Filed: Jun. 18, 2009
Latest Update: Mar. 02, 2020
Summary: By order of the Bankruptcy Appellate Panel, the precedential effect of this decision is limited to the case and parties pursuant to 6th Cir. BAP LBR 8013-1(b). See also 6th Cir. BAP LBR 8010-1(c). File Name: 09b0003n.06 BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT In re: JACK V. OAKLEY, ) ) Debtor. ) _ ) ) No. 08-8103 ) ELIZABETH H. DOUCET, TRUSTEE, et al., ) ) Appellees, ) ) v. ) ) DRYDOCK COAL COMPANY, et al., ) ) Appellants. ) ) Appeal from the United States Bankruptcy Court for the Southe
Summary: By order of the Bankruptcy Appellate Panel, the precedential effect of this decision is limited to the case and parties pursuant to 6th Cir. BAP LBR 8013-1(b). See also 6th Cir. BAP LBR 8010-1(c). File Name: 09b0003n.06 BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT In re: JACK V. OAKLEY, ) ) Debtor. ) _ ) ) No. 08-8103 ) ELIZABETH H. DOUCET, TRUSTEE, et al., ) ) Appellees, ) ) v. ) ) DRYDOCK COAL COMPANY, et al., ) ) Appellants. ) ) Appeal from the United States Bankruptcy Court for the Souther..
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By order of the Bankruptcy Appellate Panel, the precedential effect
of this decision is limited to the case and parties pursuant to 6th
Cir. BAP LBR 8013-1(b). See also 6th Cir. BAP LBR 8010-1(c).
File Name: 09b0003n.06
BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT
In re: JACK V. OAKLEY, )
)
Debtor. )
_____________________________________ )
) No. 08-8103
)
ELIZABETH H. DOUCET, TRUSTEE, et al., )
)
Appellees, )
)
v. )
)
DRYDOCK COAL COMPANY, et al., )
)
Appellants. )
)
Appeal from the United States Bankruptcy Court
for the Southern District of Ohio, Eastern Division.
No. 03-59297; Adv. No. 05-2289.
Submitted: May 20, 2009
Decided and Filed: June 18, 2009
Before: BOSWELL, HARRIS, and SHEA-STONUM, Bankruptcy Appellate Panel Judges.
____________________
COUNSEL
ON BRIEF: Kenneth C. Johnson, BRICKER & ECKLER, LLP, Columbus, Ohio, for Defendants.
Elizabeth H. Doucet, ELIZABETH H. DOUCET & ASSOCIATES, Lake Charles, Louisiana,
William B. Logan, Jr., Kenneth M. Richards, LUPER, NEIDENTHAL & LOGAN, Columbus, Ohio,
for Plaintiffs. Jack V. Oakley, Nelsonville, Ohio, pro se.
____________________
OPINION
____________________
G. HARVEY BOSWELL, Bankruptcy Appellate Panel Judge. Following the conclusion of
a five day trial in an adversary proceeding before the bankruptcy court, one of the named defendants,
Jack Oakley (the “Debtor”), filed a motion to dismiss the adversary proceeding alleging the
bankruptcy court did not have jurisdiction over nor did the plaintiffs have standing to pursue the
claims asserted therein. The bankruptcy court entered an order denying the Debtor’s motion. It is
from this order that the Debtor appeals. For the following reasons, we affirm the order of the
bankruptcy court.
I. ISSUE ON APPEAL
Whether the bankruptcy court erred in denying the Debtor’s post-trial motion to dismiss for
lack of jurisdiction and standing.
II. JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction to decide this appeal. The United States District Court for the Southern
District of Ohio has authorized appeals to the Bankruptcy Appellate Panel for the Sixth Circuit, and
no party to this appeal has timely elected to have the appeal heard by the district court. 28 U.S.C.
§§ 158(b)(6), (c)(1).1 A final order of the bankruptcy court may be appealed as of right pursuant to
28 U.S.C. § 158(a)(1). “[A] decision is ordinarily considered final and appealable under § 1291 [and
§ 158(a)] only if it ‘ends the litigation on the merits and leaves nothing for the court to do but
execute the judgment.’” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712,
116 S. Ct. 1712, 1718
(1996) (quoting Catlin v. United States,
324 U.S. 229, 233,
65 S. Ct. 631, 633-34 (1945)); Wicheff
v. Baumgart (In re Wicheff),
215 B.R. 839 (B.A.P. 6th Cir. 1998). Under that standard, the order
1
Although the Debtor’s notice of appeal says he appeals the order to the “United States District Court for the
Southern District of Ohio,” no separate written statement making such an election was filed. Therefore, this appeal is
properly pending before the Bankruptcy Appellate Panel for the Sixth Circuit. See, e.g., In re Snell, 237 B.R. 636 (B.A.P.
