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In re Waid

United States District Court, N.D. Alabama, Southern Division

July 24, 2019

IN RE JOANN WAID, LENNIS L. WAID, et al., Appellants,
v.
MISSION COAL COMPANY, LLC, et al., Appellees.

          MEMORANDUM OPINION

          KARON OWEN BOWDRE, CHIEF UNITED STATES DISTRICT JUDGE

         This matter comes before the court on Appellants JoAnn Waid, Lennis L. Waid, and other Waid Claimants' (“Waid Claimants”) “Motion to Stay Pending Appeal.” (Doc. 5). This action originated in the Bankruptcy Court, in which Debtor Mission Coal Company, LLC, and its debtor affiliates (collectively “Mission Coal”) filed for Chapter 11 bankruptcy. On April 15, 2019, the Bankruptcy Court entered an order approving the sale of the acquired assets free and clear of claims, liens, interests and encumbrances; approving the assumption and assignment of certain executory contracts and unexpired leases; and granting related relief. (Doc. 1-2). That same day, the Bankruptcy Court also entered an order confirming the Fourth Amended Chapter 11 Plan of Mission Coal. (Doc. 1-3). The Waid Claimants then appealed both orders to this court, and now move this court to stay the effect of the Bankruptcy Court's orders while the appeal is pending. For the reasons discussed below, the court will DENY the motion to stay pending appeal.

         I. Background

         The current action stems from two underlying actions: the state court action and the bankruptcy court action. On September 22, 2004, the Waid Claimants filed a lawsuit in the Circuit Court of Jefferson County, Alabama. In this state court action, the Waid Claimants alleged that Mission Coal's mining operations and the Concord Coal Preparation Plant caused airborne contaminants or particulates to be released into the air and onto the Waid Claimants' real and personal property, causing damage.

         The parties to that action subsequently entered into a settlement agreement, which the state court approved on April 12, 2017. The settlement provided for Mission Coal to make monthly payments totaling $4, 250, 000.00, with the final payment due on December 31, 2019. The amount of each payment is determined by the coal production from the Concord Coal Preparation Plant each month until the total amount of the monthly payments equaled a set amount for each year. In return, Mission Coal received 225 conditional, revocable easements that allowed Mission Coal to release airborne particulates or contaminants into the air and onto the Waid Claimants' real and personal property. A default in the payments, after notice and an opportunity to cure the default, would nullify and void the easements. The easements noted that they will “automatically cease and terminate, be deemed null and void, and be of no further force and effect if a default by the Grantees occurs . . . . [If Grantees default, ] all of the provisions of this Easement and Release above shall cease and terminate, be null and void, and be of no further force and effect.” (Doc. 5-3 at 2).

         The state court's Amended Final Order incorporated the settlement agreement into the order. The order included the following language regarding a default on payments:

Per the Parties' settlement, if the Defendants do not timely make a payment or fail to make a payment pursuant to the terms of the Settlement Agreement, then, after reasonable notice and an opportunity to cure, then the Waid Plaintiffs . . . shall have the unilateral right to file an affidavit with the Office of the Judge of Probate of Jefferson County, Bessemer Division certifying that the Defendants' default has occurred and is continuing, in which event, all of the provisions of the Easements for the Waid Plaintiffs shall cease and terminate, be null and void, and be of no further force or effect. . . . The Parties agree that if the Easements are declared or determined to be null and void and be of no further force or effect because of a default by the Defendants, that part shall be excluded from the Settlement Agreement, but the validity of the remaining parts, terms, or provisions shall not be affected thereby, and the said Easements shall be deemed not to be a part of the Settlement Agreement.

(Doc. 5-1 at 5). The Amended Final Order was also filed in the Probate Court of Jefferson County, Alabama, to give notice to the world that the easements could be revoked upon default.

         On October 14, 2018, Mission Coal voluntarily filed for Chapter 11 bankruptcy. (Br. Doc. 1).[1]

         In 2018, [2] Mission Coal failed to make payments totaling at least $320, 059.03. As of March 1, 2019, Mission Coal is in default for failing to make payments totaling $820, 059.03. Further, the settlement agreement requires Mission Coal to make additional payments until it has paid $500, 000.00 in 2019. So, Mission Coal must pay $1, 320, 059.03 under the settlement agreement by December 31, 2019.

