Opinion
MISCELLANEOUS ACTION 01-3048, SECTION "T"(4)
January 7, 2002
ORDER AND REASONS
On September 24, 2001, a "Petition for Leave to Appeal from Interlocutory Order, and for Withdrawal and Abstention from Hearing a Proceeding to Partition Community Property" was filed in the Bankruptcy Court on behalf of Sidney Robertson, III. On October 3, 2001, the Trustee, David V. Adler, filed an opposition to said motion. This matter was transmitted to the District Court and filed into this miscellaneous record on October 5, 2001. There was no hearing date set for said matter. Subsequently, on October, 26, 2001, David V. Adler filed a Motion to Dismiss the Appeal and secondly, a Motion for Damages and Costs for Frivolous Appeal, which were set on this Court's docket for November 21, 2001. Sidney Robertson, III filed a memorandum in opposition to Adler's motions. The Court, having considered the memoranda of counsel, the Court record, the law and applicable jurisprudence, is fully advised in the premises and ready to rule.
I. Background:
Sidney Robertson, III is the ex-husband of debtor, Kelly Dennis. On January 4, 1999, a Judgment was rendered in the Civil District Court for the Parish of Orleans, State of Louisiana, after a trial on the merits to partition the community property of Sidney Robertson, III and Kelly Robertson, now Kelly Dennis. The Court dissolved the community of acquets and gains then existing between the parties and a separation of the community assets was ordered wherein each party was awarded an undivided one-half interest in the land and improvements located at 19 Bethany Court, New Orleans, Louisiana. The Judgment further provided an undivided obligation to repay a loan secured by said property. Next, the Judgment provided that the retirement plans of each were to be partitioned in accordance with the law and jurisprudence. Moreover, Sidney Robertson was awarded $2,900.00 worth of movables and Kelly Robertson awarded $11,120.00 worth of movable property. Finally, the Judgment required Kelly Robertson to pay rent in the amount of $400.00 per month with $29,200.00 accrued as of June 25, 1996. Following the divorce, the parties agreed to sell the home at 19 Bethany Court. The proceeds from the sale, after the mortgage, penalties, and interest were paid in full, amounted to $14,262.37. The funds were held in escrow at Gulf South Title Corporation.
On December 12, 2000, Kelly Dennis filed a voluntary petition for bankruptcy. Sidney Robertson, III filed a complaint in the bankruptcy proceeding on March 7, 2001. In June 2001, Sidney Robertson, III, filed a motion to lift the stay, which was denied by the Bankruptcy Court. Mr. Robertson appealed said ruling to this Court which formed the subject matter of Civil Action 01-2796. Additionally in the bankruptcy proceeding, a complaint was filed by the Trustee, David V. Adler, against Gulf South Title Corporation ("Gulf South") on March 21, 2001, seeking to recover Kelly Dennis' share of the proceeds from the sale of the home. A default judgment was rendered against Gulf South wherein Gulf South was ordered to turn over the sum of $7,231.18 to the Trustee. Thereafter, Gulf South deposited the full amount of $14,587.99 into the registry of the Court. As such, the Trustee moved for the withdrawal of Dennis' portion, $7,231.18, which was opposed by Mr. Robertson as an interested party. On September 12, 2001, the motion was granted by the Bankruptcy Judge over Mr. Robertson's objection. It is this order which forms the subject matter of the present petition for interlocutory appeal.
II. Arguments of the Respective Parties:
It is Mr. Robertson's contention that the ruling affects his private right to receive a fair and equitable share of the assets of the former community, thus he is a "person aggrieved". More specifically, it is asserted that the community property partition awarded movable property to Kelly Dennis in the amount of $11,120.00, while Sidney Robertson was only awarded movables in the amount of $2,900.00; therefore, there is an additional $8,220.00 to which Mr. Robertson is owed. As such, Mr. Robertson contends that he should be awarded Dennis' share of the proceeds in the amount of $7,231.18 to offset the $8,220.00 to which he is due and to further offset the amount in rentals due pursuant to the January 4, 1999 Judgment. Accordingly, petitioner asks this Court to grant leave to appeal and then vacate the Bankruptcy Court's Order of September 12, 2001. Additionally, petitioner asks the Court to abstain from hearing the partition in the interest of comity remanding the community property partition to state court.
