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THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA MARTINSBURG

GEORGE VAN WAGNER, Plaintiff, v. Civil Action No. 3:11-CV-75 (BAILEY)

ATLAS TRI-STATE SPE, LLC, et al., Defendants.

MEMORANDUM OPINION AFFIRMING ORDERS OF THE BANKRUPTCY COURT Pending before the Court is an appeal filed by George Van Wagner challenging various decisions of the United States Bankruptcy Court for the Northern District of West Virginia ("Bankruptcy Court"): (1) a November 22, 2010, order finding that certain causes of action had not been abandoned by the trustee of Mr. Van Wagner's bankruptcy estate [Doc.16-28], (2) three August 1, 2011, orders settling claims in various bankruptcy proceedings [Docs. 9-4, 12-12, and 15-4], and (3) two August 11, 2011, orders granting motions to expunge notices of lis pendens [Docs. 12-16 and 16-4]. For the reasons more fully stated below, this Court finds that the orders of the Bankruptcy Court should be AFFIRMED. I. BACKGROUND A. General On September 24, 2007, Hickory Ridge, LLC, ("Hickory Ridge") filed a Chapter 7

bankruptcy petition with the United States Bankruptcy Court for the Northern District of West Virginia ("Bankruptcy Court") [Doc. 9-4 at 2]. Robert Trumble was appointed Chapter 7 trustee for Hickory Ridge [Id. at 4]. Vanwood, LLC, ("Vanwood") filed a Chapter 7 bankruptcy petition on December 27, 2007, with the Bankruptcy Court [Id. at 2]. Mr. Trumble was appointed trustee of Vanwood's estate [Id. at 5]. On March 28, 2008, George Van Wagner (hereinafter "Mr. Van Wagner" or "appellant") filed a voluntary Chapter 11 petition with the Bankruptcy Court, which was converted to a Chapter 7 proceeding on July 1, 2009 [Id. at 2]. Thomas Fluharty was appointed the trustee of Mr. Van Wagner's estate [Id. at 1]. B. Mr. Van Wagner's State Civil Cases Mr. Van Wagner "filed two civil lawsuits in the Circuit Court of Berkeley County[,] West Virginia, referred to . . . as the `First Civil Case' and the `Second Civil Case,'" because he was "[u]nder the belief that the Chapter 7 trustee of his personal estate had abandoned certain causes of action and business interests" [Doc. 9-4 at 2].1 In these state civil proceedings, Mr. Van Wagner "assert[ed] rights on behalf of himself, Hickory Ridge, and/or Vanwood" [Id.]. 1. First Civil Case The First Civil Case was filed by Mr. Van Wagner on February 16, 2010 [Doc. 9-4 at 2]. On February 19, 2010, the case was removed to Bankruptcy Court and assigned Adversarial Proceeding Number 3:10-AP-21 (with Case Number 3:07-BK-1251 serving as the lead bankruptcy case). In the complaint for this, Mr. Van Wagner claimed to be the
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However, on November 22, 2010, the Bankruptcy Court ruled that abandonment was not accomplished [Doc. 9-4 at 2]. 2

