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Taking a Bankruptcy Court Decision to the Fort Worth District Courts: Is The Trip Really Worth It? Steven K. Hayes © 2007.

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Presentation on theme: "Taking a Bankruptcy Court Decision to the Fort Worth District Courts: Is The Trip Really Worth It? Steven K. Hayes © 2007."— Presentation transcript:

1 Taking a Bankruptcy Court Decision to the Fort Worth District Courts: Is The Trip Really Worth It? Steven K. Hayes © 2007

2 Is The Trip Really Worth It? Probably Not.

3 Thank You.

4 The Population of Cases Comprising This Study: The Lexis © Cases The Pacer Cases

5 The Lexis © Cases Lexis Search Phrase: “bankruptcy” and “McBryde” or “Means” and “fort worth division”, from 1/1/2006-8/15/2007. Eliminate: All cases that did not result from an appeal from a Bankruptcy Judge’s decision, or recommendation concerning a motion to withdraw the reference Results: 8 decisions (including 3 Pacer Decisions)

6 The Pacer Cases Identified all cases filed in Fort Worth from 1/1/ /15/2007 that involved an appeal from a bankruptcy court decision or a decision on a motion to withdraw the reference (“Nature of Suit” 422 or 423). Eliminate: All cases not also decided during that same Result: 31 decisions (7 decisions reflecting extensive analysis, including 3 Lexis© decisions).

7 How Did the Bankruptcy Judges Do? The Lexis © Opinions: They batted.750 The Pacer Cases: They batted about.997

8 The Lexis © Cases Results: 8 published decisions Appeal (6): 4 Aff’d., 1 Rev’d., 1 Mo. for Leave Granted Motion to Withdraw Ref (2): 1 Rec. Accepted, 1 Rec. Not Accepted.

9 The Pacer Cases Result: 31 decisions (including 7 decisions reflecting extensive analysis). 25 Appeals: 1 Rev’d, 10 Aff’d., 14 Other 6 Motion to Withdraw: 2 Aff’d, 4 Dism’d.

10 The Overview of Lexis © & Pacer Cases Result: 32 decisions (allowing for overlaps), 2 Rev’d, 1 Recommendation Not Accepted, 13 Affirming or Accepting Bankruptcy Court, the rest. Bankruptcy Court Decision Left Undisturbed 91% of the time.

11 What About Timing Issues? On an arguably incorrect decision, the length of the appeal might affect the decision.

12 How Long Does An Appeal Take? Appeals Motion for Leave to Appeal: Total--4 Court Rules on Appeal: Total--8 Agreed Dismiss: Total--6 Contested Dismiss: Total--7Overall Long Short Median Avg

13 How Long Does It Take on a Motion to Withdraw Reference? Motions to Withdraw Ruling on Motion to Withdraw: Total--2 Agreed Dismissals: Total--2 Contested Dismissals: Total--2Overall Long Short Avg

14 Playing for Time A Comment That Surprised Me: “In order to provide the parties with additional time to explore settlement, the court granted several motion to extend the appellate briefing schedule. In the fourth such request… (appellees indicated settlement). Because no additional briefing has…been filed, the court concludes the parties must have finalized their settlement and that the appeals are properly dismissed.” Order, August 6, 2007, Case No. 4:07-cv

15 Why The High Affirmance Rates of the Bankruptcy Courts? The Dynamics of Bankruptcy The Standard of Review (especially on findings of facts, including credibility of witnesses) The Dynamics of Who the Bankruptcy Judges Are.

16 Why The High Affirmance Rates of the Bankruptcy Courts? The Dynamics of Bankruptcy The Resources Do Not Always Exist: to Appeal; or to see the Appeal out.

