In re: John Q. Hammons Fall

Opinion

FILED

United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit

FOR THE TENTH CIRCUIT July 22, 2024

_________________________________

Christopher M. Wolpert

Clerk of Court

In re: JOHN Q. HAMMONS FALL 2006, LLC; ACLOST, LLC; BRICKTOWN RESIDENCE CATERING CO., INC.; CHATEAU CATERING CO., INC.; CHATEAU LAKE, LLC; CITY CENTRE HOTEL CORP.; CIVIC CENTER REDEVELOPMENT CORP.; CONCORD GOLF CATERING CO., INC.; CONCORD HOTEL CATERING CO., INC.; EAST PEORIA CATERING CO., INC.; FORT SMITH CATERING CO., INC.; FRANKLIN/CRESCENT CATERING CO., INC.; GLENDALE COYOTES CATERING CO., INC.; GLENDALE COYOTES HOTEL CATERING CO., INC.; HAMMONS OF ARKANSAS, LLC; HAMMONS OF COLORADO, No. 20-3203 LLC; HAMMONS OF FRANKLIN, (16-21142) LLC; HAMMONS OF FRISCO, LLC; (United States Bankruptcy Court for HAMMONS OF HUNTSVILLE, LLC; the District of Kansas) HAMMONS OF LINCOLN, LLC; HAMMONS OF NEW MEXICO, LLC; HAMMONS OF OKLAHOMA CITY, LLC; HAMMONS OF RICHARDSON, LLC; HAMMONS OF ROGERS, INC.; HAMMONS OF SIOUX FALLS, LLC; HAMMONS OF SOUTH CAROLINA, LLC; HAMMONS OF TULSA, LLC; HAMMONS, INC.; HAMPTON CATERING CO., INC.; HOT SPRINGS CATERING CO., INC.; HUNTSVILLE CATERING, LLC; INTERNATIONAL CATERING CO., INC.; JQH - ALLEN DEVELOPMENT, LLC; JQH -

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CONCORD DEVELOPMENT, LLC; JQH - EAST PEORIA DEVELOPMENT, LLC; JQH - FT. SMITH DEVELOPMENT, LLC; JQH - GLENDALE AZ DEVELOPMENT, LLC; JQH - KANSAS CITY DEVELOPMENT, LLC; JQH - LA VISTA CY DEVELOPMENT, LLC; JQH - LA VISTA CONFERENCE CENTER DEVELOPMENT, LLC; JQH - LA VISTA III DEVELOPMENT, LLC; JQH - LAKE OF THE OZARKS DEVELOPMENT, LLC; JQH - MURFREESBORO DEVELOPMENT, LLC; JQH - NORMAL DEVELOPMENT, LLC; JQH - NORMAN DEVELOPMENT, LLC; JQH - OKLAHOMA CITY BRICKTOWN DEVELOPMENT, LLC; JQH - OLATHE DEVELOPMENT, LLC; JQH - PLEASANT GROVE DEVELOPMENT, LLC; JQH - ROGERS CONVENTION CENTER DEVELOPMENT, LLC; JQH - SAN MARCOS DEVELOPMENT, LLC; JOHN Q. HAMMONS 2015 LOAN HOLDINGS, LLC; JOHN Q. HAMMONS CENTER, LLC; JOHN Q. HAMMONS HOTELS DEVELOPMENT, LLC; JOHN Q. HAMMONS HOTELS MANAGEMENT I CORPORATION; JOHN Q. HAMMONS HOTELS MANAGEMENT II, LP; JOHN Q. HAMMONS HOTELS MANAGEMENT, LLC; JOPLIN RESIDENCE CATERING CO., INC.; JUNCTION CITY CATERING CO., INC.; KC RESIDENCE CATERING CO., INC.; LA VISTA CY CATERING CO., INC.; LA VISTA ES CATERING CO., INC.; LINCOLN P

