Opposition Brief — Wright v. John Deere Industrial Equipment Co.

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No. 93-1112 1 OffKE Ch ie Cue

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IN THE

Supreme Court Of Che United States

OCTOBER TERM, 1993

R. DON WRIGHT,

Petitioner,

Vv.

JOHN DEERE INDUSTRIAL

EQUIPMENT Co.,

Respondent.

BRIEF IN OPPOSITION

MARVIN S. SLOMAN

Counsel of Record for Respondent

CARRINGTON, COLEMAN, SLOMAN

& BLUMENTHAL, L.L.P.

200 Crescent Court, Suite 1500

Dallas, Texas 75201

214/855-3000

Telecopier: 214/855-1333

Of Counsel:

CRAIG W. WEINLEIN

LARRY T. BATES

CARRINGTON, COLEMAN, SLOMAN

& BLUMENTHAL, L.L.P.

200 Crescent Court, Suite 1500

Dallas, Texas 75201

214/855-3000

Telecopier: 214/855-1333

ee a, ee are ? aad i

i

QUESTION PRESENTED

Whether under Texas law a federal-court default judg-

ment can impose a constructive trust and equitable lien on

real property for monies fraudulently diverted into the real

property, when the real property is asserted to be a home-

stead under Texas law but not, as required by Texas law,

established by evidence to have been a homestead at the

time the monies were diverted.

LIST OF AFFILIATED CORPORATIONS

Pursuant to Rule 29.1, Respondent, John Deere Industrial

Equipment Company provides the following list of affiliated

corporations:

Deere & Company [parent of respondent ]

TABLE OF CONTENTS

Question Presented . .

List of Affiliated Corporations ............+65)

Table of Contents ...

Table of Authorities ...

Jurisdiction.........

Statement of the Case .

Reasons for Denying the Writ

A. This Case Is Not an Appropriate One for

Review by the Court........

B. The Factual Bases Asserted by Wright in the

Questions Presented by Him Are Non-

existent in the Record , re

C. The Decision Below Was Correct As a

Matter of Texas Law.........

D. The Decision Below Is Not in C onflict With

the Decision of Any Court of Appeals or of

the Court ....

Conclusion ..

6

6

—~

10

iV

TABLE OF AUTHORITIES

Cases

Baucum v. Texam Oil Corp., 423 S.W.2d 434

(Tex. Civ. App. — El Paso 1967, writ refd

cu Givdetseus ee ekekedehetécenaness-<

First Interstate Bank v. Bland, 810 S.W.2d 277

(Tex. App. — Fort Worth 1991, no writ) ....

First State Bank of Ellinger v. Zelesky, 262

S.W. 190 (Tex. Civ. App. — Galveston 1924,

MEE Nbc ducuduven vise eedceeereeuss +.

Hoffman v. Love, 494 S.W.2d 591 (Tex. Civ.

App. — Dallas), writ refd n.r.e., 499 S.W.2d

Fy 8. eR rrr rr ery eerreee

In re Moody, 862 F.2d 1194 (Sth Cir. 1989),

cert. denied, US. , 112 Sup. Ct.

Se EE ue Onwebwewssbueeiesees sees

Kostelnik v. Roberts, 680 S.W.2d 532 (Tex.

App. — Corpus Christi 1984, writ refd n.r.e.)

Layne & Bowler Corp. v. Western Well Works,

Se ds ee EE rl c's gar Gin wdd caseek es

Rice v. Sioux City Memorial Park Cemetery,

ee ee

Smith v. Green, 243 S.W. 1006 (Tex. Civ.

App. — Amarillo 1922, writ refd) ..........

United States v. Rodgers, 461 U.S. 677 (1983)

Wright v. John Deere Indus. (Matter of

Wright), 4 F.3d 991 (Sth Cir. 1993) ........

Wright v. Wright, 981 F.2d 1256 (Sth Cir.

WN eee e acs a ee ee

Page

Page

Statutes

2B U.S.C. § 1254(1) . 0... eee creer eters: 2

28 U.S.C. § 1334... . nee ccecccccccesecceeees 3

Other Authorities

Rules of the Supreme Court of the United States

6

Dude 1043 occccdcccsesaedeceeereseeeres

No. 93-1112

IN THE

Supreme Court Of The United States

OcTOBER TERM, 1993

R. DON WRIGHT,

Petitioner,

Vv.

JOHN DEERE INDUSTRIAL

EQUIPMENT Co.,

Respondent.

BRIEF IN OPPOSITION

Respondent (“John Deere”) respectfully prays that the peti-

tion for writ of certiorari be denied.

DECISIONS BELOW

The decision of the court of appeals that is sought to be

reviewed is unreported, and is set forth at App. |.' See Wright v

John Deere Indus. (Matter of Wright), 4 F.3d 991 (Sth Cir.

1993) (mem.). This decision is referred to herein as Wright I]

The unreported decision of the court of appeals on motion for

rehearing in Wright I/ is set forth at App. 2. The unreported

decisions of the district court whose orders were affirmed in

Wright Il are set forth at App. 3-A and 3-B. The unreported

decision of the bankruptcy court from which appeals were taken

in Wright II and Wright I, infra is set forth at App. 4. The

"References are to the appendix following the text of this brief in

Opposition.

2

unreported decision of the district court that was the basis for the

appeal in Wright / is set forth at App. 5. The unreported decision

of the court of appeals in Wright J is set forth at App. 6. See

Wright v. Wright, 981 F.2d 1256 (Sth Cir. 1992) (mem.).”

JURISDICTION

The decision and judgment of the court of appeals in Wright I]

was filed September 3, 1993. (App. | at p. 1) The court of

appeals order denying rehearing was filed October 13, 1993.

(App. 2 at p. 1) Petitioner’s petition for writ of certiorari was filed

with the Court January !0, 1994. The jurisdiction of the Court to

review decisions of the court of appeals by certiorari rests on

28 U.S.C. §'1254(1).

STATEMENT OF THE CASE

In 1983, while acting in a fiduciary capacity to John Deere,

petitioner (“Wright”) fraudulently diverted over $400,000 of

John Deere’s money for his own use and benefit. John Deere

brought suit against Wright in the United States District Court

for the Northern District of Texas and recovered judgment

against Wright in 1985 for the principal sum of $403,933.34, plus

interest and attorneys’ fees. (R. 10048-7, vol. 101, p. 26)?

In aid of collection, the district court entered a turnover order,

which Wright refused to obey. The district court then entered an

order requiring Wright to show cause why he should not be held

in civil contempt for refusing to obey the turnover order.

? Petitioner's bankruptcy trustee was, confusingly, also named Wright.

See App. 3-A at p. 1.

* Citations are to the record on appeal in the court of appeals.

3

(2 Tr. 124)* Wright refused to obey the show-cause order, and

the district court entered an order finding Wright in contempt of

court and ordering that an arrest warrant be issued to bring

Wright before the court. (Jd.) Four days later and before the

arrest warrant could be served on Wright, he filed a voluntary

petition in bankruptcy on August 24, 1987, invoking the jurisdic-

tion of the court pursuant to 28 U.S.C. § 1334(a). (R. 10048-7,

vol. 101, p. 1)

In his bankruptcy case, Wright attempted to shield certain

properties from creditors by claiming the properties as exempt

under Texas law. In particular, Wright attempted to shield certain

real property by designating the property as his homestead in his

supplemental bankruptcy schedules filed October 1, 1987.