"beneficial owner of the assets of Hickory Ridge [and] sued multiple defendants based on a May 4, 2005[,] sale of 53.7 acres by Hickory Ridge to James G. Gore, Jr." [Id. at 2-3]. The land purchase agreement described five parcels (parcels 34.1, 37, 37.1, 37.2, and 38) and included multiple conditions precedent to finalizing the sale [Id. at 3]. "On June 22, 2005, Mr. Gore sold all five parcels to a third party for $9,730,000," which was substantially more than what Hickory Ridge received from Mr. Gore for its sale [Id.]. Hickory Ridge obtained the deed to four of the five parcels (parcels 34.1, 37, 37.1, and 37.2) on August 4, 2005; it received the deed to the fifth parcel (parcel 38) three days later [Id.]. On February 17, 2006, Mr. Gore filed a lawsuit against Hickory Ridge to compel the conveyance of these parcels of land [Doc. 9-4 at 3]. The parties agreed that Hickory Ridge would convey the five parcels of land to Jennifer Grafton-Gore for $5,143,000 [Id.]. David A. Pill, Esq., and the law firm Pill & Pill, LLC, oversaw the closing [Id.]. "[H]owever, the conveyance erroneously omitted parcel 38" [Id.]. On March 7, 2006, Ms. Grafton-Gore granted a deed of trust on all five parcels to secure a note owed to Centra Bank; however, the deed of trust also erroneously omitted parcel 38 [Id.]. On the same day, Ms. GraftonGore signed a promissory note to Hickory Ridge for $3,168,711.56, which also erroneously omitted parcel 38, and Hickory Ridge's interest in the note and deed of trust was then assigned to Rapid Funding [Id.]. Hickory Ridge did not learn about the mistake with parcel 38 being omitted from the deed until March 13, 2008, which is when a lawsuit was filed by Centra Bank to correct the deed [Doc. 9-4 at 4]. As such, Hickory Ridge did not include parcel 38 on its bankruptcy schedules when it submitted its September 24, 2007, Chapter 7 bankruptcy case [Id.]. A settlement of the lawsuit to correct the deed was approved on December 4, 2008; in the 3

settlement the "Chapter 7 trustee for Hickory Ridge conveyed parcel 38 in exchange for $50,000" [Id.]. Based on these facts, Mr. Van Wagner argued in the first civil proceeding that the Hickory Ridge obtained title to parcel 38, not Ms. Grafton-Gore [Id. at 3-4]. He also claimed that Mr. Pill and Pill & Pill, LLC, not only made negligent errors during the closing, but also "conspired to hide the omission of parcel 28 from him, and to reach a settlement without his knowledge" [Id. at 4]. 2. Second Civil Case The Second Civil Case was filed by Mr. Van Wagner on March 8, 2010 [Doc. 9-4 at 5]. On the same day, the case was removed to Bankruptcy Court and assigned Adversarial Proceeding Number 3:10-AP-46 (with Case Number 3:08-BK-435 serving as the lead bankruptcy case). In the complaint, Mr. Van Wagner alleged that he is the beneficial owner of Vanwood [Id.]. Mr. Van Wagner alleged that Vanwood financed the purchase of 49.3822 acres of real property in Berkeley County under five deeds through Branch Banking and Trust Company ("BB&T") and that BB&T took an ownership interest in that property [Id.]. One of the tracts contained 4.172 acres [Id. at 5]. Mr. Van Wagner alleged that the "habendum clause" of the deed of trust securing BB&T's loan did not sufficiently describe this 4.172-acre tract [Id. at 6]. On March 31, 2009, BB&T foreclosed on the 49.3822 acres and sold it to Atlas Tri-State SPE, LLC ("Atlas") [Id.]. This deed fully described the 4.172acre tract [Id. at 6-7]. In Case Numbers 3:08-BK-435 and 3:07-BK-1671, Mr. Van Wagner asked the Bankruptcy Court to declare that the 4.172-acre tract of property belongs to Vanwood and was not subject to a lien by BB&T [Id. at 7].

