Riffenburg v. Rice (In re Roper)

Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
2 months 2 days ago

Case Type:

Consumer

Case Status:

Dismissed

Citation:

No. 25-6008 (8th Circuit, Dec 16,2025) Published

Tag(s):

Ruling:

Over a dissent, the U.S. Bankruptcy Appellate Panel for the Eighth Circuit dismissed an appeal from an order approving a Chapter 7 Trustee's free-and-clear sale of a debtor's half-interest in real property. The co-owner (the debtor's ex-spouse) appealed from the sale order but did not obtain a stay from the bankruptcy court pending appeal. While the appeal was pending, the Trustee consummated the sale. The panel agreed with the Trustee's argument that the appeal became statutorily moot under 11 U.S.C. § 363(m) as a result of the sale.

Procedural context:

After the bankruptcy court denied the co-owner/Appellant's motion to stay the sale pending appeal on June 20, 2025, Appellant did not immediately move the Bankruptcy Appellate Panel for a stay pending appeal. Appellant filed his appellate brief on August 8 and, five days thereafter, filed an emergency motion for a stay with the panel. Before that motion was decided, Trustee executed a deed conveying the estate's half-interest in the real property. Trustee then moved the panel to dismiss the appeal. While the panel majority concluded the appeal became statutorily moot after the sale, Judge Norton disagreed. She explained that, while the record lacked evidence that the purchaser acted in bad faith, "the converse is also true: there are no allegations or evidence that the purchaser is a good faith purchaser. In the absence of such evidence, the limited safe harbor of § 363(m), by its express terms, does not apply to this appeal. And I think there are reasons to question whether the appeal is otherwise constitutionally moot."

Facts:

Debtor Vanessa Roper, while married to Appellant Logan Riffenburg, purchased real property in Arkansas in 2021. They divorced in 2022. In the divorce, Debtor and Appellant agreed to transfer the real property to their daughter, Claudia. Neither took steps to do so and Appellant continued to live at the real property with Claudia. In 2023, after Debtor re-married, she and her spouse filed a joint bankruptcy petition in the U.S. Bankruptcy Court for the Eastern District of Arkansas. Chapter 7 Trustee/Appellee Mark Randy Rice filed an adversary proceeding against Appellant and Claudia "to avoid the anticipated but unconsummated transfer of [Debtor's] interest in the Real Property to Claudia [ ] and seeking a finding that the Trustee is a bona fide purchaser for value under § 544(a)(3) with an interest superior to Claudia [ ], among other claims." Appellant and Claudia defended the case but the bankruptcy court found in Trustee's favor, holding "Debtor’s interest in the real property constitutes and remains property of the bankruptcy estate." Trustee then moved to approve a sale of the bankruptcy estate's half interest in the real property to Blue Sun Capital LLC. Appellant and Claudia objected. After conducting an evidentiary hearing, the bankruptcy court granted Trustee's motion, stating in an oral ruling "that the sale was in good faith, for fair value and in the best interests of the bankruptcy estate." As to good faith, the bankruptcy court "focused on the Trustee’s conduct, concluding that the Trustee had the right and obligation to sell the bankruptcy estate’s interest in the Real Property. . . . The bankruptcy court made no specific findings regarding the good faith of the buyer under 11 U.S.C. § 363(m)." Appellant timely appealed from the order granting the motion approving the sale within one week of its entry on May 15, 2025, and, two weeks later, moved the bankruptcy court to stay the sale pending resolution of the appeal. The bankruptcy court denied that motion on June 20, 2025. With no stay in place, Trustee sold the real property on August 19, 2025, and then moved the Bankruptcy Appellate Panel to dismiss the appeal as statutorily moot.

Judge(s):

Hastings, Surratt-States, and Norton

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