Blackwell v. Lurie (In re Popkin & Stern)

234 B.R. 724, 1999 Bankr. LEXIS 535, 34 Bankr. Ct. Dec. (CRR) 471
CourtUnited States Bankruptcy Appellate Panel for the Eighth Circuit
DecidedMay 17, 1999
DocketBAP No. 98-6082EM
StatusPublished
Cited by11 cases

This text of 234 B.R. 724 (Blackwell v. Lurie (In re Popkin & Stern)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Blackwell v. Lurie (In re Popkin & Stern), 234 B.R. 724, 1999 Bankr. LEXIS 535, 34 Bankr. Ct. Dec. (CRR) 471 (bap8 1999).

Opinion

KRESSEL, Bankruptcy Judge.

Michael and Ryan Lurie appeal from the August 18, 1998, order and judgment of the bankruptcy court1 holding that their father, Ronald U. Lurie, fraudulently transferred real property to them and that, as a result, the transfer was void and the trustee could avoid the transfer. For the reasons set forth below, we affirm the judgment of the bankruptcy court.

We review the bankruptcy court’s factual findings for clear error and its conclusions of law de novo. Johnson v. Border State Bank (In re Johnson), 230 B.R. 608, 609 (8th Cir. BAP 1999); Eilbert v. Pelican (In re Eilbert), 162 F.3d 523, 525 (8th Cir.1998).

Background2

The debtor was a law firm and Ronald Lurie was its managing partner. When forced into bankruptcy by an involuntary petition, the debtor converted to a case under Chapter 11. A plan was confirmed on August 27, 1993, under which Blackwell was appointed liquidating trustee. Blackwell subsequently prevailed in an adversary proceeding against Ronald, and judgment was entered against him and in favor of Blackwell in the amount of $1,121,743.

The subject of this appeal is the bankruptcy court’s disposition of the adversary proceeding brought by Blackwell against Ronald and his two adult sons, Michael and Ryan. Michael and Ryan each owned an undivided % interest in a piece of real property known as the Clayton Road property.' Blackwell contends that Michael and Ryan became owners of the property by the fraudulent transfers to them from their father, Ronald, who inherited an undivided /é interest in the property from his mother, Edna Lurie. Michael and Ryan argue that Ronald executed a valid disclaimer of any interest in property of Edna’s estate, and that therefore the interest in the Clayton Road property passed by devise directly to Michael and Ryan, as if their father, Ronald, had predeceased his mother.

The bankruptcy court, having determined that the settlement agreement between the parties was not going to close,3 held a trial on the merits of the adversary proceeding and determined that Ronald’s disclaimer was void and, as a result, that he fraudulently transferred his interest in the Clayton Road property to his sons, Michael and Ryan.

On December 22, 1998, Ronald’s interest in the Clayton Road property was sold at a [727]*727valid execution sale by the Sheriff of St. Louis County pursuant to the money judgment Blackwell had obtained earlier against Ronald.

Mootness

BJaekwell has moved to dismiss this appeal arguing that it is moot due to the sale of the property to an unrelated third party and the 'failure of the appellants to seek and obtain a stay pending appeal. An appeal is moot when it is impossible for the court to grant “any effectual relief whatever” to a prevailing party. See Church of Scientology v. United States, 506 U.S. 9, 12, 113 S.Ct. 447, 121 L.Ed.2d 313 (1992), quoting Mills v. Green, 159 U.S. 651, 653, 16 S.Ct. 132, 40 L.Ed. 293 (1895). An appeal is moot when the reviewing court is incapable of restor- ' ing thé parties to their original position. Id., cited in Egbert Development, LLC v. Community First Nat’l Bank (In re Egbert Development, LLC), 219 B.R. 903, 905 (10th Cir. BAP 1998). See also See Roller v. Worthen Nat’l Bank of Northwest Arkansas (In re Roller), 999 F.2d 346, 347 (8th Cir.1993); Ross v. Strauss (In re Ross), 223 B.R. 702, 704 (8th Cir. BAP 1998).

