A Wild West Blunder: PHH’s Hired Bounty Hunters at Hopkins Law Deliver a Cockamamie Response

PHH Mortgage Corporation (“PHH”) files this its Response in Opposition to Plaintiff Joanna Burke’s (“Burke” or “Plaintiff”) Motion to Dismiss for Lack of Jurisdiction (the “Motion”).

[Doc. 33].

In support thereof, PHH would respectfully show unto the Court the following:

I.  SUMMARY& BACKGROUND

1.                  Burke’s “Motion to Dismiss for Lack of Jurisdiction” is her second attempt to challenge the jurisdiction of this court and amounts to nothing more than a motion to reconsider her Motion to Remand, which was denied by this Court.

[Doc. 18].

Burke’s motion to dismiss for lack of jurisdiction is without merit.

2.                  This suit arises from Burke’s continuing battle to prevent foreclosure of the Property.

Though a valid judgment for foreclosure exists, Burke continues to file repeated frivolous lawsuits to stop the foreclosure sale from taking place.

Burke’s repetitive lawsuits have now delayed the foreclosure of the Property1 for fourteen (14) years.

Burke filed this suit to again stop the foreclosure, asserting affirmative claims against all parties that were involved in the latest foreclosure posting.

1 46 Kingwood Greens Drive, Kingwood, Texas 77339 (“Property”).

After the state court denied her request to stop the sale, she filed her first bankruptcy.3

Shortly thereafter, the Bankruptcy Court dismissed her case for failure to file the required bankruptcy documents.

A month later, Burke finally served PHH with her lawsuit.

After learning the property was posted again for foreclosure, Burke filed her second bankruptcy.

Thereafter, PHH removed the case to this Court. Burke then moved for remand, which was denied by the Court.

[Doc. 18].

3.                  Burke’s second attempt to contest jurisdiction of this Court presents no new compelling legal argument for the Court to reconsider its jurisdiction.

For the reasoning previously provided by this Court in denying remand, and as set out below, this Court has jurisdiction and should deny Plaintiff’s Motion.

II.  ARGUMENT AND AUTHORITIES

4.                  Displaying a misunderstanding of the structure of our federal courts, Burke argues the District Court is without jurisdiction over this case because she believes the bankruptcy court possesses exclusive jurisdiction over the matter.

At the core of Burke’s reasoning is General Order 2012-06, which sets out an internal procedure of the United States District Court for the Southern District of Texas regarding referral of proceedings related to a case under Title 11 of the United States Code to the bankruptcy court of the district.

See, Gen. Order 2012-06.

Burke confuses internal procedures of the Court with the jurisdiction of the Court.

5.                  Burke fails to understand that a bankruptcy court sits as an adjunct to a district court, with the district court first having jurisdiction over a matter.

A district court has the authority to refer a case within its jurisdiction to its adjunct bankruptcy court.

The United States Code provides in straightforward fashion that bankruptcy courts are simply a ‘unit’ of the district court where they are located.

Specifically, 28 U.S.C. §151 provides:

In each judicial district, the bankruptcy judges in regular active service shall constitute a unit of the district court to be known as the bankruptcy court for that district. Each bankruptcy judge, as a judicial officer of the district court, may exercise the authority conferred under this chapter [28 USC §§ 151 et seq.] with respect to any action, suit, or proceeding and may preside alone and hold a regular or special session of the court, except as otherwise provided by law or by rule or order of the district court.

28 U.S.C. §151.

6.                  It is because the Court has jurisdiction over this case that the United States Bankruptcy Court for the Southern District of Texas could even possess jurisdiction over this matter, if the Court had referred the matter to the bankruptcy court.

Burke’s argument (properly framed) is not one about jurisdiction, it is about Burke’s perception that the Court elected to maintain the case on its docket instead of referring the matter to its adjunct.

7.                  The Fifth Circuit made it abundantly clear that a bankruptcy court’s jurisdiction rests on a district court’s jurisdiction:

The bankruptcy court functions as an adjunct of the district court and, indeed, the constitutionality of the bankruptcy court’s jurisdiction rests on that fact and on the careful supervision that the district court is bound to provide over the bankruptcy court.

In re Hester, 899 F.2d 361, 3698 (5th Cir. 1990).

8.                  Thirteen years after In re Hester, the Fifth Circuit clarified again that federal courts are courts of limited jurisdiction, with bankruptcy courts serving as adjuncts to district courts:

All federal courts are courts of limited jurisdiction.

A bankruptcy court’s jurisdiction is especially circumscribed and wholly “grounded in, and limited by, statute.”

Celotex Corp. v. Edwards, 514 U.S. 300, 307, 131 L. Ed. 2d 403, 115 S. Ct. 1493 (1995).

District courts, and their adjunct bankruptcy courts, have jurisdiction “of all civil proceedings arising under title 11, or arising in or related to cases under title 11.” 1334(b).

Bissonnet Invs. Llc. v. Quinlan, 320 F.3d 520, 525 (5th Cir. 2003).

9.                  Here, Burke had an active bankruptcy case pending at the time of removal of this case, and the Court determined it has “related to jurisdiction” over this case as district courts have original and exclusive jurisdiction of all cases under Title 11.

