David Beem v. Gary A. Ferguson ( 2017 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-13358
Non-Argument Calendar
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D.C. Docket No. 1:15-cv-20389-FAM,
Bkcy No. 12-bkc-22368-LMI
In re:
GARY A. FERGUSON,
Debtor.
_________________________________________________________
DAVID BEEM,
Plaintiff - Appellant,
versus
GARY A. FERGUSON,
Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(March 30, 2017)
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Before TJOFLAT, WILLIAM PRYOR and BLACK, Circuit Judges.
PER CURIAM:
Creditor David Beem appeals the district court’s dismissal of his bankruptcy
appeal and its order denying his motion for rehearing requesting reconsideration of
the same. His appeal to the district court challenged several bankruptcy court
orders: its order confirming debtor Gary Ferguson’s Chapter 11 plan of
reorganization; its order granting Ferguson’s motions to strike Beem’s ballot
purporting to vote against the Plan and to deny his objections to the Plan as
untimely; and two of Beem’s motions to reconsider the same. Ferguson moved for
this Court to dismiss Beem’s appeal for lack of jurisdiction, and we granted the
motion in part and carried the motion with the case in part. Beem devotes most of
his attention to errors allegedly committed by the bankruptcy court, but also
assigns error to the district court’s decision to dismiss his appeal. After review, 1
we affirm.
I. FACTUAL BACKGROUND
In May 2012, Ferguson filed a voluntary petition for bankruptcy under
Chapter 11 of the Bankruptcy Code. After over two years of litigation, on July 18,
2014, Ferguson submitted a second amended plan of reorganization (the Plan).
1
We consider questions of subject matter jurisdiction de novo, Justice Cometh, Ltd. v.
Lambert, 426 F.3d 1342, 1343 (11th Cir. 2005), and we review a district court’s decision to
dismiss a case for failure to comply with an order of the court for an abuse of discretion, Foudy
v. Indian River Cty. Sheriff’s Office, 845 F.3d 1117, 1122 (11th Cir. 2017).
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The court scheduled a confirmation hearing for September 15, 2014 and ordered
that the deadline for objecting to the plan would be September 1, 2014. On
September 2, one day after the deadline, Beem, a creditor asserting a claim of
approximately $385,000 against the bankruptcy estate, field an objection to the
proposed Plan. He also submitted a ballot rejecting the Plan. Ferguson moved to
strike the objection and the ballot, contending the objection was untimely, and
asserting Beem was not entitled to vote on the Plan because he did not have an
“allowed claim.” Ferguson noted that as a result, Beem was never served with a
ballot. Instead, Ferguson argued, Beem, having been notified that he was not
entitled to a vote, enlisted Jeffrey Norkin, an attorney suspended from the practice
of law, to fraudulently “concoct[ ] his own purported ballot.” The bankruptcy
court granted Ferguson’s motion and struck the ballot and the objection. The next
day, it issued an order confirming the Plan.
Beem moved to vacate, rehear, reconsider, or supplement the Plan and for a
stay to prevent the enactment of the Plan until the court had resolved the motion.
Two days later, he filed a similar motion for reconsideration of the order striking
his ballot. The bankruptcy court denied both motions.
On November 21, 2014, Beem appealed the orders striking his ballot and
approving the plan and the orders denying reconsideration to the district court.
Beem filed his initial brief and appendix on February 24, 2015. Ferguson moved
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to strike Beem’s brief, arguing the brief was impermissibly excessive, that the
appeal was untimely as to the ballot strike and ballot reconsideration orders, and
that Beem had once again availed himself of the services of Norkin, the suspended
attorney. The district court granted the motion. It stated that Beem’s own pleading
indicated Norkin “prepared the brief, [after which] he gave it to Appellant to file it
pro se.” The court stated it would “not allow Mr. Norkin to circumvent the Florida
Bar and this Court’s orders of suspension by doing the work and having his clients
file pleadings pro se.” It struck the brief and ordered Beem to “file an initial brief
consistent with this Order by no later than April 8, 2015,” and noted that “[f]ailure
to do so may result in the Court dismissing the appeal.” Beem filed a new initial
brief but did not do so until April 9. Ferguson moved to dismiss the brief once
again, asserting that Beem missed the deadline to file and that the brief still bore
evidence of Norkin’s work. Beem had not opposed the motion when his time for
doing so had expired, so the district court dismissed the appeal by default. Beem
moved for reconsideration, but the district court denied his motion. Beem
appealed to this Court the district court’s dismissal of his appeal and its denial of
his motion for reconsideration. He also appealed the orders of the bankruptcy
court that were the subject of his appeal to the district court.
