Terri L. Steffen v. Douglas N. Menchise ( 2014 )

Case: 13-11052 Date Filed: 01/16/2014 Page: 1 of 8
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-11052
Non-Argument Calendar
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D.C. Docket Nos. 8:12-cv-01053-VMC; 8:01-bk-09988-MGW
In Re: TERRI L. STEFFEN Debtor.
_________________________________________________
TERRI L. STEFFEN,
Plaintiff-Appellant,
versus
DOUGLAS N. MENCHISE,
Chapter 7 Trustee,
Defendant-Appellee.
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Appeal from the United States District Court
for the Middle District of Florida
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(January 16, 2014)
Before HULL, MARCUS and JORDAN, Circuit Judges.
PER CURIAM:
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Terri Steffen, appearing pro se, appeals the district court’s order dismissing
as moot her appeal of a bankruptcy court order approving the sale of real property
pursuant to 11 U.S.C. § 363. Ms. Steffen also appeals the district court’s denial of
her motion to reconsider the dismissal order. After careful review, we affirm the
district court’s ruling that the appeal is moot because Ms. Steffen failed to obtain a
stay of the sale as required under 11 U.S.C. § 363(m).
I. Background
This case has a long and complex procedural history involving many
appeals. The facts relevant to this appeal are as follows.
Ms. Steffen owned property at 16634 Sedona de Avila, in Tampa, Florida.
The property was part of the Chapter 7 bankruptcy estate. Following a long legal
battle, 1 the bankruptcy court issued a written order on February 6, 2012,
1
In 2001, Ms. Steffen filed for bankruptcy relief under Chapter 11. In 2008, the
bankruptcy court converted the case from a Chapter 11 reorganization to a Chapter 7 liquidation.
At that time, Ms. Steffen owned real property at 16634 Sedona de Avila, in Tampa, Florida
(“Sedona Property”), which she had purchased with cash proceeds from the sale of real property
at 16229 Villareal de Avila, in Tampa, Florida (“Villareal Property”). Ms. Steffen attempted to
claim the Sedona Property as exempt from her Chapter 7 estate under the homestead exemption.
But the bankruptcy court ruled that the Villareal Property did not fall under the exemption
because it was owned by a non-natural person (an entity in which Ms. Steffen had an ownership
interest) and that therefore the proceeds of the sale – and the Sedona Property purchased with
those proceeds – were nonexempt.
The district court affirmed the bankruptcy court’s ruling on the homestead issue, and Ms.
Steffen appealed to this Court. Amidst some “unusual circumstances” that form the object of a
separate appeal, she voluntarily dismissed that appeal. Bank. D.E. 1511 at 42. On October 27,
2010, after she made an unsuccessful attempt to dismiss her bankruptcy case, the bankruptcy
court ordered her ejectment from the Sedona Property and authorized the trustee to sell, lease, or
use the property. The trustee marketed the property, negotiated a sale contract with a buyer, and
filed an expedited motion for approval of sale of real property on January 12, 2012. The
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authorizing the trustee to sell the property in accordance with a sale contract that
the trustee had negotiated with a buyer. The sale contract provided for a closing
date of February 10, 2012. Bank. D.E. 370, Exh. 1 at 1.2 The trustee and buyer
consummated the sale two days early – on February 8, 2012 – apparently at the
request of the buyer. On February 14, 2012, Ms. Steffen moved the bankruptcy
court for a stay pending appeal, which the bankruptcy court orally denied at a
hearing on February 21, 2012 (confirming this ruling in a written order issued on
April 5, 2012).
Ms. Steffen appealed to the district court, and the trustee moved to dismiss
the appeal as moot. On December 7, 2012, the district court ordered Ms. Steffen to
respond to the motion to dismiss by December 17, 2012. Ms. Steffen failed to file a
timely response, apparently because her counsel, a sole practitioner, was involved
in a criminal trial during this time. On December 18, 2012, the district court
dismissed the appeal on the grounds that § 363(m) prevents an appellate court from
granting relief if the bankruptcy court has not issued a stay. Ms. Steffen filed a
bankruptcy court held a hearing on February 2, 2012 and orally granted the motion over Ms.
Steffen’s objection. Four days later, on February 6, 2012, the bankruptcy court issued a written
order approving the sale and authorizing the trustee to “sell the Property . . . in accordance with
the contract.” Bank. D.E. 1370 at § 2.
2
The trustee’s expedited motion for approval of sale of real property listed the closing
date as February 20, 2012 (which Ms. Steffen cites as the closing date in her brief). This
apparently was a “scrivener’s error.” Appellee’s Br. at 7, n. 6. The sale contract (which the
trustee attached to its expedited motion) listed the closing date as February 10, 2012. The
numbers are admittedly difficult to read, but on close inspection, the date in fact appears to be
February 10, 2012. We will treat this as the date of closing authorized by the bankruptcy court,
but our holding ultimately will not depend on this fact.
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motion for reconsideration, which the district court denied by written order on
February 7, 2013.
Here, Ms. Steffen argues that her appeal is not moot even though she did not
obtain a stay of the sale. Specifically, she argues that the bankruptcy court’s denial
of her motion for stay was “illusory” because the trustee had already sold the
property when the motion was filed and thus violated Fed. R. Bankr. P. 6004(h),
which provides for an automatic 14-day stay period following “[a]n order
authorizing the use, sale, or lease of property other than cash collateral.” She also
argues that the district court abused its discretion by expediting the deadline for her
to respond to the trustee’s motion to dismiss and by applying the heightened Rule
59(e) standard in deciding her motion for reconsideration knowing that her counsel
was unable to respond to the expedited deadline to respond to the trustee’s motion
to dismiss.
