 5, 2024); In re U Lock, Inc.,

Bankr. Case No. 22-2083-GLT, Docket No. 567 (Bankr. W.D. Pa. Mar. 5, 2024). This appeal

followed. (Docket No. 1).

III. LEGAL STANDARD

This Court has appellate jurisdiction over final judgments, orders and decrees of a

Bankruptcy Court pursuant to 28 U.S.C. § 158(a)(1). See In re Connors, 497 F.3d 314, 318 (3d

Cir. 2007). In this role, the Court “review[s] the bankruptcy court’s legal determinations de

novo, its factual findings for clear error, and its discretionary decisions for abuse of discretion.”

In re Imerys Talc Am., Inc., 38 F.4th 361, 370 (3d Cir. 2022) (internal quotation omitted). It is

also well established that a party may waive or forfeit arguments on appeal by not first raising

them before the Bankruptcy Court. Id. at 372, n.6 (quoting Hamer v. Neighborhood Hous. Servs.

of Chi., 583 U.S. 17, 20 n.1, 138 S. Ct. 13, 17 n.1, 199 L.Ed.2d 249 (2017)) (further quotation

omitted) (“Waiver contemplates that an argument has been ‘intentional[ly] relinquish[ed] or

abandon[ed],’ while forfeiture is merely a failure to timely raise an issue.”).

IV. DISCUSSION

Ms. Snyder raises both procedural and merits-based challenges to the Bankruptcy Court’s

decision disallowing her proof of claim. (Docket No. 7). Ms. Biros argues that the Bankruptcy

Court’s rulings are well-supported and should be affirmed. (Docket No. 17). Having analyzed

the parties’ positions in light of the record before the Bankruptcy Court and the prevailing legal

standards, the Court will affirm the decision below.

A. Ms. Biros’ Alleged Lack of Standing to Object to the Proof of Claim

The Court initially turns to Ms. Snyder’s contention that the Bankruptcy Court’s

judgment should be vacated, and the matter should be remanded because Ms. Biros allegedly

lacked standing to object to the proof of claim. (Docket No. 7 at 11-13). She asks that this Court

direct the Bankruptcy Court “to dismiss the objection to the claim unless the estate becomes

solvent to a point where unsecured creditors will be paid and then to hear any objections only if

the Trustee pursues it or refuses to act.” (Id. at 13). Ms. Snyder admits that she failed to include

these arguments in her statement of issues on appeal but asserts that the issue of standing is

jurisdictional and cannot be waived. (Id. at n.2). Ms. Biros counters that she had standing to

object as she is an unsecured creditor, the U Lock bankruptcy is ongoing with multiple pending

appeals potentially affecting the assets of the estate and that she is competing with other

unsecured creditors for any assets that may be distributed. (Docket No. 17 at 62-64).

In this Court’s estimation, Ms. Snyder has failed to demonstrate that Ms. Biros lacked

constitutional standing to pursue her objections and waived any arguments that only the Chapter

7 Trustee had the ability to object under the Bankruptcy Code. To that end, the U.S. Court of

Appeals for the Third Circuit recently clarified that “a litigant’s ‘standing’ to pursue causes of

action that become the estate’s property means its statutory authority under the Bankruptcy

Code, not its constitutional standing to invoke the federal judicial power.” In re Wilton Armetale,

Inc., 968 F.3d 273, 280–81 (3d Cir. 2020) (emphases in original). To establish constitutional

standing sufficient to invoke Article III jurisdiction, a litigant must show only: “(1) ‘a concrete

and particularized injury in fact,’ (2) that is ‘fairly traceable’ to the defendant’s conduct, and (3)

that ‘a favorable judicial decision’ would likely ‘redress [it].’” In re Wilton Armetale, Inc., 968

F.3d at 281 (quoting Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 125

(2014)). Moreover, “[t]he statutory requirements of bankruptcy ‘standing’ exceed the three

elements of constitutional standing,” and go to the merits of a dispute rather than the Court’s

jurisdiction. In re Wilton Armetale, Inc., 968 F.3d at 281 (further citations omitted).

