Colleen Powers v. Odyssey Capital Group, LLC ( 2009 )

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
No. 08-6038
In re: *
*
Mesaba Aviation, Inc., *
*
Debtor. *
*
Coleen L. Powers, * Appeal from the
* United States
* Bankruptcy Court for the
Appellant, * District of Minnesota
*
v. *
*
Odyssey Capital Group, LLC, *
*
Appellee. *
Submitted: October 16, 2009
Filed: November 16, 2009
Before SCHERMER, VENTERS and SALADINO, Bankruptcy Judges
SCHERMER, Bankruptcy Judge
Coleen L. Powers (“Powers”) appeals three orders entered by the bankruptcy
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court. The first two orders, entered on September 12, 2008, closed Mesaba Aviation,
Inc.’s (the “Debtor”)2 chapter 11 bankruptcy case (the “Closing Order”) and overruled
Powers’ objection to the case closing (the “Overruling Order” and together with the
Closing Order, the “Case Closing Orders”). The third order that Powers appeals was
entered on May 1, 2009 (the “Final Order”). The Final Order denied Powers’ requests
that the bankruptcy court: (1) reconsider the Case Closing Orders; (2) allow Powers
to proceed in forma pauperis (“IFP”) for this appeal; and (3) seal Powers’ IFP
application or reconsider its previous order denying her request for IFP status. We
also consider Powers’ requests for appointment of counsel and oral argument in this
appeal. We have jurisdiction over this appeal from the final orders of the bankruptcy
court. See 28 U.S.C. § 158(b). We also have jurisdiction to consider Powers’ requests
for appointment of counsel and oral argument. For the reasons set forth below, we
affirm the decisions of the bankruptcy court and we deny Powers’ request for
appointment of counsel and for oral argument.
ISSUES
Powers’ principal brief lists 35 issues that she alleges are on appeal, including
some that have already been decided by the Eighth Circuit and others that were never
raised before the bankruptcy court. We understand the issues that are properly on
appeal to include whether the bankruptcy court erred when it: (1) closed the Debtor’s
bankruptcy case and declined to reconsider that decision; (2) denied Powers’ request
to proceed IFP for this appeal; and (3) refused to seal Powers’ IFP application and did
not afford Powers relief from its prior order denying her request to seal. We conclude
1
The Honorable Gregory F. Kishel, United States Bankruptcy Judge for the District of
Minnesota.
2
The named appellee is Odyssey Capital Group, LLC. Under the Debtor’s Modified
Plan of Reorganization, Odyssey Capital Group, LLC was appointed as trustee of the Mesaba
Liquidation Trust.
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that Powers lacks standing to challenge the closing of the Debtor’s bankruptcy case
and, accordingly, that the bankruptcy court properly denied her request for relief from
the Case Closing Orders. In addition, Powers’ requests to appear IFP and to seal her
IFP application are moot. The bankruptcy court properly denied Powers’ request to
seal her IFP application because she failed to demonstrate how the information in her
application was scandalous or defamatory. Because we are not permitted to appoint
counsel to represent Powers and we are not required to allow her oral argument in this
appeal, we decline to do either.
BACKGROUND
Events in Debtor’s Bankruptcy Case Leading to Closing
On October 13, 2005, the Debtor filed a voluntary petition for relief under
Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). Powers
filed her proof of claim which is number 638. The bankruptcy court disallowed
Powers’ claim and denied her motion to reconsider the claim disallowance (the “Claim
Disallowance Orders”). At about the same time, the court confirmed the Debtor’s
plan of reorganization. Thereafter, the bankruptcy court also entered orders, over the
objection of Powers, allowing compensation to certain of the Debtor’s professionals
(the “Fee Orders”).
