Friday, February 16, 2007

Halkas v. Grigsby (Maryland U.S.D.C.)(Not Approved for Publication)

Signed February 15, 2007--Opinion by Judge Deborah K. Chasanow (Not aproved for publication)

In a follow up to an earlier Memorandum Opinion in the same case, discussed here, the debtor ("Halkas") challenged the motion by the bankruptcy trustee ("Grigsby") to dismiss the appeal of the debtor from the bankruptcy court. The earlier opinion had required Grigsby to file an affidavit or other evidence of the disbursement of funds to creditors from the estate on or about September 30, 2006, in order to establish that the matters at issue were now moot. Grigsby filed an affidavit and accompanying financial records as proof of those transactions.

Halkas challenged the submissions as inadequate to demonstrate the appeal was moot in that they were not admissible as evidence, and further argued that the appeal was not moot because the debtor might file a claim against the trustee, and that even if the appeal is dismissed, the bankruptcy court's order below should be vacated.

On the first point, Halkas argued that Grigsby's affidavit did not state that it was based upon Grigsby's personal knowledge, and that the checks and financial records submitted were hearsay statements which had not been properly authenticated. The judge had little difficulty in finding that the records qualified as "business records" exempt from exclusion as hearsay, or in finding that Grigsby in fact had personal knowledge of the submitted materials and thus had established a sufficient foundation for admission of the records, notwithstanding some minor technical and format issues with the submission.

The judge also found Halkas' claim that she might have a cause of action against Grigsby for fees retained by the trustee or arising from improper disbursements made to nonparty creditors to be speculative and counter to the fact that no such claims had been made to date, and in fact no basis for such claims had been submitted by Halkas.

The judge also found that dismissal of the appeal was the proper remedy rather than vacating the order below, given both the mootness of the matters raised on appeal and the inability of the court below to effect a remedy even if Halkas could prevail on the merits, given the prior disbursal of all available funds to nonparty creditors.

This memorandum opinion is available in PDF.

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