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STREET CATERING CO., INC.; LOVELAND CATERING CO., INC.; MANZANO CATERING CO., INC.; MURFREESBORO CATERING CO., INC.; NORMAL CATERING CO., INC.; OKC COURTYARD CATERING CO., INC.; R-2 OPERATING CO., INC.; REVOCABLE TRUST OF JOHN Q. HAMMONS DATED DECEMBER 28, 1989 AS AMENDED AND RESTATED; RICHARDSON HAMMONS, LP; ROGERS ES CATERING CO., INC.; SGF - COURTYARD CATERING CO., INC.; SIOUX FALLS CONVENTION/ARENA CATERING CO., INC.; ST. CHARLES CATERING CO., INC.; TULSA/169 CATERING CO., INC.; U.P. CATERING CO., INC.,

Debtors.

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JOHN Q. HAMMONS FALL 2006, LLC; ACLOST, LLC; BRICKTOWN RESIDENCE CATERING CO., INC.; CHATEAU CATERING CO., INC.; CHATEAU LAKE, LLC; CITY CENTRE HOTEL CORP.; CIVIC CENTER REDEVELOPMENT CORP.; CONCORD GOLF CATERING CO., INC.; CONCORD HOTEL CATERING CO., INC.; EAST PEORIA CATERING CO., INC.; FORT SMITH CATERING CO., INC.; FRANKLIN/CRESCENT CATERING CO., INC.; GLENDALE COYOTES CATERING CO., INC.; GLENDALE COYOTES HOTEL CATERING CO., INC.; HAMMONS OF ARKANSAS,

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LLC; HAMMONS OF COLORADO, LLC; HAMMONS OF FRANKLIN, LLC; HAMMONS OF FRISCO, LLC; HAMMONS OF HUNTSVILLE, LLC; HAMMONS OF LINCOLN, LLC; HAMMONS OF NEW MEXICO, LLC; HAMMONS OF OKLAHOMA CITY, LLC; HAMMONS OF RICHARDSON, LLC; HAMMONS OF ROGERS, INC.; HAMMONS OF SIOUX FALLS, LLC; HAMMONS OF SOUTH CAROLINA, LLC; HAMMONS OF TULSA, LLC; HAMMONS, INC.; HAMPTON CATERING CO., INC.; HOT SPRINGS CATERING CO., INC.; HUNTSVILLE CATERING, LLC; INTERNATIONAL CATERING CO., INC.; JQH - ALLEN DEVELOPMENT, LLC; JQH - CONCORD DEVELOPMENT, LLC; JQH - EAST PEORIA DEVELOPMENT, LLC; JQH - FT. SMITH DEVELOPMENT, LLC; JQH - GLENDALE AZ DEVELOPMENT, LLC; JQH - KANSAS CITY DEVELOPMENT, LLC; JQH - LA VISTA CY DEVELOPMENT, LLC; JQH - LA VISTA CONFERENCE CENTER DEVELOPMENT, LLC; JQH - LA VISTA III DEVELOPMENT, LLC; JQH - LAKE OF THE OZARKS DEVELOPMENT, LLC; JQH - MURFREESBORO DEVELOPMENT, LLC; JQH - NORMAL DEVELOPMENT, LLC; JQH - NORMAN DEVELOPMENT, LLC; JQH - OKLAHOMA CITY BRICKTOWN DEVELOPMENT, LLC; JQH - OLATHE DEVELOPMENT, LLC; JQH - PLEASANT GROVE DEVELOPMENT, LLC; JQH -