The Trustee, however, contends that petitioner has no standing to bring this "petition for appeal". Robertson has not, and can not, show that the order releasing the funds to the Trustee diminished his property, increased his burdens, or detrimentally affected his rights. See, In re: Dykes, 10 F.3d 184 (3rd Cir. 1993); Rohm Hass Texas, Inc. v. Ortis Bros. Insulation. Inc., 32 F.3d 205 (5th Cir. 1994). Instead, Robertson argues that the state court judgment did not completely partition all the property in the community and because his offset claim was never adjudicated, he has a claim for the entire amount of the proceeds derived from the sale of the former community home. The community home, however, was partitioned and Robertson's rights are not detrimentally affected and his property is not diminished by the order releasing the debtor's one-half of the proceeds of the sale of the former family home to the Trustee. Mr. Robertson's share of the proceeds never entered the bankruptcy estate, but is held in escrow in the Court's registry.
Additionally, all former non-partitioned community property enters the bankruptcy estate under 11 U.S.C. § 541 (a)(2); however, the partition is effective as to the community home and Robertson's claim is determined based upon his liquidated ownership interest in his one-half of the proceeds from the sale of the former community home. Matter of Stouder 164 B.R. 59 (E.D. La. 1994). Robertson has a claim that should be decided through the claims processing procedure in the bankruptcy proceeding. Robertson's claim, while rooted in state law, is a core proceeding against the debtor's bankrupt estate.
III. Law and Analysis:
District Courts have jurisdiction to hear appeals from "final judgments, orders, and decrees, and, with leave of court, from interlocutory orders and decrees, of bankruptcy judges entered in cases and proceedings referred to the bankruptcy judges . . ." 28 U.S.C. § 158 (a). "The decision to grant or deny leave to appeal a bankruptcy court's interlocutory order is committed to the district court's discretion." In the matter of O'Connor, 258 F.3d 392 (5th Cir. 2001). Based upon a review of the facts and circumstances of this case, the law and applicable jurisprudence, this Court does not find that petitioner is entitled to leave to file this interlocutory appeal. It is the opinion of this Court that petitioner lacks standing to object to the disbursement of funds to the Trustee in this instance. Mr. Robertson was not a party to the adversary proceeding in which the interlocutory order was granted, and furthermore, Robertson is not a "person aggrieved" within the confines of the applicable jurisprudence. While this Court is sympathetic with Mr. Robertson's situation, he is merely a creditor, as any other, which must find relief within the procedure of the bankruptcy.
Additionally, this Court will not consider the request for abstention and/or withdrawal of this matter, as improperly brought before this Court. Likewise, this Court denies the Trustee's request for sanctions in the form of attorney's fees and expenses in having to defend against this appeal. While this Court has denied petitioner's request for leave to appeal, the situation does not warrant an award of sanctions at this time.
Accordingly,
IT IS ORDERED that the "Petition for Leave to Appeal from Interlocutory Order, and for Withdrawal and Abstention from Hearing a Proceeding to Partition Community Property" filed on behalf of Sidney Robertson, III, be and the same is hereby DENIED.
IT IS FURTHER ORDERED that the Motion to Dismiss Appeal filed on behalf of the Trustee, David V. Adler, be and the same is hereby rendered MOOT.
IT IS FURTHER ORDERED that the "Motion for Damages and Costs for Frivolous Appeal Under Federal Rules of Bankruptcy Procedure 8020 and Federal Rules of Appellate Procedure 38" filed on behalf of the Trustee, David V. Adler, be and the same is hereby DENIED.