(R. 10048-7, vol. 101, p. 29) John Deere thereupon instituted an

adversary proceeding against Wright contesting his discharge,

challenging the exemptions claimed by Wright, and further alleg-

ing that while acting in the fiduciary capacity to John Deere

Wright fraudulently diverted John Deere’s money into the real

property which Wright later claimed as his homestead. (R. 1035,

vol. 103, p. 403) John Deere sought judgment impressing the

alleged homestead with a nondischargeable equitable lien and

constructive trust in favor of John Deere in the amount of

$403,933.34. Another judgment creditor, NCNB National Bank,

instituted 2 second adversary proceeding challenging Wright's

exemptions and contesting Wright's discharge. (App. 6 at p. 2)

John Deere, NCNB, and the bankruptcy trustee attempted to

obtain discovery from Wright concerning his claimed exemptions,

including the alleged homestead. Wright engaged in repeated

flagrant abuse of the discovery process and refused to obey

numerous bankruptcy court orders compelling discovery.

(2 Tr. 249-262) John Deere, NCNB and the trustee filed various

* Transcripts of hearings in the bankruptcy court are included in the

record on appeal but are not consecutively paginated with the rest of the

record.

motions for sanctions against Wright. The bankruptcy court

conducted a consolidated evidentiary hearing on the various

sanctions motions. At the conclusion of the hearing, the court

found that Wright had continually refused to engage in discovery,

willfully refused to obey six different bankruptcy court orders,

made numerous false statements to the bankruptcy court about

the existence and location of relevant documents, engaged in

intentional efforts to conceal relevant documents from the bank-

ruptcy court, and filed frivolous state court lawsuits against his

creditors and their attorneys to harass them and intimidate them.

See App. 4, passim. As sanctions, the bankruptcy court denied

Wright’s discharge, struck Wright’s pleadings, and entered de-

fault judgments against Wright in favor of John Deere, NCNB

and the trustee in the various adversary proceedings and in the

bankruptcy case. (/d. at p. 10-11)

Wright appealed the final orders and final judgments of the

bankruptcy court to the United States District Court for the

Northern District of Texas. The district court first affirmed the

bankruptcy court in Wright's appeal against the trustee. (App. 5)

Wright then appealed the district court’s decision to the United

States Court of Appeals for the Fifth Circuit, which affirmed.

(Wright I, App. 6) The court of appeals characterized Wright’s

conduct as “open and notorious contempt of the bankruptcy

court” and affirmed the imposition of sanctions resulting in the

entry of default judgments in favor of his creditors. Wright did not

seek review in this Court of the decision in Wright 1.

After Wright I, the district court then affirmed the bankruptcy

court in Wright’s appeal against John Deere. (App. 3-A, 3-B)

The district court’s affirmance as to John Deere was issued in

reliance upon and in conformity with the court of appeals’ opinion

in Wright I. The district court held (App. 3-A at p. 2, 3-B at

p. 2):

Appellant [Wright] contends that the orders of the

court were unlawful, violated certain of his constitu-

tional rights, and are not supported by evidence in the

record. The orders of the bankruptcy court have been

affirmed by this court and by the United States Court

of Appeals for the Fifth Circuit. Wright v. Wright (In

the Matter of R. Don Wright), No. 92-1604, (Sth Cir.,

Dec. 22, 1992). The additional argument presented by

R. Don Wright in this appeal, that the record does not

support the imposition of the equitable lien and con-

structive trust on his homestead, has no merit.

Wright then appealed to the court of appeals from the district

court’s order affirming as to John Deere, and the court of appeals

again affirmed. (Wright II, App. 1) Of pertinence to the question

presented to this Court, the court of appeals held:

Consideration here of Wright’s sole colorable basis for

challenging the equitable lien and constructive trust —

that they cannot be placed on nonfraudulently acquired

homestead property as a matter of law —is also

pretermitted by the sanctions upheld by a previous

panel of this court in Wright J. Wright’s challenge is

predicated on classifying his property as a homestead

as of the time he misappropriated the funds. Texas law,

however, places the burden of establishing the home-

stead character of the property on the one claiming the

homestead exemption. Because Wright subjected him-

self to sanctions that prevented him from offering proof

on this issue, he cannot now claim that his property was

a homestead during the relevant period without requir-

ing us to revisit whether those sanctions were properly

imposed. Again, that inquiry is precluded by the law of

the case.

(App. | at p. 5)

The court of appeals denied rehearing with a brief opinion

(App. 2) and Wright then petitioned for a writ of certiorari.

6

Wright was represented by various counsel in the original John

Deere district court suit, during all proceedings in the bankruptcy

court, and in his appeals of the bankruptcy court judgments to the

district court. Wright also was represented by counsel in Wright I.

Wright began acting pro se in his second appeal to the court of

appeals and has continued to act pro se in his petition for writ of

certiorari.

Wright does not challenge the denial of his discharge, striking

of his pleadings, or entry of default judgments against him.

Wright simply claims that as a matter of Texas law, John Deere’s

bankruptcy-court default judgment cannot impose a constructive

trust and equitable lien on real property that he asserts is his

homestead, but which was never shown to have been his home-

stead at the time of the fraudulent diversions as required by Texas

law.

REASONS FOR DENYING THE WRIT

A. This Case Is Not an Appropriate One for Review by the

Court

Certiorari will be granted “only when there are special and

important reasons therefor.” Sup. Ct. R. 10.1 The concept of

“importance” relates to the importance of the issues to the

general public rather than their importance to the particular

parties involved. Rice v. Sioux City Memorial Park Cemetery,

Inc., 349 U.S. 70, 79 (1955); Layne & Bowler Corp. v. Western

Well Works, 261 U.S. 387, 393 (1923).

Wright has neither argued nor suggested any circumstances

that invite the discretion of the Court to review the decision

below, or that suggest that the case is important to anyone other

than Wright. The case presents issues purely of state law that

were addressed correctly, but disappointingly to Wright, by the

courts below. No federal question is involved. The decision of the

court of appeals presents no conflict with a a” of any other

ee

circuit or of the Court. The standards governing the exercise of

the Court’s discretionary power of review are simply not met.

B. The Factual Bases Asserted by Wright in the Questions

Presented by Him Are Non-existent in the Record

As recognized by the court of appeals:

Wright’s challenge is predicated on classifying his

property as a homestead as of the time he misappropri-

ated the funds. Texas law, however, places the burden

of establishing the homestead character of the property

on the one claiming the homestead exemption. Be-

cause Wright subjected himself to sanctions that pre-

vented him from offering proof on this issue, he cannot

now claim that his property was a homestead during

the relevant period....

App. | at p. 5 (emphasis added).

