Molekule met its burden on both counts of the complaint. However, because the Court does not have sufficient data to rule on Aura’s affirmative defense of illegality, the Court is unable to grant either motion for summary judgment. In light of the Court’s analysis of the relevant agreement between the parties and the Court’s own prior orders in the chapter 11 case of Molekule, the only issue remaining for trial is Aura’s affirmative defense of illegality. The Court will limit presentation at trial to evidence and legal argument relevant to that defense.

* * *

In count I, Molekule seeks specific performance of Aura’s obligations under the TCA. Citing section 2.04(ii) of the TCA, Molekule asks the Court to order Aura to deliver the “tangible embodiments” of Aura’s Background IP.

* * *

In count II, Molekule seeks injunctive relief aligned with the specific performance requested in count I. Molekule asks the Court to enjoin Aura from deleting or modifying its Background IP, including the AAP, that is stored with third parties including an entity called Atlassian Corporation. Molekule asks the Court to enjoin Aura from denying Molekule access to and the ability to transfer all source code and related documentation from any account in the name of Aura at Atlassian or elsewhere, so that it can be transferred into the source code escrow.

* * *

Aura did not challenge any aspect of Molekule’s assumption of the TCA, including the absence of defaults. The Court’s order confirming Molekule’s plan and the assumption of the TCA was long ago final. The parties are bound by that order, including the inherent finding that Molekule was not in default under the TCA at the time of assumption.

Molekule served discovery on Aura in the main bankruptcy case in connection with Molekule’s objection to Aura’s filed proof of claim. Aura asked for an extension of time to respond and Molekule agreed. However, Aura failed to respond to discovery by the agreed extended deadline. Molekule sought sanctions against Aura and the Court held several hearings. After multiple hearings, the Court awarded Molekule sanctions against Aura in the form of attorneys’ fees and expenses as well as disallowing Aura’s claim against the bankruptcy estate That order was not appealed and is final. As a result, Aura holds no allowed claim in Molekule’s chapter 11 case.

* * *

Aura argues that Molekule is asking the Court to enforce an illegal contract. Aura states that the relief requested in this adversary proceeding — in particular to give Molekule access to the source code for the AAP — is contrary to the law of Israel and would expose Aura to penalties including, potentially, incarceration of representatives of Aura.

On April 9, 2024, the Court held a hearing on the MTD. The Court found that the nature of the filing, the apparent strategic use of the bankruptcy process, Debtor’s complete lack of respect for the Court process, and Debtor’s substantial assets, significantly outweighing any disclosed claims, warranted dismissal of this case with prejudice for two years.

By order dated April 19, 2024, the Court dismissed Debtor’s case prior to any assets being liquidated or any distributions being made, and further held that the Trustee’s professionals may file a motion seeking payment from Debtor for compensation of any fees and out of pocket expenses incurred in this chapter 7 case.

* * *

Being fully aware of the tasks undertaken and the effort expended, the Court does find it appropriate to reduce the overall requested fees by 15%, primarily in the hours expended on responding to the Emergency Motion and for the opposition to the MTD, to an award of $51,578.

The Firm also seeks actual and necessary expenses of $270.44, which the Court finds reasonable and necessary.

Thus, of the total request of $64,742.94, the Court awards $51,848.44.

The Firm’s efforts in this matter are commendable and were directly incurred from Debtor’s bad faith filing. Awarding the fees requested (albeit reduced as set forth herein) and reimbursement of expenses as requested in the Fee Application is based on this Court’s inherent powers, Rule 9011, Section 330, and balancing the interests of justice between Debtor’s bad-faith filing with the good-faith work on behalf of the Trustee representing the rights of creditors.

* * *

ORDERED, that the award hereunder survives the dismissal of this case as a personal liability of Debtor; and it is further

ORDERED, that the Firm shall have the rights of any creditor under non-bankruptcy law.

The panel reversed the district court’s dismissal, as barred by the Rooker-Feldman doctrine, of attorney Jeffrey Cogan’s complaint collaterally challenging a civil judgment entered against him in Arizona state court.

Cogan filed this complaint to collaterally challenge an Arizona state court malicious prosecution action brought against him by bankruptcy debtor Arnaldo Trabucco. Cogan sought a declaration that any claim for malicious prosecution arising solely from conduct occurring in a federal bankruptcy proceeding was exclusively within the jurisdiction of the federal courts and that, as a result, any judgment in the Arizona malicious prosecution action was void. Cogan and Trabuco ultimately reached a settlement of the malicious prosecution action.

