Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 1 FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT December 13, 2022 _________________________________ Christopher M. Wolpert Clerk of Court In re: THEOPHILUS SHAWN WILLIAMS,
Debtor. ------------------------------
THEOPHILUS SHAWN WILLIAMS,
Appellant,
v. No. 22-1067 (BAP No. 21-024-CO) ADAM M. GOODMAN, Chapter 13 (Bankruptcy Appellate Panel) Trustee; EMESE WILLIAMS,
Appellees.
–––––––––––––––––––––––––––––––––––
In re: THEOPHILUS SHAWN WILLIAMS,
EMESE WILLIAMS,
Plaintiff - Appellee,
v. No. 22-1068 (BAP No. 21-002-CO) THEOPHILUS SHAWN WILLIAMS, (Bankruptcy Appellate Panel)
Defendant - Appellant. Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 2
_________________________________
ORDER AND JUDGMENT* _________________________________
Before HOLMES, Chief Judge, HARTZ and ROSSMAN, Circuit Judges. _________________________________
Theophilus Shawn Williams appeals a judgment of the Tenth Circuit
Bankruptcy Appellate Panel (BAP) affirming the bankruptcy court’s determination
that his estranged wife, Emese Williams, held an equitable interest in their marital
residence at the time he filed for bankruptcy. Mr. Williams also appeals a BAP
judgment affirming the bankruptcy court’s order authorizing the chapter 13 trustee to
withhold distributions to Ms. Williams pending resolution of her claims against his
bankruptcy estate. Exercising jurisdiction under 28 U.S.C. § 158(d)(1), we affirm the
challenged judgments.
I. Background
Theophilus and Emese Williams married in 2003. Mr. Williams bought a
house in 2016 that the couple moved into with their children. The house was titled in
Mr. Williams’s name only. Ms. Williams filed for divorce later that same year.
* After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel.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.
2 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 3
In the divorce proceedings, the Williamses agreed to sell the house, and
Ms. Williams recorded a notice of lis pendens in the applicable real property records.
The divorce court later “order[ed] that [Ms. Williams] receive the first $24,800 of the
proceeds from the sale of the marital residence, with the remaining sale proceeds to
be divided equally between the parties.” Aplt. App. at 68. But Mr. Williams
“refused to sign a listing agreement” and filed a chapter 13 bankruptcy petition in
2018 without selling the house. Id. at 129.
Ms. Williams filed an adversary proceeding in the bankruptcy court seeking
declarations that (1) her interest in the house did not become part of Mr. Williams’s
bankruptcy estate under 11 U.S.C. § 541(d), and (2) Mr. Williams’s other debts to her
were not dischargeable under 11 U.S.C. § 523(a)(2)(A). Mr. Williams responded
with several counterclaims and a request for attorneys’ fees under 11 U.S.C.
§ 523(d).
The bankruptcy court conducted a trial on these claims. By order entered
January 8, 2021, it ruled in favor of Ms. Williams on her § 541(d) property-of-the-
estate claim and against Ms. Williams on her § 523(a)(2)(A) non-dischargeability
claim. It also rejected Mr. Williams’s sole remaining counterclaim. But it did not
address Mr. Williams’s § 523(d) request for attorneys’ fees. The bankruptcy court
entered a final judgment that same day.
On January 22, 2021, Mr. Williams filed a motion under Federal Rules of
Bankruptcy Procedure 7052 and 9023 alerting the bankruptcy court to its failure to
rule on his request for attorneys’ fees and seeking reconsideration. On the same day,
3 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 4
Mr. Williams filed a notice of appeal listing the “Order and Judgment on Plaintiff’s
claims under 541(d) and 523(a)” entered by the bankruptcy court on January 8, 2021,
as “the judgment, order, or decree appealed from.” Aplt. App. at 147.
The bankruptcy court denied Mr. Williams’s motion for reconsideration on
January 28, 2021. Its order expressly rejected Mr. Williams’s request for attorneys’
fees. Mr. Williams did not file a new or amended notice of appeal after the
bankruptcy court ruled on his motion for reconsideration.
