In re: ADAM PEEPLES; JENNIFER K. PEEPLES, Debtors.
SCOTT J. MCCARDLE, individually and as trustee of the Jack and Ruth McCardle Trust, Defendant Counterclaimant -Appellee. ADRIAN J. LEE; ANGELA LYNN NOYES LEE, Plaintiffs Counter Defendants -Appellants,
from the United States District Court for the District of
Utah (D.C. No. 2:16-CV-00808-JNP)
J. Lee, Holladay, Utah, pro se and for Co-Appellant.
K. Brough, Bennett Tueller Johnson & Deere, Salt Lake
City, Utah (Brigman L. Harman, Bennett Tueller Johnson &
Deere, Salt Lake City, Utah, with him on the brief) for
LUCERO, BACHARACH, and MORITZ, Circuit Judges.
MORITZ, CIRCUIT JUDGE.
Adrian and Angela Lee asked the bankruptcy court to declare that
the automatic stay in Adam and Jennifer Peeples'
bankruptcy case applies to a separate lawsuit Adrian Lee
filed in state court against defendant Scott McCardle. The
Lees also asserted that the automatic stay prevented McCardle
from collecting attorney's fees levied against Adrian Lee
in that state-court lawsuit. The Lees further sought damages
against McCardle for willfully violating the automatic stay.
The bankruptcy court found-and the district court agreed-that
the automatic stay didn't apply to the state-court
lawsuit. Thus, it granted summary judgment to McCardle. The
Lees appeal, arguing that the district court erred in ruling
that the automatic stay didn't apply. We don't reach
this question; instead, we vacate the district court's
judgment against Angela Lee because she lacks Article III
standing to bring this lawsuit, and we affirm summary
judgment against Adrian Lee because his claims don't fall
within the Bankruptcy Code's zone of interests.
2012, the Lees obtained a default judgment against the
Peepleses for unpaid rent and waste. In 2013, they obtained a
second default judgment against the Peepleses for fraud. The
Lees then sought to collect on those judgments by garnishing
distributions that the Jack and Ruth McCardle Trust (the
Trust) allegedly owed Adam Peeples. Trustee Scott McCardle
responded that Adam Peeples was only an inconsequential
beneficiary of the trust who wasn't owed any
distributions. Adrian Lee then sued Scott McCardle in Utah
state court, both individually and in Scott McCardle's
capacity as trustee, essentially alleging that Scott
McCardle's undue influence over Ruth McCardle prompted
her to disinherit Adam Peeples in a memorandum amending the
Trust. Thus, Lee asserted that the memorandum must be
rescinded and that the Trust owed Adam Peeples overdue
distributions dating back to Ruth McCardle's death in
2009. Lee sought to collect these distributions as
Peeples' judgment creditor.
state court dismissed the lawsuit because it determined Lee
didn't have standing and, alternatively, the claims were
time-barred. The state court further ordered Lee to pay
McCardle attorney's fees and left the case open to
determine those fees. The Peepleses filed their bankruptcy
petition while the state court was calculating fees. Lee then
argued that the automatic stay triggered by the
Peepleses' bankruptcy petition covered his lawsuit
against McCardle and moved to stay further proceedings. The
state court denied the motion and entered judgment assessing
$41, 889 in attorney's fees against Lee.
Lees initiated this adversarial proceeding against McCardle
in the Peepleses' bankruptcy case a week before the state
court entered final judgment. The Lees sought (1) a
declaratory judgment to confirm that the automatic stay
applied to the state-court lawsuit and (2) damages from
McCardle for willfully violating the automatic stay. The Lees
moved for partial summary judgment on the declaratory
judgment and the issue of McCardle's liability for
violating the automatic stay. But they reserved the issue of
damages for trial. McCardle filed a cross-motion for full
summary judgment. The bankruptcy court held that the
automatic stay didn't apply to the state-court lawsuit
because Lee had asserted claims against McCardle, not Adam
Peeples. Thus, the bankruptcy court denied the Lees'
motion and granted McCardle's. The Lees appealed to the
district court, which affirmed for substantially the same
reasons the bankruptcy court provided in its order.
hearing an appeal from a district court's review of a
bankruptcy-court order, "we independently review the
bankruptcy court's decision, applying the same standard
as the . . . district court." Jubber v. SMC Elec.
Prods., Inc. (In re C.W. Min. Co.), 798 F.3d
983, 986 (10th Cir. 2015). We review bankruptcy-court orders
granting summary judgment in adversarial proceedings de novo,
id., and affirm if "there is no genuine dispute
as to any material fact and the movant is entitled to
judgment as a matter of law." Fed.R.Civ.P. 56(a);
see also Fed. R. Bankr. P. 7056 (applying Rule 56 to
adversarial proceedings). The scope of the automatic stay is
a question of law that we review de novo regardless of the
case's posture. Johnson v. Smith (In re
Johnson), 575 F.3d 1079, 1082 (10th Cir. 2009). We also
review jurisdictional questions de novo. In re Special
Grand Jury 89-2, 450 F.3d 1159, 1170 (10th Cir. 2006).
we must address whether Angela Lee has Article III standing
to bring this appeal. Article III standing is jurisdictional;
thus, "where the record reveals a colorable standing
issue, we have a 'duty to undertake an independent
examination' (sua sponte if necessary) of that
issue." United States v. Ramos, 695 F.3d 1035,
1046 (10th Cir. 2012) (quoting Morgan v. McCotter,
365 F.3d 882, 887 (10th Cir. 2004)). Article III standing
requires that a "plaintiff must have (1) suffered an
injury in fact, (2) that is fairly traceable to the
challenged conduct of the defendant, and (3) that is likely
to be redressed by a favorable judicial decision."
Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016).
The plaintiff bears the burden of "demonstrat[ing] ...