In Re: Peggy Nestor

Background

Peggy Nestor filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of New York on April 25, 2023. Marianne Nestor, Peggy Nestor’s sister, became involved in the bankruptcy proceedings through her co-ownership of a property with Peggy Nestor.

Marianne Nestor appealed a July 26, 2024 Bankruptcy Court decision that authorized a Chapter 11 trustee to obtain financing after the bankruptcy filing, granted the financing lender a first-priority senior mortgage lien, and granted related relief. Marianne Nestor filed the appeal in the District Court, where the case was assigned to Judge Rearden and referred to Magistrate Judge Sarah L. Cave for general pretrial matters and a report and recommendation on dispositive motions.

Report and Recommendation

Judge Cave ordered Marianne Nestor to explain why the appeal should not be dismissed for lack of subject-matter jurisdiction. Federal Rule of Bankruptcy Procedure 8002(a) requires a notice of appeal to be filed within 14 days after entry of the order being appealed. Judge Cave determined that Marianne Nestor had not filed her notice within that period and found that her response to the order to show cause did not appear to address the appealed order.

Judge Cave therefore recommended that the appeal be dismissed without prejudice because the District Court lacked jurisdiction. Albert Togut filed an objection, arguing that the appeal should be dismissed with prejudice because, according to his objection, Marianne Nestor and the debtor had filed untimely appeals from nearly every Bankruptcy Court order entered after Togut became trustee. The objection also asserted that the appeals impeded administration of the bankruptcy estate, imposed costs, and served no useful purpose.

Court’s Ruling

Judge Rearden reviewed the objection de novo, meaning independently rather than under the more deferential clear-error standard. The court explained that when a court lacks subject-matter jurisdiction, it does not have the power to dismiss with prejudice. The court also relied on authority stating that the bankruptcy appeal deadline is jurisdictional and that a district court lacks jurisdiction when a notice of appeal is not timely filed.

The court overruled Albert Togut’s objection, adopted Judge Cave’s Report and Recommendation in its entirety, and dismissed Marianne Nestor’s appeal without prejudice. The Clerk was directed to close the case and mail a copy of the order to Marianne Nestor.