Court Opinion

ID: 63929
Source: CourtListenerOpinion
Date Created: 2010-04-26 05:05:38+00
Date Added: 2024-06-11T08:50:43.816792
License: Public Domain

REVISED October 28, 2008

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                   United States Court of Appeals
                                                                            Fifth Circuit

                                                                        FILED
                                                                     October 6, 2008
                                     No. 08-10121
                                   Summary Calendar              Charles R. Fulbruge III
                                                                         Clerk

In The Matter Of: THE WATCH LTD; DFW RADIO LICENSE LLC

                                                  Debtors

DAVID A. SCHUM; CAROL D. KRATVILLE; FRANK D. TIMMONS

                                                  Appellants
v.

D. B. ZWIRN SPECIAL OPPORTUNITIES FUND LP; DFW RADIO INC;
RENAISSANCE RADIO INC; RADIO CAFÉ LLC; UNSECURED
CREDITORS COMMITTEE

                                                  Appellees

                   Appeal from the United States District Court
                        for the Northern District of Texas
                            USDC No. 3:07-cv-00563-N

Before SMITH, STEWART, and SOUTHWICK, Circuit Judges.
PER CURIAM:*

       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
                                        No. 08-10121

       David A. Schum, Carol D. Kratville, and Frank D. Timmons (collectively,
“Schum”) appeal, pro se, the district court’s order of January 3, 2008, denying
motions for leave to supplement the record on appeal and for reconsideration of
the district court’s order dismissing as moot Schum’s appeal of the bankruptcy
court order compelling execution of documents related to a sale of assets of the
debtor. Appellee D.B. Zwirn Special Opportunities Fun, L.P., (“Zwirn”) responds
that the district court ruling is correct and that this appeal is moot. For the
reasons set forth below, this appeal is moot, and we DISMISS.1
                                     I. BACKGROUND
       This is the Court’s second occasion to address an appeal from this
bankruptcy proceeding.2
       On May 26, 2005, The Watch, Ltd., and DFW Radio Licence, LLC (the
“Debtors”) filed petitions for relief under Chapter 11 of the Bankruptcy Code.
A public auction of the Debtors’ assets under 11 U.S.C. § 363 was held on
October 13, 2005, after which Zwirn, the secured creditor, was named as the
successful bidder with a credit bid of $9 million.
       On December 28, 2005, after a hearing on the merits, the bankruptcy court
entered an order approving the sale of the Debtors’ assets to Zwirn (the “Sale
Approval Order”). No stay pending appeal was obtained, and the sale went
forward.3

       1
         Zwirn also filed a motion to dismiss this appeal as moot. Because it is clear from the
briefing that the appeal is moot, we need not address the motion separately.
       2
           See In re The Watch, 257 F. App’x. 748 (5th Cir. 2007) (unpublished).
       3
         Schum eventually sought a stay of the Sale Approval Order from the district court in
March 2007, more than 14 months after the Sale Approval Order was issued. The district court
denied the stay.

                                               2
                                       No. 08-10121

       On January 9, 2006, Schum, pro se, appealed the Sale Approval Order to
the district court. After briefing by the parties, the district court entered an
order on July 6, 2006, dismissing the appeal of the Sale Approval Order due to
lack of standing by Schum.
       Schum then appealed the Sale Approval Order to this Court. Without
reaching the standing issue, we dismissed that appeal as moot because the
appellant had not obtained a stay pending appeal.                    The sale had been
consummated to a good-faith purchaser and was protected under 11 U.S.C. §
363(m).4 In re The Watch Ltd., 257 F. Appx. at 748.
       Because Schum refused to execute documents to effectuate the closing of
the sale of the assets during the months following entry of the Sale Approval
Order, the bankruptcy court then entered a series of orders in aid of enforcing
the Sale Approval Order. Schum appealed the last of those six orders, the Order
Granting the Sixth Motion to Compel, dated January 31, 2007, to the district
court (the “Second Appeal”).5
       The district court dismissed the Second Appeal on November 30, 2007 (the
“Dismissal Order”), holding that it was moot under 11 U.S.C. § 363(m) because
there was no stay of the Sale Approval Order and the sale at issue had already
been consummated to a good-faith purchaser. Schum timely filed separate
motions for reconsideration of the Dismissal Order and to supplement the record

       4
         Schum also attempted to challenge Zwirn's status as a “good-faith” purchaser for the
first time on appeal. We would not consider the argument because it had not been raised in
the bankruptcy court. In re The Watch Ltd., 257 F. App’x. at 750-51.
       5
        Schum attempted to appeal other orders issued more than ten days before the notice
of appeal to the district court. The district court lacked jurisdiction over, and thus did not
address, those appeals. See Fed. R. Bankr. P. 8002(a).

