Biltmore Investments, LTD. v. TD Bank, N.A.
Filing
UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:14-cv-00099-MOC Copies to all parties and the district court/agency. [999670202].. [15-1076]
Appeal: 15-1076
Doc: 24
Filed: 10/01/2015
Pg: 1 of 7
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1076
BILTMORE INVESTMENTS, LTD.,
Debtor - Appellee,
v.
TD BANK, N.A.,
Creditor - Appellant.
Appeal from the United States District Court for the Western
District of North Carolina, at Asheville. Max O. Cogburn, Jr.,
District Judge. (1:14-cv-00099-MOC)
Submitted:
August 27, 2015
Decided:
October 1, 2015
Before NIEMEYER, KING, and GREGORY, Circuit Judges.
Vacated and remanded by unpublished per curiam opinion.
Lance P. Martin, Norman J. Leonard II, WARD AND SMITH, P.A.,
Asheville, North Carolina, for Appellant.
Edward C. Hay, Jr.,
PITTS, HAY, HUGENSCHMIDT & DEVEREUX, P.A., Asheville, North
Carolina; T. Scott Tufts, TUFTS LAW FIRM, PLLC, Maitland,
Florida, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
Appeal: 15-1076
Doc: 24
Filed: 10/01/2015
Pg: 2 of 7
PER CURIAM:
TD
Bank,
December
22,
N.A.,
2014
appeals
(the
the
district
“Order”),
court’s
reversing
the
Order
of
bankruptcy
court’s order and concluding that the automatic stay, see 11
U.S.C.
§ 362,
bars
TD
Bank
from
satisfying
its
state
court
judgment against Walter McGee by foreclosing on McGee’s common
stock
in
Biltmore
Investments,
Ltd.,
underlying bankruptcy proceeding.
had
already
Biltmore’s
expired
plan
of
when
the
debtor
in
the
Because the automatic stay
the
bankruptcy
reorganization,
we
court
vacate
confirmed
the
Order
and
remand for further proceedings.
I.
The relevant facts of the case are undisputed.
filed
a
petition
Bankruptcy
filings,
Code
for
in
bankruptcy
which was TD Bank.
2011.
scheduled
Biltmore
January
three
under
In
Chapter
its
secured
Biltmore
11
of
bankruptcy
creditors,
the
court
one
of
In July 2012, TD Bank obtained from a North
Carolina state court a $2.5 million judgment against McGee, who
owns
all
bankruptcy
of
Biltmore’s
court
common
confirmed
reorganization (the “Plan”).
stock.
Biltmore’s
In
second
April
2013,
amended
plan
the
of
TD Bank had objected to the Plan
in bankruptcy court, but did not appeal the order confirming the
Plan.
The Plan included a provision that, if Biltmore recovered
2
Appeal: 15-1076
Doc: 24
Filed: 10/01/2015
Pg: 3 of 7
in an adversary proceeding it had brought against a third party,
that
recovery
would
be
“split
[Biltmore] on an equal basis.”
After
the
Plan
was
between
the
creditors
and
J.A. 333.
confirmed,
the
adversary
proceeding
settled for $1.3 million – a much greater sum than anyone had
anticipated.
Apparently
out
of
fear
that
Biltmore
would
distribute its share of the settlement proceeds to McGee rather
than reinvest them in the business, TD Bank attempted to satisfy
its
judgment
Biltmore.
against
McGee
by
executing
See N.C. Gen. Stat. § 1-324.3.
on
McGee’s
stock
in
To that end, TD Bank
filed a motion in the bankruptcy court requesting a declaration
that the automatic stay provided in 11 U.S.C. § 362 did not bar
TD Bank from executing on McGee’s shares.
The bankruptcy court
granted TD Bank’s motion, and then denied Biltmore’s motion for
reconsideration
of
that
order.
Biltmore
appealed
to
the
district court, which reversed and “stayed” TD Bank from “taking
any
action
directed
at
Walter
T.
McGee,
in
state
court
or
otherwise, to seize or sell his shares of stock in Biltmore.”
See Order 11.
In its Order, the district court applied the standard we
articulated in A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999
(4th
Cir.
1986).
There,
we
explained
that,
although
the
protections of the automatic stay typically extend only to the
debtor, the stay may under “unusual circumstances” be extended
3
Appeal: 15-1076
Doc: 24
Filed: 10/01/2015
Pg: 4 of 7
to non-bankrupt third parties.
Id.
Unusual circumstances may
be found, for example, when “there is such identity between the
debtor and the third-party defendant that the debtor may be said
to be the real party defendant and that a judgment against the
third-party defendant will in effect be a judgment or finding
against the debtor.”
Id.
Here, the district court determined
that unusual circumstances existed because, in its view, “[w]hat
is ultimately at issue in this matter is control of Biltmore,”
and “TD Bank’s state court actions amount to an action to obtain
possession
of,
or
exercise
control
over,
property
of
the
debtor’s bankruptcy estate (Mr. McGee’s stock), which is, in
effect, an action against the debtor.”
