• Report: #757437

Complaint Review: Malcolm Hampton and 5-starinvestments llc

  • Submitted: Thu, July 28, 2011
  • Updated: Tue, March 27, 2012

  • Reported By: Jose — fremont California USA
Malcolm Hampton and 5-starinvestments llc
102 starr court lincoln, California United States of America

Malcolm Hampton and 5-starinvestments llc Malcolm Hampton lincoln, California

*Author of original report: Malcolm Hampton, Ripoff 7,495.80

*Author of original report: Malcolm D. Hampton Lost Small Claim for $ 7,495.80 and he still not pay,

*General Comment: truth & karma

*REBUTTAL Owner of company: Jose pay your bills

*Author of original report: malcolm hampton is liar

*REBUTTAL Owner of company: You can not trust Jose

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malcolm hampton do not pay rent for 3 months and live in my rental home for free, i gave him eviction notice but he still do not want to leave, do not trust him.

This report was posted on Ripoff Report on 07/28/2011 12:51 AM and is a permanent record located here: http://www.ripoffreport.com/r/Malcolm-Hampton-and-5-starinvestments-llc/lincoln-California-95648/Malcolm-Hampton-and-5-starinvestments-llc-Malcolm-Hampton-lincoln-California-757437. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.

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#1 Author of original report

Malcolm Hampton, Ripoff 7,495.80

AUTHOR: jcastanedas - (USA)

The Owner of 5 Star Investments LLC, Malcolm D. Hampton lived in my Rental home 102 Starr Court in Lincoln, CA, he was going to buy my house in short sale for 280,000 so I had to stop paying my mortgage so the bank approved the short sale, the bank approved  the short sale and he decided not to buy the property by disappearing when the deal was ready for signing and pay the money, instead he lived in my property for 5 months without paying rent and I wanted to show my property to other buyers but he did not let me show it and he made me go to foreclosure, so he could buy the property in foreclosure, He bought the property for foreclosure for 351,000, he lost 71,000 and that is not a good Investment, right?. I went to Superior Court of California, County of Placer to do Small Claim and I won the case for 5 months he lived in my property without paying rent for 7,495.80 ( Case # RSC-17609 ), Now I hired a Collection Agency and they made Investigation on him and they found out The Owner of 5 Star Investments LLC, Malcolm D. Hampton hided all his assets by putting them on his Company name so not body can collect Judgments on his name,

Be very careful to do business with The Owner of 5 Star Investments LLC, Malcolm D. Hampton may rip off  you too.

I declare under penalty of perjury under the laws of The State of California that the above is true and correct.      
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#2 Author of original report

Malcolm D. Hampton Lost Small Claim for $ 7,495.80 and he still not pay,

AUTHOR: jcastanedas - (USA)

Malcolm D Hampton Lost Small Claim for $ 7,495.80 (notice of entry of judgment in Lincoln, CA) he still do not want to pay for living 5 Month in my rental property, He still living in the Foreclosure Property waiting for the bank to send the police to kick him out. I noticed, he closed all his bank accounts on his name to prevent pay lawsuits. Be very careful to do bussiness with this person and be very careful to do bussiness with his son too, who help him on his bussiness Jr. Malcolm Hampton.   
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#3 General Comment

truth & karma

AUTHOR: Selina Watts - (United States of America)

Accidental scam

Little League officials meant well, but their raffle was a crime

AAComments () By Holly Mullen Thursday, Oct 24 1996

Joanne Groshardt, a technical writer in Dallas, recently decided to find out who won the grand prize in a charity raffle sponsored by Little League Baseball of Dallas. Groshardt, who had bought two chances for $2, was none too happy about what she found.

The grand prize advertised on the raffle tickets last May was a spanking-new 1996 Ford Explorer, valued at $32,000. Trouble is, nobody won the much-in-demand sport utility vehicle. In fact, Little League officials never even had the vehicle in their possession.

"It wasn't like I was hung up on who won the car," says Groshardt, who bought her tickets from a co-worker whose young son plays Little League baseball. "I'm sure I'm like most people:You buy a couple of tickets for a good cause and you never expect to win; you stash your ticket stub somewhere and you forget about it. But we were just talking at work a few weeks ago and the subject came up. We just kind of wondered who ended up winning the car."

The Little League mom says she called the office of Little League Baseball of Dallas and was told the Explorer was never awarded because not enough tickets were sold.

"When I found out that the car had never been awarded--that they had never even had the car to begin with--I started thinking about how easy it would be to do something like this. No one would ever know," Groshardt says.

Representatives of Little League Baseball of Dallas--the local, nonprofit chapter of the international organization that has run the Little League program for more than 60 years--vow there was never any intent to misrepresent last spring's raffle.

"Let me cut to the nut," says Malcolm Hampton, a Little League dad and longtime volunteer for the group. "We're a worldwide program with a reputation for being honest and for helping kids. The last thing we want is to have a pimple on our butt because of some simple misunderstanding."

Nevertheless, according to the 1990 Charitable Raffle Enabling Act, the organization--whether knowingly or not--did skirt state law. Among other things, the statute requires a charity holding a raffle to have each prize in its possession, or to post a bond for the full amount of the value of the prize with the county clerk of the county where the drawing is being held.