A party’s constitutional standing is determined at the start of the case and developments

during the litigation do not affect a party’s standing to initiate the matter but may bear on the

separate issue of mootness. See e.g., In re Boy Scouts of Am., 35 F.4th 149, 156 (3d Cir. 2022)

(“When the requirements necessary for standing at the start of a case disappear, it becomes moot

and no longer satisfies Article III’s case-or-controversy requirement (unless the defendant

voluntarily ceased the challenged conduct in response to litigation or the injury is likely to recur

while evading review)”). Pertinent here, objections to constitutional standing cannot be waived

because those issues are jurisdictional, but a litigant may waive an objection to prudential or

statutory standing by failing to raise it before the Bankruptcy Court. See In re Imerys Talc Am.,

Inc., 38 F.4th at 374.

This Court’s review of Ms. Snyder’s appellate brief indicates that she has largely

presented merits-based issues about bankruptcy standing under the Code which she needed to

raise initially before the Bankruptcy Court in order to preserve those issues for appellate review.

(See Docket No. 7 at 11-13). Indeed, Ms. Snyder effectively waived the issue that only the

Trustee could make the objections to her proof of claim because she expressly consented to the

automatic stay being lifted in her individual bankruptcy case so that Ms. Biros could bring the

objections in the U Lock bankruptcy as part of a stipulation with the Trustees of both cases. See

In re U Lock, Bankr. Case No. 22-20823-GLT, Docket No. 305 (Bankr. W.D. Pa. Jan. 27, 2023).

She also had numerous opportunities to raise these arguments in pre- and post-hearing briefing in

the Bankruptcy Court but failed to do so. (See e.g., A530-535; A559-567; A702-712). Thus, the

Court finds that Ms. Snyder’s arguments that Ms. Biros lacked bankruptcy standing are waived.

See In re Imerys Talc Am., Inc., 38 F.4th at 374.

To the extent that Ms. Snyder’s arguments are more broadly construed as challenging

Ms. Biros’ lack of constitutional standing, they are without merit. Courts have recognized that a

creditor has constitutional standing to bring a claim against a third party (or lodge an objection to

a claim of another creditor) to redress a potential reduction in the amount of estate assets which

would be available to satisfy her own claim. See e.g., In re Wilton Armetale, Inc., 968 F.3d at

281-82 (creditors retained constitutional standing to bring fraudulent transfer claims against

corporate plunderers whose actions allegedly reduced the available assets of the estate); see also

Adair v. Sherman, 230 F.3d 890, 894 (7th Cir. 2000) (“if one creditor files a potentially

fraudulent proof of claim, other creditors have standing to object to the proof of claim.”). The

same principles apply in this case. Ms. Biros is an unsecured creditor who has asserted her own

proof of claim against the U Lock bankruptcy estate; if Ms. Snyder’s proof of claim was allowed,

it would reduce the available assets for other unsecured creditors, including Ms. Biros; and a

favorable decision on Ms. Biros’ objection would increase the likelihood that she could recover

from the estate. (A161-A174). Therefore, she has sufficiently demonstrated constitutional

standing to pursue her objections. See In re Wilton Armetale, Inc., 968 F.3d at 281-282.

Accordingly, Ms. Snyder’s appeal is denied to the extent she claims that Ms. Biros lacked

standing to lodge her objections.

B. Alleged Procedural Issues

Ms. Snyder next asserts that the judgment disallowing her proof of claim should be set

aside due to several alleged procedural errors in the Bankruptcy Court’s handling of this matter.

(Docket No. 7). Among other things, she claims that the Bankruptcy Court was an improper

forum, lacked subject matter jurisdiction and did not have the authority to enter a final judgment

disallowing her proof of claim because it relied on the prepetition default judgment from the

District Court. (Id.). Ms. Biros counters that the Bankruptcy Court properly exercised

jurisdiction over the matter and applied the correct standards in evaluating the default judgment.

