Chittranjan Thakkar v. Good Gateway, LLC

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[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-10521
Non-Argument Calendar
____________________
In Re: BAY CIRCLE PROPERTY, LLC,
Debtor.
___________________________________________________
___________________
CHITTRANJAN THAKKAR,
Plaintiff-Appellant,
versus
GOOD GATEWAY, LLC,
SEG GATEWAY, LLC,
CLAY TOWNSEND,
Defendants-Appellees.
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2 Opinion of the Court 22-10521
____________________
Appeal from the United States District Court
for the Northern District of Georgia
D.C. Docket No. 1:20-cv-04792-RWS
____________________
Before WILSON, TJOFLAT and ANDERSON, Circuit Judges.
PER CURIAM:
The District Court affirmed the Bankruptcy Court’s denial
of Chittranjan Thakkar’s motion for sanctions on the ground that
Thakkar lacked standing to prosecute the motion. We agree that
Thakkar lacked standing and accordingly affirm.
I.
Since this opinion is not published, we write solely for the
benefit of the courts below and the parties. 1 The salient facts are
1 We note in passing that Thakkar has been before this Court on three sepa-
rate occasions. See In re Nilhan Fin., LLC, 835 F. App’x 1013 (11th Cir. 2021)
(unpublished) (concluding that Thakkar lacked standing because the order he
appealed from only indirectly affected his pecuniary interest in the debtor, if
at all); In re Nilhan Fin., LLC, 832 F. App’x 678 (11th Cir. 2021) (unpublished)
(dismissing Thakkar’s appeal because the Bankruptcy Court order indirectly
affected his pecuniary interest in the debtor); In re Nilhan Fin., LLC, 831 F.
App’x 479 (11th Cir. 2020) (unpublished) (dismissing Thakkar’s appeal because
his pecuniary interest was indirectly affected by the approval of a settlement
agreement). Each appeal was related, albeit indirectly, to the controversy
providing the background of this appeal.
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22-10521 Opinion of the Court 3
these. Chittranjan K. Thakkar is the manager and member of five
limited liability companies that are in bankruptcy in the Northern
District of Georgia pursuant to petitions for relief he filed on May
4, 2015, on the LLCs’ behalf under Chapter 11 of the Bankruptcy
Code.2 See 11 U.S.C. § 301. By statute, the Chapter 11 filing trig-
gered an automatic stay preventing creditors from, inter alia, tak-
ing any action to “create, perfect, or enforce any lien against” prop-
erty of the Debtors’ estate. See 11 U.S.C. § 362(a)(4).
Several years before Thakkar filed the petitions, Good Gate-
way, LLC (“Gateway”) obtained judgments in the Circuit Court of
Orange County, Florida, in the amount of $2.5 million, $12 million,
and $15.3 million against Thakkar and Nilhan Developers, LLC
(“Nilhan”), the debtor in one of the Chapter 11 cases pending in the
Northern District of Georgia. Unable to obtain satisfaction of the
judgments against Thakkar, Gateway on February 2, 2019, moved
the Circuit Court for a charging order 3 against Thakkar’s interest
2 Thakkar also filed Chapter 11 petitions on behalf of four other limited liabil-
ity companies he controlled. None of these companies is involved in this ap-
peal.
3 A charging order is a remedy under provided by Florida law, citation, that
entitles a judgment creditor of an LLC to pursue the LLC member’s interest—
that is, his share of the LLC’s profits and losses—and to receive distributions
of an LLC which the member would have been entitled to receive up to the
amount of the unsatisfied judgment debt. See Capstone Bank v. Perry-Clifton
Enterprises, LLC, 230 So.3d 970, 971 (Fla. Ct. App. 2017). A charging order
does not provide the judgment creditor a direct remedy against the assets of
the LLC. As indicated in the text infra, Thakkar contended that Gateway
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4 Opinion of the Court 22-10521
in Nilhan, which would enable it to obtain any proceeds Thakkar
might be entitled to receive as a member of the LLC. On July 22,
2019, Gateway filed a notice stating that the Circuit Court would
hear its motion for a charging order on September 18, 2019.
