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Walker v. Wetzel

United States District Court, E.D. Arkansas, Western Division

March 31, 2019

MICHAEL W. WALKER APPELLANT
v.
FREDERICK S. WETZEL, III, et al. APPELLEES

          OPINION AND ORDER

          KRISTINE G. BAKER UNITED STATES DISTRICT JUDGE.

         On July 13, 2017, the United States Bankruptcy Court for the Eastern District of Arkansas entered an order denying debtor Michael W. Walker's pro se motion to clarify and strike (Dkt. No. 23-1, at 46).[1] Mr. Walker filed a notice of appeal from that order on July 28, 2017 (Dkt. No. 1). On September 22, 2017, the Bankruptcy Court entered an order denying debtor Mr. Walker's pro se objection to motion to withdraw as counsel and Mr. Walker's pro se supplemental objection (Dkt. No. 23-1, at 55). Mr. Walker filed a Notice of Appeal from that order on October 18, 2017. Walker v. Wetzel, No. 4:17-cv-00675-KGB, Dkt. No. 1 (E.D. Ark. Oct. 18, 2017). The second appeal was consolidated with the first by an order from this Court (Dkt. No. 29). The Court has jurisdiction to hear these appeals pursuant to 28 U.S.C. § 158(a). For the reasons discussed below, the Court dismisses without prejudice Mr. Walker's appeal.

         I. Background

         While the history of this case appears somewhat convoluted, the facts surrounding the issues on appeal are straightforward. This case arises from a Chapter 13 bankruptcy proceeding in which Mr. Walker filed a voluntary petition on January 8, 2016 (Dkt. No. 23-1, at 2). The bankruptcy filing was proceeded by an Arkansas state court action in which Dr. Judy McDonald and other plaintiffs sued Mr. Walker on February 1, 2011, for fraud, breach of fiduciary duty, conversion, accounting, trespass, and assault (Dkt. No. 24-4, at 2-10). After discovery, Arkansas Circuit Judge Marcia Hearnsberger entered a letter order denying plaintiffs' motion for partial summary judgment and Mr. Walker's motion for partial judgment on the pleadings (Dkt. No. 24-21, at 3). Judge Hearnsberger found that the parties were entitled to a jury trial on certain claims, and that “[a]ll traditionally equitable issues pled by the parties such as accounting, attorney's fees and costs, and Dissolution and Receivership will be determined by the Court.” (Id.).

         After a trial before a jury, the jury returned a verdict in Dr. McDonald's favor (Dkt. No. 24-23, at 2). Judge Hearnsberger issued a judgment on the jury's verdict, which included the following findings:

1. The Jury found in favor of Plaintiff Spillway Mountain Village and Resort, LLC (“SMVR”) against [Mr. Walker] in the amount of $148, 000 on its breach of fiduciary duty claim.
2. The Jury found in favor of Plaintiff [SMVR] against [Mr. Walker] in the amount of $148, 000 on its conversion claim; and
3. The Jury found in favor of Plaintiff Judy McDonald against [Mr. Walker] in the amount of $75, 000 on her conversion claim . . . .

(Id.). The jury also found in favor of Mr. Walker on Dr. McDonald's claim of assault, and the jury found in favor of Dr. McDonald on Mr. Walker's counterclaims. Judge Hearnsberger's judgment also states that “[w]ith the consent” of Mr. Walker, the claim for dissolution of SMVR was granted (Id., at 3). Judge Hearnsberger ordered SMVR dissolved and stated that the activity of SMVR was limited to acts winding up its affairs (Id.).

         An amended judgment on jury verdict was entered on September 17, 2015, which corrected clerical errors in the original judgment on jury verdict (Dkt. No. 24-24). Then, on December 10, 2015, Judge Hearnsberger entered a final judgment granting SMVR judgment against Mr. Walker in the amount of $296, 00.00 and granting Dr. McDonald two judgments against Mr. Walker, one in the amount of $75, 000.00 and the other in the amount of $100, 000.00 (Dkt. No. 24-25, at 3). The final judgment also stated that “[t]his court retains jurisdiction over the dissolution of [SMVR] to appoint a receiver and supervise the winding up of its affairs. All other claims of the parties are dismissed.” (Id., at 4). On the same day, at the request of Dr. McDonald and with the consent of Mr. Walker, Judge Hearnsberger appointed Richard Cox as receiver for SMVR (Dkt. No. 24-26, at 1).

         Mr. Walker then filed his voluntary petition for Chapter 13 bankruptcy on January 8, 2016 (Dkt. No. 23-1, at 2). Mr. Cox, as receiver for SMVR, filed a proof of claim against Mr. Walker in the amount of $201, 240.00, based on a “Houseboat Lease Agreement.” (Dkt. No. 24-27, ag 3). Mr. Cox also filed a proof of claim on SMVR's behalf in the amount of $308, 569, 84 (Dkt. No. 24-28, at 4). Further, Mr. Cox filed another proof of claim in the amount of $204, 035.00 against Mr. Walker, again based upon the Houseboat Lease Agreement (Dkt. No. 24-29, at 3). Dr. McDonald also filed a proof of claim in the amount of $178, 068.48 against Mr. Walker (Dkt. No. 24-31, at 3). She further filed a proof of claim in the amount of $227, 792.50 for “[c]ontribution on Houseboat lease payments” or alternatively for “lease rejection damages” against Mr. Walker (Dkt. Nos. 24-32, at 3; 24-33, at 3).

         On September 2, 2016, the bankruptcy case was converted to a Chapter 7 bankruptcy (Dkt. No. 23-1, at 21). Then, on January 31, 2017, Chapter 13 Trustee Frederick Wetzel filed a motion for approval of compromise and settlement (Dkt. No. 23-1, at 24). In this motion, Mr. Wetzel noted that Mr. Walker listed his ownership share in SMVR at $2, 093, 437.35 but that Dr. McDonald disputed that Mr. Walker's ownership interest had value (Dkt. No. 24-39, at 2). Mr. Wetzel further noted that Mr. Walker “scheduled an appeal of the $471, 000.00 of judgments entered against him in favor of Dr. McDonald.” (Id.). According to the motion, Mr. Walker did not timely pursue that appeal (Id., at 3). Mr. Wetzel also noted the claims that SMVR, via its receiver, Mr. Cox, asserted against Mr. Walker (Id., at 4). Per the proposed settlement, Mr. Wetzel agreed to withdraw all of the claims of the estate against Dr. McDonald and SMVR and to assign the estate's interest in SMVR to Dr. McDonald (Dkt. No. 24-39, at 4). In exchange, Dr. McDonald would pay $75, 000.00 to the estate and withdraw all of her claims and all claims of SMVR against the estate (Id.). Mr. Wetzel acknowledged Mr. Walker's asserted claims against Dr. McDonald and SMVR, but Mr. Wetzel noted that substantial costs would have to be incurred to pursue those claims and that the estate had no funds for such costs (Id., at 5). Given these obstacles, Mr. Wetzel opined that the proposed settlement was in the best interest of the estate and should be approved (Id.).

         A hearing was held on the motion for approval of compromise and settlement before the bankruptcy court (Dkt. No. 23-1). The bankruptcy court approved the compromise agreement proposed by Mr. Wetzel (Id., at 12). Regarding the compromise agreement, the bankruptcy court explained its reasoning as follows:

It's in the best interest of creditors because it appears as though all creditors are going to get paid. There's a good chance that those remaining creditors, of about [$]21, 000 dollars, not all of those will file a proof of claim. It may be then, that being the case, furthermore, if there's some objections to claims, that frees up even that much more ...

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