United States v. Melot

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT April 13, 2015
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 14-2120
(D.C. No. 2:09-CV-00752-JCH-WPL)
BILLY R. MELOT; KATHERINE L. (D.N.M.)
MELOT,
Defendants - Appellants,
and
KLM TRUST; LEIGH CORPORATION;
SUZANNE CORPORATION; MIRROR
FARMS, INC.; C.D. EXPRESS, INC.,
Defendants.
ORDER AND JUDGMENT*
Before BRISCOE, Chief Judge, LUCERO, and MATHESON, 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
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 This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Husband and wife Billy and Katherine Melot, proceeding pro se, appeal from
the district court’s order confirming the judicial sale of several parcels of real
property and equipment.1 We have jurisdiction under 28 U.S.C. § 1291. Several of
the Melots’ arguments are moot because the sale has been completed. As to those
arguments that are not moot, we affirm the district court’s judgment.
I
The Melots owe millions in unpaid federal taxes, and Mr. Melot owes millions
more in unpaid excise taxes. Government efforts to collect this revenue have resulted
in numerous orders and appeals. See, e.g., United States v. Melot, 562 F. App’x 646
(10th Cir.) (unpublished), cert. denied, 135 S. Ct. 488 (2014) (Melot I); United States
v. Melot, 768 F.3d 1082 (10th Cir. 2014) (Melot II).
On the issues before us, the district court granted the government’s motion to
reduce tax assessments to judgment and to authorize the foreclosure of tax liens and
the sale of the Melots’ real property and equipment. A receiver was appointed to
handle the sale.2 Following the receiver’s appointment, the government moved for an
order confirming a judicial sale of several parcels of real property and equipment to a
single buyer for $1,125,000. According to the government, the properties were
placed for sale, advertised in a multiple listing service, and received several inquiries.
1
Because the Melots are proceeding pro se, we construe their filings liberally.
Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991).
2
This court later affirmed that judgment and rejected the Melots’ objections to
the receiver. See Melot I, 562 F. App’x at 649-50, 654.
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They were shown by the receiver to numerous prospective buyers, and the highest
and best offer submitted for all the properties plus equipment was $1,125,000. The
receiver and the United States both determined that no better offer was likely to be
submitted.
After initially declining to confirm the sale because the buyer and the
government had not agreed on the water rights that were to be conveyed and
expressing some concern that the parcels were offered for sale as a group, rather than
separately, the district court confirmed the sale. This followed clarification of the
agreement by the buyer and the government, and a second motion for confirmation
by the government that provided more information about the steps the receiver had
taken to sell the properties. However, Mrs. Melot initially refused to leave the
property, preventing the sale from occurring. After the district court issued an order
of forcible ejectment, Mrs. Melot relocated, allowing the sale process to continue.
Because the initial confirmation order had by then expired, the government moved
for a second confirmation order, which was issued by the district court on June 30,
2014, leading to this appeal. The government informs us that the sale occurred on
July 21, 2014, and that it received $1,035,000 from the sale.
II
A
Because the property has been sold, the government contends that this appeal
is moot. “We address the issue of mootness as a threshold question because in the
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absence of a live case or controversy, we have no subject-matter jurisdiction over an
appeal.” Golfland Entm’t Ctrs., Inc. v. Peak Inv., Inc. (In re BCD Corp.), 119 F.3d
852, 856 (10th Cir. 1997).
“An appeal is moot if the court of appeals can no longer grant effective relief
because the object of the suit has been transferred.” Out of Line Sports, Inc. v.
Rollerblade, Inc., 213 F.3d 500, 501 (10th Cir. 2000). The June 30, 2014,
confirmation order was not stayed, and the Melots’ real property and equipment were
sold to a purchaser who is not a party to this case. We therefore cannot grant any
relief that would have the effect of invalidating the sale. See, e.g., United States v.
Antiques Ltd. P’ship, 760 F.3d 668, 673 (7th Cir. 2014) (“[I]n the absence of a stay
. . . a closed sale (that is, a sale that has been executed, not just contracted for) of a
debtor’s assets can’t be reopened.”); cf. C.O.P. Coal Dev. Co. v. C.W. Mining Co. (In
re C.W. Mining Co.), 641 F.3d 1235, 1239 (10th Cir. 2011) (holding that Bankruptcy
Code barred upsetting completed sale); Osborn v. Durant Bank & Trust Co. (In re
Osborn), 24 F.3d 1199, 1203-04 (10th Cir. 1994) (same), abrogated in part on other
grounds by Eastman v. Union Pac. R.R., 493 F.3d 1151, 1156 & n.4 (10th Cir. 2007).
Despite this restriction, if “it is not impossible for the court to grant some
measure of effective relief, the . . . appeal is not moot.” In re Osborn, 24 F.3d at
1203. It is the government’s burden to “foreclose[] the possibility that [the Melots]
might be entitled to alternative relief that would not affect the validity of the sale.”
In re C.W. Mining Co., 641 F.3d at 1239. In United States v. Buchman, 646 F.3d
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409 (7th Cir. 2011), the Seventh Circuit held that an appeal was not moot even
though the court could not overturn a completed sale to a non-party. Id. at 410-13.
Buchman reasoned that the appellant could receive relief against the government
despite the completed sale, such as an order directing the government to transfer
proceeds from the sale to the appellant or vacating a deficiency judgment entered in
favor of the government. See id. at 410-11. For similar reasons, the appeal in this
case is not moot. But we consider only those arguments that would not inevitably
lead to invalidating the sale itself.
B
The Melots complain that the sale was improperly conducted and produced
less than the best possible price for the properties sold. A challenge to confirmation
based on price can succeed only if “the price is so grossly inadequate as to shock the
conscience of the court . . . coupled with slight additional circumstances indicating
unfairness such as chilled bidding.” Smith v. Juhan, 311 F.2d 670, 672 (10th Cir.
1962); see also In re BCD Corp., 119 F.3d at 860 (“Juhan . . . imposes a high
requirement for challenges based on mere inadequate price.”).
The facts of this case fall far short of the Juhan standard. The alleged
irregularities, namely that the receiver wrongfully advertised the properties and failed
to pursue attractive offers, ultimately chose an offer that was lower than others, and
allowed his own funds to be used to purchase the property, are unsupported and
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speculative.3 Contrary to the Melots’ arguments, the district court never required the
government to obtain a better price than $1,125,000. Rather, the record indicates that
the court denied the government’s first request to confirm the sale because of
concerns that the government and the buyer were not yet in agreement on what water
rights were included. The court did express some concern about selling the
properties as a group, but it did not reject the $1,125,000 price. Ultimately, the
district court approved the sale after careful consideration, and there was no
reasonable likelihood that the receiver could have obtained a better offer.
Accordingly, with regard to any arguments that are not moot, no relief from the June
30, 2014, second confirmation order is warranted.
III
We GRANT the Melots’ separate motions to proceed without prepayment of
costs and fees. The June 30, 2014, order confirming the judicial sale is AFFIRMED.
Entered for the Court
Carlos F. Lucero
Circuit Judge
3
When it imposed sanctions on the Melots, the district court struck certain
filings that objected to the confirmation of the sale. Those sanctions were later
vacated. See Melot II, 768 F.3d at 1085-86. In reaching our decision, we reviewed
all relevant district-court filings, including those that previously were stricken.
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