United States District Court, W.D. Louisiana, Shreveport Division
HAROLD L. ROSBOTTOM, JR.
GERALD H. SCHIFF, TRUSTEE
HORNSBY MAGISTRATE JUDGE.
ELIZABETH ERNY FOOTE UNITED STATES DISTRICT JUDGE.
before the Court is an appeal filed by the Appellant, Harold
L. Rosbottom, Jr. ("Rosbottom"), of an order issued
by the Bankruptcy Court dated June 8, 2016, denying a motion
entitled "Rule 60(b) Motion to Vacate the Chapter 11
' Confirmation Plan." [Record Doc. 1]. The Appellees
are the Chapter 11 Bankruptcy Trustee, Gerald Schiff
("Schiff" or "Trustee"), Louisiana Truck
Stop and Gaming, LLC ("LTSG"), and Leslie Fox
("Fox"). [Record Doc. 27]. For the reasons assigned
herein, the decision of the Bankruptcy Court is
AND PROCEDURAL BACKGROUND
filed for Chapter 11 bankruptcy in 2009 during a contentious
divorce from his now ex-wife, Fox. Rosbottom originally
functioned as the debtor-in-possession managing the Chapter
11 bankruptcy estate. However, during the course of the
bankruptcy certain irregularities became apparent, prompting
the Bankruptcy Court to appoint Schiff as Chapter 11 Trustee.
[Bankr. Doc. 846]. The irregularities eventually led to a
criminal indictment against Rosbottom for bankruptcy related
crimes. See LUL v. Rosbottom. USDC, W.D. La.,
5:11-cr-0272. On September 28, 2012, Rosbottom was convicted
on eight counts, including conspiracy to commit bankruptcy
fraud, transfer of assets, concealment of assets, false oath,
and conspiracy to launder monetary instruments. Id.
Rosbottom is currently serving a 120-month term in federal
months later, Schiff filed a Chapter 11 Plan of
Reorganization ("Plan") wherein Rosbottom's
interests in the bankruptcy estate were equitably
subordinated pursuant to 11 L).S.C. § 510(c) to all
other interests, including Fox, due to his criminal
conviction for bankruptcy crimes against the
estate. On April 22, 2013, the Bankruptcy Court
held a confirmation hearing regarding the Plan, including the
equitable subordination of Rosbottom's interests. [Bankr.
Docs. 1742 and 2076]. On May 1, 2013, the Bankruptcy Court
entered an order confirming the Plan of Reorganization.
[Bankr. Doc. 1745]. On May 3, 2013, Rosbottom timely filed a
Notice of Appeal with this Court. [Bankr. Doc. 1749; USDC,
W.D. La, 5:13-cv-2431, Record Doc. 1]. However, on August 14,
2013, his appeal was dismissed for failure to prosecute.
[USDC W.D. La., 5:13-cv-2431, Record Doc. 6].
April 25, 2016, Rosbottom filed a pro se motion in Bankruptcy
Court entitled "Rule 60(b) Motion to Vacate Order
Equitably Subordinating the Interest of HLR in the Post
Administration Estate." [Bankr. Doc. 1944]. The motion
sought to revoke the portion of the Bankruptcy Court's
confirmation order concerning the equitable subordination of
Rosbottom's interests in the estate. The Bankruptcy Court
held a hearing on the motion on June 7, 2016. [Bankr. Doc.
2080]. Rosbottom appeared by telephone from FCI Butner, North
Carolina. Fox and counsel for the Trustee appeared in person.
8, 2016, the Bankruptcy Court denied Rosbottom's motion,
and issued a written opinion. [Bankr. Doc. 2003]. First, the
Bankruptcy Court considered whether notice and service of the
Disclosure Statement, proposed Chapter 11 Plan, and related
hearings were proper in light of the equitable subordination
clause. Rosbottom argued in his motion that the
confirmation order of the Chapter 11 Plan should be vacated
because he was not provided proper service or notice of
certain pleadings, or of certain hearings. [Bankr. Doc.
1944]. The Bankruptcy Court disagreed, finding that the
record reflected that Rosbottom received proper notice and
service of the Disclosure Statement and the proposed Chapter
11 Plan. The Bankruptcy Court noted that the record reflected
that Rosbottom received both electronic and paper copies. The
Bankruptcy Court also noted that the record reflected that
Rosbottom filed numerous objections to the proposed Chapter
11 Plan, which were considered and overruled. Thus, the
Bankruptcy Court found no error with service or notice
provided to Rosbottom under the Federal Rules of Bankruptcy
Procedure ("FRBP"). The Bankruptcy Court also held
that given the record, service was constitutionally
sufficient. [Bankr. Doc. 2003 at 7].