                                              3
                                      No. 08-10121

on appeal.6 Schum sought reconsideration of the Dismissal Order based on a
statement in the Dismissal Order that Schum did not seek a stay, arguing that
he did seek a stay of the sale. On January 3, 2008, the district court entered an
order denying both of these motions (the “Reconsideration Order”). The district
court explained that granting the motions would not alter the outcome of the
case because although Schum sought a stay of the Sale Approval Order, he did
not obtain a stay, and the sale had already taken place. Schum now appeals the
Reconsideration Order.
                                   II. DISCUSSION
       Zwirn argues that the appeal is moot because there is no relief that this
Court can grant that would change the outcome of the proceedings. Zwirn
further argues that because this Court already dismissed the appeal of the Sale
Approval Order as moot, this appeal of the Reconsideration Order, related to
orders issued in aid of the Sale Approval order, is a fortiori moot. It is not clear
what Schum argues on appeal because he devotes most of the briefing to issues
that were not part of the district court’s Reconsideration Order and are not
before this Court, primarily that Zwirn is not a “good faith” purchaser. Schum
also appears to agree that either the Second Appeal or the appeal from the
Reconsideration Order is moot because the application for the stay pending
appeal was denied.7

       6
         Schum sought to supplement the record with the information that he had sought a
stay of the Sale Approval Order, although he did not obtain such stay.
       7
         Schum also argues that the bankruptcy court cut off the right to review by denying
the stay pending appeal. This is the at times harsh effect of denying a stay pending appeal,
but this is the balance that Congress has struck between the rights of debtors and creditors.
See In re Sullivan Central Plaza, I, Ltd., 914 F.2d 731, 736 (5th Cir. 1990) (Congress could
have created a remedy such as an automatic stay pending appeal but has chosen not to).

                                             4
                                       No. 08-10121

       “Whether an appeal is moot is a jurisdictional matter, since it implicates
the Article III requirement that there be a live case or controversy.” Bailey v.
Southerland, 821 F.2d 277, 278 (5th Cir. 1987). An appeal is properly dismissed
as moot when an appellate court lacks the power to provide an effective remedy
for an appellant, even if the court were to find in the appellant’s favor on the
merits. In re Sullivan Century Plaza, I, Ltd., 914 F.2d 731, 735 (5th Cir. 1990).
       Deciding Schum’s appeal of the Reconsideration Order would be plainly
advisory because there is no remedy available. Schum’s briefs do not identify
relief that this Court might provide. Schum requests no relief specific to the
Reconsideration Order purportedly being appealed. Instead, he requests that
we remand the entire case to the bankruptcy court for the purpose of litigating
Zwirn’s status as a “good-faith” purchaser.                    Our disposition of the
Reconsideration Order can do nothing of the sort. See In re The Watch Ltd., 257
F. App’x. at 750 (refusing to consider Schum’s argument regarding Zwirn’s
“good-faith” purchaser status); In re The Ginther Trusts, 238 F.3d 686, 688-89
(5th Cir. 2001) (challenge to whether the purchaser was a “good-faith” purchaser
may not be raised for the first time on appeal); 11 U.S.C. § 363(m).
       We have already dismissed a prior appeal of the Sale Approval Order as
moot, and the present appeal is nothing but a repackaged attack on the Sale
Approval Order by way of an appeal of the Reconsideration Order.8 Were the
court to reverse the Reconsideration Order, and the district court to allow Schum

       8
         In addition to apparently conceding that this appeal is moot, Schum’s brief discusses
the alleged foreign ownership of Zwirn, accounting irregularities at Zwirn, and other purported
evidence outside of the record on appeal that Zwirn was not a good-faith purchaser of the
debtor's assets. Because these issues are unrelated to the Reconsideration Order, we need not
address these arguments. Zwirn's status as a “good faith” purchaser was decided by the
bankruptcy court and was not appealed. That issue is not before this Court any more than it
was in the prior appeal in this case. See In re The Watch Ltd., 257 F. Appx. at 751.

                                              5
                                       No. 08-10121

to supplement the record on appeal and then reconsider the Second Appeal, none
of these further events would change the fact that, as has been stated ad naseum
in the proceedings, there was no stay of the Sale Approval Order and the sale of
assets has been consummated. Schum cannot undo that fact by refusing to sign
documents and appealing orders issued in aid of the Sale Approval Order.9 If
this Court has already determined that an appeal of the Sale Approval Order is
moot, then an appeal of the motion to reconsider an order in aid of executing that
sale, where there is no relief that this Court may grant appellants, is also moot.
                                   III. CONCLUSION
       For the foregoing reasons, this appeal is DISMISSED.

       9
         The Court notes that it is over two and a half years since the bankruptcy court signed
the Sale Approval Order and over a year and a half since the court signed the Order Granting
Sixth Motion to Compel David Schum to Sign Sale Documents as Required by the Sale
Approval Order of This Court. “If deference were not paid to the policy of speedy and final
bankruptcy sales, potential buyers would not even consider purchasing any bankrupt's
property. As a result, the bankrupt's creditors would be the ones most injured thereby. The
public has a keen interest in protecting such creditors. Otherwise, financing might become a
thing of the past.” In re Bleaufontaine, Inc., 634 F.2d 1383, 1389 n.10 (5th Cir. 1981).

                                              6