Court Opinion

ID: 1018795
Source: CourtListenerOpinion
Date Created: 2013-07-04 22:25:54.23125+00
Date Added: 2024-06-11T10:57:59.771812
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                              No. 05-1876

In Re:   UNITED REFUSE LLC,

                                                             Debtor.
----------------------------------

JAMES C. LEHNER AND SUZANNE LEHNER,

                                                          Appellants,

           and

W. CLARKSON MCDOW, JR., U.S. Trustee,

                                                 Party in Interest,

           versus

UNITED REFUSE LLC; UNITED LEASING CORPORATION,

                                             Defendants - Appellees.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. James C. Cacheris, Senior
District Judge. (CA-05-438-JCC-1; BC-04-11503; AP-04-1196)

Submitted:   March 8, 2006                  Decided:   March 21, 2006

Before WILLIAMS, KING, and GREGORY, Circuit Judges.

Affirmed by unpublished per curiam opinion.
Steven S. Biss, Richmond, Virginia, for Appellants.  Kermit A.
Rosenberg,   TIGHE,   PATTON,  ARMSTRONG, TEASDALE,  P.L.L.C.,
Washington, D.C., for Appellee United Refuse, L.L.C.; William
Daniel Sullivan, LECLAIR RYAN, P.C., Alexandria, Virginia, for
Appellee United Leasing Corporation.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

                               2
PER CURIAM:

      This appeal arises from a Chapter 11 bankruptcy proceeding in

which James Lehner and Suzanne Lehner, the putative owners of the

debtor corporation, United Refuse, LLC (“United Refuse”), were

directed to convey legal title of United Refuse to its creditor,

United Leasing Corporation (“ULC”). Dissatisfied with that result,

the Lehners sought to appeal.            However, counsel for the Lehners

filed a notice of appeal solely in the name of United Refuse before

the bankruptcy court and filed the appeal against ULC in the

Eastern District of Virginia.            Following a stipulation between

United    Refuse   and   ULC   to    dismiss    the    bankruptcy   appeal,   the

district court denied the Lehners’ motion to substitute themselves

for   United    Refuse    and       dismissed    the    matter   for   lack    of

jurisdiction.      We now affirm the district court’s disposition of

the bankruptcy appeal.

                                        I.

      The underlying factual dispute in this bankruptcy appeal

pertains to the Lehners’ ownership interests in United Refuse.1                On

      1
      ULC is a business that provides equipment financing through
leases to commercial customers.    According to ULC, one of its
clients, Garcia’s, Inc. (“Garcia’s”), a trash removal service,
defaulted on its loan payments. ULC subsequently seized Garcia’s
assets, voted out Garcia’s then-owners, and established United
Refuse to operate Garcia’s assets.
     The articles of incorporation filed for United Refuse
originally did not name an owner.     However, by July 2002, the
articles of incorporation were amended to identify the Lehners as

                                         3
April 30, 2004, United Refuse filed a complaint against ULC in

bankruptcy court to determine the validity, priority, and extent of

certain liens.      ULC subsequently asserted a counterclaim against

United Refuse regarding the true ownership of United Refuse, and

joined the Lehners as counterclaim defendants. On October 7, 2004,

the parties stipulated that the Lehners would be dismissed without

prejudice and agreed that the Lehners “will be personally bound by

the Court’s determination of this matter and will respond to and

participate in discovery in the same manner and to the same extent

as they would be required to do if they were parties named to this

suit.”    J.A. 104.    This stipulation was executed by counsel for

United Refuse and counsel for ULC, and individually by James

Lehner,   Suzanne     Lehner,   and   Edward   Shield,   the   controlling

shareholder of ULC.

     Following a trial, the bankruptcy court held a hearing on

March 14, 2005, and announced that the Lehners only held legal

title to United Refuse for the benefit of ULC and directed the

Lehners to “execute such documents as necessary to convey legal

title to [ULC] which is the sole beneficial owner . . . .”           J.A.

45; J.A. 5.    The bankruptcy court then advised the Lehners, who

the 100% owners of United Refuse. According to ULC, United Refuse
was solely intended “to act as a workout vehicle for the assets
leased to Garcia’s and the collateral security given by Garcia’s
for those leases.”    J.A. 157.   Moreover, ULC asserts that the
Lehners only held legal title of United Refuse for the benefit of
ULC, and that ultimately, the Lehners intended to steal United
Refuse from ULC.

                                      4
were present, that “you have heard the judgment of the Court and

you have heard your counsel.          You have the right of appeal.”            J.A.