See 28 U.S.C. §1334.2 [Doc.18].

To the extent necessary, and for the sake of judicial efficiency, PHH incorporates by reference its prior argument regarding the Court’s ‘related to’ jurisdiction [Doc. 8].

Burke’s grounds lack merit and are moot.

10.              Moreover, Burke’s argument in the alternative, that the Court should have transferred the matter to bankruptcy court and is now without jurisdiction, is wrong.

11.              Burke’s lawsuit asserts claims for violation of the Texas Constitution, Malicious Use of Process, Conspiracy, Fraud, Intentional Infliction of Emotional Distress, Mental Anguish (as an affirmative claim), Texas Debt Collection Practices Act violations, Declaratory Relief, and Injunctive Relief.

These claims largely do not invoke substantive rights created by federal bankruptcy law, could exist outside of the bankruptcy context and constitute “non-core” claims.

See generally, Longhorn Partners Pipeline L.P. v. KM Liquids Terminals, L.L.C, 40 B.R. 90, 96 (Bankr. S.D. Tex. 2009).

The only core claim asserted by Burke was her alleged claim of violation of the automatic stay, which was determined against her.

[Doc. 18].

As the bankruptcy courts are limited in power, parties must look at the bankruptcy court’s power over referred matters and issues that are “non-core.”

Id. §157(b).

If a proceeding is not core, the bankruptcy judge may only submit proposed findings of fact and conclusions of law to the district court; only the district court may enter a final order,

“after considering the bankruptcy judge’s proposed findings and conclusions and after reviewing de novo those matters to which any party has timely and specifically objected.”

2 To be clear, the Court possesses both federal question jurisdiction and diversity jurisdiction.

[Doc. 8].

The Court did not reach PHH’s assertion regarding federal question jurisdiction or diversity jurisdiction in its Order on Motion to Remand [Doc. 18], since it determined it possessed “related to” jurisdiction.

28 U.S.C. §157(c)(i);

Vela v. Enron Oil & Gas Co., No. 5:02-cv-37, 2007 U.S. Dist. LEXIS 38997 at *9 (S.D. Tex. 2007).

12.              Further, nothing would be gained by having a bankruptcy court preside over this lawsuit if a bankruptcy court did not possess any intimate familiarity with the case in which to justify its assertion of jurisdiction.

In re Doctors Hosp. 1997, L.P., 351 B.R. 813, 868 (Bankr. S.D. Tex. 2006).

As all of Burke’s prior litigation has been conducted in the federal district court, this Court is intimately familiar with Burke and her claims.

13.              In typical pro se style, Burke has attempted to forum shop her claims in Texas state courts, bankruptcy courts, and Minnesota federal courts (along with multiple attempted interventions in many other states). See PHH’s Second Motion to Declare Burke as a Vexatious Litigant, [Doc. 28].

Also important, as Burke demanded a jury trial, this would have required returning to the district court.

In re Align Strategic Partners, LLC, 2019 Bankr. LEXIS 1906 at *5.

Given Burke’s history of litigation, judicial resources strongly favored keeping the matter in the district court.

14.              No factor that the Court may consider weighed in favor of transfer of this case to bankruptcy court for partial consideration of the issues.

Now, transfer of the case is moot, given that Burke’s bankruptcy was dismissed within 30 days of its filing for non-compliance in failing to comply with the Court’s order on filing any bankruptcy documents (schedules, statement of financial affairs, income, etc.).

See In Re Joanna Burke, Case No. 24-30885 at Docket 5 and 24.

15.              As to Burke’s continued argument regarding the automatic stay, this has been previously briefed and the Court found no violation of the automatic stay.

[Doc. 18].

The bankruptcy stay only works to stop suits “against bankrupt debtors, not suits filed by bankrupt debtors.”

McMillian v. MBank Fort Worth, N.A., 4 F.3d 362, 366 (5th Cir. 1993) citing 11 U.S.C. § 362(a).

Nothing has changed since the Court correctly determined the suit was filed by, not against, Burke, and the automatic stay was not invoked.

Order denying Remand at P.6.

[Doc. 18].

“Against the debtor’ means that Congress intended only to stay suits filed against bankrupt debtors, not suits filed by bankrupt debtors.”

Stafford v. Wilmington Trust, 2023 U.S. Dist. LEXIS 16588, 2023 WL 1421564 (N.D. Tex. 2023);

relying on, McMillan, 4 F.3d at 366; (LIT: 1993)

see also In re Merrick, 175 B.R. 333, 336 (B.A.P. 9th Cir. 1994)

(“[T]he stay is inapplicable to post-petition defensive action in a prepetition suit brought by the debtor.”).

As the Court found, the automatic stay was simply not applicable to a lawsuit initiated by Burke and did not bar its removal to this court.

III.  CONCLUSION

For each of the reasons set out above, PHH Mortgage Corporation requests that the Court deny Plaintiff’s Motion to Dismiss for Lack of Jurisdiction. [Doc. 33], and further requests the Court grant such other relief, in law or in equity, to which it may be justly entitled.

Respectfully submitted,