Bleaufontaine, Inc., Matter of

• Decision Date: 26 January 1981
• Docket Number: Nos. 78-2945,s. 78-2945
• Citation: 634 F.2d 1383
• Parties: In the Matter of BLEAUFONTAINE, INC., Bankrupt. BLEAUFONTAINE, INC., Appellant, v. ROLAND INTERNATIONAL et al., Appellees. In the Matter of BLUEVACK, INC., Bankrupt. BLUEVACK, INC., Appellant, v. ROLAND INTERNATIONAL CORP. et al., Appellees. In the Matter of FONTAINEBLEAU HOTEL CORP., Bankrupt. FONTAINEBLEAU HOTEL CORP., Appellant, v. ROLAND INTERNATIONAL CORP. and Larry Gilbert et al., Appellees. In the Matter of Ben NOVACK, Bankrupt. Ben NOVACK, Appellant, v. ROLAND INTERNATIONAL et al., Appellees. In the Matter of Ben NOVACK, Bankrupt. Ben NOVACK, Appellant, v. R. C. GARDNER, Jr. and Larry Gilbert, Trustees, Appellees. In the Matter of Ben NOVACK, Bankrupt. Ben NOVACK, Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees. In the Matter of BLEAUFONTAINE, INC., Bankrupt. BLEAUFONTAINE, INC., Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees. In the Matter of BLEAUFONTAINE, INC., Bankrupt. BLEAUFONTAINE, INC., Appellant, v. R. C. GARDNER and Larry Gilbert, Trustees, Appellees. In the Matter of BLUEVACK, INC., Bankrupt. BLUEVACK, INC., Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees. In the Matter of BLUEVACK, INC., Bankrupt. BLUEVACK, INC., Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees. In the Matter of FONTAINEBLEAU HOTEL CORPORATION, Bankrupt. FONTAINEBLEAU HOTEL CORPORATION, Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees. In the Matter of FONTAINEBLEAU HOTEL CORPORATION, Bankrupt. FONTAINEBLEAU HOTEL CORPORATION, Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees. to 78-2947, 79-1725, 79-1727, 79-1728, 79-1730 to 79-1732, 79-1735and 79-1736. . Unit B
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1383

634 F.2d 1383

7 Bankr.Ct.Dec. 820

In the Matter of BLEAUFONTAINE, INC., Bankrupt.

BLEAUFONTAINE, INC., Appellant, v. ROLAND INTERNATIONAL et al., Appellees.

In the Matter of BLUEVACK, INC., Bankrupt.

BLUEVACK, INC., Appellant, v. ROLAND INTERNATIONAL CORP. et al., Appellees.

In the Matter of FONTAINEBLEAU HOTEL CORP., Bankrupt.

FONTAINEBLEAU HOTEL CORP., Appellant, v. ROLAND INTERNATIONAL CORP. and Larry Gilbert et al., Appellees.

In the Matter of Ben NOVACK, Bankrupt.

Ben NOVACK, Appellant, v. ROLAND INTERNATIONAL et al., Appellees.

In the Matter of Ben NOVACK, Bankrupt.

Ben NOVACK, Appellant, v. R. C. GARDNER, Jr. and Larry Gilbert, Trustees, Appellees.

In the Matter of Ben NOVACK, Bankrupt.

Ben NOVACK, Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees.

In the Matter of BLEAUFONTAINE, INC., Bankrupt.

BLEAUFONTAINE, INC., Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees.

In the Matter of BLEAUFONTAINE, INC., Bankrupt.

BLEAUFONTAINE, INC., Appellant, v. R. C. GARDNER and Larry Gilbert, Trustees, Appellees.

In the Matter of BLUEVACK, INC., Bankrupt.

BLUEVACK, INC., Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees.

In the Matter of BLUEVACK, INC., Bankrupt.

BLUEVACK, INC., Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees.

In the Matter of FONTAINEBLEAU HOTEL CORPORATION, Bankrupt.

FONTAINEBLEAU HOTEL CORPORATION, Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees.

In the Matter of FONTAINEBLEAU HOTEL CORPORATION, Bankrupt.

FONTAINEBLEAU HOTEL CORPORATION, Appellant, v. R. C. GARDNER, Jr., and Larry Gilbert, Trustees, Appellees.

Nos. 78-2945 to 78-2947, 79-1725, 79-1727, 79-1728, 79-1730

to 79-1732, 79-1735and 79-1736.

United States Court of Appeals, Fifth Circuit.

Unit B

Jan. 26, 1981.

Irving Schulman, Miami, Fla., Ronald S. Itzler, New York City, for appellants in all cases.

Martin L. C. Feldman, Robert A. Kutcher, New Orleans, La., for appellants in 78-2945, 78-2946 and 78-2947.

Walter H. Beckham, Jr., Joel D. Eaton, Aaron Podhurst, James E. Yacos, Miami, Fla., for Roland Int'l Corp.

Friedman & Britton, Friedman, Britton, Cohen, Kaufman, Zinkow, Benson &amp Schantz, John L. Britton, Lawrence M. Schantz, Francis L. Carter, Miami, Fla., for Larry Gilbert and R. C. Gardner.

Richard Weinberger, Ballon, Stoll & Itzler, New York City, for appellants in 79-1725, 79-1727, 79-1728, 79-1730 to 79-1732, 79-1735 and 79-1736.

Appeals from the United States District Court for the Southern District of Florida.

Before GEWIN, RONEY, and FRANK M. JOHNSON, Jr., Circuit Judges.

GEWIN, Circuit Judge:

This case represents twelve consolidated appeals ¹ from three orders of the district court, which served to effectively approve the bankruptcy court's confirmation of the sale of the bankrupts' assets to the appellees. ² We affirm for the reasons stated below.

