United States District Court, N.D. Alabama, Eastern Division
VIRGINIA EMERSON HOPKINS United States District Judge.
(“Wholesalecars” or “Appellant”)
appeals from an adverse final judgment entered by the United
States Bankruptcy Court for the Northern District of Alabama
on July 18, 2016. (Doc. 1). In support, Wholesalecars has
filed a brief addressing its arguments for reversal. (Doc.
4). The Trustee of the bankruptcy estate, Rocco J. Leo
(“Mr. Leo” or the “Trustee”), has
responded. (Doc. 7). Wholesalecars has, in turn, replied.
(Doc. 8). For the following reasons, the Court will DISMISS
this action for lack of jurisdiction.
is a former employer of the debtor, Cory Hutcherson
(“Ms. Hutcherson”). On September 10, 2013,
Wholesalecars terminated Ms. Hutcherson's employment, and
Ms. Hutcherson subsequently filed a pregnancy employment
discrimination lawsuit against Wholesalecars in the United
States District Court for the Northern District of
Alabama. Upon Wholesalecars' motion, the
district court compelled arbitration and dismissed the action
without prejudice pending resolution in arbitration. On
September 8-9, 2015, the parties attended an arbitration
hearing, during which Ms. Hutcherson was represented by the
law firm Wiggins, Childs, Pantazis, Fisher, & Goldfarb,
LLC (“Wiggins Childs”).
September 25, 2015, after the arbitration hearing but before
the arbitration award was issued, Ms. Hutcherson filed for
Chapter 7 bankruptcy in the United States Bankruptcy Court
for the Northern District of Alabama. On November 24, 2015, the
arbitrator issued an award in Ms. Hutcherson's favor,
awarding her $28, 229.22 in back pay, $38, 448 in front pay,
and a damages-cap award of $50, 000 in compensatory and
punitive damages, for a total award of $116, 677.22. (A-192;
Doc. 4-1 at 199). The arbitrator retained jurisdiction over
the issue of attorney's fees and expenses.
not been disputed that Ms. Hutcherson did not timely disclose
the existence of her bankruptcy action to the arbitrator and
did not disclose her cause of action against Wholesalecars to
the bankruptcy court. (Doc. 4 at 11, Doc. 7 at 9). On
November 9, 2015, the bankruptcy trustee issued a report of
no distribution. On January 5, 2016, Ms. Hutcherson filed
amended bankruptcy schedules that did not mention the
arbitration award. On January 7, 2016, the bankruptcy court
issued a discharge of approximately $150, 000 in
January 28, 2016, Wholesalecars filed a Motion To Vacate the
arbitration award in the United States District Court for the
Northern District of Alabama, which is currently
pending. On January 29, 2016, the bankruptcy estate
Trustee filed a notice of withdrawal of the report of no
distribution. On May 18, 2016, the Trustee filed an
Application To Employ in bankruptcy court to approve the
employment nunc pro tunc of Wiggins Childs as
special counsel pursuant to 11 U.S.C. § 327.
objected to the application to appoint Wiggins Childs on the
following grounds: (1) the Trustee did not meet the statutory
requirements of “specified special purpose” and
the appointment was not in the best interests of the estate;
(2) Wiggins Childs had a concurrent or former client conflict
of interest that was “adverse to the debtor” with
respect to the matter on which Wiggins Childs was to be
employed; and (3) the Trustee did not meet any of the
“extraordinary circumstances” necessary for
nunc pro tunc retroactive appointment. (Doc. 4 at
16, 2016, the bankruptcy court held a hearing regarding the
Trustee's application. On July 18, 2016, the bankruptcy
court overruled Wholesalecars's objections and approved
the appointment of Wiggins Childs as special counsel to
represent the Trustee in pursuing Ms. Hutcherson's
“pre-petition claims against Wholesalecars.com in the
United States District Court nunc pro tunc to
September 25, 2015.” Id. at 15.
August 1, 2016, Wholesalecars.com appealed the bankruptcy
court's order approving the appointment of Wiggins Childs
as special counsel to this Court. (Doc. 1). The appeal came
under submission on November 16, 2016. On March 24, 2017, the
Trustee filed a Notice, informing this Court of briefing
filed in the Motion To Vacate action, alleging that
“[b]ecause Wiggins Childs's representation of the
Trustee in that case implicates the issues before this Court,
counsel thought it best to inform the court of the related
proceedings.” (Doc. 11 at 1).
STANDARD OF REVIEW
courts function as appellate courts in reviewing a bankruptcy
court's decisions. Williams v. EMC Mortg. Corp. (In
re Williams), 216 F.3d 1295, 1296 (11th Cir. 2000). The
Court reviews the bankruptcy court's findings of fact
under the clearly erroneous standard and conclusions of law
under the de novo standard of review. In re Piazza,
719 F.3d 1253, 1260 (11th Cir. 2013) (citing In re
Englander, 95 F.3d 1028, 1030 (11th Cir. 1996)).
Questions of jurisdiction, such as standing, are subject to
de novo review. In re Smith, 522 F.App'x 760,
764 (11th Cir. 2013) (citing Dermer v. Miami-Dade
Cty., 599 F.3d 1217, 1220 (11th Cir. 2010)).
bankruptcy court's ruling on employment of counsel is
reviewed for abuse of discretion. In re Cecil, 2012
WL 3231321, at *2 (M.D. Fla. Aug 3, 2012) (citing In re
Pillowtex, Inc., 304 F.3d 246, 250 (3d Cir. 2002)).
Additionally, a bankruptcy court's ruling “on an
attempt to secure [retroactive] approval of an application
for the employment of a professional should be reviewed by
the district court under the abuse-of-discretion
rubric.” In re Jarvis, 53 F.3d 416, 420 (1st
court may affirm the bankruptcy court's judgment
‘on any ground that appears in the record, whether or
not that ground was relied upon or even considered by the
court below.'” Perry v. United States, 500
B.R. 796, 798 (M.D. Ala. 2013) (Watkins, J.) (quoting
Thomas v. Cooper Lighting, Inc., 506 F.3d 1361, 1364
(11th Cir. 2007)); see also In re Alam, 359 B.R.
142, 151 (B.A.P. 6th Cir. 2006) (“We may affirm the
decision of the bankruptcy court if it is correct for any
reason, including one not considered by the bankruptcy
court.”); In re Maximus Computers, Inc., 278
B.R. 189, 194 (B.A.P. 9th Cir. 2002) (same).
appeal, Wholesalecars argues that the bankruptcy court abused
its discretion in retroactively appointing Wiggins Childs as
special counsel to represent the estate pursuant to 11 U.S.C.
§ 327. (Doc. 4 at 8). In addition to responding to that
issue, the Trustee argues that Wholesalecars lacks standing
on appeal to object to the appointment of Wiggins Childs as
special counsel. (Doc. 7 at 6). Because this Court concludes
that Wholesalecars lacks standing to pursue this appeal and
this Court lacks subject matter jurisdiction to entertain it,
the Court does not reach the question of whether the
bankruptcy court abused its discretion in retroactively
appointing Wiggins Childs as special counsel.
only a bankruptcy trustee can appeal an order from a
bankruptcy court. Westwood Cmty. Two Ass'n v. Barbee
(In re Westwood Community Two Ass'n, Inc.), 293 F.3d
1332, 1334 (11th Cir. 2002); see Id. (“This
general rule was developed as a means to control, in an
orderly manner, proceedings that often involve numerous
creditors who are dissatisfied with any compromise that
jeopardizes the full payment of their outstanding claims
against the bankrupt.”) (citation omitted). However,
courts have allowed some exceptions to this rule when the
exception does not run ...