Orion Fitness v. River Valley Fitness

2004 DNH 050

• Court: District Court, D. New Hampshire
• Decided: March 17, 2004
• Docket: CV-030474-JD
• Status: Published

Opinion

Orion Fitness v. River Valley Fitness CV-030474-JD 03/17/04 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Orion Fitness Group, LLC

v. Civil No. 03-4 74-JD Opinion No. 2004 DNH 050 River Valiev Fitness One Limited Partnership

O R D E R

Orion Fitness Group, LLC, appeals the bankruptcy court's

decision to confirm the debtor's reorganization plan over

Orion's objections. Woodrow Fitness, LLC, ("Debtor") is the

successor by merger to the original debtor. River Valley

Fitness One Limited Partnership. The Debtor opposes Orion's

appeal on the grounds that Orion lacks standing, that the

appeal is moot, that Orion provided an insufficient record on

appeal, and that the bankruptcy court correctly confirmed the

Debtor's plan. At the direction of the court, Orion has filed

a brief addressing the standing and mootness issues.1

In bankruptcy cases, only "a person aggrieved" has

standing to pursue an appeal. David v. Cox, 356 F.3d 76, 93

n.15 (1st Cir. 2004) . Standing under the "person aggrieved"

1Orion incorporated into its response both its own first appellate brief and the Debtor's appellate brief. Therefore, it appears that Orion does not dispute the factual information provided in the Debtor's appellate brief. standard exists "only where the challenged order directly and

adversely affects an appellant's pecuniary interests."2

Soenlinhauer v. O'Donnell, 261 F.3d 113, 117-18 (1st Cir.

2001). To be directly affected by the order, the appellant's

pecuniary interests must exist at the time of the bankruptcy

proceeding and cannot be merely contingent or speculative.

See, e.g., Davis, 356 F.3d at 93 n.15; Travelers Ins. Co. v.

H.K. Porter Co., Inc., 45 F.3d 737, 742-43 (3d Cir. 1995); In

re El San Juan Hotel, 809 F.2d 151, 154-55 (1st Cir. 1987).

The Debtor asserts, without contradiction, that Orion is

an entity that was formed by three individuals for the purpose

of filing a competing plan of reorganization in the Debtor's

bankruptcy proceeding. Orion bought six small unsecured

claims against the Debtor for a total value of $6,192,34.

Under the Debtor's plan, confirmed by the bankruptcy court,

Orion's claims were part of the "Convenience Class." All of

the claims in the "Convenience Class" have been satisfied in

full under the confirmed plan. Therefore, the Debtor

contends, the bankruptcy court's decision to confirm the plan

did not adversely affect Orion's pecuniary interests.

2A "person aggrieved" has also been defined as one for whom "the order diminishes his property, increases his burdens, or impairs his rights." In re El San Juan Hotel, 809 F .2d 151, 154 (1st Cir. 1987).

2 Orion does not dispute that its claims in the bankruptcy

proceeding have been satisfied in full. It asserts, however,

without any evidentiary support, that its property has been

diminished and its burdens increased because it "incurred more

than $114,000 in cost [sic] and expense trying to confirm its

reorganization plan (the 'Orion Plan') under which it would

have acquired the Debtor's assets and terminated years of

litigation and threatened litigation . . . which continues as

a result of the confirmation of the Debtor's Plan." Response

at 2-3 (footnote omitted).3 Orion also asserts that the order

confirming the Debtor's plan impaired "its right to a fair

competing plan process" because the Debtor used misleading

cash flow forecasts to support its plan.

Orion's argument demonstrates its misunderstanding of the

"aggrieved person" requirement for standing. It has not shown

that it had an existing pecuniary interest that was directly

and adversely affected by the bankruptcy court's order. To

the extent Orion's claim for standing depends on a pecuniary

interest in attorneys' fees or other costs incurred in its

participation in the bankruptcy proceeding, that is not a

pecuniary interest in the bankruptcy estate that was adversely

3The omitted footnote refers to attorneys' fees paid by the Debtor to its counsel.

3 affected by the order. The asserted right to a fair plan

process is also not a pecuniary interest that was affected by

the order.

In addition, generally "a prospective purchaser of assets

from a bankruptcy estate is not within the zone of interests

intended to be protected by the Bankruptcy Code and,

therefore, does not typically have standing to challenge a

sale of the assets to another party." In re Murphy, 288 B.R.

1, 4 (D. Me. 2002) . Orion has not shown that it would fall

into the narrow exception to the general rule. See i d . at 4-

5. Because Orion has not shown that it is

a "person aggrieved" by the bankruptcy court's order, it lacks

standing to pursue this appeal. Therefore, it is not

necessary to consider the other grounds raised by the Debtor

to dismiss the appeal.

Conclus ion

For the foregoing reasons, the appeal is dismissed. The

clerk of court shall enter judgment accordingly and close the

case.

SO ORDERED.

Joseph A. DiClerico, Jr. United States District Judge

March 17, 2004 c c : James W. Donchess, Esquire

4 William S. Gannon, Esquire Ralph F. Holmes, Esquire Geraldine B. Karonis, Esquire George Vannah, USBC-NH