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Lall v. Powers

United States District Court, N.D. Texas, Dallas Division

May 24, 2019

ANNETTE M. LALL, Appellant/Debtor,



         Before the Court is Appellant Annette Lall's motion to stay the bankruptcy court order pending the outcome of her appeal. Doc. 3. The Court DENIES her request.

         I. BACKGROUND

         Annette Lall appeals an order from the bankruptcy court denying her motion to vacate that court's order dismissing her Chapter 13 case with prejudice for five years and her motion to reinstate her case. Doc. 1-1, Notice of Appeal, 3 (bankruptcy court order). After holding a hearing and accepting arguments and evidence from the parties, the bankruptcy court dismissed Lall's case on the motion of trustee Thomas Powers. The court dismissed the case because it found that this was the fourth bankruptcy Lall had filed in a short period of time, that she had not made payments on her mortgage in eleven years, and that she was not proceeding in good faith to work with her lenders to establish a payment plan. Doc. 3, Mot. to Stay (Ex. 3), 28 (transcript of hearing on motion to stay). After the bankruptcy court dismissed her case, Lall moved to reinstate her case and vacate the dismissal order. The bankruptcy court denied her motion because she failed to show good cause for the relief requested. Doc. 1-1, Notice of Appeal, 3.

         Lall proceeded to timely file her notice of appeal of this order. Doc. 1, Notice of Appeal. In the interim, Lall first sought a stay of that order in the bankruptcy court. Doc. 3, Mot. to Stay (Ex. 1), 11-17 (motion made to bankruptcy court). The bankruptcy court held a hearing on that motion and denied it. Id. (Exs. 2 & 3). Lall now seeks the same relief in this Court.


         Federal Rule of Bankruptcy Procedure 8007 governs the procedure for stays of bankruptcy court orders pending appeal. This rule states that a party ordinarily must first move for a stay of a bankruptcy court judgment or order in the bankruptcy court. Fed.R.Bankr.P. 8007(a)(1)(A). The rule also provides that a motion for a stay may be made in the district court where the appeal is pending. Id. 8007(b)(1). If the motion under 8007(a)(1)(A) was originally made in the bankruptcy court, the motion in the district court must “either state that the [bankruptcy] court has not yet ruled on the motion, or state that the court has ruled and set out any reasons given for the ruling.” Id. 8007(b)(2)(B). The motion must also include “(A) the reasons for granting the relief requested and the facts relied upon; (B) affidavits or other sworn statements supporting facts subject to dispute; and (C) relevant parts of the record.” Id. 8007(b)(3)(A)-(C).

         “The decision of a bankruptcy court to deny a stay pending appeal will be reviewed for abuse of discretion.” 18 Audubon Place, LLC v. SBN V FNBC LLC, 2018 WL 5831231, at *1 (E.D. La. Nov. 7, 2018) (quoting In re Permian Producers Drilling, Inc., 263 B.R. 510, 514 (W.D. Tex. 2000)). “A bankruptcy court abuses its discretion if it seriously errs in its determination of whether the moving party has established a case meriting injunctive relief.” Id. “A district court reviews a bankruptcy court's conclusions of law de novo and findings of fact for clear error.” Id. (citing In re First S. Savings Ass'n, 820 F.2d 700, 711 (5th Cir. 1987)). “A finding is ‘clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Id.

         The movant seeking a stay of a bankruptcy court order pending appeal has the burden of satisfying four factors: “(1) whether the stay applicant has made a strong showing that [s]he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” Saldana v. Saldana, 2015 WL 5021415, at *2 (N.D. Tex. Aug. 25, 2015) (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987); Nken v. Holder, 556 U.S. 418, 426 (2009)). “The first two of these factors are the most critical.” Id. (citing Nken, 556 U.S. at 434). Regarding the first factor, the Fifth Circuit has explained that “the movant need not always show a ‘probability' of success on the merits; instead, the movant need only present a substantial case on the merits when a serious legal question is involved and show that the balance of equities weighs heavily in favor of granting the stay.” Id. (quoting In re First S. Savings Ass'n, 820 F.2d at 709 n.10 (quoting Ruiz v. Estelle (“Ruiz I”), 650 F.2d 555, 565 (5th Cir. Unit A June 1981))). However, a likelihood of success is required in the usual case. Id. “Only if the balance of equities (i.e. consideration of the other three factors) is . . . heavily tilted in the movant's favor will we issue a stay in its absence, and, even then, the issue must be one with patent substantial merit.” Id. (emphasis and alterations in original) (quoting Ruiz v. Estelle (“Ruiz II”), 666 F.2d 854, 857 (5th Cir. 1982)).



         Lall first brought her motion for a stay pending appeal in the bankruptcy court. After that court denied her motion, Lall reasserted it here. Doc. 3, Mot. to Stay. As Lall points out in her current motion, the bankruptcy court denied the initial motion because it found that: (1) Lall did not show there was a substantial case on the merits; and (2) a stay would work substantial harm on third parties. Id. at 2 (citing to the bankruptcy court's order). The Court finds that Lall has met the initial requirements of her Rule 8007 motion, and will go on to review whether the bankruptcy court abused its discretion in denying a stay pending appeal.

         A. Likelihood of Success on the Merits

         Lall's appeal argues that the bankruptcy court erred in denying her motion to reinstate her Chapter 13 proceeding because the court gave no reasons for denying her motion and was biased against her. Doc. 3, Mot. to Stay, 3-5. Lall claims that the bankruptcy court should have addressed her arguments in her motion to reinstate with an opinion that included findings of fact and conclusions of law on the issues she raised regarding the ownership of the note on her home mortgage. Id. at 4-5. Lall further asserts that the bankruptcy court was biased towards her because the court questioned whether she ...

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