Powers appealed to the district court from the bankruptcy court’s Claim
Disallowance Orders. On August 3, 2007, the district court dismissed her appeal with
prejudice as being untimely. It also denied a request by Powers to reconsider the
dismissal of her appeal. Powers appealed to the bankruptcy appellate panel (the
“BAP”) from the Fee Orders. On August 20, 2007, the BAP dismissed Powers’
appeal of the Fee Orders for lack of standing. Powers appealed the district court and
BAP decisions to the Eighth Circuit.
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As administration of the Debtor’s plan neared completion, the bankruptcy court
prepared to close the Debtor’s case. On August 21, 2008, the court entered an order
setting a deadline for the filing of reports regarding any further judicial proceeding to
be commenced or any other reason to keep the case open. Powers filed a timely
objection to the proposed case closing on the ground that the bankruptcy court should
retain jurisdiction pending resolution of her appeals to the Eighth Circuit.
Bankruptcy Court’s Orders Closing Debtor’s Case
On September 12, 2008, the bankruptcy court entered its Case Closing Orders.
In the Overruling Order, it overruled Powers’ objection to the case closing. The court
agreed with Powers that it would need jurisdiction to rule in the event that the Eighth
Circuit reversed and remanded any proceedings to it, but noted that keeping the case
open during the pendency of Powers’ appeals would impose an unnecessary financial
burden on other parties because all other proceedings in the case had been finalized.
Accordingly, the court ruled that, in the event of post-appellate remand, it would act
sua sponte to reopen the Debtor’s case, pursuant to 11 U.S.C. 350(b), and would
waive the reopening fee, thus accommodating Powers’ concerns without financially
burdening other parties.
Despite the bankruptcy court’s thoughtful resolution of her objection, Powers
elected to dispute the Case Closing Orders. On September 22, 2008, Powers filed a
motion to reconsider both orders and a notice of appeal of both orders.3 On
September 29, 2008, Powers applied to proceed IFP for this appeal and requested that
the court seal her financial information contained in her IFP application. The
3
The substance of Powers’ numerous requests for relief in this case and related
proceedings is confusing. In addition to her frequent attempts to proceed with simultaneous
challenges of orders in the bankruptcy and appellate courts, she often tries to “repeat” her prior
motions in subsequent filings. An interpretation of the relief Powers seeks is confused further by
her failure to use the accurate terminology and her complete disregard for applicable rules of
procedure.
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bankruptcy court denied Powers’ request to seal the same day that Powers filed it. On
October 8, 2008, Powers sought relief in the bankruptcy court from the order denying
her request to seal. Her motion for relief included a “repeated” motion to seal.
Stay of Proceedings Before the BAP and Request for Appointment of Counsel
Meanwhile, the BAP stayed the proceedings in Powers’ appeal of the Case
Closing Orders on October 1, 2008, terminated the stay on March 19, 2009, and again
stayed the proceedings on April 13, 2009. The BAP’s April 13, 2009 order operated
to hold Powers’ appeal in abeyance “pending entry of a final order by the bankruptcy
court on her motion to reconsider.” In connection with various motions filed by
Powers, including her requests that the BAP hold its proceedings in abeyance, Powers
requested that the BAP appoint counsel to represent her in this appeal. On June 23,
2009, the BAP entered an order instructing this panel to consider Powers’ request for
the appointment of counsel.
Bankruptcy Court’s Final Order
On May 1, 2009, the bankruptcy court entered the Final Order, denying each
of Powers’ then outstanding requests for relief. First, the court denied Powers’
request that it reconsider the Case Closing Orders because her motion merely repeated
substantive arguments she had already made in her objection to the case closing and
did not satisfy the requirements for relief under Federal Rule of Civil Procedure 59(e).
Next, based on her inability to demonstrate why the information she sought to seal
was protected from public disclosure under the applicable law, failure to satisfy the
requirements for relief under Rule 59(e), and res judicata, the court denied Powers’
requests to seal her application to proceed IFP or reconsider its previous order denying
her request to seal. Last, the court denied Powers’ request to proceed IFP, finding that
Powers had not proceeded in good faith by seeking review of the Overruling Order,
which was carefully structured to protect her rights.