Mootness arises frequently in the context of bankruptcy when property is sold or relief from stay is granted and foreclosure proceedings move ahead. In those cases, an appeal is almost always moot because a stay pending appeal was' not obtained and the property at issue has been transferred to a good faith, third party purchaser. See Van Iperen v. Production Credit Ass’n of Worthington-Slayton Branch (In re Van Iperen), 819 E.2d 189, 190-91 (8th Cir.1987) (when debtor fails to obtain a stay pending appeal and collateral is taken and converted into cash, no court is able to formulate adequate relief to the debtor). Even when the good faith purchaser is also the creditor, the appeal is moot. See Lang v. Farmers Home Admin., 48 F.3d 1224, 1995 WL 74499 (8th Cir.1995) (unpublished decision).

In Forbes v. Forbes (In re Forbes), 215 B.R. 183, 192-94 (8th Cir. BAP 1997), we defined the mootness doctrine as a statutorily and judicially created finality rule based upon “the occurrence of events which prevent an appellate court form granting effective relief ... and the particular need for finality in orders regarding stays in bankruptcy,” and we held that the rule applies in situations other than bankruptcy trustee sales of debtor property. We held that “unless a stay is obtained, an order approving a sale of property will not be affected on appeal.” Id. at 193, citing Plotner v. AT & T, 172 B.R. 337, 340-41 (W.D.Okla.1994). We found that “Bankruptcy Rule 8005[], though discretionary in nature, is consistent with, and supports, the codal and judicial counterparts of the mootness rule.” Forbes, 215 B.R. at 193.

The mootness issue arises overwhelmingly, however, in the context of the bankruptcy court granting relief from the automatic stay in order for a secured creditor to pursue a foreclosure of the debtor’s real property collateral, or when the bankruptcy court issues an order approving a bankruptcy trustee’s sale of estate property pursuant to 11 U.S.C. § 363. See, e.g., United States v. Fitzgerald, 109 F.3d 1339, 1342-43 (8th Cir.1997); Perry v. Secretary of Housing and Urban Dev. (In re Perry), 223 B.R. 167, 169-70 (8th Cir. BAP 1998); Prasil v. Dietz (In re Prasil), 215 B.R. 582, 584 (8th Cir. BAP 1998).

Blackwell was not a foreclosing creditor and not a bankruptcy trustee. He was appointed solely to liquidate the debt- or pursuant to the confirmed plan. When Ronald breached his obligation under the plan, Blackwell obtained a judgment against him. Accordingly, Blackwell is a judgment creditor of Ronald. The sale that occurred here was not a foreclosure sale, relief from stay, or an order approving the sale of the Clayton Road property. In fact, it was not a bankruptcy sale at all. It was a sale by the sheriff under Missouri [728]*728law in an attempt to partially satisfy Blackwell’s judgment against Ronald.

The adversary proceeding before the bankruptcy court determined that Ronald’s purported disclaimer was void, the transfer to Michael and Ryan was fraudulent, and that the Clayton Road property was owned by Ronald and his brother Robert Lurie, each holding an undivided one half interest, as tenants in common. The sale of Ronald’s interest in the Clayton Road property subsequently occurred pursuant to a valid execution sale by the county sheriff. We think that this situation is readily distinguishable from creditor foreclosures and other court approved sales cases.

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Related

Strong v. Bank of America (In Re Strong)
312 B.R. 378 (Eighth Circuit, 2004)
Blackwell v. Lurie (In re Popkin & Stern)
263 B.R. 885 (Eighth Circuit, 2001)
Robert J. Blackwell v. Michael Lurie
223 F.3d 764 (Eighth Circuit, 2000)
In Re Popkin & Stern
223 F.3d 764 (Eighth Circuit, 2000)
Impac Funding Corp. v. Simpson (In Re Simpson)
240 B.R. 559 (Eighth Circuit, 1999)

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Bluebook (online)
234 B.R. 724, 1999 Bankr. LEXIS 535, 34 Bankr. Ct. Dec. (CRR) 471, Counsel Stack Legal Research, https://law.counselstack.com/opinion/blackwell-v-lurie-in-re-popkin-stern-bap8-1999.