A raffle that fails to follow the 1990 law is considered unauthorized, says Sonya Sanchez, a spokeswoman for the state attorney general's office. Conducting an unauthorized raffle is a third-degree felony. Participating in one is a class-C misdemeanor.

The misunderstanding about the raffle, Hampton says, happened like this: Early last spring, as the group mulled the possibilities for a big fund raiser, the idea of sponsoring a raffle surfaced. Hampton explains that the $50 fee each boy and girl pays to sign up on a team hardly covers equipment costs, not to mention the cost of building ball fields and maintaining them.

The $1-a-chance raffle seemed perfect. Volunteer parents scoured the city for prize donors, and numerous merchants coughed up contributions--round-trip tickets on Southwest Airlines, Texas Rangers tickets, certificates to clothing stores, restaurant gift certificates, bowling passes.

But the top prize was the new Explorer. Hampton says an auto leasing company agreed to give Little League the vehicle for half its $32,000 cost. If Little Leaguers raised the first $16,000, he company would cover the rest.

What sounded fairly easy turned into a bit of a challenge. "We gave the tickets to the coaches and they were to ask each kid to sell 20 to 40 tickets," Hampton says. "Quite a few of the coaches distributed them to their teams. But quite a few came back and said they wouldn't do it. They said, 'There's nothing that says I have to sell these things, and I'm not going to do it.' "Oh, jiminy, I thought. How are we going to sell all these?"
They didn't. Although Little League volunteers had ordered 50,000 printed
tickets, by the time the May drawing rolled around, only 10,000 chances had been sold. They fell $6,000 short of the price of the Ford Explorer, so league officials never received the vehicle, Hampton says.

The organization did, however, raffle off hundreds of remaining prizes. "The joke is that at least 80 percent of those people who won haven't picked up their stuff yet," Hampton says with a little scoff.

Little League officials vow to give refunds of the price of raffle tickets to anyone who wants them. The money is in escrow, and people need only present their ticket stub for an immediate refund, Hampton says. If people have misplaced their receipt, they need only show identification for a refund; their names and addresses are on the backs of the raffle tickets.

While Little League promises to do right by the ticket holders, even Hampton pauses to marvel at how easy it would be to pull off a raffle scam--if an organization really wanted to. "It only cost us $450 to run
off 50,000 tickets," he says. "I guess if it was your intention to rip someone off, it wouldn't be difficult."

Although Little League volunteers assured Groshardt she would get her $2
back, she says she was concerned enough about the appearance of impropriety to write a letter to the Texas attorney general's consumer protection division.

Sanchez says Groshardt's complaint is the only one on file with the
attorney general regarding Little League Baseball of Dallas. "It doesn't
sound like there was a deliberate attempt to mislead," she says.
The fine print on the tickets for last spring's raffle stated that Little League had the right to cancel the drawing at any time, and that all proceeds would benefit the organization.

"Here's the sweet part of the story,"Hampton says. "Next spring, we're going to put all the unclaimed tickets back in the hat again. And we'll sell enough tickets this time. We will give that car away next year. We sure will.


(Chapter 7)

Alleged Debtor.



This is an involuntary petition prosecuted by an attorney, Douglas J. Brooks, who

purported to act on behalf of three creditors of TRED Holdings, L.P. Mr. Brooks filed

the involuntary petition against TRED so that two of the petitioning creditors,

Tonya Hampton and Branden Maner, L.L.C., would gain an advantage against TRED in certain state

court litigation. TRED has requested actual and punitive damages against Mr. Brooks

and two of the petitioning creditors, Tonya Hampton and Branden Maner,

pursuant to 11 U.S.C. 303(i). TRED dropped its request for damages against the third

petitioning creditor, Anna J. Molina, based on her testimony at the damages hearing. The following

constitutes the Courts findings of fact and conclusions of law.




The Litigation Prior to the Involuntary Petition


is in the business of lending money to people who want to purchase


Jeffrey R. Burrell, one of the owners of TRED, testified that TRED has not


any new loans since January 2008. TRED has serviced its existing portfolio of


for the past several years as well as bought and sold its own properties.1

1 In October 2009, Mr.

Burrell entered into an agreed order with the Texas Department of Savings and


Lending whereby he agreed that he would not engage in any activity for which a



is required unless and until he is sponsored by a licensed mortgage broker.

Under this agreement,

TRED may

not finance mortgages but is permitted to buy and sell homes for itself.



dispute that led to this involuntary bankruptcy case arises from a loan TRED


to Branden Maner in 2006. In particular, on or about September 22, 2006,



executed and delivered to TRED a promissory note in the original principal


of $435,000. To secure payment of the Note, Branden Maner executed and


to TRED a deed of trust for the real property generally described as 4865


Road 2714, Caddo Mills, Texas. In addition, Malcolm Hampton Jr., who is the managing member of Branden Maner, Malcolm Hampton Sr., and Tonya Hampton guaranteed the note.

Branden Maner failed to perform its obligations under the note. As a result,
TRED purchased the property at a foreclosure auction on November 6, 2007. Malcolm Hampton Jr. was living with his wife, Tonya, and his father on the Caddo Mills property at the time of the foreclosure sale. TRED thereafter made demand upon the Hampton family to vacate the property. They refused.