(Docket No. 17). The Court has conducted its de novo review of these legal disputes and finds

that the Bankruptcy Court correctly determined that it had jurisdiction over the claim and

properly resolved the parties’ disputes over the default judgment.

At the outset, binding precedent from the Supreme Court and the U.S. Court of Appeals

for the Third Circuit establishes that a creditor consents to the equitable jurisdiction of the

Bankruptcy Court by submitting a proof of claim to the debtor’s estate. See Travellers Int'l AG

v. Robinson, 982 F.2d 96, 98 (3d Cir. 1992). The filing of a proof of claim initiates the claims

allowance process under § 157(b)(2)(B) of the Bankruptcy Code and is a core proceeding which

authorizes the Bankruptcy Court to enter final judgment on the claim. See In re Trib. Media Co.,

902 F.3d 384, 394 (3d Cir. 2018) (citation omitted) (a litigant’s consent “gives bankruptcy courts

the constitutional authority to enter a final judgment on claims that ordinarily require a ruling by

an Article III court.”). As a result, a creditor who has submitted a proof of claim to the estate

waives her rights to a jury trial and to have an Article III Judge hear the claim. Id. The Supreme

Court has emphasized that “[s]he who invokes the aid of the bankruptcy court by offering a proof

of claim and demanding its allowance must abide the consequences of that procedure.” Katchen

v. Landy, 382 U.S. 323, 332 n.9, 86 S.Ct. 467 (1966) (citation omitted).

In non-core proceedings, the Bankruptcy Court “may only hear and make proposed

findings of fact and conclusions of law unless all parties consent.” In re Essar Steel Minnesota,

LLC, 47 F.4th 193, 198 (3d Cir. 2022). Given same, “courts have required claimants to raise the

issue of consent before bankruptcy cases conclude” so as to prevent ‘a litigant ... ‘sandbagging’

the court—remaining silent about [her] objection and belatedly raising the error only if the case

does not conclude in [her] favor.’” In re Trib. Media Co., 902 F.3d 384, 395 (3d Cir. 2018)

(quoting Stern v. Marshall, 564 U.S. 462, 482, 131 S.Ct. 2594 (2011)) (further citations omitted).

Courts look to the totality of the circumstances to determine if a litigant impliedly or expressly

consented to the Bankruptcy Court’s jurisdiction. Id.

It is this Court’s opinion that the record plainly reveals that Ms. Snyder consented to the

Bankruptcy Court’s jurisdiction and that her present arguments to the contrary must be

overruled. See In re Trib. Media Co., 902 F.3d at 395. In this regard, Ms. Snyder initiated the U

Lock bankruptcy by filing an involuntary Chapter 7 petition against the company. (A6-A10).

She then submitted a proof of claim to the estate and demanded that her claim be allowed. (A1-

5). The Bankruptcy Court presided over the claims’ objections process, invited briefing from the

parties and conducted an evidentiary hearing, at the conclusion of which Ms. Snyder’s claim was

disallowed. (A465-516; A588-701). Although Ms. Snyder raised two objections to the

Bankruptcy Court’s jurisdiction, which are further discussed below, she pressed forward with her

claim at the hearing and through post-hearing briefing, continually advocating that her claim

should be allowed under the Bankruptcy Code. (See e.g., A455-460; A530-535; A702-712).

Now that she has lost, she cannot complain on appeal that she did not consent to the Bankruptcy

Court entering a final judgment. See In re Trib. Media Co., 902 F.3d at 394. Following the

above precedent, the Court concludes that Ms. Snyder expressly and/or impliedly consented to

the jurisdiction of the Bankruptcy Court. Id.

