Sheehan v. Warner

Filing 9

MEMORANDUM OPINION AND ORDER AFFIRMING THE ORDER OF THE BANKRUPTCY COURT AND DISMISSING CASES WITH PREJUDICE: The Court AFFIRMS the order of the bankruptcy court, DENIES AS MOOT Sheehans 5 motion for consolidation and to withdraw the reference, an d ORDERS that these cases be DISMISSED WITH PREJUDICE and stricken from the Courts active docket. The Court directs the Clerk of Court to enter a separate judgment. (copy USBC) Signed by District Judge Irene M. Keeley on 3/4/14. (jss) Modified on 3/4/2014 - modified title and docket text (jss).

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

MARTIN P. SHEEHAN,
Appellant,
v.

//

Civil Action Nos. 1:13CV165 &
1:13cv166
(Judge Keeley)
Bk. No. 10-bk-888
(Judge Flatley)

KARL K. WARNER,
Appellee.
MEMORANDUM OPINION AND ORDER AFFIRMING
THE ORDER OF THE BANKRUPTCY COURT AND
DISMISSING CASES WITH PREJUDICE
The appellant, Martin Sheehan(“Sheehan”), appeals from an
order of the United States Bankruptcy Court for the Northern
District of West Virginia entered on August 20, 2011, denying his
motion pursuant to Rule 60(b) seeking reconsideration of an order
entered on July 1, 2011. (1:13cv165, Dkt. No. 1-30). Sheehan also
has filed

a motion to withdraw the reference,1 (1:13cv166, dkt.

no. 1-2), and two motions to consolidate. (1:13cv165, Dkt. No. 5;
1:13cv166, Dkt. No. 3). For the reasons that follow, the Court
AFFIRMS the order of the bankruptcy court, and DENIES AS MOOT
Sheehan’s motions for consolidation and to withdraw the reference.

1

Pursuant to the Rules of General Practice and Procedure,
Sheehan opened a separate case, 1:13cv166, in order to file his
motion to withdraw the reference.

SHEEHAN v. WARNER

1:13CV165, 1:13CV166

MEMORANDUM OPINION AND ORDER AFFIRMING
THE ORDER OF THE BANKRUPTCY COURT AND
DISMISSING CASES WITH PREJUDICE
I.

PROCEDURAL BACKGROUND

This case has a complicated procedural history. On April 22,
2010, Benjamin F. Warner (“the Debtor”) filed a petition for
bankruptcy pursuant to Chapter 7 of the United States Bankruptcy
Code.

On July 30, 2010, Sheehan, the bankruptcy trustee of the

Debtor’s

estate,

Appellee,

Karl

brought

Warner

an

adversary

(“Warner”),

proceeding

alleging

that

against
the

the

Debtor’s

transfer of his interest in McCoy Farm, LLC (“McCoy Farm”) to
Warner constituted a fraudulent conveyance of bankruptcy estate
property. Sheehan v. Warner, Case No. 10-ap-100, 2011 WL 3510736,
at *4 (Bankr. N.D.W.Va. July 1, 2011).
On

March

11,

2011,

Sheehan

filed

a

motion

for

summary

judgment, which the bankruptcy court denied in a Memorandum Opinion
and Order entered on July 1, 2011,

(1:13cv165, dkt. no. 1-13). In

that order, the bankruptcy court found that Sheehan had failed to
establish

that

a

transfer

of

bankruptcy

estate

property

had

occurred, either within the meaning of 11 U.S.C. §§ 437 and 548, or
under applicable state law.

Id. Sheehan then filed a motion to

reconsider the denial of his motion, (1:13cv165, dkt. no. 1-15),
which the bankruptcy court denied on August 2, 2011, stating that

2

SHEEHAN v. WARNER

1:13CV165, 1:13CV166

MEMORANDUM OPINION AND ORDER AFFIRMING
THE ORDER OF THE BANKRUPTCY COURT AND
DISMISSING CASES WITH PREJUDICE
it

had

already

addressed

his

arguments

in

its

July

1,

2011

Memorandum Opinion and Order. (1:13cv165, Dkt. No. 1-17).
Shortly

after

receiving

the

bankruptcy

court’s

order

of

July 1, 2011 denying his motion for summary judgment, Sheehan filed
a second motion for summary judgment on July 6, 2011, in which he
sought a declaration that the Debtor’s membership interest in McCoy
Farm was property of the bankruptcy estate. On November 29, 2011,
the bankruptcy court granted that motion, finding that the Debtor’s
membership interest in McCoy Farm was, in fact, property of the
bankruptcy estate. Sheehan, 10-ap-100 at 4.

