Case: 22-10831 Document: 00516659051 Page: 1 Date Filed: 02/28/2023
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
No. 22-10831 FILED
Summary Calendar February 28, 2023
Lyle W. Cayce
Clerk
In the matter of Highland Capital Management, L.P.
Debtor,
______________________________
The Dugaboy Investment Trust,
Appellant,
versus
Highland Capital Management, L.P.,
Appellee.
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:21-CV-2268
Before Higginbotham, Graves, and Ho Circuit Judges.
Per Curiam:*
*
This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 22-10831 Document: 00516659051 Page: 2 Date Filed: 02/28/2023
No. 22-10831
Appellant Dugaboy Investment Trust 1 (“Dugaboy”) appeals the
district court’s order dismissing, for lack of prudential standing, its appeal of
the bankruptcy court’s order denying its Motion to Compel Compliance with
Bankruptcy Rule 2015.3. For the following reasons, we affirm.
I.
Appellee Highland Capital Management, L.P. (“Highland”)—previ-
ously headed by James Dondero—filed for Chapter 11 bankruptcy in October
2019. Subsequent years of litigation ensued, much of which involved the re-
spective rights and obligations of Highland’s estate, creditors and parties in
interest. A minor (0.1866 percent) limited partnership interest in Highland
was held by Dugaboy, a family trust for Dondero.
In January 2021, Highland filed its reorganization plan—the Fifth
Amended Plan of Organization of Highland Capital Management, L.P. (the
“Plan”). The next month, at the Plan’s confirmation hearing, Dugaboy
brought up the issue of Highland’s non-compliance with Bankruptcy Rule
2015.3’s requirement that debtors submit “periodic financial reports of the
value, operations, and profitability” of each non-debtor entity in which the
debtor “holds a substantial or controlling interest.” Fed. R. Bankr. P.
2015.3(a). Despite Dugaboy’s protests, the bankruptcy court entered the
Confirmation Order and approved the Plan on February 22, 2021. Dugaboy’s
interest was consequently terminated under the confirmed plan.
On April 29, 2021, raising the same argument, Dugaboy filed its
Motion to Compel Compliance with Bankruptcy Rule 2015.3 with the
bankruptcy court. However, before the court ruled on the motion, the Plan
became effective on August 11, 2021. Accordingly, the bankruptcy court
denied the motion as moot on September 6, 2021. Dugaboy filed its notice of
appeal of the order on September 22, 2021.
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Get Good Trust also moved for the motion to compel. However, it decided not to
appeal the decision before this court.
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On August 8, 2022, the district court dismissed the appeal for lack of
jurisdiction. In doing so, it held that Dugaboy lacked standing because it was
no longer a creditor and did not have a claim in the estate, and therefore
lacked a financial injury flowing from the order. This appeal followed.
II.
“We review the decision of a district court, sitting in its appellate ca-
pacity, by applying the same standards of review to the bankruptcy court’s
finding of fact and conclusions of law as applied by the district court.” In re
ASARCO, L.L.C., 650 F.3d 593, 600 (5th Cir. 2011). Conclusions of law are
reviewed de novo, as are mixed questions of law and fact. In re Quinlivan,434
F.3d 314, 318 (5th Cir.2005). “Standing is a question of law that we review
de novo.” In re Technicool Sys., Inc., 896 F.3d 382, 385 (5th Cir. 2018).
III.
“[S]tanding to appeal a bankruptcy court order is, of necessity, quite
limited.” In re Dean, 18 F.4th 842, 844 (5th Cir. 2021). To determine
whether a party has standing in these cases, courts use the “person ag-
grieved” test. Fortune Nat. Res. Corp. v. U.S. Dep’t of Interior, 806 F.3d 363,
366 (5th Cir. 2015). “The ‘person aggrieved’ test is an even more exacting
standard than traditional constitutional standing.” In re Coho Energy Inc., 395
F.3d 198, 202 (5th Cir. 2004). This test “demands a higher causal nexus be-
tween act and injury; appellant must show that he was directly and adversely
affected pecuniarily by the order of the bankruptcy court in order to have
standing to appeal.” Id. at 203 (internal quotation marks and citation omit-
ted). “This restriction narrows the playing field, ensuring that only those
with a direct, financial stake in a given order can appeal it.” Technicool Sys.,
Inc., 896 F.3d at 386.
Upon reviewing the record, we agree that Dugaboy fails to meet these
requirements. Dugaboy cannot, and does not, point to any direct pecuniary
harm. Instead, it argues that Rule 2015.3 grants it standing because the rule
is designed to help prepetition creditors provide a complete accounting be-
tween the debtor and its non-debtor affiliates. Thus, Dugaboy’s main
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argument is that, if the bankruptcy court had required Highland to submit
reports under Rule 2015.3, Dugaboy could have used that information to dis-
cover whether there were any claims against the estate that arose from trans-
actions between Highland and its non-debtor affiliates. The mere possibility
of harm, however, does not satisfy the person aggrieved standard. Technicool
Sys., Inc., 896 F.3d at 386 (holding that the owner of a debtor company in a
Chapter 7 bankruptcy could not object to an order approving the hiring of
special counsel because the order would not affect the debtor company’s dis-
charge); Fortune Nat. Res. Corp., 806 F.3d at 366 (holding that a creditor did
not have bankruptcy standing to object to an order approving the sale of as-
sets because the creditor would be in the same position financially, whether
or not the bankruptcy court approved the sale).
Even assuming an injury occurred, any potential pecuniary harm to
Dugaboy is indirect. Several events would have to occur before money is put
back into Dugaboy’s pocket. As the district court aptly explained: “It is un-
clear how post-dated reports disclosing years-old facts could lead to any di-
rect recovery by a creditor, let alone recovery by a non-creditor with a pur-
ported ownership in non-debtor affiliates.” Thus, the district court properly
found that Dugaboy lacked standing.
In a last-ditch effort to avoid dismissal, Dugaboy contends that it has
standing under 11 U.S.C. § 1109(b). We will not consider this argument,
which is raised for the first time on appeal. See XL Specialty Ins. Co. v. Kiewit
Offshore Servs., Ltd., 513 F.3d 146, 153 (5th Cir. 2008).
We therefore conclude that the district court correctly dismissed
Dugaboy’s appeal for lack of appellate standing.
AFFIRMED.
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