Fidelity Bank, Nat. Ass'n v. M.M. Group, Inc.

Decision Date04 March 1996
Docket NumberNo. 95-3075,95-3075
Citation77 F.3d 880
PartiesFIDELITY BANK, NATIONAL ASSOCIATION; Haley, Bader & Potts; Lee W. Schubert, Plaintiffs-Appellees, v. M.M. GROUP, INC., et al., Defendants, Robert Casagrande; Tel Lease, Inc., Defendants-Appellants, Robert J. Maccini, Receiver-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

On Appeal from the United States District Court for the Southern District of Ohio; John D. Holschuh, Judge.

Michael S. Kranitz (argued and briefed), Benesch, Friedlander, Coplan & Aronoff, Columbus, OH, for Fidelity Bank, Nat. Assn.

Percy Squire, Bricker & Eckler, Columbus, OH, for Haley, Bader & Potts, Lee W. Schubert.

Samuel N. Lillard (argued and briefed), Mowery & Youell, Worthington, OH, for Robert Casagrande and Tel Lease, Inc.

E. James Hopple (briefed) and Susan K. Cliffel (argued), Schottenstein, Zox & Dunn, Columbus, OH, for Robert J. Maccini.

Before: KENNEDY and SUHRHEINRICH, Circuit Judges; GILMORE, * District Judge.

KENNEDY, Circuit Judge.

Defendants, Robert Casagrande and Tel Lease, Inc., appeal from a District Court order permitting the receiver of the M.M. Group ("MMG") to abandon MMG's fraudulent conveyance claim against Tel Lease. We dismiss this appeal on the grounds that appellants do not have standing to challenge the District Court's order.


This receivership action commenced when Fidelity Bank sought damages against MMG arising out of MMG's default of its debt obligations. By consent order, the District Court appointed a federal receiver to administer MMG's estate. In an action that was ultimately consolidated with the receivership action, Haley, Bader & Potts ("HBP"), an unsecured creditor of MMG, sued MMG, MMG's affiliate Tel Lease, and Robert Casagrande, a Tel Lease principal and shareholder, alleging that MMG's sale of three radio stations to Tel Lease was for less than adequate consideration.

HBP agreed to abandon its fraudulent conveyance claim against MMG in exchange for MMG's assignment of its rights to pursue the fraudulent transfer claim against Tel Lease. Accordingly, the receiver moved to abandon the receivership estate's fraudulent transfer claim against Tel Lease. Despite Tel Lease's and Casagrande's objections, the District Court granted the receiver the authority to abandon the claim.

Claiming that because the fraudulent transfer claim "does not exist," it is not property of the receivership estate that the District Court can authorize the receiver to abandon, defendants Tel Lease and Casagrande appeal from that order. Because we conclude that appellants do not have standing to appeal from the District Court's order permitting the receiver to abandon its fraudulent conveyance claim against Tel Lease, we do not reach the merits of appellants' appeal.


We have found, and the parties have identified, no cases that explicitly set forth the criteria governing whether a litigant has standing to appeal from an order entered in a federal receivership action. However, given that a primary purpose of both receivership and bankruptcy proceedings is to promote the efficient and orderly administration of estates for the benefit of creditors, we find it appropriate and helpful to refer to the rules governing appellate standing in bankruptcy proceedings. See Unisys Fin. Corp. v. Resolution Trust Corp., 979 F.2d 609, 611 (7th Cir.1992) (referring to principles of bankruptcy law to determine whether a creditor had an enforceable security interest in the property of a receivership estate established under federal banking laws).

To appeal from an order of the bankruptcy court, appellants must have been directly and adversely affected pecuniarily by the order. Travelers Ins. Co. v. H.K. Porter Co., Inc., 45 F.3d 737, 741 (3d Cir.1995); Tilley, B & C Equities v. Vucurevich (In re Pecan Groves of Arizona), 951 F.2d 242, 245 (9th Cir.1991); Morgenstern v. Revco D.S., Inc. (In re Revco D.S., Inc.), 898 F.2d 498, 499 (6th Cir.1990); In re El San Juan Hotel, 809 F.2d 151, 154-55 (1st Cir.1987). This principle, also known as the "person aggrieved" doctrine, limits standing to persons with a financial stake in the bankruptcy court's order. In re Revco D.S., Inc., 898 F.2d at 499. Only when the order directly diminishes a person's property, increases his burdens, or impairs his rights will he have standing to appeal. Depoister v. Mary M. Holloway Found., 36 F.3d 582, 585 (7th Cir.1994); Gen. Motors Acceptance Corp. v. Dykes (In re Dykes), 10 F.3d 184, 187-88 (3d Cir.1993); In re El San Juan Hotel, 809 F.2d at 154-55.

Rejecting the application of bankruptcy standing rules to receiverships, appellants argue that Sec. and Exch. Comm'n v. Elliott, 953 F.2d 1560 (11th Cir.1992), Morrison-Knudsen v. CHG Int'l Inc., 811 F.2d 1209 (9th Cir.1987), and Sec. and Exch. Comm'n v. Hardy, 803 F.2d 1034 (9th Cir.1986), evidence that appellants in receivership cases are not bound by bankruptcy's special standing rules. In each of those cases, however, it is clear that the courts applied principles of standing that were consistent with those of bankruptcy law. See Elliott, 953 F.2d at 1566 (entertaining receivership estate's claimants' due process objections to the district court's administration of the estate); Morrison-Knudsen Co., Inc., 811 F.2d at 1213 (dismissing appellants' appeal from the dismissal of certain claims on the basis that appellants had only an indirect financial stake in those claims); Hardy, 803 F.2d at 1038-40 (reviewing a district court's denial of receivership estate's claimants' request for leave to file late Investor Claim Forms). Only when the appellants had direct financial interests did these courts address the merits of their claims. Therefore, we reject appellants' suggestion that principles of bankruptcy standing are foreign to the receivership context.


Whether an appellant is a person aggrieved is a question of fact for the district court. Depoister, 36 F.3d at 585; Gen. Motors Acceptance Corp., 10 F.3d at 188. Although the District Court did not consider whether appellants are persons aggrieved, the relevant facts and evidence are before us. Thus, we consider it proper to address the issue ourselves. See In re El San Juan Hotel, 809 F.2d at 154 n. 3.

Assuming that bankruptcy standing rules apply in the receivership context, appellants first argue that they have standing because they are parties to the adversary proceeding. We reject appellants' argument. Appellants are parties to the receivership action not because they are creditors of MMG but instead because HBP alleged that they were a party...

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