United States District Court, E.D. Louisiana
18 AUDUBON PLACE, LLC, RICHARD GOLDENBERG, KAREN B. GOLDENBERG
SBN V FNBC LLC, et al.
ORDER & REASONS
W. ASHE UNITED STATES DISTRICT JUDGE.
October 31, 2018, the debtor, 18 Audubon Place, LLC (the
“Debtor”), and tenants, Richard Goldenberg and
Karen Goldenberg (the “Tenants”) (collectively
“Appellants”), filed an emergency motion (R. Doc.
4) to stay portions of the bankruptcy court's order of
October 16, 2018 (the “Order”) pending appeal
pursuant to Rules 7062 and 8007(b) of the Federal Rules of
Bankruptcy Procedure and without posting bond pursuant to
Rule 62(d) of the Federal Rules of Civil Procedure. In
relevant part, the bankruptcy court ordered the eviction of
Tenants from 18 Audubon Place, New Orleans (the
“Property”) by no later than November 10, 2018.
Appellants appealed the Order to this Court on October 19,
2018,  and the appeal remains pending. As
required, the Debtor first sought this stay from the
bankruptcy court, but it was denied. Appellants now seek relief
in this Court.
requested expedited consideration of their motion for stay,
which the Court granted, ordering that any oppositions to the
motion be filed by November 5 and that the motion for stay
would be submitted on November 7. Thereafter, appellee SBN V
FNBC LLC (“SBN”) filed an opposition to the
motion for stay (R. Doc. 6), as did the appointed trustee,
David V. Adler (the “Trustee”), who also joined
SBN's opposition (R. Doc. 8). Appellees Audubon Place
Commission, Inc. and Trinity Episcopal School joined
SNB's opposition as well (R. Docs. 7, 9).
November 5, 2018, Appellants filed yet another ex parte
emergency motion to stay the Order pending appeal (R. Doc.
10), to which SBN filed an opposition (R. Doc. 11). This
motion asks the Court to stay execution of the Order through
November 20, 2018, to allow this Court additional time to
rule on Appellants' first motion to stay and to provide
Appellants more time to comply with the Order of eviction.
considered the parties' memoranda and the applicable law,
the Court issues this Order & Reasons.
decision of a bankruptcy court to deny a stay pending appeal
will be reviewed for abuse of discretion.” In re
Permian Producers Drilling, Inc., 263 B.R. 510 (W.D.
Tex. 2000) (citing In re Barrier, 776 F.2d 1298,
1299-1300 (5th Cir. 1985)). “A bankruptcy court abuses
its discretion if it seriously errs in its determination of
whether the moving party has established a case meriting
injunctive relief.” Id. A district court
reviews a bankruptcy court's conclusions of law de
novo and findings of fact for clear error. In re
First S. Savings Ass'n, 820 F.2d 700, 711 (5th Cir.
1987). “A finding is ‘clearly erroneous' when
although there is evidence to support it, the reviewing court
on the entire evidence is left with the definite and firm
conviction that a mistake has been committed.”
Id. (quoting United States v. U.S. Gypsum
Co., 333 U.S. 364, 395 (1948)).
is a discretionary remedy to be granted or denied within the
sound judgment of the district court. See Nken v.
Holder, 556 U.S. 418, 434 (2009); Arnold v.
Garlock, 278 F.3d 426, 438 (5th Cir. 2001). To obtain a
stay in a district court pending appeal from a bankruptcy
court's decision, the appellants bear the burden of
establishing each of the following four elements:
1. A likelihood of success on the merits, or, if a serious
legal question is involved, a substantial case on the merits
and equities weighing heavily in favor of granting the stay;
2. irreparable injury;
3. that the stay will not harm other parties; and
4. that the stay would serve the public interest.
In re Javier Estrada, Inc., 2010 WL 1416778, at *1
(S.D. Tex. Apr. 5, 2010) (citing Arnold, 278 F.3d at
438-42)). “Only ‘if the balance of the equities
(i.e. consideration of the other three factors) is …
heavily tilted in the movant's favor' will we issue a
stay in [the] absence [of a likelihood of success on the
merits], and, even then, the issue must be one with patent
substantial merit.” Ruiz v. Estelle (Ruiz
II), 666 F.2d 854, 856-57 (5th Cir. 1982) (quoting
Ruiz v. Estelle (Ruiz I), 650 F.2d 555,
565-66 (5th Cir. 1981)).
examining these elements in the context of this case, it is
instructive to review in brief the long and tortured history
of how the parties have come to this pass. This review is
taken in part from the factual findings of the bankruptcy
court, which Appellants have not attempted to question and as
to which this Court finds no clear error, and the public
record of the bankruptcy court.
