Robert A. Sears v. Joseph H. Badami
734 F.3d 810
| 8th Cir. | 2013Background
- AFY, Inc. and Sears Cattle Co. owned Tracts 1 and 4; Robert A. Sears and Korley B. Sears claimed sole control, ownership, and directorship of both entities.
- AFY and Sears Cattle sold jointly-owned property at auction on February 9, 2010; Rolling Stone Land & Cattle, LLC purchased Tract 1 and ConsAg purchased Tract 4.
- AFY filed for Chapter 11 bankruptcy on March 25, 2010; Joseph Badami was appointed trustee on May 6, 2010.
- The bankruptcy court issued a sale order (May 14, 2010) approving the Tract 1 and 4 sales; Badami sought enforcement to compel closing; sale of Tract 1 was later deemed moot under § 363(m).
- The bankruptcy court converted AFY’s Chapter 11 to Chapter 7; Badami moved to pay Tract 4 proceeds to Farm Credit; district court dismissed related appeals for lack of jurisdiction.
- Appellants argued on appeal that district court erred in mootness ruling, lacked standing to appeal, and that the conversion order should be reversed; this court affirmed the district court’s dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 363(m) mootness governs the Tract 1 appeal | Sears/Seas Cattle contend mootness lacks jurisdictional basis. | District court properly dismissed as moot under § 363(m). | § 363(m) mootness applied; Tract 1 appeal dismissed. |
| Standing of Sears Cattle to appeal the order to pay funds | Sears Cattle has a direct interest as a co-owner; standing supports appeal. | Sears Cattle lacked standing; acts derivatively as shareholders. | Sears Cattle lacked standing; district court correct to dismiss. |
| Standing of Robert and Korley Sears to appeal the conversion order | Conversion affects their pecuniary interests as shareholders; Singleton-based standing. | Shareholder-standing rule limits to direct, not derivative interests; no direct injury. | Sears lacked standing to appeal the conversion order; affirmed. |
Key Cases Cited
- In re Polaroid Corp., 611 F.3d 438 (8th Cir. 2010) (moots challenge where good-faith purchaser unaffected by appeal)
- Weingarten Nostat, Inc. v. Service Merchandise Co., 396 F.3d 737 (6th Cir. 2005) (sale vs. assignment distinction in § 363(m) applicability)
- In re Rickel Home Centers, Inc., 209 F.3d 291 (3d Cir. 2000) (§ 363(m) governing sale of property not limited to assignment cases)
- In re Troutman Enters., Inc., 286 F.3d 359 (8th Cir. 2002) (standing rule: creditors/shareholders lack appellate standing for derivative interests)
- Franchise Tax Bd. of Cal. v. Alcan Aluminum Ltd., 493 U.S. 331 (1989) (shareholder standing limitations; bad-faith considerations do not override standing rules)