Wright’s petition for certiorari makes numerous factual asser-

tions, relevant to a determination of homestead, that are unsup-

ported in the record. The petition for certiorari states that the

property was purchased in 1976, remodeled in 1982 and 1983

without the use of John Deere’s money, lived in continuously ever

since as a residence, and has a homestead tax exemption. (Peti-

tion at pp. 2, 7, 11) All of these statements are unsupported by

the record and are offered by Wright for the first time in his

petition for certiorari. There was no evidence, no finding, and no

determination that the property was Wright’s homestead in 1983,

at the time he fraudulently diverted John Deere’s money.

The bankruptcy court rejected Wright’s characterization of the

property as his homestead even at the time of the sanctions

hearing. The bankruptcy court found Wright’s repeated refusals

to permit discovery concerning the properties he claimed as

exempt to be more revealing of the truth than Wright's testimony.

The bankruptcy court stated: “The court concludes that

8

Mr. Wright’s actions clearly demonstrate a lack of merit in his

asserted defenses.” (App. 4 at p. 10) On appeal, Wright never

challenged any of the bankruptcy court’s findings of fact. The

legal questions raised by Wright in his petition are not susceptible

of consideration by the Court because the facts underlying them

are either not of record or were found contrary to Wright's

position.

C. The Decision Below Was Correct As a Matter of Texas

Law

Even had the record established that the property was Wright's

homestead in 1983 when he diverted John Deere’s monies, the

decisions of the courts below were correct as straightforward

applications of Texas law. The property was properly the subject

of a constructive trust and equitable lien for the funds fraudu-

lently diverted into the property. Baucum v. Texam Oil Corp.,

423 S.W.2d 434, 442 (Tex. Civ. App. — El Paso 1967, writ ref'd

n.r.e.). See Kostelnik v. Roberts, 680 S.W.2d 532, 536 n. 1 (Tex.

App. — Corpus Christi 1984, writ ref'd n.r.e.). See also First

State Bank of Ellinger v. Zelesky, 262 S.W. 190 (Tex. Civ.

App. — Galveston 1924, no writ); Smith v. Green, 243 S.W. 1006

(Tex. Civ. App. — Amarillo 1922, writ refd).

The state-law decisions on which Wright relies are simply

inapposite. See First Interstate Bank v. Bland, 810 S.W.2d 277

(Tex. App. — Fort Worth 1991, no writ) (deed of trust lien void

on property where jury found that property was homestead and

that no fraud was committed); Hoffman v. Love, 494 S.W.2d 591

(Tex. Civ. App. — Dallas), writ refd n.r.e., 499 S.W.2d 295

(Tex. 1973) (jury finding of homestead and no abandonment;

amount of property in excess of homestead limitation is subject to

lien for the benefit of general creditors); Jn re Moody, 862 F.2d

1194 (Sth Cir. 1989), cert. denied, US. ,112 Sup. Ct. 1562

(1992) (creditors have no right to equitable lien because of

attempted fraudulent conveyance of the property by owner).

No dnt 6 ATS RNR

D. The Decision Below Is Not in Conflict With the Decision

of Any Court of Appeals or of the Court.

Wright appears to contend that the decision below is in conflict

with United States v. Rodgers, 461 U.S. 677 (1983). (Petition at

10) There the Court recognized the existence of Texas homestead

law. But on the merits, Rodgers held only that a federal tax

Statute empowers a federal district court to order the forced sale

of real property in which a delinquent taxpayer had an interest at

the time he incurred his indebtedness, even when the taxpayer’s

spouse, who did not owe any of that indebtedness, had a separate

homestead right in the property under Texas law. The Court’s

decision in Rodgers is irrelevant to Wright’s contentions and the

decision of the court of appeals in the present case presents no

conflict with it.

10

CONCLUSION

For all of the above reasons, the petition for writ of certiorari

should be denied.

Respectfully submitted,

MARVIN S. SLOMAN

Counsel of Record for Respondent

CARRINGTON, COLEMAN, SLOMAN

& BLUMENTHAL, L.L.P.

200 Crescent Court, Suite 1500

Dallas, Texas 75201

214/855-3000

Telecopier: 214/855-1333

Of Counsel.

CRAIG W. WEINLEIN

LARRY T. BATES

CARRINGTON, COLEMAN, SLOMAN

& BLUMENTHAL, L.L.P.

200 Crescent Court, Suite 1500

Dallas, Texas 75201

214/855-3000

Telecopier: 214/855-1333

February 9, 1994

App. 1

si.

[Filed, U.S. Court of Appeals, September 3, 1993]

United States Court Of Appeals

For THE FIFTH CIRCUIT

No. 93-1144

No. 93-1146

SUMMARY CALENDAR

p mabe

IN THE MATTER OF: R. DON WRIGHT

AND MICKI WRIGHT,

Adon

Debtors.

a all no — A Sa

R. Don Wright

Appellant,

VERSUS

JOHN DEERE INDUSTRIAL EQUIPMENT Co..,

Appellee.

PBL ER BAN BES 6 10 teh ER me he

Appeal from the United States District Court

For the Northern District of Texas

(1:91-CV-058-C; 1:91-CV-059-C)

TN ra te LP ne

Before: JOLLY, WIENER, AND EMILIO M. GARZA. CIRCUIT

JUDGES.

PER CURIAM:*

* Local Rule 47.5 provides: “The publication of opinions that have no

; precedential value and merely decide particular cases on the basis of

well-settled principles of law imposes needless expense on the public and

: burdens on the legal profession.” Pursuant to that Rule, the Court has

; determined that this opinion should not be published.

App. 1

R. Don Wright, Debtor-Appellant, appeals the district court’s

affirmance of the bankruptcy court’s imposition of a constructive

trust and equitable lien on Wright’s domicile in favor of John

Deere Industrial Equipment Co., Creditor-Appellee (‘John

Deere”). The constructive trust and equitable lien were imposed

as part of the bankruptcy court’s entry of default judgment against

Wright for his repeated refusals to follow the bankruptcy court’s

lawful orders that he allow John Deere and other creditors to

inspect personal property located within his domicile. Concluding

that under the law of the case doctrine we are bound by an earlier

decision of this court upholding the default judgment, we affirm

the orders of the district court. :

I

FACTS AND PROCEEDINGS

Both of Wright’s instant appeals, No. 93-1144 and

No. 93-1146, arise out of the district court orders' affirming the

bankruptcy court’s imposition of sanctions that in turn produced

the entry of default judgment in favor of creditors John Deere and

NCNB Texas National Bank. They and the trustee, Stanley

Wright, had moved for sanctions because of Wright’s repeated

refusal to obey the Bankruptcy Court’s inspection orders. After

' Appeal no. 1144 arises from the Order dated January 25, 1993 in

adversarial case no. CA-1-91-058-C; Appeal no. 1146 arises from the

order dated January 22, 1991 in adversarial case no. CA-1-91-059-C.

Neither the Appellant nor the Appellees have distinguished between the

two adversarial cases and orders on appeal. In addition, the only thing

that the Appellant challenges is the imposition of the equitable lien and

constructive trust in favor of John Deere, the imposition of which was

contained in both orders of the district court. Thus, for purposes of these

appeals, we have consolidated the analysis of the two orders and the

constructive trust issue within this one opinion.

