Lindemann v. Mann

Filing 19

ORDER signed by Judge J.P. Stadtmueller on 5/19/2017: GRANTING 11 Appellee's Motion to Dismiss; DENYING as moot 14 Appellant's Motion to Stay; and DISMISSING action. (cc: all counsel, via mail to Christine Lindemann) (jm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
CHRISTINE LINDEMANN,
Appellant,

v.

Case No. 17-CV-180-JPS

DOUGLAS F. MANN,

ORDER

Appellee.
On

February

7,

2017,

Appellant

Christine

Lindemann

(“Lindemann”) filed the instant appeal of the bankruptcy court’s January
26, 2017 “Order Approving the Sale of the Bankruptcy Estate’s Beneficial
Interest in the Testamentary Trust of Rene von Schleinitz (The ‘Trust’).” (the
“Sale Order”) (Docket #1-1 at 16-19). After some delays and procedural
missteps, Lindemann’s brief in support of her appeal was received on April
26, 2017. (Docket #10). Two days later, Appellee Douglas F. Mann
(“Mann”), trustee of Lindemann’s bankruptcy estate, filed a motion to
dismiss the appeal. (Docket #11). Lindemann responded to the motion to
dismiss on May 1, 2017. (Docket #13). Mann also filed his brief in response
to the appeal on May 18, 2017. (Docket #18). No further briefing has been
received on either the motion to dismiss or the appeal itself. Also on May 1,
2017, Lindemann filed a motion to stay the sale that is the subject of the Sale
Order (the “Sale”) pending disposition of this appeal. (Docket #14). That
motion is fully briefed. (Response, Docket #15; Reply, Docket #17). The
Court need not reach the briefing on the appeal itself because, as described
below, the motion to dismiss must be granted.

Lindemann’s bankruptcy estate had an interest in the Rene von
Schleinitz trust (the “Trust”). (Docket #1-1 at 16). Mann moved the
bankruptcy court to approve sale of that interest. Id. After providing notice
to all interested parties and conducting multiple hearings, the bankruptcy
court granted Mann’s motion and approved the Sale. Id. at 16-18. The Sale
Order made three findings in that vein: 1) Mann had the legal authority to
sell Lindemann’s interest in the Trust; 2) Mann could sell that interest to
Arvonus Realty Corporation (“Arvonus”), and directed Mann to
consummate the sale by accepting the buyer’s money and filing various
subordination agreements; and 3) Arvonus was a “good faith purchaser for
reasonable value.” Id. at 18-19. Mann represents that the Sale was
completed on or about January 27, 2017. (Docket #11 at 2).1
Lindemann has filed a number of motions since the Sale. On
February 1, 2017, she moved for a stay of “the trustee’s distribution of
proceeds from the debtor’s bankruptcy estate” resulting from the Sale. In re
Lindemann, 16-25706-GMH, (E.D. Wis. Bankr.), (Docket #118). The motion
argued that the bankruptcy court should stay the sale pending resolution
of a petition Lindemann filed in Wisconsin probate court. Id. The
bankruptcy court denied that motion on February 7, 2017, noting that

Mann’s brief states that “[t]he subordination agreements [were filed on]
January 27, 2017, and the transaction has been consummated in accordance with
the terms of the Bankruptcy Court Order. (Dkt. #1-1, p. 13.).” (Docket #11 at 2). The
citation, which is to the bankruptcy case docket sheet, shows that the
subordination agreements were indeed filed on that date. It does not, however,
give a date for the transfer of funds completing the Sale. See (Docket #1-1 at 18)
(“Upon Arvonus’ tender of $197,000 to Trustee, and filing of a subordination
[agreements] . . ., the Debtor’s full beneficial interest in the Trust is transferred to
Arvonus without further documentation or Court order.”). The Court nevertheless
presumes that, given Mann’s representation, the transfer occurred that same day.
See also (Docket #15 at 1; Docket #18 at 8).
1