6th Cir. 1999).
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denying the Debtor’s motion for lack of jurisdiction and standing was not final when it was issued.
However, the order became final when the bankruptcy court issued its memorandum opinion and
judgment finding in favor of the plaintiffs in the adversary proceeding. See Thickston Bros. Equip.
Co., Inc. v. Encompass Servs. Corp. (In re Thickston Bros. Equip. Co., Inc.), 344 B.R. 515, 517
(B.A.P. 6th Cir. 2006) (order denying motion for lack of jurisdiction was final when court was left
with nothing to do but execute judgment).
We review jurisdictional determinations de novo. Thickston Bros. Equip. Co., 344 B.R. at
517 (citing Gordon Sel-Way, Inc. v. United States (In re Gordon Sel-Way, Inc.),
270 F.3d 280, 284
(6th Cir. 2001)). “Under a de novo standard of review, the reviewing court decides an issue
independently of, and without deference to, the trial court’s determination.” Menninger v.
Accredited Home Lenders (In re Morgeson),
371 B.R. 798, 800 (B.A.P. 6th Cir. 2007).
III. FACTS
On June 20, 2003 (the “Petition Date”), the Debtor and his wife filed a joint voluntary
petition for relief under chapter 11 of the Bankruptcy Code. On May 17, 2004, their case was
converted to chapter 7, upon motion of Citizens Bank of Logan (“Citizens”), a creditor of the Debtor.
Elizabeth Doucet (“Trustee”) was appointed chapter 7 trustee.
As of the Petition Date, the Debtor owned 54% of the shares of Drydock Coal Company
(“Drydock”), a business founded in 1940 by the Debtor’s family. The remaining shares of Drydock
were owned by the Debtor’s four sons and Margaret Galvin, a long-time secretary of Drydock and
relative of the Debtor’s family through marriage.
A dispute arose between the estate, the creditors, the Debtor and the other shareholders of
Drydock over the ownership and transferability of and encumbrances against the Drydock shares.
On June 10, 2005, the Trustee and Citizens, a creditor of the Debtor with an alleged perfected
security interest in the stock, commenced the adversary proceeding at issue here seeking, inter alia,
a declaration that the Drydock stock was free of any restrictions and that Citizens held a valid and
existing first priority security interest in the stock. The Debtor and other defendants filed answers
and counterclaims seeking an order that the Drydock stock was restricted by virtue of an alleged
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agreement restricting the transfer of the stock, that Citizens’ security interest in the stock was void
and that the defendants had the right to purchase the stock at the price of $400 per share.
The bankruptcy court conducted a five day trial on those issues. Following the conclusion
of the trial, but before the bankruptcy court issued a ruling, the Debtor, without the assistance of the
counsel who represented him in the adversary proceeding, filed a motion to dismiss the adversary
proceeding for lack of jurisdiction and standing. The bankruptcy court denied the motion to dismiss
stating that the Trustee had standing to pursue and collect all non-exempt estate assets and to
determine the characteristics of property of the estate. With respect to Citizens, the bankruptcy court
similarly held Citizens had standing based on its status as a purported secured creditor. As for
jurisdiction, the bankruptcy court found this to be a core proceeding over which it has jurisdiction
pursuant to 28 U.S.C. § 157(b)(2)(K) and § 1334 (a), (b) and (e)(1). This is the only order of the
bankruptcy court from which the Debtor has appealed.2
IV. DISCUSSION
Preliminarily, we dispense with several issues the Debtor attempts to raise which are not
properly before us. In his brief, in addition to asking the Panel to dismiss the adversary proceeding,
the Debtor asks the Panel to reverse the bankruptcy court’s finding of contempt against him, and
overturn the bankruptcy court order approving the Trustee’s compromise of pre-petition state court
breach of contract litigation between the Debtor and Citizens.3 The Debtor did not timely appeal
2
The other defendants have appealed from the judgment entered in the adversary proceeding finding the stock
to be property of the estate and not subject to a transfer restriction. This appeal is pending before the Bankruptcy
Appellate Panel of the Sixth Circuit, Case No. 08-8102.
