RAIN TREE HEALTHCARE OF WINSTON SALEM, LLC v. J&F PARTNERS, LLC et al

Filing 32

MEMORANDUM OPINION AND ORDER signed by JUDGE WILLIAM L. OSTEEN, JR on 03/22/2018, that J & F Partners, LLC's Amended Motion to Dismiss Appeal (Doc. 17 ) is DENIED. FURTHER ORDERED that J & F Partners, LLC's Motion to Dismiss Appeal (Doc. 15 ) is DENIED AS MOOT. (Garland, Leah)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
In re:

)
)
RAIN TREE HEALTHCARE OF
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WINSTON-SALEM, LLC,
)
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Debtor,
)
)
________________________________)
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RAIN TREE HEALTHCARE OF
)
WINSTON-SALEM, LLC,
)
)
Appellant,
)
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v.
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)
J & F PARTNERS, LLC, and
)
WILLIAM P. MILLER,
)
)
Appellees.
)

1:17CV546

MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
Appellant Rain Tree Healthcare of Winston-Salem, LLC (“Rain
Tree”) filed a voluntary petition for Chapter 11 Bankruptcy in
the United States Bankruptcy Court for the Middle District of
North Carolina. (Doc. 5-10.) The bankruptcy court granted a
motion to dismiss this bankruptcy case. (Doc. 5-4.) Rain Tree
then appealed to this court. (Doc. 1.)
This matter comes before the court on Appellee J & F
Partners, LLC’s (“J & F’s”) Amended Motion to Dismiss Appeal,

(Doc. 17), on the grounds that Rain Tree’s appeal is equitably
moot. Appellee has filed a brief in support of this motion,
(Doc. 18), to which Appellant has responded, (Doc. 24), and
Appellee William P. Miller, Bankruptcy Administrator has
replied, joining in Appellee J & F’s Amended Motion to Dismiss
Appeal. (Doc. 25.) This matter is ripe for adjudication and, for
the reasons stated below, this court will deny J & F’s Amended
Motion to Dismiss Appeal.
I.

FACTUAL BACKGROUND
The relevant procedural history of this case goes back to

December 2016, and is outlined below.
A.

Western District Bankruptcy Petition

Rain Tree first filed a voluntary petition for Chapter 11
Bankruptcy in the United States Bankruptcy Court for the Western
District of North Carolina on December 30, 2016. (Bankruptcy R.
on Appeal pt. 2, Attach. 1, Amendment to Voluntary Pet. (Doc.
7-1) at 1.) This case was dismissed on March 31, 2017, for two
reasons: (1) the debtor’s (Rain Tree’s) violations of the
Chapter 11 Operating Order of the court and (2) “substantial
continuing loss to the estate and the absence of a reasonable
likelihood of reorganization.” (Bankruptcy R. on Appeal pt. 1,
Attach. 5, Order (Doc. 5-5) at 5-6.) J & F then filed a Motion
for Relief from the Automatic Stay, (Bankruptcy R. on Appeal
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pt. 1, Attach. 22, Mot. for Relief from Stay (Doc. 5-22)), which
the bankruptcy court granted. (Bankruptcy R. on Appeal pt. 1,
Attach. 7, Order Granting Relief (Doc. 5-7).) Rain Tree then
filed an Emergency Motion Requesting Reconsideration of Order
Lifting the Automatic Stay, (Bankruptcy R. on Appeal pt. 2,
Attach. 9, First Mot. to Reconsider (Doc. 7-9)), which was
denied by the bankruptcy court. (Bankruptcy R. on Appeal pt. 1,
Attach. 8, Order on Emergency Mot. (Doc. 5-8).)
B.