On September 6, 2019, the United States Bankruptcy Court
for the Northern District of Georgia issued an order directing
Thakkar and Gateway to mediate (before a bankruptcy judge not
assigned to the case) the merits of Gateway’s motion for a charging
order (“Mediation Order”). On September 18, 2019—less than two
weeks after the Mediation Order was granted—the Circuit Court
held a hearing on Gateway’s motion for the charging order and
subsequently granted the motion. Thakkar then moved for sanc-
tions against Gateway in Bankruptcy Court pursuant to 11 U.S.C.
§ 362(k), arguing that Gateway violated the automatic stay and Me-
diation Order by obtaining the charging order, but the Bankruptcy
Court denied Thakkar’s motion on September 30, 2019.
On November 8, 2019, Thakkar moved the Bankruptcy
Court to hold a hearing on his motion for sanctions against Gate-
way. The Bankruptcy Court granted Thakkar’s motion and held
an evidentiary hearing on Thakkar’s motion for sanctions on Octo-
ber 27, 2020. On November 9, 2020, the Bankruptcy Court denied
Thakkar’s motion for sanctions. The Bankruptcy Court explained
that because Thakkar was not the Debtor, Nilhan, a creditor, or an
violated the automatic stay when it moved the Circuit Court for a charging
order and moved the Bankruptcy Court to sanction Gateway for the violation.
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22-10521 Opinion of the Court 5
equity owner of the Debtor, he was not an aggrieved party entitled
to seek relief under 11 U.S.C. § 362(k) and therefore lacked standing
to assert a claim against Gateway for violating the automatic stay
or the Mediation Order. The Court also reasoned that Thakkar’s
alleged grievance—that he incurred fees as a result of the charging
orders—did not fall within the zone of interests the automatic stay
was designed to protect.
Thakkar appealed the Bankruptcy Court’s decision to the
District Court. The District Court agreed with the Bankruptcy
Court that Thakkar lacked standing and dismissed Thakkar’s ap-
peal for lack of subject-matter jurisdiction to seek relief under
§ 362(k) of the Bankruptcy Code. He now appeals the District
Court’s decision to this Court. For the reasons that follow, we af-
firm.
II.
We will review both the bankruptcy court’s and District
Court’s conclusions of law de novo and the bankruptcy court’s
findings of fact for clear error. In re Sublett, 895 F.2d 1381, 1383
(11th Cir. 1990).
Article III standing “represents a jurisdictional requirement
which remains open to review at all stages of the litigation.” Nat’l
Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 255, 114 S. Ct. 798,
802 (1994). Pursuant to Article III, our jurisdiction is limited to
“cases” and “controversies.” Christian Coalition of Fla., Inc. v.
United States, 662 F.3d 1182, 1189 (11th Cir. 2011) (internal
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6 Opinion of the Court 22-10521
quotation marks omitted). Standing is an important justiciability
doctrine that goes to the heart of Article III’s cases or controversies
requirement. Id. “To have standing, a plaintiff must show: (1) he
has suffered an injury in fact that is (a) concrete and particularized
and (b) actual or imminent, not conjectural or hypothetical; (2) the
injury is fairly traceable to conduct of the defendant; and (3) it is
likely, not just merely speculative, that the injury will be redressed
by a favorable decision.” Kelly v. Harris, 331 F.3d 817, 819–20 (11th
Cir. 2003).
To determine whether a person has standing to appeal an
order of a bankruptcy court, we apply the “person aggrieved”
standard. In re Ernie Haire Ford, Inc., 764 F.3d 1321, 1325 (11th
Cir. 2014). The “person aggrieved” doctrine limits the right to ap-
peal a bankruptcy court order to “those parties having a direct and
substantial interest in the question being appealed.” Id. (internal
quotation marks omitted). Under the doctrine, a person has stand-
ing to appeal only when he is “directly, adversely, and pecuniarily
affect[ed] by a bankruptcy court’s order.” Id. In other words, the
person must have a financial stake in the appealed order such that
the order “diminishes their property, increases their burdens, or
impairs their rights.” Id. (internal quotation marks omitted). The
person does not have standing to appeal the bankruptcy court’s or-
der simply by virtue of participating in bankruptcy proceedings.