74.     That   same     day,   the    bankruptcy     court     issued   an   order

memorializing     the    above-made     findings     and     stating    that,    in

accordance with the executed stipulation, the Lehners “are fully

bound by this order the same as if they were parties to this

action.”   J.A. 6.

      On March 24, 2005, counsel for the Lehners, Steven S. Biss,

filed a notice of appeal in the name of United Refuse against ULC

in the bankruptcy court.          The notice bore two captions: “In re:

United Refuse LLC, Debtor” and “United Refuse LLC, Plaintiff, v.

United Leasing Corporation, Defendant.” J.A. 82. In addition, the

only parties named within the notice of appeal were United Refuse

and ULC.

      On May 9, 2005, Biss, apparently at the direction of the

Lehners, filed an appellate brief solely in the name of United

Refuse before the district court, seeking to reverse the ownership

determination rendered by the bankruptcy court.                The brief set out

a host of issues related to the true ownership of United Refuse.

Specifically,     the     brief      challenged     the    bankruptcy      court’s

determination that the Lehners only held bare legal title for the

benefit of ULC.

      That same day, counsel for United Refuse and ULC executed a

joint   stipulation      dismissing      the      bankruptcy     appeal.        The

                                         5
stipulation represented that Biss was not “counsel for United

Refuse and has no right, authority, or even color of authority to

prosecute    an   action   on   behalf       of   United   Refuse.”   J.A.   95.

According to the stipulation, counsel for United Refuse attested

that in conducting his fiduciary duties, he reviewed the issues

presented by Biss, but concluded that there was neither any basis

for the appeal nor any conceivable benefit to the estate by the

prosecution of the appeal.       On June 3, 2005, Biss, acting on behalf

of the Lehners, filed an opposition to the stipulation of dismissal

and sought to substitute the Lehners for United Refuse in the

bankruptcy appeal.2

     On July 6, 2005, the district court denied the Lehner’s motion

to strike the dismissal of appeal and motion to substitute the

parties on appeal.     In addition, the district court dismissed the

appeal for lack of subject matter jurisdiction because the Lehners

had not identified themselves as appellants in the notice of

appeal.     The Lehners now appeal both the dismissal of the appeal

and the denial of their motion to substitute themselves for United

Refuse as parties on appeal.

     2
      Meanwhile, the Lehners quitclaimed their ownership interests
in United Refuse and conveyed legal title to ULC on May 19, 2005.

                                         6
                                 II.

                                  A.

     The Lehners first challenge the district court’s dismissal of

the bankruptcy appeal based on lack of subject matter jurisdiction.

Specifically,   the   Lehners   assert   that   the   notice   of   appeal

sufficiently identified them as appellants for the purposes of

Federal Rule of Bankruptcy Procedure 8001(a).         In dismissing the

appeal, the district court reasoned that the notice of appeal

failed to name the Lehners as appellants, to express the Lehners’

intent to appeal, or to establish privity between the Lehners and

United Refuse, thereby rendering their appeal unperfected.            For

these reasons, the district court confined the notice of appeal to

United Refuse, the only party explicitly asserted as the appellant,

and determined that it lacked jurisdiction to adjudicate the

Lehners’ appeal.      We agree with the reasoning of the district

court.

                                  1.

     We apply de novo review to the district court’s dismissal of

the bankruptcy appeal for lack of subject matter jurisdiction. See

Welch v. United States, 409 F.3d 646, 650 (4th Cir. 2005).

                                  2.

     This appeal causes us to consider two distinct procedural

rules governing the sufficiency of notices of appeal: Federal Rule

of Bankruptcy Procedure 8001(a), which specifically governs notices

                                   7
of appeal related to bankruptcy appeals to the district courts, and

Federal Rule of Appellate Procedure 3(c), which generally governs

notices of appeal.   Rule 8001(a) provides, in relevant part:

     The notice of appeal shall (1) conform substantially to
     the appropriate Official Form, (2) contain the names of
     all parties to the judgment, order, or decree appealed
     from and the names, addresses, and telephone numbers of
     their respective attorneys, and (3) be accompanied by the
     prescribed fee.

Bankr. R. 8001(a).     The accompanying advisory committee notes

further explain that Rule 8001 “require[s] that a notice of appeal

be filed whenever a litigant seeks to secure appellate review.”

Bankr. R. 8001 advisory committee notes.

