Kreit v. Quinn, No. 21-20067 (5th Cir. 2022)
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In an action arising from the bankruptcy of CISH, the Fifth Circuit affirmed the bankruptcy court's sanction of appellants. Appellants had filed an adversary proceeding asserting causes of action that the bankruptcy court had placed in trust for CISH's creditors, but the bankruptcy court concluded that by attempting to seize control of trust property, appellants had knowingly violated its order confirming the liquidation plan.
The court concluded that it lacked jurisdiction to review the dismissal order because appellants did not file a notice of appeal on the adversary docket and the notice of appeal did not comply with the requirements of the bankruptcy rules for appealing the adversary proceeding. In regard to the punitive sanctions, appellants failed to allege an injury-in-fact and the court lacked jurisdiction. Finally, because the bankruptcy court had jurisdiction over the Cleveland Imaging bankruptcy case, it had jurisdiction to enter the sanctions order, too; likewise, the court has jurisdiction to consider appellants' appeal; appellants have standing to appeal the sanctions order; the bankruptcy court did not err in finding that appellants violated its confirmation order by filing their adversary proceeding and contentions to the contrary lack merit; and clear and convincing evidence supported the bankruptcy court's finding of bad faith.
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