Neither Branden Maner nor the Hampton family made any payments to TRED after the foreclosure sale. On or about January 20, 2009, TRED brought a forcible detainer lawsuit against the Hampton family in a county court in Hunt County, Texas.

Malcolm Hampton Sr. obtained a stay of that action by filing a bankruptcy petition in this Court on March 19, 2009. Malcolm Hampton Sr. maintained that since he and his family occupied the property, and he had sought bankruptcy protection in this Court, the county court could not proceed with the forcible detainer lawsuit until TRED obtained relief from
the automatic stay.

While Malcolm Hampton Sr.s bankruptcy case was pending, in or around
January 2009, Malcolm Hampton Jr. and his wife filed a state district court lawsuit i Hunt County, Texas. They alleged, among other things, a claim against TRED for wrongful foreclosure. The Hunt County district court dismissed their suit for want of prosecution on November 30, 2009.

On October 19, 2009, TRED filed a motion in Malcolm Hampton Sr.s
bankruptcy case for relief from the automatic stay with respect to the real property located at 4865 County Road 2714, Caddo Mills, Texas. TRED sought relief from the stay to the extent necessary to proceed with its forcible detainer action and, if it prevailed in that action, to evict Malcolm Hampton Sr. and his family from the Caddo Mills property.

Malcolm Hampton Sr. opposed the motion, arguing that the foreclosure sale was wrongful. He asserted in his opposition to the motion that he was preparing an adversary complaint against TRED.

On December 2, 2009 the day TREDs motion for relief was scheduled for a final hearing Malcolm Hampton Sr. filed his adversary complaint against TRED.

However, the parties appeared at the final hearing on TREDs motion for relief from the stay and announced that they had reached an agreement. On December 17, 2009, the Court entered an agreed order lifting the stay and allowing TREDs forcible detainer action to proceed in county court. On January 8, 2010, the Court entered an agreed order dismissing Mr. Hamptons adversary complaint with prejudice.

On January 28, 2010, TRED obtained a judgment for possession of the Caddo Mills property. Branden Maner and the Hampton family appealed the judgment and requested a stay pending appeal. On February 9, 2010, the state appellate court denied their motion for a stay pending appeal.

On February 10, 2010, Branden Maner filed a lawsuit in the 191st
District Court of Dallas County, Texas, and obtained a temporary restraining order restraining TRED from serving the writ of possession. The district court scheduled a temporary injunction hearing for 9:00 a.m. on February 26, 2010. According to Mr. Brooks, on the eve of the scheduled
hearing, he had a discussion with Malcolm Hampton Jr. and Gale Corbitt
Hutchinson, who Mr. Brooks employed as a paralegal on a case-by-case basis, regarding whether to file an involuntary petition against TRED in order to obtain another stay of the execution of the writ of possession. At or around this time, Malcolm Hampton Jr. contacted Anna Molina and invited her to join in the bankruptcy case as a petitioning creditor.
Anna Molina declined.

B.The Involuntary Petition Between 1:25 and 1:32 a.m. on February 26, 2010, Mr. Brooks electronic login and password were used to file two involuntary petitions against TRED. 2 The petitions were filed in the United States Bankruptcy Court for the Eastern District of Texas, Lufkin Division.

The Court closed one of the cases as a duplicate. The Court transferred the
other case to the Sherman Division and assigned it Case No. 10-40749.
The involuntary petition lists three petitioning creditors: Branden Maner, Anna J. Molina, and Tonya Hampton. The involuntary petition states that each creditors claim is based on fraud and breach of contract. The stated amount of Branden Maners claim is $542,972.32, the stated amount of Tonya Hamptons claim is also $542,972.30, and the 2 This Court issued an electronic login and password to Mr. Brooks more than a year ago. Mr. Brooks used that electronic login to file documents in connection with voluntary cases filed by Fat Joes Pizza Pasta Bar, Inc., Case No. 09-40726; Cancer Care Resource Management, Case No. 09-41996; and Gale C.
Hutchinson Sr., Case No. 10-40080. In December 2009, Mr. Brooks also used his electronic login and password to file an involuntary petition against Frisco World Cup Main, L.L.C., Case No. 09-43570. The Court dismissed all of these cases for a variety of reasons.

stated amount of Anna Molinas claim is $329,754. Mr. Brooks knew that none of these individuals or entities held undisputed claims against TRED as required for them to sustain an involuntary petition pursuant to 303(b) of the Bankruptcy Code.

Mr. Brooks orally announced the filing of the involuntary petition at the
injunction hearing on the morning that the involuntary petition was filed. He also informed the state district court that Malcolm Hampton Jr., the managing member of Branden Maner, was filing a suggestion of bankruptcy relating to the involuntary petition.

As a result, the state district court did not go forward with the injunction
hearing. In addition, Mr. Brooks office faxed a notice of the involuntary filing to TREDs primary lender, Texas Capital Bank, on the date of the involuntary bankruptcy filing.

