In re: Speer

Filing 25

ORDER granting 17 Motion to Dismiss. Please see attached Ruling and Order. Signed by Judge Robert N. Chatigny on 2/18/15. (Reardon, C)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
SHERI SPEER,

:
:
Appellant,
:
:
v.
:
:
CLIPPER REALTY TRUST, SEAPORT :
CAPITAL PARTNERS, DR. MICHAEL :
TEIGER, AND SLS HEATING, LLC :
:
Appellees.
:

No. 3:14-cv-01912(RNC)

RULING AND ORDER
Alleged debtor Sheri Speer brought this appeal after the
Bankruptcy Court approved an involuntary petition filed by a
group of her creditors.

The creditors have moved to dismiss the

appeal as moot (ECF No. 17).

For reasons that follow, the

motion is granted.
I. Background
Ms. Speer owns and manages real estate in southeastern
Connecticut.

On May 20, 2014, creditors Michael Teiger, M.D.,

SLS Heating, LLC and Clipper Realty Trust filed a Chapter 7
petition alleging that they held unsecured claims against Ms.
Speer and she was not paying her debts as they came due.

After

a hearing, the Bankruptcy Court approved the involuntary
petition and entered an order for relief.
Ms. Speer timely appealed the Bankruptcy Court’s order.
ECF No. 1.

In her brief, she contends that the court committed

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a variety of errors in approving the petition.

Specifically,

she asserts that the court erred by: 1) determining that Clipper
Realty Trust’s claim was non-contingent and not subject to a
bona fide dispute; 2) concluding that the Rooker-Feldman
doctrine did not preclude approval of the petition; 3) crediting
testimony from witness Elizabeth Alina; 4) finding that less
than $10,000 was available to satisfy a lien held by Dr. Teiger;
5) denying her a fair opportunity to litigate special defenses;
6) determining that the petition was not filed in bad faith; and
7) denying her motion for recusal.

ECF No. 12.

Shortly after filing her appeal, Ms. Speer moved the
Bankruptcy Court to convert her Chapter 7 case to one under
Chapter 11.

The Bankruptcy Court granted her motion on January

5, 2015.
The creditors argue that the conversion of Ms. Speer’s
bankruptcy proceeding moots her appeal.

I agree.

II. Discussion
On the theory that debtors should be permitted to repay
their debts instead of suffering involuntary liquidation, 11
U.S.C. § 706(a) grants a Chapter 7 debtor a one-time right to
convert her case to one under Chapter 11.
Corp., 876 F.2d 96, 97 (11th Cir. 1989).

See In re J.B. Lovell
Provided the debtor is

eligible for relief under Chapter 11, the case has not
previously been in Chapter 11 or 13, and the debtor is acting in
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good faith, the conversion motion will “supersede the Chapter 7
petition.”

ROBERT E. GINSBERG, ROBERT D. MARTIN & SUSAN V. KELLEY,

GINSBERG & MARTIN

ON

BANKR. § 12.13 (2014).

No longer subject to

liquidation under Chapter 7, the debtor will reorganize under a
Chapter 11 plan.
As a general matter, “[t]he conversion of a petition from
one chapter to another . . . moots an appeal taken from an order
in the original chapter.”

AmeriCredit Fin. Servs., Inc. v.

Tompkins, 604 F.3d 753, 755 (2d Cir. 2010).

Conversion of the

case to a new chapter “renders the [order] irrelevant and [the]
court unable to provide effective relief.”

Id.

Because a court

may not adjudicate a matter in which “the parties lack a legally
cognizable interest in the outcome,” the appeal will be
dismissed as moot.

Id. (internal quotation marks and citations

omitted).
J.B. Lovell Corp. illustrates this principle.

In that

case, the bankruptcy court granted an involuntary petition filed
against the debtor.

The debtor appealed the order.

On the same

day, he filed a motion converting his Chapter 7 proceeding to a
proceeding under Chapter 11.

J.B. Lovell Corp., 876 F.2d at 97.

He argued that, having been forced into Chapter 7 against his
will, he should be permitted to both convert to Chapter 11 and
contest the Chapter 7 order on appeal.

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Id.

The Eleventh Circuit disagreed.

“Voluntary conversion

under § 706(a),” it wrote, “constitutes an election of remedies
that obviates the need for further litigation of issues unique
to Chapter 7.”

Id. at 99.

The debtor’s decision to

“voluntarily [seek] protection of the bankruptcy laws” under
Chapter 11 rendered the Chapter 7 order “irrelevant.”
appeal was accordingly dismissed.