     Rule 3(c) provides that a notice of appeal must “specify the

party or parties taking the appeal by naming each one in the

caption or the body of the notice, but an attorney representing

more than one party may describe those parties with such terms as

‘all parties,’ ‘the defendants,’ ‘the plaintiffs A, B, et al.’ or

‘all defendants except X.’”     Fed. R. App. P. 3(c)(1)(A).      As

detailed in the advisory committee notes, the rule reflects a

liberalized pleading standard in response to Torres v. Oakland

Scavenger Co., 487 U.S. 312 (1988),3 which held that a party’s

     3
      Unlike Rule 8001(a), which has enjoyed a relatively sparse
legislative history, Rule 3(c)(1)(A) was recently amended in 1993
to its present form following Torres. Torres held that Rule 3(c)’s
specificity requirement--i.e., that a notice of appeal “shall
specify the party or parties taking the appeal”--is a strict
jurisdictional threshold, notwithstanding Rule 3(c)’s additional
language indicating that “an appeal shall not be dismissed for
informality of form or title of the notice of appeal.” Torres, 487

                                 8
failure to comply strictly with the specificity requirement of Rule

3(c) forfeits its right to appeal.    In particular, the advisory

committee notes explain:

     The amendment states a general rule that specifying the
     parties should be done by naming them. Naming an
     appellant in an otherwise timely and proper notice of
     appeal ensures that the appellant has perfected an
     appeal. However, in order to prevent the loss of a right
     to appeal through inadvertent omission of a party's name
     or continued use of such terms as “et al.,” which are
     sufficient in all district court filings after the
     complaint, the amendment allows an attorney representing
     more than one party the flexibility to indicate which
     parties are appealing without naming them individually.
     The test established by the rule for determining whether
     such designations are sufficient is whether it is
     objectively clear that a party intended to appeal. A
     notice of appeal filed by a party proceeding pro se is
     filed on behalf of the party signing the notice and the
     signer’s spouse and minor children, if they are parties,
     unless the notice clearly indicates a contrary intent. .
     . . Finally, the rule makes it clear that dismissal of
     an appeal should not occur when it is otherwise clear
     from the notice that the party intended to appeal. If a
     court determines it is objectively clear that a party
     intended to appeal, there are neither administrative
     concerns nor fairness concerns that should prevent the
     appeal from going forward.

Fed. R. App. P. 3(c) advisory committee notes (emphases added).

U.S. at 314. In so holding, the Supreme Court reasoned that “[t]he
failure to name a party in a notice of appeal is more than
excusable ‘informality’; it constitutes a failure of that party to
appeal.” Id. at 314; see also In re Case, 937 F.2d 1014, 1021 (5th
Cir. 1991) (“Rule 3(c) is jurisdictional in nature and the failure
to comply with its specificity requirement invokes a strict rule of
forfeiture which denies an individual party’s right to appeal.”).
However, due to the heavy onset of “satellite litigation” spawned
from Torres’s admittedly harsh result, the 1993 Amendments permit
an “attorney representing more than one party the flexibility to
indicate which parties are appealing without naming them
individually.” Fed. R. App. P. 3(c) advisory committee notes.

                                9
      The   considerable         overlap    between    the   two        rules    raises

significant issues regarding the degree of specificity and formal

compliance required in identifying appellants in notices of appeal.

Yet   the   rules    themselves       provide    little      insight         into   that

relationship, particularly since Rule 8001 directs appellants to

“name[]” themselves and is otherwise silent as to the formality of

pleading,   whereas       Rule    3(c)     directs    appellants        to   “specify”

themselves in the notice of appeal and permits liberal pleading.

See Fadayiro v. Ameriquest Mortgage Co., 371 F.3d 920, 921 (7th

Cir. 2004) (“The two rules governing notices of appeal differ

mysteriously.”).      Not surprisingly, the courts of appeals have not

fully converged as to whether Rule 3(c) is coextensive with Rule

8001(a) or altogether inapplicable in the bankruptcy context.                           See

id. (holding that Rule 8001(a), rather than Rule 3(c), applies to

notices of appeal from bankruptcy court decisions); In re Cascade

Roads, Inc., 34 F.3d 756, 761 (9th Cir. 1994) (holding that Rule

8001(a),    not    Rule   3(c),     applies     to    notices      of    appeal        from

bankruptcy court decisions);             Case, 937 F.2d at 1021 (exclusively

applying Rule 8001(a)); cf. In re Continental Airlines, 125 F.3d

120, 128-29 (3d Cir. 1997) (applying Rule 3(c) to notice of appeal

from bankruptcy decision); Storage Technology Corp. v. United

States District Court, 934 F.2d 244, 247-48 (10th Cir. 1991)