Moving on, neither of the two issues that Ms. Snyder raised below challenging the

Bankruptcy Court’s jurisdiction have any merit.4 (See Docket No. 7). To that end, a Standing

Order is in place in this District automatically referring all Title 11 cases (including, among

others, the U Lock involuntary Chapter 7 bankruptcy petition) to the Bankruptcy Court. See 28

U.S.C. § 157(a); see also W.D. Pa. Order of Reference of Bankruptcy Cases and Proceedings

Nunc Pro Tunc (W.D. Pa. Oct. 16, 1984). “Once the district court refers the case to the

bankruptcy court, unless the district court withdraws that reference, in whole or in part pursuant

to 28 U.S.C. § 157(d), the case is within the subject matter jurisdiction of the bankruptcy court.”

In re Kashani, 190 B.R. 875, 885 (B.A.P. 9th Cir. 1995). Ms. Snyder’s act of filing a motion to

withdraw the reference to the District Court did not affect the Bankruptcy Court’s jurisdiction

because the District Court denied her motion and declined to withdraw the reference. See Snyder

v. Biros, Civ. A. No. 23-979-RJC, Docket No. 8 (W.D. Pa. Mar. 5, 2024); In re U Lock, Inc.,

Bankr. Case No. 22-2083-GLT, Docket No. 567 (Bankr. W.D. Pa. Mar. 5, 2024). Ms. Snyder

also declined to avail herself of the available procedures to request a stay of the evidentiary

4 Ms. Snyder further argues that Ms. Biros should have filed a Rule 60 motion to set aside the judgment

before the District Court which allegedly would have provided a better forum and procedural mechanism to address

the efficacy of the default judgment. (Docket No. 7). She did not raise these arguments below such that they are

waived. See In re Imerys Talc Am., Inc., 38 F.4th at 374. Regardless, Ms. Snyder’s filing of the involuntary

bankruptcy petition against U Lock triggered the automatic stay which necessarily prevented Ms. Biros from filing

such a motion against U Lock in the District Court, without her first seeking leave to do so from the Bankruptcy

Court. See Mar. Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1206 (3d Cir. 1991), reh'g granted and opinion

vacated (Jan. 10, 1992), opinion reinstated on reh’g (Mar. 24, 1992) (“Once triggered by a debtor’s bankruptcy

petition, the automatic stay suspends any non-bankruptcy court's authority to continue judicial proceedings then

pending against the debtor. This is so because § 362’s stay is mandatory and ‘applicable to all entities’, including

state and federal courts.”).

hearing pending the District Court’s disposition of her motion. See Docket Report, Bankr. Case

No. 22-20823. Indeed, Rule 5011 of the Federal Rules of Bankruptcy Procedure states that:

[t]he filing of a motion for withdrawal of a case or proceeding or

for abstention pursuant to 28 U.S.C. § 1334(c) shall not stay the

administration of the case or any proceeding therein before the

bankruptcy judge except that the bankruptcy judge may stay, on

such terms and conditions as are proper, proceedings pending

disposition of the motion. A motion for a stay ordinarily shall be

presented first to the bankruptcy judge. A motion for a stay or

relief from a stay filed in the district court shall state why it has not

been presented to or obtained from the bankruptcy judge. Relief

granted by the district judge shall be on such terms and conditions

as the judge deems proper.

Fed. R. Bankr. P. 5011(c). As Ms. Snyder never asked for a stay of the proceedings before the

Bankruptcy Court, this Court rejects her position that the Bankruptcy Court lacked jurisdiction to

enter the judgment disallowing her claim. See 28 U.S.C. § 157(d); see also Fed. R. Bankr. P.

5011(c).

Next, despite Ms. Snyder’s arguments to the contrary, Bankruptcy Courts are routinely

tasked with evaluating judgments from federal and state courts during the claims allowance

process. The Bankruptcy Code states that a proof of claim may be supported by a judgment of

another court. See 11 U.S.C. §§ 101(5), 501. However, a judgment of another court is not

automatically entitled to preclusive effect and is otherwise subject to the principles set forth in

the Bankruptcy Code for disallowance of claims, exemptions to discharge, and the like. See 11

U.S.C. §§ 502, 523. The judgment of a federal court must be evaluated under the relevant

federal common law standards of res judicata and collateral estoppel, otherwise known as claim

and issue preclusion. See Taylor v. Sturgell, 553 U.S. 880, 891, 128 S. Ct. 2161, 2171, 171 L.

