In Re: PB Life and Annuity Co., Ltd.

Background

The appeal arose from a bankruptcy adversary proceeding brought by John Johnston and Edward Willmott, acting as joint provisional liquidators for four entities involved in Bermuda insolvency proceedings. The proceeding included claims against four North Carolina insurance companies. A North Carolina court had issued an injunction requiring permission before filing an action against those insurance companies, and the Bankruptcy Court had separately stayed the adversary proceeding as to them.

Despite the denial of permission by the North Carolina court, Johnston filed an amended complaint. The Bankruptcy Court later held Johnston and his lawyers—Nicholas F. Kajon, Constantine D. Pourakis, Eric M. Robinson, and Wade D. Koenecke—in civil contempt for violating the stay order. The Bankruptcy Court awarded the North Carolina insurance companies $670,292.04 for legal fees and costs. The sanction was imposed against Stevens & Lee, P.C. and was paid by that firm.

Johnston and the lawyers and firm appealed the contempt order to the District Court. Johnston later dismissed his appeal with prejudice. The remaining appellants filed two motions: one seeking dismissal without prejudice for Robinson and Koenecke, and another seeking dismissal with prejudice for Kajon, Pourakis, and Stevens & Lee, P.C. Robinson and Koenecke alternatively sought a 60-day extension to file their opening appeal brief.

Legal Standard

Federal Rule of Bankruptcy Procedure 8023(b) allows a district court to dismiss an appeal on terms agreed to by the parties or set by the court. The court applied the general rule that voluntary dismissal without prejudice should be allowed unless the opposing party would suffer “plain legal prejudice”—a legal harm beyond the possibility of having to litigate again.

Court’s Analysis

The North Carolina insurance companies did not oppose dismissal with prejudice for Kajon, Pourakis, and Stevens & Lee, P.C.; they instead asked the court to dismiss the appeal with prejudice as to everyone remaining. Because the parties agreed that Kajon, Pourakis, and Stevens & Lee, P.C. should have their appeal dismissed with prejudice, the court granted that motion.

The court also granted dismissal without prejudice for Robinson and Koenecke. It found that they were not seeking dismissal for an improper tactical reason and that they intended to ask the Bankruptcy Court to revisit the contempt finding against them under Federal Rule of Civil Procedure 60(b). The court noted that the claims against the North Carolina insurance companies had been dismissed with prejudice, the related appeal concerning the stay order had been withdrawn, and the sanctions paid by Stevens & Lee, P.C. would remain in place. The court concluded that the insurance companies had not shown plain legal prejudice; the possibility that they might have to respond to a future request was not enough.

Disposition

The court granted the motion to dismiss with prejudice as to Kajon, Pourakis, and Stevens & Lee, P.C. It granted the motion to dismiss without prejudice as to Robinson and Koenecke. It denied the motions for an extension of time to file an opening appeal brief as moot, directed the Clerk to terminate the motions, and closed the case. Judge Edgardo Ramos did not decide whether the Bankruptcy Court’s contempt findings were correct.