17 Why The High Affirmance Rates of the Bankruptcy Courts? The Standard of Review (especially on findings of facts, including credibility of witnesses)

18 The Standard of Review Findings of Fact Findings of fact of the bankruptcy court will not be set aside unless clearly erroneous. Bankr. R A finding is clearly erroneous, although there is evidence to support it, when the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Memphis-Shelby County Airport Authority v. Braniff Airways, Inc. (In re Braniff Airways, Inc.), 783 F.2d 1283, 1287 (5th Cir. 1986). That this court might have weighed the evidence differently if sitting as the trier of fact is not a sufficient reason to set aside the bankruptcy court's judgment if that court's account of the evidence is plausible in light of the record viewed in its entirety. Anderson v. City of Bessemer City, 470 U.S. 564, , 105 S. Ct. 1504, 84 L. Ed. 2d 518 (1985). From In Re: George William Childs III, et ux. First National Bank and Trust v. Childs, et ux, 2007 U.S. Dist. LEXIS 2750, *9-10 (January 12, 2007); In re: Kevco, Inc., et al. Coastal Industries, Inc., v. Dennis Faulkner, Plan Administration Agent, Acting on Behalf of Kevco, Inc., 2006 U.S. Dist. LEXIS 49091, *6-7 (July 18, 2006).

19 The Standard of Review Consider This, and Decide If You Want to Appeal A Fact Finding: “The justification for this great deference to the factual findings of the bankruptcy court is perhaps well illustrated here where the bankruptcy court's forty-one [*8] page memorandum opinion reflects extremely careful attention to and consideration of the facts.” From In re: Kevco, Inc., et al. Coastal Industries, Inc., v. Dennis Faulkner, Plan Administration Agent, Acting on Behalf of Kevco, Inc., 2006 U.S. Dist. LEXIS 49091, *7-8 (July 18, 2006).

20 The Standard of Review And, in Particular, as to the Credibility of Witnesses: The bankruptcy judge's opportunity to make first-hand credibility determinations entitles its assessment of the evidence to deference, which like other factual findings, will not be set aside unless clearly erroneous. In re Perry, 345 F.3d 303, 309 (5th Cir. 2003). Where the finding of a bankruptcy judge is based on its decision to credit the testimony of one witness over that of another, that finding, if not internally inconsistent, can virtually never be clear error. Theriot v. U.S., 245 F.3d 388, 395 (5th Cir. 1998). From In re: Kevco, Inc., et al. Coastal Industries, Inc., v. Dennis Faulkner, Plan Administration Agent, Acting on Behalf of Kevco, Inc., 2006 U.S. Dist. LEXIS 49091, *7-8 (July 18, 2006) (emphasis supplied).

21 The Standard of Review Questions of Law To the extent the appeal presents questions of law, the bankruptcy court's judgment is subject to de novo review. In re Consolidated Bancshares, Inc., 785 F.2d 1249, 1252 (5th Cir. 1986). From In re: Kevco, Inc., et al. Coastal Industries, Inc., v. Dennis Faulkner, Plan Administration Agent, Acting on Behalf of Kevco, Inc., 2006 U.S. Dist. LEXIS 49091, *6-7 (July 18, 2006); see also : (1) In Re: Tony R. Gresham, et ux. Wm. Cameron & Co., v. Tony R. Gresham, et ux, 2006 U.S. Dist. LEXIS 74286, *2-3 (October 12, 2006); and (2) In re: Juanita Garza. Garza v. J.D. Foods, Inc., 2006 U.S. Dist. LEXIS 29678, *3 (May 15, 2006).

22 The Standard of Review Motion for Leave to Appeal (Interlocutory) “Due to the absence in 28 U.S.C. §158(a)(3)…the court can look to …28 U.S.C. §1292(b) for guidance.” 28 U.S.C. §1292(b): “When a district judge…shall be of the opinion that…[the bankruptcy court order] involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation… From In Re: Tony R. Gresham, et ux. Wm. Cameron & Co., v. Tony R. Gresham, et ux, 2006 U.S. Dist. LEXIS 33992, *16-17 (May 26, 2006).

23 So, In Appealing Questions of Law Don’t Do This: “The structure of appellant's brief is very confusing. Among other things, the summary of the statement of issues on page 2 does not always correspond with the substantive briefing later in the brief…” From In re: Kevco, Inc., et al. Coastal Industries, Inc., v. Dennis Faulkner, Plan Administration Agent, Acting on Behalf of Kevco, Inc., 2006 U.S. Dist. LEXIS 49091, *3-4 (July 18, 2006).

