Court Opinion

ID: 3179272
Source: CourtListenerOpinion
Date Created: 2016-02-22 18:02:47.775253+00
Date Added: 2024-06-11T12:17:26.215784
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ___________

                                       No. 15-1094
                                       ___________

                   IN RE: ROCK AIRPORT OF PITTSBURGH, LLC,
                                            Debtor

                                 ROCK FERRONE,
                                             Appellant
                       ____________________________________

                     On Appeal from the United States District Court
                        for the Western District of Pennsylvania
                         (D.C. Civil Action No. 2-14-cv-01456)
                      District Judge: Honorable Arthur J. Schwab
                      ____________________________________

                    Submitted Pursuant to Third Circuit LAR 34.1(a)
                                   August 20, 2015

               Before: FUENTES, SHWARTZ and ROTH, Circuit Judges
                          (Opinion filed: February 22, 2016)
                                    ___________

                                        OPINION*
                                       ___________

PER CURIAM

       Rock Ferrone appeals from an order of the United States District Court for the

Western District of Pennsylvania (“the District Court”) dismissing as moot his appeal of

two orders of the United States Bankruptcy Court for the Western District of

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
Pennsylvania (“the Bankruptcy Court”). For the reasons that follow, we will affirm the

judgment of the District Court.

       Because we write primarily for the parties, who are familiar with the facts, we

will not recite them except as necessary to the discussion. This appeal arises out of

Chapter 11 Bankruptcy proceedings involving Rock Ferrone, the sole owner of Rock

Airport of Pittsburgh, LLC (“Rock Airport” or “the Debtor”). Ferrone is also the sole

shareholder of K-Cor, Inc., (“K-Cor”) a Pennsylvania company that designs,

manufactures, and sells newspaper equipment.

       In April 2009, Rock Airport filed a voluntary petition for relief under Chapter 11

of the Bankruptcy Code in the Bankruptcy Court. In April 2013, Natalie Lutz Cardiello

(“Cardiello” or “the Trustee”) was appointed to serve as Trustee over the Rock Airport

bankruptcy estate. Thereafter, Cardiello filed in the Bankruptcy Court a motion seeking

an order approving the sale of the Debtor’s assets to Alaskan Property Management

Company, LLC (“Alaskan”). Listed among those assets was a building and a parcel of

land located at 1000 Rockpointe Boulevard, at Rock Airport, in Tarentum, Pennsylvania

(“the Rock Built Parcel”).

       Ferrone objected to Cardiello’s motion to approve the sale to Alaskan, arguing that

K-Cor was, in fact, the owner of the Rock Port Parcel and that, as a result, the property

should not be included in the asset sale. In order to resolve the disputed ownership of the

Rock Built Parcel, the Bankruptcy Court held an evidentiary hearing to determine

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K-Cor’s alleged ownership of the property. Following the evidentiary hearing, and after

entertaining additional briefing on the issue, the Bankruptcy Court issued a final ruling on

September 10, 2014, determining that all of the credible evidence and testimony

demonstrated that the Debtor owned the Rock Built Parcel. In so holding, the

Bankruptcy Court noted that K-Cor had failed to demonstrate that an agreement to

convey the property from Rock Airport to K-Cor had ever existed. Nor had K-Cor

produced evidence which might have otherwise suggested its ownership of the property

(e.g., that it had insured the property or paid the property taxes).

       Shortly thereafter, in a September 16, 2014 order, the Bankruptcy Court approved

the sale of the Debtor’s assets to Alaskan. The Court noted in its opinion that it had

determined that Alaskan was a good faith purchaser, that the process complied with the

applicable bankruptcy rules and code provisions, and that the sale was in the interest of

the Debtor’s estate. Several days later, Ferrone filed in the Bankruptcy Court an

emergency motion for a stay pending appeal. After holding a hearing on Ferrone’s

emergency motion, the Bankruptcy Court denied a stay. On September 30, 2014, the

Trustee and Alaskan closed on the sale of the Debtor’s assets, which included the Rock

Built Parcel.

