United States District Court, D. Delaware
IN RE SAMSON RESOURCES CORPORATION, et al. Debtors.
SAMSON RESOURCES CORPORATION, Appellees. LLOYD AND MARY NESS, Appellants, Civ. No. 16-1156-RGA
before this Court is a pro se appeal from a
Memorandum Order (B.D.I. 1346)and an order denying
reconsideration of same (B.D.I. 1661) entered by the United
States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"), which disallowed and expunged
proofs of claim filed by Appellants in the Chapter 11 cases.
For the reasons set forth below, the appeal is dismissed for
lack of subject matter jurisdiction.
appeal arises out of an oil and gas lease ("Ness
Lease") between Appellants and a predecessor to the
Debtors, which created a one-sixth royalty interest in the
oil and gas produced from wells drilled on Appellants'
property in North Dakota. The Debtors drilled and operated
ten wells on the property. Although the Ness Lease provides
for a one-sixth aggregate royalty, Appellants and certain
relatives each own a fraction of this one-sixth interest
based on their divided ownership of the property.
September 16, 2015, Samson Resources Corporation, together
with certain affiliates ("Debtors"), filed
voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code. Appellants filed a proof of claim in
conjunction with several relatives in the Chapter 11 cases
(Claim Nos. 559, 753, 869, 1798, 1799, 1800) ("Ness
Claims"). The Ness Claims allege that the Debtors have
improperly calculated royalty payments and have debited
improper deductions. Mr. Ness's claim asserted "$75,
000 - $1, 000, 000" for royalties allegedly owed by the
Debtors to Mr. Ness, plus interest at an annual rate of 18
percent. Mr. Ness's claim also states that the claim is
secured and entitled to priority pursuant to section 507 of
the Bankruptcy Code.
February 16, 2016, the Debtors objected to the Ness Claims
(B.D.I. 675, 677) ("Ness Objection"), and the
parties subsequently engaged in discovery. On July 6, 2016,
the Bankruptcy Court held an evidentiary hearing on the Ness
Objection. (B.D.I. 1151, 7/6/16 Hr'g Tr.). Although
Appellants did not file a written response to the Ness
Objection, Appellants raised several arguments at the
evidentiary hearing, including, inter alia, that (i)
relevant case law, which permits the deduction of
post-production costs from royalty payments, was inapplicable
to gas from Appellants' wells; (ii) the Ness Lease
predated the relevant case law and therefore it should not
apply to their Claims; (iii) the automatic stay should be
modified, or in the alternative, that the Bankruptcy Court
should abstain from hearing the Ness Objection, to allow the
North Dakota courts to hear this matter; and (iv)
post-production costs of gas that exceed the amount the gas
is sold for should not be netted against oil royalties.
(See B.D.I. 1346 at 7).
September 13, 2016, the Bankruptcy Court entered the
Memorandum Order, finding that: the amount of the royalty
payments was calculated starting with the market price
received for the oil or gas and is divided among the
fractional interest holders of each well (see B.D.I.
1346 at p. 5); Debtors then subtracted the fractional costs
for post-production expenses from the royalty payments prior
to issuing royalty checks (id.); from November 2012
to January 2016, Debtors made royalty payments to Mr. Ness
totaling approximately $48, 123.49 (id.); and during
that period, Debtors deducted post-production costs of, at
most, $1, 930 from Mr. Ness's royalty payments
(id. at pp. 6, 22). The Memorandum Order, inter
alia: modified the Ness Claims to be asserted against
the correct Debtor (id. at p. 8); reclassified the
Ness Claims as general unsecured claims for disputed amounts,
if any, occurring prior to the petition date (id.);
determined that post-production expenses are properly charged
against royalties under North Dakota law (id. at pp.
9-13); declined to modify the automatic stay or abstain from
hearing the Ness Objection (id. at pp. 14-20); and
ultimately disallowed and expunged the Ness Claims
(id. at p. 24).
