This week, the Court considers a property owner’s claim to an easement over a maintenance road on federal land, and casts doubt on the longstanding “person aggrieved” standing requirement in bankruptcy appeals.
KIMBALL-GRIFFITH, L.P. v. BRENDA BURMAN, ET AL
The Court rejects a property owner’s claim to an easement over a maintenance road on federal land.
Oral arguments occur on April 24, 2023, before the U.S. Supreme Court in Lac Du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, Case No 22-227. Here is a link to the oral arguments transcript.
What follows is an attempt to, (i) summarize the facts and issue in the case, and (ii) provide a sampling of questions and comments from the justices during oral arguments.
Facts
Here’s what happened:
In August 1992, the largest indoor shopping mall in the continental United States opened to great fanfare in suburban Minneapolis, Minnesota. Dubbed the Mall of America (MOA), this sprawling retail center enjoyed 330 stores, anchored by retail tenants at the height of their reputations: Macy’s, Bloomingdale’s, Nordstrom, and Sears Roebuck and Co. (Sears).
In August 1992, the largest indoor shopping mall in the continental United States opened to great fanfare in suburban Minneapolis, Minnesota. Dubbed the Mall of America (MOA), this sprawling retail center enjoyed 330 stores, anchored by retail tenants at the height of their reputations: Macy’s, Bloomingdale’s, Nordstrom, and Sears Roebuck and Co. (Sears).
Section 363(m) of the Bankruptcy Code is one of the most important and well-known statutes to bankruptcy practitioners. This section of the Bankruptcy Code protects a good faith asset purchaser who purchases assets from a debtor’s bankruptcy estate from having the sale unwound when the sale (or an aspect of the sale) is challenged by an appeal.
Congress passed the operative texts without noticeable fanfare. From its enactment to today, section 363(k) has entitled a secured creditor to “credit bid” the full amount of the debt owed by a debtor in any sale of the underlying collateral pursuant to section 363(b). That this statutory bequest elicited little debate made imminent sense, for Congress had thereby codified one of secured creditors’ seemingly time-honored rights.
Dismissal of a bankruptcy—for bad faith filing—is a rarity.
So, how a bankruptcy court grapples with the bad faith issue . . . and ends up dismissing the bankruptcy . . . can provide a lesson for us all.
What follows is a summary of how a Chapter 11 bankruptcy is dismissed when the Court is convinced that the bankruptcy is intended for the benefit of a non-debtor . . . and not for the benefit of the debtor or its creditors.
Highlights
The Supreme Court held Section 363(m) is only a “statutory limitation” to accessing appellate relief in disputed bankruptcy sales that requires parties to take certain procedural steps to be effective
The Supreme Court also addressed mootness arguments and held that as long as parties have a concrete interest, however small, in the outcome of an appeal, the appeal should remain alive
The ruling provides insight as to how the Supreme Court may tackle the controversial doctrine of “equitable mootness”
In Short
The Situation: The U.S. Supreme Court considered whether § 363(m) of the Bankruptcy Code, which limits a party's ability to undo an asset transfer made to a good-faith purchaser in a bankruptcy case, is jurisdictional.
On April 24, 2023, the First Circuit’s opinion in Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin came up for oral argument before the Supreme Court. At issue in this appeal is whether this provision’s “abrogat[ion]” of sovereign immunity “as to a governmental unit,” defined to include any “other … domestic government” in section 101(27), embodies a congressional intention to revoke the sovereign immunity of a Native American tribe with sufficient and obvious clarity to be construed as such a revocation.