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In re Blasingame

United States Bankruptcy Appellate Panel of the Sixth Circuit

April 15, 2019

In re: Earl Benard Blasingame; Margaret Gooch Blasingame, Debtors.
v.
Bettye Sue Bedwell, Chapter 7 Trustee, Defendant-Appellee (18-8010), Church Joint Venture, L.P., Plaintiff-Appellant (18-8010), Plaintiff - Appellant/Cross-Appellee (18-8013 & 18-8018), Earl Benard Blasingame, et al., Defendants-Appellees (18-8010) Defendants-Appellees/Cross-Appellants (18-8013 & 18-8018).

          Argued: February 12, 2019

          Appeal from the United States Bankruptcy Court for the Western District of Tennessee at Memphis. No. 08-28289; Adv. Pro. 15-00021-Jennie D. Latta, Judge.

         ARGUED:

          Bruce W. Akerly, MALONE AKERLY MARTIN PLLC, Dallas, Texas, for Church Joint Venture.

          Michael P. Coury, GLANKLER BROWN, PLLC, Memphis, Tennessee, for Earl Benard Blasingame, et al.

         ON BRIEF:

          Bruce W. Akerly, MALONE AKERLY MARTIN PLLC, Dallas, Texas, for Church Joint Venture.

          Michael P. Coury, GLANKLER BROWN, PLLC, Memphis, Tennessee, for Earl Benard Blasingame, et al. Bettye Sue Bedwell, Memphis, Tennessee, for Trustee.

          Before: OPPERMAN, PRICE SMITH, and WISE, Bankruptcy Appellate Panel Judges.

          OPINION

          DANIEL S. OPPERMAN, CHIEF BANKRUPTCY APPELLATE PANEL JUDGE.

         Church Joint Venture ("CJV") appeals the bankruptcy court's decision determining that a lawsuit had inconsequential value to the bankruptcy estate and allowing the Trustee, Edward Montedonico, ("the Trustee") to abandon the lawsuit. The Blasingames[1] filed a cross appeal of a prior order denying dismissal of the lawsuit, which was interlocutory until the conclusion of the case. For the reasons stated below, the bankruptcy court's decisions are AFFIRMED.

         STATEMENT OF ISSUES ON APPEAL

         While the parties have listed multiple issues in their appellate briefs, the Panel finds that the following issues have been preserved and are to be decided in these cross-appeals:

1. Whether the bankruptcy court erred in granting the Trustee's motion to abandon a declaratory judgment claim in an adversary proceeding concerning whether certain personal property constituted property of the Debtors' bankruptcy estate.
2. Whether the bankruptcy court erred by admitting the Trustee's exhibits into evidence at the hearing on the motion to abandon when the Trustee moved to admit those exhibits to help establish the factual basis upon which he exercised his business judgment in deciding to seek abandonment.
3. Whether the bankruptcy court erred when denying the Blasingames' motions in the adversary proceeding to dismiss the declaratory judgment claim based on a purported failure to state a claim and the statute of limitations.

         JURISDICTION AND STANDARD OF REVIEW

         The United States District Court for the Western District of Tennessee has authorized appeals to the Panel, and no party has timely filed to have this appeal heard by the district court. 28 U.S.C. §§ 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right. 28 U.S.C. § 158(a)(1); Midland Asphalt Corp. v. U.S., 489 U.S. 794, 798, 109 S.Ct. 1494, 1497 (1989) (quotation marks and citation omitted). The Sixth Circuit recently prescribed a two-step approach to determining whether an order of a bankruptcy court is immediately appealable under 28 U.S.C. § 158(a)(1): "a bankruptcy court's order may be immediately appealed if it is (1) 'entered in [a] ... proceeding' and (2) 'final'- terminating that proceeding." Ritzen Group, Inc. v. Jackson Masonry, LLC (In re Jackson Masonry, LLC), Nos. 18-5157/5161, 906 F.3d 494, 497-98, 2018 WL 4997779, at *1 (6th Cir. Oct. 16, 2018).

         The orders before the Panel include an order granting the Trustee's motion to abandon the litigation and an order dismissing the adversary proceeding. Both orders were entered in a proceeding. Further, these orders fully dispose of the adversary proceeding. Geberegeorgis v. Gammarino (In re Geberegeorgis), 310 B.R. 61, 63 (B.A.P. 6th Cir. 2004) ("[A]n order that concludes a particular adversarial matter within the larger case should be deemed final and reviewable in a bankruptcy setting.") (citations omitted)). "An order to abandon property of the estate is a final order for purposes of appeal." In re DeGroot, 484 B.R. 311, 313 (B.A.P. 6th Cir. 2012).

         An "order of abandonment will be reviewed under an abuse of discretion standard." Stark v. Moran (In re Moran), 385 B.R. 799 (B.A.P. 6th Cir. 2008) (citing Viet Vu v. Kendall (In re Viet Vu), 245 B.R. 644, 647 (B.A.P. 9th Cir. 2000)). "An abuse of discretion occurs only when the [trial] court relies upon clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous legal standard." Id. (quoting Volvo Commercial Fin. LLC the Ams. v. Gasel Transp. Lines, Inc. (In re Gasel Transp. Lines, Inc.), 326 B.R. 683, 685 (B.A.P. 6th Cir. 2005) (citation omitted)). The bankruptcy court's decision to admit evidence is also reviewed for an abuse of discretion. See In re Felix, 582 B.R. 915, 918-19 (B.A.P. 6th Cir. 2018); Lebovitz v. Hagemeyer (In re Lebovitz), 360 B.R. 612, 615-16 (B.A.P. 6th Cir. 2007).

         The Blasingames filed a cross-appeal of the bankruptcy court's December 7, 2015 order denying their motion to dismiss the adversary proceeding. The order denying the Blasingames' motion to dismiss was not a final order for ...


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