Sharpe v. DaVinci Company, LLC
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 3 months 3 weeks ago
- Case Type:
- Business
- Case Status:
- Reversed and Remanded
- Citation:
- 24-1889 (4th Circuit, Oct 31,2025) Not Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Fourth Circuit held a district court abused its discretion in dismissing an appeal owing to the appellant's failure to file a designation of the record on appeal and a statement of the issues on appeal. While the district court had discretion to dismiss under the circumstances, its dismissal order did not address each factor in the test used to guide the exercise of discretion set out in In re Serra Builders, Inc., 970 F.2d 1309 (4th Cir. 1992).
- Procedural context:
- The appellant's notice of appeal to the district court triggered a 14-day deadline for him to file and serve a designation of the record on appeal and a statement of issues on appeal. Fed. R. Bankr. P. 8009(a)(1)(A). The day before the deadline, the appellant moved the bankruptcy court to extend the deadline, which motion was granted. Before the extended deadline passed, the appellant filed several other pleadings in the bankruptcy court, but he did not timely designate the record on appeal or file a statement of the issues. The bankruptcy court recommended a sua sponte dismissal of the appeal. The appellant then filed an untimely designation of the record, which the bankruptcy court struck on the appellees' motion. The appellant never filed a statement of the issues on appeal. The district court issued an order to show cause, directing the appellant to explain why his appeal should not be dismissed owing to his failure to comply with Rule 8009(a)(1)(A). After receiving the appellant's response, the district court dismissed the appeal, citing the Serra Builders decision. The Serra Builders test requires a court to :“'(1) make a finding of bad faith or negligence; (2) give the appellant notice and an opportunity to explain the delay; (3) consider whether the delay had any possible prejudicial effect on the other parties; or (4) indicate that it considered the impact of the sanction and available alternatives,' keeping in mind that dismissal is a 'harsh sanction which a district court must not impose lightly.' [ ] Proper application of the Serra Builders test requires the court to consider and balance all relevant factors." The district court's order of dismissal found the appellant negligent in failing to comply with Rule 8009(a)(1)(A) and stated that, while the court gave the appellant an opportunity to explain his failure to comply, the explanation offered was inadequate. The order did not speak to the third or fourth factors.
- Facts:
- Debtor Port City Contracting Services, Inc. filed a chapter 7 petition in the U.S. Bankruptcy Court for the Eastern District of North Carolina. The appellant, Robert Sharpe, was Debtor's majority shareholder. Prepetition, Debtor and the appellant were sued in state court by appellees The DaVinci Company, LLC and DaVinci Aerospace, LLC (the "DaVinci Parties"), which resulted in a default judgment for damages against Debtor. Post-petition, the appointed chapter 7 trustee, appellee Algernon L. Butler, III, reached a mediated settlement with the DaVinci Parties. The bankruptcy court entered an order approving the settlement pursuant to Federal Rule of Bankruptcy Procedure 9019(a). The appellant appealed from this order to the U.S. District Court for the Eastern District of North Carolina.
- Judge(s):
- GREGORY, QUATTLEBAUM, and HEYTENS
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