Court Opinion

ID: 4457840
Source: CourtListenerOpinion
Date Created: 2019-11-21 17:00:41.394025+00
Date Added: 2024-06-11T14:51:20.230455
License: Public Domain

United States Bankruptcy Appellate Panel
                           For the Eighth Circuit
                       ___________________________

                               No. 19-6020
                       ___________________________

 In re: Johnny M. Belew, also known as John Belew, formerly doing business as
                      Belew and Bell, Attorneys at Law

                              lllllllllllllllllllllDebtor

                            ------------------------------

                                Johnny M. Belew

                       lllllllllllllllllllllDebtor - Appellant

                                          v.

                                  Bianca Rucker

                       lllllllllllllllllllllTrustee - Appellee

                                The Citizen's Bank

                   lllllllllllllllllllllInterested Party - Appellee
                                      ____________

                 Appeal from United States Bankruptcy Court
               for the Western District of Arkansas - Fayetteville
                                ____________

                         Submitted: October 30, 2019
                          Filed: November 21, 2019
                                ____________

Before SALADINO, Chief Judge, NAIL and DOW, Bankruptcy Judges.
                             ____________
NAIL, Bankruptcy Judge.

       Johnny M. Belew ("Debtor") appeals the May 31, 2019 order of the bankruptcy
court1 granting Trustee Bianca Rucker's ("Trustee") motion to approve her proposed
sale of certain assets to The Citizen's Bank ("Bank"). For the reasons discussed
below, we dismiss this appeal.

                                   BACKGROUND

      Debtor filed a petition for relief under chapter 7 of the bankruptcy code.
Trustee assumed her duties shortly thereafter.2

      In the course of carrying out her duties, Trustee received an offer from Bank
to purchase

               all of the bankruptcy estate’s causes of action (except for
               the objection to exemption that is currently on appeal[3]),
               and any and all residual assets of the estate for a lump sum
               payment of eleven thousand dollars ($11,000.00), with an
               option to purchase the value of any disallowed exemption
               to the extent the ruling under appeal is reversed and
               [Debtor's] exemption on appeal and/or remand is
               disallowed, for an additional $1,000.00 from . . . Bank,
               without further notice.

      1
        The Honorable Ben T. Barry, Chief Judge, United States Bankruptcy Court
for the Eastern and Western Districts of Arkansas.
      2
      One such duty is to "collect and reduce to money the property of the estate for
which such trustee serves[.]" 11 U.S.C. § 704(a)(1).
      3
          Bianca Rucker v. Johnny M. Belew, No. 18-3045 (8th Cir.)

                                           -2-
The only other offer Trustee received for these assets was from Debtor, who offered
to purchase them for $10,000.00. Believing Bank's offer to be in the best interests of
the bankruptcy estate, Trustee filed a motion seeking the bankruptcy court's approval
of this sale.4

      Debtor objected to Trustee's motion. Following an evidentiary hearing, the
bankruptcy court enter its order approving Trustee's proposed sale.

       Debtor timely appealed. However, Debtor did not ask the bankruptcy court to
stay either its order approving Trustee's proposed sale or the sale itself, and Trustee
and Bank completed the sale.

      In their opening brief, Trustee and Bank raised the issue of whether their
completion of the sale rendered this appeal moot. Our review of the record revealed
an additional issue, i.e., whether Debtor has standing to appeal. We therefore directed
the parties to address both issues, which they did.

                                   DISCUSSION

       We have an independent duty to examine our jurisdiction. Robb v. Harder (In
re Robb), 534 B.R. 354, 356-57 (B.A.P. 8th Cir. 2015). If this appeal is moot, we
lack jurisdiction. Sears v. U.S. Trustee (In re AFY), 734 F.3d 810, 816-17 (8th Cir.
2013). If Debtor does not have standing, we likewise lack jurisdiction. O & S
Trucking, Inc. v. Mercedes Benz Financial Services USA (In re O & S Trucking, Inc.),
811 F.3d 1020, 1025 (8th Cir. 2016). We may decide these issues in any order. AFY,
734 F.3d at 816.