Ed. 2d 155 (2008) (“The preclusive effect of a federal-court judgment is determined by federal

common law” and setting forth elements of collateral estoppel/res judicata); see also Bestwall

LLC v. Armstrong World Ind., Inc., (In re Bestwall), 47 F. 4th 233, 243 (3d Cir. 2022) (setting

forth elements of collateral estoppel). If the judgment is not entitled to preclusive effect under

these standards, then the Bankruptcy Court must follow the procedures for

allowance/disallowance of claims set forth in the Bankruptcy Code. See 11 U.S.C. 502(b).

Upon consideration of the record in this matter, this Court believes that the Bankruptcy

Court properly applied the legal standards of res judicata and collateral estoppel and correctly

determined that the default judgment Ms. Snyder obtained against U Lock was not entitled to

preclusive effect. Simply put, Ms. Biros was not a party to the FLSA case before Judge Colville

and Ms. Snyder failed to demonstrate that Ms. Biros was in privity with U Lock such that neither

doctrine applies to preclude Ms. Biros’ objections. See In re Montgomery Ward, LLC, 634 F.3d

732, 738–39 (3d Cir. 2011); see also Taylor, 553 U.S. at 891. In addition, the judgment was

obtained by default and a brief default hearing where only Ms. Snyder appeared is not enough to

meet the requirement that the claims or issues be actually litigated before the District Court. See

In re Bestwall LLC, 47 F.4th at 243. Since Ms. Snyder did not satisfy the elements of res

judicata or collateral estoppel, and the objection to the prepetition default judgment was

supported with Ms. Snyder’s prior inconsistent statements, the Bankruptcy Court correctly

required her to establish her claim by a preponderance of the evidence and convened a hearing

on the matter. See In re Allegheny Int’l, Inc., 954 F.2d 167, 173 (3d Cir. 1992).

Based on the foregoing, the Court denies Ms. Snyder’s appeal on these alleged

procedural issues.

C. Merits of Proof of Claim Under FLSA

The balance of Ms. Snyder’s appeal focuses on the merits of the Bankruptcy Court’s

decision disallowing her proof of claim. (Docket Nos. 7; 17). As noted, the Bankruptcy Court

determined that Ms. Snyder’s FLSA claim was neither factually nor legally supported and

disallowed the claim. (A736-A773). The Bankruptcy Court added that each of these reasons

provided “an independent justification to disallow Ms. Snyder’s claim in its entirety.” (A759,

n.179). Ms. Snyder argues that the Bankruptcy Court should have credited her own testimony

and that of her brothers and wrongly concluded that she was not an employee covered by the

FLSA. (Docket No. 7). Ms. Biros responds that Ms. Snyder has failed to meet her burden to

demonstrate that the Bankruptcy Court erred. (Docket No. 17). With respect to these disputes,

this Court holds that the lack of factual support for the claim is dispositive and will affirm the

Bankruptcy Court’s decision disallowing the claim because its factual findings are not clearly

erroneous.

As our Court of Appeals has explained,

[w]hen sitting in an appellate capacity, [D]istrict [C]ourts are

obligated to accept a [B]ankruptcy [C]ourt’s factual findings unless

those findings are clearly erroneous. See In re Phila. Newspapers,

LLC, 599 F.3d 298, 303 (3d Cir. 2010). Findings of fact are not

clearly erroneous unless they are “completely devoid of minimum

evidentiary support displaying some hue of credibility or bear[ ] no

rational relationship to the supportive evidentiary data.” Kool,

Mann, Coffee & Co. v. Coffey, 300 F.3d 340, 353 (3d Cir. 2002)

(quoting Hoots v. Pennsylvania, 703 F.2d 722, 725 (3d Cir. 1983)).

