Christina Paylan v. Khalil Abdo

• Court: Court of Appeals for the Eleventh Circuit
• Decided: May 21, 2021
• Docket: 19-14206
• Status: Unpublished

Opinion

USCA11 Case: 19-14206 Date Filed: 05/21/2021 Page: 1 of 6

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 19-14206 Non-Argument Calendar ________________________

D.C. Docket No. 8:19-cv-01146-MSS Bkcy No. 8:18-bk-01699-CPM

In re: KHALIL E. ABDO,

Debtor,

________________________________________________________

CHRISTINA PAYLAN,

Plaintiff - Appellant,

versus

KHALIL ABDO,

Defendant - Appellee.

________________________

Appeal from the United States District Court for the Middle District of Florida ________________________

(May 21, 2021)

Before JORDAN, GRANT, and LAGOA, Circuit Judges. USCA11 Case: 19-14206 Date Filed: 05/21/2021 Page: 2 of 6

PER CURIAM:

Christina Paylan, proceeding pro se, appeals the district court’s order

dismissing her appeal challenging the bankruptcy court’s grant of debtor Khalil

Abdo’s motion for voluntary dismissal. Because Paylan is not a “person aggrieved,”

she lacked standing to appeal the bankruptcy court’s order. We therefore affirm the

district court’s dismissal of her appeal.

I. FACTUAL AND PROCEDURAL BACKGROUND

In March 2018, debtor Kahlil Abdo filed a voluntary Chapter 11 petition for

bankruptcy. Paylan—who had two pending state-court lawsuits against Abdo filed

prior to the initiation of the bankruptcy action—was not listed as a creditor in the

petition, so she filed a notice of appearance of unlisted creditor, an objection to the

proposed plan of reorganization, and a proof of claim indicating that she had other

state actions pending against Abdo.

In February 2019, after Abdo reached a settlement with all creditors except

Paylan, he moved to dismiss his bankruptcy action under 11 U.S.C. § 1112(b)(1).

He argued that his bankruptcy had become a two-party dispute between him and

Paylan and that the costs of the various actions in multiple venues had become a

substantial drain on him and the bankruptcy estate. For these reasons, the district

court granted Abdo’s motion to dismiss.

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Paylan moved for reconsideration of the dismissal, arguing that it was an

abuse of discretion to dismiss the action as a live dispute remained between the two

parties and that Abdo had made fraudulent representations about his total assets.

After holding a hearing on the motion for reconsideration, the bankruptcy court

denied the motion. The court reiterated that its resources should not be expended to

resolve a two-party dispute and held that Paylan could seek the relief she desired in

state court. As for the alleged fraud, the bankruptcy court directed Paylan to report

such activity to the proper authorities.

Paylan timely appealed the denial to the district court. At the district court,

Abdo filed a motion to dismiss the appeal for lack of standing. The district court

granted to the motion to dismiss the appeal, determining that Paylan had not suffered

any adverse pecuniary effect from the voluntary dismissal of Abdo’s bankruptcy

action. The district court found that Paylan’s legal rights as a creditor were not

impaired because she could continue to litigate against Abdo in state court as she did

before he filed his bankruptcy petition. The district court further held that, even if

Abdo sought dismissal to prevent the discovery of pre-petition fraudulent transfers,

Paylan had no standing to appeal because she “had no legal right to act as a Chapter

7 trustee or a federal prosecutor” to advance such claims. This timely appeal ensued.

II. STANDARD OF REVIEW

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We review questions of law decided by the district court, including a

determination about whether a person has standing to appeal a bankruptcy court’s

order, de novo. In re Ernie Haire Ford, Inc., 764 F.3d 1321, 1324 (11th Cir. 2014).

III. ANALYSIS

“Due to the nature of bankruptcy proceedings, which ‘often involve numerous

creditors who are dissatisfied with any compromise that jeopardizes the full payment

of their outstanding claims against the bankrupt,’” we have developed special rules

to govern the appeal of a bankruptcy court order. Id. at 1325–26 (quoting In re

Westwood Cmty. Two Ass’n., 293 F.3d 1332, 1334 (11th Cir. 2002)). One such

special rule is the “person aggrieved” standard, which we use to determine whether

a person has standing to appeal an order of a bankruptcy court. Id. at 1326. The

“person aggrieved” doctrine is more restrictive than traditional Article III standing,

as it allows a person to appeal only when she 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. (alteration in original) (quoting

In re Westwood Cmty. Two Ass’n., 293 F.3d at 1337–38). That a person had the

ability to participate in the bankruptcy proceedings does not automatically grant

standing to appeal the bankruptcy court’s order. In re Westwood Cmty. Two Ass’n.,

293 F.3d at 1336–37.

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The “person aggrieved” standard was adopted “to ensure that the goals of

bankruptcy were not derailed by a flood of appeals.” In re Ernie Haire Ford, Inc.,

764 F.3d at 1326. A party is not “aggrieved” when the bankruptcy court’s order

being appealed from causes only indirect harm to the party’s asserted interest. See

id. (holding that a former creditor was not a “person aggrieved” because he was

merely an adversary defendant with an interest in avoiding liability to the estate—

an interest antithetical to the goals of bankruptcy). 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.

Here, Paylan does not meet the “aggrieved person” standard. She has no

direct pecuniary interest in the voluntary dismissal of Abdo’s bankruptcy action

because her interests were only tangential and not central to the bankruptcy

proceeding. Indeed, she admitted to the district court that she wanted to continue in

bankruptcy court so that she could “litigate the collateral issues of Abdo’s fraud.”

Furthermore, as the district court correctly found, the dismissal of Abdo’s

bankruptcy action does not affect Paylan’s ability to prosecute her original claims

against him. In fact, now that the bankruptcy action is dismissed, she is able to

prosecute those actions that were stayed while the bankruptcy action was pending.

She is now free to continue those other civil actions against Abdo in state court, or

even file new ones, and conduct any discovery that she seeks outside the context of

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the bankruptcy action. The bankruptcy court’s order therefore did not “directly,

adversely, or pecuniarily affect” Paylan or her rights, meaning she had no financial

stake in the dismissal of Abdo’s bankruptcy action. See id. As such, the district

court did not err when it dismissed Paylan’s appeal. We affirm.

IV. CONCLUSION

Because Paylan was not “aggrieved” by the bankruptcy court dismissal of

Abdo’s bankruptcy action, she did not have standing to appeal the order to the district

court. The district court therefore did not err in dismissing her appeal.

AFFIRMED.