Dandridge, III v. Scott et al, No. 3:2018cv00051 - Document 21 (W.D. Va. 2018)
Court Description: MEMORANDUM OPINION. Signed by Senior Judge Glen E. Conrad on 10/19/18. (hnw)
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IN TilE UN ITED STA TES DISTRICT COURT FOR THE W ESTERN D ISTRICT OF VIRGINIA CHA RLOTTESV ILLE DIVISION cuzax'soizplce . AT R u s,Dlsm cotlv OANOKE,VA FI LED 22T 19 2218 JULIA C. Y: V ICTOR M ACEO DAN DM DG E,111, Appellant, CLERK . PU ..CLERK , CivilA ction N o.3:18CV 00051 M EM O RA ND UM OPINIO N w .STEPHEN SCOTT ,CHAPTER 7 TRU STEE FOR TH E BAN KRUPTY ESTATE OF V ICTOR M A CEO DAN DRIDGE,111,etal., By:H on.G len E.Conrad SeniorUnited StatesD istrictJudge Appellees. Victor M aceo Dandridge,111,proceeding pro K ,Gled this appealfrom an order entered . by the United States Bankruptcy Court for the W estern D istrict of V irginia, in w hich the bankruptcy courtapproved a settlement agreement between W .Stephen Scott the Chapter 7 Trustee(CTrustee'),andThompsonDavis& Co,lnc.(frfhompsonDavis'). Forthefollowing reasons,theappealw illbe dism issed forlack ofstanding. Backeround On M arch 24,2017,D andridge filed a voluntary petition forreliefunder Chapter7 ofthe Bankruptcy Code. ln the petition,Dandridge indicated that his totalfiabilities exceeded his assetsby $2,726,540.00. SeeIn reDandridge,No.6:17+k-60578 tBankr.W .D.Va.Mar.24, 2017)(listing totalassetsin the amountof$220,562.00 and totalliabilities in the amountof Dandridge, III v. Scott et al $2,947,102.00). Dandridge also indicated that he had been named as a defendant in Doc. 21 $6,000,000.00 lawsuitfiled byLynneKinder,which remainedpending. D andridge wasa m em berofThompson Davis,an investm entm anagem entfirm based in Richm ond,V irginia. H e w as involved in severallong-running schem es to divert assets from Dockets.Justia.com K inder and others. On June 13,2017, K inder ûled an adversary complaint seeking entry of judgmentin favorofKinderandagainstDandridge,and adetermination thatsuchjudgmentis notdischargeable in banlcruptcy. On July 17,2017,the bankruptcy courtentered a consentorder awardingjudgmenttoKinderintheamountof$6,000,000.00 anddeclaring thejudgmentnondischargeable. Tw o days later,Dandridge pled guilty to federalcrim inalcharges stem m ing from his fraudulentactions. He is currently serving an 84-m onth sentence ofimprisonm ent. OnJune1,2018,theTrustee,bycounsel,filedamotionforentryofanorder(1)granting the Trustee authority to accept a settlem entw ith Thompson D avis pursuantto FederalRule of BankruptcyProcedure9019(a);(2)granting theTrusteeauthorityto sellcertain property ofthe estatefreeand clearofallliens,claims,rights,and interestspursuantto 11U.S.C.jj 105 and 363; (3) granting interim allowance and authorization of payment of compensation and reimbursement of expenses from the settlementproceeds to the Trustee's counsel;and (4) granting related relief,nam ely approvalofthe settlem entagreem entwith Thom pson D avis. The settlemeptagreementprovided for,amongotherthings,thepaym entof$65,000.00 by Thompson DavistotheTrusteeandthetransferandassignmentby theTrusteeofthefollowingassets:(a) the debtor's shares ofcom m on stock in Thom pson Davisto Thom pson Davisand/orone orm ore ofThompson Davis'sshareholders,atthe election ofThompson Davis;(b)the debtor'sfsfty percentinterestin acertain Thom pson Davis accountowned by Seven H illsCapitalM anagem ent LLC (isevenHills'')to Seven Hills;and (c)thedebtor'ssix-tenthsofonepercentmembership interestin BarrettHouse Partners,LLC (ttBarrettHouse'')to BarrettHouse. The settlement agreement further provided thattsltjhe Trustee shallexecute and deliveral1necessary and appropriatedocumentstoeffectuatethetransferandassignmentofthe(ThompsonDavisqStock, Seven HillsAccount,and BarrettHouselnterestwithin (5)daysaftertheCourtentersafinal order approving this Agreem ent and authorizing the transfers set fol'th herein.'' Settlement Agreement!5,Dkt.No.2-1. On June 11,2018,D andridge filed a pro K . objection to the Trustee'smotion. The bankruptcy court held a hearing on the m otion on Junet 21, 2018. On June 22,2018, the bankruptcy courtentered an order granting the Trustee'smotion and approving the settlement agreementwithThompsonDavis(theçtsettlementOrder''). On July 6,2018,D andridge filed a notice ofappealofthe Settlem entOrder. The appeal was docketed in this courton July 9, 2018. The Trustee subsequently m oved to dism iss the appeal on m ultiple grounds, including lack of standing. The Trustee's m otion has been fully briefed and isripe fordecision. D iscussion A s a threshold m atter,the court must determ ine w hether D andridge has the necessary standing to bring this appeal. lsstanding in a bankruptcy appeal is narrower than Article I11 standing.''Peoplesv.Radloff.764F.3d817,820(8thCir.2014).