Middle District Bankruptcy Petition

Rain Tree filed a second voluntary petition for Chapter 11
Bankruptcy in the United States Bankruptcy Court for the Middle
District of North Carolina on April 1, 2017. (Bankruptcy R. on
Appeal pt. 1, Attach. 10, Voluntary Pet. (Doc. 5-10).) This case
was dismissed on June 16, 2017, on res judicata grounds in
addition to the reasons articulated by the Western District
bankruptcy court. (Bankruptcy R. on Appeal pt. 1, Attach. 4,
Order (Doc. 5-4) at 1; Tr. of Hearing held on June 1, 2017,
before Judge Benjamin A. Kahn (Doc. 9) at 13-14.) The order
dismissing this case included a finding “that bad faith existed
on the part of the Debtor and the Debtor shall be banned from
refiling bankruptcy for 180 days.” (Bankruptcy R. on Appeal pt.
1, Attach. 4, Order (Doc. 5-4) at 1.)

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After filing the instant appeal to this court, Rain Tree
filed an Emergency Motion for Stay Pending Appeal with the
bankruptcy court. (Bankruptcy R. on Appeal pt. 1, Attach. 26,
Mot. to Stay Pending Appeal (Doc. 5-26).) The bankruptcy court
conducted a hearing and denied the motion, finding that Rain
Tree did not establish that it was likely to succeed on the
merits of an appeal. (Opp’n Br. of Appellee J & F Partners, LLC
(“Appellee’s Opp’n Br.”), Ex. 19, Mem. Order Denying Mot. for
Stay Pending Appeal (Doc. 28-33) at 7, 29.)
C.

State Court Proceedings

On January 31, 2016, J & F filed a Complaint in Summary
Ejectment in the Forsyth County, North Carolina General Court of
Justice. (Br. in Supp. of Mot. to Dismiss Appeal (“Appellee’s
Br.”), Ex. A, Ejectment Complaint (Doc. 18-1).) This Complaint
asserted that Rain Tree failed to pay rent, was holding over,
and demanded, among other things, to be put into possession of
the premises. (Id.) On September 18, 2017, J & F filed a Motion
for Summary Judgment in this action. (Appellee’s Br., Ex. B,
Motion for Summary Judgment (Doc. 18-2).) On October 4, 2017,
the Honorable Denise S. Hartsfield, North Carolina District
Court Judge, granted the Motion for Summary Judgment.
(Appellee’s Br., Ex. C, Ejection Order (Doc. 18-4).) On

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October 16, 2017, a Writ of Possession was entered directing the
Forsyth County Sheriff’s Office to remove Rain Tree from the
5100 Lansing Drive, Winston Salem, North Carolina premises.
(Appellee’s Br., Ex. D, Writ of Possession (Doc. 18-5).)
II.

ANALYSIS
When an Article III court no longer has a case or

controversy before it, it is without jurisdiction to adjudicate.
See, e.g., Porter v. Clarke, 852 F.3d 358, 363 (4th Cir. 2017).
“Short of that, a case may become moot under ‘a melange of
doctrines relating to the court’s discretion in matters of
remedy and judicial administration.’” Cent. States, Se. & Sw.
Areas Pension Fund v. Cent. Transp., Inc., 841 F.2d 92, 95 (4th
Cir. 1988) (quoting Chamber of Commerce v. United States Dep’t
of Energy, 627 F.2d 289, 291 (D.C. Cir. 1980)). As explained by
the Fourth Circuit, the Supreme Court, many years ago in Mills
v. Green, 159 U.S. 651, 653 (1895),
declared that when, pending appeal, an event occurs,
without the fault of the defendant, that makes it
impossible for the court to grant effective relief to
the plaintiff, should the plaintiff prevail on the
merits, the appeal should be dismissed and the court
should not proceed to judgment. It is the duty of a
court to render a judgment in an actual controversy
within its jurisdiction and in the presence of proper
parties, but a court should not render an opinion in a