3 TRED promptly requested an emergency hearing in this Court on the involuntary petition. The Court granted the request over the objection of the petitioning creditors, which Mr. Brooks filed electronically on March 5, 2009. The Court scheduled the emergency hearing for March 11, 2010.
The Hunt County Constable served the writ for forcible entry and detainer on the Hamptons on March 8, 2010. The next day, on March 9, 2010, Branden Maner filed a Chapter 7 petition in the United States Bankruptcy Court for the Northern District of Texas, Case No. 10-41667. On the same day, Brandon Maner requested an emergency hearing, seeking enforcement of the automatic stay against TRED. The bankruptcy court
denied Branden Maners request in an order entered on March 11, 2010.4
3 An individual or entity using the name Malcolm Hampton also posted comments regarding the involuntary petition at www.tredholdingsfraud.com (last visited May 12, 2010).

4 After the bankruptcy court refused to issue an order staying the writ for forcible entry and detainer, Branden Maner failed to file bankruptcy schedules and other required documents. The bankruptcy court dismissed Branden Maners case on April 17, 2010.

At the emergency hearing in this Court on March 11, 2010, Mr. Brooks
announced that he was appearing for the petitioning creditors. None of the petitioning creditors attended the hearing. Mr. Brooks announced to the Court that Branden Maners principal, Malcolm Hampton Jr., and Tonya Hampton were moving out of the Caddo Mills property that morning, and Anna Molina had a personal emergency that prevented her from attending the hearing. According to Mr. Brooks testimony at a subsequent
hearing, he made the representation regarding Anna Molinas scheduling
conflict based on a representation made to him by Malcolm Hampton Jr. Mr. Brooks did not advise the Court that a paralegal had mistakenly filed the involuntary petition nor did Mr. Brooks advise the Court that his clients had not authorized the filing.

At the conclusion of the hearing on March 11, 2010, the Court granted TREDs motion to dismiss the involuntary petition based on the failure of the petitioning creditors to present evidence in support of the petition. The Court declined to address TREDs request for an award of damages in light of Mr. Brooks complete lack of preparation for the hearing. The Court scheduled TREDs request for an award of costs, actual damages,
punitive damages, and attorneys fees under 303(i) of the Code for an evidentiary hearing on April 12, 2010. At that time, Mr. Brooks advised the Court that he is not a bankruptcy attorney and would be withdrawing from his representation of the petitioning creditors prior to the damages hearing.

C. The Damages Hearing Mr. Brooks did not withdraw from representing the petitioning creditors. At the damages hearing on April 12th, TRED appeared with several witnesses who had traveled from other cities to testify. Mr. Brooks once again appeared without any witnesses or other evidence. Mr. Brooks requested a continuance of the hearing on behalf of his purported clients. In support of his request for a continuance, Mr. Brooks represented that he had not been able to reach Anna Molina to notify of her of the damages hearing. He also represented that Malcolm and Tonya Hampton had just moved to California and lacked the funds to travel back to Texas for the hearing. According to the version of events Mr. Brooks provided to this Court on April 12th, Mr. Brooks needed Malcolm Hampton Jr. as a witness to testify that he (Mr. Brooks) had nothing to do with the filing of the involuntary petition against TRED. Mr. Brooks represented to the Court on April 12th that the involuntary petition had been filed by a rogue paralegal without his knowledge or authority.

Mr. Brooks stated that he does not even know how to electronically file
documents with this Court. The Court denied Mr. Brooks request for a continuance of the damages hearing. In light of the seriousness of the matter, however, the Court announced that she would take TREDs evidence regarding damages and carry the balance of the matter to
another day in order to allow Mr. Brooks and the petitioning creditors another opportunity to present evidence on their own behalf. The Court scheduled the continued evidentiary hearing for April 30, 2010.

At the hearing on April 12, 2010, TRED sought to establish that it had suffered proximate damages as a result of the involuntary petition. Michael Stoner, the CEO for TRED, testified that he first found out about the involuntary petition from TREDs primary lender. Mr. Stoner testified that TREDs banks applied heightened standards when advancing funds to TRED in light of the involuntary petition. Mr. Stoner and Mr. Burrell
testified that TREDs banks refused to advance funds to TRED for the two weeks that the involuntary petition was pending in this Court.

Nonetheless, they could not place a precise dollar amount on damages other than legal fees and their own out-of-pocket costs. With
respect to out-of pocket costs, Mr. Burrell testified that he had spent
approximately $900 to fly from Houston, rent a car, and testify before this Court on two occasions.

With respect to legal fees, TRED introduced evidence establishing that it had incurred the total amount $15,288.94 in attorneys fees and costs from the date of the involuntary petition through April 12, 2010. This amount includes $9,900 in fees and $110.04 in costs for TREDs counsel in the state court actions, Curtis, Alexander, McCambell, & Morris, P.C. This amount also includes $3,700 in fees and $78.90 in costs for TREDs bankruptcy counsel, Michael K. Vrana, P.C., through March 24, 2010.

The parties stipulated that TRED would incur an additional charge of $200 an hour for five hours for Mr. Vranas appearance at the hearing on April 12, 2010.

D. The Damages Hearing Continued Mr. Brooks appeared at the continued damages hearing on April 30, 2010. As the parties opened the hearing, Mr. Brooks disclosed, for the first time, that he had never
met nor spoken with Ms. Molina prior to filing the involuntary petition. Mr. Brooks disclosed that he had first spoken with Ms. Molina on April 29, 2010 and that he was not acting or authorized to act as her attorney at the hearing on April 30, 2010.

