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In re Pasley

United States Bankruptcy Appellate Panel of the Sixth Circuit

August 6, 2019

In re: Jeffrey W. Pasley, Debtor.
v.
Robert W. Keats, Chapter 7 Trustee, Appellee. Jeffrey W. Pasley, Appellant,

          On Appeal from the United States Bankruptcy Court for the Western District of Kentucky at Louisville. No. 3:16-bk-33769-Alan C. Stout, Judge.

         COUNSEL

         ON BRIEF:

          Robert W. Keats, KEATS & SCHWIETZ, PLLC, Louisville, Kentucky, for Appellee.

          Jeffrey W. Pasley, Louisville, Kentucky, pro se.

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

          OPINION

          TRACEY N. WISE, Bankruptcy Appellate Panel Judge.

         Appellant/Debtor Jeffrey W. Pasley ("Debtor") is the sole member of R.E.N. Enterprises, LLC ("REN"), a Kentucky limited liability company. REN owns real estate at 4528 West Broadway, Louisville, Kentucky ("LLC Real Estate"). Appellee/Chapter 7 Trustee Robert W. Keats ("Trustee") filed a motion seeking authority from the United States Bankruptcy Court for the Western District of Kentucky to sell the LLC Real Estate. Trustee asserted that Debtor's interest in REN was estate property under § 541(a)(1), [1] and Debtor is deemed to have assigned that interest to Trustee, who had the same rights that Debtor would have as to REN, including the right to sell REN's property. Debtor objected. The bankruptcy court held two hearings, both times explaining that Trustee stands in Debtor's shoes as the sole member of REN and has whatever authority Debtor would have to sell the LLC Real Estate. The bankruptcy court subsequently entered an order ("Sale Order") granting Trustee's motion. Debtor appealed the Sale Order, arguing that the court lacked authority to enter the Sale Order because the LLC Real Estate is not property of his bankruptcy estate.

         JURISDICTION

         The Panel has jurisdiction to decide this appeal. The United States District Court for the Western District of Kentucky has jurisdiction to hear appeals from final orders issued by the Bankruptcy Court. 28 U.S.C. § 158(a)(1). The district court has authorized appeals to this Panel under 28 U.S.C. § 158(b)(6), and no party elected to have the district court hear this appeal. "[A] bankruptcy court's order may be immediately appealed if it is (1) 'entered in [a] . . . proceeding[ ]' and (2) 'final'-terminating that proceeding." Ritzen Grp., Inc. v. Jackson Masonry, LLC (In re Jackson Masonry, LLC), 906 F.3d 494, 499 (6th Cir. 2018) (quoting 28 U.S.C. § 158(a)), cert. granted sub nom. Ritzen Grp., Inc. v. Jackson Masonry, LLC, No. 18-938, 2019 WL 266853 (May 20, 2019). A bankruptcy court's order authorizing a trustee to administer an asset is a final order. Bonner v. Sicherman (In re Bonner), 330 B.R. 880 (unpublished table decision), available at 2005 WL 2136204, at *1 (B.A.P. 6th Cir. 2004) ("bankruptcy court's order granting the trustee's motion to reopen the bankruptcy case to administer an asset is a final order, because the determination that the trustee may administer the asset as property of the estate is conclusive on the merits.") (citation omitted). A bankruptcy court's sale order is also a final order. K&B Capital, LLC v. Official Unsecured Creditors' Comm. (In re LWD, Inc.), 335 Fed.Appx. 523, 526 (6th Cir. 2009) ("a sale order by a bankruptcy court is generally a final, appealable order."); accord ELM Road Dev. Co. v. Buckeye Ret. Co., LLC, Ltd. (In re Hake), 419 B.R. 328, 331 (B.A.P. 6th Cir. 2009) (citations omitted).

         FACTS

         The relevant facts are undisputed. Debtor filed a chapter 7 bankruptcy petition on December 19, 2016, and his amended petition lists "DBA R.E.N. Enterprises, LLC" in response to question 4, which asks for "[a]ny business names . . . you have used in the last 8 years." (Bankr. No. 16-33769-acs, ECF No. 143-1 at 2, 4.[2]) Debtor listed his 100% ownership interest in REN as an asset valued at $50, 000 on Schedule B but did not separately identify the LLC's assets or debts. Debtor did not claim an exemption in his REN membership interest on amended Schedule C. (ECF No. 61-1.[3])

         Trustee discovered that REN owns the LLC Real Estate. On June 29, 2018, Trustee filed a "Notice and Motion to Sell Real Property Free and Clear (11 U.S.C. § 363) 4211 West Broadway and 4528 West Broadway" (the "Sale Motion"). Only the Sale Motion as it pertains to the LLC Real Estate is at issue in this appeal. Pursuant to § 363, the Sale Motion sought authority for Trustee to: (a) list the LLC Real Estate with a realtor or sell it privately; (b) pay closing costs "as an administrative expense of the debtor estate"; and (c) hold the net sale proceeds pending further order. (ECF No. 115 at 2.) Trustee asserted that REN owns the LLC Real Estate, and Debtor's interest in REN "is an interest of the Debtor that upon the filing of a bankruptcy petition by the Debtor falls into the hands of the Trustee, which ultimately gives the Trustee authority to sell the Debtor's property." Id. (citing § 541).

         Debtor objected to the Sale Motion, arguing that the LLC Real Estate should not be sold until a pending adversary proceeding relating to separate real estate was resolved, but he did not explain the correlation between the LLC Real Estate sale and the adversary proceeding. Trustee filed a Supplemental Brief in support of the Sale Motion, reaffirming his positions that Debtor is deemed to have assigned his membership interest in REN to Trustee upon his bankruptcy filing and that Trustee had the right to liquidate ...


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