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In re Pitchford

United States District Court, N.D. Illinois, Eastern Division

September 30, 2014



JOHN Z. LEE, District Judge.

Frances Gecker, acting as Chapter 7 Trustee ("Trustee") of the bankruptcy estate of Clanton L. Pitchford and Beverly A. Pitchford (collectively, "Debtors") moves to dismiss Knight Transportation, Inc.'s ("Knight") appeal of four orders entered by the Bankruptcy Court. In particular, Knight appeals: (1) the Order Granting First and Final Application of Parente & Norem, P.C. for Allowance of Compensation and Reimbursement of Expenses (Bankruptcy Dkt. 100); (2) the Order Denying Knight Transportation, Inc.'s Motion to Apply Judicial Estoppel (Bankruptcy Dkt. 108); (3) the Order Approving Trustee's Motion to Approve Compromise of Claim of Client Funding Solutions (Claim No. 3) (Bankruptcy Dkt. 109); and (4) the Order Denying Knight Transportation, Inc.'s Objection to the Claim of Clients Funds (sic) Solutions (Claim No. 3) (Bankruptcy Dkt. 110).

The Trustee filed a motion to dismiss Knight's appeal arguing that Knight lacked standing to pursue it. Additionally, as for the Bankruptcy Court's November 8, 2013 Order denying Knight's motion to apply judicial estoppel, the Trustee contends that the Order is not a final appealable order and that the Court should not exercise its discretion to review the order on interlocutory appeal. For its part, Knight argues that it has standing and a pecuniary interest in the outcome of this appeal, and that the November 8, 2013, Order was final, or in the alternative, was proper for interlocutory appeal. For the reasons stated herein, the Court finds that Knight lacks standing to bring this appeal, and the appeal is dismissed.


The parties do not dispute the facts leading up to Knight's appeal. Debtors filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on January 19, 2007. The Trustee filed a "No Asset Report" on December 21, 2007. The Chapter 7 bankruptcy proceeding was closed on April 30, 2007.

Prior to the bankruptcy proceeding, on September 13, 2006, in Tucson, Arizona, Clanton Pitchford had been severely injured by a truck driver for Knight. On January 23, 2007, the Pitchfords retained Christopher Norem ("Norem") of the law firm Parente & Norem to represent them in bringing personal injury claims against Knight. On August 6, 2008, Norem filed in the Circuit Court of Cook County a lawsuit on behalf of the Debtors, Clanton Pitchford, et. al. v. Transportation, Inc., et. al., Case No. 08-L-8670.

On September 30, 2010, Norem notified the Trustee of the pending personal injury lawsuit. Then, on October 12, 2010, the Bankruptcy Court entered an order granting the Trustee's motion to reopen the bankruptcy case, vacate a "No Asset Report, " and reinstate the Trustee. On November 2, 2010, the Bankruptcy Court authorized the Trustee to retain Norem as the Trustee's special counsel to prosecute and resolve the claims set forth in the personal injury lawsuit.

On February 20, 2013, a jury entered a judgment against Knight. Knight was held liable to Debtor's bankruptcy estate for $2, 386, 000.00. At present, the bankruptcy estate has recovered proceeds and interest totaling $2, 517, 197.59. On April 5, 2013, Knight itself became a creditor in the bankruptcy case by purchasing a medical lien claim filed against Debtors by ACS Recovery Services, Inc. See Transfer of Claim, Bankruptcy Dkt. 58 (noting transfer of Claim 16 from ACS Recovery Services, Inc. to Knight Transportation).

On October 15, 2013, the Trustee filed a Motion to Allow and Pay Medical Lien Claims (Claims Nos. 16 and 17). See Bankruptcy Dkt. 71. The Trustee sought leave to pay the medical lien claim held by Knight as well as another medical lien claim. Knight objected to the Trustee's motion, arguing that it would agree to payment of the medical lien claim only if it retained standing to object to the disbursement to the Debtors of the judgment proceeds from the personal injury lawsuit. Appellant's Mot. Leave Appeal ¶ 12. The Bankruptcy Court granted the Trustee's motion, did not incorporate Knight's objections, and authorized the Trustee to pay Knight in full satisfaction of any claims Knight may have had on the bankruptcy estate or the personal injury judgment. See November 8, 2013 Ord., Bankruptcy Dkt. 111 ("Medical Lien Order"). On November 14, 2013, Trustee paid Knight's medical lien claim in full. See Appellant's Mot. Leave Appeal ¶ 5. Knight did not appeal the Medical Lien Order. Subsequently, the Order became final.

While the Trustee's motion to pay the medical lien was pending, Knight also filed a motion to bar Debtors from any recovery from the personal injury case. See Bankruptcy Dkt. 72. Knight sought to bar Debtors from recovery in the bankruptcy case based on the doctrine of judicial estoppel.[1] The same day it entered its order allowing the Trustee to pay out the medical lien payments, the Bankruptcy Court denied Knight's motion. See November 8, 2013, Order, Bankruptcy Dkt. 108 ("Judicial Estoppel Order"). On November 21, 2013, Knight appealed the four orders noted above.


As a threshold matter the Trustee argues that Knight, lacking a cognizable interest in the outcome of its appeal, lacks standing to pursue the appeal. In particular, the Trustee contends that because Knight's medical lien claim has been paid in full, it lacks the pecuniary interest necessary for standing to appeal an order of the Bankruptcy Court. The Trustee also argues that Knight's attempt to appeal the Judicial Estoppel Order is improper because that Order is not a final, appealable order and does not meet the standard for interlocutory review. For its part, Knight argues it has standing to pursue its appeal, pointing to a surplus of funds that would revert to the bankruptcy estate and could go to Knight if this Court finds in its favor. Knight also argues that because the Judicial Estoppel Order forecloses further consideration of judicial estoppel, it is a final, appealable order. In the alternative, Knight argues that the Judicial Estoppel Order meets the standards for interlocutory appeal because it will materially advance the ultimate resolution of the bankruptcy.

Because standing is a "threshold jurisdictional question, " see Hinrichs v. Speaker of House of Representatives of Indiana General Assembly, 506 F.3d 584, 590 (7th Cir. 2007), the Court first analyzes Knight's standing to bring its appeal. Finding Knight lacks standing under the narrow standard for pursuing bankruptcy appeals, the Court must dismiss this appeal. ...

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