The panel held this case is not moot because (1) it fits within the established line of cases holding that a partial settlement agreement specifying the ultimate form of redress that would result from success in litigation does not moot that litigation, and (2) the settlement agreement has not fully resolved the parties’ underlying substantive liabilities in a way that precludes the Court from granting any effectual relief.

The panel held that the district court erred in dismissing Cogan’s complaint under the Rooker-Feldman doctrine. Because Trabucco’s malicious prosecution claim is completely preempted by federal law and is within the federal courts’ exclusive jurisdiction, it is subject to collateral attack in the federal courts and Rooker-Feldman therefore does not apply.

Concurring, Judge M. Smith wrote separately to criticize some of the Court’s Rooker-Feldman precedents, and to highlight an unresolved circuit split on whether attorneys who allegedly abuse the federal bankruptcy process may be held accountable in state court.

Porretto primarily focuses her jurisdictional arguments on 28 U.S.C. § 1334(e)(1), which grants “[t]he district court in which a case under title 11 is commenced or is pending . . . exclusive jurisdiction . . . of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate.” Porretto interprets this provision broadly, asserting that when a debtor is in a bankruptcy proceeding, the district court has exclusive jurisdiction over all claims related to her property, including property that has been abandoned by the trustee and is no longer part of the bankruptcy estate.

Contrary to Porretto’s interpretation, courts addressing § 1334(e)(1)’s scope have consistently held that § 1334(e)(1) grants federal courts limited, exclusive in rem jurisdiction that cannot be exerted over abandoned property.

* * *

Though none of these authorities are binding on this court, taken together, they do indicate a consensus among federal courts on this issue.

* * *

In other words, the function of § 1334(e)(1)—and its language concerning property “of the debtor as of the commencement of such case”—is to facilitate the bankruptcy estate’s administration of the debtor’s property, and not, as Porretto suggests, for the bankruptcy court to exercise jurisdiction over the debtor’s property in perpetuity.

The chapter 7 debtor, Carl Dorvil, has filed a motion for summary judgment (“MSJ”) arguing that the judgment creditor has presented no summary judgment evidence that might entitle him to an exception from discharge. The court held a hearing on the MSJ on August 6, 2024, which revealed troubling information (undisputed by the judgment creditor) regarding the judgment creditor’s postpetition litigation tactics pursued in state court, without the bankruptcy court’s knowledge, much less permission.

As further described below, prepetition (in fact, just 10 days before the debtor filed bankruptcy), the judgment creditor obtained a default judgment against the debtor after a very short hearing in state court (less than one hour in duration; the transcript was 22 pages). The state court judgment, which assessed actual damages against the debtor of $990,000, plus interest, was only one-and-a-half pages in length. It had no findings of fact or conclusions of law or any indication that the state court judge heard any evidence (or assessed damages on account) of fraud. The judgment creditor had asserted several causes of action against the debtor—the primary one being breach of contract. After the chapter 7 debtor filed bankruptcy, the judgment creditor timely filed this § 523 Adversary Proceeding (on June 30, 2023). Thereafter, things took a troubling turn. After the debtor’s counsel filed the pending MSJ (on April 26, 2024), arguing that there were no fraud findings in the state court judgment to which collateral estoppel might apply, and that there was no other summary judgment evidence of fraud, the judgment creditor went back to the state court seeking a reinstatement of an earlier filed appeal of the state court judgment. Meanwhile, the judgment creditor asked debtor’s counsel for an extension of its time to respond to the MSJ (which debtor’s counsel granted). Four days before its extended deadline to respond to the debtor’s MSJ in this Adversary Proceeding (on June 3, 2024), the judgment creditor presented proposed findings of fact and conclusions of law to the state court that contained fraud findings and conclusions. The state court judge signed these (apparently without any notice to the debtor’s bankruptcy counsel), even though it had been 14 months since the short trial in the state court. Then on July 7, 2024, the judgment creditor filed his response to the MSJ, attaching the newly obtained findings of fact and conclusions of law, arguing that they should be given collateral estoppel effect in this § 523 Adversary Proceeding. Not surprisingly, the debtor replied that these surreptitiously obtained postpetition fraud findings should be stricken from the summary judgment record as void—as they were obtained in violation of the debtor’s discharge—and further argued that there is nothing else in the summary judgment record that supports fraud in this § 523 Adversary Proceeding.

According to the judgment creditor’s lawyers, they all thought this was perfectly permissible because the bankruptcy court had entered a general Order of Discharge in the chapter 7 case by this time (back in July 2023) which was, of course, subject to whatever order the bankruptcy court entered in this Adversary Proceeding. The judgment creditor argued that there could no longer be an automatic stay in place protecting the debtor, since a discharge had been generally granted. See § 362(c)(2)(C). There seems to be great confusion here regarding the automatic stay versus the discharge order—and what might have prevented what and when.