While the parties litigated the adversary proceeding, Mr. Williams’s
bankruptcy case progressed. Ms. Williams filed three general unsecured claims
against Mr. Williams’s bankruptcy estate, including one based on her right to
proceeds from the sale of the house. Mr. Williams proposed a chapter 13 plan that
placed general unsecured claims in “class four.” The plan called for holders of class
four claims to receive “a pro rata portion of all funds remaining after payment . . . of
all prior classes.” Id. at 83. And it stated that distributions would “only be made to
[unsecured] creditors whose claims are allowed and are timely filed pursuant to
Fed. R. Bankr. P. 3002 and 3004.” Id. at 84. But the plan was silent on the
allowance or disallowance of any particular class four claims. On June 25, 2020, the
bankruptcy court entered an order confirming Mr. Williams’s chapter 13 plan.
After the confirmation order entered, the chapter 13 trustee made all required
distributions to senior creditors and began preparing to make distributions to class
four unsecured creditors. By this time, the bankruptcy court had ruled on the
adversary proceeding, and Mr. Williams’s appeal of that ruling was pending before
4 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 5
the BAP. The pending appeal put the chapter 13 trustee “in a pickle” regarding
distributions to Ms. Williams. Id. at 186. Ms. Williams would be entitled to a
distribution from the bankruptcy estate based on her claim to proceeds from the sale
of the house if she lost the appeal. But if she won the appeal, Ms. Williams would
not be entitled to a bankruptcy distribution because the proceeds would be delivered
to her outside the bankruptcy.
Faced with uncertainty about whether to make a distribution to Ms. Williams,
“the chapter 13 trustee filed a motion with the bankruptcy court, asking for guidance.
The bankruptcy court ordered the trustee to hold Ms. Williams’s potential plan
distributions in trust pending the outcome of the appeal in the adversary proceeding.”
Id. at 187. If Ms. Williams were to lose the appeal, the funds would be distributed to
her as a fractional payment on her claim to a share of the house proceeds. But if she
were to win, the funds held in trust would be distributed pro rata to Mr. Williams’s
other class four creditors, and Ms. Williams would receive her share of the house
proceeds outside the bankruptcy. Mr. Williams appealed.
The BAP issued two opinions affirming the bankruptcy court’s orders. In
Mr. Williams’s appeal of the bankruptcy court’s rulings in the adversary proceeding,
the BAP first held it could not consider the bankruptcy court’s order deciding the
reconsideration motion because Mr. Williams had not filed a notice appealing that
order. On the merits, the BAP affirmed the bankruptcy court’s conclusion that Ms.
Williams had an equitable interest in the house, meaning her portion of the proceeds
from the sale would not be property of Mr. Williams’s bankruptcy estate. In Mr.
5 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 6
Williams’s appeal of the bankruptcy court’s distribution order, the BAP affirmed the
bankruptcy court’s “common-sense resolution of the distribution issue.” Id.
Mr. Williams appeals both BAP decisions. We procedurally consolidated his
two appeals.
II. Standard of Review
“Although this is an appeal from a BAP decision, we review only the
Bankruptcy Court’s decision.” Rebein v. Cornerstone Creek Partners, LLC (In re
Expert S. Tulsa, LLC), 842 F.3d 1293, 1296 (10th Cir. 2016) (citation and internal
quotation marks omitted). “We treat the BAP as a subordinate appellate tribunal
whose rulings may be persuasive but are not entitled to deference. Matters of law are
reviewed de novo, and factual findings (which are made only by the bankruptcy
court, not by the BAP) are reviewed for clear error.” Id.
