United States District Court, S.D. Texas, Houston Division
THOMAS E. BALKE, TEBJES INC. d/b/a BASIC EQUIPMENT, and ULTRAWAVE TECHNOLOGY FOR EMULSION CONTROL, LLC d/b/a ULTRATEC, LLC, Appellants,
DON B. CARMICHAEL, KK & PK FAMILY, L.P., BARRY D. WINSTON, and GARY EMMOTT, Appellees.
MEMORANDUM AND ORDER
UNITED STATES DISTRICT JUDGE.
Memorandum and Order resolves several motions. On July 30,
2019, the court issued a Memorandum and Order dismissing the
appeal filed by Thomas E. Balke, Basic Equipment, and
Ultratec, LLC from the bankruptcy court's order excluding
certain items from the designated appellate record in the
related appeal, Civil Action No. H-18-731, from the
underlying Bankruptcy Adversary Proceeding No. 14-3375.
(Docket Entry Nos. 29, 30). On August 8, the appellants filed
an emergency motion to extend the time to move for a
rehearing of this court's order dismissing the appeal
about the record items. (Docket Entry No. 31). The appellees,
Don B. Carmichael, KK & PK Family, L.P., Barry D.
Winston, and Gary Emmott, responded, and the appellants
replied; moved to stay and for a rehearing of the court's
dismissal order; and moved to extend the deadline to file
their notice of appeal. (Docket Entry Nos. 32-35). The
appellees responded, and the appellants appealed the
dismissal order. (Docket Entry Nos. 36, 37). The appellees
moved to strike and exclude from the Fifth Circuit appellate
record in this case, Civil Action No. H-19-313, all the
docket entries in Civil Action No. H-18-731; the appellants
responded; and the appellees replied. (Docket Entry Nos.
on a careful review of the filings, the record, and the
applicable law, the court: (1) grants the appellants'
motion to extend the time to move for rehearing, making the
appellants' rehearing motion timely; (2) denies the
appellants' motion for rehearing; (3) denies as moot the
appellants' motion to stay the dismissal order and to
extend the deadline to file their notice of appeal; and (4)
denies the appellees' motion to strike. The reasons are
set out below.
The Motion to Extend the Time to Move for Rehearing
Rule of Bankruptcy Procedure 8022, formerly Rule 8015,
governs motions for rehearing. A party seeking rehearing of a
district court's order must file the motion “within
14 days after entry of judgment on appeal.”
Fed.R.Bankr.P. 8022(a)(1). The court may extend that deadline
for cause under Bankruptcy Rule 9006(b)(1) if the party moves
to extend the deadline before the deadline expires.
court entered judgment on July 30, 2019. (Docket Entry No.
30). The 14 days for filing a motion for rehearing expired on
August 13, 2019. (See id.). The appellants moved on
August 8, 2019, for an additional 14 days to file their
motion. (Docket Entry No. 31). They explained that their
counsel's “professional and personal obligations,
” including preparing for a deposition in a state-court
matter, refiling a motion in the underlying adversary
proceeding in the bankruptcy court, and attending a
multiparty arbitration in another state, combined to prevent
a timely filing. (Id. at 1-3).
court holds that there is cause to extend the deadline for
the appellants to move for rehearing of the dismissal order.
The motion to extend the time, (Docket Entry No. 31), is
granted, making the motion for rehearing filed on August 27,
2019, (Docket Entry No. 35), timely.
appellees objected that this extension would “delay
the finality of this appeal.” (Docket Entry No. 32 at
2). Because the court also denies the rehearing motion-for
the reasons explained below-this objection is moot.
