USCA11 Case: 19-14321 Date Filed: 03/10/2021 Page: 1 of 8
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 19-14321
________________________
D.C. Docket No. 1:17-cv-00312-JB-B
In re: CHARLES K. BRELAND, JR.,
Debtor.
__________________________________________________________________
CHARLES K. BRELAND, JR.,
Plaintiff - Appellant,
versus
UNITED STATES OF AMERICA,
LEVADA EF FIVE, LLC,
A. RICHARD MAPLES, JR.,
UNITED STATES BANKRUPTCY ADMINISTRATOR,
Defendants - Appellees,
EQUITY TRUST COMPANY, LLC,
HUDGENS & ASSOCIATES LLC,
Interested Party-Appellees.
USCA11 Case: 19-14321 Date Filed: 03/10/2021 Page: 2 of 8
________________________
Appeal from the United States District Court
for the Southern District of Alabama
________________________
(March 10, 2021)
Before WILSON, NEWSOM and ED CARNES, Circuit Judges.
NEWSOM, Circuit Judge:
What began as a case about the meaning and application of the seldom-
litigated Thirteenth Amendment—which, as relevant here, prohibits “slavery [and]
involuntary servitude”—presents itself to us as one about the relatively ho-hum
issue of standing.
Real-estate developer Charles Breland, Jr. voluntarily filed for Chapter 11
bankruptcy. When the bankruptcy court later determined that he was transferring
assets and defrauding his creditors, it removed him as the debtor-in-possession and
appointed a trustee to administer the estate. Breland protested that the trustee’s
appointment violated his Thirteenth Amendment right to be free from “involuntary
servitude”—because, he said, under the trustee’s direction, all of his post-petition
earnings would be put into the bankruptcy estate for the benefit of his creditors.
The bankruptcy court dismissed Breland’s Thirteenth Amendment claim as unripe,
and, on review, the district court similarly held that Breland couldn’t show an
injury-in-fact sufficient to confer Article III standing.
2
USCA11 Case: 19-14321 Date Filed: 03/10/2021 Page: 3 of 8
We disagree. We hold that Breland’s loss of authority and control over his
estate, which he suffered as a result of his removal as the debtor-in-possession,
constitutes an Article III-qualifying injury-in-fact that is both traceable to the
bankruptcy court’s appointment of the trustee and redressable by an order vacating
that appointment—and, accordingly, that Breland has standing to pursue his
Thirteenth Amendment claim. We leave it to the district court on remand to
consider the merits—and demerits—of Breland’s arguments.
I
The facts of this case are undisputed, and are largely irrelevant to the central
issue presented on appeal in any event, so we’ll summarize them only briefly.
Real estate developer Charles Breland, Jr., voluntarily filed for Chapter 11
bankruptcy in the United States Bankruptcy Court for the Southern District of
Alabama. Upon filing, Breland became the debtor-in-possession of his bankruptcy
estate, meaning that he owed a fiduciary duty to his creditors to act in the estate’s
best interest. See
11 U.S.C. § 1106, 1107(a). Alleging that Breland had failed to
do that, his creditors asked the bankruptcy court to appoint a trustee. After finding
that Breland had been transferring assets in and out of the estate and defrauding
creditors, the bankruptcy court appointed a trustee, deposing Breland as the debtor-
in-possession.
3
USCA11 Case: 19-14321 Date Filed: 03/10/2021 Page: 4 of 8
Breland objected to the bankruptcy court’s appointment of a trustee. He
contended, in particular, that the trustee’s appointment violated his Thirteenth
Amendment right to be free from “involuntary servitude”—because, he asserted,
under the trustee’s stewardship, all of his earnings would be placed into the
bankruptcy estate and thus out of his control, and that he would lose his right to
move to dismiss his Chapter 11 bankruptcy case or to convert it to a proceeding
under a different chapter. The bankruptcy court dismissed Breland’s Thirteenth
Amendment claim as unripe on the ground that it hadn’t yet imposed a plan of
reorganization that would require him to work for the benefit of the estate and his
creditors. On appeal to the district court, Breland renewed his Thirteenth
Amendment claim. The district court also dismissed the claim, but on the ground
that Breland hadn’t suffered an injury-in-fact sufficient to confer Article III
standing. The district court thus affirmed the bankruptcy court’s original orders
appointing a trustee and dismissing Breland’s Thirteenth Amendment claim.
This is Breland’s appeal.1
1
We review the bankruptcy and district courts’ decisions of law de novo. In re Sublett,
895 F.2d
1381, 1383 (11th Cir. 1990). District courts have jurisdiction to hear appeals from “final
judgments, orders, and decrees” of bankruptcy courts,
28 U.S.C. § 158(a)(1), and we can hear
appeals from “final decisions, judgments, orders, and decrees” entered under § 158(a)(1), id. §
158(d)(1). The appointment or removal of a bankruptcy trustee is a final order appealable to this
Court. In re Walker,
515 F.3d 1204, 1211 (11th Cir. 2008).
4
USCA11 Case: 19-14321 Date Filed: 03/10/2021 Page: 5 of 8
II
Both the bankruptcy court and the district court held that Breland’s
Thirteenth Amendment claim was nonjusticiable in the absence of a reorganization
plan requiring Breland to work and devote his income to paying off his creditors—
the bankruptcy court because the claim wasn’t ripe, and the district court because
Breland had suffered no injury-in-fact. Whatever the merits of Breland’s
Thirteenth Amendment challenge—and we are skeptical—we hold that the
appointment of the trustee sufficiently diminished Breland’s ability to control the
assets in his own bankruptcy estate to satisfy Article III’s standing requirements.