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dispute if the court is without the power to afford
effective relief.
Cent. States, 841 F.2d at 95-96 (citing In re Combined Metals
Reduction Co., 557 F.2d 179, 187 (9th Cir. 1977)).
Here, J & F claims that Rain Tree’s appeal is subject to
dismissal as equitably moot.1 (Appellee’s Br. (Doc. 18) at 1.)
J & F contends that the relief Rain Tree requests – “a
reinstitution of the Chapter 11 business reorganization case –
is no longer possible due to the fact that Rain Tree’s lease has
been legally terminated and Rain Tree has been evicted from the
Premises.” (Id. at 5.) J & F asserts that “[t]here is simply no
going concern to preserve; no business to reorganize.” (Id. at
5-6.) Rain Tree, on the other hand, asserts that the relief it
requests, “a reinstitution of the [sic] of its Chapter 11 case
can be granted. Although, [it] has been evicted from the leased

J & F has not cited, nor has this court located, a case in
which the equitable mootness doctrine warranted dismissal of an
appeal of a bankruptcy court’s order dismissing a case. To the
contrary, the only case this court located on the issue within
the Fourth Circuit found the appeal to not be equitably moot.
Mulhern v. Grigsby, Case No. RWT 13-cv-2376, 2015 WL 6001625, at
*4 (D. Md. Oct. 9, 2015); see also 7 Collier on Bankruptcy
¶ 1129.09 (16th ed. rev. April 2018) (“Traditionally, the
equitable mootness doctrine has been applied only to appeals
from orders confirming plans of reorganization in chapter 11,
and courts have often indicated a reluctance to move beyond that
set of cases.”). Even assuming this doctrine applies in this
case, this court finds that J & F has not met its burden and
will accordingly deny the motion.
1

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premises, [it] has the ability to reoccupy the premises and
operate the business in the same or similar fashion as the
business has been oweprating [sic].” (Resp. to Mot. to Dismiss
Appeal (“Appellant’s Resp.”)(Doc. 24) at 2.)
The Fourth Circuit, considering whether equitable mootness
warranted the dismissal of an appeal from the bankruptcy court
to the district court of a reorganization plan, has stated:
Equitable mootness is a pragmatic doctrine
“grounded in the notion that, with the passage of time
after a judgment in equity and implementation of that
judgment, effective relief on appeal becomes
impractical, imprudent, and therefore inequitable.” It
is invoked in bankruptcy proceedings because of the
equitable nature of bankruptcy judgments and is
applied when it becomes “impractical and imprudent ‘to
upset the plan of reorganization at [such a] late
date.’” Application of the doctrine “is based on
practicality and prudence,” “does not employ rigid
rules,” and requires that a court “determine whether
judicial relief on appeal can, as a pragmatic matter,
be granted.” Relevant factors in this determination
include:
(1) whether the appellant sought and
obtained a stay; (2) whether the
reorganization plan or other equitable
relief ordered has been substantially
consummated; (3) the extent to which the
relief requested on appeal would affect the
success of the reorganization plan or other
equitable relief granted; and (4) the extent
to which the relief requested on appeal
would affect the interests of third parties.
In re Bate Land & Timber LLC, 877 F.3d 188, 195 (4th Cir. 2017)
(citations omitted) (reciting what are known as the “Mac Panel
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factors”). “[A]ppellee[], as the moving part[y], bear[s] the
burden of showing that [Appellant’s] appeal is equitably moot
and should be dismissed.” In re Anderson, 349 B.R. 448, 454
(E.D. Va. 2006).2
Rain Tree believes that, if this court were to review the
bankruptcy court’s order dismissing its case and its Chapter 11
bankruptcy proceedings were reinstated, a reorganization of its
business could be successful. (See Appellant’s Resp. (Doc. 24)
at 4.) Rain Tree’s briefing argues that there is still a
business to preserve and reorganize. (Id.)
Considering the Mac Panel Co. v. Va. Panel Corp., 283 F.3d
622, 625 (4th Cir. 2002), factors listed above, this court notes
the following:
First, while Rain Tree sought a stay in the United States
Bankruptcy Court for the Middle District of North Carolina,
(Bankruptcy R. on Appeal pt. 1, Attach. 26, Mot. to Stay Pending
Appeal (Doc. 5-26)), this request was denied, (Appellee’s Opp’n

