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Cory v. Leasure

United States District Court, W.D. Kentucky, Bowling Green Division

July 15, 2015

DR. ROGER L. CORY, Appellant,
v.
ROBERT W. LEASURE, CHAPTER 11 TRUSTEE, Appellee.

MEMORANDUM OPINION AND ORDER

GREG N. STIVERS, District Judge.

This matter comes before the Court on Appellee's Motion to Dismiss Appeal (DN 7) and Motion Seeking Judicial Notice and Supplementation of the Record on Appeal (DN 12). Appellant Dr. Roger L. Cory ("Cory") has responded to both motions, and the motions are ripe for a decision. For the reasons outlined below, the motion to dismiss is GRANTED, and the motion seeking judicial notice and supplementation of the record on appeal is DENIED AS MOOT.

I. BACKGROUND AND CLAIMS[1]

This appeal relates to a contentious bankruptcy proceeding that was pending in the U.S. Bankruptcy Court for the Western District of Kentucky. Appellee Robert Leasure is the court-appointed Chapter 11 trustee ("Trustee") for the debtors in the bankruptcy proceedings below: Mammoth Resource Partners, Inc. ("MRP"); Mammoth Field Services, Inc.; and Mammoth Resources, LLC (collectively "Debtors"). Cory is a shareholder of the Debtors.

On October 2, 2007, a group of fifteen plaintiffs[2] (collectively "Bennett Plaintiffs") filed a lawsuit in this Court styled Paul Daniel Bennett, et al. v. Mammoth Resources Partners, Inc. et al., No. 1:07-CV-168-JHM, against the Debtors and eight partnerships managed by MRP. Bennett Plaintiffs asserted sixteen causes of action including: violations of the Securities Act of 1933; violations of the Securities Exchange Act of 1934; violations of the Kentucky Securities Act; fraud; breach of fiduciary duty; and breach of contract. Bennett Plaintiffs also alleged that Cory was a "controlling person" of other defendants under the Securities Act of 1933 and the Kentucky Securities Act. On September 8, 2010, Debtors filed Chapter 11 bankruptcy petitions in the Bankruptcy Court.[3] On October 28, 2010, this Court transferred the Bennett lawsuit to the Bankruptcy Court, which docketed the case as an adversary proceeding styled Paul Daniel Bennett et al. v. Mammoth Resource Partners, Inc., No. 10-1055 (Bankr. W.D. Ky.).

On May 15, 2012, the Trustee initiated an adversary proceeding in which it asserted various claims against Cory.[4] In that action, the Trustee sought to recover various sums due to MRP from Cory. On May 31, 2013, various parties-including Debtors and Cory-entered into a settlement agreement ("Settlement Agreement") resolving all claims relating to the adversary proceeding initiated against Cory and others.[5] (Appellee's Mot. to Dismiss Ex., DN 7-2). The Trustee and Cory disagreed as to whether certain claims initiated against Cory would be dischargeable in his bankruptcy proceeding. (Appellee's Mot. to Dismiss Ex.). Under the Settlement Agreement, Cory voluntarily relinquished certain property rights and interests in exchange for the Trustee's release of all further claims against Cory. (Appellee's Mot. to Dismiss Ex.). On June 25, 2013, the Bankruptcy Court approved the Settlement Agreement pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. (DN 7-2).

On November 26, 2014, Cory initiated this appeal to "set aside the Order of the Bankruptcy Court [Bankruptcy Docket No. 844] and void the settlement release agreement by showing the Appellant was induced to grant the release by fraud, and/or undue influence." (Appellant's Objection to Mot. to Dismiss Appeal 1).

II. JURISDICTION

Under 28 U.S.C. § 158(a), this Court has jurisdiction to hear appeals from "final judgments, orders, and decrees" of the bankruptcy court." 28 U.S.C. § 158(a).

III. STANDARD OF REVIEW

On appeal, this Court reviews the bankruptcy court's findings of fact under the clearly erroneous standard but applies the de novo standard to any conclusions of law. See In re Isaacman, 26 F.3d 629, 631 (6th Cir. 1994).

III. DISCUSSION

A. Appellee's Motion to Dismiss

The Trustee seeks to dismiss this appeal on the basis that it is barred by the terms of the Settlement Agreement signed by Cory and approved by the bankruptcy court. Under the terms of the Settlement Agreement, it is ...


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