September 27, 2016, Appellants filed a Motion for
Alteration Amendment of a Judgment of a Claim Worthy or
Pursuit, in Order to Take New Testimony, Amend Findings of
Fact and Conclusions of Law, or Make New Ones, and Direct the
Entry of a New Judgment as per Fed Rules of Civ. Procedure
Rule 59(a)(1)(B) (B.D.I. 1408) ("Reconsideration
Motion"). On October 17, 2016, Appellants supplemented
the Reconsideration Motion (B.D.I. 1570)
("Supplement"). The Bankruptcy Court treated the
Reconsideration Motion and Supplement as a motion for
reconsideration under Federal Rule of Civil Procedure
The Bankruptcy Court held another hearing to discuss
Appellants' arguments on November 16, 2016 and
subsequently denied the requested relief. (B.D.I. 1661)
("Reconsideration Order"). On December 7, 2016,
Appellants noticed their appeal of both the Memorandum Order
and the Reconsideration Order. (D.I. 1). The notice of appeal
was filed 21 days after the entry of the Reconsideration
February 15, 2017, the Court held a telephonic hearing and
the parties agreed to a briefing schedule. (D.I. 8).
Appellants did not comply with Bankruptcy Rule 8009, which
requires an appellant to designate "items to be included
in the record on appeal and a statement of the issues to be
presented." Fed.R.Bankr.P. 8009(a)(1). On March 22,
2017, Appellants filed their opening brief, which, according
to Appellants, refers to "new evidence" that
Debtors improperly calculated and withheld royalty payments.
(See D.I. 12 at pp. 2-3). On April 21, 2017, Debtors
filed their answering brief, asserting that this Court lacks
subject matter jurisdiction over the appeal because it was
not timely filed. (See D.I. 13 at pp. 6-9). Debtors
further argue that Appellants are seeking to improperly
assert new evidence and new arguments in the appeal
(id. at pp. 9-10); that the Bankruptcy Court
correctly determined that the Ness Claims were barred by
state law (id. at pp. 10-14); and that the
Bankruptcy Court did not commit clear error in refusing to
consider new evidence in connection with Appellants'
Reconsideration Motion (id. at pp. 14-16).
Jurisdiction and Standard of Review.
Court has appellate jurisdiction over all final orders and
judgments from the Bankruptcy Court. See 28 U.S.C.
§ 158(a)(1). Bankruptcy Rule 8002 provides: "Except
as provided in subdivisions (b) and (c), a notice of appeal
must be filed with the bankruptcy clerk within 14 days after
entry of the judgment, order, or decree being appealed."
Fed.R.Bankr.P. 8002(a)(1). The Third Circuit has held that the
failure to appeal a bankruptcy court's ruling to the
district court within the time period established by
Bankruptcy Rule 8002 deprives the district court of
jurisdiction to hear an appeal. See In re Caterbone,
640 F.3d 108, 113 (3d Cir. 2011).
days from the date of entry of the November 16, 2016
Reconsideration Order was November 30, 2016. The appeal was
not filed until December 7, 2016, seven days after the 14-day
period under Bankruptcy Rule 8002(a) had expired. Although
the Bankruptcy Rules alone cannot create or withdraw
jurisdiction, Congress has limited the jurisdiction of this
Court to hear an appeal from a final order of a Bankruptcy
Court by specifically incorporating the time limits of Rule
8002 in the jurisdictional grant to the district courts to
hear appeals from bankruptcy courts. Section 158(c)(2) of
title 28 provides that "an appeal under subsections (a)
and (b) of this section shall be taken in the same manner as
appeals in civil proceedings generally are taken to the
courts of appeals from the district courts and in the
time provided by Rule 8002 of the Bankruptcy
Rules." 28 U.S.C. § 158(c)(2) (emphasis
Third Circuit has held on several occasions that the time
limits of Bankruptcy Rule 8002 are jurisdictional and deprive
an appellate court of subject matter jurisdiction if the
appellant fails to comply. See Caterbone, 640 F.3d
at 112-13 (citing S'holders v. Sound Radio,
Inc., 109 F.3d 873, 879 (3d Cir. 1997); Whitemere
Dev. Corp., Inc. v. Cherry Hill Twp., 786 F.2d 185, 187
(3d Cir. 1986); In re Universal Minerals, Inc. 755
F.2d 309, 311 (3d Cir. 1985)). In Caterbone, the
court stated that:
[b]ecause Section 158 ... specifies the time within which an
appeal must be taken - i.e., "in the time provided by
Rule 8002" - that requirement is jurisdictional... Here,
even though it is a bankruptcy rule that specifies the time
within which an appeal must be filed, the statutory
incorporation of that rule renders ...