In re Casse v. Key Bank Nat'l Ass'n
| Decision Date | 01 August 1998 |
| Docket Number | Docket No. 98-5067 |
| Parties | (2nd Cir. 1999) In re: ROBERT E. CASSE, Debtor ROBERT E. CASSE, Debtor-Appellant, v. KEY BANK NATIONAL ASSOCIATION, Creditor-Appellee |
| Court | U.S. Court of Appeals — Second Circuit |
Appeal from a judgment of the United States District Court for the Eastern District of New York (Carol Bagley Amon, District Judge) affirming an opinion of the Bankruptcy Court (Jerome Feller, Bankruptcy Judge) denying debtor-appellant's motion to set aside the foreclosure sale of his home.
We affirm.
[Copyrighted Material Omitted]
STUART JAY YOUNG, ESQ. Rego Park, NY, for Debtor-Appellant
SHAPIRO & DiCARO (John A. DiCaro, Esq.) Rochester, NY, for Creditor-Appellee
STUART P. GELBERG, ESQ. Garden City, NY, for Appellee-Trustee
Before: KEARSE and CALABRESI, Circuit Judges, and HAIGHT, District Judge.*.
Debtor-Appellant Robert E. Casse appeals from an order of the United States District Court for the Eastern District of New York (Carol Bagley Amon, Judge) entered August 31, 1998, affirming an order of the bankruptcy court (Jerome Feller, Bankruptcy Judge) dated April 21, 1998 and denying debtor-appellant's motion for a stay. The bankruptcy court's order denied debtor-appellant's motion to vacate a foreclosure sale of the home belonging to him and his wife, Carol J. Casse, dismissed the Chapter 13 case upon which appellant's motion was based, and reserved decision on the Chapter 13 Trustee's motion to sanction debtor-appellant's counsel. See In re Casse, 219 B.R. 657 (Bankr. E.D.N.Y. 1998).
By order entered October 20, 1998, the district court stayed further proceedings under a warrant of eviction from the home pending this Court's resolution of the instant appeal.
The bankruptcy court held, and the district court agreed, that the Casses' prior bankruptcy filings, culminating in the bankruptcy court's order dated July 16, 1997 dismissing their then pending Chapter 11 case "with prejudice," barred the subsequent filing by debtor-appellant of the Chapter 13 case upon which he based his motion to vacate the foreclosure of the home. Accordingly the bankruptcy court dismissed that Chapter 13 case as void ab initio, thereby erasing the automatic stay upon which debtor-appellant relied to vacate the foreclosure.
Because we conclude that the Bankruptcy Code authorized the order of the bankruptcy court appealed from and that court did not abuse its discretion in entering it, we affirm.
In September 1988, appellant Robert E. Casse and his wife Carol J. Casse (collectively "the Casses") obtained a mortgage loan of approximately $170,000 to purchase a home at 64-24 Austin Street, Rego Park, Queens, New York ("the Property"). About a year later the Casses defaulted on the loan. In April 1990 appellee Key Bank National Association ("Key Bank"), to which the mortgage loan had been assigned, instituted foreclosure proceedings upon the Property in state court. The Casses thereupon embarked upon a series of filings under the Bankruptcy Code, whose sole and transparent purpose was to frustrate Key Bank's foreclosure proceedings. 1.
On August 29, 1991 the Casses filed the first of three joint petitions for relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. 1101-1146 (1994), thereby obtaining the automatic stay of Key Bank's state court foreclosure action provided by the Code, 11 U.S.C. 362. The Casses never filed a reorganization plan or took any other meaningful action to advance that Chapter 11 proceeding. In July 1992 the bankruptcy court granted Key Bank a conditional lifting of the stay, setting a time table for the selling of the Property and requiring the Casses to commence making post-petition mortgage payments by August 1, 1992, failing which the stay would automatically terminate without further court order. The Casses failed to comply with those requirements. Upon Key Bank's filing of a notice of non-compliance on July 8, 1993, the stay terminated. On July 29, 1993, the case was converted to a Chapter 7 liquidation case on the Casses' motion. The Chapter 7 Trustee submitted a "no asset" report. The Casses were granted a discharge on January 6, 1995.