In re Fiber-Span, Inc., 40 F.4th 79, 93–94 (3d Cir. 2022). “Great care must be exercised […] to

defer to the fact-finding tribunal, absent clear error.” In re Fiber-Span, Inc., 40 F.4th at 94.

Therefore, when the Bankruptcy Court hears testimony from witnesses, this Court must give

“due regard to the opportunity of that court to judge first-hand their credibility,” In re Somerset

Reg’l Water Res., LLC, 949 F.3d 837, 844 (3d Cir. 2020) (internal quotation omitted), because

the Bankruptcy Court is “best positioned to assess the facts, particularly those related to

credibility and purpose,” In re Myers, 491 F.3d 120, 126 (3d Cir. 2007). Finally,

[i]f the [fact-finder’s] account of the evidence is plausible in light

of the record viewed in its entirety, the [appellate 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. Where

there are two permissible views of the evidence, the fact-finder’s

choice between them cannot be clearly erroneous.

In re Allegheny Int’l, Inc., 954 F.2d at 172–73 (quoting Anderson v. City of Bessemer City, N.C.,

470 U.S. 564, 573–74, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985)) (further citations omitted).

Ms. Snyder maintains that the Bankruptcy Court erred because it allegedly prejudged the

matter and made comments before the evidentiary hearing questioning the “veracity” and

“validity” of her claim. (Docket No. 7). The Court of Appeals has noted that “[J]udges often

inform parties of their preliminary impressions to narrow issues and assist the parties in focusing

both themselves and the court.” In re Philadelphia Newspapers, LLC, 690 F.3d 161, 172 (3d

Cir. 2012), as corrected (Oct. 25, 2012). In addition, it is not error for the Bankruptcy Court to

provide parties with “a preview of what they needed to do to counteract” these initial

impressions, as doing so encourages “parties to develop additional arguments” and “[m]ost

counsel would prize such insights.” Id. The same is true here as a fair reading of the record

indicates that the Bankruptcy Court expressly qualified the comments, stating that they were not

final determinations and Ms. Snyder was provided with a full and fair opportunity to conduct

discovery and then prove her claim at the evidentiary hearing. (A69; A478-A479). If anything,

the Bankruptcy Court’s comments should have helped Ms. Snyder and her counsel to better

prepare for the hearing. See In re Phila. Newspapers, 690 F.3d at 172. The fact that she lost

does not establish any errors by the Bankruptcy Court.

Ms. Snyder also argues that she “wholly disagrees” and “vehemently disagrees” with the

Bankruptcy Court’s findings that she lied about performing security monitoring work for U Lock

and that she and her brothers did not testify credibly in support of her claim. (Docket No. 7).

Yet, she does not challenge any of the specific factual findings made by the Bankruptcy Court

which would establish that they were clearly erroneous, i.e., completely devoid of minimum

evidentiary support or bearing no rational relationship to the supporting evidentiary data. See In

re Milton, Civ. A. No. 19-184, 2019 WL 4643580, at *2 (W.D. Pa. Sept. 24, 2019), aff’d, 828 F.

App’x 842 (3d Cir. 2020) (appellant failed to show any factual findings were clearly erroneous

based on general assertions as he did not “support that conclusory argument with any citations to

the actual record and failed to point out any specific factual errors.”). The unchallenged findings

include the Bankruptcy Court’s detailed assessments of the three witnesses.

As to Ms. Snyder, the Bankruptcy Court wrote:

[i]n ten years, the Court has never held a stronger conviction that a

fraud was perpetrated upon the court as it is following an

evidentiary hearing on Shanni Snyder’s claim. Ms. Snyder

obtained a default judgment under the [FLSA] by swearing that

debtor U Lock, Inc. employed her to monitor security cameras for

ten hours a day, every day, for four years without paying wages.

