United States District Court, District of Maryland
RAINER T. ROSE, Appellant,
SEAN T. LOGAN, APPELLEE. Bankr. No. 12-25471-RAG
Richard D. Bennett United States District Judge
In this case, Appellant Rainer T. Rose (“Appellant Rose” or “Appellant”) appeals various orders of the United States Bankruptcy Court for the District of Maryland pertaining to the sale of real property owned by the Debtor, Blackwater Enterprises, Inc. Specifically, Appellant Rose, as a shareholder of the Debtor, appeals (1) the Bankruptcy Court’s August 12, 2013 Amended Order Granting Trustee’s Motion to Sell Debtor’s Real Property Free and Clear of Liens, Claims, Encumbrances and Interests (ECF No. 4-30); and (2) the Bankruptcy Court’s October 29, 2013 Order Denying Motion to Reconsider and Motion for Rule 2004 Examination (ECF No. 4-55). In this Court, Appellant argues that the Trustee failed to obtain an appraisal of the property and misrepresented a realtor’s opinion of value as an appraisal in various documents, and that these facts warrant reversal of the Bankruptcy Court’s orders.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 158(a)(1), which extends jurisdiction to the United States District Courts to hear appeals from the final judgments, orders, and decrees of the United States Bankruptcy Courts. The parties’ submissions have been reviewed, and this Court held a hearing on the appeal on March 13, 2014. For the reasons that follow, the Bankruptcy Court’s Amended Order Granting Trustee’s Motion to Sell Debtor’s Real Property (ECF No. 4-30) and Order Denying Motion to Reconsider and Motion for Rule 2004 Examination (ECF No. 4-55) are AFFIRMED. Accordingly, Appellant’s appeal is DENIED.
I. Scope of the Appellate Record and Appellant Rose’s Request to Strike Portions of Trustee’s Appellate Brief
In his Reply brief, Appellant Rose requests that this Court strike significant portions of the Trustee’s brief for failure to include citations to the record. This Court has neither cited to nor relied upon any of the challenged passages from the Trustee’s brief in this Memorandum Opinion. Therefore, to the extent Appellant challenges reliance upon the Trustee’s brief, Appellant’s request is moot.
However, at the March 13 hearing, counsel for Appellant Rose made clear that the Appellant objects to specific factual assertions. Specifically, Appellant takes issue with paragraphs 1, 2, 3, 4, 5, 6, 7, 9, 10, and 11, which primarily address the marketing of the Property, because the facts contained therein are neither tied to nor supported in the record in Appellant’s view. After a thorough review of the record, this Court finds ample support for the challenged facts. Moreover, the Transcript of the August 2, 2013 Hearing on the Motion to Sell bears out many of these same facts. While Appellant failed to include that transcript in his designation, this Court notes that the hearing transcript contains relevant information regarding the evidence before the Bankruptcy Court in deciding the Motion to Sell. As such, the transcript-and any information contained therein-will not be stricken. See In re Lloyd E. Mitchell, Inc., Bankr. No. 06-13250-NVA, Adversary No. 07-0230, 2007 WL 2011734, at *3 (Bankr. D. Md. July 6, 2007) (denying motion to limit appellate record to record from adversary proceeding alone because materials from debtor’s bankruptcy proceeding were necessary to give the appellate court the “full spectrum of the applicable facts” considered by the Bankruptcy Court); In re General Development Corp. (Sipes v. General Development Corp.), 177 B.R. 1000, 1006-07 (S.D. Fla. 1995) (refusing to strike materials from bankruptcy appellate record where those materials were before the bankruptcy judge). Specifically, because the record of the proceedings below contains support for the following statements, this Court refuses to strike the passages identified by the Appellant.
II. Factual Background
This case arises out of Appellant Rainer T. Rose’s (“Appellant Rose”) opposition to the sale of 9843 Wades Point Road, Claiborne, Maryland (‘the Property”), which is the sole asset of the Debtor Blackwater Enterprises, Inc. (the “Debtor”). Mem. Op. Supp. Order Denying Rose’s Mot. Stay Pending Appeal 2 (hereinafter, “Mem. Op. Mot. Stay”), ECF No. 5-6. The Debtor filed a voluntary petition for bankruptcy on August 23, 2012 under Chapter 11 of the United States Bankruptcy Code. See Voluntary Pet., ECF No. 2. After the case sat inactive for several months, the United States Trustee filed a motion to convert or dismiss on January 8, 2013. Mem. Op. Mot. Stay 3. On March 4, 2013, the Bankruptcy Court granted the motion, converted the case to a Chapter 7 proceeding, and designated Sean Logan (“the Trustee”) as the Trustee for the estate. See Id . at 4. The Debtor filed a motion to reconsider the conversion of the case, which the Bankruptcy Court denied. See Order, ECF No. 4-16; see also Mem. Op. Mot. Stay 4-6. Meanwhile, the Trustee began to market the property and filed a motion to employ Barry Waterman, a real estate agent with Coldwell Banker Waterman Realty, in order to market the property on March 15, 2013.