Id.

His

Id.; see also, e.g., Beaudry

v. Mfrs. & Traders Trust Co., No. 6:05 Civ. 893, 2007 U.S. Dist.
LEXIS 90446, at *4 (N.D.N.Y. Dec. 7, 2007) (collecting cases);
In re Mendy, No. 03 Civ. 521, 2003 WL 22038392, at *4 (E.D. La.
Aug. 20, 2003) (“Conversion renders a debtor’s appeal of rulings
in the original proceeding moot because the factual predicates
of the appeal [are] no longer relevant.” (internal quotation
marks omitted)); In re Klein, 77 B.R. 203, 204 (N.D. Ill. 1987)
(appeal moot because following conversion, “the debtor is not an
adjudicated involuntary bankrupt but, rather, a debtor protected
by Chapter 11 pursuant to his own voluntary petition”); ALAN N.
RESNICK & HENRY J. SOMMER, 6 COLLIER

ON

BANKRUPTCY § 706.02[4] (16th ed.

Matthew Bender 2010) (conversion to Chapter 11 “constitutes an
election of remedies that obviates the need for further
litigation of issues pertaining to the involuntary petition,
including any appeal of an order granting relief on the petition
prior to conversion”).

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Here, as in the cases cited above, Ms. Speer’s voluntary
conversion to Chapter 11 has mooted her appeal.

If the Court

were to grant Ms. Speer the relief she seeks by vacating the
Bankruptcy Court’s Chapter 7 order, it would be of no practical
consequence.
effect.

The case is now in Chapter 11 and the order has no

The parties therefore “lack a legally cognizable

interest in the outcome” of this appeal, and it must be
dismissed.

See Tompkins, 604 F.3d at 755.

Ms. Speer advances two arguments to the contrary.

First,

she attempts to distinguish her case from J.B. Lovell Corp. on
the ground that the appeal in that case concerned only statutory
questions about 11 U.S.C. § 303 (a provision in the Bankruptcy
Code that governs involuntary petitions).

Her appeal, in

contrast, raises non-statutory issues, such as due process and
the Rooker-Feldman doctrine.

This argument misses the mark.

It

is the order’s lack of any continuing significance, not the
nature of its alleged infirmities, that renders the appeal moot.
Ms. Speer’s second argument focuses on the Bankruptcy
Judge’s decision not to recuse himself for bias.

She asserts

that her appeal is “not limited to the order for relief” because
the Bankruptcy Judge “still presides over issues related to the
case.”

ECF No. 23, at 3.

Even if the Chapter 7 order is moot,

she argues, the question of recusal is not.

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It is true that an appeal of an order under one chapter can
survive conversion if the order will bear on the case as it
proceeds under a new chapter.

See Tompkins, 604 F.3d at 755

(allowing a creditor’s appeal of an order expunging its
unsecured claim in a Chapter 13 proceeding later converted to
Chapter 7 because “whether an unsecured claim is allowed is a
determination that, unlike many orders entered with respect to a
Chapter 13 petition, has an impact on the distribution of assets
in a Chapter 7 proceeding”).

But this is not such a case.

If

Ms. Speer is arguing that the court’s order should be vacated
because the Bankruptcy Judge was biased, she is, as discussed
above, seeking a remedy that has no actual significance.
If, on the other hand, Ms. Speer is endeavoring to appeal
the Bankruptcy Judge’s order denying her motion for recusal with
an eye to securing his removal from the case, mootness is not an
issue.

As Ms. Speer points out, that order is still in force

and affects her proceeding.

But an appeal of the order is

premature.
Title 28 U.S.C. § 158(a) governs bankruptcy appeals.

A

bankruptcy court’s order denying recusal is not a “final
judgment[]” appealable under § 158(a)(1); neither is it
appealable under the collateral order doctrine.

See 28 U.S.C. §

158(a)(1); In re Ad Hoc Committee of Tort Victims, No. 04 Civ.
08934 (CSH), 2005 WL 267564, at *2-4 (S.D.N.Y. Feb. 3, 2005).
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Moreover, an order denying recusal is not a fit object of
discretionary appeal under § 158(a)(3), at least when, as in
this case, the appeal raises questions of fact instead of “a
controlling question of law.”

Id. at *4.

In consequence, the

question of recusal cannot properly be brought before the Court
at this time.
III. Conclusion
Accordingly, the motion to dismiss is hereby granted.
So ordered this 18th day of February, 2015.

____________/s/
___________
Robert N. Chatigny
United States District Judge

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