III. Discussion
A. Appeal No. 22-1067
In No. 22-1067, Mr. Williams appeals the bankruptcy court’s distribution
order. Mr. Williams argues the distribution order contravenes the bankruptcy court’s
earlier confirmation order and should therefore be set aside as a matter of law under
the doctrines of res judicata and equitable mootness. In Mr. Williams’s view, the
confirmation order set the amount of each class four claim, including Claim No. 5,
which Ms. Williams filed based on her alleged interest in the marital residence.
From this premise, he argues the bankruptcy court erred by approving Ms. Williams’s
agreement to withdraw Claim No. 5 if she prevails in the appeal of the adversary
6 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 7
proceeding. According to Mr. Williams, the chapter 13 trustee must make
bankruptcy distributions to Ms. Williams based on Claim No. 5 even if she prevails
on appeal and recovers the amount claimed outside the bankruptcy. We are not
persuaded.
Mr. Williams’s argument is based on an erroneous reading of the chapter 13
plan and confirmation order. The bankruptcy court correctly observed “there is no
language in the Plan relating specifically to Claim No. 5 or the amount of Class Four
unsecured claims . . . . The Plan merely provides for the total amount to be paid to
Class Four claims on a pro rata basis.” Aplt. App. at 165. The plan also does not
address the timing of class four distributions. The confirmation order likewise does
not address the allowance or disallowance of Claim No. 5 or the timing of class four
distributions. Because neither the confirmation order nor the plan it confirmed
addressed Claim No. 5, the confirmation order did not have preclusive effect
regarding the allowance of that claim or the timing of distributions based on that
claim. Cf. Bullard v. Blue Hills Bank, 575 U.S. 496, 502 (2015) (“Confirmation has
preclusive effect, foreclosing relitigation of any issue actually litigated by the parties
and any issue necessarily determined by the confirmation order.” (internal quotation
marks omitted)). For this reason, Mr. Williams’s invocation of the doctrine of
equitable mootness on the grounds that the trustee’s motion was “in the nature of an
untimely appeal of the confirmation Order,” Aplt. Br. at 30, is misplaced.1
1 “Equitable mootness is a judicially-created doctrine of abstention that permits the dismissal of bankruptcy appeals where confirmed plans have been 7 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 8
B. Appeal No. 22-1068
In No. 22-1068, Mr. Williams appeals the bankruptcy court’s rulings in the
adversary proceeding. As discussed, the BAP dismissed the portion of Mr.
Williams’s appeal challenging the bankruptcy court’s denial of reconsideration
because he failed to file a timely notice of appeal from the reconsideration order. We
begin by affirming that dismissal.
“[T]he failure to file a timely notice of appeal from a bankruptcy court’s order
constitutes a jurisdictional defect.” Emann v. Latture (In re Latture), 605 F.3d 830,
832 (10th Cir. 2010). As a general proposition, “[a] notice of appeal of a judgment
or order is not effective with respect to judgments or orders entered after the
challenged judgment or order.” Abbasid, Inc. v. First Nat’l Bank of Santa Fe, 666
F.3d 691, 697 (10th Cir. 2012). In particular, under Bankruptcy Rule 8002, “[i]f a
party intends to challenge an order disposing of” a Bankruptcy Rule 7052 or 9023
motion, “or the alteration or amendment of a judgment, order, or decree upon the
motion—the party must file a notice of appeal or an amended notice of appeal.”
Fed. R. Bankr. P. 8002(b)(3). This court has construed substantially identical
language in Federal Rule of Appellate Procedure 4(a)(4)(B)(ii) to require a new
document designating the ruling on the reconsideration motion; a notice of appeal
substantially completed and reversal would prove inequitable or impracticable.” Drivetrain, LLC v. Kozel (In re Abengoa Bioenergy Biomass of Kan., LLC), 958 F.3d 949, 955 (10th Cir. 2020). 8 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 9
filed before the court ruled on the reconsideration motion does not suffice. Husky
Ventures, Inc. v. B55 Invs., Ltd., 911 F.3d 1000, 1009–10 (10th Cir. 2018).