RN eee eh eb

Si ei lie 6 aa A! No

App. 1

conducting a full evidentiary hearing the bankruptcy court

entered orders in favor of the trustee and the creditors.

In an earlier appeal Wright challenged the order imposing

sanctions in favor of the trustee. In Wright I,” we reviewed those

sanctions and concluded that none were erroneous, including

those striking Wright’s answer and imposing a default judgment

in favor of the creditors. As we stated in Wright I :

Wright invoked the aid of the court in seeking a benefit

he desired — a discharge in bankruptcy. As long as the court

did his bidding he was inclined to obey. When orders adverse

to Wright’s position were issued he chose to ignore them

without seeking interlocutory appeal or mandamus relief.

Wright’s conduct constituted open and notorious contempt

of the bankruptcy court. We cannot and will not countenance

such.”

In this appeal Wright challenges the district court’s orders

affirming the bankruptcy court’s imposition of sanctions in favor

of John Deere. Specifically, Wright challenges the sanction that

imposed an equitable lien and constructive trust as part of the

default judgment in favor of John Deere.

II

ANALYSIS

Wright asserts several grounds to challenge the district court’s

orders affirming the equitable lien and constructive trust in favor

of John Deere. We do not address the merits of Wright’s

>In re R. Don Wright, No. 92-1604 (Sth Cir., Dec. 22, 1992)

[ Wright I].

> Wright I, at 6.

App. I

challenges, however, because we are bound by the earlier decision

of this court in Wright 1.*

In Wright I, while deciding the trustee’s appeal, we addressed

whether the bankruptcy court abused its discretion in striking

Wright’s answer and entering default judgment in favor of the

creditors, John Deere and NCNB. After a review of the record we

concluded that Wright’s open and notorious defiance of the

bankruptcy court amply justified the imposition of those

sanctions.» The following colloquy with the bankruptcy court

reveals the extent of Wright’s contempt:

Q: So Mr. Wright if the court issues a fourth order, or a

fifth order compelling you to allow the creditors entry to

your residence, to inspect and appraise the entire contents,

you will continue to refuse to obey those orders?

A: I will refuse to let you in the house; yes, sir.

The sanction striking Wright’s answer and entering default

judgment in favor of John Deere establishes the validity of John

Deere’s equitable lien and constructive trust. As a result of

Wright's answer being stricken, the allegations contained in John

Deere’s original and amended complaint are taken as true —

including the allegation that Wright fraudulently diverted

proceeds from John Deere for the improvement of his property.

By entering the default judgment the bankruptcy court granted

John Deere’s prayer for relief — which included the request that

*E.g, Ingalls Shipbuilding, Inc. v. Director, Office of Workers’

Compensation Programs, 976 F.2d 934, 937 (Sth Cir. 1992) (stating

that one panel is bound by the decision of a prior panel absent

intervening legislation or a superseding decision by the Supreme Court

or this court en banc).

> Wright I, at 1, 6.

PS Analy se

a

App. 1

Wright’s property be impressed with an equitable lien and

constructive trust for $403,933.34.

Consideration here of Wright’s sole colorable basis for

challenging the equitable lien and constructive trust — that they

cannot be placed on non-fraudulently acquired homestead

property as a matter of law—is also pretermitted by the

sanctions upheld by a previous panel of this court in Wright 1.

Wright’s challenge is predicated on classifying his property as a

homestead as of the time he misappropriated the funds. Texas

law, however, places the burden of establishing the homestead

character of the property on the one claiming the homestead

exemption.® Because Wright subjected himself to sanctions that

prevented him from offering proof on this issue, he cannot now

claim that his property was a homestead during the relevant

period without requiring us to revisit whether those sanctions were

properly imposed. Again, that inquiry is precluded by the law of

the case.’

Ill

CONCLUSION

Wright's open defiance of the bankruptcy court led to extensive

but justifiable sanctions having far reaching consequences. One of

those consequences was the imposition of an equitable lien and

° E.g. NCNB Texas National Bank v. Carpenter, 849 S.W.2d 875, 879

(Tex. App. — Fort Worth 1993, no writ); First Interstate Bank v. Bland,

810 S.W.2d 277, 286 (Tex. App. — Fort Worth 1991, no writ); Pace v.

McEwen, 617 S.W.2d 816, 818 (Tex. Civ. App. — Houston [14th Dist. }

1981, no writ).

” See e.g, E.E.0.C. v. Intern. Longshoremen’s Ass'n, 623 F.2d 1054,

1058 (Sth Cir. 1980) (stating that the “law of the case” rule precludes

review of findings of fact and conclusions of law made by an appellate

court in a prior appeal of the case at issue).

App. 1

constructive trust on his domicile. Because we conclude that our

previous decision bars reexamination of the validity of the

sanctions on which the district court’s orders are based, the orders

of the district court are AFFIRMED.*

* In affirming the district court, and thus the bankruptcy court, we

caution Wright that, like his defiance of those courts, any frivolous or

contemptuous actions in this court relative to the subject matter of this

and previous decisions could subject him to the fuli panoply of sanctions

at our disposal.

App. 2

aa

[Filed, U.S. Court of Appeals, October 13, 1993]

United States Court Of Appeals

For THE FIFTH CIRCUIT

No. 93-1144

No. 93-1146

SUMMARY CALENDAR

IN THE MATTER OF: R. DON WRIGHT

AND MICKI WRIGHT,

Debtors.

R. Don Wright

Appellant,

VERSUS

JOHN DEERE INDUSTRIAL EQUIPMENT Co.,

Appellee.

Appeals from the United States District Court

For the Northern District of Texas

(1:91-CV-058-C; 1:91-CV-059-C)

ON PETITION FOR REHEARING

( OCTOBER 13, 1993 )

Before: JOLLY, WIENER, AND EMILIO M. GARZA, CIRCUIT

JUDGES

IT IS ORDERED that the petitions for rehearing filed in the

above entitled and numbered causes on behalf of Appellant,

Wright, be and the same are hereby DENIED.

In its petition for rehearing, Wright argues for the first time

that the Appellee, John Deere Industrial Equipment Co.,

judicially admitted that Wright’s property was a homestead

during the period in which the funds at issue were diverted to that

property. Deere counters that it merely used the term

“homestead” in the present tense, namely, to describe the current

status of the property.

We decline to consider these issues, as we adhere to the well-

settled practice that a court of appeals will not consider claims

raised for the first time in a petition for rehearing.’

ENTERED For THE CourRT

/s/ Jacques L. Wiener, Jr.

United States Circuit Judge

' E.g., Browing v. Navarro, 894 F.2d 99, 100 (Sth Cir. 1990); Dean v

Dean, 837 F.2d 1267, 1268 (Sth Cir. 1988); Wells v. Rushing, 760 F.2d

660, 661 (Sth Cir. 1985).

ew

[Filed in U.S. District Court, January 22, 1993]

IN THE

United States Bistrict Court

FOR THE NORTHERN DISTRICT OF TEXAS

ABILENE DIVISION

IN RE

R. D. WRIGHT, A/K/A

DON WRIGHT, A/K/A

R. DON WRIGHT,

CASE No.

