Katebian v. Ogier (In re Morrow GA Investors, LLC)
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 6 months 3 days ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- No. 23-13134 (11th Circuit, Aug 14,2025) Not Published
- Tag(s):
-
- Ruling:
- In a very short opinion, the U.S. Court of Appeals for the Eleventh Circuit affirmed a district court's dismissal of an appeal of a settlement, which included a sale approved under 11 U.S.C. § 363(b), as equitably moot. Judge Newsom filed a concurrence to explain "why the [ ] appeal is not equitably but rather statutorily moot" as the bankruptcy court approved a good-faith sale and the objecting appellants did not obtain a stay of the order pending appeal as § 363(m) requires. Judge Newsom expressed that "[c]onfining equitable mootness to the reorganization-plan setting makes sense[.]"
- Procedural context:
- Judge Newsom's concurrence outlines the law on the doctrines of constitutional, equitable, and statutory mootness. The concurrence explains the district court's reasoning in deciding to dismiss Appellants' initial appeal based on equitable mootness. It also explains Judge Newsom's view that "statutory mootness is a better fit here than equitable mootness—both as a matter of our own caselaw and in light of the doctrines’ distinct functions. ... There’s no need to apply an expanded equitable-mootness rule in this case because the doctrine’s statutory cousin is right on the mark. While equitable mootness safeguards third parties, the debtor, and the bankruptcy plan itself, statutory mootness’s focus is more targeted. Section 363(m) principally protects only two parties: the seller of bankruptcy-estate property and, most importantly, the good-faith purchaser. ... True enough, both mootness doctrines yield the same outcome here. But equitable mootness is a judicial invention that I’d prefer not to extend lest the doctrine chip away at our 'virtually unflagging obligation' to decide cases that Congress has authorized us to decide. Unlike equitable mootness, statutory mootness doesn’t contravene Congress’s prescription—it obeys it. I would have preferred to resolve this case by cleaning up the fuzzy boundaries between the two mootness doctrines and making clear that [Appellants'] appeal is statutorily moot."
- Facts:
- Debtor Morrow GA Investors, LLC filed a chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the Northern District of Georgia after defaulting on a loan used to acquire an office building. Appellants Payam Katebian and Morteza Katebian guaranteed the loan. When the loan matured, the original lender commenced non-judicial foreclosure proceedings and later assigned its interest in the loan to Appellee 1590 Adamson, LLC ("Adamson"). "Having 'obligate[d] [themselves] to pay [Morrow’s] debt,' the Katebians gained a subrogation right against Morrow, giving them a financial stake in Morrow’s bankruptcy estate. [ ] The bankruptcy estate’s primary asset was the building that Morrow had bought with the loan." Adamson filed a claim in the case, to which Appellants and the appointed Chapter 11 Trustee (Appellee Tamara Ogier) objected. Trustee (on behalf of the estate) and Adamson then agreed to a settlement: Adamson agreed to reduce the value of its secured claim, and Trustee agreed to market the property at that value (the "Settlement Order"). Appellants perceived that Adamson's secured claim had been over-valued and thus appealed the Settlement Order to the U.S. District Court for the Northern District of Georgia--but did not seek or obtain a stay of the bankruptcy proceedings pending appeal. No buyers came forward, and Adamson acquired the property via a credit bid at the full value of its secured claim. The bankruptcy court approved the sale to Adamson under 11 U.S.C. § 363(b); Appellants did not object to the motion to approve the sale or appeal from the resulting order. The district court then dismissed Appellants' appeal of the Settlement Order as equitably moot and Appellants sought further review at the Eleventh Circuit.
- Judge(s):
- NEWSOM, GRANT, and ABUDU
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