This court is granting the debtor’s motion to strike the postpetition state court findings from the summary judgment record, as they are void under § 524(a). The court also grants the debtor-defendant’s MSJ. Since the judgment creditor has presented no other credible summary judgment evidence of fraud, the debt owed to it is hereby declared discharged. This court has sometimes given collateral estoppel effect to a state court’s fraud findings, in connection with a § 523(a) adversary proceeding.

This court also has, on occasion, granted parties permission to go back to a state court to finish litigating a fraud suit that was already well underway prepetition, and then bring back to the bankruptcy court whatever judgment is rendered, to see if it will have estoppel effect, one way or another, in a § 523(a) adversary proceeding. But the procedures undertaken by the judgment creditor here were wholly improper. This should serve as cautionary tale.

To put it succinctly, Bourff offers no plausible explanation how he is the Debtors’ successor, and the Court cannot see any way that he could be.

Bourff also cannot enforce the automatic stay. As relevant, section 362 of the Bankruptcy Code states that “an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.” 11 U.S.C. § 362(k). Courts in this Circuit have generally limited standing under section 362(k) to individual debtors, the bankruptcy trustee, and individual creditors. A creditor seeking relief under this section “must allege an injury in his capacity as a creditor of the estate rather than in some other capacity.” Bourff has failed to do so, and he is not a creditor—he has not demonstrated that he has any prepetition claim against the Debtors, 11 U.S.C. § 101(10)(a), or otherwise shown that he is a statutory “creditor,” see 11 U.S.C. § 101(10)(b)–(c). Since Bourff is not a creditor of the Debtors’ estate, he cannot enforce the automatic stay in these Chapter 11 Cases.

Bourff is a defendant in a state-court action to quiet title to non-estate property. He has not demonstrated that he has any direct financial stake in these Chapter 11 Cases, or even an indirect one. Without a direct financial stake, Bourff is not a party in interest and has no right to be heard.

Van Deelen asks that we take judicial notice of material that was not before the bankruptcy and district courts. Specifically, Van Deelen asks us to consider his suit against Judge Jones in the United States District Court for the Southern District of Texas, Van Deelen v. Jones, the press coverage about Judge Jones’s relationship with Elizabeth Freeman; and our circuit’s complaint against Judge Jones for misconduct. Because we “may not consider new evidence furnished for the first time on appeal,” we decline to take judicial notice of this new material.

Instead, we remand to the district court to remand to the bankruptcy court to make additional findings of fact and conclusions of law on Van Deelen’s recusal motion. Because our remand here is limited, as it is on the question of Van Deelen’s consent, “[w]e retain jurisdiction of the appeal.”

This case involves two related appeals. In the first, the Law Offices of Jaenam Coe PC (“Coe1”), the law firm for the now dismissed chapter 112 debtor appeals the bankruptcy court’s order awarding it $5,000 in attorney’s fees and costs and directing it to remit the balance of its retainer funds to the former chapter 11 trustee. Because the fee award was not an abuse of discretion, we AFFIRM.

In the second, Coe appeals the bankruptcy court’s order sanctioning the debtor and the debtor’s principal. However, Coe is appearing solely on its own behalf, Coe is not representing the debtor in these appeals, and Coe was not sanctioned. Because Coe cannot establish standing to appeal the sanctions order we DISMISS this appeal.

Chapter 111 debtors Silver State Broadcasting, LLC (“Silver State”), Golden State Broadcasting, LLC (“Golden State”), and Major Market Radio, LLC (“Major Market”) (collectively, “Debtors”) appeal the bankruptcy court’s order approving the sale of the Debtors’ radio stations and associated equipment. They contend that the court failed to first determine that the equipment was estate property. They also argue that the sale included a compromise that required a separate motion and that one of the buyers was not a good-faith purchaser.

Section 363(m) precludes the Debtors from challenging the validity of the sale. The Debtors did not seek a stay of the sale order, the sale has closed, the bankruptcy court found that the buyers were good-faith purchasers, and that finding was not clearly erroneous.

Even if the Debtors sought relief other than invalidation of the sale, the bankruptcy court did not abuse its discretion in approving the sale. We AFFIRM.

First, the bankruptcy court found the application moot insofar as the dismissal of the bankruptcy case resulted in the automatic dissolution of the Official Committee. As the Court previously held, “automatic dissolution” does not occur immediately upon dismissal.