Appellants were voluntarily adjudicated bankrupts after various rehabilitative measures proved unsuccessful. Subsequent to his order to show cause why the proposed sale of the principal assets of the bankrupt estates, including the famous Fontainebleau Hotel and Spa, should not be approved to appellee-Hotelerama, Bankruptcy Judge Thomas C. Britton, for the Southern District of Florida, conducted two lengthy hearings to evaluate all the relevant considerations pertaining to the sale.

Represented by different trial counsel than were before this court on appeal, appellants, at the first hearing, opposed the sale to Hotelerama on two grounds. Initially, they contended that Hotelerama could not possibly be a good faith purchaser since Roland International, a secured creditor of the bankrupts, had a twenty-five percent participation in the purchase offer pursuant to its status as a shareholder of Hotelerama. Secondly, they alleged certain procedural irregularities had been allowed by the bankruptcy court. However, Roland International's relationship to Hotelerama was fully disclosed during this hearing. All previous offers were rejected and the bankruptcy court directed the trustees to solicit sealed bids.

Three bids were submitted and later considered at a second bankruptcy hearing. Although appellants again objected, the bankruptcy judge followed the trustees' recommendation, which was supported by quite an extensive analysis, and approved the subsequent increased offer to purchase made by Hotelerama. ³

Thereafter, the bankrupts petitioned the bankruptcy court for a stay of the sale pending their appeals to the district court challenging the propriety of the sale order. Bankruptcy Judge Britton granted the stay conditioned upon the posting of a $10,000,000.00 supersedeas bond. Since the bond was not posted as required, the sale was consummated on March 14, 1978. Nevertheless, the appellants' appeals to the district court were still pending.

Appellees moved to dismiss these appeals as moot arguing that the sale could not be affected by any appellate order since it was to a good faith purchaser and had not been stayed as demanded by Bankruptcy Rule 805. ⁴ The district court remanded the appeals to the bankruptcy judge with directions to determine the good faith status of Hotelerama.

Bankruptcy Judge Britton reasoned that no further hearings were necessary since all the appellants' allegations of bad faith were already matters of record and known personally by him. The bankruptcy court's order on remand, issued on June 26, 1978, found that Hotelerama was a good faith purchaser. Three days later, on June 29, 1978, the district court, without a hearing, adopted the findings upon remand in all respects thereby dismissing the bankrupts' appeals from the sale order as moot under Rule 805. ⁵

Appellants then proceeded with an appeal to this court seeking relief from the June 29, 1978 district court dismissal order. Concurrently, they filed an appeal in district court from the June 26, 1978 bankruptcy court remand order. In response, appellees moved to dismiss for lack of jurisdiction. Appellants replied by cross-motion, under Rule 60(b) of the Federal Rules of Civil Procedure, petitioning the district court for redress from its June 29, 1978 dismissal order.

Meanwhile, the bankrupts moved this court to hold its proceedings in abeyance and to consolidate appeals, while awaiting the district court's formal review of the June 26, 1978 bankruptcy court's order on remand. On October 6, 1978, then Chief Judge Brown of this court granted the motion. ⁶

Upon District Judge Fulton's transition to senior status, all then pending Fontainebleau appeals were transferred to Judge Gonzales, who conducted a status conference on January 25, 1979. Four days later on January 29, 1979, Judge Gonzales rendered four orders granting appellees' motion to dismiss the appeals from the June 26, 1978 bankruptcy court order on remand for lack of jurisdiction. Thereafter, on February 5, 1979, the district court also denied appellants' Rule 60(b) motion reasoning that the procedures used to reach its June 29, 1978 dismissal order were legally sound.

On two subsequent occasions the appellees moved this court to dismiss all appeals as moot. Although one request was denied, the other was carried with the case. Moreover, both parties were permitted to supplement the record.

It has long been recognized that a fundamental requirement of due process is the opportunity to be heard at a meaningful time and in a meaningful manner. Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970); Armstrong v. Manzo, 380 U.S. 545, 85 S.Ct. 1187, 14 L.Ed.2d 62 (1965). Some form of hearing must be accorded an individual before he is finally deprived of a property interest. Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). Nevertheless, "(i)n assessing what process is due ..., substantial weight must be given to the good-faith judgments of the individuals charged by Congress with the administration of ... programs that the procedures they have provided assure fair consideration of the ... claims of individuals." Id. at 349, 96 S.Ct. at 909, 47 L.Ed.2d at 41.

Affording such weight to the good-faith judgment of the bankruptcy judge, ⁷ we find that the June 26, 1978 order on remand did not violate the appellants' rights to due process. ⁸ Bankruptcy Judge Britton stated the following in that order:

In arriving at the foregoing findings (that Hotelerama was a good faith purchaser), I have reexamined and reconsidered the assertions of bad faith made by the bankrupts through counsel ..., which is a part of the file presently remanded to this court. As counsel has stated, all the facts relied upon by him in support of his charges of bad faith are already matters of record in this case and directly known by me.

The order of remand leaves to this court's determination whether any further hearings are necessary. Because time is a compelling factor in this case and because the order of remand reached this court immediately after I had left on vacation, regrettably this court's response has already been delayed (twenty-six days during which appellants never requested a hearing). It has never been suggested to this court by the bankrupts that they rely, in support of their assertion of bad faith, on any matters not already in the record. The matter was argued at length before me by able counsel and relates to matters that had occurred before me. Under these circumstances, I do not believe the entry of this order should be further delayed for additional hearings before this court (emphasis added).

As noted by the bankruptcy judge, he had already heard the bad faith allegations on a number of occasions. It appears from the record that if the bankrupts had wished to introduce any other evidence relevant to bad faith, they had many opportunities in which to do so. ⁹ The bankruptcy court surely was not obligated to rehear contentions which had been considered earlier at a...