(applying    the    pre-1993       Amendments    version      of    Rule        3(c)    in

interpreting Rule 8001(a) and concluding that “the failure to

                                           10
specifically designate a party somewhere in the notice of appeal is

a jurisdictional bar to that party’s appeal”), superseded by rule

on other grounds, Fed. R. App. 3(c), as recognized in Dodger’s Bar

& Grill, Inc. v. Johnson County Bd. of County Comm’rs,     32 F.3d

1436, 1440 (10th Cir. 1994).4

     We need not determine the applicability of Rule 3(c) or its

rationale because, as the district court concluded, the Lehners

have failed to satisfy the requirements of either Rule 8001(a) or

Rule 3(c).   Under Rule 8001(a), the Lehners concede that they

failed to name themselves as parties in the appeal, but contend

that the rule only applies to the parties extant at the time the

bankruptcy court rendered its decision.    However, this argument

flies in the face of the uncontested facts that (1) the Lehners had

been originally named as counterclaim defendants in the underlying

bankruptcy proceeding; and (2) they executed a stipulation, which

bound them to the bankruptcy’s ultimate determination of the

ownership of United Refuse--the very issue they now seek to raise

     4
      Indeed, according to the Seventh Circuit, the fact that Rule
8001(c) does not contain the specificity requirement casts doubt
over whether a failure of absolute compliance with the rule even
constitutes a jurisdictional defect as defined by Torres.       See
Fadayiro, 371 F.3d at 922 (rejecting rule that failure to comply
with Rule 8001(a) is a jurisdictional defect and remarking that
“[n]othing in the history of the rule, the case law, the treatises,
the discussion by the district judge, or the appellees’ brief
suggests that such dire, irrevocable consequences should flow from
the difference in wording between Fed. R. App. P. 3(c) and Bank. R.
8001(a), significant as that difference is”); Case, 937 F.2d at
1021 (stating that the wording of Rule 8001 and Rule 3(c) is
“materially different”).

                                11
on appeal.   Significantly, the Lehners were dismissed without

prejudice from the action solely pursuant to the stipulation, which

provided that the Lehners “will be personally bound by the Court’s

determination of this matter and will respond to and participate in

discovery in the same manner and to the same extent as they would

be required to do if they were parties named to this suit.”   J.A.

104 (emphasis added).   As a result, the Lehners’ forbearance in

exercising their right to litigate the ownership dispute does not

undermine the bankruptcy court’s determination of that issue in

light of their explicit agreement to be bound.5      Moreover, the

     5
      We further note that the other cases cited by the parties
stand for the limited proposition that counsel for appellants need
not name itself as a party because of the close privity between
counsel and client in conducting litigation. Miltier v. Downes,
935 F.2d 660, 663 n.1 (4th Cir. 1991) (reviewing sanctions award
against appellant’s counsel even though the notice of appeal did
not name counsel because counsel was the “only party adversely
affected by the court’s ruling,” to the extent that there was no
“risk of ambiguity or confusion”); Case, 937 F.2d at 1021 (holding
that the district court properly reviewed attorney’s fees awarded
against appellant’s counsel even though the notice did not
specifically list counsel as an “appellant” because an attorney is
not a “litigant” who must be listed under Rule 8001); Corp. of the
Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints
v. Associated Contractors, Inc., 877 F.2d 938, 939 n.1 (11th Cir.
1989) (entertaining jurisdiction over counsel’s appeal from fee
award imposing joint and several liability on the appellant and its
counsel based on the “close privity between a lawyer and his client
with respect to the conduct of litigation”). Here, there is no
indication of any relationship between the Lehners and United
Refuse beyond their claims of putative ownership over United
Refuse. See G.E. Smith & Assocs., Inc. v. Otis Elevator Co., 608
F.2d 126, 127 (11th Cir. 1979) (dismissing appeal asserted only by
one co-plaintiff because the co-plaintiffs were “not one and the
same but are different entities in contract with another, one as
owner and the other as party to do construction work”).

                                12
bankruptcy court specifically apprised the Lehners of their right

to appeal the ownership determination.                 For these reasons, we

conclude that the Lehners, as litigants in the underlying action

and parties bound to the challenged ownership decision, failed to

comply with the pleading requirements of Rule 8001(a) in asserting

their appeal.

     Nor   can    the    Lehners     seek    refuge    in   Rule   3(c)    and   its

liberalized pleading standard.               The notice of appeal bore two

captions--“In re: United Refuse LLC, Debtor” and “United Refuse

LLC, Plaintiff, v. United Leasing Corporation, Defendant”--and

exclusively designated United Refuse and ULC as the parties on

appeal.    Nowhere did the Lehners name themselves in any capacity.

