United States District Court, District of Columbia
In Re MAX E. SALAS, Debtor.
MAX E. SALAS, Appellee. NICOLAAS J. BREKELMANS, et al., Appellants,
Ketanji Brown Jackson United States District Judge.
J. Brekelmans, Gail Gregory Brekelmans, Michael McLoughlin,
and Martha Johnson (collectively, “Appellants”)
have appealed from a decision of the United States Bankruptcy
Court for the District of Columbia regarding real property
that is also the subject of another, related bankruptcy
proceeding in the Middle District of Tennessee. (See
Appellants' Opening Br., ECF No. 6.) Before this Court at
present is Appellants' motion to stay the bankruptcy
court's order pending the resolution of this appeal,
which Appellants have filed in an attempt
to protect the Appellants['] interest in the Property,
protect the Appellants' claims against the
Debtor/Appellee and the Property in the Tennessee Bankruptcy
Case[, ] and avoid the unfair and inequitable result that the
length of time in which this appeal is pending (and not
decided) will threaten the Appellants['] rights to
recover substantial assets in the pending bankruptcy matters.
(Appellants' Mot. to Stay the J. & Order of the
Bankr. Ct. (“Appellants' Mot.”), ECF No. 24,
at 3.) Appellants' motion makes clear that
they are primarily seeking a stay of the bankruptcy
court's order to preserve the claims that are at issue in
the Tennessee case, but as the bankruptcy court below has
already informed Appellants, staying the bankruptcy
court's order would have no impact on the proceedings in
Tennessee. (See Ex. A to Appellants' Mot.
(“Bankr. Ct. Dec.”), ECF No. 24-1, at 2, 6, 7.)
Thus, this Court agrees with and will adopt the bankruptcy
court's analysis with respect to the stay request, for
the reasons explained below. As a result, Appellants'
stay motion will be DENIED. A separate Order
consistent with this Memorandum Opinion will follow.
FACTUAL AND PROCEDURAL BACKGROUND
April 18, 2018, Appellee Max E. Salas (“Salas” or
“Appellee”) filed for Chapter 11 bankruptcy in
the District of Columbia. (See Mem. in Supp. of
Appellants' Mot. (“Appellants' Mem.”),
ECF No. 24-2 at 5.) His son, Len Salas, filed his own,
separate Chapter 11 proceedings in the Middle District of
Tennessee. (See id.) Appellants are creditors of
both father and son. (See id.) When Salas filed his
petition for bankruptcy, he claimed an exemption for the real
property that the motion to stay addresses, claiming that he
owned and lived at the property, and that, therefore, the
property is subject to the so-called Homestead Exemption and
thus should not to be included in his bankruptcy estate.
(See Id. at 6.) Appellants objected to this claimed
exemption. (See id.)
September 25, 2018, the United States Bankruptcy Court for
the District of Columbia (Judge S. Martin Teel, Jr.,
presiding) overruled Appellants' objection, and
determined that Salas is entitled to the Homestead Exemption.
(See id.; see also Appendix to
Appellants' Br., ECF No. 6-1, at 5.) On October 9, 2018,
Appellants filed a notice of appeal in this Court.
(See Not. of Appeal from Bankr. Ct., ECF No. 1.)
April 10, 2019, the trustee of the bankruptcy estate in Len
Salas's bankruptcy proceedings in the Middle District of
Tennessee filed a motion with that bankruptcy court seeking
the authority to sell the bankruptcy estate's interest in
all claims related to the property. (See
Appellant's Mem. at 7.) More than one month later, on May
13, 2019, Appellants filed in this Court a motion to
stay Judge Teel's decision regarding the Homestead
Exemption pending appeal. (See ECF No. 16.) This
Court issued an Order to Show Cause why the Court should not
deny the motion to stay for failure to comply with Federal
Rule of Bankruptcy Procedure 8007 (see ECF No. 18;
see also Fed. R. Bankr. P. 8007(a)(1), (b)(2)
(requiring a party seeking a stay pending appeal to
“move first in the bankruptcy court[, ]” or
“show that moving first in the bankruptcy court would
be impracticable”), and Appellants withdrew their
motion (see ECF No. 20). Appellants then filed a
motion to stay with the bankruptcy court (see
Appellants' Resp. to the Court's Order to Show Cause,
ECF No. 19, at 2), and on June 5, 2019, the bankruptcy court
denied Appellants' motion to stay as moot (see
Bankr. Ct. Dec. at 2, 6 (concluding that “a stay would
serve no purpose” because, even if the bankruptcy
court's order were stayed, the “trustee in
Len's bankruptcy case [would be] free to press forward
with attempting to obtain court authorization for a sale of
whatever interest Len has in the Property”)).
Appellants then filed a second motion to stay in this Court.
(See Appellants' Mot.).
their motion to stay, Appellants maintain that because the
trustee of Len Salas's bankruptcy estate invoked section
363(m) of Title 11 of the United States Code in the Middle
District of Tennessee when seeking authority to sell that
bankruptcy estate's interest in the real property at
issue, any sale of that bankruptcy estate's interest-if
allowed to proceed-would potentially moot the appeal pending
before this Court. (See Appellants' Mem. at
Appellants further insist that this Court's stay of the
bankruptcy court's decision below would “protect
the Appellants' claims to the equity in the
Property”; protect “the Appellants' claims in
the Len's Bankruptcy against [Appellee] and the
Property”; and “avoid the unfair and inequitable
result that the length of time in which this appeal is
pending (and not decided) will threaten the Appellants'
rights to recover substantial assets in the pending
bankruptcy matters.” (Id.) Finally, Appellants
argue that a stay is justified because they are likely to
succeed on the merits of their appeal (see Id. at
11); they will suffer irreparable harm if a stay is not
granted (see Id. at 11-12); the balance of equities
tips in their favor (see Id. at 13); and public
policy supports granting a stay (see Id. at 13-14).
Appellants' motion to stay Judge Teel's order is now
ripe for this Court's review. (See
Appellee's Opp'n to Appellants' Mot., ECF No.
may grant a stay pending appeal upon consideration of the
(1) the likelihood that the party seeking the stay will
prevail on the merits of the appeal; (2) the likelihood that
the moving party will be irreparably harmed absent a stay;
(3) the prospect that others will be harmed if the Court
grants the stay; and (4) the public interest in granting the
Cuomo v. U.S. Nuclear Regulatory Comm'n, 772
F.2d 972, 974 (D.C. Cir. 1985) (per curiam) (citation
omitted); see also In re Sabine Oil & Gas Corp.,
551 B.R. 132, 142 (S.D.N.Y. 2016) (applying factors in
bankruptcy context). When seeking a stay, “it is the
movant's obligation to justify the court's exercise
of such an extraordinary remedy.” Id. at 978.