Miller v. Bill and Carolyn Ltd.

593 F.3d 1155, 2010 U.S. App. LEXIS 1800, 52 Bankr. Ct. Dec. (CRR) 189
CourtCourt of Appeals for the Tenth Circuit
DecidedJanuary 26, 2010
DocketNos. 06-7083, 09-7004
StatusPublished

This text of 593 F.3d 1155 (Miller v. Bill and Carolyn Ltd.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Miller v. Bill and Carolyn Ltd., 593 F.3d 1155, 2010 U.S. App. LEXIS 1800, 52 Bankr. Ct. Dec. (CRR) 189 (10th Cir. 2010).

Opinion

McKAY, Circuit Judge.

These two consolidated appeals arise from separate adversary proceedings in a Chapter 7 bankruptcy case. Both adversary proceedings involve the same parties and relate to a family limited partnership in which Debtor Carolyn Baldwin owned a 99% limited partnership interest at the time the bankruptcy proceeding commenced. The parties have agreed on appeal that the bankruptcy trustee stepped into the shoes of the debtor with respect to this partnership interest and was entitled to assert whatever rights the limited partner had under the partnership agreement. The question now before us is what exactly these rights are. Specifically, we must decide whether the trustee has the right to seek dissolution of or withdrawal from the partnership. We must also determine whether the buy/sell offer made by the trustee based on a price of $3000 per percentage point of partnership interest is valid and enforceable under the partnership agreement’s withdrawal provision.

Background

At the time she and her husband filed their bankruptcy petition in 2004, Mrs. Baldwin was the sole limited partner of a family limited partnership created by her father as an estate planning tool in 1994. The partnership’s sole general partner is a trust, consisting of Mrs. Baldwin’s parents as the sole trustees. When the partnership was first formed, Mrs. Baldwin owned a 7.73993% limited partnership interest, while her parents’ trust owned a 91.26007% limited interest and a 1% general interest. Soon after the partnership’s creation, the general partner assigned its entire limited interest to Mrs. Baldwin. Thus, at the time she filed for bankruptcy, Mrs. Baldwin owned a 99% limited interest in the partnership, while the general partner had a 1% general interest with exclusive management and control rights. The partnership assets at the time of the bankruptcy filing consisted of approximately 200 acres of undeveloped land and a house—the debtors’ primary residence— that the partnership had constructed on the land.

Following initiation of bankruptcy proceedings, the bankruptcy trustee filed an adversary proceeding against the partnership and the general partner, seeking a declaration that Mrs. Baldwin’s interest in the partnership now belonged to the bankruptcy estate and that the partnership should be dissolved due to the general partner’s refusal to recognize the bankruptcy estate’s interest. After a trial, the bankruptcy court ruled in favor of the trustee on both of these issues and ordered dissolution of the partnership. The Bankruptcy Appellate Panel affirmed the bankruptcy court on the first issue but reversed as to dissolution, and the trustee appealed the BAP’s reversal of the bankruptcy court’s dissolution order to this court. We stayed any action in the appeal pending resolution of the second adversary proceeding, which was then ongoing in the bankruptcy court.

In the second adversary proceeding, the trustee sought to enforce a withdrawal notice and buy/sell offer that he gave to the [1159]*1159general partner following the BAP’s ruling. In the buy/sell offer, the trustee offered to purchase the general partner’s 1% partnership interest for $3000, payable immediately in cash, or to sell the 99% limited partnership interest for $297,000, also payable immediately in cash. The bankruptcy court held that this offer was valid and enforceable under the partnership agreement, and the non-debtor Defendants—the limited partnership, the general partner, and Mrs. Baldwin’s father— appealed. Pursuant to 28 U.S.C. § 158(c)(1)(B), the trustee elected to have the appeal heard by the district court. After the opening brief and response brief had been filed, but prior to the deadline for filing a reply brief, the district court affirmed the bankruptcy court’s ruling. Defendants subsequently filed a reply brief and motion for rehearing. The district court then granted rehearing as to consideration of the reply brief, denied rehearing on the merits, and affirmed the bankruptcy court. Defendants appealed, and we consolidated this appeal with the appeal from the first adversary proceeding for purposes of argument and disposition.

Discussion

In an appeal in a bankruptcy case, we independently review the bankruptcy court’s decision, applying the same standard as the BAP or district court. See In re Albrecht, 233 F.3d 1258, 1260 (10th Cir.2000); Broitman v. Kirkland (In re Kirkland), 86 F.3d 172, 174 (10th Cir.1996). We thus review the bankruptcy court’s legal determinations de novo and its factual findings for clear error. In re Kirkland, 86 F.3d at 174.

The parties have raised three main issues in these consolidated appeals. First, the trustee argues that the BAP erred in reversing the bankruptcy court’s order of dissolution. Second, Defendants argue that the district court erred in affirming the bankruptcy court’s ruling that the trustee’s withdrawal notice and buy/sell offer were valid and enforceable. Third, Defendants argue that the district court erred in denying their motion for rehearing on the merits.

I. Dissolution

The trustee argues that the BAP erred in concluding that he was not entitled as the limited partner to dissolve the partnership. In the bankruptcy court and BAP proceedings, the trustee argued that dissolution was warranted under both the partnership agreement and Oklahoma law. On appeal to this court, the trustee does not contest the BAP’s conclusion that none of the triggering events for dissolution under the partnership agreement had occurred. He argues only that judicial dissolution is warranted under Oklahoma law.

The first question we must consider is one of jurisdiction. In their appellate brief, Defendants argue that we do not have jurisdiction over this appeal because the BAP’s decision was not a final order under 28 U.S.C. § 158(d). We disagree. “[T]he appropriate 'judicial unit’ for application of these finality requirements in bankruptcy is not the overall case, but rather the particular adversary proceeding or discrete controversy pursued within the broader framework cast by the petition.” Adelman v. Fourth Nat’l Bank & Trust Co. (In re Durability, Inc.), 893 F.2d 264, 266 (10th Cir.1990). This particular adversary proceeding and both of the issues raised therein—whether Mrs. Baldwin’s partnership interests became property of the bankruptcy estate and whether dissolution of the partnership was warranted under either the partnership agreement or Oklahoma law—were fully resolved by the BAP’s order. We accordingly conclude [1160]*1160that the BAP’s order was a final, appeal-able order.

We thus turn to the merits of this issue. Oklahoma law provides that “[o]n application by or for a partner, the district court may decree dissolution of a limited partnership whenever it is not reasonably practicable to carry on the business in conformity with the partnership agreement.” Okla. Stat. tit. 54, § 346 (2000).

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Related

Broitman v. Kirkland (In Re Kirkland)
86 F.3d 172 (Tenth Circuit, 1996)
In re: Albrecht v.
233 F.3d 1258 (Tenth Circuit, 2000)
Heskett v. Heskett
1995 OK CIV APP 52 (Court of Civil Appeals of Oklahoma, 1995)
Barnes v. Helfenbein
1976 OK 33 (Supreme Court of Oklahoma, 1976)

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Bluebook (online)
593 F.3d 1155, 2010 U.S. App. LEXIS 1800, 52 Bankr. Ct. Dec. (CRR) 189, Counsel Stack Legal Research, https://law.counselstack.com/opinion/miller-v-bill-and-carolyn-ltd-ca10-2010.