Ms. Molina appeared at the hearing on April 30, 2010, without counsel. Her testimony was highly credible. In light of her credible testimony, TRED withdrew its request for an award of damages against her. Ms. Molina testified that she had never authorized Mr. Brooks to include her in an
involuntary petition against TRED, never authorized Mr. Brooks to represent her in connection with any matter, and never spoken with Mr. Brooks until the day before the damages hearing. She testified that she did not know about the prior hearings on March 11, 2010 and April 12, 2010. She did not tell Mr. Brooks or anyone else that she had a family
emergency on March 11, 2010, and, in fact, did not have a family emergency on that date.

Ms. Molina testified that Malcolm Hampton Jr. had called her months ago. He told her he needed three people to file some sort of suit against TRED. He was aware that TRED had foreclosed on a home she had purchased and thought she might want to join the suit. She told Malcolm Hampton Jr. that she was not interested. Although the involuntary petition states that she has claims against TRED for fraud and breach of contract, she testified that she does not have any claims against TRED. Ms. Molina admitted
receiving some documents from TREDs counsel relating to this proceeding.
She testified, credibly, that she did not understand the documents or pay any particular attention to them as they did not appear to involve her.

Ms. Molina testified, credibly, that she had only recently learned that her name had been used to file an involuntary petition against TRED in this Court. She contacted Malcolm Hampton Jr. on April 29, 2010, who told her that she did not need to attend the hearing on April 30, 2010. He told her that Mr. Brooks paralegal, Gale Corbett Hutchinson, had filed the involuntary petition without Mr. Brooks authority. Malcolm Hampton
Jr. gave her Mr. Brooks telephone number. She did not call the number. Later that day, however, Malcolm Hampton Jr. and Mr. Brooks initiated a three-way call with her.

Mr. Brooks repeated the story of the rogue paralegal and discouraged her from attending the hearing on April 30, 2010. Mr. Brooks also testified at the hearing on April 30, 2010. The primary purpose of his testimony was to throw his client and occasional employee, Mr. Hutchinson, under
the proverbial bus. Mr. Hutchinson was not present at the hearing. Mr. Brooks testified that he has known Mr. Hutchinson for approximately 10 years. Mr. Brooks represented Mr. Hutchinson in a bankruptcy case filed in this Court on August 16, 2004 (Case No. 04-43766) and another case filed on January 5, 2010 (Case No. 10-40080). At the time the involuntary petition was filed against TRED, Mr. Brooks was representing Mr.
Hutchinson in connection with the later bankruptcy case as well as criminal charges brought by the State of Texas against Mr. Hutchinson. Mr. Hutchinsons bankruptcy case was automatically dismissed on February 20, 2010, by operation of 521(i) of the Code based on his failure to file the documents required by 521(a)(1). With respect to the criminal
proceedings, Mr. Brooks filed a motion to withdraw as counsel for Mr.
Hutchinson on April 15, 2010 shortly after he first regaled this Court with the story that Mr. Hutchinson was a rogue paralegal who had filed the involuntary petition against TRED without his knowledge.

5 Mr. Brooks representations that he did not authorize or participate in the filing of the involuntary petition against TRED were false. Mr. Brooks, in fact, authorized the filing. He used the existence of the involuntary petition to obtain a stay of the injunction hearing in state district court on the day he filed the involuntary petition. He then 5 According to Mr.
Brooks, Malcolm Hampton Jr. was Mr. Hutchinsons client. Mr. Brooks
suggested that Mr. Hutchinson had been holding himself out as a lawyer. However, if these unsupported statements are true, it appears that Mr. Brooks aided and abetted Mr. Hutchinsons role-playing. There is
no dispute that, whatever the clients may have understood, Mr. Hutchinson was working under the supervision of Mr. Brooks on a case-by-case basis. appeared before this Court and opposed dismissal of the involuntary petition at the emergency hearing on March 11, 2010.

From the day the involuntary petition was filed on February 26, 2010, until the first day of the damages hearing on April 12, 2010, Mr. Brooks never mentioned that a paralegal filed the case without proper authorization, nor did he take any steps to withdraw or dismiss the petition prior to the Courts dismissal order. Malcolm Hampton Jr. knew that the petition had been filed before dawn on February 26, 2010 he
filed a suggestion of bankruptcy with the state court later that morning. Mr. Brooks fabricated a story that Mr. Hutchinson was acting without authority in order to deflect blame from himself, Tonya Hampton, and Malcolm Hampton Jr. In short, Mr. Brooks lied.

Mr. Brooks also attempted to distance himself from any responsibility for this involuntary petition by testifying that he does not have a computer or know how to electronically file documents. This testimony was not credible. Moreover, he has a history of allowing others to file documents for him. He admitted that he authorized the electronic filing of a bankruptcy petition by Branden Maner. According to Mr. Brooks, Malcolm Hampton Jr. obtained an electronic username and password for Mr. Brooks from the bankruptcy clerks office for the United States Bankruptcy Court for the Northern
District of Texas. Malcolm Hampton Jr. then used his own computer to
electronically file Branden Maners bankruptcy petition. Mr. Brooks obviously could have used the same or a similar procedure to cause the filing of an involuntary petition against TRED.