the Bankruptcy Court considered whether it erred by not
issuing written findings of fact or conclusions of law
regarding the equitable subordination of Rosbottom's
interest in the estate. Id. Rosbottom argued that
the lack of written findings warranted vacating the Plan. The
Bankruptcy Court disagreed, noting that FRBP 7052
specifically provides that findings of fact and conclusions
of law may be orally entered in the record in open court,
which is what happened in this instance.
the Bankruptcy Court found that even if there were a legal
error in the confirmation process, the confirmation order
remains final and binding upon Rosbottom because he had
notice of the alleged errors and failed to prosecute his
appeal. Based on this finding, the Bankruptcy Court found
that "a motion under Rule 60(b)(4) is not a substitute
for a timely appeal." [Bankr. Doc. 2003 at 8 (citing
Kocher v. Dow Chem. Co., 132 F.3d 1225, 1229 (8th
Cir. 1997))]. The Bankruptcy Court concluded that
Rosbottom's motion was a collateral attack of the
confirmation order. Rosbottom timely appealed the Bankruptcy
Court's order. [Record Doc. 1-1].
Court has appellate jurisdiction over final judgments,
orders, and decrees issued by the bankruptcy court. 28 U.S.C.
reviewing a decision by the Bankruptcy Court, this Court
functions as an appellate court, applying the same standards
of review generally applied to federal appellate courts.
Webb v. Reserve Life Ins. Co., 954 F.2d 1102,
1103-04 (5th Or. 1992). This court reviews discretionary
decisions made by the Bankruptcy Court under an abuse of
discretion standard. In re ASARCO LLC, 702 F.3d 250,
257 (5th Cir. 2012). This court reviews a Bankruptcy
Court's findings of fact for clear error. Id.
Legal conclusions are reviewed de novo. Id.
has raised both procedural and substantive issues concerning
the confirmation of the Plan in his appeal of the Bankruptcy
Court's denial of his Rule 60(b) motion. Rosbottom argues
that the confirmed Plan should be vacated due to alleged
deficiencies with notice and service during the confirmation
process. He also argues that the confirmation order is
insufficient because the Bankruptcy Court did not issue
separate findings of fact and conclusions of law or a
separate judgment. The Court will review these issues.
also asserts various arguments regarding the substance of the
confirmed Plan, including issues of fairness, equity, and the
accuracy of calculations contained within the Plan. The Court
will not review Rosbottom's arguments regarding the
substance of the confirmed Plan because these are matters
that should have been addressed in a direct appeal of the
Plan. For the reasons assigned herein, the Plan and
confirmation order are final and Rosbottom has waived all
arguments relating to the substance of the confirmed Chapter
Federal Rule of Civil Procedure 60(b) - Generally
Rule of Civil Procedure 60(b) provides that a court may grant
relief from a final judgment under certain circumstances when
"just terms" are present. Relief from a final
judgment may be granted for any of the following reasons: (1)
mistake, inadvertence, surprise, or excusable neglect; (2)
newly discovered evidence that could not have been discovered
in time to move for a new trial under Rule 59(b); (3) fraud,
misrepresentation, or misconduct by opposing party; (4) the
judgment is void; (5) the judgment has been satisfied,
released, or discharged; or (6) any other reason that
justifies relief. Fed.R.Civ.P. 60(b).
motion pursuant to "Rule 60(b) may not be used as a
back-door substitute for an omitted appeal, and, in all but
the most exceptional circumstances, a party's neglect to
prosecute a timely appeal will bar relief under the
rule." Carter v. Fenner, 136 F.3d 1000, 1006 (5th Cir.
1998) (citing Hoult v. Hoult 57 F.3d 1, 3 (1st Cir.
1995)). Although presented as a Rule 60(b) motion,
Rosbottom's motion is clearly an attempt to collaterally
attack the substance of the confirmed Plan. Rosbottom does
not explain why he filed a timely appeal of the confirmed
Plan and then neglected to pursue the appellate process.
Regardless, the abandonment of his appeal renders the Plan
and its contents final and binding. Eubanks v. FDIC.
977 F.2d 166, 171 (5th Cir. 1992); Republic Supply Co. v.
Shoaf, 815 F.2d 1046, 1050 (5th Cir. 1987). There is a
firm rule within the Fifth Circuit that a Rule 60(b) motion
is not a substitute for an appeal. In re Air Crash at
Dallas/Fort Worth Airport, 852 F.2d 842, 844 (5th Cir.
1988). Accordingly, this Court will not entertain
Rosbottom's arguments regarding alleged unfairness of the
Plan, including whether it was proper to equitably
subordinate his interests and in the amount described in the
Plan. However, the Court will review Rosbottom's motion
to the extent it raises legitimate issues appropriately
considered under Rule 60(b).
Federal Rule of Civil Procedure ...