188-10048-7

Debtor.

* * *

R. D. WRIGHT, A/K/A

DON WRIGHT, A/K/A

R. DON WRIGHT,

Appellant,

bi > CA-1-91-059-C

JOHN DEERE INDUSTRIAL

EQUIPMENT COMPANY,

NCNB TEXAS NATIONAL BANK,

AND STANLEY WRIGHT, TRUSTEE,

Appellees. |

APPEAL FROM THE

UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

JOHN C. AKARD, BANKRUPTCY JUDGE, PRESIDING

* * *€

App. 3-A

ORDER

This case is before the court for consideration of another appeal

of the debtor, R.D. Wright, from orders of the bankruptcy court

imposing various sanctions upon him, including the denial of his

discharge, the award of monetary sanctions in favor of certain

creditors, and the imposition of a nondischargeable, equitable lien

and constructive trust on his homestead in favor of John Deere.

Appellant contends that the orders of the court were unlawful,

violated certain of his constitutional rights, and are not supported

by evidence in the record. The orders of the bankruptcy court

have been affirmed by this court and by the United States Court

of Appeals for the Fifth Circuit. Wright v. Wright (In the matter

of R. Don Wright), No. 92-1604, (Sth Cir., Dec. 22, 1992). The

additional argument presented by R. Don Wright in this appeal,

that the record does not support the imposition of the equitable

lien and constructive trust on his homestead, has no merit.

It is, accordingly, ordered that the decision of the bankruptcy

court is, in all things, AFFIRMED.

The clerk shall furnish a copy of this order to each attorney of

record.

DATED this 22nd day of January 1993.

/s/ SAM R. CUMMINGS

SAM R. CUMMINGS

United States District Judge

[Filed in U.S. District Court, January 25, 1993]

IN THE

United States Bistrict Court

FOR THE NORTHERN DISTRICT OF TEXAS

ABILENE DIVISION

IN RE

R. D. WRIGHT, A/K/A

DON WRIGHT, A/K/A

R. DON WRIGHT,

CASE No.

188-10048-7

Debtor.

* * *

R. D. WRIGHT, A/K/A

DON WRIGHT, A/K/A

R. DON WRIGHT,

Appellant,

. CA-1-91-058-C

JOHN DEERE INDUSTRIAL

EQUIPMENT COMPANY,

Appellee. }

APPEAL FROM THE

UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

JOHN C. AKARD, BANKRUPTCY JUDGE, PRESIDING

App. 3-B

ORDER

This case is before the court for consideration of another appeal

of the debtor, R.D. Wright, from orders of the bankruptcy court

imposing various sanctions upon him, including the denial of his

discharge, the award of monetary sanctions in favor of certain

creditors, and the imposition of a nondischargeabie, equitable lien

and constructive trust on his homestead in favor of John Deere.

Appellant contends that the orders of the court were unlawful,

violated certain of his constitutional rights, and are not supported

by evidence in the record. The orders of the bankruptcy court

have been affirmed by this court and by the United States Court

of Appeals for the Fifth Circuit. Wright v. Wright (In the matter

of R. Don Wright), No. 92-1604, (Sth Cir., Dec. 22, 1992). The

additional argument presented by R. Don Wright in this appeal,

that the record does not support the imposition of the equitable

lien and constructive trust on his homestead, has no merit.

~

It is, accordingly, ordered that the decision of the bankruptcy

court is, in all things, AFFIRMED.

The clerk shall furnish a copy of this order to each attorney of

record.

Dated January 22, 1993.

/s/ SAM R. CUMMINGS

SAM R. CUMMINGS

United States District Judge

IN THE

United States Bankruptry Court

FOR THE NORTHERN DISTRICT OF TEXAS

ABILENE DIVISION

IN RE

JOHN DEERE INDUSTRIAL

EQUIPMENT COMPANY

VS.

R.D. WRIGHT AND

MICK! WRIGHT

, Bankruptcy Cause

No. 188-1035

IN RE ;

FIRST REPUBLICBANK OF

ABILENE, N.A. BANKRUPTCY CAUSE

No. 188-1036

VS.

R.D. WRIGHT

PROCEEDINGS

JUDGMENT OF THE COURT

THE COURT: The next is two adversary proceedings,

No. 188-1035, John Deere Industrial Equipment Company versus

R.D. Wright and Micki Wright,

and 188-1036, First

RepublicBank of Abilene, which the record, of course, will be

billed as NCNB National Bank versus R.D. Wright.

There does not seem to be much dispute about the facts in this

matter. The Court adopts the stipulations in the pre-trial order,

and the recitation of facts made by Mr. Weinlein at the opening

of the hearing.

App. 4

Additional findings of fact will be made as the Court discusses

its decision. The Court first notes that Mr. Wright voluntarily

filed this bankruptcy proceeding — not the adversary, of course,

but the base underlying bankruptcy proceeding.

He came to this Court asking for relief from his creditors, and

for the benefits the Bankruptcy Code makes available to him.

With those benefits come duties and responsibilities. You cannot

have the benefits without fulfilling the duties and responsibilities.

One of the very first duties is to fully and completely fill out the

statement of financial affairs and schedules.

One of the questions asked for the location of books and

records of the Debtor. Mr. Wright did not disclose that a

substantial portion of his books and records were in the pessession

of Abilene Aero. Clearly, Mr. Wright knew the records were

there. He had put some of the records in the hangar himself.

It thus appears, from the very start of this case, he set about to

conceal his financial records from the creditors and the Trustee.

Mr. Wright has a duty to make a full disclosure to the creditors

and the Trustee, and to cooperate with the Trustee. Contrary to

this duty, he has fought the Trustee and the creditors at every

turn.

He asserts that practically all of the property in his possession

belongs to someone else. It is incumbent upon him to furnish

proof of those claims. But, of course, he has not done so.

These assertions of ownership are, to say the very least, suspect.

Mr. Wright controls several corporations. He says that Cami

Corporation owns lots of his household furniture and a

condominium in New Mexico, which he enjoys.

This Court has heard of no business done by that corporation.

Clearly, the Trustee and the creditors are entitled to freely

investigate all of the corporations which Mr. Wright controls, or

in which he has an interest. They are entitled to determine if, in

App. 4

a

fact, these corporations are his alter ego. Mr. Wright seeks to

prevent an examination of his house, asserting the assets therein

are owned by those corporations, his wife or their children.

The Trustee and the creditors cannot test the validity of these

claims without a physical inspection, photographing, and

appraisal of the items in question. Mr. Wright's offer to put the

items claimed as exempt on the lawn for inspection, while

concealing the other items in the house, borders on being

ridiculous. It is nothing more than a ploy to try to further frustrate

the Trustee and the creditors.

The property of the bankruptcy estate is defined in section 541,

more specifically section 541a. And it tells us that a bankruptcy

estate is comprised of all of the following property, wherever

located, and by whomever held.

Subdivision one, after some exceptions that are not applicable

here, then states that the property of the estate includes all legal

or equitable interest of the Debtor in property as of the

commencement of this case. Now, that seems rather broad.

