149 B.R. 687 (M.D.Fla. 1992), 91-2684, Tooke v. Sunshine Trust Mortg. Trust No. 86-225

Docket Nº:Bankruptcy No. 91-2684-3P1.
Citation:149 B.R. 687
Party Name:. Henry Eugene TOOKE, III d/b/a H.E. Tooke Trucking and Material, Edith M.B. Tooke, d/b/a H.E. Tooke Trucking and Material, Appellants, v. SUNSHINE TRUST MORTGAGE TRUST # 86-225, Appellee. No. 92-181-CIV-ORL-19.
Case Date:May 22, 1992
Court:United States District Courts, 11th Circuit, Middle District of Florida
 
FREE EXCERPT

Page 687

149 B.R. 687 (M.D.Fla. 1992)

.

Henry Eugene TOOKE, III d/b/a H.E. Tooke Trucking and Material, Edith M.B. Tooke, d/b/a H.E. Tooke Trucking and Material, Appellants,

v.

SUNSHINE TRUST MORTGAGE TRUST # 86-225, Appellee.

No. 92-181-CIV-ORL-19.

Bankruptcy No. 91-2684-3P1.

United States District Court, M.D. Florida, Orlando Division.

May 22, 1992

On Motion for Clarification, June 22, 1992.

Page 688

William Francis Lawless, Sr., Kevin E. Mangum, Law Office of William F. Lawless, P.A., Altamonte Springs, FL, for Henry Eugene Tooke, III and Edith M.B. Tooke.

Jon Eric Kane, Lawrence, Landis & Morgan, P.A., Orlando, FL, Emory Robert Meek, Foley & Lardner, Jacksonville, FL, for Sunshine State Mortg. Trust No. 86-225.

ORDER

FAWSETT, District Judge.

1. Appellants' Emergency Motion for Stay Pending Appeal and Memorandum of Law in Support thereof (Doc. No. 11, filed April 27, 1992); Appellee's Response in Opposition to Appellants' Emergency Motion for Stay Pending Appeal (Doc. No. 13, filed May 7, 1992); Transmittal of Record to District Court (Doc. No. 1, filed February 25, 1992); Initial Brief of Appellant (Doc. No. 5, filed March 13, 1992); and Initial Brief of Appellee (Doc. No. 7, filed March 30, 1992). All parties were represented by counsel.

After considering the filings in the case and the argument of counsel, the Court enters its Order as follows:

FINDINGS OF FACT

This case is on appeal from the United States Bankruptcy Court for the Middle District of Florida, Jacksonville Division, pursuant to Rule 8001 of the Federal Rules of Bankruptcy Procedure and 28 U.S.C. § 158. Appellants have filed an Emergency Motion for Stay Pending Appeal pursuant to Rule 8005 of the Federal Rules of Bankruptcy Procedure.

On April 11, 1991, Appellants filed for bankruptcy under Chapter 12 of Title 11, the reorganization plan for debtors qualifying under 11 U.S.C. § 101(17), (18), (19) and (20) as family farmers with regular annual income. At the first creditors' meeting on May 20, 1991, Appellants realized that they were ineligible to file under Chapter 12 because they did not meet the requirement that more than 50 percent of the debtor's income for the preceding taxable year must be derived from farming operations. See 11 U.S.C. § 101(17). One of Appellants' creditors, Great Southern Machinery, Inc., not a party to this proceeding, filed a Motion for Relief from the Automatic Stay on May 20, 1991. Two days later, at a status conference, counsel for Appellants orally moved to dismiss the Chapter 12 case, recognizing Appellants' ineligibility. On that date, May 22, 1991, Judge Corcoran entered an order dismissing Appellants' bankruptcy case.

The next day, May 23, 1991, Appellants filed for bankruptcy under Chapter 11 of Title 11 with the bankruptcy court in the Jacksonville Division. On May 24, 1991, Great Southern Machinery, Inc. filed a Motion to Dismiss pursuant to 11 U.S.C. § 109(g)(2), which motion was subsequently withdrawn. Sunshine State Mortgage Trust # 86-225 (Appellee) filed a Motion to Dismiss on July 23, 1991.

