      Case: 13-10120           Document: 00513154664   Page: 1    Date Filed: 08/14/2015




            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT


                                        No. 13-10120
                                                                         United States Court of Appeals
                                                                                  Fifth Circuit

                                                                                FILED
In the Matter of: ONDOVA LIMITED COMPANY,                                 August 14, 2015
                                                                           Lyle W. Cayce
                                                 Debtor                         Clerk

----------------------------


PETFINDERS, L.L.C.,

                                                 Appellant
v.

CHAPTER 11 TRUSTEE DANIEL J. SHERMAN,

                                                 Appellee




                      Appeal from the United States District Court
                           for the Northern District of Texas
                                 USDC No. 3:12-CV-387


Before JOLLY, HIGGINBOTHAM, and DAVIS, Circuit Judges.
PER CURIAM:*




        *Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                        No. 13-10120
       This appeal arises from the bankruptcy case styled Matter of Ondova
Limited Company. 1 Petfinders, LLC, appeals a district court order dismissing
as moot its appeal from a bankruptcy court order authorizing the Trustee to
sell the domain name <petfinders.com>, an asset of the estate. We adopt the
analysis of the district court 2 and, concluding that the appeal to the district
court was indeed moot, we affirm the judgment of dismissal.
                                                I.
       On October 7, 2011, the Trustee requested authority to sell the domain
name <petfinders.com> pursuant to 11 U.S.C. § 363(b). 3 The bankruptcy court
scheduled a hearing for November 9, 2011. On November 7, two days before
the section 363 hearing, Petfinders, LLC, filed an objection challenging the
proposed sale price and alleged that <petfinders.com> was not the property of
the estate but was instead owned by another entity, Novo Point, LLC, which
had assigned its rights and interest in <petfinders.com> to Petfinders.
       Following the November 9 hearing, the bankruptcy court granted the
Trustee’s motion, authorized the sale of <petfinders.com> to Discovery
Communications, LLC, for $25,000, and issued an order to that effect.
Regarding the arguments advanced on behalf of Petfinders, the bankruptcy
court found and concluded as follows:
       The Court heard substantial evidence establishing that the
       Domain Name is clearly property of the Estate. One party
       asserting that the Domain Name was its property, Petfinders,
       LLC, offered no evidence whatsoever to support its position. The
       Court further heard convincing evidence that Discovery holds
       numerous trademark registrations on the word “petfinder” and


       1   Case No. 09-34784-sgj-11 (Bankr. N.D. Tex.).
       2   See R.1828-30 (Order Granting Appellee’s Motion to Dismiss Appeal Based on
Mootness).
         3 Section 363(b)(1) provides that “[t]he trustee, after notice and a hearing, may use,

sell, or lease, other than in the ordinary course of business, property of the estate,” subject to
exceptions and conditions not at issue here.
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                                     No. 13-10120
       that any use or sale by the Trustee of the Domain Name could lead
       to claims by Discovery of trademark infringement. Accordingly,
       the Domain Name is property of the Estate, and the sale of the
       Domain Name for $25,000.00 is an exercise of the Trustee's sound
       business judgment and is in the Estate's best interest under the
       circumstances.

      The Court also heard convincing evidence that the proposed sale
      was negotiated in good-faith and at arms-length and that
      Discovery is a third-party purchaser with no affiliations with the
      Debtor, the Estate or the Trustee and, accordingly, Discovery is
      entitled to the protections afforded to it as a good-faith purchaser
      under section 363(m) of the Bankruptcy Code. 4


The bankruptcy court also ordered that the statutory 14-day stay provided for
in Bankruptcy Rule 6004(h) did not apply and that the sale order was effective
immediately.
      Novo Point filed an emergency motion to stay the sale order in this court.
On November 15, 2011, we temporarily stayed the sale “until further order of
this court.” 5 Novo Point’s emergency motion was based on its assertion of
ownership of <petfinders.com> and its challenge to the authorized sale price
for <petfinders.com>. 6 On December 2, 2011, after considering Novo Point’s
emergency motion to stay, the response, and the reply, we vacated the
temporary stay and denied Novo Point’s emergency motion. 7 There has not
been a stay of the sale order since the termination of our temporary stay.
       This court’s temporary stay having been lifted, the Trustee sold
<petfinders.com> to Discovery Communications, LLC, consistent with the
terms authorized in the sale order.