On May 22, 2013, the Trustee filed his Motion to Sell Debtor’s Real Property Free and Clear of Liens, Claims, Encumbrances and Interests (ECF No. 4-18) and attached a contract with a proposed sale price of $1.42 million. The contract was dated April 25, 2013-i.e., forty-one (41) days after the Trustee was appointed and two days after the Bankruptcy Court approved the Trustee’s Motion to Employ Real Estate Agent.
The Trustee’s Motion to Sell and accompanying Notice of Sale (ECF No. 4-19) contained a number of disclosures. The Motion stated that the Debtor had valued the Property at $2.9 million in his bankruptcy filings, but that Barry Waterman of Coldwell Banker Waterman Realty had conducted an “appraisal” of the Property and had set “the value and listing price of the Property” at $1.499 million. See Trustee’s Mot. Sell ¶¶ 7, 13, ECF No. 4-18. Similarly, the Trustee’s Notice of Sale stated that the Debtor had valued the property at $2.9 million, but that Barry Waterman of Coldwell Banker Waterman Realty had conducted an “in-depth appraisal” valuing the property at $1.499 million. See Notice Trustee’s Mot. Sell 2, ECF No. 4-19. Both the Motion and the Notice indicated that the $1.42 million offer was the highest offer received to date and disclosed the $71, 000 sales commission to be paid to Barry Waterman and Coldwell Banker Waterman Realty. See Trustee’s Mot. Sell ¶¶ 15-16; Notice Trustee’s Mot. Sell 1-2.
The Debtor opposed the Motion to Sell, arguing that the property had been appraised for $2.9 million in July of 2012. Debtor’s Opp. ¶ 2, ECF No. 23. In addition, the Debtor filed a Motion to Dismiss and a Motion for Authority to Incur Secured Debt (“Motion to Finance”) in an attempt to repurchase the Property.
The Bankruptcy Court held a hearing on the Motion to Sell on August 2, 2013. At the hearing, the Debtor withdrew both its Motion to Dismiss and Motion to Finance as the proposed financing had fallen through. Mot. Sell Hr’g Tr. 4:13-19 Aug. 2, 2013, ECF No. 14 Ex. A (hereinafter, “Aug. 2 Hr’g Tr.”). Nevertheless, both the Debtor and Appellant Rose expressed a preference for auctioning the Property. Id. at 4:20-5:10. The Trustee, however, recommended against an auction and explained his marketing efforts to the Bankruptcy Court as follows:
I’ve had this property on the market since March. We’ve had reasonable traffic both visiting the property and requesting information on it. We’ve had a couple of bids. I listed the property at 1.49. The highest bid that I had is the current one at 1.42.
My agents have gone back to the next highest bid and tried to generate additional interest and they’re not willing to go above, I think it’s 1.275 was their offer.
I continue to advertise it. It’s on a number of electronic medias [sic]. We’ve had an advertisement come out in a couple of newspapers as well as magazines. The last one last month generated some interest but not a higher offer. I don’t even have an offer yet at 1.49.
Id. at 5:15-6:4; see also Mem. Opp. Mot. Stay 7 (“The Trustee indicated that he had listed the real estate at $1.49 million, had diligently marketed it, and had received a fair volume of traffic and interest. He also indicated that the contract on the table-for a price of $1.42 million-reflected the highest bid received and that the next highest bidder was unwilling to go higher.”). Several creditors-including Severn Savings Bank, FSB (“Severn Bank”), which has intervened in this appeal-appeared at the hearing and voiced support for the sale. See Aug. 2 Hr’g Tr. 6:15-7:14.
On August 26, 2013, Appellant Rose filed a Motion to Reconsider Sale (ECF No. 4-31), asserting that the Trustee’s marketing efforts were deficient and that the notice of the Motion to Sell misrepresented Mr. Waterman’s valuation of the property as an appraisal. In addition, Appellant Rose filed Motions for Rule 2004 Examinations of the Trustee and Barry Waterman.
The Bankruptcy Court held a hearing on the motions on October 22, 2013. The Bankruptcy Court rejected the Motion for Reconsideration as an attempt to relitigate issues addressed at the prior hearing, noting that the Appellant’s arguments “weren’t raised at the last hearing.” Mot. Reconsider Hr’g Tr. 4:14-16 Oct 22, 2013, ECF No. 4-75 (hereinafter “Oct. 22 Hr’g Tr.”). Moreover, the Bankruptcy Judge stated:
There is no evidence that the property could be sold for more [than $1.42 million.] . . . [T]here was a bona fide purchaser out there ready, willing and able to step up and purchase it for more than what the trustee’s contract was, and that’s what we were left with.
Id. at 12:5-9. Accordingly, the Bankruptcy Court denied the Motion for Reconsideration and the Motions for Rule 2004 Examinations.
Appellant Rose filed a timely appeal of the Bankruptcy Court’s rulings. Appellant Rose filed a Motion for Stay Pending Appeal (ECF No. 4-59) in the Bankruptcy Court, which was denied on ...