In Thakkar v. Bay Point Capital Partners, LP (In re Bay Circle Properties, LLC), 2020 WL 1696303 (11th Cir. Apr. 8, 2020), the Eleventh Circuit dismissed an appeal because the only appellant remaining after a settlement lacked Article III standing (and in any event failed to meet the “person aggrieved doctrine” standard for appealing a bankruptcy court order).
The case originally featured two plaintiffs: Mr. Thakkar and a company called DCT Systems Group, LLC. DCT had declared bankruptcy and then entered into a settlement agreement, to which Thakkar was also a party, with its creditor Wells Fargo. The settlement agreement was secured by two properties owned by DCT. Wells Fargo sold its interest in the settlement agreement to Bay Point; DCT defaulted under the agreement; and the bankruptcy court authorized Bay Point to foreclose on both properties.
Thakkar and DCT filed an action against Bay Point in state court, alleging that the two properties were worth at least $8 million and that one of them, alone, would have been sufficient to satisfy DCT’s $2.7 million debt. Thakkar alleged that he was “affiliated with” DCT and had a “beneficial interest” in the two properties.
Bay Point removed the case to bankruptcy court and moved for judgment on the pleadings. The bankruptcy court granted the motion, and the district court affirmed. Thakkar and DCT appealed to the Eleventh Circuit. While the appeal was pending, DCT entered into a settlement agreement with Bay Point. After that, Bay Point moved to dismiss the appeal.
The Eleventh Circuit, in an opinion written by Judge Wilson and joined by Judge Branch and Judge Julie Carnes, affirmed the dismissal. Citing Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), the court reviewed the requirement that “[a]t the pleading stage, ‘plaintiff[s] must clearly allege facts demonstrating each element’ of standing.” The court added that “standing is not dispensed in gross,” and a party’s ability to “piggyback” on another’s standing “exists only if the [party with standing] is in fact an appellant. . . ; in the absence of the [party with standing] in that capacity, there is no case.”
DCT had had standing to complain about the foreclosures—it owned the properties. But DCT’s settlement left Thakkar as the sole appellant in the case. His allegations about an unspecified “beneficial interest” in the properties and “mental anguish” as a result of the foreclosure, paired with the allegation that DCT (and not Thakkar) owned the properties, were insufficient to establish Thakkar’s Article III standing to pursue the claims.
Even apart from the question of Article III standing, the court continued, Thakkar could not meet the “person aggrieved doctrine” applicable in the Eleventh Circuit for assessing a party’s ability to appeal a bankruptcy court’s order. “Based on that doctrine, we also dismiss this appeal because Thakkar certainly cannot clear the higher hurdle of showing that he is a person aggrieved.”
Posted by Valerie Sanders.