The bankruptcy court

then closed the case.
Subsequently, Sheehan filed a complaint with this Court on
December 2, 2011, (1:11cv193, dkt. no. 1), seeking a declaration
that McCoy Farm’s Operating Agreement required the dissolution of
the farm inasmuch as the Debtor had filed for bankruptcy.
February

21,

2012,

Sheehan

filed

a

motion

for

On

summary

judgment,(1:11cv193, Dkt. No. 15), which this Court referred to the
bankruptcy court on April 23, 2012, pursuant to 28 U.S.C. 157(a),
(b)(1), and (c)(1). (1:11cv193, Dkt. No. 29).
Upon referral, the bankruptcy court opened a new adversary
proceeding

for

the

case,

docketed
3

as

12-AP-35.

After

the

SHEEHAN v. WARNER

1:13CV165, 1:13CV166

MEMORANDUM OPINION AND ORDER AFFIRMING
THE ORDER OF THE BANKRUPTCY COURT AND
DISMISSING CASES WITH PREJUDICE
completion of briefing, the bankruptcy court denied Sheehan’s
motion on September 27, 2013. Sheehan v. Warner, 480 B.R. 641, 65556 (Bankr. N.D.W.Va. 2012)(holding that the Operating Agreement
provisions which purported to dissolve McCoy Farm upon the Debtor’s
filing of bankruptcy were unenforceable ipso facto clauses under 11
U.S.C. § 541(c)).
On

October

1,

2012,

Sheehan

filed

a

motion

asking

the

bankruptcy court to reconsider its July 1, 2011 Memorandum Opinion
denying his original motion for summary judgment , (1:13cv165, dkt.
no. 1-13), and its August 2, 2011 Order, denying a subsequent
motion to reconsider. (1:13cv165, Dkt.

No. 1-17). The bankruptcy

court then reopened the initial adversary proceeding in order to
rule on the motion for reconsideration. It conducted a hearing on
that motion on March 19, 2013, at which Sheehan conceded that the
orders

he

sought

to

have

the

court

reconsider

were

in

fact

interlocutory. (1:13cv165, Dkt. No. 1-30).
Consequently, in an order entered April 25, 2013, (1:13cv165,
dkt. no. 1-30), the bankruptcy court denied Sheehan’s motion for
reconsideration as untimely filed, finding that, because Sheehan
was seeking review of interlocutory orders, he should have filed
his motions prior to the entry of final judgment in the case.
4

SHEEHAN v. WARNER

1:13CV165, 1:13CV166

MEMORANDUM OPINION AND ORDER AFFIRMING
THE ORDER OF THE BANKRUPTCY COURT AND
DISMISSING CASES WITH PREJUDICE
Sheehan appealed that order to this Court on July 3, 2013.
(1:13cv165 Dkt. No. 1). He then opened a separate case, 1:13cv166,
in which he filed a motion to withdraw the reference and requested
that, in the event his appeal in 1:13cv165 was successful, the
Court withdraw its referral order, rather than remand the case to
the bankruptcy court.

He later filed two motions to consolidate

cases nos. 1:13cv165 and 1:13cv166.
II.

LEGAL STANDARD

Pursuant to Fed. R. Bankr. P. 8013, this Court functions as an
appellate court whenever it reviews a bankruptcy court’s order, and
it may affirm, modify, reverse, or remand with instructions for
further

proceedings.

Rulings

on

Rule

60(b)

motions

for

reconsideration are within the bankruptcy court’s discretionary
authority; as such, they are reviewed on appeal for abuse of
discretion.

See Shultz v. Butcher, 24 F.3d 626, 630 (4th Cir.

1994).
III.

DISCUSSION

Sheehan argues that the bankruptcy court abused its discretion
in

denying

his

Rule

60(b)

motion

for

reconsideration

by

misconstruing his motion as a request to reconsider interlocutory
orders.