Debtor, whose members are Richard Goldenberg and his son,
exists for no other purpose than to own the
Property. Goldenberg previously owned the Property
and transferred it to the Debtor on May 31,
2012. SBN holds a mortgage on the Property to
secure a note that had been payable in $26, 175.00 monthly
installments at the time the Debtor filed bankruptcy on
August 1, 2018, in the Western District of
Louisiana. SBN's proof of claim reflects a
principal balance, accrued and unpaid interest, attorney
fees, late charges, insurance premiums, expenses and costs
owed by the Debtor of nearly $5.5 million. No. payments have
been made on the SBN debt since August 2016. The amount
necessary to bring the SBN note out of default, as of the
date bankruptcy was filed, is at least $658,
947.55. In addition, the Debtor owes property
filing bankruptcy, the Debtor and Tenants had entered a
written lease on July 23, 2018, which was recorded on July
31, 2018. The lease requires payment of $25, 000 in monthly
rent, plus payment of property taxes and insurance, and
purports to reflect a term from July 2016 through December
2019. As of the date of the bankruptcy filing, the Debtor
scheduled past due rent owed by the Tenants in an amount
ranging between $600, 000 and $1.2 million.
troubled history of this Property did not begin with the
Debtor. Before transferring the Property to the Debtor in
2012, Richard Goldenberg, individually, filed bankruptcy in
July 2010 to forestall an earlier foreclosure sale of the
Property. The then noteholder represented in the
bankruptcy that no payment had been made on the indebtedness
on the Property since August 2009 and that property taxes and
insurance had not been paid. Goldenberg sought to
reorganize his debts, including those associated with the
Property; meanwhile, his family continued to occupy the
Property. However, Goldenberg ultimately failed to
comply with the plan of organization he had proposed and the
bankruptcy court had approved, which had included
relinquishing the Property. Goldenberg did so by
transferring the Property to the Debtor back in
October 11, 2016, SBN's predecessor in interest sought to
foreclose on the Property for the Debtor's nonpayment of
the mortgage indebtedness. Thereafter, in December 2016,
after Goldenberg failed to appear at a hearing to show cause
why he had not complied with the court's order to cure
certain deficiencies under the plan of reorganization, the
bankruptcy court dismissed Goldenberg's individual
bankruptcy case with prejudice, ordered that he was not
entitled to a discharge, and barred Tenants from filing a
bankruptcy case for a period of five years.
August 23, 2018, venue in the Debtor's bankruptcy case
was transferred to the Eastern District of Louisiana, and on
October 3, 2018, the bankruptcy court appointed the Trustee
under 11 U.S.C. § 1104. On October 10, 2018, the
bankruptcy court conducted a hearing and took evidence on
SBN's motion to evict the Debtor from the
Property. The court held that the recorded lease
was unenforceable as to third parties pursuant to Section
13:3888(A) of the Louisiana Revised Statutes and ordered
Tenants to vacate the Property by November 10, 2018, because
“the obligations owed under the alleged agreement
between Debtor and the [Tenants] were in default, the
[Tenants] had not paid rent timely postpetition, and the
Trustee was requesting possession of the
this backdrop, the Court now examines the elements required
for a stay.
The likelihood of success on the merits
argue that “the appeal presents serious legal issues
for which appellants have a substantial case on the
merits.” Even assuming arguendo that a
“serious legal question is involved, ” the
balance of the equities does not weigh heavily in favor of
Appellants, as discussed below. In contending that the
eviction date was arbitrarily chosen, Appellants ignore that
this date was thirty days from the date of the eviction
hearing and the bankruptcy court's order of eviction, and
was a date chosen in deference to Appellants' own request
to afford them sufficient time to vacate the Property.
Moreover, as reflected in the foregoing review, Appellants
have been living in the home for years without consistent
payment of either their mortgage indebtedness or rent. The
actions, initially of the Tenants, and later of the Debtor
(which is controlled by the Goldenbergs), reflect a cavalier
treatment of their creditors. Therefore, Appellants must
demonstrate a likelihood of success on the merits of their
appeal from the order of eviction. This they cannot do.
set out three grounds for their appeal: (1) that, upon
finding the written lease invalid, the bankruptcy court did
not consider the efficacy of an oral lease or a recorded
extract of a lease; (2) that the bankruptcy court's order
of eviction failed to follow state eviction procedure; and
(3) that the Trustee's appointment rendered SBN's
alternative motion for eviction moot. In denying
the motion to stay, the bankruptcy court addressed each of
these arguments in its Reasons for Decision.
to the first, the bankruptcy court found that Appellants
waived their right to argue that an oral lease existed when
Appellants failed to present such an argument at the
hearing. This finding by the bankruptcy court is
not clearly erroneous nor contrary to law. Appellants'
memorandum in support does not actually allege the existence
of an oral lease. Neither does the memorandum or
bankruptcy record reflect the existence of an extract of a
recorded lease.Accordingly, Appellants have waived their
right to raise these arguments on appeal and cannot show a
likelihood of success on this ground. See Feld v. Zale
Corp. (In re Zale Corp.), 62 F.3d 746, 763 (5th
Cir. 1995) (finding that “parties have waived their
right to protest the lack of an adversary proceeding when the
court afforded them all the protections of an adversary
proceeding yet they knowingly failed to litigate a Rule 7001
issue which they had an opportunity to litigate”).
Appellants do not contest or even address the bankruptcy
court's finding that the written lease was invalid as to
third parties pursuant to Section 13:3888(A) of the Louisiana
Revised Statutes. Thus, because SBN foreclosed on the
Property prior to the recordation of the lease, the
bankruptcy court appears to be on sound footing in holding
that the lease is invalid as to ...