Armstrong v. Potter (In Re Potter) , 101 F. App'x 770 ( 2004 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
MAY 27 2004
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
In re:
JENNIFER GAYLE POTTER,
Debtor. No. 02-4220
(BAP No. UT-01-027)
(BAP)
DONALD E. ARMSTRONG,
Plaintiff-Appellant,
v.
JENNIFER GAYLE POTTER,
Defendant-Appellee.
ORDER AND JUDGMENT *
Before McCONNELL , ANDERSON , and BALDOCK , Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
This appeal requires us to determine whether the Bankruptcy Appellate
Panel (BAP) correctly dismissed Donald E. Armstrong’s appeal from an order of
the bankruptcy court for lack of standing and whether the BAP was similarly
correct to affirm the bankruptcy court’s order denying Armstrong’s motion to
recuse. After our review of the record, the relevant law, and the submissions of
the parties, we dismiss this appeal for lack of jurisdiction.
Armstrong obtained a judgment in a Utah state court against appellee
Jennifer Potter. After Potter filed for Chapter 7 bankruptcy relief, Armstrong
brought an adversary proceeding in Potter’s Chapter 7 case seeking a
determination that the debt owed his estate by Potter was nondischargeable. 1
Shortly after filing the adversary proceeding, Armstrong also filed a motion to
recuse the bankruptcy court judge, which was eventually denied.
On July 11, 2000, the bankruptcy court conducted a pretrial conference in
the adversary proceeding at which Armstrong appeared pro se. The court then
issued a scheduling order in which the parties were directed to file a proposed
1
Our review of this case has been hampered by the extremely limited record
filed by Armstrong. Because Armstrong had filed his personal Chapter 11
proceeding before filing the adversary proceeding in Potter’s bankruptcy case,
we assume that he brought the action in Potter’s case on behalf of his bankruptcy
estate and as debtor-in-possession of that estate.
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pretrial order by March 6, 2001, and to appear for a final pretrial conference on
March 20, 2001. Armstrong was served with the order which specified, in bold
type, that “[f]ailure of plaintiff(s)’s counsel to timely file a stipulated pretrial
order, or a proposed pretrial order and an explanation as to the failure to stipulate,
as described above, shall, unless the court grants relief for cause shown, result in
the dismissal of the adversary proceeding.” Aplee. Br. at 2.
After the scheduling order was issued, but before the deadline for filing the
pretrial order, Kenneth Rushton was appointed trustee in Armstrong’s bankruptcy
case. When neither Rushton, Armstrong, nor counsel for Potter filed a pretrial
order, and no one appeared at the March 20, 2001, pretrial conference, the
bankruptcy court dismissed the adversary proceeding as it had warned it might.
Armstrong filed a timely motion to reconsider, to which Rushton
responded. 2
Without ruling on the motion to reconsider, the bankruptcy court, on
May 3, 2001, issued a written order dismissing the adversary proceeding.
Armstrong timely appealed to the BAP.
On May 29, 2001, the Honorable Judith A. Boulden, presiding
in Armstrong’s Chapter 11 personal bankruptcy case, approved the sale of the
Potter claim from Armstrong’s bankruptcy estate to Armstrong personally.
2
The motion is not in the record on appeal to this court. Thus, it is unclear
in what capacity Armstrong filed his motion to reconsider.
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On March 27, 2002, the BAP entered a remand order for the limited purpose of
giving the bankruptcy court the opportunity to rule on Armstrong’s motion to
reconsider the dismissal of the adversary proceeding. On June 5, 2002, the
bankruptcy court denied the motion to reconsider.
In addressing the order dismissing the adversary proceeding, the BAP first
analyzed the issue of Armstrong’s standing to bring the appeal and concluded
that, because he was not a “person aggrieved” by the dismissal order, he did not
have standing and thus the BAP did not have jurisdiction to hear the appeal.
We review this matter de novo, Nintendo Co. v. Patten (In re Alpex Computer
Corp.) , 71 F.3d 353, 356 (10th Cir. 1995), and agree.
The Bankruptcy Code does not delineate any contours to appellate standing.