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the debtor has not cited any authority for the proposition that
the court should issue a stay of the trustee’s distribution of the
proceeds from that sale to await the outcome of state-court
litigation. Compare 11 U.S.C. § 363(m) (appellate court’s
reversal or modification of sale order has no effect on good
faith purchasers unless the court stays the sale order pending
appeal).
Id., (Docket #124). As noted above, Lindemann filed her notice of appeal to
this Court that same day. On April 10, 2017, Lindemann finally moved the
bankruptcy court to stay the sale itself pending her instant appeal. Id.,
(Docket #155). The bankruptcy court heard the motion on April 28, 2017
and denied it. Id., (Docket #173 and #175). In both the hearing and the laterfiled minutes, the bankruptcy court noted that the sale had already been
concluded and so the requested stay was moot. Id.
Mann’s motion to dismiss presents the same mootness argument he
used to oppose the April 10 motion to stay in the bankruptcy court. Mann’s
position relies on the Seventh Circuit’s recent opinion in Lardas v. Grcic, 847
F.3d 561 (7th Cir. 2017). That case involved, inter alia, a sale of property in
bankruptcy. Id. at 566-67. The bankruptcy court had ordered the sale of
certain property, and an appeal was taken of that order. Id. The Court of
Appeals did not reach the merits of the sale order because the appeal had
become moot. Id. at 567. The court reasoned:
[The debtor] opposed the sale of his interest in WSP
through a motion to compel the trustee to abandon that
property and through an objection to the trustee’s motion to
sell. The bankruptcy court denied the motion to compel
abandonment and approved the sale over [the debtor’s]
objection. At that point, if [the debtor] wanted to seek judicial
review of the sale order, he should have moved for a stay
pursuant to Federal Rule of Bankruptcy Procedure
8007(a)(1)(A), thereby preserving the status quo.
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Under 11 U.S.C. § 363(m), the reversal on appeal of an
authorized sale “does not affect the validity of a sale. . .to an
entity that purchased. . .property in good faith. . .unless such
authorization and such sale. . .were stayed pending appeal.”
In light of this safe harbor provision, we have “repeatedly
held that when a party challenges the bankruptcy court’s
order approving the sale of estate property to a good faith
purchaser, it must obtain a stay of that order pending appeal,
lest the sale proceed and the appeal become moot.” In re River
West Plaza–Chicago, LLC, 664 F.3d 668, 671 (7th Cir. 2011),
quoting In re CGI Industries, Inc., 27 F.3d 296, 299 (7th Cir.
1994) (collecting cases).
Id. at 567-68.
As found by the bankruptcy court in deciding Lindemann’s
underlying motion to stay, Lardas’ application here is clear. The Sale was
completed on January 27, 2017. Lindemann’s first motion to stay in the
bankruptcy court sought to stay distribution of the proceeds of the Sale, not
to prevent the Sale itself. In fact, the first time Lindemann sought to stop
the Sale was her April 10 motion. By then, however, the Sale was long since
concluded. Lindemann’s appeal is of an order to sell property, and if she
wanted to preserve her right to appeal that order, she needed to move to
stay the Sale Order before the Sale was consummated. Lardas, 847 F.3d at
567. Lindemann failed to do so and her appeal has become moot.
Lindemann’s opposition to the motion to dismiss makes no attempt to
distinguish Lardas. See generally (Docket #13).
One wrinkle remains, however. As cited by the bankruptcy court
and Lardas, 11 U.S.C. § 363(m) provides that a sale completed pursuant to a
bankruptcy court’s approval cannot be undone, even if the order approving
the sale is later reversed, as long as the buyer purchased the property in
good faith. Lardas, 847 F.3d at 567. Conversely, “[t]he safe harbor in section
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363(m) does not apply if the sale was not conducted in good faith.” Id. at
568. While Lindemann’s other briefing argues bad faith as a reason to
reverse the Sale Order, she makes no mention of the issue in her response
to the motion to dismiss. See (Docket #10 and #17). The Court is reluctant to
act as her legal advisor and insert that argument into her brief opposing the
motion to dismiss. See Anderson v. Hardman, 241 F.3d 544, 545 (7th Cir. 2001).
Even assuming the argument was properly presented by
Lindemann, the Court would reject it. The majority of her “bad faith”
contentions in those other documents relate to one of the purchaser’s
alleged violations of his fiduciary duties as a trustee of the Trust, not to bad
faith in the Sale transaction itself. (Docket #10 at 8-11 and #17 at 2-4). As the
remainder, Lardas again provide the answer:
In its sale order, the bankruptcy court explicitly found
that the Grcics were “good faith purchasers” and that the sale
was “conducted at arms-length without fraud, collusion, or
undue influence by the purchasers.” The bankruptcy court
reached these findings after three hearings and the
submission of affidavits by the Grcics, the contents of which
Christofalos failed to rebut. These findings are reviewable
only for clear error, [Hower v. Molding Sys. Eng. Corp., 445 F.3d
935, 938 (7th Cir. 2006)], and there was no such error here.
Lardas, 847 F.3d at 568. The bankruptcy court expressly found that Arvonus
was a good faith purchaser after extensive briefing and multiple hearings.
(Docket #1-1 at 19); In re Lindemann, (Docket #71 and #108). Lindemann’s
briefing in this action simply rehashes the factual contentions the
bankruptcy court considered and rejected in making that determination.
Compare (Docket #10 at 6-8) with In re Lindemann, (Docket #55 at 1-5). The
Court finds no clear error in the bankruptcy court’s finding of good faith.
As discussed at the hearing, Arvonus’s offer was substantial and was, in
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fact, the only offer to purchase Lindemann’s interest in the Trust. Mann
solicited other offers but none arose, even among Lindemann’s own family
members.2
In light of Lardas’ command, the Court must grant Mann’s motion to
dismiss this appeal.3 Given the disposition of the motion to dismiss,
Lindemann’s motion to stay must be denied as moot.
Accordingly,
IT IS ORDERED that the appellee’s motion to dismiss (Docket #11)
be and the same is hereby GRANTED;
IT IS FURTHER ORDERED that the appellant’s motion to stay
(Docket #14) be and the same is hereby DENIED as moot; and
IT IS FURTHER ORDERED that this action be and the same is
hereby DISMISSED.
The Clerk of the Court is directed to enter judgment accordingly.
Dated at Milwaukee, Wisconsin, this 19th day of May, 2017.
BY THE COURT:

__________________
J. P. Stadtmueller
U.S. District Judge

Lindemann has proceeded pro se throughout this appeal and the related
bankruptcy court motions and hearings. During each hearing, the bankruptcy
court was more than accommodating in assisting Lindemann’s presentation of
argument, documents, and testimony. She can and should expect nothing more in
light of her decision not to retain her own counsel.
2

Mann further argues that various procedural infirmities also require
dismissal of this appeal. (Docket #11 at 3-4). The Court need not reach these
concerns.
3

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