Second, the bankruptcy court suggested that McCarter & English’s proposed hourly rates were excessive as compared to “rates customarily charged by experienced counsel practicing before this Court.” The bankruptcy court’s oral decision and written order omit any indication of what it believed a fair customary rate to be. This inhibits the Court’s review of the decision. Moreover, the bankruptcy court found the proposed hourly rates unreasonable in part because of the “size and relative lack of complexity” of the case. To be sure, the case was resolved in short order—but that was the result of the bankruptcy court’s own decision to terminate the case via a summary dismissal. Because it is unclear whether and to what degree the bankruptcy court’s substantive error influenced its perception of the case—and, thereby, its view of the reasonableness of McCarter & English’s proposed hourly rates—remand is warranted to allow the bankruptcy court to assess the application in light of the further proceedings that will be undertaken.

As noted in Part V.A of this Opinion, the Debtor has admitted that the child support payments of $1,430.00 per month, and the spousal support payments of $3,300.00 per month, are “in the nature of alimony, maintenance, or support” and the Court finds this to be correct for the reasons stated below. But the Debtor argues that the gross spousal obligation of $1,390.65 is not “in the nature of alimony, maintenance or support.” The Court disagrees.

* * *

The property awarded to the Plaintiff in paragraph 2 above is the basis for the “Property Award” debt amount listed in the Plaintiff’s POC. Because the “Property Award” is not specifically labeled as support in the JOD, the Court must make an independent factual inquiry to determine if the State Court intended for the property in paragraph 2 to be a true property settlement, or alternatively, whether the State Court intended it to be “in the nature of alimony maintenance or support” of the Plaintiff and the minor children.

* * *

Despite missing some of the indicia of support listed in Sorah, there is sufficient other indicia of support in the JOD and the State Court Opinion to establish that the State Court intended all of these obligations designated as a “Property Award” to be “in the nature of alimony, maintenance, or support.”

* * *

There were so few marital assets remaining due to the Debtor’s wrongful conduct, that the State Court even found that it was necessary to invade the Debtor’s separate property and award it to the Plaintiff, in order to provide necessary maintenance and support for the Plaintiff and the minor children. The Debtor’s separate property included a $75,407.40 inheritance, in the form of a life insurance benefit that the Debtor received while the divorce case was pending, then dissipated, and then only later disclosed. The State Court explained that it had the statutory authority to invade the separate property of the Debtor, because it was necessary to do so to provide support for the Plaintiff and the minor children.

At issue in this case is whether Jackson Walker, LLP (“Jackson Walker”) and its counsel Jason L. Boland (“Mr. Boland”) of Norton Rose Fulbright US LLP, Russell Hardin, Jr. (“Mr. Hardin”) of Russell Hardin & Associates, and former United States Bankruptcy Judge David R. Jones (“Mr. Jones”) and his counsel Benjamin I. Finestone (“Mr. Finestone”) of Quinn Emanuel Urquhart & Sullivan, LLP are in violation of the The Guide to Judiciary Policy Volume 20, Chapter 8 (the “Judiciary Regulations”) and this Court’s Order with respect to a recent interview Mr. Jones gave to Jackson Walker and its attorneys, and whether or not they should be held in civil contempt or sanctioned pursuant to this Court’s inherent authority.

Following the issuance of this Court’s show cause order for Jackson Walker, Mr. Boland, Mr. Hardin, Mr. Jones and Mr. Finestone, this Court held a hearing on August 7, 2024, and for the reasons stated herein, summarizes its findings as follows: (1) the Court finds that no party is in contempt, (2) the Court narrowly finds that Jackson Walker, Mr. Boland, Mr. Hardin, and Mr. Finestone, have not acted in bad faith and will not be sanctioned pursuant to this Court’s inherent authority, and (3) the Court finds that Mr. Jones has acted in bad faith, and will be ordered, as a sanction, to complete 7.5 hours of ethics related continuing legal education approved by the State Bar of Texas.

* * *

Notwithstanding the clear mandate that the Judiciary Regulations imposed on Mr. Jones, he unilaterally decided in flagrant contravention of his obligations to reach out to Jackson Walker in an attempt to persuade them to not follow through on taking his deposition. Mr. Jones did so without notifying any other party in interest or this Court that it was his intention to do so. Mr. Jones, frankly, knew better. Mr. Jones knew what his obligations were and devised a contrived reading of the Judiciary Regulations to try to justify his own personal goals in avoiding the need to provide sworn testimony in this proceeding. Mr. Jones would rather ask for forgiveness than permission from this Court, something that this Court does not take well even on a normal day, much less in a proceeding as sensitive as this one. As such, this Court finds that Mr. Jones has, in bad faith, flouted his obligations under the Judiciary Regulations in this proceeding in an attempt to further his own goals.

