Court Opinion

ID: 3190174
Source: CourtListenerOpinion
Date Created: 2016-03-31 00:00:55.157537+00
Date Added: 2024-06-11T07:39:05.903325
License: Public Domain

Case: 15-10278      Document: 00513445396         Page: 1    Date Filed: 03/30/2016

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                    No. 15-10278                         United States Court of Appeals
                                  Summary Calendar                                Fifth Circuit

                                                                                FILED
                                                                          March 30, 2016
In Re: REGINA NACHAEL HOWELL FOSTER,                                       Lyle W. Cayce
                                                                                Clerk
              Debtor

REGINA NACHAEL HOWELL FOSTER; FOSTER CHILDREN, by and
through their Next Friend, Regina Nachael Howell Foster,

              Appellants

v.

AREYA HOLDER,

              Appellee

                   Appeal from the United States District Court
                        for the Northern District of Texas
                     USDC Nos. 4:14-CV-1061, 4:14-CV-1062

Before HIGGINBOTHAM, ELROD, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
       Regina Foster and her children seek to appeal in forma pauperis. We
DENY the motion and DISMISS the appeal.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 15-10278    Document: 00513445396     Page: 2   Date Filed: 03/30/2016

                                 No. 15-10278
      Regina Foster declared Chapter 7 bankruptcy in 2012. In 2013, she filed
a claim against her estate as next friend of her children and sought to remove
the Chapter 7 Trustee under 11 U.S.C. § 324(a). The bankruptcy court denied
that motion. Foster and her children moved in the bankruptcy court to appeal
that order in forma pauperis.      The bankruptcy court denied the Foster
children’s motion because the court had disallowed their claim.             The
bankruptcy court granted Foster’s motion to appeal in forma pauperis.
      On appeal in the district court, the Chapter 7 Trustee moved to dismiss
because Foster and her children lacked standing to appeal the bankruptcy
court’s order. The district court dismissed the appeal. The district court denied
motions by Foster and her children to proceed in forma pauperis.

                                 DISCUSSION
      Foster and her children now appeal here and move to proceed in forma
pauperis. A motion to proceed in our court in forma pauperis is a challenge to
a district court’s certification that an appeal is not taken in good faith. See
Baugh v. Taylor, 117 F.3d 197, 202 (5th Cir. 1997). We determine whether an
appeal is taken in good faith by inquiring “whether the appeal involves legal
points arguable on their merits (and therefore not frivolous).” Howard v. King,
707 F.2d 215, 220 (5th Cir. 1983) (quotation marks omitted).
      We apply the same standard of review to the bankruptcy court’s decision
as applied by the district court. In re Amco Ins., 444 F.3d 690, 694 (5th Cir.
2006). “The bankruptcy court’s findings of fact are reviewed under a clear error
standard, while conclusions of law are reviewed de novo.”            Id.   When
considering a motion to dismiss for lack of standing, we “must accept as true
all material allegations of the complaint, and must construe the complaint in
favor of the complaining party.” In re Coho Energy Inc., 395 F.3d 198, 202 (5th
Cir. 2004).
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     Case: 15-10278         Document: 00513445396           Page: 3      Date Filed: 03/30/2016

                                         No. 15-10278
       We first consider whether Foster’s children have standing to challenge
the bankruptcy court’s order. 1            A party cannot appeal from a bankruptcy
court’s order unless the party qualifies as a “person aggrieved.” Id. A “person
aggrieved” is one “directly and adversely affected pecuniarily by the order of
the bankruptcy court.” Id. at 203. The bankruptcy court disallowed the claim
by Foster’s children. We affirmed that decision. See Foster v. Holder, No. 15-
10778. The children cannot show they suffer a direct or adverse pecuniary
effect from the bankruptcy court’s denial of their motion because they are not
creditors of the estate. Therefore, they lack standing to appeal the bankruptcy
court’s decision.
        Foster also appealed the bankruptcy court’s order.                         A persuasive
unpublished opinion guides our analysis of Foster’s challenge.                          See In re
Solomon, 129 F.3d 608, 1997 WL 680934 (5th Cir. Sept. 25, 1997). In Solomon,
we noted that Chapter 7 debtors typically do not have standing to appeal
bankruptcy court orders because they lack “pecuniary interest in the
administration of the estate” because the estate is insolvent. Id. at *6 n.10. If
the estate is solvent or if the debtor shows that a successful appeal will make
the estate solvent, creating a surplus for the debtor under 11 U.S.C. § 726(a)(6),
then the debtor could have a pecuniary interest in the estate that may be
directly or adversely affected by bankruptcy court orders. See id. Foster
argues that the estate is solvent. The debtor in Solomon similarly asserted
that he had standing because his successful appeal would make the estate
solvent and create a surplus of assets. Id. In Solomon, the panel assumed that

       1  We do not decide whether a bankruptcy court’s denial of a motion to remove the trustee is a
final, appealable order because Foster and her children have alternatively characterized their appeal
as a petition for a writ of mandamus. See In re Delta Servs. Indus., 782 F.2d 1267, 1271–72 (5th Cir.
1986). Because we hold that Foster and her children fail to raise any nonfrivolous argument, they
would be unable to meet the higher standard for a writ of mandamus. See In re Avantel, S.A., 343
F.3d 311, 317 (5th Cir. 2003).

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                                 No. 15-10278
the debtor’s assertion was correct and that he had standing because it reasoned
that “in any case, Solomon cannot show that the bankruptcy court erred.” Id.
We take a similar course.
      Assuming Foster has standing, we turn to the bankruptcy court’s order.
A trustee is removed for cause upon a showing of clear and convincing evidence.
See In re IFS Fin. Corp., 803 F.3d 195, 203, 205–08 (5th Cir. 2015); 11 U.S.C.
§ 324(a). We review a bankruptcy court’s decision concerning the removal of a
Chapter 7 trustee for abuse of discretion. See In re IFS Fin. Corp., 803 F.3d at
203. A bankruptcy court abuses its discretion when it “applies an improper
legal standard or follows improper procedures” or “rests its decisions on
findings of fact that are clearly erroneous.” Id. The bankruptcy court held a
hearing on the Foster children’s motion and denied the motion. Foster fails to
point to any clearly erroneous factual finding the bankruptcy court made at
that hearing or any misapplication of law. She presents no arguable legal point
as to how the bankruptcy court abused its discretion.
      Finally, the Chapter 7 Trustee requests that we dismiss the appeal as
frivolous and award damages and costs under Federal Rule of Appellate
Procedure 38. We agree with an unpublished opinion from our court that a
party must make a “separately filed motion,” as Rule 38 states, in order to
request damages and costs. See Olive v. Gonzalez, 31 F. App’x 152, 2001 WL
1747763 (5th Cir. 2001). Nonetheless, we may dismiss an appeal as frivolous
sua sponte when it is apparent the appeal lacks merit. See 5TH CIR. R. 42.2;
Baugh, 117 F.3d at 202 & n.24.
      We DENY the motion to proceed in forma pauperis and DISMISS the
appeal as frivolous. The appellants must bear all court costs, but we do not
award damages.

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