6 The Courts own records show that he has filed other bankruptcy cases
in this district. Michael Stoner testified for TRED on April 30, 2010, in an attempt to shore up TREDs claim for proximate damages caused by the involuntary petition. Mr. Stoner testified that his lenders refused to advance approximately $73,000 to TRED during the two weeks between the filing and dismissal of the involuntary petition. TRED used funds
from its cash reserves during this period of time. TRED used these funds to pay its operational expenses, including payments to contractors for the rehabilitation of TREDs properties, among other things. Mr. Stoner testified, credibly, that the filing of the involuntary petition had been inconvenient and frustrating for TRED.

II. DISCUSSION As a general rule, the attorneys who practice before this Court possess a high degree of professionalism and skill. It is a privilege to preside over matters in this district.

The Court is rarely called upon to correct the behavior of the attorneys who appear in the courtroom. This is one of those rare and unfortunate cases.

A. TREDs Request for an Award of Damages Against Petitioning Creditors
Section 303(i)(1) provides that, if a bankruptcy court dismisses an involuntary petition over the objection of the petitioning creditors, the court may grant judgment against the petitioners for costs or reasonable attorneys fees. If the petitioners filed the petition in bad faith,  303(i)(2) provides that the court may grant judgment for any actual damages
proximately caused by such filing or punitive damages. Section 303(i)
expressly permits a court to award punitive damages under 303(i)(2) even in the  The only evidence in support of Mr. Brooks version of events was an unsigned letter purportedly written by Malcolm Hampton Jr. as the managing member of Branden Maner The letter was rank, selfserving

absence of actual damages. See In re Oakley Custom Homes, 168
B.R. 232 (Bankr. D. Colo. 1994) (an award of punitive damages may enter whether or not there is proof of actual damages); In re Advance Press & Litho, Inc., 46 B.R. 700 (Bankr. D. Colo. 1984)

([T]he Bankruptcy Code specifically authorizes, in 303(i)(2), punitive damages even in the absence of or in addition to actual damages); In re
Atlas Mach. & Iron Works, 190 B .R. 796, 804 (Bankr. E.D. Va.1995) ([S]ection 303(i)(2)(B) does not require proof of actual damages as a prerequisite to an award of punitive damages.).

If an involuntary bankruptcy petition is dismissed, there is a rebuttable
presumption the alleged debtor is entitled to reasonable fees and
costs. 11 U.S.C. 303(i). The burden is on the petitioning creditors to rebut the presumption by establishing that fees and costs were unwarranted under the totality of circumstances. Id.See also Sofris v. Maple-Whitworth, Inc., et al. (In re Maple-Whitworth, Inc.), 556 F.3d 742, 746 (9th Cir. 2009). However, with respect to proximate and punitive damages,
courts addressing the issue agree that [t]here is a presumption
of good faith in favor of the petitioning creditor, and thus the alleged debtor has the burden of proving bad faith.

In re John Richard Homes Building Co., 291 B.R. 727, 729-30 (Bankr. E.D. Mich. 2003) (internal quotations omitted), affd, 439 F.3d 248 (6th Cir. 2006). Determining whether an involuntary bankruptcy petition was filed in bad faith requires the bankruptcy court to look at the totality of circumstances. Id.; see also Higgins v. Vortex Fishing Systems,
Inc., 379 F.3d 701, 706 (9th Cir. 2004) (collecting .cases).

7  The term bad faith is not defined in 303. Courts have used four different approaches for determining whether an involuntary petition was filed in bad faith for purposes of 303(i)(2): (a) an improper use test,(b) an improper purpose test, (c) an objective test, which inquires into what a reasonable person would have believed, and (d) a Rule 9011 test, which inquires into whether the petition: (i) was justified based upon a reasonable inquiry into the facts and the law; and (ii) was interposed
for an improper purpose. Lubow Machine Co., Inc. et al, v. Bayshore Wire Products Corp., 209 F.3d 100, 105-06 (2nd Cir .2000).

Here, Branden Maner and Tonya Hampton objected to the dismissal of the
involuntary petition against TRED. The Court dismissed the involuntary petition over their objection. At the hearings on April 12th and 30th,
they did not offer any evidence rebutting the presumption that TRED is entitled to fees and expenses. The Court finds that TREDs fees and expenses were necessary, reasonable, and warranted under the
totality of the circumstances. The Court, therefore, concludes that TRED may recover from Tonya Hampton and Branden Maner, jointly and severally, its attorneys fees and costs from the date of the involuntary petition through the conclusion of the hearings on TREDs request for damages. See In re Landmark Distribs., Inc., 195 B.R. 837, 846
(Bankr. D. N.J. 1996). The total amount of TREDs fees and costs for this period is $18,188.94, which includes out-of-pocket costs of $900, attorneys fees and costs of $16,288.94 through the conclusion of the hearing on April 12th, plus an additional $1,000 for attorneys fees incurred in preparing for and attending the hearing on April 30th

With respect to whether Branden Maner and Tonya Hampton acted in bad faith, the Court concludes that the totality of the circumstances establishes that they did. Their claims against TRED were the subject of litigation at the time they joined the involuntary petition. The involuntary petition had no merit and was filed without the knowledge of the third petitioning creditor, who had refused an invitation from Branden Maners managing
member to join in the involuntary petition. Tonya Hampton and Branden
Maner did not conduct a reasonable investigation of the facts or the law prior to filing an involuntary petition against TRED. The motivation of Tonya Hampton and Branden Maner was to harm TRED and to forestall the imminent eviction of the Hampton family from the Caddo Mills property.