         On April 15, 2019, the Bankruptcy Court entered the Sale Order authorizing the sale of nearly all Mission Coal's assets to Murray Metallurgical Coal Holdings, LLC and its affiliates. This sale included the sale of the easements on the Waid Claimants' land. The Bankruptcy Court also confirmed Mission Coal's Fourth Amended Joint Chapter 11 Plan (“the Plan”). Mission Coal claims that the “[s]ale to Murray was a critical component, indeed the sine qua non, of the Plan.” (Doc. 15 at 6).

         On April 26, 2019, the Waid Claimants filed a notice of appeal from the Order Approving Sale and the Order Confirming the Fourth Amended Chapter 11 Plan. That same day, they also filed a non-emergency motion in the Bankruptcy Court seeking a stay of the orders pending the appeal.

         On April 30, 2019, Mission Coal closed the sale to Murray. Pursuant to the sale agreement, Mission Coal sold its easements to Murray Oak Grove, LLC, free and clear of all liens, claims, and encumbrances. Because the sale closed, the Plan Effective Date occurred on April 30, 2019. Additionally, the Waid Claimants' notice of appeal was docketed in this court on April 30, 2019. (Doc. 1).

         On May 3, 2019, the transfer of the easements was recorded in the Probate Court of Jefferson County, Alabama.

         On May 8, 2019, the Bankruptcy Court held a hearing on the motion to stay pending appeal. The Bankruptcy Court denied the motion, finding that (1) the Waid Claimants failed to show they were likely to succeed on the merits of their appeal; (2) the Waid Claimants failed to show that they would suffer irreparable harm without a stay; (3) the entry of a stay would be confusing and have no practical effect because the sale had been consummated; and (4) the public interest is best served by the closing of the sale and confirmation of the Plan.

         Following the Bankruptcy Court's denial of the motion to stay, the Waid Claimants next moved this court for a stay pending the appeal in this court on May 23, 2019, which is now before this court.

         II. Standard of Review

         A stay pending appeal is akin to a preliminary injunction. See Matter of Forth-Eight Insulations, Inc., 115 F.3d 1294, 1300 (7th Cir. 1997) (“These factors mirror the factors to be considered in ruling on an application for preliminary injunction, in which context we have more fully explained how the factors are to be applied and balanced.”). The Eleventh Circuit explained the standard:

A stay pending appeal is an “extraordinary remedy” and the party seeking it must show: “(1) a substantial likelihood that [the movant] will prevail on the merits of the appeal; (2) a substantial risk of irreparable injury to the[m] unless the [stay] is granted; (3) no substantial harm to other interested persons; and (4) no harm to the public interest.”

In re Woide, 730 Fed.Appx. 731, 737 (11th Cir. 2018) (quoting Touchston v. McDermott, 234 F.3d 1130, 1132 (11th Cir. 2000)), cert. denied sub nom., Woide v. Fed. Nat'l Mortg. Ass'n, 139 S.Ct. 481 (2018). The party seeking the stay bears the burden of proving each element, “but the court may give greater weight to any of the elements in its discretion depending upon the circumstances of the case.” In re Powers, No. 15-03267-JJR13, 2018 WL 5255295, at *3 (N.D. Ala. Oct. 15, 2018).

         Generally, the party must first move the bankruptcy court to stay the judgment, order, or decree. Fed.R.Bankr.P. 8007(a)(1). But, the party can instead directly move the district court hearing the case on appeal to stay the judgment, order, or decree under one of two circumstances: (1) the party “show[s] that moving first in the bankruptcy court would be impracticable, ” or (2) “if a motion was made in the bankruptcy court, [the party] either state[s] that the court has not yet ruled upon the motion, or state[s] that the court has ruled and set out any reasons given for the ruling.” Id. at 8007(b)(2).

         In this case, Mission Coal contends that, while the Waid Claimants moved the Bankruptcy Court for a stay, that motion to stay was different from the motion to stay filed before this court. Mission Coal alleged that the Waid Claimants sought a stay of the initial transfer of ...


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