He contends that he intended to seek reconsideration of
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SHEEHAN v. WARNER

1:13CV165, 1:13CV166

MEMORANDUM OPINION AND ORDER AFFIRMING
THE ORDER OF THE BANKRUPTCY COURT AND
DISMISSING CASES WITH PREJUDICE
the bankruptcy court’s final order granting him declaratory, rather
than monetary, relief.
A careful review of the record in this case belies Sheehan’s
argument. It is clear that the bankruptcy court properly construed
Sheehan’s motion for reconsideration as an attempt to seek relief
from interlocutory orders. In point of fact, in his motion for
reconsideration, Sheehan specifically requested review of the
bankruptcy court’s July 1, 2011 Memorandum Opinion and Order, and
its August 2, 2011 Order. As discussed below, there are two reasons
why both of these orders are interlocutory in nature.
First, the bankruptcy court’s July 1, 2011 Memorandum Opinion
and Order that denied Sheehan’s first motion for summary judgment
was not a final order because it was not immediately appealable.
See Ahrenholz v. Board of Trustees of Univ. of Ill., 219 F.3d 674,
676 (7th Cir. 2000) (“A denial of a summary judgment motion is a
paradigmatic example of an interlocutory order that normally is not
appealable.”); In re Lancelot Investors Fund, L.P., 467 B.R. 643,
646 n.1 (Bankr. N.D. Ill. 2012). Second, the bankruptcy court’s
August 2, 2011 Order, denying Sheehan’s motion to reconsider that
court’s July 1, 2011 Memorandum Opinion and Order did not end
litigation on the merits and leave “nothing for the court to do but
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SHEEHAN v. WARNER

1:13CV165, 1:13CV166

MEMORANDUM OPINION AND ORDER AFFIRMING
THE ORDER OF THE BANKRUPTCY COURT AND
DISMISSING CASES WITH PREJUDICE
execute the judgment.” Fleet Data Processing Corp. v. Branch (In re
Bank of New England Corp.), 218 B.R. 643, 645 (B.A.P. 1st Cir.
1998).
Sheehan concedes that his motion for reconsideration did “ask
the bankruptcy court to reverse issues resolved adversely” to him
in the July 1, 2011 Memorandum Opinion and Order, and the August 2,
2011 Order. (1:13cv165; Dkt. No. 4).

Moreover, during a hearing

before the bankruptcy court, he admitted that those orders were
interlocutory in nature. (1:13cv165; Dkt. No. 1-30).

His present

attempt to recharacterize his motion as one seeking review of the
final order of the bankruptcy court is unavailing; from the face of
the

motion,

as

well

as

from

a

review

of

the

surrounding

circumstances, it is patently apparent that Sheehan is seeking
review of interlocutory orders.
Given that fact, the proper time for Sheehan to have brought
such a motion for reconsideration was prior to entry of final
judgment

by

the

bankruptcy

court.

Interlocutory

orders

are

“subject to reconsideration at any time prior to the entry of a
final judgment.” Fayetteville Investors, 936 F.2d at 1469, 1472
(emphasis added). Courts may only review an interlocutory order up

7

SHEEHAN v. WARNER

1:13CV165, 1:13CV166

MEMORANDUM OPINION AND ORDER AFFIRMING
THE ORDER OF THE BANKRUPTCY COURT AND
DISMISSING CASES WITH PREJUDICE
to the time it enters a final judgment in the case. Akeva, L.L.C.
v. Adidas America, Inc., 385 F.Supp.2d 559, 565 (M.D.N.C. 2005).
Here, a final order has been entered on which Sheehan seeks
reconsideration. On November 29, 2011, the bankruptcy court granted
Sheehan’s alternative motion for summary judgment, (1:13cv165, dkt.
no. 1-21), and closed the adversary proceeding, noting as it did so
that the “court’s order of November 29, 2011, was a final order,
and no appeal has been filed.” Id.

The order closing the case also

stated that Sheehan had informed the Clerk of Court that, as no
further

issues

remained

to

be

proceeding, it could be closed.

adjudicated

in

that

adversary

Id. Sheehan then filed his motion

for reconsideration on September 27, 2012, nearly ten months after
entry of the final judgment by the bankruptcy court. Thus, it is
clear that the bankruptcy court did not abuse its discretion when
it denied Sheehan’s Rule 60(b) motion as untimely.
IV.
For the reasons discussed, the Court AFFIRMS the order of the
bankruptcy

court,

DENIES

AS

MOOT

Sheehan’s

motions

for

consolidation and to withdraw the reference, and ORDERS that these
cases be DISMISSED WITH PREJUDICE and stricken from the Court’s
active docket.
8

SHEEHAN v. WARNER

1:13CV165, 1:13CV166

MEMORANDUM OPINION AND ORDER AFFIRMING
THE ORDER OF THE BANKRUPTCY COURT AND
DISMISSING CASES WITH PREJUDICE
Pursuant to Fed. R. Civ. P. 58, the Court directs the Clerk of
Court to enter a separate judgment order and to transmit copies of
both orders to counsel of record and all appropriate agencies.
Dated: March 4, 2014.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

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