R.T.R. Building Company, Inc
ORDER DISMISSING CASE, Signed by District Judge John Corbett O'Meara. (WBar)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
In re: R.T.R. Building Company, Inc.,
R.T.R. Building Company, Inc.
Case No. 13-12956
Hon. John Corbett O’Meara
R.T.R. Building Company, Inc.
Case No. 13-13951
Hon. John Corbett O’Meara
Daniel M. McDermott,
United States Trustee,
ORDER DISMISSING APPEALS
Before the court are two related bankruptcy appeals filed by R.T.R. Building
Company (“RTR”). RTR appeals from an order lifting the automatic stay and from
the order dismissing its bankruptcy case. The appellee in the automatic stay appeal
is PrivateBank1, which has moved to dismiss the appeal as moot. The appellee in
the dismissal appeal, the United States Trustee, urges the court to affirm the
This case involves property owned by Appellant RTR. The property went
into foreclosure because RTR defaulted on a loan by Appellee, The PrivateBank
(“the Bank”). A foreclosure sale was scheduled for March 7, 2013. That same
day, RTR filed a bankruptcy petition, resulting in an automatic stay.
On April 15, 2013, the Bank filed a motion to lift the automatic stay so that
the foreclosure sale could proceed. On May 22, 2013, the bankruptcy court
granted the Bank’s motion. RTR did not seek a stay pending appeal. On June 13,
2013, the Bank conducted a foreclosure sale of the property. RTR appealed the
bankruptcy’s court’s order lifting the automatic stay on July 9, 2013. On July 30,
2013, the bankruptcy court entered an order of dismissal, which RTR also
appealed. The Bank seeks dismissal of the automatic stay appeal, arguing that it is
On January 21, 2014, The PrivateBank and JC Detroit, LLC stipulated to dismiss
The PrivateBank and substitute JC Detroit as the Appellee.
LAW AND ANALYSIS
A case is moot “when the issues presented are no longer live or the parties
lack a legally cognizable interest in the outcome.” Hodges v. Schlinkert Sports
Assocs., Inc., 89 F.3d 310, 312 (6th Cir. 1996). In the bankruptcy context, the Sixth
Circuit has explained as follows:
“Bankruptcy’s mootness rule applies when an appellant
has failed to obtain a stay from an order that permits a
sale of a debtor’s assets.” The bankruptcy mootness rule
differs from general mootness law because it is based on
“the general rule that the occurrence of events which
prevent an appellate court from granting effective relief
renders an appeal moot, and the particular need for
finality in orders regarding stays in bankruptcy.”
In re 255 Park Plaza Assocs. Ltd., 100 F.3d 1214, 1216 (6th Cir. 1996) (citations
omitted). See also Miami Ctr. Ltd. Partnership v. Bank of New York, 838 F.2d
1547, 1553-54 (11th Cir.), cert. denied, 488 U.S. 823 (1988) (“[Bankruptcy’s
mootness rule] is premised upon considerations of finality, protection of the
integrity of the foreclosure sale process, and the court’s inability to rescind the sale
and grant relief on appeal even if the purchaser of the property is a party to the
appeal.”) (citation omitted); Egbert Development, LLC v. Community First Nat’l
Bank (In re Egbert), 219 B.R. 903, 905-906 (10th Cir. 1998) (“It is well established
that an appeal will be dismissed as moot if a debtor fails to obtain a stay pending
appeal of a bankruptcy court order granting relief from the automatic stay and the
moving creditor subsequently conducts a foreclosure sale, as the appellate court
cannot grant any effective relief.”).
In this case, RTR did not seek a stay and the foreclosure sale went through.
In light of the above authority, the court cannot rescind the sale and is unable to
grant any effective relief to RTR. Therefore, RTR’s appeals are moot, including
the appeal of the dismissal of the bankruptcy case. See In re Asmar, Inc., 2013 WL
628581 (E.D. Mich. Feb. 20, 2013) (Cohn, J.). As the court explained in Asmar,
Asmar failed to move for relief from the automatic stay
and foreclosure sales went forward. This rendered any
appeal from the bankruptcy court’s decisions as moot.
This includes not only the order granting relief from the
automatic stay but also the order dismissing Asmar’s
case. Because Asmar’s only tangible asset was rent from
properties he no longer owns, and has no legal right to
own, no plan of reorganization can take place. These
facts render his appeals moot, whether under general
principles of mootness or bankruptcy’s “equitable
Id. at *7. This case parallels Asmar, in that RTR’s only asset of any value was sold
at a foreclosure sale and RTR did not obtain a stay. Under the circumstances, this
court cannot grant effective relief and dismissal of the bankruptcy case was
appropriate because RTR, with no assets, is unable to reorganize. Id. See also In
re 255 Park Plaza Assocs., 100 F.3d at 1219. To the extent the appeal is not moot,
the court affirms the dismissal.
The Bank seeks attorney’s fees and costs in connection with this appeal,
pursuant to Fed. R. Bankr. P. 8020 and 28 U.S.C. § 1927. Although RTR’s appeal
is without merit, the court finds that it does not exhibit the level of frivolousness or
bad faith so as to warrant sanctions.
IT IS HEREBY ORDERED that the Bank’s motion to dismiss is GRANTED
and RTR’s bankruptcy appeals are DISMISSED.
Date: March 3, 2014
s/John Corbett O’Meara
United States District Judge
I hereby certify that a copy of this order was served upon counsel of record
on this date, March 3, 2014 using the ECF system.
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