United States District Court, M.D. Louisiana
RULING AND ORDER
A. JACKSON, CHIEF JUDGE
the Court is an appeal of an order, issued by the United
States Bankruptcy Court for the Middle District of Louisiana,
approving a settlement in a Chapter 7 bankruptcy case.
Appellant Susan Raborn filed an Emergency Motion for Stay
Pending Appeal (Doc. 4) and an Amended Emergency Motion for
Stay Pending Appeal (Doc. 16). Appellees James G. Muller,
Betsy R. Muller; Karen R. Rogers, and Pedicons, Inc. filed a
Motion to Dismiss the Appeal for Lack of Standing (Doc. 19),
and a Motion to Strike Attachments Improperly Included in the
Record on Appeal (Doc. 33). Appellees and Martin A. Schott,
Trustee, filed a Motion to Dismiss Appeal for Mootness. (Doc.
44). The parties filed oppositions (Doc. 13, 24, 34), and Ms.
Raborn filed a Brief. (Doc. 40). For the following reasons,
the Emergency Motion for Stay Pending Appeal (Doc. 4) and the
Amended Emergency Motion for Stay Pending Appeal (Doc. 16)
are DENIED, the Motion to Dismiss the Appeal for Lack of
Standing (Doc. 19), the Motion to Strike (Doc. 33), and the
Motion to Dismiss Appeal for Mootness (Doc. 44) are GRANTED.
The decision of the Bankruptcy Court is AFFIRMED.
Charles Raborn sold Ms. Susan Raborn 245 shares of stock in a
family medical management company called Pedicons in 2006,
but in 2013 when she failed to pay the purchase price he sued
to dissolve the stock sale. In re Raborn, No.
15-10938, 2017 WL 1417204, at *2 (Bankr. M.D. La. Apr. 20,
2017). Dr. Raborn won a unanimous jury verdict in Louisiana
state court, dissolving the stock sale and recognizing Dr.
Raborn as the stock's owner. Id.
August 10, 2015, Ms. Raborn filed for Chapter 11 bankruptcy.
In re Raborn, Doc. 1. The Bankruptcy Court then
converted the Chapter 11 case to a Chapter 7 liquidation case
on August 31, 2016. Id. at Doc. 609. Martin Schott
was then appointed as the Trustee for Ms. Raborn's
bankruptcy estate. Id. at Doc. 644. The Trustee then
sued Dr. Raborn in the Bankruptcy Court to recover the stock
lost in the state court judgment. In re Raborn, 2017
WL 1417204, at *2.
February 13, 2017, Martin Schott, the Trustee, filed a Motion
to Approve a Settlement. In re Raborn, Doc. 705. The
settlement will bring the estate $405, 000 and terminate
pending litigation in federal and state courts. In re
Raborn, 2017 WL 1417204, at *1. Ms. Raborn objected to
the settlement. Id. On March 10, 2017, the
Bankruptcy Court held an evidentiary hearing on the
settlement. Id. at *5.
April 24, 2017, the Bankruptcy Court approved the settlement.
In re Raborn, Doc. 761. On May 2, 2017, Ms. Raborn
filed a Motion for Reconsideration of the Bankruptcy
Court's Order that approved the settlement. In re
Raborn, Doc. 763. On May 4, 2017, Ms. Raborn filed an
Amended Motion for Reconsideration. Id. at Doc. 768.
On May 5, 2017, Ms. Raborn timely filed a notice of appeal
challenging the Bankruptcy Court's decision. (Doc. 1). On
July 13, 2016, the Bankruptcy Court granted the Amended
Motion for Reconsideration in part, and "reserve[d] the
debtor's claim to an exemption under applicable law of
Pedicons dividends, which the trustee shall retain pending
further order of the court." Id. at Doc.
On July 26, 2017, Ms. Raborn timely filed an Amended Notice
of Appeal challenging the Bankruptcy Court's Order on her
Amended Motion for Reconsideration. (Doc. 31-1).
STANDARD OF REVIEW
bankruptcy appeals, district courts review bankruptcy court
rulings and decisions under the same standards employed by
federal courts of appeal. Carrieri v. Jobs.com
Inc., 393 F.3d 508, 517 (5th Cir. 2004). A
bankruptcy court's findings of fact are reviewed for
clear error and its conclusions of law de novo. Carrieri
v. Jobs.com Inc., 393 F.3d 508, 517 (5th Cir.
2004). Under the clearly erroneous standard, this court will
reverse "only if, on the entire evidence, we are left
with the definite and firm conviction that a mistake has been
made." Walker v. Cadle Co., 51 F.3d 562, 565
(5th Cir. 1995). A bankruptcy court's dismissal for lack
of standing is reviewed de novo. Joffroin v. Tufaro,
606 F.3d 235, 238 (5th Cir. 2010).
Motion to Strike Exhibits
threshold matter, the Court must determine the universe of
evidence that is part of the record on appeal. Appellees
Betsy R. Rogers, Karen R. Rogers, and James G. Muller and
Pedicons, Inc., request that the Court strike eight documents
from the record, including seven affidavits and the articles
of incorporation of Pedicons, Inc. (Doc. 33). Federal Rule of
Bankruptcy Procedure 8006 "provides that the record on
appeal from a bankruptcy court decision consists of
designated materials that became part of the bankruptcy
court's record in the first instance." In re SI
Restructuring Inc., 480 Fed.Appx. 327, 328-29 (5th Cir.
2012) (quoting In re CPDC, Inc., 337 F.3d 436, 443
(5th Cir. 2003). "The rule does not permit items to be
added to the record on appeal to the district court if they
were not part of the record before the bankruptcy
argue that the seven affidavits and the articles of
incorporation of Pedicons, Inc., that they seek to strike
were not part of the Bankruptcy Court record. (Doc. 33-1). On
April 13, 2017, the Bankruptcy Court ordered that Ms.
Raborn's post-hearing brief be stricken from the record
because she attached exhibits to it that she did not
introduce into evidence at the March 10, 2017 evidentiary
hearing. In re Raborn, Doc. 739. Appellees claim
that many of the exhibits that the Bankruptcy Court ordered
stricken are the same exhibits that Ms. Raborn now seeks to
make part of the record on appeal. (Doc. 33-1). The Court,
however, cannot view the documents that the Bankruptcy Court
ordered stricken from the record because they were entirely
removed from the electronic Bankruptcy Court docket. That
said, the Bankruptcy Court made clear which exhibits it
admitted in a minute entry following the March 10, 2017
hearing, and all of the exhibits that Appellees object to,
were not listed in the Bankruptcy Court's
order. Therefore, the Court will not rely on any
of these exhibits on appeal.