      4
        "The trustee, after notice and a hearing, may . . . sell . . . property of the
estate[.]" 11 U.S.C. § 363(b)(1).

                                          -3-
        Whether this appeal is moot is readily resolved by reference to the bankruptcy
code.

              The reversal or modification on appeal of an authorization
              . . . of a sale . . . of property does not affect the validity of
              a sale . . . under such 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 . . . were stayed pending
              appeal.

11 U.S.C. § 363(m). Absent a stay pending appeal, this "finality rule" prevents a
court from undoing a completed sale to a good-faith purchaser. Nieters v. Sevcik (In
re Rodriquez), 258 F.3d 757, 759 (8th Cir. 2001).

       As previously noted, Debtor did not obtain a stay pending appeal. He does not
dispute the sale has been completed. And he does not suggest Bank was not a good-
faith purchaser.

      Under the circumstances, the sale authorized by the bankruptcy court cannot
be undone. This appeal is therefore moot. Griffin v. Griffin (In re Griffin), 310 B.R.
135, 137 (B.A.P. 8th Cir. 2004); Prasil v. Dietz (In re Prasil), 215 B.R. 582, 584
(B.A.P. 8th Cir. 1998).

       Whether Debtor has standing is also readily resolved. To have standing to
appeal an order, an appellant must demonstrate he or she is a person aggrieved by the
order. Robb, 534 B.R. at 357. Under the "person aggrieved" doctrine, only
appellants who are directly and adversely affected pecuniarily by an order have
standing to appeal that order. Nangle v. Surratt-States (In re Nangle), 288 B.R. 213,
216 (B.A.P. 8th Cir. 2003). Put another way, only appellants who have a financial
stake in an order have standing to appeal that order. Id.

                                            -4-
      In most chapter 7 cases, the debtor does not have such a financial stake,
because no matter how the trustee administers the bankruptcy estate's assets, none of
those assets will be returned to the debtor. Williams v. Marlar (In re Marlar), 252
B.R. 743, 748 (B.A.P. 8th Cir. 2000). However, in some chapter 7 cases,

             a trustee might be able to satisfy all allowed claims and
             have money left over. This would entitle the debtor to a
             distribution of the balance under 11 U.S.C. § 726(a)(6). If
             the debtor can show a reasonable possibility of a surplus
             after satisfying all debts, then the debtor has shown a
             pecuniary interest and has standing to object to a
             bankruptcy order.

Nangle, 288 B.R. at 216.

       This is not such a case. Before Debtor would be entitled to any surplus,
Trustee would have to pay (1) priority claims (including Trustee's attorney's fees and
expenses and Trustee's own fees and expenses), (2) allowed and timely-filed
unsecured claims, (3) allowed but tardily-filed unsecured claims, and (4) allowed
claims for certain fines, penalties, forfeitures, and damages, all in full, with interest
at the legal rate from June 13, 2017, the date on which Debtor filed his petition for
relief. 11 U.S.C. § 726(a); Bank of Nebraska v. Rose (In re Rose), 483 B.R. 540, 546
(B.A.P. 8th Cir. 2012).

       As Trustee and Bank point out, according to Debtor's amended schedule A/B,
all of Debtor's assets are worth only $3,052.305 (most, if not all, of which Debtor has
claimed exempt), while according to the bankruptcy court's claims register, the
unsecured claims alone total $2,228,698.43. Given these figures, it is not surprising

      5
       This figure does not include the $11,000.00 Trustee received from Bank for
the causes of action and the residual assets.

                                          -5-
Debtor does not even attempt to explain how Trustee might be able to satisfy all
allowed claims and have money left over to return to Debtor.

      Debtor has not shown any possibility–much less a reasonable possibility–of a
surplus in this case. Consequently, he does not have a financial stake in the
bankruptcy court's order approving Trustee's proposed sale and thus lacks standing
to appeal that order.

                                 CONCLUSION

       Both because this appeal is moot and because Debtor does not have standing
to appeal the bankruptcy court's order approving Trustee's proposed sale, we lack
jurisdiction and must dismiss this appeal.

                                       -6-