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ROGERS CONVENTION CENTER DEVELOPMENT, LLC; JQH - SAN MARCOS DEVELOPMENT, LLC; JOHN Q. HAMMONS 2015 LOAN HOLDINGS, LLC; JOHN Q. HAMMONS CENTER, LLC; JOHN Q. HAMMONS HOTELS DEVELOPMENT, LLC; JOHN Q. HAMMONS HOTELS MANAGEMENT I CORPORATION; JOHN Q. HAMMONS HOTELS MANAGEMENT II, LP; JOHN Q. HAMMONS HOTELS MANAGEMENT, LLC; JOPLIN RESIDENCE CATERING CO., INC.; JUNCTION CITY CATERING CO., INC.; KC RESIDENCE CATERING CO., INC.; LA VISTA CY CATERING CO., INC.; LA VISTA ES CATERING CO., INC.; LINCOLN P STREET CATERING CO., INC.; LOVELAND CATERING CO., INC.; MANZANO CATERING CO., INC.; MURFREESBORO CATERING CO., INC.; NORMAL CATERING CO., INC.; OKC COURTYARD CATERING CO., INC.; R-2 OPERATING CO., INC.; REVOCABLE TRUST OF JOHN Q. HAMMONS DATED DECEMBER 28, 1989 AS AMENDED AND RESTATED; RICHARDSON HAMMONS, LP; ROGERS ES CATERING CO., INC.; SGF - COURTYARD CATERING CO., INC.; SIOUX FALLS CONVENTION/ARENA CATERING CO., INC.; ST. CHARLES CATERING CO., INC.; TULSA/169 CATERING CO., INC.; U.P. CATERING CO., INC.,

Appellants,

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v.

OFFICE OF THE UNITED STATES TRUSTEE,

Appellee.

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ACADIANA MANAGEMENT GROUP, LLC; ALBUQUERQUE- AMG SPECIALTY HOSPITAL, LLC; CENTRAL INDIANA-AMG SPECIALTY HOSPITAL, LLC; LTAC HOSPITAL OF EDMOND, LLC; HOUMA-AMG SPECIALTY HOSPITAL, LLC; LTAC OF LOUISIANA, LLC; LAS VEGAS- AMG SPECIALTY HOSPITAL, LLC; WARREN BOEGEL; BOEGEL FARMS, LLC and THREE BO'S, INC.

Amici Curiae.

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ORDER AND JUDGMENT *

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Before BACHARACH, EBEL, and PHILLIPS, Circuit Judges.

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This matter is before us on remand from the Supreme Court. See Off. of

the U.S. Tr. v. John Q. Hammons Fall 2006, LLC, 144 S. Ct. 1588 (2024).

*

This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.

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Our country operates under a dual bankruptcy structure. The United

States Trustee Program (Trustee Program) unites most of the nation’s ninety-

four judicial districts under one bankruptcy system. See Pub. L. No. 95-598,

§§ 224–32, 92 Stat. 2549, 2662–65 (1978); Bankruptcy Judges, United States

Trustees, and Family Farmer Bankruptcy Act of 1986, Pub. L. No. 99-554,

§§ 111–17, 302(d), 100 Stat. 3088, 3090–96, 3119–23. But six judicial

districts—located in North Carolina and Alabama—are permanently exempt

from that program. Federal Courts Improvement Act of 2000, Pub. L. No. 106-

518, § 501, 114 Stat. 2410, 2421–22. These districts administer bankruptcy

cases under a separate system called the Bankruptcy Administrator Program.

The Bankruptcy Administrator Program is funded by the Judiciary’s

general budget, while the Trustee Program is self-funded through fees paid by

its Chapter 11 debtors. Siegel v. Fitzgerald, 596 U.S. 464, 469 (2022); see 28

U.S.C. § 589a(b)(5). Chapter 11 debtors in Trustee Program districts pay

quarterly fees to the bankruptcy court. 28 U.S.C. § 1930(a)(6). These fees are

calculated from the quarterly disbursements paid to the debtors’ creditors. Id.

Chapter 11 debtors in Bankruptcy Administrator districts were not always

charged quarterly fees, but in 2000 Congress authorized those districts to start

imposing fees equal to those paid in Trustee Program districts. Federal Courts

Improvement Act of 2000 § 501. That permissive authority became mandatory

the next year, when the Judicial Conference of the United States issued a

standing order that required all federal districts to implement the same fee

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schedule, under 28 U.S.C. § 1930. Report of the Proceedings of the Judicial

Conference of the United States 45–46 (2001), https://www.uscourts.gov/

sites/default/files/2001-09_0.pdf. That standing order remained in place for

about seventeen years, during which time all Chapter 11 debtors paid equal

quarterly fees regardless of which judicial district administered their case.

