Smyth v. Simeon Land Development, L.L.C. (In re Escarent Entities, L.P.)

Summarized by Lyndel Vargas , Cavazos Hendricks Poirot, PC
12 years 10 months ago

Citation:

In the Matter of Escarent Entities, LP/ Smyth v Simeon Land Development, LLC et.al., Case No. 12-50297 (5th Cir. 2013)UNPUBLISHED

Tag(s):

Ruling:

Following In re Gilchrist, 891 F. 2d 559, 560, the Circuit Court affirmed the District Court's holding that the appeal of a sale order of the Bankruptcy Court was moot as Appellant had not obtained a stay order pending appeal, therefore the Circuit Court could neither modify nor reverse the sale order.District Court had not committed error in dismissal of bankruptcy appeal as 11 U.S.C.Section 363(m) prevented the District Court from modifying the sale order. Footnote 2 also contains finding that Appellant had lost standing when he did not challenge the sale order.

Procedural context:

Debtor, Escarent, had obtained approval to intervene in a removed adversary, originally brought by Appellant, Smyth, in State Court, on the basis that the causes of action appeared to be property of the estate. Smyth had been appointed representative of the Chapter 11 Debtor to prosecute the claims but had not pursued them. Appellant moved for conversion, which was granted. Chapter 7 Trustee then sold all causes of action to Appellees. When Appellees filed a motion to dismiss the claims, Appellant filed a motion to remand the state court action and state law claims asserting that the Bankruptcy Court did not have jurisdiction to sell the claims. Appellees' motion to dismiss the claims in the adversary was granted and Appellant appealed to the District Court. The District Court dismissed the appeal as moot.

Facts:

Escarent Entities,LP had been created to buy and then sell a parcel in Hays County and had entered into a contract for a sale just before it filed for bankruptcy. Limited Partner, Smyth (Appellant), sued the General Partner and the two other Limited Partners (now Appellees) in state court asserting that the bankrupcty filing was a breach of fiduciary duty to prevent the pending sale, and alleged claims of negligence, tortious interference with contract, breach of contract, conspiracy and breach of fiduciary duty allegedly causing injury "to the Partnership and [Smyths' interest therein]". Appellees removed the suit to the Bankruptcy Court. Appellant then moved to remand on the basis that some of the claims were his individual claims, but the Bankruptcy Court denied remand finding that the claims appeared to be property of the estate. They were not prosecuted and the bankruptcy was converted to a Chapter 7. The Chapter 7 Trustee filed a motion to sell the claims to Appellees and Appellant did not object. The sale order was entered and then Appellees' motion to dismiss the claims against themselves was granted. That dismissal order was appealed by Smyth.

Judge(s):

DeMoss, Owen and Haynes. Judge Haynes concurred in the judgment only.

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