July 17, 2019

Tenth Circuit: Bankruptcy 11 U.S.C. § 363(m) Mootness Does not Apply to Purely Statutory Claim for Money Damages

The Tenth Circuit Court of Appeals published its opinion in In re C.W. Mining Co. on Wednesday, January 22, 2014.

These appeals arise from a Chapter 7 asset sale for the liquidating bankruptcy estate of C.W. Mining Co., a former coal mining operation in Emery County, Utah. The four appellants did business with C.W. Mining before its involuntary bankruptcy. They now claim various assets that the bankruptcy trustee, Kenneth A. Rushton, sold to an unrelated entity, Rhino Energy LLC. Under 11 U.S.C. § 363(m), the court cannot grant the appellants any relief that would affect the validity of Rushton’s sale to Rhino. The district court dismissed the appeals as moot because of this statute.

The Tenth Circuit affirmed the dismissal of all the appeals with the exception of Charles Reynolds’s appeal because he raised a statutory claim for relief that did not affect the validity of the sale. Reynolds and his family lived in the mine’s scale house. Reynolds opposed Rushton’s action to evict Reynolds and return the house to the bankruptcy estate by arguing he was the rightful owner of the house and counterclaiming under the Utah Occupying Claimant Statute (UOCS).

On appeal, Reynolds sought damages under UOCS of the value of improvements to the house, not undoing the sale to Rhino. Section 363(m) mootness does not apply to this claim, nor does equitable mootness because this is a purely statutory claim for money damages. The court reversed and remanded the dismissal of Reynolds’s claim.

Print Friendly, PDF & Email

Speak Your Mind

*