PBCBA BAR BULLETINS pbcba_bulletin_March 2019 | Page 10

BANKRUPTCY C o r n e r
A Creditor’s Standing to Appeal in Bankruptcy
JASON S. RIGOLI
Both the United States Courts of Appeal
for the Fifth Circuit and Tenth Circuit
have recently authored nonprecedential
opinions regarding a creditor’s standing
to appeal.
The Fifth Circuit’s opinion
addressed constitutional standing, see
NuStar Energy Service, Inc. v. M/A/ Cosco
Auckland, Case No. 17-20246, --Fed. Appx.
--, 2019 WL 192408 (5th Cir. Jan. 14, 2019)
(“NuStar”), while the concurring opinion
of Circuit Judge Robert E. Bacharach
addressed prudential standing. See The
Slovak Republic v. Loveridge (In re Eurogas
Inc.), Case No. 17-4197, -- Fed. Appx --, 2019
WL 103891 (10th Cir. Jan. 4, 2019).
I. Constitutional Standing Generally
To file a lawsuit or mount an appeal, a
plaintiff or appellant must demonstrate
constitutional standing.
Constitutional
standing requires the existence of a case or
controversy and is derived from Article III of
the United States Constitution. U.S. Const.
art. 3, § 2. Constitutional standing is the
minimum showing a plaintiff or appellant
must make to invoke the jurisdiction of
the Courts. “Plaintiff [or appellant] must
have suffered or be imminently threatened
with a concrete and particularized “injury
in fact” that is fairly traceable to the
challenged action of the defendant and
likely to be redressed by a favorable judicial
decision.” Lexmark Intern, Inc. v. Static
Control Components, Inc., 572 U.S. 118, 125,
134 S.Ct. 1377, 1386 (2014) (internal citations
omitted).
a. NuStar and Constitutional Standing of
Creditor on Appeal
certain rights, arguing that NuStar held a
valid maritime lien and that the assignment
to ING did not include the lien rights, and
ING’s lien claim was therefore invalid. Ibid.
On summary judgment the district court
ruled that Nustar did not hold a maritime
lien and that the bank liens were valid.
Nustar, at 2. Both rulings were appealed.
Aggrieved persons as those individuals
who are “directly, adversely, and pecuniarily
affect[ed]” by a bankruptcy court’s order.
Ibid. (internal citations and quotations
marks omitted). “An order will directly,
adversely, and pecuniarily affect a person
if that order diminishes their property,
increases their burdens, or impairs their
rights.”
Ibid. (internal citations and
On the first issue, the 5th Circuit affirmed quotations marks omitted). “Unsecured
the district court that the subcontractor did creditors generally have a direct pecuniary
not have a valid maritime lien. Id. (citing interest in a bankruptcy court’s order
Valero Mktg. & Supply Co. v. M/V Almi Sun, transferring assets of the estate.” Eurogas, at
893 F.3d 290, 295 (5th Cir. 2018)). Before *7 (citations and quotation marks omitted).
getting to the merits of the second issue the
5th Circuit had to determine whether the Judge Bachrach’s reason for writing his
subcontractor had constitutional standing concurring opinion in Eurogas was to
to appeal whether the bank’s lien was valid. address an error by the 10th Circuit BAP,
Having decided that NuStar did not have stating that when determining whether an
a valid lien, NuStar did not have standing appellant was aggrieved by a bankruptcy
as a “competing lienholder.” NuStar, at court’s order and has prudential standing,
*3. NuStar also argued that it remained the court must take the appellant’s material
a creditor of the estate and if the bank’s allegations as true and in the appellant’s
lien was invalidated the funds subject to favor and not lower court’s finding regarding
the bank’s lien would become property of disputed fact. Id. at *8.
the estate for the benefit of all unsecured
creditors, including NuStar. Ibid. The 5th This article is submitted by Jason S.
Circuit found that NuStar’s argument was Rigoli, Esq., Furr Cohen, 2255 Glades Road,
too speculative that the funds would reach Suite 301E, Boca Raton, FL 33431, jrigoli@
the estate because irrespective of the furrcohen.com
validity of ING’s lien rights ING had other
contract rights would give ING the right to
the funds, and even if those contract rights
were invalidated the funds would have to be
paid to a member of the credit facility that
does hold a valid maritime lien. Id. at *3-4.
Criminal Law Primer: Federal and State
SAVE THE DATE!
II. Prudential Standing for Creditor to
Appeal a Bankruptcy Court Order
Just because a creditor had standing at
the trial court level does not mean the
automatic constitutional standing on
appeal. Hollingsworth v. Perry, 570 U.S.
693, 705, 133 S.Ct. 2652, 2661 (2013) (“Article
III demands that an “actual controversy”
persist throughout all stages of litigation.”)
(citations omitted). Prudential standing is a higher threshold
that must be met to have standing to appeal.
When it comes to bankruptcy appeals, this
is met by showing that the appellant was
“aggrieved” by the bankruptcy court’s order.
Eurogas, at *7. Accord In re Ernie Haire
Ford, Inc., 764 F.3d 1321, 1324-27 (the “person
aggrieved” standard applies to bankruptcy
appeals).
In NuStar, $2.99 million was placed into the
court registry and a third-party interpleader
claim was filed. Id. at * 1. NuStar was a
subcontractor that sued ING, which has
been acting as the security agent for a credit
facility syndicate and as such assigned The person aggrieved doctrine limits
the right to appeal a bankruptcy court
order to those parties having a direct and
substantial interest in the question being
appealed.” Ernie Haire Ford, at 1325 (internal
quotation marks and citations omitted).
Practical Comparisons from the Bench
Friday, May 3, 2019, 11:45 am – 1:00 p.m.,
PBCBA office
Panel : Judge Robin L. Rosenberg, Judge
Bruce E. Reinhart, Judge Joseph Marx and
Judge John S. Kastrenakes
Discussion of first appearance and prelimi-
nary appearances in State and Federal Court;
Bond hearings; Conditions of release; How
to persuade the Court on issues of pre-trial
release; Plea conferences and considerations
in state and federal court; Sentencing
considerations and procedures in state and
federal court; Open discussion