       4R.28.
       5Doc. 350 (Case No. 10-11202) (Nov. 15, 2011, Order).
      6 See Motion Filed on Behalf of Party for Stay Pending Appeal, Nov. 4, 2011, at 11-13

(Documents, Case No. 10-11202)
      7 Doc. 368 (Case No. 10-11202) (Dec. 2, 2011, Order).

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                                        No. 13-10120
       Meanwhile, Petfinders and Novo Point appealed the sale order to the
district court. There, the appellants challenged the sale order on grounds that
<petfinders.com> was not the property of the estate and argued, for the first
time, that the evidence did not support the bankruptcy court’s conclusion that
Discovery was a “good faith purchaser” under 11 U.S.C. § 363(m). The district
court dismissed the appeal as moot as to both appellants, concluding that
section 363(m) removed its ability to provide an effective remedy in a sale to a
good faith purchaser and that the appellants had waived any challenge to
Discovery’s good-faith status by failing to raise such challenge before the
bankruptcy court. 8
       Petfinders, LLC, appeals.
                                               II.
       The plain language of section 363(m) prevents an appellate court from
granting effective relief in cases challenging bankruptcy court orders
authorizing the sale of property of the estate to a good-faith purchaser,
“whether or not such entity knew of the pendency of the appeal, unless such
authorization and such sale . . . were stayed pending appeal.” 9 We have
interpreted section 363(m) to “patently protect[ ], from later modification on
appeal, an authorized sale where the purchaser acted in good faith and the sale
was not stayed pending appeal.” 10 We have indicated that a challenge to the



       8  R.1828-30.
       9  11 U.S.C. § 363(m).
        10 In re Gilchrist, 891 F.2d 559, 560 (5th Cir. 1990); see In re Energytec, Inc., 739 F.3d

215, 218-19 (5th Cir. 2013) (“The section codifies Congress's strong preference for finality and
efficiency in the bankruptcy context, particularly where third parties are involved. By
providing good faith purchasers with a final order and removing the risks of endless litigation
over ownership, [s]ection 363(m) allows bidders to offer fair value for estate property, which
greatly benefits both the debtor and its creditors.”) (internal quotation marks and citations
omitted); see also In re Steffen, 552 F. App’x 946, 949 (11th Cir. 2014) (per curiam) (“There is
no exception to this rule where the [objecting party] sought a stay pending appeal but was
denied.”).
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                                       No. 13-10120
purchaser’s good-faith status itself is not mooted by sale if timely raised, 11 but
“such a challenge may not be raised for the first time on appeal to the district
court.” 12 “It is well established that we do not consider arguments or claims not
presented to the bankruptcy court.” 13
       Petfinders did not challenge Discovery’s good-faith status before the
bankruptcy court. 14 The bankruptcy court found and concluded that Discovery
was a good-faith purchaser under section 363(m). Although Novo Point sought
a stay of the sale from this court, it failed to obtain one. The sale to Discovery
was subsequently consummated consistent with the terms of the sale order.
The district court correctly concluded that this appeal is moot under section
363(m).
                                             III.
       As a final matter, the Trustee filed a motion to dismiss this appeal on
grounds that Petfinders has failed to demonstrate that it has a claim or
interest to the <petfinders.com> domain name. As we determine that the
district court was correct in its order of dismissal, we DENY as MOOT the
Trustee’s motion to dismiss and AFFIRM the district court judgment.




       11  See In re O’Dwyer, No. 14-30917, 2015 WL 2407666, at *4 (5th Cir. May 21, 2015)
(“We . . . ‘have no jurisdiction to review an unstayed sale order once the sale occurs, except
on the limited issue of whether the sale was made to a good faith purchaser.’”) (quoting In re
Gucci, 105 F.3d 837, 838 (2d Cir. 1997)).
       12 In re The Watch Ltd., 257 F. App’x 748, 750 (5th Cir. 2007).
       13 Gilchrist, 891 F.2d at 61 (citation omitted).
       14 See Bankr. Doc. 676, Case No. 09-34784-sgj-11 (Bankr. N.D. Tex.) (Petfinders LLC’s

Objection to Trustee’s Motion for Authority to Sell Property of the Estate).
                                              5