Indeed, the Lehners’ counsel, Biss, solely identified himself as

counsel for “Appellant, United Refuse LLC” in filing the notice of

appeal and the appellate brief.             Furthermore, the notice of appeal

failed to contain any signifiers such as “all the parties,” “et

al.,” or “the plaintiffs” that would indicate that parties other

than United Refuse and ULC were implicated in the appeal.                         Cf.

Dodger’s Bar & Grill,       32 F.3d at 1440 (holding that designation of

additional plaintiffs as “et al.” and “other individually-named

plaintiffs”      was    sufficient    to     satisfy   Rule   3(c));      see    also

Fadayiro, 371 F.3d at 922 (finding compliance where the appellant

solely identified one defendant in the notice of appeal, but

appended the names of the remaining defendants to the notice of

                                        13
appeal).    From the face of the notice of appeal itself, we are hard

pressed to conclude, by any stretch of the imagination, that the

Lehners    specified   themselves    as   appellants,    or   that   it    was

“objectively clear” that the Lehners intended to appeal.

      The Lehners nevertheless contend that the totality of the

circumstances demonstrates that they intended to appeal.                       In

effect, the Lehners request this Court to infer that they were the

real parties in interest for the purposes of the appeal.                       We

decline to make that assumption because in the bankruptcy context,

as   the   Seventh   Circuit   has   observed,   not    all   parties     to    a

bankruptcy decision will necessarily be involved in the appeal:

      A bankruptcy will often spawn multiple subproceedings.
      Whereas in normal civil litigation it can be safely
      assumed that everyone who is not an appellant must be an
      appellee, that is not a safe assumption in bankruptcy.
      Many parties will be bystanders to a particular adversary
      proceeding, or other subproceedings, that has given rise
      to the appeal. It is therefore important that the notice
      of appeal name the appellees.

Fadayiro, 371 F.3d at 922.     Thus, even if Rule 3(c) applied in this

context, the Lehners have failed to meet its pleading standard.6

      6
      The Lehners’ assertion that a cover letter attached to the
notice of appeal identified them as appellants was never presented
to the district court.      Nor was the letter included in the
appellate record. Therefore, we decline to consider this argument
on appeal.
     In addition, because we find that the Lehners have failed to
satisfy the liberalized pleading standard of Rule 3(c), we cannot
waive its jurisdictional requirements even in the face of “good
cause.”   Torres, 487 U.S. at 317.    Thus, we cannot notice the
Lehners’ equitable concerns--i.e., that they are now precluded from
raising an appeal--in waiving the requirements of Rule 3(c).

                                     14
     In sum, the Lehners, as parties bound by the bankruptcy

court’s challenged decision, were required to name themselves as

appellants in accordance with Rule 8001(a).          We further conclude

that the Lehners’ failure to do so was not the result of clerical

mistake or inartful pleading under either Rule 8001(a) or Rule

3(c). Accordingly, we affirm the district court’s dismissal of the

bankruptcy appeal.

                                    B.

     The Lehners alternatively assert that the district court

abused   its   discretion   in   denying   their   motion   to   substitute

themselves for United Refuse as parties to the appeal.                 The

district court denied the motion without comment.           We perceive no

error in the district court’s decision.

                                    1.

     We review the district court’s denial of the Lehners’ motion

to substitute themselves for United Refuse in prosecuting the

bankruptcy appeal for abuse of discretion.         See Esposito v. United

States, 368 F.3d 1271, 1273 (10th Cir. 2004) (internal citations

omitted).

                                    2.

     Rule 17(a) of the Federal Rules of Civil Procedure provides,

in relevant part:

     No action shall be dismissed on the ground that it is not
     prosecuted in the name of the real party in interest

                                    15
         until a reasonable time has been allowed after objection
         for ratification of commencement of the action by, or
         joinder or substitution of, the real party in interest;
         and such ratification, joinder, or substitution shall
         have the same effect as if the action had been commenced
         in the name of the real party in interest.

Fed. R. Civ. P. 17(a).          On appeal, the Lehners simply assert that

denial was inappropriate because they are the real parties in

interest and that justice can only be served if the appeal is

permitted to proceed. However, because the Lehners failed to raise

these arguments before the district court, we deem them waived on

appeal.      In re Wallace and Gale Co., 385 F.3d 820, 835 (4th Cir.

2004) (failure to raise argument before the district court results

in   a    waiver   of   that   argument    on   appeal   “absent   exceptional

circumstances”).         Accordingly, we affirm the district court’s

disposition of the motion.

                                     III.

         The district court’s dismissal of the bankruptcy appeal and

denial of the motion to substitute parties is affirmed in its

entirety.

                                                                      AFFIRMED

                                      16