Scruggs v. Lowman

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT November 19, 2004

__________________________ Charles R. Fulbruge III
Clerk
No. 03-41333
__________________________

IN THE MATTER OF: KAREN JUNE SCRUGGS;
THOMAS HERBERT SCRUGGS,

Debtors

KAREN JUNE SCRUGGS; THOMAS HERBERT SCRUGGS,

Appellees,
versus

DONNA LOWMAN, as Personal Representative
of the Estate of the late JOHN F. LOWMAN,

Appellant.

___________________________________________________

Appeal from the United States District Court
for the Southern District of Texas
___________________________________________________

Before SMITH, WIENER, and PICKERING, Circuit Judges.

PER CURIAM:*

Appellant Donna Lowman (“Lowman”), on behalf of the Estate of

her late father, John F. Lowman (“Decedent”), filed this appeal

from an August, 2003 order of the district court that reversed an

October, 2002 order of the Bankruptcy Court. The Bankruptcy Court

had granted its order in response to Lowman’s motion for relief

*
Judge Wiener specially concurs and reserves his right to
file a Special Concurrence at a later time.
from the automatic stay that was then in place in the Chapter 13

bankruptcy of both Appellees, namely, (1) Karen June Scruggs

(“Karen”) who had been divorced from Decedent in Florida on March

25, 1994; and (2) Thomas Herbert Scruggs, Karen’s husband before

and after the time in June, 2002 when they filed for Chapter 13

bankruptcy protection (collectively the “Debtors”). We conclude

that the instant appeal of the district court’s order is moot as a

result of events that occurred after October 2, 2002 (the date of

the Bankruptcy Court’s order that lifted the automatic stay for the

limited purpose of allowing “the Florida State Court [property

settlement] enforcement action to proceed to final judgment”), but

before August 7, 2003 (the date of the district court’s order that

reversed the Bankruptcy Court). Furthermore, as we conclude that

this matter became moot before the district court granted the order

appealed to us, mootness vitiates both our appellate jurisdiction

and the district court’s order as well. Thus we not only must

dismiss this appeal but also must vacate the district court’s

order: The Bankruptcy Court’s order lifting the automatic stay was

in full force and effect at all times pertinent to the state court

action in Florida because the judgment in that action was rendered

and became final and no longer appealable after the Bankruptcy

Court lifted the automatic stay and before the district court

purported to reverse the Bankruptcy Court.1

1
As Appellees in Lowman’s appeal to us, the Debtors filed a
motion to dismiss Lowman’s appeal as moot. A different panel of

2
 I. FACTS & PROCEEDINGS

The lengthy and contentious litigation between, on the one

hand, Decedent (and now his estate, represented since his death in

1999 by Lowman, his daughter and legal representative), and, on the

other hand, Decedent’s former wife Karen (with her current husband,

one of the Debtors) continues to be fought out in the state courts

of Florida and the Bankruptcy and district courts of the Southern

District of Texas as it has been for more than 10 years. The only

aspects of this litigation before us today, however, are those

affected by (1) the Bankruptcy Court’s October 2002 order in the

Debtors’ Chapter 13 proceedings, lifting the automatic stay at the

behest of Lowman, (2) the Debtors’ October 11, 2002 appeal of that

ruling to the district court, (3) the district court’s August 7,

2003 order reversing the Bankruptcy Court’s order and re-imposing

the automatic stay, (4) Lowman’s September 4, 2003 appeal to us

from that ruling of the district court; and (5) the subsequent

urgings of both Lowman as appellant and the Debtors as appellees

that we dismiss the instant appeal as moot. We therefore recount

briefly only the background chronology of this case needed to put

our disposition of the instant appeal in perspective:

• September, 1993: Decedent and Karen marry

• October, 1993: Decedent retires from 20-year career with
YMCA and elects 100% Joint and Survivor

this court ordered the Debtors’ motion carried with the case.
Our ruling today of necessity disposes of the Debtors’ dismissal
motion.

