Biltmore Investments, LTD. v. TD Bank, N.A., No. 15-1076 (4th Cir. 2015)

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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-1076 BILTMORE INVESTMENTS, LTD., Debtor - Appellee, v. TD BANK, N.A., Creditor - Appellant. Appeal from the United States District Court for the Western District of North Carolina, at Asheville. Max O. Cogburn, Jr., District Judge. (1:14-cv-00099-MOC) Submitted: August 27, 2015 Decided: October 1, 2015 Before NIEMEYER, KING, and GREGORY, Circuit Judges. Vacated and remanded by unpublished per curiam opinion. Lance P. Martin, Norman J. Leonard II, WARD AND SMITH, P.A., Asheville, North Carolina, for Appellant. Edward C. Hay, Jr., PITTS, HAY, HUGENSCHMIDT & DEVEREUX, P.A., Asheville, North Carolina; T. Scott Tufts, TUFTS LAW FIRM, PLLC, Maitland, Florida, for Appellee. Unpublished opinions are not binding precedent in this circuit. PER CURIAM: TD Bank, December 22, N.A., 2014 appeals (the the district “Order”), court’s reversing the Order of bankruptcy court’s order and concluding that the automatic stay, see 11 U.S.C. § 362, bars TD Bank from satisfying its state court judgment against Walter McGee by foreclosing on McGee’s common stock in Biltmore Investments, Ltd., underlying bankruptcy proceeding. had already Biltmore’s expired plan of when the debtor in the Because the automatic stay the bankruptcy reorganization, we court vacate confirmed the Order and remand for further proceedings. I. The relevant facts of the case are undisputed. filed a petition Bankruptcy filings, Code for in bankruptcy which was TD Bank. 2011. scheduled Biltmore January three under In Chapter its secured Biltmore 11 of bankruptcy creditors, the court one of In July 2012, TD Bank obtained from a North Carolina state court a $2.5 million judgment against McGee, who owns all bankruptcy of Biltmore’s court common confirmed reorganization (the “Plan”). stock. Biltmore’s In second April 2013, amended plan the of TD Bank had objected to the Plan in bankruptcy court, but did not appeal the order confirming the Plan. The Plan included a provision that, if Biltmore recovered 2 in an adversary proceeding it had brought against a third party, that recovery would be “split [Biltmore] on an equal basis.” After the Plan was between the creditors and J.A. 333. confirmed, the adversary proceeding settled for $1.3 million – a much greater sum than anyone had anticipated. Apparently out of fear that Biltmore would distribute its share of the settlement proceeds to McGee rather than reinvest them in the business, TD Bank attempted to satisfy its judgment Biltmore. against McGee by executing See N.C. Gen. Stat. § 1-324.3. on McGee’s stock in To that end, TD Bank filed a motion in the bankruptcy court requesting a declaration that the automatic stay provided in 11 U.S.C. § 362 did not bar TD Bank from executing on McGee’s shares. The bankruptcy court granted TD Bank’s motion, and then denied Biltmore’s motion for reconsideration of that order. Biltmore appealed to the district court, which reversed and “stayed” TD Bank from “taking any action directed at Walter T. McGee, in state court or otherwise, to seize or sell his shares of stock in Biltmore.” See Order 11. In its Order, the district court applied the standard we articulated in A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986). There, we explained that, although the protections of the automatic stay typically extend only to the debtor, the stay may under “unusual circumstances” be extended 3 to non-bankrupt third parties. Id. Unusual circumstances may be found, for example, when “there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor.” Id. Here, the district court determined that unusual circumstances existed because, in its view, “[w]hat is ultimately at issue in this matter is control of Biltmore,” and “TD Bank’s state court actions amount to an action to obtain possession of, or exercise control over, property of the debtor’s bankruptcy estate (Mr. McGee’s stock), which is, in effect, an action against the debtor.” Order 9. The court observed that, if TD bank was allowed to execute on McGee’s stock, “there is the potential that TD Bank or a third party” would buy the stock and that “the new stockholder may not act in the best comply interests with the of Biltmore terms liquidating the company.” of the by, for example, confirmed Id. at 9-10. Plan failing or to simply TD Bank timely appealed the Order to this Court. II. Biltmore argues we lack jurisdiction of this appeal under 28 U.S.C. § 158(d)(1), because the district court’s Order was not final. However, our jurisdiction does not depend on whether 4 the Order was final, for 28 U.S.C. § 1292(a)(1) gives us jurisdiction of “[i]nterlocutory orders of the district courts . . . granting, continuing, modifying, refusing, or dissolving . . . injunctions.” See Conn. Nat’l Bank v. Germain, 503 U.S. 249, 252 (1992) (explaining that jurisdiction over bankruptcy appeals under § 158(d) does not limit jurisdiction over interlocutory orders under § 1292). TD Bank argues that the district court misapplied our decision in A.H. Robins Co., while Biltmore defends the district court’s determination of unusual circumstances and extension of the automatic stay to McGee. court and bankruptcy court The parties – like the district – assume automatic stay is still in effect. is erroneous. Thus, instead that 11 U.S.C. § 362’s Such an assumption, however, of “address[ing] an issue predicated on [a] misconception,” see Genesis Healthcare Corp. v. Symczyk, dissenting), 133 we S. Ct. vacate 1523, the Order language of 1537 and (2013) (Kagan, remand for J., further proceedings. Under the plain the Bankruptcy Code, the confirmation of Biltmore’s Plan terminated the automatic stay. Upon assets confirmation, subject only the to Plan all “re-vested outstanding [Biltmore] liens which avoidable by [Biltmore] under the [Bankruptcy] Code.” with its are not J.A. 334; see also 11 U.S.C. § 1141(b) (“Except as otherwise provided in 5 the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor.”). Pursuant to § 362(c)(1), estate’s assets in the the re-vesting debtor of terminated “against the property of the estate.” the the bankruptcy stay of acts See McKinney v. Waterman S.S. Corp., 925 F.2d 1, 4 (1st Cir. 1991) (“Since confirmation revests the property of the estate in the debtor . . . the stay of an act against the property of the estate would no longer be applicable.”). Confirmation of the Plan also discharged “any and all amounts due by [Biltmore] to its creditors.” J.A. 335; see otherwise also provided 11 in U.S.C. this § 1141(d)(1)(A) subsection, in the (“Except plan, or as in the order confirming the plan, the confirmation of a plan . . . discharges the debtor from any debt that arose before the date of such confirmation . . . .”). Pursuant to § 362(c)(2), the discharge ended the stay of “other act[s]” enumerated in § 362(a). See United States v. White, 466 F.3d 1241, 1245 (11th Cir. 2006) (“[C]onfirmation of the plan discharges the debtor, and . . . discharge of the debtor lifts the automatic stay.”). the automatic stay had expired, the district court Because erred in extending it to McGee and in invoking the expired stay to enjoin TD Bank’s efforts to collect on its judgment against McGee in state court. 6 Biltmore argues in the alternative that an injunction is proper under 11 U.S.C. § 105, which provides that a bankruptcy court may “issue any order . . . that is necessary or appropriate to carry out the provisions of this title.” The district the court declined “to address the propriety of” bankruptcy court’s refusal to grant an injunction pursuant to § 105. See Order 10-11. Rather than consider whether an injunction should have issued under § 105, we remand for the district court to consider that issue in the first instance, and for such other and further proceedings as may be appropriate. We dispense contentions with are oral argument adequately because presented in the facts and the materials legal before this court and argument would not aid the decisional process. VACATED AND REMANDED 7

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