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In re Nicole Gas Production, Ltd.

United States Bankruptcy Appellate Panel of the Sixth Circuit

March 13, 2018

In re: Nicole Gas Production, Ltd., Debtor.
v.
Frederick L. Ransier, Trustee, Appellee. James A. Lowe (15-8053); Curtland H. Caffey, S. Brewster Randall II, and Robert C. Sanders (15-8055), Appellants,

          Argued: May 9, 2017

         On Appeal from the United States Bankruptcy Court for the Southern District of Ohio at Columbus. No. 09-52887-John E. Hoffman, Judge.

         COUNSEL

         ARGUED:

          Rick L. Ashton, ALLEN KUEHNLE STOVALL & NEUMAN, LLP, Columbus, Ohio, for Appellant James A. Lowe. Reginald W. Jackson, VORYS, SATER, SEYMOUR & PEASE, LLP, Columbus, Ohio, for Appellee.

          Robert C. Sanders, Upper Marlboro, Maryland, pro se.

         ON BRIEF:

          Rick L. Ashton, James A. Coutinho, ALLEN KUEHNLE STOVALL & NEUMAN, LLP, Columbus, Ohio, for Appellant James A. Lowe. Reginald W. Jackson, Brenda K. Bowers, VORYS, SATER, SEYMOUR & PEASE, LLP, Columbus, Ohio, for Appellee.

          Robert C. Sanders, Upper Marlboro, Maryland, S. Brewster Randall II, Columbus, Ohio, Curtland H. Caffey, Columbus, Ohio, pro se.

          Before: DELK, HARRISON, and OPPERMAN, Bankruptcy Appellate Panel Judges.

          OPINION

          DANIEL S. OPPERMAN, CHIEF BANKRUPTCY APPELLATE PANEL JUDGE

         The Bankruptcy Court in the underlying case held Appellants in contempt for conduct that it found constituted an impermissible exercise of control over property of the bankruptcy estate. A Fee Order followed the Contempt Order and awarded Appellee fees and expenses of $91, 068.00 as a sanction for Appellants' conduct. Appellants appealed the Contempt Order and the opinion regarding same and the Fee Order and opinion regarding same. For the reasons stated below, the Panel AFFIRMS those orders and opinions.

         ISSUES ON APPEAL

         1. Whether the Bankruptcy Court erred in entering the Contempt Order based on its determination that the claims Appellants pursued under the OCPA were property of Debtor's estate.

         2. Whether the Court erred when it awarded Appellee fees and expenses totaling $91, 068.00 as a sanction for Appellants' contempt.

         JURISDICTION AND STANDARD OF REVIEW

         Under 28 U.S.C. § 158(a)(1), this Panel has jurisdiction to hear appeals "from final judgments, orders, and decrees" issued by the bankruptcy court. For purposes of appeal, an order is final if it "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S.Ct. 1494, 1497 (1989) (quotation marks and citation omitted). The orders at issue in this appeal are final and none of the parties to this appeal challenge the Panel's jurisdiction to hear it.

         1. Standard and Method of Review Regarding the Contempt Order

         Reviewing the Contempt Order and opinion accompanying it requires a three-step analysis. The first step is to determine whether Freddie Fulson, the indirect equity owner of the Debtor, had an individual claim under the OCPA. The Bankruptcy Court held that Fulson did not have his own claim, under the OCPA, for damage to the value of his interest in Debtor. That decision involves interpretation of a statute and the Panel reviews it de novo. TranSouth Fin. Corp. v. Sharon (In re Sharon), 234 B.R. 676, 679 (B.A.P. 6th Cir. 1999).

         The second step is to determine whether the claims against the Columbia Gas Entities belonged to Debtor's estate. According to the Bankruptcy Court, Debtor had the exclusive right to prosecute those claims and those claims became estate property when Debtor filed bankruptcy. Thus, the Court held that Fulson violated the automatic stay by appropriating estate property when he pursued the claims in state court. The determination of whether property belongs to the estate is reviewed de novo. Kitchen v. Boyd (In re Newpower), 233 F.3d 922, 927 (6th Cir. 2000). The determination of whether conduct violates the automatic stay also is reviewed de novo. Slabicki v. Gleason (In re Slabicki), 466 B.R. 572, 577 (B.A.P. 1st Cir. 2012).

         The third step is to determine whether the Bankruptcy Court's holding of contempt was appropriate. The Panel reviews that decision for abuse of discretion. Long Term Care Mgmt. Inc. v. VI/XII Collateral Trust (In re Nat'l Century Fin. Enters., Inc.), No. 05-8048, 2006 WL 620643, *1 (B.A.P. 6th Cir. Mar. 14, 2006).

         2. Standard and Method of Review Regarding the Fee Order

         The Panel also must determine whether the Bankruptcy Court's fee award was appropriate. An appellate court reviews a fee award for abuse of discretion. Adell v. John Richards Homes Bldg. Co., LLC (In re John Richards Homes Bldg. Co., LLC), 475 B.R. 585, 592 (E.D. Mich. 2012). A trial court abuses its discretion when it commits a clear error of judgment; if reasonable people could differ on the issue, there is no abuse. Id.

         FACTS

         Nicole Gas Productions, Ltd. ("Debtor") is the Chapter 7 debtor in the matter before the Panel. Freddie L. Fulson, now deceased[1], was the indirect equity owner of Debtor. Fulson's equity interest in Debtor resulted from his owning a company known as Nicole Gas Marketing, which company was the sole owner of Debtor. Before filing bankruptcy, Debtor had business relationships with various branches of Columbia Gas. Those relationships soured, resulting in litigation between Debtor and numerous Columbia Gas entities. Eventually, Debtor filed bankruptcy and the ...


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