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Events After Entry of Final Order
On May 11, 2009, Powers amended the Notice of Appeal that she had
previously filed on September 22, 2008. Her September 22, 2008 Notice of Appeal
sought review of the Case Closing Orders. By the Amended Notice of Appeal,
Powers added the Final Order to the list of matters for appeal. On May 12, 2009,
Powers filed a motion in the bankruptcy court seeking relief from the Final Order.4
The bankruptcy court has not ruled on Powers’ motion for relief from the Final Order.
After the bankruptcy court entered its Final Order and Powers filed her
Amended Notice of Appeal, Powers’ Eighth Circuit appeals regarding the Claim
Disallowance Orders and the Fee Order ultimately proved to be unsuccessful. On July
7, 2009, the Eighth Circuit affirmed the district court’s and BAP’s dismissal of
Powers’ appeals.
Waiver of Filing Fee and Request for Oral Argument
In May of 2009, Powers asked the BAP to grant her the same relief that the
bankruptcy court had already denied, waiver of the filing fee for her appeal. After
twice ordering Powers to pay the filing fee, on June 9, 2009, an administrative panel
of the BAP granted Powers permission to proceed IFP.5
4
Powers’ May 12, 2009 motion was filed more than ten days after entry of the Final
Order. Accordingly, this Court does not need to decide whether it qualifies as a motion specified
in Federal Rule of Bankruptcy Procedure 8002(b). Even if it did qualify as a Rule 8002(b)
motion, this Court retained jurisdiction over this appeal. See Fed. R. Bankr. P. 8002(b).
5
The BAP entered orders on May 6, 2009 and May 20, 2009, refusing Powers’
additional requests for waiver of her filing fee. On June 1, 2009, Powers appealed the BAP’s
May 2009 orders to the Eighth Circuit. Notwithstanding the BAP’s entry of its June 9, 2009
order waiving the filing fee, Powers refused to withdraw her June 1, 2009 appeal. The Eighth
Circuit dismissed her appeal for lack of jurisdiction.
6
On August 6, 2009, this Court sent a letter indicating that this case had been
selected for submission to this panel without oral argument. Powers filed a timely
objection to the “no argument” classification for this appeal, together with requests
that the BAP reconsider the “no argument” classification and grant her separate
request for oral argument.
Powers now seeks review of the Case Closing Orders and the Final Order. We
also address Powers’ requests for appointment of counsel and for oral argument.
STANDARD OF REVIEW
We review the bankruptcy court’s findings of fact for clear error and its
conclusions of law de novo. DeBold v. Case, 452 F.3d 756, 761 (8th Cir. 2006);
Kaelin v. Bassett (In re Kaelin), 308 F.3d 885, 888 (8th Cir. 2002); Fokkena v. Klages
(In re Klages), 381 B.R. 550, 553 (B.A.P. 8th Cir. 2008). The grant or denial of a
motion for relief from judgment under Federal Rule of Civil Procedure 59(e) is
reviewed for abuse of discretion. Anderson v. Family Dollar Stores of Ark., Inc., 579
F.3d 858, 861-862 (8th Cir. 2009); Barger v. Hayes County Non-Stock Co-Op (In re
Barger), 219 B.R. 238, 243 (B.A.P. 8th Cir. 1998).
DISCUSSION
Case Closing Orders
Powers lacks standing to challenge the Case Closing Orders. Only an aggrieved
person has standing to appeal from a bankruptcy court order. Yates v. Forker (In re
Patriot Co.), 303 B.R. 811, 815 (B.A.P. 8th Cir. 2004)(citing Nangle v. Surratt-States
(In re Nangle), 288 B.R. 213, 216 (B.A.P. 8th Cir. 2003), aff’d 83 Fed.Appx. 141 (8th
Cir. 2003)(unpublished) ). To be aggrieved, Powers would have to be “directly and
adversely affected pecuniarily by the order.” Id. (quoting Nangle, 288 B.R. at 216).