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After Beem filed his initial brief, Ferguson moved to dismiss the appeal for
lack of jurisdiction. The motion was granted in part and carried with the case in
part. 2
II. DISCUSSION
A. Jurisdiction
Before proceeding to the merits of the appeal, we must address subject
matter jurisdiction. To that end, in this case, we are principally concerned with
mootness. Ferguson filed a motion to dismiss this appeal in this Court in which he
contends the order confirming the Plan is equitably moot because it has already
been substantially consummated, and so we cannot grant effective relief. He
argues the appeal is constitutionally moot for the same reasons. Beem responds
that the Plan is not substantially consummated and that in any event he will recover
a larger portion of his judgment if the Plan is unwound.
“Equitable mootness is a discretionary doctrine that permits courts sitting in
bankruptcy appeals to dismiss challenges (typically to confirmation plans) when
effective relief would be impossible.” In re Bayou Shores SNF, LLC, 828 F.3d
1297, 1328 (11th Cir. 2016). It “reflects a court’s concern for striking the proper
balance of equitable considerations of finality and good faith reliance on a
2
In addition to the orders set forth above, Beem listed two bankruptcy court orders issued
during the pendency of his appeal to the district court. We dismissed those appeals for lack of
jurisdiction because they were neither appealed to the district court nor certified for direct
review.
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judgment and the competing interests that would underlie the right of a party to
seek review of a bankruptcy court order adversely affecting him.” In re Club
Assocs., 956 F.2d 1065, 1069 (11th Cir. 1992). In determining whether to apply
the doctrine of equitable mootness, a court considers a variety of concerns
affecting the balance of equities, including whether a stay pending appeal has been
obtained and if not, why not; whether the plan has been “substantially
consummated;” what type of relief is sought; and what the effect of granting such
relief would be. Id. at 1069 n.11.
Though Ferguson urges us to do so, we will not undertake such an analysis
here because the doctrine is discretionary and does not divest us of jurisdiction.
See In re Metromedia Fiber Network, Inc., 416 F.3d 136, 144 (2d Cir. 2005)
(“Equitable mootness is a prudential doctrine that is invoked to avoid disturbing a
reorganization plan once implemented.” (citing In re UNR Indus., 20 F.3d 766, 769
(7th Cir.1994) (“There is a big difference between inability to alter the outcome
(real mootness) and unwillingness to alter the outcome (‘equitable mootness’).”)));
see also In re Cont’l Airlines, 91 F.3d 553, 571 (3d Cir. 1996) (en banc) (Alito, J.,
dissenting) (“[Equitable mootness] does not present a jurisdictional question; we
are not required to consider it before proceeding to the merits . . . .”). The Fourth
Circuit succinctly captured the distinction between equitable and constitutional
mootness as follows:
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Unlike the constitutional doctrine of mootness, which bars
consideration of appeals because no Article III case or controversy
remains, the doctrine of equitable mootness is a pragmatic principle,
grounded in the notion that, with the passage of time after a judgment
in equity and implementation of that judgment, effective relief on
appeal becomes impractical, imprudent, and therefore inequitable.
Mac Panel Co. v. Va. Panel Corp., 283 F.3d 622, 625 (4th Cir. 2002). Equitable
mootness “bears only upon the proper remedy, and does not raise a threshold
question of our power to rule.” In re Metromedia, 416 F.3d at 144.
Constitutional mootness, on the other hand, “derives directly from the case-
or-controversy limitation because an action that is moot cannot be characterized as
an active case or controversy.” Fla. Pub. Interest Research Grp. Citizen Lobby,
Inc. v. EPA, 386 F.3d 1070, 1086 (11th Cir. 2004) (quotation omitted). “A case is
moot when the issues presented are no longer ‘live’ or the parties lack a legally
cognizable interest in the outcome.” Id. “As long as the parties have a concrete
interest, however small, in the outcome of the litigation, the case is not moot.”