Then in 2017, Congress amended § 1930(a)(6) to replenish a shortage in

the Trustee Program’s fund. See Additional Supplemental Appropriations for

Disaster Relief Requirements Act of 2017, Pub. L. No. 115-72, § 1004(a)(2),

131 Stat. 1224, 1232. The 2017 Act hiked up quarterly fees for Chapter 11

debtors in Trustee Program districts whose quarterly disbursements exceeded

$1 million. Id. These increases were scheduled to begin in the first quarter of

2018 and continue through 2022. Id. The same fee increases were installed in

Bankruptcy Administrator districts, but not until October 1, 2018. Report of the

Proceedings of the Judicial Conference of the United States 11–12 (2018),

https://www.uscourts.gov/sites/default/files/2018-09_proceedings.pdf. And in

those six districts, the higher fees applied only to newly filed bankruptcy cases,

while Chapter 11 debtors in the rest of the country faced the higher fees

whether their cases were new or pending by the beginning of 2018.

In 2022, a Chapter 11 debtor from the Eastern District of Virginia (a

Trustee Program district) challenged the constitutionality of the 2017 Act.

Siegel, 596 U.S. at 472. Thanks to the 2017 Act, the debtor had owed and paid

$632,542 during the first three quarters of 2018. Id. Had the debtor filed in a

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Bankruptcy Administrator district, it would have owed $56,400 for the same

period. Id. So the debtor sued, arguing that the discrepancy between the fees

imposed on equally situated Chapter 11 debtors in Trustee Program districts

and Bankruptcy Administrator districts violated the Bankruptcy Clause, id.,

which empowers Congress to enact “uniform Laws on the subject of

Bankruptcies throughout the United States,” U.S. Const. art. I, § 8, cl. 4. The

debtor asserted that the 2017 Act was nonuniform and therefore

unconstitutional. Siegel, 596 U.S. at 472.

After an unfavorable ruling against the debtor in the Fourth Circuit, the

Supreme Court granted certiorari to settle a circuit split on the 2017 Act’s

constitutionality. Id. at 473. In Siegel, the Supreme Court held (1) that the

Bankruptcy Clause’s uniformity requirement applied to the 2017 Act; and

(2) that the 2017 Act violated that requirement because, though “[t]he

Bankruptcy Clause affords Congress flexibility to fashion legislation to resolve

geographically isolated problems,” the 2017 Act inflicted “disparate treatment”

on Chapter 11 debtors “not from an external and geographically isolated need,

but from Congress’ own decision to create a dual bankruptcy system.” Id. at

479 (citation omitted). Essentially, the Supreme Court rejected Congress’s

gambit to charge some Chapter 11 debtors higher fees simply because one

federal bankruptcy program suffered financial straits while the other remained

solvent. See id. at 479–80 (contrasting the 2017 Act with the Regional Rail

Reorganization Act of 1973—legislation tailored to resolve a crisis with the

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national railway system that disproportionally affected the Northeast and

Midwest regions).

In 2021, we heard an appeal from seventy-six Chapter 11 debtors

affiliated with John Q. Hammons Hotels & Resorts (Debtors). In re John Q.