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But Powers has no financial stake with respect to the bankruptcy court’s closing of the
Debtor’s chapter 11 case. Her only alleged interest in the Debtor’s case arose from
her proof of claim number 638. Powers’ claim 638 was disallowed in its entirety by
the bankruptcy court. The district court dismissed Powers’ appeal of the disallowance
of her claim and the Eighth Circuit affirmed the order of disallowance.6
In addition, the Eighth Circuit has agreed that Powers is not an aggrieved
person with respect to the Debtor’s bankruptcy case. In its July 7, 2009 per curiam
decision, the Eighth Circuit found that Powers lacked standing to appeal the Fee
Orders “because her only claim in the matter had been resolved adversely to her.”
Powers v. Mesaba Aviation, Inc., 328 Fed. Appx. 344, 344-345 (8th Cir.
2009)(unpublished) (citation omitted).
Final Order
Request to Reconsider Case Closing Orders
Simultaneous with the notice of appeal of the Case Closing Orders, Powers
filed a motion seeking reconsideration of the same orders. She now appeals the
bankruptcy court’s Final Order denying her request for reconsideration of the Case
Closing Orders. It is clear that the bankruptcy court acted within its discretion when
it denied Powers’ motion to reconsider. The procedure set forth in the Overruling
Order was specifically crafted to protect Powers’ rights. The bankruptcy court
provided a forum with jurisdiction for Powers to adjudicate the merits of her claim if
the Eighth Circuit were to reverse the district court’s dismissal of her appeal and
remand the proceeding to the bankruptcy court. The Overruling Order also spared
Powers administrative work or expenses to reopen the Debtor’s case. It stated that,
in the event of post-appellate remand, the bankruptcy court would reopen the Debtor’s
6
The Eighth Circuit denied Powers’ request for rehearing.
8
bankruptcy case sua sponte pursuant to 11 U.S.C. §350(b), and waive the applicable
filing fee.
Because the Eighth Circuit affirmed the dismissal of Powers’ appeal, the
bankruptcy court will not have to reconsider the merits of Powers’ claim. There will,
therefore, be no cause to reopen the case under section 350(b). 11 U.S.C.
§350(b)(allowing a court to reopen a case “to administer assets, to accord relief to the
debtor, or for other cause”).
Request to File In Forma Pauperis
In an effort to avoid paying a fee to file this appeal, Powers requested IFP
status. She now appeals the bankruptcy court’s Final Order denying her request. On
June 9, 2009, a date that fell between the time when Powers filed her Amended Notice
of Appeal to include the Final Order and the date of this decision, the BAP waived
Powers’ filing fee. Accordingly, Powers’ appeal of the bankruptcy court’s denial of
her request for IFP status is now moot because it no longer presents an ongoing
controversy. This Court may only exercise jurisdiction over ongoing cases and
controversies. U.S. CONST., art. III, §2, cl. 1; Hickman v. State of Missouri, 144 F3d
1141, 1142 (8th Cir. 1998); I.R.S. v. Ealy (In re Ealy), 396 B.R. 20, 22 (B.A.P. 8th Cir.
2008).
Request to Seal Application to File In Forma Pauperis
The last ruling in the Final Order from which Powers appeals is the bankruptcy
court’s denial of her request to seal her IFP application.7 Her request is moot. The
7
Technically, the Final Order denied Powers’ attempts to have her IFP application
sealed based on procedural and preclusion principles, Federal Rule of Civil Procedure 59(e) and
res judicata. After the bankruptcy court denied Powers’ initial request to seal her IFP
application, she filed a motion to reconsider the bankruptcy court’s ruling. Apparently in an
effort to get a second bite at the apple, she also filed a “repeated” motion to seal. The
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bankruptcy court never sealed the record. Powers’ application has been publically
available on the bankruptcy court’s docket for over a year. At this point, meaningful
appellate relief is no longer possible. Church of Scientology of Ca. v. U.S., 506, U.S.