In the interim Key Bank continued with its foreclosure action against the Property, eventually obtaining a judgment of foreclosure and sale from the state court. A foreclosure sale of the Property scheduled for April 18, 1996 was forestalled when, on April 17, the Casses filed their second Chapter 11 case and achieved another automatic stay. Once again, the Casses took no steps to advance the reorganization. They failed to file the monthly reports required of a debtor in possession; failed to pay the United States Trustee's quarterly fees; failed to remain current on post-petition administrative expenses; failed to attend the meeting of creditors mandated by 341 of the Code; and failed to file a plan of organization.
In July 1996, the United States Trustee moved to dismiss the proceeding. The bankruptcy court granted that motion and dismissed the Casses' second Chapter 11 case in an order dated September 24, 1996.
Following dismissal of the Casses' second Chapter 11 case, Key Bank renewed its efforts to foreclose on the Property. Eventually the state court scheduled a foreclosure sale for April 17, 1997. True to form, on April 16, 1997 the Casses filed their third Chapter 11 case, thereby staying the foreclosure sale for the third time. The Casses showed no more interest in Chapter 11's substantive remedies than previously. The United States Trustee moved to dismiss the Casses' third Chapter 11 case within two weeks of its filing. After two adjournments procured by the Casses, that motion came on for hearing before the bankruptcy court on June 19, 1997.
The hearing on the Trustee's motion to dismiss the Casses' third Chapter 11 case took place before Bankruptcy Judge Feller on June 19, 1997. Alfred Dimino, Esq., appeared as counsel for the Trustee. Bertram Brown, Esq., appeared as counsel for the Casses. The hearing was brief. We reproduce below the transcript of the hearing in its entirety.
On July 16, 1997 Bankruptcy Judge Feller signed an order which reads in its entirety as follows:
ORDER DISMISSING THIS CHAPTER 11 CASE WITH PREJUDICE
WHEREAS, the United States Trustee having made an application to this Court, dated April 23, 1997, pursuant to 11 U.S.C. Section 1112(b), for conversion or dismissal of this case; and
WHEREAS, a hearing having been held on June 19, 1997; and
WHEREAS, the debtors and their its [sic] attorney, Betram Brown, Esq., having appeared and consented to the dismissal of this case; and
WHEREAS, the United States Trustee, by Alfred M. Dimino, Esq., having appeared in support of a dismissal of this case; and
WHEREAS, it appearing that appropriate notice having been given and sufficient cause existing for the relief requested, it is
ORDERED, that pursuant to 11 U.S.C. Section 1112(b), this case commenced under Chapter 11 of the Bankruptcy Code be, and hereby is, dismissed with prejudice.
Once more, Key Bank geared up for a foreclosure sale of the Property, which was set for September 19, 1997.
Debtor-appellant Robert E. Casse (hereinafter "Casse" or "the debtor") responded by retaining a new attorney, George Poulos, Esq., who on September 17 filed a Chapter 13 petition on behalf of the debtor, in an effort to obtain yet another stay of the foreclosure sale of the Casses' residence.
Unlike the three preceding Chapter 11 filings, Casse's wife Carol was not a party. Presumably that was because she had insufficient income of her own. As a commentator has noted, 5 Norton, Bankruptcy Law and Practice 2d (1997) at 113:1 (footnotes omitted).
This time the debtor did not obtain a stay of the foreclosure sale. Attorney Poulos says in an affidavit dated September 29, 1997 and filed with the bankruptcy court, App. 50-53, that he reviewed that court's files, determined at least to his own satisfaction that Judge Feller's July 16, 1997 order dismissing the Casses' third Chapter 11 case "with prejudice" did not bar a subsequent Chapter 13 filing, accomplished that filing on September 17, and faxed a copy to Key Bank's attorneys on September 18, stating that the foreclosure sale should be stayed.
Not in the least deterred, on September 18 counsel for Key Bank replied to Poulos in a letter reading in part:
I reviewed the Order Dismissing Case in Mr. Casse's previous ...
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