&çTohavestandingtoappeala bankruptcy order, the appellant m ust be a Gperson aggrieved' by the order, that is a person Gdirectly and adversely affectedpecuniarily.''' Rantav.Gorman,721F.3d 241,248n.10 (4th Cir.2013)(quotingW hitev.UnivisionofVa.Inc.,401F.3d236,243-44(4thCir.2005:. W hen a debtor tsles a Chapter 7 bankruptcy petition,the'debtor's assets,including his interests in any existing causes of action,.becom e the property of the bankruptcy estate. 11 U.S.C.j541(a);seealso Grayson Consulting.Inc.v.W achoviaSec..lnc.,716 F.3d 355,367 ) (4th Cir.2013). G%y virtue of j 541,debtors,particularly chapter7 debtors,rarely have a pecuniary interest''in the adm inistration of the bankruptcy estate,since dthow the estate's assets are disbursed by the trustee hasno pecuniary effecton the debtor.'' Peoples,764 F.3d at820;see also W illemain v.Kivitz,764 F.2d 1019, 1022 (4th Cir.1985) (explaining that Etsince the bankrupt is norm ally insolvent, he is considered to have no interest in how his assets are distributed among his creditorsand isheld notto be aparty in interesf')(citation omitted). lnstead,as a generalm atter,SGthe trustee alone hasstanding to raise issues before the bankruptcy courtand to prosecute appeals,''since the tnlstee is the representative of the bankruptcy estate and has the capacity to sue or be sued. Ri chmanv.FirstW oman'sBank,104F.3d654,657(4th Cir.1997). A num berofcourts,including the United States CourtofAppealsforthe Fourth Circuit, have recognized an tçtexception'to the rule thatdebtors do nothave standing to objectto ) banknlptcy orders,which is notso m uch an exception as a carefulapplication ofthe pecuniary interestrule itself.'' CultAwarenessNetwork.Inc.v.Martino,151F.3d 605,608 (7th Cir. 1998). Specifkally,GGgijfthe debtor can show a reasonable possibility of a surplus after satisfyinga11debts,thenthedebtorhasshownapecuniaryinterestandhasstandingtoobjed toa bankruptcyorder.''ld.;seealsoW illemain,764F.2dat1022-23(applyingthisgeneralprinciple and concluding that a Chapter 7 debtor lacked standing to challenge the proposed sale ofthe estate's prim ary assetbecause the debtor failed to show thatan alternative sale of the property wouldretul. n solvencytotheestateorprovidethedebtorwithasurplus);Licatav.Coan,659F. App'x 704,706 (2d Cir.2016) (emphasizing thatGEthe Chapter 7 debtor hasthe burden of showingthatthereisatleastareasonablepossibilityofasurplus''inordertoestablishstanding). In this case, it is clear from the record that the bankruptcy estate is insolvent. Dandridge'sliabilitiesfarexceedhisassets,andhis$6,000,000.00judgmentdebttoKinderhas been declared non-dischargeable. A lthough Dandridge m aintains that his shares of comm on stock in Thompson Davis were worth m ore than the fil'm was required to pay as part of the 4 settlementw eementDandridgedoesnotasselt muchlessplausiblysàow,thatanaltemaive Y etmentcould have been reached tbatwould have rendexd the estate solvent. LlkeW se, Dandridgedoesnotidenffy any otherbasisforllnding1 atthereisareasonablepossibility ofa . surplusO erallof the creditors'clnlmK are pid. Consequently,Dandridge hasno pectmlary lnlrestin theSettlementOrderandtherefore lacksstandingto pm suethisappeal. SeePeoples. 764F.3dat820-21(concllldlngthatadebtordldnothaveKfnndingtoappealanorderapproving a settlement between tlle M qtee and the debtor's employer,shce the amount owed to the debtor'screditorsexceedH tke amountofthe settltmentand ierewasno reasonable possibillty ofasurplusl. Conclusios For the reasons ssatedythe courtconcludesthatthis appealom the bnnkmlptcy court' mustbedismlssed forlack ofstanding.* Accore gly,the courtw111granttheTa stee'smoion to dismijs. The Clerk is directed to send copiestof thlq memorandum opiaion and the accompu ying od ertotheappellantandallcounselofrecord. DATED:TMs%h* dayofOctober, 2018. SeniorUnlted StatesDisd ctJudge *h liltoftbecoM 'sn'rmgontheismeofstanding,thecourtneenotaddiessthepaGes'ra nining
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