Holmes v. Silver Wings Aviation, Inc. , 881 F.2d 939, 940 (10th Cir. 1989). This
circuit, however, has joined other courts in adopting the “person aggrieved”
standard under which the right to appellate review of a bankruptcy court order
is limited to “those persons whose rights or interests are directly and adversely
affected pecuniarily by the decree or order of the bankruptcy court.” Id. (internal
quotes omitted). Armstrong is a “person aggrieved” only if the order appealed
from “diminishes [his] property, increases [his] burdens, or impairs [his] rights.”
Lopez v. Behles (In re Am. Ready Mix, Inc.) , 14 F.3d 1497, 1500 (10th Cir. 1994).
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Even before Armstrong can achieve status as a “person aggrieved,”
however, he must have attended a bankruptcy court proceeding and objected to
the dismissal. See Weston v. Mann (In re Weston) , 18 F.3d 860, 864 (10th Cir.
1994) (characterizing such attendance and objection as a “prerequisite” for being
a person aggrieved). Because, after he purchased the Potter claim, he did not
appear in the bankruptcy court or object to the dismissal of the adversary
proceeding, Armstrong qua Armstrong has not met the prerequisite for aggrieved
party status.
Here it is important to focus on the three different legal personae with
which Armstrong was robed during the different phases of this case. When he
filed the adversary proceeding and when he attended the July 11, 2000, pretrial
conference, Armstrong did so as the debtor-in-possession of his own Chapter 11
estate. Armstrong’s estate was the plaintiff in the adversary proceeding and
a potential creditor of the Potter estate. Armstrong, as debtor-in-possession,
represented his estate and had standing. After September 18, 2000, when Rushton
was appointed trustee of Armstrong’s bankruptcy estate, Armstrong was the
debtor-out-of-possession in his case and no longer had standing to pursue his
estate’s claim against Potter. See Jones v. Harrell , 858 F.2d 667, 669 (11th Cir.
1988) (noting that “[a] trustee in bankruptcy succeeds to all causes of action
held by the debtor at the time the bankruptcy petition is filed”); see also
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Fed. R. Bankr. P. 2012(a) (providing “[i]f a trustee is appointed in a chapter 11
case . . ., the trustee is substituted automatically for the debtor in possession as
a party in any pending action, proceeding or matter”). When, on May 29, 2001,
Armstrong’s purchase of the Potter claim from his bankruptcy estate was
approved by his Chapter 11 bankruptcy court, Armstrong qua Armstrong,
individually and without any legal trappings arising from his own Chapter 11
debtor status, became a simple creditor in Potter’s bankruptcy.
It was at this point, when Armstrong himself was a simple creditor in
Potter’s bankruptcy, and while the motion to reconsider the bankruptcy court’s
dismissal of the adversary proceeding was still pending in that court, that
Armstrong should have appeared in the case and objected to the dismissal of the
adversary proceeding. Although, as a creditor of the Potter estate, he could have
availed himself of the right to be heard as provided in 11 U.S.C. § 1109(b), there
is no evidence in the record that Armstrong did so. See Starzynski v. Sequoia
Forest Indus. , 72 F.3d 816, 821 (10th Cir. 1995) (noting that an individual
creditor, with leave of the bankruptcy court, may initiate actions when the
debtor-in-possession–or here the trustee–has failed to do so). Nor, as the
BAP noted, did Armstrong seek to intervene in the adversary proceeding once
he had purchased the Potter claim or attempt to substitute himself, individually,
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as plaintiff. 3
Thus, because Armstrong did not appear individually in the
bankruptcy court and object to the dismissal as required by Weston , 18 F.3d
at 860, he did not meet the initial prerequisite for aggrieved-party status. He,
therefore, does not have standing to bring the appeal, and neither the BAP nor this
court has jurisdiction to consider it.
With regard to the motion to recuse, the BAP assumed for purposes of its
decision that Armstrong had standing to appeal from the order denying recusal.
We see no difference between Armstrong’s lack of standing to appeal the
dismissal order and his status regarding the recusal matter. Armstrong lacks
standing to appeal from anything relative to the adversary proceeding.
This appeal is DISMISSED.
Entered for the Court
Bobby R. Baldock
Circuit Judge
3
We agree with the BAP majority that to construe Armstrong’s motion to
reconsider as a motion to intervene requires too much speculation and legal
sleight of hand.
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