Secondly, all interests of the Debtor, and the Debtor’s spouse in

community property as of the commencement of the case; that is,

under the sole, equal or joint management and control of the

Debtor are liable for an allowable claim against the Debtor.

Clearly, the items in the house are under his management and

control. And the creditors and the Trustee are entitled to inspect,

photograph, and appraise — not only the items, but the house,

itself, all of its contents, and to examine all papers and other

properties in the vault in the house.

The mere presence of the vault leads the Court to believe that

valuable assets are being concealed. At one time, the house was

valued at $600,000.00. So, the furnishings couid be expected to be

very expensive. In deed, the furniture described in the testimony

costs a great deal.

App. 4

The Debtor is entitled only to $30,000.00 of personal property

exemptions, assuming he is entitled to exemptions for a family.

And that, therefore, could be used up very rapidly by the

furniture.

Mr. Wright asked for bankruptcy relief. He must, then, allow

the inspection. This Court feels that by asking for bankruptcy

relief, Mr. Wright consented to the inspection, thereby

eliminating any Fourth Amendment to the United States

Constitution problems.

Even if Mr. Wright in entitled to Fourth Amendment

protections, the inspections were ordered by the Court, after due

notice, and those orders were not appealed. Thus, any Fourth

Amendment requirements were fully met. And the Court does

not concede that there are such requirements.

Several times, both orally and in writing, this Court ordered

Mr. Wright to permit inspection of his home. Each time, he

refused. He says that he will refuse to obey any further orders of

this Court to that effect.

This Court issued two such specific orders on that subject that I

want to refer to. The first is the order of June 13, 1989 in the main

case. It was entered on July 24, 1989, and it was based on an

objection by NCNB Texas National Bank to the Debtor’s claim

of exempt property.

And the ordering portion reads as follows: “Ordered that the

Debtor allow NCNB access to his residence upon five day’s

written notice to inspect, inventory, and appraise all property

owned by the Debtor, or in the Debtor’s possession, or over which

the Debtor exercises use and control.”

Parenthetically here, you will notice how that parallels the

definition of property of the estate that we read a minute ago.

a

App. 4

Another portion of the order reads: “Ordered that the failure of

the Debtor to provide NCNB with access to his residence for

such inspections and appraisal and shall result in a denial in all

inspections claimed by the Debtor and/or such other sanctions as

the Court shall deem proper.”

There are other provisions, but those are the ones that I wanted

to mention.

And order in, basically, the same language was dated July 28th,

1989 and entered on August 8th, 1989 with respect to John Deere

Industrial Equipment Company’s objection to the Debtor’s claim

of exempt property. And that order also mentioned denial of

exemptions or other sanctions determined by the Court.

Mr. Wright totally ignored both of these orders. The orders

mentioned denial of exemptions or other appropriate sanctions.

Under Section 727a 6 of the Bankruptcy Code, the Debtor can be

denied a discharge for refusal to obey a lawful order of the Court.

Mr. Wright is clearly on notice of this statutory provision. And

when he failed to abide by the orders of this Court, he knew that

he was inviting denial of discharge.

Here, Mr. Wright refused to obey several lawful orders of the

Court. And I point out that these orders were not appealed from.

The Court gave Mr. Wright every benefit of the doubt and

several opportunities to comply with this Court’s orders. Not only

did he fail, and willfully refuse each time to obey the orders of this

Court, he blatantly testifies that he would not comply if the Court,

again, ordered him to do so.

Considering all of these factors, the Court feels that denial of

the discharge is appropriate. And it is, therefore, the order of the

Court that Mr. Wright’s discharge be denied for failure to abide

by lawful orders of this Court.

App. 4

-6-

The Court will now consider the requested sanctions for failure

to provide discovery. What has already been said about inspection

applies equally as well here. The creditors and the Trustee need to

physically inspect and examine all of Mr. Wright's assets, and all

assets under his control; and all assets of his spouse, to recover as

much of their claims as possible. | guess that the assets of the

spouse is limited to the community property, as was defined in

Section 54] that I read a moment ago.

The Trustee and the creditors are also entitled to examine

Mr. Wright's books and records and his financial transactions to

look for secreted assets, sham transactions, fraudulent transfers

and the like.

Mr. Wright is obligated to make a full disclosure and to make

the books and records and papers available to the Trustee, and to

the creditors.

By an order dated February 5, 1988, and entered on February

10, 1988 in the main case, we find this ordering paragraph: “It is

further ordered and adjudged that the Debtor will appear within

the next 30 days at a time and place selected by Mr. Thomas.”

And parenthetically here, Mr. Thomas, at that time, was

representing John Deere.

Back to quotation: “For the purpose of being deposed by

Mr. Thomas, and for the further purpose of being examined by

Mr. Thomas pursuant to Rule 2004 of the United States

Bankruptcy Rules. Mr. Wright's objections to the production of

documents is denied. Mr. Wright is ordered to produce the

documents requested. However, he is not required to incur any

undue expense in gathering the documents, and may, instead,

offer his accountant, or other custodians of said documents for

depositions, if the expense and time required to gather the

documents would impose an undue burden,” end of quotation.

= : —— .

App. 4

x 3

Mr. Wright had alleged that it would cost a great deal of money

to compile the documents requested by the discovery request. So,

the Court allowed him to produce the documents, or the

custodian of those documents. In effect, relieving him of an

obligation to compile them.

The documents which he produced at his February, 1988

deposition, given pursuant to this order are described in John

Deere’s portion of the pre-trial order. And that summary is not

contested by Mr. Wright.

Clearly, the documents furnished did not comply with the

discovery request. The Court felt — and still feels — that the

discovery request was reasonable and necessary under the

circumstances of this case.

Had it not been for the motion to lift the automatic stay filed by

Abilene Aero in October of 1988 — you will note several months

later — after the deposition. Had it not been for that, we would

not have realized how far Mr. Wright had gone in hiding records.

He knew the records were there. He had taken some there.

himself. His wife removed items that she had stored there. Yet.

Mr. Wright did not mention these items in his schedules: did not

bring them to his deposition; did not mention them, any of them,

in his deposition, nor did he produce an officer of Abilene Aero as

a custodian of those records.

However, even with the fortuitous discovery of these

documents, the Trustee and the creditors do not have all of the

necessary documents. Mr. Randy Burchell described documents

that he gave to Mr. Wright in November or December of 1987.

But Mr. Wa did not produce those documents at his

deposition in ruary of 1988. And there is no evidence that he

has ever produced those documents.

In his testimony at this hearing, Mr. Wright admitted having

documents which he should have turned over in his February,

App. 4

1988 deposition, but he did not do so. He professed to feel that

the documents were not covered by the Notice and this Court's

order. But the Court feels that he knew quite well the relevancy of

those documents, and deliberately attempted to hide them.

Mr. Wright's attitude seems to be that he will do what he

wishes, and ignore this Court's orders when he wishes. The Court

can only conclude that he continues to hide relevant information

and documents. Such action must not and cannot be tolerated by

this Court.