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 Annuity under the YMCA’s ERISA pension
plan

• November, 1993: Decedent receives first monthly payment
of his participant’s annuity under YMCA
pension plan

• March, 1994: Decedent and Karen separate

• March 25, 1994: Final Florida divorce decree filed,
incorporating property settlement

• October 25, 1999 (the day before Decedent’s death):
Motion filed in Decedent’s name in
circuit court for Monroe County, Florida
seeking enforcement of Karen’s divorce
settlement agreement waiving any interest
in Decedent’s pension

• October 26, 1999: Decedent dies in Michigan from “head and
throat cancer” “months” after onset (per
his Certificate of Death); his lifetime
“joint” annuity ceases automatically

• November 1, 1999: Pursuant to Decedent’s 1993 election of
“Joint and Survivor” annuity, Karen’s
survivor annuity commences and she
receives her first monthly payment from
that feature of the pension elected by
Decedent under the YMCA retirement plan

• October 13, 2000: Lowman, as Decedent’s estate represen-
tative, substituted as plaintiff in
Florida property settlement enforcement
action

• March 5, 2002: Florida circuit court enters “Order On
Federal ERISA Issue”

• April 24, 2002 Debtors file for bankruptcy protection
under Chapter 13 in Southern District of
Texas, activating automatic stay against,
inter alia, Lowman’s prosecution of the
Florida enforcement action

• June 19, 2002: Lowman seeks relief from automatic stay
in Bankruptcy Court

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• October 2, 2002: Bankruptcy Court grants relief from stay
“to allow the Florida state court
enforcement action to proceed to final
judgment”

• October 11, 2002: Debtors appeal bankruptcy order to
district court (S.D.Tex.)

• October 16, 2002: Lowman files motion for final judgment in
Florida proceeding

• October 21, 2002: Debtors file motion in Bankruptcy Court
to stay its decision and order granting
Lowman relief from automatic stay

• November 2, 2002: Florida court issues Final Judgment

• November 8, 2002: Bankruptcy Court denies Debtors’ motion
to stay its decision and its order
lifting automatic stay

• December 2, 2002: In absence of an appeal by Karen, Florida
judgment becomes final and no longer
appealable

• August 7, 2003: District court for Southern District of
Texas reverses Bankruptcy Court, orders
stay reinstated

• September 4, 2003: Lowman appeals district court order to
this court

• April 25, 2003: Bankruptcy Court orders Debtors’ case
converted from Chapter 13 to Chapter 7

• December 30, 2003: Debtors discharged in bankruptcy under
Chapter 7; automatic stay expires
automatically pursuant to 11 U.S.C. §
362(c)(2)(C)

• March 9, 2004: Debtors file motion to dismiss this
appeal as moot

• April 30, 2004: Panel of this court orders dismissal
motion carried with this appeal

II. ANALYSIS

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 Both protagonists in this procedural chess match now insist

that the instant appeal is moot, albeit they differ significantly

as to when and why it became moot. As mootness is jurisdictional

and we must examine our appellate jurisdiction, on our own motion

if need be, we are obligated to determine de novo whether the

instant appeal is moot.2

“A controversy becomes moot where, as a result of intervening

circumstances, there are no longer adverse parties with sufficient

legal interest to maintain the litigation....A controversy can also

become moot when the parties lack a legally cognizable interest in

the outcome.”3 “A moot case presents no Article III case or

controversy, and a court has no constitutional jurisdiction to

resolve the issues it presents.”4

The Debtors insist that mootness occurred on —— but not before

—— December 30, 2003, the date on which they received their Chapter

7 bankruptcy discharge which ipso facto dissolved the automatic

stay. They argue that, because the instant appeal is from an order

that the district court granted before the automatic stay

evaporated on discharge, the appeal of that order to us became moot

when the automatic stay itself became moot on discharge. This,

2
See Harris v. City of Houston, 151 F.3d 186, 189 (5th Cir.
1998).
3
Chevron, U.S.A., Inc. v. Trailour Oil Co., 987 F.2d 1138,
1153 (5th Cir. 1993)(internal citations omitted).
4
Goldin v. Barthalow (In re Goldin), 166 F.3d 710, 717 (5th
Cir. 1999).

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they contend, eliminated any possibility of our issuing a ruling

that could affect the rights of the parties. As such, reason the

Debtors, the district court’s reversal of the Bankruptcy Court’s

order is final and no longer appealable. They thus assert that the

Florida judgment is a nullity because it was rendered (and became

final) at a time when the automatic stay was in full force and

effect. Stated differently, the mootness of the appeal of the

district court’s reversal of the Bankruptcy Court means that the

automatic stay was in effect —— not lifted —— when the Florida

judgment was rendered, making it void ab initio.

Despite being the appellant, Lowman too insists that this

appeal is moot. She urges that, in addition to our obligation to

satisfy ourselves that we have appellate jurisdiction, we must also

ensure that the court who’s ruling is under review had jurisdiction

to issue such ruling.5 Lowman adds that “[i]f the district court

lacked jurisdiction ‘[this court’s] jurisdiction extends not to the

merits but merely for the purpose of correcting the error of the

lower court.’”6 Thus, urges Lowman, even in a moot appeal such as

this one, we “retain authority to order vacatur of a moot

case....If mootness occurred prior to the rendering of a final

judgment by the district court, vacatur and dismissal is

5
See Bauhaus USA, Inc. v. Copeland, 292 F.3d 439, 442 (5th
Cir. 2002).
6
United States v. Key, 205 F.3d 773, 774 (5th Cir. 2000)
citing New York Life Ins. Co. v. Deshotel, 142 F.3d 873 882 (5th
Cir. 1998).