See also In re SemCrude, L.P., 728 F.3d 314, 321 (3d. Cir.
2013); In re Stephens, 704 F.3d 1279, 1283 (10th Cir. 2013); In
re Focus Media, Inc., 378 F.3d 916, 923 (9th Cir. 2004); Mar-Bow
Value Partners, LLC v. McKinsey Recovery & Transformation Servs.
US, LLC, 578 B.R. 325, 348 (E.D. Va. 2017); S. Pac. Transp. Co.
v. Voluntary Purchasing Grps., Inc., 246 B.R. 532, 534 (E.D.
Tex. 2000) (“Obviously, the burden is upon the party asserting
the equitable mootness doctrine to prove that it applies.”).
2

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Br., Ex. 19, Mem. Order Denying Mot. to Stay Pending Appeal
(Doc. 28-33)). Rain Tree neither sought to appeal the stay
denial to this court nor sought an independent stay before this
court. Likewise, Rain Tree did not seek to appeal the denial of
its motion for reconsideration in the Western District. (Doc.
7-9; Doc. 5-8.) This factor supports a finding of mootness. See
In re U.S. Airways Grp., Inc., 369 F.3d 806, 809-10 (4th Cir.
2004).
Second, there is no reorganization plan or other equitable
relief that has been substantially consummated. “Applied
principally in bankruptcy proceedings because of the equitable
nature of bankruptcy judgments, equitable mootness is often
invoked when it becomes impractical and imprudent ‘to upset the
plan of reorganization at this late date.’” Mac Panel, 283 F.3d
at 625 (quoting In re UNR Indus., Inc., 20 F.3d 766, 769 (7th
Cir. 1994)). In this case, reorganization has not occurred. This
factor weighs against a finding of equitable mootness. See
Mulhern v. Grigsby, Case No. RWT 13-cv-2376, 2015 WL 6001625, at
*4 (D. Md. Oct. 9, 2015) (“[T]here is no confirmed . . . Plan at
present that would be upset were this Court to overrule the
Bankruptcy Court.”).

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Considered together, the third and fourth Mac Panel factors
illustrate why this court is unable to find, from this record,
that the relief requested on appeal would not affect the success
of the reorganization plan or other equitable relief granted nor
would the relief requested affect the interests of any third
party. As in In re Bate Land & Timber LLC, 877 F.3d 188, 195
(4th Cir. 2017), “[t]his case essentially presents a two-party
dispute.” As there was no reorganization plan that went into
effect, no third parties acted in reliance on such a plan. See
id. at 196 (“[T]he Debtor has not engaged in significant
transactions with third parties who relied on the Confirmed
Plan’s terms such that alteration of the Confirmed Plan would
negatively impact the Confirmed Plan and the third parties who
relied upon it.”). Both the third and fourth factors, in absence
of a confirmed plan, weigh heavily against mootness. See id.
The Mac Panel factors, taken together, weigh against a
finding of equitable mootness. Moreover, the ultimate question
before the court, which the factors assist it in considering, is
“whether judicial relief on appeal can, as a pragmatic matter,
be granted.” Mac Panel Co., 283 F.3d at 625. While J & F, the
party carrying the burden, presents information to support that
Rain Tree has been evicted from the premises in question, it

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does not present any information to the court as to (a) whether
the premises has since been leased or sold to a third party or
(b) whether the lease is Rain Tree’s only asset that might be
affected by any relief ordered by this court. Rain Tree’s
argument, that it might be able to reoccupy the premises, is
entirely unsupported, but ultimately, it is J & F’s burden to
establish mootness. While in no way expressing an opinion as to
the likelihood of Rain Tree’s success on the merits of this
appeal, this court, on the record before it, cannot conclude
that this appeal is equitably moot.
III. CONCLUSION
For the reasons set forth above,
IT IS ORDERED that J & F Partners, LLC’s Amended Motion to
Dismiss Appeal (Doc. 17) is DENIED. IT IS FURTHER ORDERED that
J & F Partners, LLC’s Motion to Dismiss Appeal (Doc. 15) is
DENIED AS MOOT.
This the 22nd day of March, 2018.

_______________________________________
United States District Judge

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