A hearing was held on September 19, 1991, and Judge Proctor granted Appellee's Motion to Dismiss on December 6, 1991. See In re Tooke, 133 B.R. 661 (Bankr.M.D.Fla.1991). Appellants' Motion for Rehearing

Page 689

was heard and denied on January 28, 1992. On that same day, Appellants filed a Notice of Appeal with this Court.

Sometime after the bankruptcy case was dismissed, Appellee filed a foreclosure action against Appellants in state court. On February 4, 1992, Appellants filed a Motion for Stay Pending Appeal. A hearing was held on April 16, 1992, and Judge Proctor granted a thirty (30) day stay effective April 27, 1992.

CONCLUSIONS OF LAW

Rule 8005 of the Federal Rules of Bankruptcy Procedure states in pertinent part:

A motion for a stay of the judgment, order, or decree of a bankruptcy judge, for approval of a supersedeas bond, or for other relief pending appeal must ordinarily be presented to the bankruptcy judge in the first instance.... A motion for such relief, or for modification or termination of relief granted by a bankruptcy judge, may be made to the district court or the bankruptcy appellate panel, but the motion shall show why the relief, modification, or termination was not obtained from the bankruptcy judge....

Appellants have satisfied this procedural rule by first seeking the requested stay from the bankruptcy judge. Judge Proctor in his "Order Granting for Thirty Days Debtors' Motion for Stay Pending Appeal Pursuant to Federal Rule of Bankruptcy Procedure 8005" instructed Appellants that they "may seek further relief within the thirty (30) day period from the United States District Court." Thus, Appellants filed this Emergency Motion for Stay Pending Appeal in compliance with Rule 8005 and Judge Proctor's Order.

The standard to obtain a stay pending an appeal from a bankruptcy court pursuant to Rule 8005 was articulated in In re The Charter Company, 72 B.R. 70 (M.D.Fla.1987).

[T]he movant must clearly establish: (i) that the movant is likely to prevail on the merits of its appeal, (ii) that the movant will suffer irreparable injury if a stay or other injunctive relief is not granted, (iii) that other parties will suffer no substantial harm if a stay or other injunctive relief is granted, and (iv) in circumstances where the public interest is implicated, that the issuance of a stay or other injunctive relief will serve, rather than disserve, such public interest.

Id. at 71-72.

A. Likelihood of Success on the Merits of the Appeal

Appellee contends that the stay must be denied because Appellants can not prove that they are likely to prevail on the merits of their appeal from the Order Granting Motion to Dismiss entered by the Bankruptcy Court on December 6, 1991.

Section 109(g)(2) of the Bankruptcy Code states as follows:

Notwithstanding any other provision of this section, no individual or family farmer may be a debtor under this title who has been a debtor in a case pending under this title at any time in the preceding 180 days if ...

(2) the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay provided by section 362 of this title.

Judge Proctor granted Appellee's motion to dismiss, concluding that Appellants were not entitled to be debtors under Title 11 of the United States Code since, within the 180 days preceding the filing of Appellants' Chapter 11 case, they had been debtors in a prior Chapter 12 case where they requested and obtained a voluntary dismissal following the filing of a request for relief from the automatic stay under 11 U.S.C. § 362. Judge Proctor ruled that the application of § 109(g)(2) is mandatory, and the debtors' motives in dismissing the prior case are irrelevant.

In 1984, Congress enacted § 109(f), the predecessor to § 109(g), in the Bankruptcy Amendments and Federal Judgeship Act of 1984. Pub.L. No. 98-353, 98 Stat. 352 (1984). In 1986, § 109(f) was renumbered to § 109(g) without substantive change. Pub.L. No. 99-554, 100 Stat. 3105 (1986).

Page 690

The purpose of § 109(g)(2) is creditor protection.

[S]ection 109(g) prevents certain tactics on the debtor's...

To continue reading

FREE SIGN UP