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R. Brown & Sons, Inc. v. Rathe Salvage, Inc.

United States District Court, District of Vermont

February 25, 2015

R. BROWN & SONS, INC., Appellant,
v.
RATHE SALVAGE, INC., LAROCHE TOWING & RECOVERY, INC., and NEW ENGLAND QUALITY SERVICE, INC., Appellees.

OPINION AND ORDER (DOC. 1)

J. Garvan Murtha United States District Judge

I. Introduction

R. Brown & Sons, Inc. (“R. Brown”) appeals the Bankruptcy Court’s September 18, 2013 final order on pre-petition and post-petition storage claims. For the following reasons, the Bankruptcy Court’s decision is AFFIRMED.

II. Background

Appellant R. Brown is a scrap metal recycling and transporting business that filed for bankruptcy in June of 2013. Appellee Rathe Salvage, Inc. (“Rathe”), a creditor who had obtained a $440, 095 judgment against R. Brown, obtained a writ of execution on ten items of equipment, machinery, and vehicles (“Property”) belonging to R. Brown. The Property was seized by Rutland and Washington County Sheriffs (the “Sheriffs”) in accordance with state statutes.

Rathe arranged for Appellees LaRoche Towing & Recovery, Inc. (“LaRoche”) and New England Quality Service, Inc., d/b/a Earth Waste & Metal Systems (“Earth Waste”) to store the Property. In a July 26, 2013 order the Bankruptcy Court concluded the Sheriffs acted as “custodians” as defined by 11 U.S.C. § 101(11) and LaRoche and Earth Waste acted as the Sheriffs’ agents in storing the Property. (Doc. 1-4 (Record), at 102.) LaRoche and Earth Waste stored the property for 116 days. Because Vermont law holds a judgment debtor responsible for costs resulting from the levy, R. Brown is responsible for expenses associated with storing the Property for 116 days. The rates averaged between $50 and $100 a day per a piece of equipment and ultimately totaled $73, 125.

On appeal, R. Brown argues the Bankruptcy Court (1) erred as a matter of law in determining the Sheriffs qualified as custodians under § 101(11), and (2) committed clear error in finding the storage fees reasonable. (Doc. 16, at 10.) R. Brown filed its brief on October 30, 2014 (Doc. 16.) Earth Waste filed its brief on December 30, 2014 (Doc. 19) and Rathe filed its brief on December 31, 2014 (Doc. 20). R. Brown did not file a reply brief.

III. Discussion

A custodian of the debtor’s property may recover “administrative expenses” in the amount of “actual, necessary costs of preserving the estate, ” 11 U.S.C. § 503(b), and is entitled to priority in recovering these expenses, see 11 U.S.C. § 507(a)(2). R. Brown argues the Sheriffs were not custodians and are therefore not entitled to priority. R. Brown also argues the storage fees were unreasonably high -- and thus not “necessary” -- and therefore LaRoche and Earth Waste, who acted as agents of the custodian Sheriffs, should not be entitled to priority. LaRoche and Earth Waste argue the Sheriffs were custodians and the storage fees were reasonable. (Docs. 19, 20.) Earth Waste also argues the Court lacks jurisdiction to consider the appeal because R. Brown failed to timely file its notice of appeal. (Doc. 19.)

A. Standard of Review

A Bankruptcy Court’s “[f]indings of fact are reviewed for clear error, and conclusions of law are reviewed de novo.” In re Kalikow, 602 F.3d 82, 91 (2d Cir. 2010). A district court reviews a bankruptcy court’s conclusions on mixed questions of law and fact de novo. See Pion v. Bean, No. 1:07-cv-272, 2008 WL 2756478, at *1 (D. Vt. July 14, 2008).

B. Timely Filing of the Notice of Appeal

Earth Waste argues R. Brown’s Notice of Appeal was not timely filed. (Doc. 19, at 2-5.) The time limit for appeals prescribed by the bankruptcy rules is jurisdictional. See In re Indu Craft, Inc., 749 F.3d 107, 115 (2d Cir. 2014).

Earth Waste asserts the Federal Rules of Appellate Procedure provide the relevant time in which to appeal, citing 28 U.S.C. § 158(a)’s general provision that bankruptcy appeals are “taken as any other civil appeal under these rules.” 28 U.S.C. § 158(a). Earth Waste is incorrect. Section 158(c)(2) explains an appeal from a decision of a Bankruptcy Court shall be taken “in the time provided by Rule 8002 of the Bankruptcy Rules.” 28 U.S.C. § 158(c)(2). Rule 8002(a) requires a notice of appeal be ...


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