Accordingly, as a sanction for bad faith pursuant to this Court’s inherent authority, no later than September 16, 2024, David R. Jones must complete seven and one half (7.5) hours of ethics related continuing legal education approved by the State Bar of Texas and file a certificate of compliance with the Clerk of Court when said ethics training is complete.

* * *

With this said, the Court simultaneously does not take well and strongly admonishes Jackson Walker, Mr. Boland, Mr. Hardin, and Mr. Finestone’s fast and loose approach to participating in an interview that touches upon the same topics and subject matter that this Court is currently has under advisement. With the amount of legal talent involved in this case, and the sensitive nature of this proceeding, it is incredulous to this Court that well-seasoned attorneys would play with fire like this and proceed on such a legally dubious course of action. Notwithstanding decades of experience between these attorneys, they decided to play fast and loose with the Judiciary Regulations and this Court’s authority. This Court expects a more conservative and cautious approach from all attorneys involved and is deeply disappointed. These parties, like Mr. Jones, also presented arguments concerning what constitutes an interview or a legal proceeding under the Judiciary Regulations,77 and as stated supra, the Court finds these arguments to be extremely contrived at best. Further actions that undermine and circumvent this Court’s authority as determining officer will not be tolerated and any further incursion on this Court’s authority as determining officer will result in severe sanctions. However, having holistically analyzed all of the evidence received at the hearing, the arguments of counsel, the applicable law, and the Judiciary Regulations, the Court narrowly finds that Jackson Walker, Mr. Boland, Mr. Hardin and Mr. Finestone’s conduct did not amount to bad faith.

Debtor Noah Sapir (the “Debtor”) seeks relief from the automatic stay to pursue his appeal of a New York state trial court judgment against him in favor of the Bechem Creditors, in an amount over $6.8 million. The Bechem Creditors assert the request for relief from stay should be denied because the Debtor has failed to show he is more likely than not to succeed on appeal, which is a necessary requirement for stay relief to prosecute the appeal; and argue further that the record demonstrates the appeal has no likelihood of success. The Debtor counters that he likely will succeed in the appeal but need only show a colorable prospect of success on appeal to obtain stay relief.

Although both parties rely on Chizzali v. Gindi (In re Gindi), 642 F.3d 865 (10th Cir. 2011),2 for the reasons stated below this Court distinguishes Gindi on the basis that Gindi applies only to a creditor’s motion for relief from the stay to prosecute an appeal, not as here to a debtor’s stay motion. The Court concludes after considering all relevant factors that it is appropriate to grant stay relief to permit the Debtor to pursue his state court appeal.

As stated above, it is the intent at the time of the transfer of the property, not stated at some later time, that determines whether the transaction can be deemed a resulting trust. Here, Erwin admitted that at the time the funds were deposited in the WBAT account there was no discussion between him and his spouse or the Raymond James employee as to whether Erwin was to be the sole beneficial owner of the funds. In fact, the circumstances surrounding the deposit do not support Erwin’s contention that he did not intend WBAT to have any beneficial interest in the funds.

* * *

It appears to the Court that Erwin’s failure to deposit the funds in a separate personal account at Raymond James with which he was familiar and then waiting two years to reclaim the funds is plausibly indicative of Erwin having no initial intent to create a resulting trust but rather to simply use the WBAT account for convenience purposes as his own “piggy bank” when in fact he had no right to do so. In doing so Erwin, unfortunately, placed himself in jeopardy.

Under the law, determining intent is a question of fact for the Court. The problem for Erwin is the extraordinary, onerous burden of proof cast upon one asserting the existence of a resulting trust: as stated above, it is Erwin’s burden to prove by evidence that is clear, unequivocal, and decisive beyond a reasonable doubt; and if doubtful, or susceptible to other reasonable interpretation, the evidence is insufficient to show a resulting trust. In re SemCrude L.P., 418 B.R. at 103; Davenport, 268 B.R. at 163. Erwin cannot alleviate himself of his ultimate burden of proof by merely presenting some evidence (here only his self-serving testimony) in support of his claim. It is the Court’s opinion that the proof offered by Erwin in this case does not meet the required standard to establish a resulting trust in his favor. Accordingly, The Court finds that the $318,261.05 being held by the Trustee from Wright Brothers Aircraft Title, Inc.’s account #9741 with Raymond James and Associates Inc. is property of the Bankruptcy Estate of Wright Brothers Aircraft Title, Inc.