In re Aheong, BAP No. HI-01-1315-MoRyB.
| Decision Date | 29 March 2002 |
| Docket Number | BAP No. HI-01-1315-MoRyB.,Bankruptcy No. 99-00320-LK. |
| Citation | 276 B.R. 233 |
| Parties | In re Althea Kehaulani AHEONG, Debtor. Althea Kehaulani Aheong, Appellant, v. Mellon Mortgage Company, Appellee. |
| Court | U.S. Bankruptcy Appellate Panel, Ninth Circuit |
Gary Victor Dubin, Dubin Law Offices, Honolulu, HI, for Althea Kehaulani Aheong.
Russell Leu, Leu & Okuda, Honolulu, HI, for Mellon Mortgage Co.
Before MONTALI, RYAN and BRANDT, Bankruptcy Judges.
Debtor Althea Kehaulani Aheong ("Debtor") appeals from the bankruptcy court's orders reopening her previously-dismissed chapter 13 case (the "Reopening Order") and annulling the automatic stay of Section 3621 (the "Order Annulling Stay") as to foreclosure proceedings of secured creditor Mellon Mortgage Company, a Colorado company ("Mellon").2
Debtor claims the bankruptcy court had no jurisdiction to enter the Order Annulling Stay without issuing the Reopening Order, and no jurisdiction to enter the Reopening Order without first setting aside the order dismissing her chapter 13 case (the "Dismissal Order"). We disagree, and rule that Debtor lacks standing to challenge the Reopening Order. Her appeal from that order will be DISMISSED.
Debtor argues in the alternative that Mellon did not show adequate cause for the bankruptcy court to annul the automatic stay, primarily because Mellon did not move for such relief until over two years after it learned of the chapter 13 case. We rule that the bankruptcy court did not abuse its discretion and that the Order Annulling Stay will be AFFIRMED.
Debtor and her late husband, Cecil Aheong, executed a promissory note, dated May 3, 1990, in the principal amount of $137,200 secured by a mortgage on Debtor's residence in Kahului, Maui, Hawaii (the "Residence"). Mellon filed a foreclosure complaint in state court on March 12, 1998, and moved for summary judgment and an interlocutory decree of foreclosure in accordance with Hawaii law (the "State Court Motion"). On January 26, 1999, the day before a scheduled hearing on the State Court Motion, Debtor filed her chapter 13 case pro se (Case No. 99-00320, the "Bankruptcy Case"). Debtor listed only one creditor, Mellon, in her creditor matrix. She filed no schedules, statements, or chapter 13 plan, nor did she notify the state court or Mellon that she had filed a bankruptcy petition, nor appear at the hearing on the State Court Motion. On January 27, 1999, the state court orally granted the State Court Motion.
On February 17, 1999, the bankruptcy court ordered Debtor to file her schedules, statements, and chapter 13 plan within 15 days or the Bankruptcy Case would be dismissed. On February 25, 1999, Debtor herself moved to dismiss her Bankruptcy Case, and on March 1, 1999, the Dismissal Order was entered pursuant to that request.
The Dismissal Order provided that the bankruptcy court would retain jurisdiction to receive and review the final account of the chapter 13 trustee, enter an order discharging the trustee and the trustee's surety, and make such orders as might be necessary and proper to close the case. On June 25, 1999, the bankruptcy court entered an order entitled "Order Approving Final Report, Discharging Trustee and Closing Estate in Chapter 13 Case Dismissed Before Confirmation."
Mellon proceeded with its foreclosure action and on October 11, 1999, the state court entered a written order that, like its oral ruling during the Bankruptcy Case, granted the State Court Motion. Debtor filed two subsequent bankruptcy petitions, first under chapter 13 and then chapter 7. On January 17, 2001, Debtor received her chapter 7 discharge but the foreclosure proceeding continued and on April 12, 2001, a deputy sheriff served Debtor with a writ of possession of the Residence.
On April 17, 2001, Debtor moved in state court for an emergency stay of the writ of possession, asserting that the order granting the State Court Motion was void as having been obtained in violation of the automatic stay under Section 362 in the Bankruptcy Case. The state court granted a stay to allow the parties time to seek clarification from the bankruptcy court and on May 4, 2001, Mellon moved to reopen the Bankruptcy Case for the limited purpose of considering its motion to annul the automatic stay (the "Motion to Annul the Stay") and to reclose the Bankruptcy Case when that matter was concluded.