       Ferrone timely appealed to the District Court the Bankruptcy Court’s September

10, 2014 order (ruling that the Debtor owned Rock Built Parcel) as well as its September

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16, 2014 order (approving the sale of the Debtor’s assets to Alaskan).1 The Trustee

argued that the appeal was moot under 11 U.S.C. § 363(m). Upon review, the District

Court entered an order dismissing Ferrone’s appeal as moot. This appeal followed.2

         We have jurisdiction over Ferrone’s appeal from the District Court’s order

pursuant to 28 U.S.C. §§ 158(d) and 1291. Our review over the District Court’s legal

conclusions is plenary, see In re Heritage Highgate, Inc., 679 F.3d 132, 139 (3d Cir.

2012), and we review findings of fact for clear error. See In re Marvel Entm’t Grp, Inc.,

140 F.3d 463, 470 (3d Cir. 1998).

         Sales in bankruptcy are governed by the provisions of 11 U.S.C. § 363 which,

inter alia, authorize the trustee, after notice and a hearing, to use, sell, or lease property

of a debtor’s estate. 11 U.S.C. § 363(b)(1). Property of the estate includes “all legal or

equitable interests of the debtor in property as of the commencement of the case.”

11 U.S.C. § 541(a)(1). To promote certainty and finality with respect to such sales, as

well as to encourage parties to bid for assets in bankruptcy cases, § 363(m) prohibits the

reversal of a sale to a good faith purchaser of bankruptcy estate property, 11 U.S.C. §

363(b)(1), if a party fails to obtain a stay of the sale. See 11 U.S.C. § 363(m);3 Cinicola

1
 We note that the Bankruptcy Court issued a separate order on September 16, 2014,
approving the Trustee’s Amended Disclosure Statement as well as her Chapter 11 Plan.
However, Ferrone did not appeal that separate order to the District Court.
2
    Ferrone did not obtain a stay of the sale from the District Court or this Court either.
3
  The statute provides that “[t]he reversal or modification on appeal of an authorization
. . . of a sale or lease of property does not affect the validity of a sale or lease under such
                                                 4
v. Scharffenberger, 248 F.3d 110, 121-22 (3d Cir. 2001). In interpreting that provision,

we previously determined that the following two conditions must be satisfied before an

appeal may be dismissed as moot under § 363(m): (1) the sale was not stayed pending

appeal, and (2) reversal or modification of the Bankruptcy Court’s authorization would

affect the validity of the sale. See Cinicola, 248 F.3d at 128; Krebs Chrysler-Plymouth v.

Valley Motors, Inc., 141 F.3d 490, 499 (3d Cir. 1998).

         Having reviewed the record and the arguments on appeal, we conclude that the

District Court correctly determined that Ferrone’s appeal had been rendered moot under

§ 363(m). Although he sought a stay pending appeal, Ferrone was unsuccessful in

securing one. Additionally, despite his repeated assertion that Alaskan did not purchase

the Debtor’s assets in good faith, we agree with the District Court that there is no

evidence upon which to conclude that Alaskan was not a good-faith purchaser, or that

Cardiello and Alaskan acted in bad faith. We further agree that the remedies sought by

Ferrone on appeal—that K-Cor be deemed the owner of Rock Built Parcel, and that the

sale of Rock Airport’s assets to Alaskan be voided—would inevitably undermine the

validity of the sale. As a result, the District Court correctly dismissed Ferrone’s appeal as

moot.4

authorization to an entity that purchased or leased such property in good faith, whether or
not such entity knew of the pendency of the appeal, unless such authorization and such
sale or lease were stayed pending appeal.
4
 We also agree, for the reasons identified by the District Court—and assuming without
deciding that such a claim was cognizable—that there was no basis upon which to
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       For these reasons, we will affirm the judgment of the District Court. Ferrone’s

request for oral argument is denied.

conclude that Ferrone’s due process rights had been violated during relevant proceedings
before the Bankruptcy Court.
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