United States District Court, M.D. Louisiana
IN RE BEN M. TODD
RULING AND ORDER
A. JACKSON UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF
the Court is Samera Abide and Steven Lemoine's Motion
to Dismiss (Doc. 3) Liberty Personal
Insurance Company's appeal from a bankruptcy-court order
approving Abide and Lemoine's fee application. Abide and
Lemoine contend that Liberty lacks appellate standing under
the "person aggrieved" test. The Court agrees. For
the reasons that follow, Abide and Lemoine's
Motion (Doc. 3) is GRANTED
and Liberty's appeal is DISMISSED.
bankruptcy appeal arises from a rear-end collision and
lawsuit that led Ben Todd to declare bankruptcy. (Doc. 4 at
18). Todd's bankruptcy spawned two adversary proceedings.
(Doc. 2-1 at 33, 160). In one of them, Abide-as trustee-sued
to avoid a pre-petition transfer from Todd to his parents.
(Id. at 33). In the other, Abide sued to avoid
Todd's settlement of a potential bad-faith claim against
Liberty. (Id. at 160).
first adversary proceeding settled. (Id. at 362).
Abide and Lemoine, as trustee's counsel, then moved the
bankruptcy court to approve their application for a fee equal
to one-third of the settlement. (Id. at 347). The
bankruptcy court did so. (Doc. 1-2). Liberty appeals. (Docs.
asks the Court to reverse the bankruptcy court's order
approving the fee application. (Doc. 6). It asserts that the
fee derives from money it paid Todd to settle his potential
bad-faith claim. (Id. at 1). It reasons that Abide
and Lemoine will have to return the fee if the adversary
proceeding seeking to set aside the settlement succeeds.
(Id. at 6). And it concludes that the Court should
require Abide (as trustee) to "holdQ the funds pending
the outcome of the adversary proceeding." (Id.
Abide and Lemoine move to dismiss Liberty's appeal. (Doc.
3). They contend that Liberty lacks appellate standing
because Liberty is not a "person aggrieved" by the
bankruptcy court's order. (Id.). Liberty
disagrees. (Doc. 5). It rejoins that it has standing as a
"person aggrieved" because "every dollar
awarded to [Abide and Lemoine] in fees is a dollar less that
will be returned back to Liberty if the Trustee is successful
in her avoidance action." (Id.).
in bankruptcy cases is governed by the "person
aggrieved" test. In re Coho Energy, Inc., 395
F.3d 198, 202 (5th Cir. 2004). The test is "an even more
exacting standard than traditional constitutional
standing." Id. at 202. To meet the test,
Liberty must show that it was "directly and adversely
affected pecuniarily by the order of the bankruptcy
court." Id. at 203 (citation omitted). Liberty
is the putative appellant and thus bears the burden of
alleging facts showing that it is a proper party to appeal.
See Fortune Nat'l Res. Corp. v. U.S. Dep't
Interior, 806 F.3d 363, 366 (5th Cir. 2015) (citation
cannot show that it was "directly and adversely affected
pecuniarily" by the bankruptcy court's order
approving Abide and Lemoine's fee
application. See Coho Energy, 395 F.3d at 203.
That order only authorized Abide (as trustee) to pay Lemoine
and Abide $53, 333 in fees. (Doc. 1-2). It did not
directly affect Liberty. See Fortune, 806
F.3d at 367 (emphasizing that the order itself must produce
the direct and adverse pecuniary effect). Nor did it affect
Liberty pecuniarily; it cannot do so unless and until the
second adversary proceeding resolves in Abide's favor.
See In re Technicool Sys., Inc., 896 F.3d 382, 386
(5th Cir. 2018) (holding that putative appellant's
showing of a "speculative prospect of harm" failed
to confer standing). Until then, Liberty has not lost a
dollar of the settlement payment it admits is only
"potentially returnable" to it. (Doc. 5 at 2).
Liberty fails to show that it was "directly and
adversely affected pecuniarily" by the order of the
bankruptcy court, Liberty fails to establish its standing to
appeal under the "person aggrieved" test. See
Fortune, 806 F.3d at 367.
IT IS ORDERED that the Motion to Dismiss ...