May 7, 2008 — Jeffrey Prosser, former CEO and owner of Innovative Telephone, has lost yet another procedural round in the federal courts — his second setback in this area in less than a week.
This time it was a three-judge panel of the U.S. Court of Appeals for the Third Circuit, sitting in Philadelphia, that issued a one-line order denying Prosser the stay ( i.e. postponement) he had sought in the bankruptcy proceedings.
The latest ruling was handed down May 6 by Circuit Court Judges Dolores Sloviter, Thomas Ambro and Richard Nygaard. On May 1, V.I. federal court Judge Curtis V. Gómez had similarly ruled against three different Prosser motions for stays. (See "Judge Says No. No and No to Prosser Appeals.")
Had Prosser won any of these decisions, the result would have brought the complex, ongoing sales of his former assets to a screeching halt. Among the transactions that would have been put on ice would have been the $7.7 million sale of the Bjerget House properties on St. Croix, already approved by the U.S. Bankruptcy Court, and the scheduled auction of the V.I. Daily News, now slated for May 12.
Appeals from rulings of U.S. Bankruptcy judges in the Virgin Islands go to the U.S. District Courts in the Islands, and then to the Third Circuit in Philadelphia. Appeals from a circuit can go to the U.S. Supreme Court, but that court has the option — which it frequently exercises — of deciding not to hear cases brought to it, thus confirming the decision below.
As with the earlier Gómez decision, the Circuit Court's order was a procedural ruling on denying a stay of the bankruptcy court's actions, not a substantive decision approving those actions. The Prosser appeals of various bankruptcy court decisions are pending in the bankruptcy and district courts.
Since the Philadelphia court issued only a ruling, and not an opinion, it is impossible to know what legal thinking went into the judges' decision, but court records do disclose the (lengthy) arguments made by both sides.
In this case, the creditors and the neutral parties all spoke with a single voice. Filings against a stay were made by the two major creditors, Rural Telephone Finance Cooperative, long Prosser's banker, and by the Greenlight companies, representing one-time stockholders in an earlier Prosser-controlled corporation.
Similarly, both of the court-appointed trustees argued, through their lawyers, against a stay. The trustees are Stan Springel, who handles the former Prosser corporations, and James Carroll,who has similar duties with Prosser's personal finances.
A new voice was heard, if briefly, in this decision. The day after Prosser filed his appeal to the circuit, on April 23, the clerk of the circuit filed a one-paragraph note with the judges saying "the … appeals are listed for possible dismissal for lack of jurisdiction … it is noted that the notices of appeal are not taken from any order of the district court."
Circuit courts routinely handle only cases that have already been decided at the district court level.
Prosser's lawyers had argued, among other things, that the sale of the Daily News and Bjerget House would ruin Prosser's efforts to obtain financing to pay off the debtors. Lawyers on the other side dismissed the possibility that Prosser has the ability to bring off the refinancing, given the tightened state of the credit markets, among other things.
In other developments, Judge Judith Fitzgerald has issued several more orders, one of which overruled Dawn Prosser's request for a jury trial on the issue of who owns the house in West Palm Beach, the Prossers or the formerly Prosser-controlled Innovative Communications Corporation. The judge cited various legal precedents to reject Mrs. Prosser's claim. Any jury trial would have needed to take place in federal district court, since the bankruptcy court system does not use juries. Such a trial would have delayed any sale of the mansion.
Fitzgerald also ruled that it was appropriate for Christie's, the New York auction house, to go ahead and conduct an auction for the sale of the Pissarro painting "LeGrand Noyer, Matin, Eragny."
The next scheduled hearing of the bankruptcy court will be May 16 in Fitzgerald's home courtroom in Pittsburgh.
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