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automatic.”7 Lowman thus argues that, in addition to dismissing

this appeal for mootness, we are obligated to determine whether the

case appealed from was already moot when the district court entered

the appealed order, and if it was, to vacate the district court’s

order when we dismiss this appeal.

According to Lowman, the question of the automatic stay in

bankruptcy had become moot before the district court ruled. Thus,

even though the parties agree that the controversy before the

Bankruptcy Court became moot no later than the time of Debtors’

discharge under Chapter 7 on December 30, 2003, Lowman differs from

the Debtors as to the date when mootness occurred, viz., almost a

year earlier, on December 2, 2002, when the Florida court’s

judgment became final and unappealable. By ending the “case or

controversy” between the parties, that finality produced mootness.

As that date followed the Bankruptcy Court’s order lifting the stay

but preceded the district court’s order reversing that Bankruptcy

Court order, argues Lowman, the district court’s order being

appealed to us is itself moot, leaving the Bankruptcy Court’s pre-

mootness, stay-lifting order in place and not appealable to either

the district court or us. As such, the final and unappealable

Florida judgment remains valid because the automatic stay had been

validly lifted and thus was not in place (1) when the state court’s

judgment was rendered or (2) when that judgment became final and no

7
Goldin, 166 F.3d at 718 (emphasis in original).

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longer appealable. That, in turn, ended the case or controversy

between Lowman and Karen, leaving no live case for the district

court to decide by reversing (or, for that matter, affirming) the

Bankruptcy Court.

We agree with Lowman. Regardless whether, sometime in the

future, the judgment of the Florida circuit court should be the

declared null ab initio for violating ERISA’s preemptive ban on

both voluntary and involuntary alienation, that judgment is the

matter lying at the heart of this federal litigation. When that

state court judgment became final and no longer appealable on

December 2, 2002, at a time when the automatic stay remained lifted

for the limited purpose of letting that happen, the Article III

case or controversy in the federal courts ceased to exist.

Consequently, anything that the Bankruptcy Court or the district

court purported to do with regard to that judgment after December

2, 2002 was moot for lack of a live controversy.

It is axiomatic that the controversy between these parties

could not have become “more moot” as a result of the subsequent

evaporation of the automatic stay when, more than a year after the

Florida judgment became final and no longer appealable, the Debtors

were discharged under Chapter 7: There is no such thing as being

a little bit moot. Under the doctrine of mootness, the district

court no longer had jurisdiction to entertain Debtors’ appeal from

the Bankruptcy Court’s order of October 2, 2002 once the Florida

judgment became final two months later. Stated differently, the

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matter became moot on December 2, 2002, before the district court’s

2003 order purporting to reverse the Bankruptcy Court, and before

the Debtors’ 2003 discharge under Chapter 7. As we recognized in

Goldin,8 when a matter on appeal is determined to have become moot,

not merely prior to or during the appeal but prior to the date of

the order being appealed from, we must dismiss as moot the appeal

before us and vacate as moot the ruling from which the appeal was

sought. That is the course we are compelled to take today.

III. CONCLUSION

To recap, the district court’s order that was appealed to us

is moot because the Florida state court judgment had become final

and no longer appealable long before the district court purported

to reverse the Bankruptcy Court (and even longer before the

Debtors’ Chapter 7 discharge). Consequently, by the time the

district court acted in August of 2003, the sole case or

controversy between the parties had ceased to exist as a matter of

law. Under the doctrine of mootness, this deprived the district

court of jurisdiction, making its order reversing the Bankruptcy

Court void ab initio and the appeal of that order moot, thereby

depriving us of appellate jurisdiction. Thus, the only federal

court ruling left uninfected by mootness was the Bankruptcy Court’s

October 2, 2002 order lifting the automatic stay and keeping it

lifted until after the Florida judgment had become final, non-

8
In re Goldin, 166 F.3d 710 (5th Cir. 1999).

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appealable, and executory. We therefore dismissal this appeal and

vacate the order of the district court, both under the doctrine of

mootness, for lack of jurisdiction.

APPEAL DISMISSED; DISTRICT COURT ORDER VACATED.

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