TRED asserts that the bad faith filing of the involuntary petitions resulted in proximate damages of $73,000. TREDs banks froze TREDs credit after learning of the bankruptcy petition, and TRED asserts that it was unable to borrow all of the funds it requested from the banks for approximately two weeks. TRED used its cash reserves to cover the $73,000 shortfall in operational funds for this period of time. TRED failed to show, however, that it was damaged by the change in the source of its operational

TRED also failed to present evidence of any specific business opportunities it missed as a result of the involuntary petition. The Court, therefore, concludes that TRED failed to establish actual damages other than its costs and attorneys fees.

In addition to an award of costs and attorneys fees, TRED requests that the Court award punitive damages against Tonya Hampton and Branden Maner, jointly and severally, for their bad faith filing of the involuntary petition against TRED. It is a wellestablished principle that punitive damages must bear a reasonable relationship to compensatory
damages. BMW of North America, Inc. v. Gore, 517 U.S. 559, 597 (1996).
In determining the appropriate amount of punitive damages, courts also consider the degree of reprehensibility of the conduct at issue. See Rubinstein v. Administrators of the Tulane Educ. Fund, 218 F.3d 392, 408 (5th Cir. 2000).

In this case, Tonya Hampton and Branden Maner filed an involuntary petition against TRED for the purpose of harming TRED and gaining an advantage in pending state court litigation. They, and their attorney, were well aware that they were not qualified to act as petitioning creditors under the Bankruptcy Code. They were also aware that they needed three creditors to file an involuntary petition and did not have the requisite number. Their use of an involuntary petition to harass TRED and extract a
litigation advantage is precisely the sort of bad faith conduct that can and should be sanctioned under 303(i). As applied to the facts of this case, the Court finds that the amount of punitive damages that is appropriate, not unduly oppressive in the light of the conduct of Tonya Hampton and Branden Maner, and consistent with the severity of their improper
actions, is $25,000.00, jointly and severally.

B. TREDs Request for Sanctions Against Mr. Brooks Finally, TRED requests an award of actual and punitive damages against Mr. Brooks.
TRED cites 303(i) in support of this request. However, 303(i) of the Code
provides for sanctions against petitioning creditors not their counsel.

The imposition of sanctions against an attorney is often guided by Bankruptcy Rule 9011. See, e.g., In re Oakley Custom Homes, Inc., 168 B.R. at 241 (imposing sanctions against counsel who filed and prosecuted a bad faith involuntary petition).

Although TRED has not requested sanctions against Mr. Brooks based on violations of Bankruptcy Rule 9011(b), this Court may issue an order sua sponte for Mr. Brooks to appear and show cause why he has not violated Bankruptcy Rule 9011(b). See FED. R. BANKR. P. 9011(c)(1)(B).

The Court also has authority to impose sanctions against Mr. Brooks under 28 U.S.C. 1927, which states: Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.

The Fifth Circuit has interpreted the requirement that an attorneys conduct must be vexatious and unreasonable as requiring evidence of bad faith, improper motive, or reckless disregard of the duty owed to the court. Edwards v. Gen. Motors Corp., 153 F.3d 242, 246 (5th Cir. 1998). An imposition of sanctions sua sponte by the court requires due process and reasonable opportunity for the attorney to defend against the imposition
of sanctions. U.S. v. Woodberry, 672 F.Supp.2d 761, 768 (S.D. Miss.,

In addition to the Courts authority under Bankruptcy Rule 9011 and 28 U.S.C. 1927, the Supreme Court has stated that an assessment of attorneys fees is undoubtedly within a courts inherent power. Chambers v. NASCO, Inc., 501 U.S. 32, 45 (1991).

[A] court may assess attorney's fees when a party has acted in bad faith,
vexatiously, wantonly, or for oppressive reasons. Id. at 45-46 (internal quotations omitted). Moreover, statutes and rules that provide for sanctions do not displace this inherent power. Id. at 46. However, [b]ecause of their very potency, inherent powers must be exercised
with restraint and discretion. Id. at 44. In this case, Mr. Brooks admits that he discussed the possibility of filing an involuntary petition against TRED on the eve of the injunction hearing in the state district
court lawsuit initiated by Branden Maner against TRED. He now claims that he did not actually authorize the filing. He blames his client and sometime-paralegal, Mr. Hutchinson, for filing the involuntary petition against his express directives. Mr. Brooks appears to recognize that blaming his client creates a conflict of interest, see TEX.

R. DISCL. P. 1.06(b)(2), and he indicated at the hearing on April 30, 2010, that he was seeking to withdraw as counsel for Mr. Hutchinson in the pending criminal proceedings.

Mr. Brooks testimony that he did not authorize the filing of the involuntary petition against TRED was false. Mr. Brooks used the filing of the involuntary petition to obtain a stay of the injunction hearing. Mr. Brooks was aware that the claims of Branden Maner and Tonya Hampton were the subject of a bona fide dispute he was representing them in connection with that dispute. Mr. Brooks did not make any inquiry
into Ms. Molinas alleged claims against TRED but, instead, relied entirely upon the representations made to him by Malcolm Hampton Jr. Nonetheless, at an emergency hearing in this Court on TREDs motion to dismiss the involuntary petition, Mr. Brooks prosecuted the petition and sought the entry of an order for relief. Mr. Brooks came up with
the story of a rogue paralegal when it became clear that this Court might
sanction him, personally, for his conduct.

