Three Legged Monkey, L. P., James Michael Armstrong and 2700 N. Mesa, LLC v. John Cook , 417 S.W.3d 541 ( 2013 )

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
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THREE LEGGED MONKEY, L.P., No. 08-13-00189-CV
JAMES MICHAEL ARMSTRONG, §
AND 2700 N. MESA, L.L.C., Appeal from
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Appellants, 327th District Court
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v. of El Paso County, Texas
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JOHN COOK, (TC # 2012-DCV-00099)
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Appellee.
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OPINION
This appeal is before the Court to determine whether the appellants, Three Legged
Monkey, L.P. (3LM), James Michael Armstrong, and 2700 N. Mesa LLC, timely perfected their
appeal from an order dismissing their suit against John Cook. We dismiss the appeal for lack of
jurisdiction.
Appellants sued Cook and several other defendants for business disparagement,
defamation and defamation per se, tortious interference, and negligence. The other defendants
successfully moved for dismissal of the suit against them pursuant to Section 27.003 of the Civil
Practice and Remedies Code and Appellants timely filed notice of appeal. See TEX.CIV.PRAC.&
REM.CODE ANN. § 27.003 (West Supp. 2012). That appeal is docketed as 08-12-00182-CV.
The instant appeal, cause number 08-13-00189-CV, concerns the remaining defendant
John Cook. Like the other defendants, Cook also moved to dismiss the suit against him pursuant
to Section 27.003. The trial court granted the motion and dismissed the suit against Cook on
May 18, 2012. Under Section 27.008(c)’s deadline (60 days from date order signed),
Appellants’ notice of appeal was due to be filed on July 17, 2012. See TEX.CIV.PRAC.&
REM.CODE ANN. § 27.008(c). 3LM filed a Chapter 11 bankruptcy petition on June 2, 2012. In
response to a notification filed by 3LM, this Court stayed the related appeal involving 3LM and
the other plaintiffs (cause number 08-12-00182-CV) by order entered on June 21, 2012. See
TEX.R.APP.P. 8.1 (providing that any party may file a notice that a party is in bankruptcy), 8.2
(providing that a “bankruptcy suspends the appeal and all periods in these rules from the date
when the bankruptcy petition is filed until the appellate court reinstates or severs the appeal in
accordance with federal law”). Likewise, on July 12, 2012, the trial court entered an order
staying “any further action in this cause” and removed the case from the docket. It does not
appear that any party sought relief from the stay in this Court or the bankruptcy court. See 11
U.S.C.A. § 362(d)(the debtor or any other interested party may apply to the bankruptcy court for
relief from the stay). There is also no indication that Cook ever objected to the stay order
entered by the trial court. The bankruptcy court entered an order confirming 3LM’s plan of
reorganization on July 8, 2013. Judge Chew signed an order on July 18, 2013 lifting the stay and
Appellants filed their notice of appeal that same date.
The Clerk’s Office sent Appellants a 10-day letter notifying them that it appeared the
appeal had not been timely perfected. The Court has received responses from the Appellants and
Cook. Appellants take the position that they timely perfected appeal within 30 days after the
stay was lifted. Cook argues that the automatic bankruptcy stay does not apply in this case
because the underlying case is not a suit against the debtor, but rather is a suit by the debtor
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3LM.
Cook is correct that a petition filed under the Bankruptcy Code operates as an automatic
stay of judicial proceedings against the debtor. 11 U.S.C.A. § 362(a)(1). “Against the debtor”
means that Congress intended only to stay suits filed against bankrupt debtors, not suits filed by
bankrupt debtors. Montgomery Ward & Co., Inc. v. Denton County Appraisal Dist., 13 S.W.3d
828, 829-30 (Tex.App.--Fort Worth 2000, pet. denied), citing McMillan v. MBank Fort Worth,
N.A., 4 F.3d 362, 366 (5th Cir. 1993). Clearly, 3LM initiated the suit below, and therefore the
automatic bankruptcy stay did not apply to that case. Nevertheless, 3LM notified both this Court
and the trial court of the bankruptcy proceeding and both courts entered stay orders in response
of that notification. This Court’s stay order in cause number 08-12-00182-CV was entered
pursuant to Rules 8.1 and 8.2 which are not restricted to a proceeding “against the debtor.” Of
course, that order is irrelevant to this appeal and could not serve to toll the appellate deadlines in
the instant appeal. The question is whether the trial court’s stay order tolled the appellate
deadline.
The cases addressing the automatic bankruptcy stay are instructive. Some intermediate
appellate courts have held that the automatic bankruptcy stay does not operate to toll any state
appellate deadlines even though the debtor cannot perfect appeal of a judgment entered against
him during the pendency of the stay -- the notice of appeal would be considered void if filed
during the automatic bankruptcy stay. See e.g., Bashaw v. State, Cause No. 03-05-00745-CV,
2007 WL 1518063 (Tex.App.--Austin 2007, no pet.); Gantt v. Gantt, 208 S.W.3d 27, 31
(Tex.App.--Houston [14th dist.] 2006, pet. denied); Burrhus v. M & S Machine and Supply Co.,
Inc., 897 S.W.2d 871, 873 (Tex.App.--San Antonio 1995, no writ). However, Section 108(c) of
the Bankruptcy Code provides for a thirty day extension of any deadline that expired during the
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stay. 11 U.S.C.A. § 108(c). If the automatic bankruptcy stay actually applied to this case, we
would find that 3LM and the other appellants timely filed their notice of appeal because it was
filed within 30 days after the stay was terminated. But, the automatic bankruptcy stay and
Section 108(c) do not apply here. Consequently, 3LM and the other appellants cannot avail
themselves of Section 108(c)’s extension of time. The trial court stayed the proceedings and
removed the case from its docket, but the deadline for filing the notice of appeal was not tolled.
Appellants also rely on Section 108(b) which provides that a debtor-in-possession may be
granted a 60-day extension after entry of the order for relief for the filing of a pleading, demand,
notice, or proof of claim. 11 U.S.C.A. § 108(b). Cook concedes that Section 108(b) applies but
he argues that Appellants did not file their notice of appeal by the extended deadline. The
commencement of a voluntary case under Chapter 11 by filing a petition constitutes an order for
relief. 11 U.S.C.A. § 301(a), (b). 3LM filed its bankruptcy petition on June 2, 2012. Thus, the
extension of time provided by Section 108(b) expired sixty days after June 2, 2012 and
Appellants did not file their notice of appeal until July 18, 2013.
Because Appellants did not file their notice of appeal on or before the due date provided
by the Rules of Appellate Procedure or by the extended deadline provided by Section 108(b),
they failed to timely perfect the appeal. We dismiss the appeal for want of jurisdiction.
August 21, 2013
ANN CRAWFORD McCLURE, Chief Justice
Before McClure, C.J., Rivera, and Rodriguez, JJ.
Rivera, J., not participating
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