640 B.R. 558
6th Cir. BAP2022Background
- Penn Line Service filed six proofs of claim seeking administrative-expense priority for services to individual debtors in the jointly administered Murray Energy bankruptcy.
- Debtors objected; Penn Line responded and filed an Application for Allowance of Administrative Expense Claims. No witnesses were requested when a March 18, 2021 hearing was scheduled.
- At the March 18 hearing Penn Line presented only legal argument (arguing it was a "critical vendor" via an "implied assumption" theory and suggesting some work might be postpetition); the court rejected the implied-assumption theory and the postpetition argument.
- The bankruptcy court entered two April 16, 2021 orders: (1) sustained the objection to claims (reclassifying them) and (2) denied Penn Line’s administrative-expense application with prejudice.
- Penn Line moved for reconsideration, asserting it had been denied discovery/evidentiary presentation and attaching a Vice President’s affidavit; the court denied reconsideration (June 1, 2021).
- Penn Line appealed only the Reconsideration Order (not the underlying orders) and focused its briefing on the merits of the underlying orders while failing to brief the Rule 60(b) standard; the BAP affirmed the denial of reconsideration, holding the court did not abuse its discretion and the underlying orders were not properly before the Panel.
Issues
| Issue | Penn Line's Argument | Debtor / Plan Administrator's Argument | Held |
|---|---|---|---|
| Whether the bankruptcy court abused discretion by denying administrative-expense claims without allowing discovery or an evidentiary hearing | Court prematurely entered dispositive orders and should have allowed discovery and an evidentiary hearing before ruling | Penn Line had notice, raised only legal arguments at hearing, offered no witnesses, and did not request continuance or discovery | Not reached on merits—underlying orders were not properly appealed; court found Penn Line failed to preserve the issue in the appeal of the Reconsideration Order |
| Whether the court abused discretion in denying Penn Line’s Rule 60(b)/reconsideration motion | Reconsideration was warranted for mistake/inadvertence, newly discovered evidence, and inconsistent hearing notice; Liston affidavit showed new facts | Liston affidavit did not present new evidence that could not have been discovered earlier; Penn Line conceded no record support for its procedural claims | Denied: BAP affirmed denial—Penn Line failed to meet clear-and-convincing Rule 60(b) standard and merely rehashed prior arguments |
| Whether the appeal properly presents the April 16 orders (administrative-expense denial and claims objection) | Penn Line treated those orders as central to the appeal and linked them in docket text | Notice of Appeal and attached documents identified only the Reconsideration Order; Bankruptcy Rule 8003 requirements were not satisfied for the April 16 orders | The April 16 orders were not properly appealed and therefore are not before the Panel |
Key Cases Cited
- Ritzen Grp., Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582 (Sup. Ct. 2020) (bankruptcy orders are final when they definitively dispose of discrete disputes)
- Bullard v. Blue Hills Bank, 575 U.S. 496 (Sup. Ct. 2015) (finality principles for bankruptcy orders)
- Blue Diamond Coal Co. v. Trs. of UMWA Combined Benefit Fund, 249 F.3d 519 (6th Cir. 2001) (denial of Rule 60(b) relief reviewed for abuse of discretion)
- Browder v. Dir., Dep’t of Corr., 434 U.S. 257 (Sup. Ct. 1978) (appeal from denial of Rule 60(b) relief does not bring up the underlying judgment for review)
- Info-Hold, Inc. v. Sound Merch., Inc., 538 F.3d 448 (6th Cir. 2008) (party seeking Rule 60(b) relief bears burden to prove grounds by clear and convincing evidence)
- Hood v. Hood, 59 F.3d 40 (6th Cir. 1995) (Rule 60(b) appeal does not raise underlying judgment)
- Johnson v. Unknown Dellatifa, 357 F.3d 539 (6th Cir. 2004) (reiteration of previously rejected arguments is not grounds for Rule 60(b) relief)
- Peake v. First Nat’l Bank & Tr. Co. of Marquette, 717 F.2d 1016 (6th Cir. 1983) (appeal from denial of Rule 60(b) relief does not review underlying judgment)