United States Ex Rel. Yelverton v. Federal Insurance
831 F.3d 585
D.C. Cir.2016Background
- Debtor Stephen Yelverton filed bankruptcy (2009) and objected to a trustee-negotiated settlement that transferred his estate’s interest in Yelverton Farms to his sisters for $110,000; bankruptcy and appellate courts previously approved the settlement.
- Yelverton filed dozens of lawsuits and motions during the bankruptcy, prompting the district court to enter a pre-filing injunction (Aug. 6, 2014) barring him from filing any new civil action in that court without permission; this court previously upheld that injunction.
- After the injunction, Yelverton filed three adversary proceedings in bankruptcy court (two were filed before the injunction, one after): (1) breach of fiduciary duty against the trustee and surety (14‑10014); (2) RICO and stay-violation claims against his sisters (14‑10024); (3) fraud and breach claims against the trustee’s surety (14‑10043). All three were dismissed by the bankruptcy court.
- Yelverton appealed each dismissal to the district court without first obtaining permission under the pre‑filing injunction; the district court dismissed those appeals as violating the injunction.
- The D.C. Circuit reviewed whether the injunction clearly encompassed appeals from the bankruptcy court, and then (where possible) evaluated the merits of the underlying dismissals to avoid needless remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district-court pre‑filing injunction barred appeals from bankruptcy court | Yelverton argued the injunction did not apply to bankruptcy appeals, because he filed notices of appeal in bankruptcy court, not new civil complaints in the district court | Appellees argued appeals are civil cases docketed in district court (and bankruptcy courts are units of the district court), so the injunction covered them | The injunction, phrased as barring filing “any new civil action in this Court,” was not written with sufficient specificity to cover bankruptcy appeals or filings in bankruptcy court; injunction did not validly bar these appeals |
| Whether initial adversary filings in bankruptcy court (post‑injunction) counted as filing a new civil action “in this Court” | Yelverton: filings were in bankruptcy court and thus not within the injunction | Appellees: bankruptcy courts are units of the district court, so filing in bankruptcy court is filing in the district court | Court held the injunction’s language did not make that clear; it did not plainly prohibit filings in the bankruptcy court |
| Whether Yelverton stated a RICO or stay‑violation claim against his sisters (14‑10024) | Yelverton alleged eight predicate acts and actions violating the automatic stay | Sisters argued the allegations failed to plead predicate acts with Rule 9(b) particularity and did not show a stay violation | Dismissal affirmed: allegations did not sufficiently plead the required RICO predicates or a stay violation |
| Whether claims against the trustee’s surety (14‑10043) stated fraud or fiduciary‑duty claims | Yelverton alleged fraudulent concealment, misrepresentation, constructive fraud, and breach of fiduciary duty by the surety | Federal Insurance argued the complaint failed to allege requisite elements or any conduct by the surety giving rise to liability | Dismissal affirmed: complaint failed to plead elements of any fraud or fiduciary‑duty claim against the surety |
Key Cases Cited
- Int’l Ass’n of Machinists & Aerospace Workers, AFL-CIO v. E. Airlines, Inc., 849 F.2d 1481 (D.C. Cir. 1988) (standard to review injunction interpretation de novo)
- In re Powell, 851 F.2d 427 (D.C. Cir. 1988) (due‑process notice and opportunity concerns when injunction limits access to courts)
- Abbott Labs. v. TorPharm, Inc., 503 F.3d 1372 (Fed. Cir. 2007) (injunctions must give adequate notice of proscribed conduct)
- In re Baldwin-United Corp., 770 F.2d 328 (2d Cir. 1985) (ambiguities in injunctions resolved in favor of the enjoined)
- Jones v. Bernanke, 557 F.3d 670 (D.C. Cir. 2009) (appellate court may affirm on any ground supported by the record)
- ALCOM Am. Corp. v. Arab Banking Corp., 48 F.3d 539 (D.C. Cir. 1995) (de novo review of legal questions from bankruptcy court)
- W. Assocs. Ltd. P’ship v. Mkt. Square Assocs., 235 F.3d 629 (D.C. Cir. 2001) (elements of a RICO claim)
- Larson v. Northrop Corp., 21 F.3d 1164 (D.C. Cir. 1994) (elements required for fraudulent concealment)
- Nader v. Allegheny Airlines, Inc., 626 F.2d 1031 (D.C. Cir. 1980) (elements required for fraudulent misrepresentation)
- Himmelstein v. Comcast of the Dist., LLC, 908 F. Supp. 2d 49 (D.D.C. 2012) (discussion of constructive‑fraud pleading requirements)