3
Prior to the Petition Date, the Debtor had filed suit in state court against Citizens for breach of an alleged oral
agreement to lend money for the completion of a golf course. The state court granted summary judgment in favor of
Citizens and denied the Debtor’s subsequent motion for reconsideration. At the time the Debtor filed his petition for
relief, he had pending in the Fourth District Court of Appeals of Ohio an appeal from the state court’s denial of his
motion for reconsideration. In an effort to avoid future litigation costs, Citizens offered to settle the Debtor’s claim with
the Trustee. The Trustee sought and obtained an order of the bankruptcy court on February 15, 2005, approving
settlement of the claim with Citizens.
Despite the compromise of his state court claims by the Trustee as part of administration of the bankruptcy
estate, the Debtor subsequently filed a motion in the state court seeking to continue his litigation against Citizens in state
court. The Trustee and Citizens responded by filing a motion with the bankruptcy court seeking an order finding the
Debtor in contempt of court, assessing sanctions, and ordering the Debtor to withdraw his motion with the state court.
On September 25, 2008, the bankruptcy court found the Debtor in violation of the order approving the compromise of
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from the bankruptcy court’s September 25, 2008, order finding Debtor in contempt, nor did he
appeal from the February 15, 2005, order approving the Trustee’s compromise of the pre-petition
state court litigation between the Debtor and Citizens. See Federal Rule of Bankruptcy Procedure
8002(a). Also not properly before us is the Debtor’s argument that the bankruptcy court erred in
finding that he pledged Drydock stock to Citizens. The bankruptcy court did not make a finding
concerning the pledge of the stock in its order denying the Debtor’s motion to dismiss, the only order
the Debtor has timely and properly appealed. Because these issues are not properly before us, we
will not address them.
The only issue the Debtor raises which is properly before us is whether the bankruptcy court
erred in denying the Debtor’s motion to dismiss the adversary proceeding. In his motion to dismiss,
the Debtor argued that the bankruptcy court lacked jurisdiction over the Trustee and Citizens’ claims
in the adversary proceeding because, despite promises to the Debtor, the Trustee failed to pursue the
Debtor’s appeal in state court. Additionally, he asserted that, pursuant to the principle of concurrent
jurisdiction, the state court retained jurisdiction over Citizens’ attempt to sell his Drydock stock
because he first initiated litigation against Citizens in state court for breach of contract, fraud, and
duress.
The Debtor also argued in his motion to dismiss that the Trustee and Citizens did not have
standing to bring their adversary complaint because a “breach of [the agreement and legend
prohibiting transfer] would be between the shareholders and the corporation - not a creditor nor a
trustee.” (Appellant’s App. at 7.) The Debtor summarized his argument as follows:
[Citizens] cannot be a secured party because it has no security agreement, nor could
it have from the stock certificate because it could not be transferred by legend and
contract to anyone. By contract [Citizens] has no standing nor could have.
The Trustee, standing in the shoes of the debtor has only a void transfer by operation
of law by contract, but would have an interest in any underlying value such as
dividends, or sales, or liquidation approved by the board of Directors.
his pre-petition litigation and entered an order sustaining the motion of the Trustee and Citizens.
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Because of the restrictive legend of the stock certificate, neither plaintiffs have
standing to bring this action and it should be dismissed.
(Appellant’s App. at 9.)
The bankruptcy court denied the Debtor’s motion to dismiss for lack of jurisdiction and
standing. In so doing it stated:
The Trustee is statutorily bound to pursue and collect all non-exempt estate assets.
11 U.S.C. § 704(a)(1). The shares are property of the estate, and are subject to
administration. 11 U.S.C. § 541(a)(1). Citizens’ standing is derived from its status
as a purported secured lender with reference to the shares. Jurisdiction is based upon
sections, 157(a), 1334(a), (b) and (e)(1) of Title 28. The instant litigation is a core
proceeding subject to final disposition by this Court. 28 U.S.C. § 157(b)(2)(K). The
alleged transfer restriction does not alter standing and/or jurisdiction, but is only
relevant to the ultimate disposition of the value of the shares.
(Appellee’s App. at 12-13.)