Knox v. Serv. Emps. Int’l Union, Local 1000, 567 U.S. 298, 132 S. Ct. 2277, 2287
(2012) (quotation and alterations omitted). In general, a case becomes moot “only
when it is impossible for a court to grant any effectual relief whatever to the
prevailing party.” Cook v. Bennett, 792 F.3d 1294, 1299 (11th Cir. 2015)
(quotation omitted).
Ferguson states that the same grounds on which we should find the case
equitably moot also show the case is constitutionally moot; namely, that the Plan
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has already been substantially consummated and it would be cumbersome to
unwind each transaction. Mortgages would have to be modified, liens released,
and sums of money returned. To the contrary, however, these facts indicate the
case is not constitutionally moot. Equitable mootness “seeks to avoid an appellate
decision that would knock the props out from under the authorization for every
transaction that has taken place and create an unmanageable, uncontrollable
situation for the Bankruptcy Court.” In re Nica Holdings, Inc., 810 F.3d 781, 787
(11th Cir. 2015) (quotation omitted). As is evident, however, the prerequisites for
equitable mootness tend to show that there are very real “concrete interest[s] . . . in
the outcome of the litigation.” Knox, 567 U.S. 298, 132 S. Ct. at 2287 (quotation
omitted). The very fact that it could be so imprudent to disturb the Plan is a
testament to the fact that there is indeed a live controversy; the pragmatic doctrine
of equitable mootness exists precisely because the vindication of a party’s rights
must be balanced against the chaos that could result from rescinding a plan of
confirmation in large and complex bankruptcy cases. Such a decision would not
constitute a mere “advisory opinion,” Fla. Pub. Interest Research Grp., 386 F.3d at
1086; quite the opposite—the effects on the parties are all too real, In re Pac.
Lumber Co., 584 F.3d 229, 240 (5th Cir. 2009) (“[E]quitable mootness applies
when a judicial ruling might have too much effect on the parties to a confirmed
reorganization.” (citation omitted)). Beem challenges the confirmation of the Plan;
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presumably, if the Plan were unlawful as he claims, a different plan could have
resulted in more favorable treatment. Beem’s claims may or may not be valid, but
they are not constitutionally moot.
Beem’s case was lawfully appealed to the district court and his appeal of the
district court’s ruling was timely appealed to us. We thus have jurisdiction to hear
the appeal and deny Ferguson’s motion to dismiss the appeal for lack of
jurisdiction.
B. District Court’s Dismissal
Beem asserts the district court erred when it dismissed his appeal because it
made its decision based on “facts irrelevant to the issues before the court.” He
contends he was entitled to use Norkin’s services because he did not pay Norkin to
prepare his brief. The district court gave no instructions on how to comply with its
order, he complains, and deprived him of access to the courts in ordering him to
submit a brief prepared without Norkin’s assistance. He cites no authority for any
of these propositions.
The district court did not err in dismissing the appeal. Beem’s contentions
are without merit; he simply failed to follow clear court orders given ample
opportunity to do so. In its order striking Beem’s initial brief, the district court
noted that Beem himself had indicated he used the services of suspended attorney
Norkin to prepare the brief, which he then filed pro se. The court clearly ordered
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Beem to file a new initial brief no later than April 8 without Norkin’s assistance
and notified him that failure to do so could result in dismissal. Beem did not file
until April 9 nor did he file a response to Ferguson’s motion to dismiss the appeal.
The district court was well within its discretion to dismiss the appeal and deny
reconsideration. See Foudy v. Indian River Cty. Sheriff’s Office, 845 F.3d 1117,
1126 (11th Cir. 2017) (“Federal courts possess an inherent power to dismiss a
complaint for failure to comply with a court order. (citing Goforth v. Owens, 766
F.2d 1533, 1535 (11th Cir. 1985)); Degen v. United States, 517 U.S. 820, 827
(1996) (“A federal court has at its disposal an array of means to enforce its orders,
including dismissal in an appropriate case.”); see also S.D. Fla. L.R. 7.1(c)
(“[E]ach party opposing a motion shall serve an opposing memorandum of law no
later than fourteen (14) days after service of the motion. Failure to do so may be
deemed sufficient cause for granting the motion by default.”).
III. CONCLUSION
Because we hold the district court did not err in dismissing Beem’s appeal,
we do not consider his assignments of error to the bankruptcy court.
AFFIRMED.
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