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C. The Bankruptcy Court's Orders On January 24, 2010, the Bankruptcy Court held a hearing on pending motions to compromise, which were approved by order on February 3, 2010 [See Doc. 16-28]. On November 22, 2010, the Bankruptcy Court entered a Memorandum Opinion concluding that "the Trustee did not abandon `any and all other causes of action which could be asserted by George Van Wagner, individually, against any party other than Paul Van Wagner, PVW Enterprises, King Metro Rentals or Quail Farms,' as of the January 14, 2010[,] hearing on the Trustee's Motion to Compromise, or as of February 3, 2010, the date the court entered the order approving of the Trustee's proposed settlement" [Doc. 16-28 at 11]. Mr. Van Wagner previously appealed this order to this Court on January 28, 2011 [Case No. 3:11CV-6 Doc. 1]. This Court denied the interlocutory appeal on February 28, 2011, stating that the notice requirements for abandonment pursuant to 11 U.S.C. 554(a) and Rule 6007 of the Federal Rules of Bankruptcy Procedure were not met for a number of reasons [Case No. 3:11-CV-6 Doc. 15 at 4-5]. On March 7, 2011, Mr. Van Wagner appealed the District Court's Order Denying Interlocutory Appeal to the Fourth Circuit Court of Appeals ("Fourth Circuit") [Case No. 3:11-CV-6 Doc. 17]; on August 29, 2011, the Fourth Circuit denied the appeal [Case No. 3:11-CV-6 Doc. 22 at 3]. By August 1, 2011, order, the Bankruptcy Court granted motions for approval of settlement and compromise of claims against (1) BB&T and (2) Mr. Pill and Pill & Pill, LLC, filed by Thomas Fluharty in Case Number 3:08-BK-435 and Robert Trumble in Case Number 3:07-BK-1671 [Doc. 9-4 at 15]. On the same day in Case Number 3:10-AP-46, the Bankruptcy Court entered orders providing for the settlement of all claims raised against Mr. Pill; Pill & Pill, LLC; BB&T; Atlas; William Hallam; Rosenberg, Martin, Greenberg, LLP; 5

Thomas Libowitz, P.A.; James Steptoe; and the estate of James Steptoe [Doc. 12-16; Doc. 16-4].2 The appellant filed notices of lis pendens with regard to the disputed property in Berkeley County [See Doc. 16-14]. After ruling on the motions for approval of settlement and compromise, the Bankruptcy Court issued orders granting motions to expunge the plaintiff's notices of lis pendens on August 11, 2011 [Doc. 12-16 at 1; Doc. 16-4 at 1]. D. Appeal of the Bankruptcy Orders On October 27, 2011, Notices of Appeal from Bankruptcy Court Case Numbers 3:08-BK-435, 3:10-AP-46, 3:07-BK-1251, 3:10-AP-21, and 3:07-BK-1671 [Docs. 9, 10, 11, 12, 13, 14, 15, 16, and 19] were filed in this proceeding. This Court consolidated the various appeals by Orders entered on November 2, 2011, [Doc. 20] and November 3, 2011 [Doc. 23]. On November 23, 2011, Mr. Van Wagner filed his Appellant's Brief [Doc. 42]. In his brief, the appellant identifies the following seven issues for review: (1) Whether the [B]ankruptcy [C]ourt erred in expunging a Notice of Lis Pendens, (2) Whether [the] [B]ankruptcy [C]ourt erred in granting a Motion without giving [the] adverse party adequate time to respond, (3) Whether the action of the [B]ankruptcy [C]ourt subjected Appellant to a Due Process Deprivation, (4) Whether the Bankruptcy Court committed error when it informed the Pro se Appellant that his Bankruptcy Estate Trustee had abandoned all cause of actions, (5) Whether [the] Bankruptcy Court erred in determining that Trustee's abandonment was an informal notice of intent to abandon all causes of action, (6) Whether [the] Bankruptcy Court erred when it reversed itself with further
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These orders were amended by the Bankruptcy Court on August 11, 2011, to correct the spelling of Mr. Hallam and the law firm of Rosenburg, Martin, Greenberg, LLP [See Docs. 12-17 at 1 and 16-15 at 1]. However, these amended orders made no substantive changes to the Bankruptcy Court's August 1, 2011, orders [id.]. 6