Hammons Fall 2006, LLC, 15 F.4th 1011, 1016 (10th Cir. 2021). Debtors

mounted a nearly identical challenge against the Office of the United States

Trustee (the Trustee) as the debtor in Siegel: because of the 2017 Act, Debtors

had “paid over $2.5 million more in quarterly fees than they would have paid

had they filed in a Bankruptcy Administrator district.” Id. at 1018. Before this

court, Debtors argued first that the bankruptcy court had erred in applying the

higher fees to Debtors retroactively, even though their cases were pending

when Congress enacted the 2017 Act. Id. Second, they argued that the 2017 Act

violated the Bankruptcy Clause’s prohibition against nonuniform bankruptcy

laws. Id. We held (1) that the 2017 Act fee increases unambiguously applied to

existing and newly filed Chapter 11 debtors, id. at 1019–20, and (2) that the

2017 Act was “unconstitutionally nonuniform” because the amendment “neither

applie[d] uniformly to a class of debtors nor addresse[d] a geographically

isolated problem,” id. at 1024. We determined that Debtors were entitled to

monetary relief in the form of a refund for the “quarterly fees paid exceeding

the amount that Debtors would have owed in a Bankruptcy Administrator

district during the same period.” Id. at 1026.

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The Trustee petitioned the Supreme Court for certiorari. Petition for Writ

of Certiorari, Off. of the U.S. Tr. v. John Q. Hammons Fall 2006, LLC, No. 21-

1078 (Feb. 2, 2022). Months later, the Court decided Siegel. Owing to its recent

decision, the Supreme Court granted the Trustee’s petition, vacated our

decision, and remanded for further consideration in light of Siegel. Off. of the

U.S. Tr. v. John Q. Hammons Fall 2006, LLC, 142 S. Ct. 2810 (2022) (mem.).

After recalling the mandate and vacating the judgment, see Order, No. 20-3203,

ECF No. 10927037 (July 15, 2022), we directed the parties to file supplemental

briefs addressing Siegel’s impact on the case, see Order, No. 20-3203, ECF No.

10927040 (July 15, 2022). Having considered the supplemental briefing and the

Siegel opinion, we reinstated our original opinion because our analysis tracked

Siegel on the unconstitutionality of the 2017 Act’s nonuniform fee schedule. In

re John Q. Hammons Fall 2006, LLC, No. 20-3203, 2022 WL 3354682, at *1

(10th Cir. Aug. 15, 2022). But Siegel left undecided what relief is appropriate

for those, like Debtors, who overpaid their quarterly fees as a result of the 2017

Act. See 596 U.S. at 480–81. So with our reinstatement, we maintained our

original remand order that Debtors receive a refund for the overcharged fees. In

re John Q. Hammons Fall 2006, 2022 WL 3354682, at *1.

The Trustee again petitioned the Supreme Court for certiorari, this time

on the sole issue that Siegel left open: the appropriate remedy for Chapter 11

debtors who dutifully paid the unconstitutional quarterly fees. Petition for Writ

of Certiorari, Off. of the U.S. Tr. v. John Q. Hammons Fall 2006, LLC, No. 22-

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1238 (June 23, 2023). The Supreme Court granted certiorari to answer that

narrow question. Off. of the U.S. Tr. v. John Q. Hammons Fall 2006, LLC, 144

S. Ct. 480 (2023) (mem.).

The Supreme Court’s opinion reverses our decision ordering a refund and

holds instead that prospective uniform fees adequately “cure[] the

constitutional violation.” John Q. Hammons Fall 2006, 144 S. Ct. at 1600. The

Court reasons that “Congress would have wanted prospective parity, not a

refund or retrospective raising of fees” because recent legislation “evince[s] a

clear desire to comply with the constitutional mandate of uniformity by

requiring prospective parity.” 1 Id. at 1596–97.

We therefore affirm our previously reinstated opinion as it pertains to the

application and unconstitutionality of the 2017 Act, but we vacate our order

directing the bankruptcy court to issue Debtors a refund. Consistent with the

Supreme Court’s opinion, no further relief is available.

Entered for the Court

Gregory A. Phillips Circuit Judge

1 In 2020, Congress amended 28 U.S.C. § 1930(a)(7) to require that Bankruptcy Administrator districts impose the same quarterly fees assessed to all other Chapter 11 debtors. Bankruptcy Administration Improvement Act of 2020, Pub. L. No. 116-325, § 3(d)(2), 134 Stat. 5086, 5088 (replacing “may” with “shall,” mandating that Chapter 11 debtors in Bankruptcy Administrator districts pay fees equal to those imposed in Trustee Program districts).