The Debtor’s brief focuses almost entirely on the issues he raises which are not properly
before us. He makes no mention of standing and only passing reference to jurisdiction. Ordinarily,
we would consider the arguments waived as a result of the failure to make some effort to develop
arguments. United States v. Elder, 90 F.3d 1110, 1118 (6th Cir. 1996) (“[I]t is a ‘settled appellate
rule that issues adverted to in a perfunctory manner, unaccompanied by some effort at developed
argumentation, are deemed waived.’”) (quoting United States v. Zannino,
895 F.2d 1, 17 (1st Cir.
1990)). However, because the Debtor is proceeding pro se we will afford him some leniency and
address the issues nevertheless. See Martin v. Overton,
391 F.3d 710, 714 (6th Cir. 2004) (pro se
litigants treated to less stringent standards).
The bankruptcy court had jurisdiction over the adversary proceeding at issue pursuant to
28 U.S.C. §§ 1334 and 157(a) and General Order No. 05-02 of the United States District Court for
the Southern District of Ohio entered on October 24, 2005, which refers all bankruptcy cases and
related matters to the bankruptcy court. The Debtor’s bankruptcy estate consists of “all legal or
equitable interests of the debtor in property as of the commencement of the case.” See 11 U.S.C.
§ 541(a)(1). Therefore, the Debtor’s shares of Drydock stock constitute property of the bankruptcy
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estate.4 The matter is a core proceeding because it concerns “matters concerning administration of
the estate,” 28 U.S.C. § 157(b)(2)(A), “determinations of the validity, extent, or priority of liens,”
28 U.S.C. § 157(b)(2)(K), and “other proceedings affecting the liquidation of the assets of the estate
. . . .” 28 U.S.C. § 157(b)(2)(O).
The Debtor provides no support for his position that the bankruptcy court lacks jurisdiction.
His assertion in his brief that the court lacks jurisdiction because of the legend on the stock is simply
nonsensical. Additionally, his argument that the state court retained jurisdiction is without merit.
The Trustee’s dismissal of the state court suit was approved by the bankruptcy court in the February
15, 2005, order approving the compromise. The Debtor did not appeal this order. The bankruptcy
court correctly held that it had jurisdiction over the claims of the Trustee and Citizens in the
adversary proceeding.
Because of the debtor’s failure to develop arguments on the issue of standing in his brief
before us, we will look to the Debtor’s argument before the bankruptcy court in addressing the issue
of standing. In the bankruptcy court, the debtor argued that the restrictive legend on the stock
certificate held by Citizens prevented either party from having standing and that any claim for breach
of the agreement prohibiting transfer of the stock was between Drydock and the shareholders, not
a creditor such as Citizens or the Trustee. Contrary to his arguments, the legend itself has no effect
on the standing of any party, and the claims at issue in the adversary proceeding were not for breach
of the agreement, but rather to establish that the stock is property of the Debtor’s estate and that
Citizens holds a security interest in the stock.
The bankruptcy court correctly held that both the Trustee and Citizens had standing to bring
their claims. The Trustee’s standing flows from her statutory duty to collect and reduce to money
property of the estate. See 11 U.S.C. § 704(a)(1). To fulfill this statutory duty, she also has standing
4
On June 20, 2006, the defendants in the adversary proceeding filed a motion with the United States District
Court for the Southern District of Ohio to withdraw the reference from the bankruptcy court. In conjunction with denying
that motion, the District Court also found that the bankruptcy court had jurisdiction. The District Court stated:
It is true that the complaint seeks declaratory relief that the Restatement’s terms are unenforceable,
but fundamentally the case is about who gets property (the shares of Drydock stock) that is part of the
Debtor’s estate. T his issue will be governed by the Bankruptcy Code. The bankruptcy court is
certainly capable of resolving the contract issue presented by the complaint.
(Bankr. Ct. Docket # 61.)
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to pursue any value the stock may have and seek a determination of the status of Citizens’ lien.
Citizens claims to hold a security interest in the pledged stock. As a purported secured party,
Citizens has standing to seek judicial relief and assert its rights before the bankruptcy court. See
Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454
U.S. 464, 472,
102 S. Ct. 752, 758-59 (1982) (identifying requirements for standing under Article
III).
V. CONCLUSION
For the foregoing reasons, we AFFIRM the order of the bankruptcy court denying the
Debtor’s motion to dismiss for lack of jurisdiction and lack of standing.
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