In Re: 60 91st Street Corp.

Background

60 91st Street Corp. filed a voluntary Chapter 11 bankruptcy petition. Kim Mortimer, the corporation’s sole shareholder and principal, proceeded without a lawyer. The bankruptcy court later approved Heidi J. Sorvino as the Chapter 11 trustee.

Mortimer appealed an August 7, 2020 bankruptcy court order. That order found Mortimer in contempt of prior orders, imposed monetary and non-monetary sanctions, restricted her contact with the debtor’s tenants, and directed the turnover of the debtor’s books, records, and other estate property under 11 U.S.C. § 542. The bankruptcy court found, among other things, that Mortimer had diverted rents and security deposits, failed to turn over required materials, provided records containing false or inaccurate information, refused to participate in further examinations, interfered with the trustee’s administration of the estate, and threatened or harassed certain tenants.

The trustee moved to dismiss Mortimer’s appeal based on her failure to comply with the Federal Rules of Bankruptcy Procedure governing the record on appeal.

Procedural deficiencies

The district court explained that an appellant generally must timely file and serve a designation identifying the materials to be included in the appellate record and a statement of the issues to be presented. The appellant must also obtain the necessary hearing transcripts or file the required certificate stating that no transcript is being ordered.

Mortimer filed her designation of items after the deadline. She did not file a statement of the issues for appeal and did not include the transcript of the bankruptcy court hearing on the contempt motion. The district court had previously ordered her to confirm that she had provided the full record. Mortimer later sought an extension in the bankruptcy court rather than in the district court and then filed an untimely designation. She said that changed locks had limited her access to a borrowed computer and that she did not know she could obtain the transcript without charge.

Court’s analysis

The court considered whether dismissal was justified under the factors governing dismissal of a bankruptcy appeal for procedural noncompliance. Those factors included the appellant’s reasons and conduct, prejudice to other parties, whether the appellant had an opportunity to correct the problems, whether important merits questions would remain unresolved, and whether a lesser sanction would be appropriate.

The court found that Mortimer’s conduct showed a pattern of negligence involving three separate deficiencies: the late record designation, the missing statement of issues, and the missing transcript. It found that her explanations did not account for all of the failures. The court also found that she had an opportunity to correct the filing but did not submit the missing statement of issues or transcript.

The court emphasized that Mortimer was pursuing the appeal in her personal capacity and that the appeal concerned a contempt order arising from her alleged interference with the bankruptcy proceedings. It therefore found that dismissal would not leave serious merits questions unresolved in the circumstances presented. The court also concluded that lesser sanctions were not appropriate because the appeal concerned a contempt motion that prejudiced Mortimer, rather than other creditors.

Disposition

Judge Paul A. Engelmayer granted the trustee’s motion and dismissed the appeal. The court expressly addressed only the procedural issues raised by the motion to dismiss and did not decide the merits of Mortimer’s challenge to the bankruptcy court’s contempt order.