Mr. Williams did not file a notice appealing the bankruptcy court’s January 28,
2021 order resolving his motion for reconsideration, and we therefore affirm the
BAP’s dismissal of that portion of his appeal for lack of jurisdiction.
We next clarify the arguments that we do not consider on mootness and
forfeiture grounds. Mr. Williams argues the bankruptcy court erred in the rulings on
appeal in No. 22-1068 by failing to address his 11 U.S.C. § 523(d) request for
attorneys’ fees. We agree with the BAP that this argument “is moot because the
Bankruptcy Court cured that error by denying the fee request in the Reconsideration
Order, which Mr. Williams did not appeal.” Aplt. App. at 176–77 n.20. We do not
consider Mr. Williams’s res judicata and equitable mootness arguments in No. 22-
1068 because he did not advance those arguments in the BAP appeal leading to No.
22-1068. He therefore forfeited those arguments in No. 22-1068. See Foster v. Hill
(In re Foster), 188 F.3d 1259, 1264 n.5 (10th Cir. 1999) (deeming an appeal point
forfeited in part because the litigant failed to make the same argument when
appealing from the bankruptcy court to the district court).2
2 We entertain arguments for reversal forfeited in lower courts “only if the appellant can satisfy the elements of the plain error standard of review.” Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1130 (10th Cir. 2011). “To show plain error, a party must establish the presence of (1) error, (2) that is plain, which (3) affects substantial rights, and which (4) seriously affects the fairness, integrity, or public reputation of judicial proceedings.” Id. at 1128. “If an appellant does not explain how its forfeited arguments survive the plain error standard, it effectively waives those arguments on appeal.” Rumsey Land Co. v. Res. Land Holdings, LLC (In re 9 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 10
We now turn to Mr. Williams’s challenge to the bankruptcy court’s finding
that Ms. Williams possessed an equitable interest in the house that did not become
part of Mr. Williams’s bankruptcy estate. Under 11 U.S.C. § 541(a), “[t]he
commencement of a [bankruptcy] case . . . creates an estate.” Subject to a few
exceptions, the estate includes “all legal or equitable interests of the debtor in
property as of the commencement of the case.” Id. § 541(a)(1). Under one of the
exceptions, “[p]roperty in which the debtor holds . . . only legal title and not an
equitable interest, . . . becomes property of the estate . . . only to the extent of the
debtor’s legal title to such property, but not to the extent of any equitable interest in
such property that the debtor does not hold.” Id. § 541(d).
“For purposes of most bankruptcy proceedings, ‘property interests are created
and defined by state law.’” Bailey v. Big Sky Motors, Ltd. (In re Ogden), 314 F.3d
1190, 1197 (10th Cir. 2002) (brackets omitted) (quoting Butner v. United States,
440 U.S. 48, 55 (1979)). “Once that state law determination is made, however, we
must still look to federal bankruptcy law to resolve the extent to which that interest is
property of the estate.” Walters v. Stevens, Littman, Biddison, Tharp & Weinberg,
LLC (In re Wagenknecht), 971 F.3d 1209, 1213 (10th Cir. 2020) (internal quotation
marks omitted).
Rumsey Land Co.), 944 F.3d 1259, 1271 (10th Cir. 2019). In connection with his res judicata and equitable mootness arguments, Mr. Williams asserts the bankruptcy court plainly erred in making a pair of findings in its distribution order. But he does not “explain how [his] forfeited arguments survive the plain error standard,” id., so we deem them waived in No. 22-1068.
10 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 11
Under Colorado law, generally “all property acquired by either spouse
subsequent to the marriage and prior to a decree of legal separation is presumed to be
marital property, regardless of whether title is held individually or by the spouses in
some form of coownership.” Colo. Rev. Stat. Ann. § 14-10-113(3). But “[e]xcept
for those rights which vest upon the filing of the divorce action, . . . a husband’s
property is free from any vested interest of the wife and, with a possible exception or
two, he can sell it or give it away.” In re Questions Submitted by U.S. Dist. Ct.,
517 P.2d 1331, 1334–35 (Colo. 1974). Yet “at the time of the filing of the
dissolution action in which the division of property will be later determined,
a vesting takes place.” Id. at 1335. “Upon and after the filing of the action, the
rights of the wife are analogous to those of a wife who can establish a resulting trust,
irrespective of a divorce action, in the property of the husband.” Id. Put differently,
the wife has a “‘species of common ownership’ of the marital estate,” that
“resemble[es]” “co-owners[hip].” Id. at 1334.