The Motion for Rehearing
Rule 8022 requires a motion for rehearing to “state
with particularity each point of law or fact that the movant
believes the district court . . . has overlooked or
misapprehended and must argue in support of the
motion.” Fed.R.Bankr.P. 8022(a)(2). Rule 8022 does not
define when rehearing is appropriate, but the Fifth Circuit
stated in an unpublished opinion that “a [rehearing]
motion may be granted to correct a ‘mistaken use of
facts or law' in the prior decision.” In re
Mar. Commc'ns/Land Mobile L.L.C., 745 Fed.Appx. 561,
562 (5th Cir. 2018) (per curiam); see also In re
Coleman, No. 15-569, 2015 WL 7101129, at *1 (E.D. La.
Nov. 13, 2015) (“[T]he standard is simply whether the
Court would have reached a different result had it been aware
of its mistaken use of facts or law.”).
appellants contend that a district court may consider items
from the general bankruptcy case record, as opposed to only
the record for the matter, ruling, or order on appeal, to
establish relevant facts, including “that a party took
a certain position” and “that certain judicial
findings, allegations, or admissions were made.”
(Docket Entry No. 35 at 11, 13-14 (quoting In re Indian
Palms Assocs., Ltd., 61 F.3d 197, 205 (3d Cir. 1995))).
The appellants argue that this is an exception to the general
rule that “items not admitted into evidence [in the
bankruptcy proceeding on appeal] must have been actually
considered by the bankruptcy court to be included in the
appellate record.” (Id. at 11-13; see
Docket Entry No. 29 at 24-26 (summarizing authorities on the
general rule)). The appellants contend that, under the
exception, they have the right on appeal to use transcripts
of the testimony of Alan Springer, who was Chief Executive
Officer, Chief Financial Officer, and Chair of the Board of
Directors of the debtor, Imperial Petroleum. (Docket Entry
No. 29 at 2; Docket Entry No. 35 at 14-15). The appellants
assert that they have the right to argue that some of the
bankruptcy judge's findings, which allegedly undermine
the judge's later rulings, were based on Springer's
testimony. (Docket Entry No. 35 at 6-8, 14-15). The
appellants claim that because “the appeal asserts that
the Plaintiff/Appellees (as assignees of the trustee) are
bound by [Imperial Petroleum's] judicial and factual
admissions, and [the] trustee's previous positions as to
the value of the estate assets[, ] . . . the excluded
transcripts revealing those positions are relevant and must
be included in the [appellate] record.” (Id.
at 3). The appellants contend that the excluded testimony
shows that they did not violate the automatic stay and that
the damages the bankruptcy court awarded were
“ludicrous.” (Id. at 9, 14-15).
appellants' argument is unpersuasive. The Third Circuit
case on which they rely, In re Indian Palms Associates,
Ltd., 61 F.3d 197 (3d Cir. 1995), does not help them.
The Third Circuit stated that district courts cannot consider
items from the general bankruptcy case record “to
determine disputed facts relating to the merits of the case .
. . .” Id. at 205. “[E]ach litigant
should be given a fair opportunity to rebut and put into
perspective the evidence admitted against its position,
” which requires “that the facts relating to the
merits of the case will be decided on the basis of evidence
admitted into the trial record.” Id.
Third Circuit's reasoning supports denying the
appellants' request for rehearing. First, because
Springer's testimony was not in the adversary-proceeding
trial record, the appellees had no opportunity to rebut that
evidence. (Docket Entry No. 29 at 26-27); see Indian
Palms, 61 F.3d at 205. Second, the appellants want to
include Springer's testimony in the appellate record to
“determine disputed facts” in order to prevail on
the merits. (Docket Entry No. 29 at 30-31); see
Indian Palms, 61 F.3d at 205. As this court
explained in its July 30 Memorandum and Order:
Balke, Basic Equipment, and Ultratec intend to use
Springer's testimony to show that the bankruptcy court
erred in finding the ownership and value of Imperial
Petroleum's assets. (See Docket Entry No. 26 at
42-43, 45-48). These are disputed factual issues material to
determining the merits of the bankruptcy court's 2018
final judgment, the 2017 Findings of Fact and Conclusions of
Law, and the nine orders on appeal. Even under the lenient
“closely related” standard that ...