If Mr. Brooks did not authorize the filling of the petition, as he now claims,
then he acted maliciously and in bad faith by failing to mention the possible error to the state court in the detainer suit. He acted maliciously and in bad faith by taking no steps to correct the unauthorized filing but, instead, prosecuting the involuntary petition in this Court.8

If this Court were to believe Mr. Brooks self-serving testimony at the sanctions hearings, then the best that could be said about his conduct is that he joined in a fraud upon the state district court and perpetrated a fraud on this Court. He deliberately acted to deceive this Court by, among other things, appearing to prosecute the involuntary petition when he knew it should never had been filed. He deliberately deceived this
Court by representing that he was appearing for Ms. Molina when, in fact, he had not been retained by Ms. Molina and had never even spoken with her.

8 As Mr. Brooks is surely aware, this Courts local rules state that the user log-in and password required for submitting documents to the electronic filing system serve as the users signature for purposes of Fed.

R. Bankr. P. 9011 or any other signature requirement imposed by the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, or any local rule of [this Court]. LBR 5005; TXEB Appendix 5005 at III(B)(2). Further, [n]o person shall knowingly utilize or cause another person to utilize the
password of an Electronic Filer unless such a person is an authorized agent of the Electronic Filer. Id.

 CONCLUSION The Court is convinced that Tonya Hampton and Branden Maner acted in bad faith. The Court will enter a separate Judgment against Tonya Hampton and Branden Maner consistent with this Memorandum Opinion. With respect to the request for sanctions against Mr. Brooks, the Court will provide Mr. Brooks with an opportunity to show cause why he has not violated Bankruptcy Rule 9011(b) and why grounds do not exist to sanction him under Bankruptcy Rule 9011(c), 28 U.S.C.  1927, and/or this Courts inherent powers.


Signed on9/3/2010

2010 Tex. App. LEXIS 4170,*

AND TANYA HAMPTON, Appellants v. TRED HOLDINGS, L.P., Appellee
No. 05-10-00143-CV


June 3, 2010, Opinion Filed


On Appeal from the County Court at Law No. 1, Hunt County, Texas. Trial Court
Cause No. CC0900015.

COUNSEL: For APPELLANT: Douglas J. Brooks, Attorney at Law, Rockwall, TX.

For APPELLEE: George Alexander, Curtis, Alexander, McCambell & Morris,
Greenville, TX.

JUDGES: Before Justices Richter, Lang-Miers, and Myers.



On April 27, 2010, this Court ordered the Hunt County Clerk to file, within
fifteen days, either the clerk's record or written verification that appellants
had not paid for the record. We warned appellants in the order that if we
received verification of non-payment, we would dismiss the appeal without
further notice. See TEX. R. APP. P. 37.3(b). On May 11, 2010, we received correspondence from the Hunt County Clerk stating appellants have not paid for the clerk's record. Appellants have not provided this Court with proof they have paid for the record. Accordingly, we dismiss the appeal for want of prosecution.


Malcolm Hampton  Updated

10/27/2011 - This profile of Malcolm D Hampton was created using data from
Texas Secretary of State   Branden Maner, L.L.C.
 Copies Plus LLC.
Mg Homes, LLC
Crown Investments LLC
Phillip Paul

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#4 REBUTTAL Owner of company

Jose pay your bills

AUTHOR: Malcolm - (United States of America)

I dont pay my rent on time you sir are a lier. I paid you on time you didnt pay the bank, you took the money and did not pay the bank thats why you are in fourclosure. I paid you over 17,000 dollars and you put it in your pocket. its people like you the has caused the banking problems in this country and caused the ecomony to crash. By the way are you in this country ilegally I wonder, Get a life and pay your bills. check out the web site http://www.recontrustco.com/upcoming_result_details.aspx?county=Placer look for the address see who the lier is.
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#5 Author of original report

malcolm hampton is liar

AUTHOR: jcastanedas - (USA)

malcolm hampton do not pay rent for 3 months, he is fight the notice eviction, he is hiding in the property to avoid to be serve, he can not find new rental home because he have bankruptcy case, he never pay rent on time, he is living in my rental home was build 2006 and it was like new with not repairs need it or repairs reported by my tenant ever, so he is riping me off, becareful to rent your property to him or do any business with him, he will try to rip you off for sure, he liars, check his credit report and story, before, he used to live in texas with his wife tonya hampton. "becareful"
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#6 REBUTTAL Owner of company

You can not trust Jose

AUTHOR: Malcolm - (United States of America)

First off 5 star investments llc is in no way conected to this transaction. second in april of 2010 I signed a 2 year lease I have made all payments to Jose until I was sent a letter stating that the payments have not been made on the property since october 2010. so for the last 8 months Jose needed the money to pay his bills a total of 17,600.00 that should have been paid on the note for the house. so he breached the contract and now my family and I must move 10 months early because jose cant pay his bills. I have had to do my own repairs on his house and I doubt he has the funds to refund my deposit his poor management is the reason for this problem not mine.  
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