She lied. First to the federal district court who awarded the

judgment, and then to this Court by commencing an involuntary

petition against U Lock based on a fraudulent claim. Ms. Snyder

did so to frustrate creditor Christine Biros’ efforts to gain control

of U Lock’s business premises […], which was awarded to Ms.

Biros by final state court orders. […] the Court will disallow Ms.

Snyder’s claim in its entirety and initiate sanction proceedings

against her to address this profound abuse.

(A736) (emphasis in original). Among other things, the Bankruptcy Court added:

[g]enerally, Ms. Snyder projected confidence on direct

examination, appearing relaxed and speaking clearly, but her

testimony was consciously abridged to limit the scope of cross-

examination. When pressed about inconsistencies, her demeanor

became evasive and the volume of her voice dropped as she began

to shift and rock in her seat. Other times Ms. Snyder appeared

defiant, self-assured that no matter how dubious, no one could

disprove anything she said. In sum, while her testimony never

strayed far from her concise direct responses, the frequent lack of

elaboration left confusing (if not pregnant) gaps which undermined

her story.

(A745). With respect to her brother George, the Bankruptcy Court noted:

[f]or his part, George provided only half-hearted corroboration of

the basic premise of Ms. Snyder's claim. Before delving into his

testimony, the Court must stress that it has observed George both

on and off the witness stand many times during the pendency of U

Lock’s case. In the past, the Court has often (though not always)

found him to be the most credible party involved with a calm,

forthright demeanor. But this was a different George. From the

minute he took the witness stand, George awkwardly clutched the

back rail as if holding on for dear life. He was visibly nervous and

flushed, constantly shifting in his seat. It seemed George was

testifying against his will.

(A749) (emphasis in original). The Bankruptcy Court continued:

Kash Snyder testified last. It did not go well. The most remarkable

moment involved an extended back and forth over whether he

remembered testifying minutes earlier that he has trouble

remembering. From the start, Kash claimed to be unaware that he

was identified as a principal of U Lock. He then shockingly stated

that he had no recollection of Ms. Biros suing U Lock in 2017

before conceding there was a lawsuit over the Property. Nor did he

recall testifying under oath in the Trial Court during that case. In

fact, the only thing Kash appeared to remember clearly was that

Ms. Snyder was performing “camera work” for U Lock, of which

he “had limited knowledge.” Needless to say, his testimony was

neither credible nor useful.

(A751). In all, this Court has carefully studied the record and believes that the Bankruptcy

Court’s detailed factual findings, including the credibility assessments of Ms. Snyder and her

brothers describing their demeanor, are well-supported and sees no basis to set them aside. See

In re Somerset Reg’l Water Res., LLC, 949 F.3d at 844.

At most, Ms. Snyder complains that the Bankruptcy Court declined to exercise its

discretion to ask her and the other witnesses direct questions at the evidentiary hearing and then

described certain gaps in the evidence using rhetorical questions in the Memorandum Opinion.

(Docket No. 7). Again, Ms. Snyder’s burden on appeal is to show that the Bankruptcy Court’s

inferences from the facts set forth in those rhetorical questions were clearly erroneous. See In re

15375 Memorial Corp. v. Bepco, L.P., 589 F.3d 605, 616 (3d Cir. 2009) (inferred facts of the

Bankruptcy Court are reviewed under the clearly erroneous standard). Hence, Ms. Snyder’s

listing of the challenged rhetorical questions in her brief without pointing to evidence showing

that the Bankruptcy Court was wrong and the unanswered questions were actually answered at

the hearing or that the factual findings and inferences were somehow inaccurate fails. See id.

Thus, her objections must be overruled.

Overall, it appears that Ms. Snyder’s appeal essentially invites this Court to credit the

testimony of her witnesses, re-weigh the evidence in her favor, and reverse the decision

disallowing her claim. (Docket No. 7). However, this Court would commit error if it accepted

Ms. Snyder’s invitation because the clearly erroneous standard precludes this Court from

substituting its own judgment for that of the Bankruptcy Court. See In re Wagner, Appeal No.

