United States District Court, D. Delaware
IN RE ENERGY FUTURE HOLDINGS CORP., et al., Debtor.
ENERGY FUTURE HOLDINGS CORP., et al., Appellees. WAYNE ENGLISH, Appellant,
before the Court is apro se appeal from a December
13, 2016 Order (B.D.I. 10380) entered by the United States
Bankruptcy Court for the District of Delaware, disallowing
Appellant's proof of claim. The Court has considered the
parties' briefing (D.I. 16, 17, 19) and supplemental
letters (D.I. 21, 22, 25). For the reasons that follow, the
Order is affirmed.
BACKGROUND On April 29, 2014, Texas Competitive
Electric Holdings, its parent Energy Future Holding
Competitive Holdings, and certain affiliates
("Debtors") filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code.
is a pro se individual who, in 2010, purchased $100,
000 in aggregate principal amount of 6.55% Series R Bonds,
issued by Energy Future's predecessor, TXU Corporation.
September 2014, Appellant sold the bonds for $75, 420.
Appellant subsequently filed a proof of claim in connection
with those bonds for $24, 580-that is, the difference between
the face amount of the bonds and the price for which
Appellant sold them.
objected to Appellant's proof of claim on the basis that
it was not valid. (B.D.I. 4784). On December 13, 2016, the
Bankruptcy Court held an evidentiary hearing on Debtors'
objection, at which time the parties presented evidence and
argument in support of their positions. (B.D.I. 10393).
hearing, Appellant essentially argued that his proof of claim
was valid because, although he sold his TXU bonds, he did so
after Debtors filed for relief under Chapter 11. (See
Id. at 66:3-8, 67:22-68:1). In other words, Debtors owed
$100, 000 to Appellant at the time they filed for Chapter 11
bankruptcy. (See Id. at 68:2). Appellant further
argued that, pursuant to Texas law, he had properly mitigated
his damages by selling the bonds for seventy-five cents on
the dollar, at a time when the price of the bonds was
fluctuating. (See Id. at 66:5-7, 68:3-11).
argument, the Bankruptcy Court ruled from the bench. It
sustained Debtors' objection. (Id. at 70:20-21).
The court explained that "the bond[s], although
contractual in nature and subject to a contractual indenture,
are securities. And under the indenture and under the
securities laws, the obligations run with the bond. And
once the bond is sold, you no longer hold the bond or no
longer are a creditor of the debtors." (Id. at
70:22-71:3). In other words, "once the bond is sold,
there is no longer a right to payment." (Id. at
71:8-9). In rejecting Appellant's mitigation of damages
argument, the court explained, "Mitigation of damages
does not apply in a purchase and sale of securities because
damages don't apply in the purchase and sale of
securities." (Id. at 71:10-12). The court
stated further, "Mitigation of damages is completely
inapplicable because we're talking about the purchase or
sale of a security and damages, contract damages, simply
don't arise." (Id. at 73:3-5).
the hearing, the Bankruptcy Court entered an order
disallowing Appellant's proof of claim. (B.D.I. 10380).
Appellant now appeals from that order.
JURISDICTION & STANDARD OF REVIEW
Court has appellate jurisdiction over all final orders and
judgments from the Bankruptcy Court. See 28 U.S.C.
Rule 8002(a)(1) 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 the appeal. See In re
Caterbone, 640 F.3d 108, 113 (3d Cir. 2011).
appeal from an order issued by the Bankruptcy Court, the
Court "review[s] the bankruptcy court's legal
determinations de novo, its factual findings for
clear error and its exercise of discretion for abuse
thereof." In re Trans World Airlines, Inc., 145
F.3d 124, 131 (3d Cir. 1998). Abuse of discretion is found
where a "court's decision rests upon a clearly
erroneous finding of fact, an errant conclusion of law, or an
improper application of law to fact." Int 7
Union, United Auto., Aerospace & Agr. Implement
Workers of Am., UAW v. Mack Trucks, Inc., 820 F.2d 91,
95 (3d Cir. 1987). Because the matter being reviewed involves
the Bankruptcy Court's determination regarding the
validity of Appellant's proof of claim, review is de
raises two principal issues on appeal. I think they can
be characterized as follows: (1) whether the Bankruptcy Court
erred in sustaining Debtors' objection to Appellant's
proof of claim,  and (2) whether Debtors' Omnibus
Objection to Appellant's proof of claim complied with
Federal Rule of Bankruptcy Procedure 3007. Appellant did not
raise the second issue in the Bankruptcy Court. Accordingly,
it is deemed waived, and I may not ...