evidentiary hearings, and (7) Whether the Bankruptcy Court erred in granting Motions for Approval to Settle & Compromise Claims brought by the U.S. Trustees when claims of fraud and deceit among parties were alleged and not yet litigated. [Doc. 42 at 4]. In addition, the appellant requests this Court to "reverse the Orders of the Bankruptcy Court [referred to in his brief], including the Orders of [August 1, 2011]" [Doc. 42 at 22].3 On December 5, 2011, appellee BB&T filed its brief [Doc. 43]; in its brief, BB&T argues that (1) the Bankruptcy Court properly determined that Fluharty had not abandoned the disputed claims, (2) the Bankruptcy Court did not abuse its discretion in authorizing Mr. Fluharty and Mr. Trumble to settle the disputed claims, and (3) the quashing of the notices of lis pendens was required by the abandonment opinion and the settlement orders [Id. at 12-25]. Also on December 5, 2011, Appellees Atlas and William Hallam filed their brief [Doc. 44] and Mr. Pill and Pill & Pill, LLC, filed their Appellee Brief [Doc. 45], both briefs "incorporat[ing] by reference . . . Brief of Appellee [BB&T]" [Docs. 44 and 45 at 1]. On December 7, 2011, Robert W. Trumble, Chapter 7 Trustee for the bankruptcy estates of Vanwood, LLC, and Hickory Ridge, LLC, filed a Brief of Appellee [Doc. 47], also joining in and incorporating by reference BB&T's brief [Id. at 2]. The appellant never filed a reply brief in response to the appellees' various briefs [See 3:11-cv-75 docket sheet]. II. APPLICABLE STANDARD Pursuant to Rule 8013 of the Federal Rules of Bankruptcy Procedure, "the district court . . . may affirm, modify, or reverse a bankruptcy judge's judgment, order or decree or
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The appellant also states that he requests this Court "[t]o stay all proceedings of the Bankruptcy Court until matters are resolved" [Doc. 42 at 22]. However, this Court has addressed the Motion for Stay in a prior ruling [See Doc. 18]. 7

remand with instructions for further proceedings. Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of witnesses." FED. R. BANKR. P. 8013. "A finding is `clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Anderson v. Bessemer City, 470 U.S. 564, 573 (1985) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)). With respect to a bankruptcy court's conclusions of law, the appropriate standard of review is de novo. See In re Mitrano, 409 B.R. 812, 815 (E.D. Va. 2009); In re Meredith, 527 F.3d 372, 375 (4th Cir. 2008); Gilbert v. Scratch `N Smell, Inc., 756 F.2d 320 (4th Cir. 1985). In cases where the issues present mixed questions of law and fact, the reviewing court applies the clearly erroneous standard to the factual portion of the inquiry and de novo review to the legal conclusions derived from those facts. See Gilbane Bldg. Co. v. Fed. Reserve Bank of Richmond, 80 F.3d 895, 905 (4th Cir. 1996). Finally, decisions committed to the discretion of the bankruptcy court are reviewed for abuse of discretion. See In re Morris, 385 B.R. 823, 828 (E.D. Va. 2008). III. ANALYSIS Below, the Bankruptcy Court's orders included rulings on (1) the abandonment of causes of action, (2) the settlement and compromise of claims, and (3) the expungement of notices of lis pendens [See Docs. 16-28, 12-12, 15-4, 9-4, 12-16, and 16-14].

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A. Abandonment of Causes of Action On November 22, 2010, the Bankruptcy Court issued a Memorandum Opinion stating that "its order approving the settlement agreement did not act to abandon the property interests sought to be assumed by Mr. Van Wagner" [Doc. 16-28 at 1]. Mr. Van Wagner identifies three issues with regard to abandonment: (1) whether the Bankruptcy Court improperly informed Mr. Van Wagner that his bankruptcy estate trustee had abandoned all causes of action; (2) whether the Bankrupcty Court improperly determined that the Trustee's abandonment was an informal notice of intent to abandon all causes of action; and (3) whether the Bankruptcy Court improperly reversed itself with regard to abandonment [Doc. 42 at 4]. The appellant acknowledges that he has already appealed the Bankruptcy Court's November 22, 2010, ruling; he states that he is submitting these arguments again to this Court now that the issue is final [Doc. 42 at 12]. However, this Court has already ruled that the Bankruptcy Court properly found that the notice requirements of 11 U.S.C.

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