22-13642, --- F.4th ----, 2024 WL 4142990, at *5 (11th Cir. Sept. 11, 2024) (citation omitted)

(“The record shows that, rather than deferring to the weight that the bankruptcy court accorded

[to the three witnesses’] testimony and its interpretation of the documentary evidence, the district

court weighed the evidence anew and made its own factual findings—an endeavor neither it nor

we have authority to undertake sitting as a reviewing court of the bankruptcy court’s decision.”).

The fact that Ms. Snyder believes that she presented sufficient evidence from which the

Bankruptcy Court could have found in her favor is simply not enough for her to prevail on this

appeal. In re Allegheny Int’l, Inc., 954 F.2d at 172–73 (the fact-finder’s choice between two

permissible views of the evidence cannot be clearly erroneous). Rather, this Court must defer to

the factual findings and conclusions of the Bankruptcy Court which presided throughout this

contentious case, was well familiar with the parties, the debtor’s business and the claims

asserted, personally observed the three witnesses testify, and was much better positioned to

assess their credibility and weigh the conflicting evidence. In re Fiber-Span, Inc., 40 F.4th at 94.

For all of these reasons, the Bankruptcy Court’s finding that Ms. Snyder did not actually

perform work for U Lock and the resulting conclusion that her claim under the FLSA should be

disallowed must be affirmed. See e.g., In re Washington Mut., Inc., 848 F. App’x 84, 87 (3d Cir.

2021) (quoting TD Bank N.A. v. Hill, 928 F.3d 259, 270 (3d Cir. 2019)) (District Court “may

affirm on any basis supported by the record). Given this disposition, the Court need not consider

the alternative theory that Ms. Snyder also failed to prove by a preponderance of the evidence

that she was an employee covered under the FLSA.

V. CONCLUSION

Based on the foregoing, the February 29, 2024 Memorandum Opinion and Order of the

Bankruptcy Court disallowing Ms. Snyder’s proof of claim is AFFIRMED. The Court

recognizes that the Bankruptcy Court stated that it would hold in abeyance the corresponding

order directing Ms. Snyder to show cause why she should not be sanctioned for submitting a

fraudulent claim to the estate and the resulting litigation she caused by doing so. With that said,

all litigants and counsel should be reminded of the importance of the “public interest in

preserving the integrity of the judicial system,” and the Court’s role in upholding same. Derzack

v. Cnty. of Allegheny, Pa., 173 F.R.D. 400, 416 (W.D. Pa. 1996), aff'd sub nom. Derzack v. Cnty.

of Allegheny Child. & Youth Servs., 118 F.3d 1575 (3d Cir. 1997) (internal quotation omitted). It

also bears repeating the decades-old admonitions of the Supreme Court:

[T]ampering with the administration of justice in the manner

indisputably shown here involves far more than an injury to a

single litigant. It is a wrong against the institutions set up to protect

and safeguard the public, institutions in which fraud cannot

complacently be tolerated consistently with the good order of

society.

In re Theokary, 592 F. App’x 102, 107 (3d Cir. 2015) (quoting Hazel–Atlas Glass Co. v.

Hartford–Empire Co., 322 U.S. 238, 246, 64 S.Ct. 997, 88 L.Ed. 1250 (1944)). Given same,

Bankruptcy Courts have the inherent authority to dismiss a claim as a sanction to serve the dual

purposes of punishing the wrongdoing and “preserving the dignity” of the Bankruptcy Court. In

re Theokary, 592 F. App’x at 107.

An appropriate Order follows.

s/Nora Barry Fischer

Nora Barry Fischer

Senior United States District Judge

Dated: October 11, 2024

cc/ecf: All counsel of record.

The Honorable Gregory L. Taddonio

United States Bankruptcy Judge