II. Discussion
In an appeal from a district court’s decision in a bankruptcy case, we sit as a
second court of review and examine independently the factual and legal
determinations of the bankruptcy court based on the same standards of review as
the district court. Finova Capital Corp. v. Larson Pharmacy Inc. (In re Optical
Technologies, Inc.), 425 F.3d 1294, 1299-1300 (11th Cir. 2005). Generally, we
review de novo legal conclusions by either the bankruptcy court or the district
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court. Id. When the issue raises a question as to the interpretation of a Federal Rule
of Bankruptcy Procedure, we apply a plenary standard of review. In re Chase &
Sanborn Corp., 904 F.2d 588, 593 (11th Cir. 1990). We review for abuse of
discretion a district court order denying a motion for reconsideration. See Lockard
v. Equifax, Inc., 163 F.3d 1259, 1267 (11th Cir. 1998).
We have articulated “a flat rule governing all appeals of section 363
authorizations,” namely that “[b]ecause this provision prevents an appellate court
from granting effective relief if a sale is not stayed, the failure to obtain a stay
renders the appeal moot.” See In re The Charter Co. 829 F.2d 1054, 1056 (11th
Cir. 1987). There is no exception to this rule where the debtor sought a stay
pending appeal but was denied. The plain language of § 363(m) states that an
appellate court order cannot invalidate a sale that the bankruptcy court authorized
“unless such authorization and such sale . . . were stayed pending appeal” (not
“unless the debtor attempted to obtain a stay pending appeal”). 3
We conclude that Ms. Steffen’s appeal is moot because she did not obtain a
stay pending appeal. The fact that she filed a motion for stay that the bankruptcy
court rejected does not change this result. In In re The Charter Co., the debtor
3
See also In re Baker, 339 B.R. 298, 303 (E.D.N.Y. 2005) (“This rule applies even when
the debtor has sought a stay, but the stay has been denied. . . . Moreover, this rule applies even
where the debtor believes the sale has been wrongly authorized. . . . Section 363(m) does not say
that the sale must be proper under § 363(b); it says that the sale must be authorized under §
363(b). . . . [I]t matters not whether the authorization was correct or incorrect.”) (quotations
marks omitted).
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argued that the stay requirement does not apply to a purchaser who challenges the
bankruptcy court’s authorization, and we concluded that “[t]here is nothing in the
language of § 363(m) to suggest that such an exception exists.” 829 F.2d at 1056.
Similarly here, there is no exception where the bankruptcy court denies the
debtor’s motion for stay.
There is also no exception where the trustee has sold the property before the
14-day automatic stay period provided by Fed. R. Bankr. P. 6004(h) expires. First,
the 14-day stay applies “unless the court orders otherwise.” Fed. R. Bankr. P.
6004(h). See also Fed.R.Bankr.P. 6004, Advisory Committee Note (1999) (“The
court may, in its discretion, order that [Rule 6004(h)] is not applicable so that the
property may be used, sold, or leased immediately in accordance with the order
entered by the court.”). Here, by authorizing a closing date that was four days after
it entered its sale order,4 the bankruptcy court curtailed the 14-day stay period,
such that it arguably did not apply at all. Second, and more importantly, Ms.
Steffen was able to file a motion for stay within the 14-day period, and the
bankruptcy court addressed the merits of that motion in depth. Ms. Steffen suffered
no prejudice from the early closing because she received what Rule 6004(h) was
designed to provide: “sufficient time for a party to request a stay pending appeal of
4
On February 6, 2012, the bankruptcy court issued a written order authorizing the trustee
to sell the property in accordance with the sale contract. The sale contract in turn provided for a
closing date of February 10, 2012 – four days after the sale order was issued. The trustee sold the
property still sooner, however, on February 8, 2012 – two days after the sale order was issued.
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an order authorizing the use, sale, or lease of property under § 363(b).”
Fed.R.Bankr.P. 6004, Advisory Committee Note (1999). The fact that the closing
had already occurred at the time the bankruptcy court considered the motion for
stay is of no consequence because the district court could have invalidated the sale
if Ms. Steffen had obtained a stay. 5 The trustee and the buyer thus “proceeded to a
closing at their own peril” by closing before the sale order was final. See In re
Quanalyze Oil & Gas Corp., 250 B.R. 83, 88 (Bankr. W.D. Tex. 2000)
(interpreting Rule 6004(h) in the context of a closing within the 14-day stay
period). This gamble by the trustee did not affect Ms. Steffen’s right under Rule
6004(h) to seek a stay – and if successful to seek reversal of the sale on appeal –
and thus cannot be grounds for reversal.
We need not reach Ms. Steffen’s second argument regarding the district
court’s expedited deadline to respond to the trustee’s motion to dismiss. Based on
the analysis above, we conclude that the district court properly dismissed the case
as moot, even under the de novo standard of review that would apply if the district
court had heard all of Ms. Steffen’s arguments on a motion to dismiss rather than a
motion for reconsideration.
5
As the district court noted, Rule 6004(h) merely allows the debtor to file a motion for
stay within the 14-day window; it does not require the bankruptcy court to decide the motion
within that window. Thus, even if the trustee waits for the 14-day period to expire before selling
the property, it is possible that the bankruptcy court will dispose of the motion after the sale has
occurred (e.g., the sale could happen on day 15, and the bankruptcy court could decide the
motion on day 20).
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III. Conclusion
The district court’s orders dismissing Ms. Steffen’s appeal as moot and
denying Ms. Steffen’s motion for reconsideration are affirmed.
AFFIRMED.
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