In re: Susan A. Giblin

Filing 16

ORDER granting appellees' 5 Motion to Dismiss Appeal by Judge Robert S. Lasnik.(RS)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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In re SUSAN A. GIBLIN,
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Debtor.
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_______________________________________)

USDC No. 12-cv-1728RSL
Bankruptcy Case No. 12-15792-TWD
Bankruptcy Internal Appeal No. 12-S038
ORDER GRANTING APPELLEES’
MOTION TO DISMISS APPEAL

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I. INTRODUCTION
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This matter comes before the Court on a “Motion to Dismiss Appeal” (Dkt. # 5) filed by
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Ida Jean Rogers and Steven Giblin (“Appellees”), as co-trustees for the James R. Giblin and
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Carole A. Giblin Revocable Living Trust, Under Agreement Dated February 17, 1997 and
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Amended March 31, 2009 (the “Trust”). Appellees seek dismissal of Creditor-Appellant Daniel
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R. Laurence’s (“Appellant”) appeal of the bankruptcy court’s order granting Appellees’ motion to
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relief from stay and for set-off. Having reviewed the memoranda, declarations, and exhibits
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submitted by the parties, the Court finds as follows:
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II. BACKGROUND
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This bankruptcy appeal arises out of a state court action concerning the administration of
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the Trust. The Giblins’ children, Susan A. Giblin (“Debtor”) and Steven Giblin, were the original
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beneficiaries and co-trustees of the Trust. After Carol Giblin’s death, James Giblin married Ida
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Jean Rogers and amended the Trust to add her as a beneficiary and co-trustee. James Giblin
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ORDER GRANTING MOTION
TO DISMISS APPEAL

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passed away in January 2010, and disputes arose among the co-trustees regarding the

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administration of the Trust.

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In April 2010, Ms. Rogers filed a complaint against Debtor and Steven Giblin in Skagit

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County Superior Court under the Trust and Estate Dispute Resolution Act (“TEDRA”).

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Appellant began representing Debtor in that action in December 2010. A bench trial was held in

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January 2012, and the state court determined that Debtor owed money to the Trust. Debtor was

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ordered to pay Ms. Rogers’ attorney’s fees. The state court denied Appellant’s motion for his

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attorney’s fees and later struck the attorney’s lien he filed in the case.

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On May 31, 2012, Debtor filed a Chapter 7 bankruptcy petition and named her co-

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beneficiaries, their attorneys, and Appellant as creditors. Following the meeting of the creditors,

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the trustee issued a no asset report. A few weeks later, Ms. Rogers and Steven Giblin, as co-

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trustees of the Trust, sought relief from the automatic stay to exercise their right of set-off against

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Debtor’s share of the Trust pursuant to the state court’s order. The bankruptcy court granted the

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motion and the order became effective on September 12, 2012. Dkt. # 1-2; Fed. R. Bankr. P.

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4001(a)(3).

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On September 6, 2012, the bankruptcy court entered a discharge of Debtor. Appellant

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filed a notice of appeal to the Ninth Circuit Bankruptcy Appellate Panel (“BAP”) the following

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day. Appellant also filed a motion to stay the bankruptcy court’s order in the bankruptcy court.

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The bankruptcy court denied Appellant’s motion on September 11, 2012. Appellant did not file a

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motion to stay in the district court or BAP.

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On September 12, 2012, the state court entered an Order approving final distribution of the

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Trust assets, dissolving the Trust and dismissing the TEDRA action. The Trust assets were

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distributed and the Trust was dissolved.
III. DISCUSSION

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Appellees argue that Appellant’s appeal is constitutionally and equitably moot. Dkt. # 5 at

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ORDER GRANTING MOTION
TO DISMISS APPEAL

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4-6. This court’s jurisdiction is limited to actual cases and controversies and thus lacks

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jurisdiction to hear a case that is moot. U.S. Const. art. III, § 2, cl. 2; see also Cook Inlet Treaty

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Tribes v. Shalata, 166 F.3d 986, 989 (9th Cir. 1999). “The test for mootness of an appeal is

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whether the appellate court can give the appellant any effective relief in the event that it decides

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the matter on the merits in his favor.” In re Thorpe Insulation Co., 677 F.3d 869, 880 (9th Cir.

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2012).

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Appellant seeks reversal of the bankruptcy court’s order granting relief from the automatic

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stay and for set-off. Dkt. # 1-1. He contends that if his appeal succeeds on the merits, the

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bankruptcy court has the authority to recall the assets of the Trust that have been distributed and

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“order those assets re-distributed according to bankruptcy law.” Dkt. # 6 at 4. In making this

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argument, Appellant fails to account for the fact that the Trust assets were distributed and the

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Trust dissolved pursuant to a state court order, not pursuant to an order of the bankruptcy court.