9, 12, 113 S. Ct. 447, 121 L. Ed. 2d 313 (1992)(citing Mills v. Green, 159 U.S. 651,
653, 16 S. Ct. 132, 133, 40 L. Ed. 293 (1895)).
In addition, the bankruptcy court properly denied Powers’ request to seal her
application for IFP status because the information contained in her application is not
scandalous or defamatory.8 Section 107(a) of the Bankruptcy Code states that papers
filed in bankruptcy cases are public records. 11 U.S.C. §107(a). Section 107(b)(2)
provides an exception to the rule of public access for “scandalous or defamatory
matter contained in a paper filed in a case under [the Bankruptcy Code].” 11 U.S.C.
§107(b)(2)(emphasis added). Federal Rule of Bankruptcy Procedure 9018 permits the
bankruptcy court to make an order “to protect any entity against scandalous or
defamatory matter contained in any paper filed in a case under the [Bankruptcy]
Code.” Fed. R. Bankr. P. 9018 (emphasis added). When viewing the financial
information in Powers’ IFP application in light of its role in the court records, it is
clear that the information was neither scandalous nor defamatory. Neal v. The
Kansas City Star (In re Neal), 461 F.3d 1048, 1053-1054 (8th Cir. 2006)(employing
a context-sensitive inquiry). The only imaginable harm to Powers from public access
to information in her IFP application is damage to her reputation. Injury or potential
injury to Powers’ reputation will not suffice to deny public access to the document.
Id. (citing Gitto v. Worcester Telegram & Gazette Corp. (In re Gitto Global Corp.),
422 F.3d 1, 11 (1st Cir. 2005)). Moreover, it strikes the panel as rather odd that
bankruptcy court was well within its discretion to disallow the motion to reconsider. In addition,
its application of res judicata to Powers’ “repeated” motion to seal is well-reasoned.
8
Powers cited various statutes and constitutional provisions to allegedly support her
request. As the bankruptcy court correctly noted in its Final Order, Powers never “developed a
comprehensible argument as to why the information [in her application] is the sort protected
under the constitutional provisions and the statutes that she cited.”
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Powers would seek to invoke the protections of §107 and Rule 9018 with respect to
her own filings; surely the statute and rule were not intended to protect persons from
filing papers that contain information that is scandalous or defamatory to themselves.
Request for Appointment of Counsel
Powers’ request for appointment of counsel to represent her in this appeal is
denied. Only an indigent whose physical liberty is at stake has a right to counsel.
Lassiter v. Dep’t of Soc. Servs. of Durham County, 452 U.S. 18, 26-28, 101 S. Ct.
2153, 68 L. Ed. 2d 640 (1981). Powers’ physical liberty was not at stake in this appeal.
We know of no bankruptcy court that has granted a request for appointment of counsel
under similar facts.
Request for Oral Argument
The last matter that we consider is Powers’ request for oral argument in this
appeal. Pursuant to Federal Rule of Bankruptcy Procedure 8012, we have reviewed
the briefs, record and appendixes on appeal, and have determined that oral argument
is not necessary because Powers’ appeal is frivolous. Fed. R. Bankr. P. 8012.
CONCLUSION
For the foregoing reasons, we affirm the decisions of the bankruptcy court in
the Case Closing Orders and the Final Order. We deny Powers’ requests for
appointment of counsel and for oral argument in this appeal.
Powers has, in our opinion, abused her rights by filing frivolous and vexatious
documents that do not comply with the applicable procedural rules for appeals to this
panel. She has exhausted the patience of the BAP given the fact that she is not a
claimholder and has no pecuniary interest in the Debtor’s bankruptcy case. We have
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no doubt that she will appeal this Order to the Eighth Circuit. If she does so, we
suggest that the Eighth Circuit take the unusual but appropriate steps to deny her the
right to any further appeals of the bankruptcy court’s orders.
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