Westwood Cmty. Two Ass’n, Inc. v. Barbee (In re Westwood
Cmty. Two Ass’n, Inc.), 293 F.3d 1332, 1336–37 (11th Cir. 2002).
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22-10521 Opinion of the Court 7
A party is not “aggrieved” under the doctrine when the
bankruptcy court’s order being appealed causes only indirect harm
to the party’s asserted interest. See In re Ernie Haire Ford, Inc., 764
F.3d at 1325–26 (holding that a party is not aggrieved when the only
interest allegedly harmed by a bankruptcy court’s order is the
party’s interest in avoiding liability from an adversary proceeding).
Moreover, “for a person to be aggrieved, the interest they seek to
vindicate on appeal must be one that is protected or regulated by
the Bankruptcy Code.” Id.
Nilhan was organized under Georgia law. Under Georgia
law, a member has no interest in specific limited liability company
property. O.C.G.A. § 14-11-501(a). 4 In a Chapter 11 bankruptcy
proceeding, the distribution of any surplus funds back to the debtor
occurs only after all other claims against the estate are satisfied. See
11 U.S.C. § 726(a).
III.
We need not reach the merits of this case because Thakkar
lacks standing to challenge the bankruptcy court’s order.
4 The text of the statute reads:
(a) A limited liability company interest is personal property. A mem-
ber has no interest in specific limited liability company property.
(b) An operating agreement or the articles of organization may pro-
vide that a limited liability company interest may be evidenced by a
certificate issued by the limited liability company.
O.C.G.A. § 14-11-501.
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8 Opinion of the Court 22-10521
Assuming, arguendo, that Thakkar is a member and man-
ager of Nilhan, because he was not a party to the bankruptcy pro-
ceedings involving Nilhan, he had at most an indirect interest in
the bankruptcy court’s order denying his motion for sanctions. See
In re Ernie Haire Ford, Inc., 764 F.3d at 1326. Thakkar’s interest as
a member of Nilhan did not equate to an ownership interest in the
property of Nilhan under state law, nor did his ability to participate
in the bankruptcy proceedings give him standing to appeal the
bankruptcy court’s order. See O.C.G.A. § 14-11-501(a); Fla. Stat.
§ 605.0110(4); In re Westwood Cmty. Two Ass’n, Inc., 293 F.3d at1336–37. Although Thakkar may have incurred expenses in chal-
lenging the charging order on behalf of Nilhan, he did not have a
“direct and substantial interest in the question being appealed
from”— whether the charging order violated the automatic stay or
the Mediation Order—particularly because responsibility for man-
aging Nilhan’s estate had passed to the trustee the Bankruptcy
Court appointed to handle Nilhan’s estate. See In re Ernie Haire
Ford, Inc., 764 F.3d at 1325. Because no guarantee existed that
Thakkar would receive any surplus remaining even if Nilhan satis-
fied its obligations to its creditors, his status as an equity holder in
Nilhan Developers did not convert his interest in the Bankruptcy
Court’s order denying his motion from an indirect interest to a di-
rect interest. See id. at 1326; 11 U.S.C. § 726(a). Even though Thak-
kar asserted his own individual claim for sanctions, “a party is not
aggrieved, for purposes of appealing from a bankruptcy court or-
der, when the only interest allegedly harmed by that order is the[ir]
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22-10521 Opinion of the Court 9
interest in avoiding liability from an adversary proceeding.” See In
re Ernie Haire Ford, Inc., 764 F.3d at 1326.
Here, the District Court correctly determined that Thakkar
did not constitute a “person aggrieved” by the Bankruptcy Court
order denying his motion for sanctions and thus lacked standing to
appeal that. Accordingly, we affirm.
AFFIRMED.