Rule 37b 2 of the Federal Rules of Civil Procedure, which is

made applicable to bankruptcy, by Bankruptcy Rule 7037

provides in pertinent parts, “If a party fails to obey an order to

provide or permit discovery, the Court in which such action is

pending may make such orders in regard to such failure as are

just. And among other things, the following: Capital C says, “an

order striking out pleadings or rendering a judgment by default

against the disobedient party.”

This is the sanction for which John Deere and NCNB have

asked. This is a harsh sanction and should be granted only after

careful consideration, and only in the most egregious cases.

The Trustee, of course, is asking for similar relief

The Court should also consider whether a lesser sanction would

secure proper behavior.

The ground rules for this sanction were laid down by the United

States Supreme Court in 1909 in a case called Hammond

Packing Company versus Arkansas, 212 US 322.

The Rules remain the same under the Federal Rules of Civil

Procedure 37b 2c.

In Hammond Packing, the Supreme Court sustained the

striking of the defendant's answer, an entry of a default judgment

App. 4

for failure to secure attendance of witnesses, and failure to

produce documents.

The Court said: “The preservation of due process was secured

by the presumption that the refusal to produce evidence material

to the administration of due process was but an admission of the

want of merit in the asserted defense.” End quote. And that is

from page 351.

In this case, Mr. Wright has repeatedly failed to allow

inspection of his residence, and states that he will not allow

inspection, even if the Court once again orders it.

Mr. Wright has concealed, and continues to conceal documents

relevant and necessary for this case.

Mr. Wright has not made a bona fide effort to comply with

orders of this Court. Instead, he has looked at every turn for ways

to avoid compliance with the orders of this Court, and has

flagrantly stated that he would not comply with this Court's

orders for inspection.

Mr. Wright has not offered any plausible excuse for his

noncompliance. He simply says he will not comply.

Clearly, Mr. Wright is able to comply; he just refuses to do so.

Mr. Wright has had ample time, and several opportunities to

comply with this Court’s orders concerning inspection and

production of documents; but, he refuses to do so. His actions in

this matter are not the result of oversight, inability, or neglect. His

actions are willful and done for spite.

His blatant refusals to allow inspections, and the frivolous

lawsuits which he caused the corporations to file against NCNB

and John Deere and their agents are but two examples of the

malicious nature of his actions.

App. 4

-10-

Threats or lectures from this Court will not secure his

compliance. They have been tried already, and they have been

ignored by Mr. Wright.

Mr. Wright has attempted to hide his assets. John Deere

already has a large, uncollected judgment against him. Thus,

monetary sanctions, will do no good.

The Court concludes that Mr. Wright’s actions clearly

demonstrate a lack of merit in his asserted defenses.

Through the bankruptcy process, and his evasive and

combative tactics, Mr. Wright has held his creditors off for

several years. He chose this course of action; he carried out this

course of action. It is now time for the bitter harvest of the seed

which he has sown.

This Court is convinced that no threats or sanctions that this

Court might impose will result in Mr. Wright’s voluntary

compliance. Therefore, with respect to John Deere, Mr. Wright's

answer is stricken and a judgment shall be entered against

Mr. Wright for all relief prayed for by John Deere, including the

monetary amounts mentioned in the pre-trial order.

Mr. Weinlein is to prepare an appropriate judgment.

With respect to NCNB, Mr. Wright’s answer is stricken, and a

judgment shall be entered against Mr. Wright for all relief prayed

for by NCNB, including the monetary amounts described in the

testimony.

Parenthetically, the monetary amounts would not be

dischargeable in a bankruptcy proceeding.

Mr. Moore is to prepare an appropriate judgment.

With respect to the Trustee, Mr. Wright’s ariswer is stricken

and a judgment shall be entered denying Mr. Wright's discharge.

And the Trustee shall have judgment against Mr. Wright for all

relief prayed for by the Trustee, except for the denial of personal

property exemptions. The Trustee shali have judgment for the

sums described in the testimony.

Mr. Boone is to prepare an appropriate judgment.

Again, all of the amounts in the testimony and in John Deere’s

pre-trial order would be non-dischargeable as sanctions.

Some comment about these orders, is perhaps, necessary. I do

not intend to deny Mr. Wright his personal property exemptions.

And none of the orders shall deny his personal property

exemptions.

Each judgment shall be submitted to Mr. Mcllhany for

approval as to form. If the parties cannot agree on the form of the

judgment within 15 days from the first mailing to Mr. Mcllhany,

or the first delivery, if it is delivered to his office, then, both

parties shall submit proposed judgments to the Court.

More than one complaint may have asked for a denial of the

discharge. If so, it would be appropriate to include the denial of

the discharge in each judgment where it was asked for. Thus, if

one of these judgments is reversed on appeal, denial will be in the

other.

There is no need for written findings of fact or conclusions of

law. The Court has put those on the record.

Are there any questions, Gentlemen?

Very well, thank you, very much, we will be in recess.

(END OF HEARING)

App. 4

it.

THE STATE OF TEXAS

COUNTY OF TAYLOR

1, H. Don Rodgers, a Certified Shorthand Reporter for the firm

of Rodgers & Rodgers, Court Reporters, 202 Pine Street,

Abilene, Texas, do hereby certify that I am the reporter who was

present and reported the foregoing judgment of the Court.

And I do hereby certify that the above and foregoing 18 pages

contain a full, true, and correct transcript of all proceedings had.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this

2nd day of July, 1990.

/s/_ H. Don RODGERS

H. DON RODGERS

CERTIFIED SHORTHAND REPORTER

IN AND FOR THE STATE OF TEXAS

Certificate No. 1096, and

Notary Public in Taylor County

For the State of Texas

My Commission Expires: 12-22-92

[Filed, U.S. District Court, June 18, 1992]

IN THE

United States Bistrict Court

FOR THE NORTHERN DISTRICT OF TEXAS

ABILENE DIVISION

>

IN RE

R. D. WRIGHT, A/K/A

DON WRIGHT, A/K/A

R. DON WRIGHT,

> CASE No. 188-10048-7

Debtor. }

* * *

R. D. WRIGHT, A/K/A

DON WRIGHT, A/K/A

R. DON WRIGHT,

Appellant,

Vv.

STANLEY W. WRIGHT,

TRUSTEE,

CiviL ACTION No.

, CA-1-91-061-C

(CONSOLIDATED WITH

CA-1-91-062-C)

Appellee. |

APPEAL FROM THE

UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

JOHN C. AKARD, BANKRUPTCY JUDGE, PRESIDING

* * *

ORDER

This case is before the court for consideration of the appeal of

the debtor, R. D. Wright, from orders of the bankruptcy court

imposing various sanctions upon him, including the denial of his

discharge.

Appellant contends that the orders of the court were unlawful

and violated certain of his constitutional rights and that the record ‘.

does not support the denial of his discharge. This court must

review the bankruptcy court’s conclusions of law de novo.

Sutton v. Bank One, Texas, N.A., 904 F.2d 327, 329 (Sth Cir. |

1990). The findings of fact of the bankruptcy court may not be set |

aside unless they are clearly erroneous. The court has considered

carefully the written arguments of counsel and the record in this

case and is of the opinion that the decision of the bankruptcy

court should be affirmed. The findings of fact are not clearly

erroneous. There is no reversible error in the conclusions of law.

