In re Dahdah

102 B.R. 262, 1989 U.S. Dist. LEXIS 8244, 1989 WL 79785
CourtDistrict Court, S.D. Florida
DecidedJune 20, 1989
DocketNo. 88-2380-Civ.
StatusPublished

This text of 102 B.R. 262 (In re Dahdah) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Dahdah, 102 B.R. 262, 1989 U.S. Dist. LEXIS 8244, 1989 WL 79785 (S.D. Fla. 1989).

Opinion

MEMORANDUM OPINION

SPELLMAN, District Judge.

ORDER GRANTING MOTION TO DISMISS

THIS CAUSE comes before the Court upon Appellees’ motions to dismiss this appeal as moot.

BACKGROUND

The Debtors/Appellants (“the Dahdahs”) filed voluntary Chapter 11 proceedings in the bankruptcy court. This appeal arises from the bankruptcy court’s appointment of the Chapter 11 trustee.

The Dahdahs and Appellees (“the Ric-ciardellis”) each owned a fifty percent interest in a partnership that was formed with the purpose of developing a shopping center. The shopping center was owned as a partnership asset. The bankruptcy court [263]*263ordered the Assistant United States Trustee (“the AUST”) to select an appraiser to value the shopping center, with the understanding that the Ricciardellis and the Dah-dahs would then meet and agree to a price at which the Ricciardellis could buy the Dahdahs’ partnership interest. The parties were unable to work out their differences and to agree upon a buyout price. The bankruptcy court subsequently appointed a Chapter 11 trustee, The Roth Trustee Corporation (“the Trustee”), to negotiate and carry out the sale of the partnership interest.

On August 18, 1988, the bankruptcy court granted the Trustee’s motion for authorization to sell the Dahdah’s partnership interest to the Ricciardellis. The Dahdahs never obtained a stay of that order, or of the sale, which was subsequently consummated.

The Dahdahs appealed the order authorizing the sale of the partnership interest to the Ricciardellis (No. 88-2379-CIV-SCOTT). After the Dahdahs failed to file an appellate brief in that appeal, the Ric-ciardellis moved to dismiss. The Dahdahs then filed a Notice of Dismissal, and Judge Scott dismissed the appeal, with prejudice, on February 8, 1989.

The bankruptcy court’s order appointing the trustee provided that the Dahdahs could propose a plan of reorganization; however, the Dahdahs failed to do so. The bankruptcy court subsequently confirmed a plan of reorganization proposed by First American Bank and Trust (“FABT”) that provided for the disposition of the remaining assets of the estate. The Dahdahs’ appeal of the bankruptcy court’s confirmation order was dismissed for failure to file a timely designation of record and statement of issues on appeal, and that plan has been substantially consummated.

The estate’s only significant asset remaining after the partnership interest buyout was an office building owned solely by the Dahdahs, on which FABT held a first mortgage. Under the plan, all remaining assets of the estate, except the office building, were to be transferred to a liquidating trust under the administration of Robert L. Roth, as liquidating trustee (“the Liquidating Trustee”).1 FABT was to buy the office building, along with the estate’s usury claims against FABT, in exchange for a release of its mortgage and a waiver of claims for any deficiency in its security therein. The Liquidating Trustee executed a Quit-Claim Deed for the office building on March 31, 1989.2 The other assets were transferred from the estate to the Liquidating Trust, and the Liquidating Trustee has begun liquidating the remaining assets of the estate.

The two most significant assets of the estate, the interest in the shopping center and the office building, have been transferred out of the estate, to the Ricciardellis and to FABT, respectively. All of the remaining estate property has vested-in the Liquidating Trustee.

DISCUSSION

The Dahdahs are appealing the bankruptcy court’s appointment of the Chapter 11 Trustee. Defendants first argue that the Chapter 11 Trustee’s duties have been fully performed and thus, because no “estate” exists any longer for the Chapter 11 Trustee to administer, this appeal is one for which no meaningful relief may be granted. Second, Defendants argue that the appeal does not seek relief from the Chapter 11 Trustee’s appointment, but rather is an attempt to revive the Dahdah’s appeal of the bankruptcy court’s order authorizing the sale of the Dahdah’s partnership interest, which was previously dismissed with prejudice by Judge Scott. Third, Defendants allege that any attempt by the Dah-[264]*264dahs to challenge the sale is moot because they failed to obtain a stay prior to the consummation of the sale.

The partnership interest sale

The sole purpose in appointing the Chapter 11 Trustee was to permit the Chapter 11 Trustee to negotiate and effect the sale of the Dahdah’s partnership interest to the Ricciardellis. The Dahdahs argue that the Ricciardellis were not “good faith purchasers for value” and that the Dahdahs should be able to litigate this issue in the bankruptcy court before the sale is final. The Dahdahs assert that the fact that their earlier appeal of the sale was voluntarily dismissed, with prejudice, should not prevent them from collaterally raising this issue in the instant appeal. Additionally, the Dahdahs claim that they are entitled to an accounting of partnership property.

The Dahdahs are judicially barred from raising any issues on appeal relating to the sale or confirmation order. Both issues were previously raised on appeal and both appeals were dismissed. The Chapter 11 Trustee's duties in arranging that sale have been fully performed. Thus, this appeal of the Order appointing the Chapter 11 Trustee is meaningless because no relief can be provided, nor may the sale be undone by such a collateral attack.

A good faith purchaser for value is entitled to act in reliance on a bankruptcy court’s approval of a sale unless an objecting party obtains a stay of the order or of the transaction itself. Hope v. General Finance Corp. of Georgia (In re Kahihikolo), 807 F.2d 1540, 1543 (11th Cir.1987). The objecting party’s failure to obtain a stay precludes the district court or any other court from considering appellate relief. Cargill, Inc. v. Charter International Oil Co., (In re The Charter Co.), 829 F.2d 1054, 1056 (11th Cir.1987).

The Dahdahs now argue that they should be allowed to collaterally attack the sale because the Ricciardellis were not established to be “good faith purchasers for value.” This issue is one that goes directly to the propriety of the sale itself and should have been raised either in obtaining a stay of that sale, or in the Dahdahs’ appeal of the sale before Judge Scott. By failing to pursue that appeal, the Dahdahs have waived any right that they may have had to pursue that issue now. Further, this (issue does not go to the propriety of the appointment of the Chapter 11 Trustee, the issue on appeal before this Court, and is therefore not properly raised in this appeal.

The accounting

The Dahdahs are also seeking an accounting of partnership property. They claim that they are entitled to such an accounting because the bankruptcy court granted the Dahdahs’ Emergency Motion for an Accounting prior to the conveyance of the property. The bankruptcy court’s order does not specifically refer to an accounting. Even if it did, the Dahdahs were requesting that the Chapter 11 Trustee be provided with an accounting, not that the Trustee provide such an accounting.

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Bluebook (online)
102 B.R. 262, 1989 U.S. Dist. LEXIS 8244, 1989 WL 79785, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-dahdah-flsd-1989.