Reach, Incorporated v. J. Smith

Case Type:
Business
Case Status:
Affirmed
Citation:
19-60175 (5th Circuit, Nov 20,2019) Not Published
Tag(s):
Ruling:
Adding judicial gloss to its earlier Sneed Shipbuilding decision, the Court explained that not all appeals are statutorily moot under 363(m), particularly where there is no evidence of "mutual dependence" between the sale order and the distribution of proceeds therefrom. Creditor here appealed an order disallowing its secured claim. Noting that "there is nothing in the record that suggests that the sale of the farm was dependent on how the proceeds of that sale were to be distributed," the Court declined to dismiss the appeal as statutorily moot. Instead, Court AFFIRMED dismissal as untimely.
Procedural context:
Creditor appealed two orders from the bankruptcy court. District court dismissed appeals of both orders as moot under 11 U.S.C. 363(m). This appeal followed.
Facts:
Debtor filed bankruptcy on March 31, 2016. On January 25, 2017, the trustee filed a motion to sell the farm. Creditor-appellant Reach, Incorporated did not object to the sale. The sale order was entered on March 16, 2017. The trustee filed a notice of sale, notifying parties of the auction to be held on May 19, 2017. Eight days before the sale--well over six months after the claims bar date--Reach filed a proof of claim, asserted a secured claim against the farm. The trustee immediately filed an objection to the claim. Then, the day before the auction, Reach file an "objection" to the sale, asking the bankruptcy court to enjoin the sale and determine that Reach's security interest in the farm was valid. The sale closed, notwithstanding these last-minute filings, and the trustee moved to confirm the sale and approve the auctioneer fee payments. Reach did not object to the motion, but did file an adversary proceeding on June 13, 2017, seeking injunctive relief. On June 22, 2017, the bankruptcy court entered an order confirming the sale. On July 5, 2017, the bankruptcy court entered an order sustaining the trustee's objection and disallowing Reach's late-filed secured claim. First, reach filed a notice of appeal of the order confirming the sale. This was filed on July 13th -- past the 14 day appeal period. Then, on October 23, 2017, Reach filed an amended notice of appeal--this time to challenge the order disallowing Reach's proof of claim. The amended notice was filed well after the 14-day appeal period as well. The district court dismissed the appeal as moot on both grounds, concluding that Reach was seeking relief that was barred under 11 U.S.C. 363(m).
Judge(s):
King, Graves, Willett (per curiam)

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