Order 9.
The court
observed that, if TD bank was allowed to execute on McGee’s
stock, “there is the potential that TD Bank or a third party”
would buy the stock and that “the new stockholder may not act in
the
best
comply
interests
with
the
of
Biltmore
terms
liquidating the company.”
of
the
by,
for
example,
confirmed
Id. at 9-10.
Plan
failing
or
to
simply
TD Bank timely appealed
the Order to this Court.
II.
Biltmore argues we lack jurisdiction of this appeal under
28 U.S.C. § 158(d)(1), because the district court’s Order was
not final.
However, our jurisdiction does not depend on whether
4
Appeal: 15-1076
the
Doc: 24
Order
Filed: 10/01/2015
was
final,
for
Pg: 5 of 7
28
U.S.C.
§ 1292(a)(1)
gives
us
jurisdiction of “[i]nterlocutory orders of the district courts
. . . granting, continuing, modifying, refusing, or dissolving
. . . injunctions.”
See Conn. Nat’l Bank v. Germain, 503 U.S.
249, 252 (1992) (explaining that jurisdiction over bankruptcy
appeals
under
§ 158(d)
does
not
limit
jurisdiction
over
interlocutory orders under § 1292).
TD
Bank
argues
that
the
district
court
misapplied
our
decision in A.H. Robins Co., while Biltmore defends the district
court’s determination of unusual circumstances and extension of
the automatic stay to McGee.
court
and
bankruptcy
court
The parties – like the district
–
assume
automatic stay is still in effect.
is
erroneous.
Thus,
instead
that
11
U.S.C.
§ 362’s
Such an assumption, however,
of
“address[ing]
an
issue
predicated on [a] misconception,” see Genesis Healthcare Corp.
v.
Symczyk,
dissenting),
133
we
S.
Ct.
vacate
1523,
the
Order
language
of
1537
and
(2013)
(Kagan,
remand
for
J.,
further
proceedings.
Under
the
plain
the
Bankruptcy
Code,
the
confirmation of Biltmore’s Plan terminated the automatic stay.
Upon
assets
confirmation,
subject
only
the
to
Plan
all
“re-vested
outstanding
[Biltmore]
liens
which
avoidable by [Biltmore] under the [Bankruptcy] Code.”
with
its
are
not
J.A. 334;
see also 11 U.S.C. § 1141(b) (“Except as otherwise provided in
5
Appeal: 15-1076
Doc: 24
Filed: 10/01/2015
Pg: 6 of 7
the plan or the order confirming the plan, the confirmation of a
plan vests all of the property of the estate in the debtor.”).
Pursuant
to
§ 362(c)(1),
estate’s
assets
in
the
the
re-vesting
debtor
of
terminated
“against the property of the estate.”
the
the
bankruptcy
stay
of
acts
See McKinney v. Waterman
S.S. Corp., 925 F.2d 1, 4 (1st Cir. 1991) (“Since confirmation
revests the property of the estate in the debtor . . . the stay
of an act against the property of the estate would no longer be
applicable.”).
Confirmation of the Plan also discharged “any
and all amounts due by [Biltmore] to its creditors.”
J.A. 335;
see
otherwise
also
provided
11
in
U.S.C.
this
§ 1141(d)(1)(A)
subsection,
in
the
(“Except
plan,
or
as
in
the
order
confirming the plan, the confirmation of a plan . . . discharges
the debtor from any debt that arose before the date of such
confirmation . . . .”).
Pursuant to § 362(c)(2), the discharge
ended the stay of “other act[s]” enumerated in § 362(a).
See
United States v. White, 466 F.3d 1241, 1245 (11th Cir. 2006)
(“[C]onfirmation of the plan discharges the debtor, and . . .
discharge of the debtor lifts the automatic stay.”).
the
automatic
stay
had
expired,
the
district
court
Because
erred
in
extending it to McGee and in invoking the expired stay to enjoin
TD Bank’s efforts to collect on its judgment against McGee in
state court.
6
Appeal: 15-1076
Doc: 24
Filed: 10/01/2015
Pg: 7 of 7
Biltmore argues in the alternative that an injunction is
proper under 11 U.S.C. § 105, which provides that a bankruptcy
court
may
“issue
any
order
. . .
that
is
necessary
or
appropriate to carry out the provisions of this title.”
The
district
the
court
declined
“to
address
the
propriety
of”
bankruptcy court’s refusal to grant an injunction pursuant to
§ 105.
See
Order
10-11.
Rather
than
consider
whether
an
injunction should have issued under § 105, we remand for the
district court to consider that issue in the first instance, and
for such other and further proceedings as may be appropriate.
We
dispense
contentions
with
are
oral
argument
adequately
because
presented
in
the
facts
and
the
materials
legal
before
this court and argument would not aid the decisional process.
VACATED AND REMANDED
7
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?