Existing standing doctrine requires a plaintiff to demonstrate (1) an actual
(or imminent), concrete, and particularized injury-in-fact (2) that is fairly traceable
to the defendant’s challenged action and (3) that is likely redressable by a
favorable decision. See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc.,
528 U.S. 167, 180–81 (2000). Here, the bankruptcy court’s decision to appoint a
trustee removed Breland as the debtor-in-possession and accordingly deprived him
of the statutory “[r]ights, powers, and duties” attendant to that status.
11 U.S.C.
§ 1107. The resulting loss of authority and control over his bankruptcy estate is
sufficient injury to confer Article III standing.
Before the appointment of a trustee—i.e., while he remained the debtor-in-
possession—Breland could, even without the bankruptcy court’s approval, hire
5
USCA11 Case: 19-14321 Date Filed: 03/10/2021 Page: 6 of 8
professionals whose work is “necessary in the operation” of his business,
id.
§ 327(b); use, sell, or lease the property of the estate in the ordinary course of
business, id. § 363(c)(1); and obtain unsecured credit in the ordinary course of
business, id. § 364(a). Likewise, before the trustee’s appointment, Breland could
do any of the following, so long as he obtained the bankruptcy court’s approval:
hire professionals to assist in the reorganization, id. § 327(a); use, sell, or lease
estate property or obtain unsecured credit outside the ordinary course of business,
id. §§ 363(b)(1), 364(b); accept and reject executory contracts and unexpired leases
to which he was a party, id. § 365(a); and bring most avoidance actions on his own
behalf, id. § 544, 548.
When the bankruptcy court appointed a trustee, and thereby deposed Breland
as the debtor-in-possession, it stripped him of the ability to do—or to seek
permission to do—any of those things. The consequent loss of authority over his
estate constitutes an Article III-qualifying injury-in-fact. And to round out the
standing analysis, Breland’s injury is “fairly traceable” to the appointment of the
trustee, and it is “redress[able],” in the sense that an order removing the trustee
would have the effect of restoring him to debtor-in-possession status, with all its
attendant rights and responsibilities. Friends of the Earth,
528 U.S. at 180–81.
6
USCA11 Case: 19-14321 Date Filed: 03/10/2021 Page: 7 of 8
We thus hold that Breland has Article III standing to pursue his Thirteenth
Amendment challenge. 2
III
It’s oh-so tempting to forge ahead and address the merits of Breland’s
Thirteenth Amendment claim, but our hands are tied. It’s true, of course, that we
can affirm a district court’s judgment based on any ground supported by the
record. See Kernel Records Oy v. Mosley,
694 F.3d 1294, 1309 (11th Cir. 2012).
But when the district court here held that Breland lacked standing to sue, it
dismissed his claim for lack of subject-matter jurisdiction—and thus without
prejudice. See Stalley ex rel. v. Orlando Reg’l Healthcare Sys., Inc.,
524 F.3d
1229, 1232 (11th Cir. 2008) (“A dismissal for lack of subject matter jurisdiction is
not a judgment on the merits and is entered without prejudice.”). Were we to range
beyond the jurisdictional issue here and reject Breland’s claim on the merits, we
would, in effect, be directing a dismissal with prejudice—and thereby altering the
district court’s judgment. That, we cannot do. See United States v. American Ry.
Exp. Co.,
265 U.S. 425, 435 (1924) (“[T]he appellee may not attack the decree
2
To be clear, it’s no answer to say that Breland voluntarily entered Chapter 11 bankruptcy—and
thus, the story goes, brought his injury upon himself. That argument proves too much. Taken to
its logical extension, it would mean that every debtor who voluntarily enters bankruptcy thereby
forfeits the ability to challenge or defend against any future injury that he might suffer at the
bankruptcy court’s hands. Experience and common sense demonstrate the contrary. See, e.g., In
re Woodlawn Cmty. Dev. Corp.,
613 B.R. 671 (N.D. Ill. 2020); In re Elijamal, No. 17-cv-07870,
2018 WL 4735719 (S.D.N.Y. Sept. 18, 2018).
7
USCA11 Case: 19-14321 Date Filed: 03/10/2021 Page: 8 of 8
with a view either to enlarging his own rights thereunder or of lessening the rights
of his adversary, whether what he seeks is to correct an error or to supplement the
decree with respect to a matter not dealt with below.”); 4 Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure § 3904 (2d ed. 2020) (“[A]n
appellee cannot, without cross-appeal, seek . . . to convert a dismissal without
prejudice into a dismissal with prejudice.”). Accordingly, we reverse the dismissal
for lack of standing and remand Breland’s case to the district court for a decision
on the merits of his Thirteenth Amendment claim.
REVERSED and REMANDED.
8