It is, accordingly, ordered that the decision of the bankruptcy

court is, in all things, AFFIRMED.

The clerk shall furnish a copy of this order to each attorney of

record.

Dated June 18, 1992.

/s/ SAM R. CUMMINGS

SAM R. CUMMINGS

United States District Judge

App. 6

is

[Filed, U.S. Court of Appeals, December 22, 1992]

United States Court Of Appeals

For THE FIFTH CIRCUIT

No. 92-1604

SUMMARY CALENDAR

IN THE MATTER OF: R. DON WRIGHT,

Debtor.

R. Don Wright

Appellant,

VERSUS

STANLEY WRIGHT, TRUSTEE,

Appellee.

Appeal from the United States District Court

For the Northern District of Texas

(1:91-CV-061-C (con. w/1:91-CV-062-C) )

Before: PoLitz, CHIEF JUDGE, JOLLY AND EMILIO M.

GARZA, CIRCUIT JUDGES.

PoOLitz, CHIEF JUDGE:*

Don Wright, debtor in bankruptcy, appeals the imposition of

sanctions resulting in the entry of default judgment in favor of his

creditors. Finding no error, we affirm.

* Local Rule 47.5 provides: “The publication of opinions that have no

precedential value and merely decide particular cases on the basis of

well-settled principles of law imposes needless expense on the public and

burdens on the legal profession.” Pursuant to that Rule, the Court has

determined that this opinion should not be published.

App. 6

Background

On August 24, 1987, Wright filed a pro se petition under

Chapter || of the Bankruptcy Code which later converted to

Chapter 7. On June 21, 1988, NCNB and John Deere, both

creditors of Wright, filed adversary proceedings objecting to the

discharge of their debts and seeking declaratory relief. Seven days

later NCNB moved to inspect and appraise property Wright

claimed as exempt. Shortly thereafter the bankruptcy court

entered an order allowing both NCNB and John Deere access to

the disputed property. The order required the creditors to provide

five-days notice of the inspection. Wright then unsuccessfully

moved to have his exemptions deemed granted.

Wright moved the court for protection when the creditors

notified him of the date of inspection. The court considered and

rejected this request. When representatives of NCNB and John

Deere arrived at Wright’s home and announced their intentions to

enter, no one answered the door. The creditors withdrew and

informed the court. Thereafter, joined by the trustee, they notified

Wright of an inspection to occur five days later. Wright responded

by notifying all concerned that no access would be allowed,

regardless of the court order.

John Deere moved for sanctions, citing Wright’s contempt of

the court’s order, refusal to comply with discovery orders, and

taking depositions without providing notice. NCNB and the

trustee joined this motion. The bankruptcy court again ordered

Wright to allow his creditors access to his home and to allow

them to conduct a proper inspection and inventory. Wright filed a

motion asking the court to reconsider. That motion was denied.

Thereafter, after being notified of yet a third date of inspection,

Wnight again refused to comply with the court’s order.

On three occasions Wright argued to the bankruptcy court that

his creditors should not be allowed access to his home. The court

thrice rejected the argument and Wright thrice ignored the

App. 6

mS

court’s order. A third motion for sanctions was made. The

bankruptcy court conducted a full evidentiary hearing and then

struck Wright's answer, entered default judgment in favor of John

Deere and NCNB, denied Wright a discharge as the trustee had

requested, and imposed monetary sanctions. The court noted from

the bench that “It... appears that from the very start of this case,

he set about to conceal his financial records . .. .” The court then

denied Wright's motion for reconsideration.

On appeal, the district court affirmed the order; Wright timely

appealed.

Analysis

The bankruptcy court's authority to sanction Wright flows from

Bankruptcy Rule 7037 which adopts Fed.RCiv.P. 37. Rule 37

provides: “(T]he court . . . may invoke such orders in regard to

the failure [to comply] as are just, and among others the

following: ‘An order striking out pleadings . . . or dismissing the

action . . . or rendering a judgment by default against the

disobedient party.” Fed.R.Civ.P. 37(b)(2) & (2)(C). Wright

proceeded through the bankruptcy proceedings displaying open

contempt for the process and the bankruptcy court’s authority.

The following colloquy is telling:

Q: So Mr. Wright if the court issues a fourth order, or a fifth

order compelling you to allow the creditors entry to your

residence, to inspect and appraise the entire contents, you

will continue to refuse to obey those orders?

A: I will refuse to let you in the house; yes, sir.

Wright claimed that virtually all the property used and enjoyed

by him belonged to someone else and he refused to allow the

trustee or his creditors access to the property to evaluate or

determine the true ownership of the assets he held. The court

App. 6

found these claims of second-party ownership to be suspect.

Wright claims, for example, “that Cami Corporation owns lots of

his household furniture and a condominium in New Mexico,

which he enjoys.” The bankruptcy court was aware of no business

by that corporation.

Wright offered to place some disputed items out on his lawn for

the creditors and the trustee to photograph. The court rejected

this suggestion as ridiculous and concluded that Wright sought to

conceal valuable property inside his home because Wright was

afraid that expensive furnishings would quickly use up his $30,000

personal property exemptions. Given the necessity of the

valuation and the lack of an iota of cooperation from Wright, the

order allowing access to the property was reasonable; Wright’s

present arguments, which imply the contrary, are rejected.

Wright made it impossible for the trustee to carry out his

responsibilities or for his creditors to protect their legitimate

interests. More importantly, Wright placed himself above the law.

Such conduct was not tolerated. Nor should it be.

Wright claims that the sanctions were improper because the

creditors did not specify particular property in their objections to

his claimed exemptions. This seems to beg the question, until the

creditors have an opportunity to conduct discovery of the value of

the personal property held by Wright, they can hardly make

specific objections. If the creditors could not make specific

objections, it is due not to their slovenliness but to Wright’s

conduct after the court determined that an inspection was

reasonable and necessary. It is not the debtor’s place to pick and

choose among the orders of the bankruptcy court he will honor.

App. 6

A

Self help is not an alternative to appeal.’ This is true even when

the order appears to run afoul of constitutional guarantees.’

Wright invoked the aid of the court in seeking a benefit he

desired — a discharge of his debts in bankruptcy. As long as the

court did his bidding he was inclined to obey. When orders

adverse to Wright’s position were issued he chose to ignore them

without seeking interlocutory appeal’ or mandamus relief.

Wright’s conduct constituted open and notorious contempt of the

bankruptcy court. We cannot and will not countenance such.

AFFIRMED.

' Maness v. Meyers, 419 U.S. 449 (1975) (“Persons who make

private determinations of the law and refuse to obey an order generally

risk criminal contempt even if the order is ultimately ruled incorrect.”)

(citations omitted).

? United States v. Dickinson, 465 F.2d 496, 509 (Sth Cir. 1972), cert.

denied, 414 U.S. 979 (1973).

* See 28 U.S.C. § 1334 (allowing interlocutory appeal to the district

court upon leave of that court).