24 So, In Appealing Questions of Law Or This: “Notwithstanding the appellant's scattergun Statement of Issues… ” From In re: Childs, et ux. First National Bank and Trust v. Childs, et ux, 2007 U.S. Dist. LEXIS 2750, *3 (January 12, 2007), which actually had to do with a question of law, to wit, the enforcement of a settlement agreement.

25 In Appealing Questions of Law Fully Brief Your Argument: “Consisting of barely two short paragraphs without any citation to legal authority, Coastal's urging of its affirmative defense of judicial estoppel is half-hearted at best....” From In re: Kevco, Inc., et al. Coastal Industries, Inc., v. Dennis Faulkner, Plan Administration Agent, Acting on Behalf of Kevco, Inc., 2006 U.S. Dist. LEXIS 49091, *12-13 (July 18, 2006).

26 In Appealing Questions of Law And Direct The Court to the Record and the Law Supporting Your Position: “Apparently Coastal cares even less about its affirmative defense of res judicata as Coastal fails to even articulate what its res judicata argument is….In essence, Coastal invites the court to sift through the voluminous record in search of facts supporting its res judicata defense and then perform independent research as to whether those facts support a finding in favor of this defense.” From In re: Kevco, Inc., et al. Coastal Industries, Inc., v. Dennis Faulkner, Plan Administration Agent, Acting on Behalf of Kevco, Inc., 2006 U.S. Dist. LEXIS 49091, *14-15 (July 18, 2006).

27 In Appealing Questions of Law And Did I Mention to Cite Specific Authority: “The debtor has failed to cite to any specific authority to the contrary. Further, the debtor has failed to cite to any specific authority holding that any Federal Rule of [*5] Bankruptcy Procedure, whether singularly or in combination with 11 U.S.C. § 502(b)(9) as amended, has effectively abrogated informal proof of claims. Consequently, the court concludes that the doctrine of informal proof of claims [which has existed for nearly a century] is alive and well in this circuit.” From In re: Garza. Juanita Garza v. J.D. Foods, Inc., 2006 U.S. Dist. LEXIS 29678, *4-5 (May 15, 2006).

28 In Appealing Questions of Law And Don’t Expect Authority From Another Circuit to Outweigh Fifth Circuit Authority: “[Creditor] concedes that the law of the Fifth Circuit is contrary to his position, noting that 'were this matter situated in the Sixth Circuit…[Creditor's] complaint would have been permitted.' Unfortunately for [Creditor], this court is governed by the law of the Fifth Circuit...The law governing this court is that equitable tolling is not allowed.” From Benson Capital Management, Inc. v. G. William Barnett, II., 4:06-cv (October 30, 2006).

29 Tips--Appealing Questions of Law: Make your statement of issues clear, succinct, direct—do not “scattergun” your issues (Childs); Make your summary of statement of issues correspond with your briefing (Kevco); Fully brief your legal arguments—articulate them (Kevco); Cite specific authority holding in your favor (Garza); Don’t expect authority outside the Fifth Circuit to outweigh Fifth Circuit authority; and Can you enhance your position through an interlocutory appeal?

30 Tips--Appealing Factual Issues: Avoid challenging fact findings that are based on a careful consideration of the evidenced (Kevco), certainly unless you can show them clearly erroneous, i.e., not plausible (Childs); Remember, the bankruptcy court’s determination of the credibility of a witness is almost never “clearly erroneous”—unless the court’s determination is internally inconsistent (Kevco);

31 Tip on Motions to Withdraw the Reference: Try to fight the Bankruptcy Court to a standstill—i.e., to the point the Bankruptcy Court makes no recommendation. In re: Mirant Corporation et al; Mirant Corporation v. Consolidated Edison Company of New York, Inc., et al, 2007 U.S. Dist. LEXIS 108, 4-5 (January 3, 2006).

32 Why The High Affirmance Rates of the Bankruptcy Courts? The Dynamics Relating to Who the Bankruptcy Judges Are—Their Judgment is Obviously Respected.


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