Applying these principles, the bankruptcy court concluded that when
Mr. Williams filed for bankruptcy, Ms. Williams had a vested interest in the house
protected by “an encumbrance of record,” created via “filing the lis pendens.”
Aplt. App. at 131. The bankruptcy court therefore determined Ms. Williams had “an
equitable interest in the Property that [Mr. Williams] does not hold,” that “is not
property of the estate and is valued at 50% plus $24,800 of the equity therein.” Id.
Mr. Williams contends the bankruptcy court erred because the divorce court
did “not award[] [Ms. Williams] a ½ interest in the home.” Aplt. Br. at 21. He
11 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 12
argues the divorce court instead merely ordered him to pay money to Ms. Williams as
part of a “garden variety property settlement.” Id. at 19. While Ms. Williams
possessed a right to payment based on the divorce court’s order, Mr. Williams
reasons, she did not have any form of ownership interest in the house. This argument
is unavailing.
Mr. Williams does not argue the house was excluded from the couple’s marital
property. And he concedes that under Colorado law, “‘upon the commencement of a
dissolution proceeding, the wife has an interest in the marital property in the nature
of a co-owner, rather than as a mere creditor of her husband.’” Id. at 20 (quoting In
re Harms, 7 B.R. 398, 399 (Bankr. D. Colo. 1980)). That interest vests by operation
of law without a need for a court to “award” it. See In re Questions, 517 P.2d at
1334–35. So Ms. Williams had a “‘species of common ownership’” of the house
“resembl[ing]” “co-owners[hip]” before the divorce court entered its division order.
Id. at 1334. We therefore agree with the bankruptcy court that when Mr. Williams
filed for bankruptcy, Ms. Williams held an “equitable interest in [the house] that [Mr.
Williams] [did] not hold.” 11 U.S.C. § 541(d).
Mr. Williams next contends that, even if Ms. Williams had an equitable
interest in the house, the bankruptcy court erred because that interest was not secured
and perfected. In support, he observes the divorce court did not impose a
constructive trust, and he argues the lis pendens Ms. Williams filed did not
effectively “record[] . . . a decreed interest in Mr. Williams[’s] home.” Aplt. Br. at
21. Again, we disagree with Mr. Williams. § 541(d) does not require an equitable
12 Appellate Case: 22-1067 Document: 010110781537 Date Filed: 12/13/2022 Page: 13
interest held by a non-debtor to be secured and perfected to be excluded from the
debtor’s estate.3 While a non-debtor’s unsecured equitable interest might be subject
to avoidance under 11 U.S.C. § 544(a), Mr. Williams does not argue Ms. Williams’s
interest in the house was or could be avoided under that section.4 The only question
before the court is therefore whether Ms. Williams’s equitable interest in the house
became property of Mr. Williams’s bankruptcy estate under § 541(d), and, for the
reasons discussed, we hold that it did not.
IV. Conclusion
We affirm the BAP’s judgment in No. 22-1067 and No. 22-1068.
Entered for the Court
Veronica S. Rossman Circuit Judge
3 As a result, we need not consider Mr. Williams’s argument that the bankruptcy court erred by buttressing its § 541(d) analysis with an observation Mr. Williams “would have been unable to unilaterally dispose of the Property because of the outstanding lis pendens.” Aplt. App. at 131. 4 We therefore do not decide whether, or under what conditions, § 544(a) might operate to avoid a non-debtor’s equitable interests in property.