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Dkt. # 5-1. A decision by this Court that the bankruptcy court erred in lifting the stay would not

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retract the state court’s final order or recall the Trust assets. Once a state court enters a

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permissible order in the absence of a stay, this Court must respect that decision. In re Timco,

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LLC, 2013 WL 150105, at *2 (6th Cir. Jan. 15. 2013). Thus, even if this Court were to find that

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the bankruptcy court erred in lifting the stay, it is impossible for this Court to fashion any

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effective relief.

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Appellant relies on In re Spirtos, 992 F.2d 1004 (9th Cir. 1993) to support his argument

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that this appeal is not moot. In that case, the bankruptcy court determined that the Chapter 7

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debtor’s interests in two pension plans were exempt. 992 F.2d at 1006. A creditor appealed.

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While the appeal was pending, the debtor, who was also the administrator and major beneficiary

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of the plans, stripped the plans of their assets. Id. at 1005-06. The BAP reversed the bankruptcy

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court’s decision finding the plans exempt and the debtor appealed. Id. at 1006. Even though the

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plans were stripped of their assets, the Ninth Circuit determined that the appeal was not moot

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ORDER GRANTING MOTION
TO DISMISS APPEAL

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because it could order the debtor, who was a party to the appeal, to return the money to the estate.

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Id. at 1007.

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Unlike the circumstances presented here, that case did not involve the rights of third

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parties not before the court. See In re Baker and Drake, Inc., 35 F.3d 1348, 1351 (9th Cir. 1994)

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(distinguishing In re Spirtos based on absence of third parties). In addition, the remedy available

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in In re Spirtos was straightforward. The debtor was the only recipient of the funds at issue and

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there was no state court order obstructing the court’s ability to order debtor to return the assets to

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the plans. In contrast, the beneficiaries of the Trust are not parties to this appeal. Furthermore,

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this Court cannot reinstate the state court TEDRA action or undo the state court’s order

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dissolving the Trust. On this record, the Court concludes that it cannot fashion effective relief

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and therefore, finds that the appeal is moot.

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B. Equitable Mootness

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The Court also finds that this appeal should be dismissed under the doctrine of equitable

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mootness. “Equitable mootness occurs when a comprehensive change of circumstances has

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occurred so as to render it inequitable for this court to consider the merits of the appeal.” In re

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Thorpe, 677 F.3d at 880 (internal quotations omitted). To determine whether an appeal is

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equitably moot, this Court considers whether a stay was sought. Id. at 881. If a stay was sought,

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but not obtained, the Court considers (1) “whether substantial consummation of the plan has

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occurred,” (2) “the effect a remedy may have on third parties not before the court,” and (3)

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“whether the bankruptcy court can fashion effective and equitable relief without completely

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knocking the props out from under the plan.” Id.

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Considering these factors, the Court finds that the appeal is equitably moot. First,

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although Appellant sought a stay in the bankruptcy court, he did not seek a stay from the district

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court or the BAP pending appeal. While a failure to obtain a stay does not necessarily render an

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appeal moot, id., failure to pursue with diligence all available opportunities to obtain a stay may

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ORDER GRANTING MOTION
TO DISMISS APPEAL

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result in the end of an appeal, In re Roberts Farms, Inc., 652 F.2d 793, 798 (9th Cir. 1981).

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Second, the distribution of Trust assets is complete and the Trust has been dissolved. With

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respect to the third factor, the Court finds that the remedy Appellant seeks would unduly harm

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innocent third parties who relied on the finality of the state court’s findings and decisions in the

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TEDRA case. Finally, as explained above, it is impossible for this Court to fashion an effective

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remedy for the alleged injuries because it cannot undo the actions taken pursuant to a permissible

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state court order. Therefore, the Court finds that a comprehensive change in circumstances has

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occurred that renders it inequitable for the Court to consider the merits of the appeal.
IV. CONCLUSION

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For all of the foregoing reasons, the Court GRANTS Appellees’ motion to dismiss (Dkt. #

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5) and dismisses the appeal (Dkt. # 4) as moot.1 The Clerk of the Court is directed to close this

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case and send copies of this Order to all counsel of record and to the bankruptcy court.

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Dated this 28th day of May, 2013.
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A

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Robert S. Lasnik
United States District Judge

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Based on the Court’s finding that this appeal is moot, the Court DENIES Appellant’s “Motion
to Continue Deadline for Filing Appellate Brief” (Dkt. # 10) as moot.
ORDER GRANTING MOTION
TO DISMISS APPEAL

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ORDER GRANTING MOTION
TO DISMISS APPEAL

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