At a hearing on May 23, 2001, on Mellon's motions the bankruptcy court stated:
This is a motion to reopen the first of the Debtor's three bankruptcy cases, each of which was filed ... [on] the eve or within a few days of something about to happen in the state court.3 It's at least alleged and I think not denied that the State court and the creditor [Mellon] were not advised of the filing of the petition.
[W]hen petitions are filed, the [d]ebtors are given by the clerk's office copies of our General Order No. 14 which advises them of their responsibilities to advise opposing parties in the State court of their responsibility to give notice and warns that failure to comply may constitute [cause for] nullification of the automatic stay. So granting the motion — these motions would constitute standing by our general order.
... These appear to be filings just for the cause of delay. If there are truth-in-lending claims [against Mellon], fine, let them be resolved in the State court if they are in fact unresolved.
On June 15, 2001, the bankruptcy court granted both motions and entered the Reopening Order and the Order Annulling Stay, with a ten-day stay of the latter. On June 25, 2001, Debtor filed a notice of appeal of both orders and filed with the bankruptcy court a motion, later granted, to stay the foreclosure action pending Debtor's appeal.
1. Whether Debtor has standing to challenge the Reopening Order.
2. Whether the bankruptcy court had jurisdiction to consider the Motion to Annul the Stay.
3. Whether the bankruptcy court erred in issuing the Order Annulling Stay.
Standing is a legal issue reviewed de novo. Loyd v. Paine Webber, Inc., 208 F.3d 755, 758 (9th Cir.2000). The bankruptcy court's jurisdiction is also a legal issue reviewed de novo. Ferm v. U.S. (In re Crowe), 243 B.R. 43, 47 (9th Cir. BAP 2000), aff'd, 246 F.3d 673, 2000 WL 1843841 (9th Cir.2000) (table). A bankruptcy court's decision whether to reopen a bankruptcy case is reviewed for abuse of discretion. Elias v. U.S. Trustee (In re Elias), 188 F.3d 1160, 1162 (9th Cir.1999). A bankruptcy court's decision whether to annul the automatic stay is reviewed for abuse of discretion. Palm v. Klapperman (In re Cady), 266 B.R. 172, 178 (9th Cir. BAP 2001); Ung v. Boni (In re Boni), 240 B.R. 381, 384 (9th Cir. BAP 1999).
1. Standing
The parties have not raised Debtor's standing as an issue on this appeal, but we have an independent duty to consider standing. Gen. Elec. Capital Auto Lease, Inc. v. Broach (In re Lucas Dallas, Inc.), 185 B.R. 801, 804 (9th Cir. BAP 1995). Appellate standing in bankruptcy is determined under the "person aggrieved" test, under which "[o]nly one who is directly and adversely affected pecuniarily has standing to appeal a bankruptcy court's order." Menk v. LaPaglia (In re Menk), 241 B.R. 896, 917 (9th Cir. BAP 1999); Fondiller v. Robertson (In re Fondiller), 707 F.2d 441, 442-43 (9th Cir.1983). Reopening a case typically "presents only a narrow range of issues: whether further administration appears to be warranted; whether a trustee should be appointed; and whether the circumstances of reopening necessitate payment of another filing fee." Menk, 241 B.R. at 916-17. Debtor challenges none of those issues, so ordinarily she would lack standing to appeal the Reopening Order. Id. at 913-17.
Debtor argues, however, that (a) the bankruptcy court had no jurisdiction to issue the Order Annulling Stay until it properly reopened her case, and (b) the bankruptcy court had no jurisdiction to issue the Reopening Order because it did not set aside the Dismissal Order. If Debtor's theory is correct then she is aggrieved by the Reopening Order, and has standing to challenge it, because without it there would have been no Order Annulling Stay and she might have avoided Mellon's attempt to proceed with its foreclosure and eviction. See generally Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (requirements for standing).
In the next part of this opinion, however, we determine that the bankruptcy court did not need to reopen the Bankruptcy Case to have jurisdiction to consider the Motion to Annul the Stay. Therefore, we will conclude that Debtor lacks standing to appeal from the Reopening Order, although she has standing to appeal from the Order Annulling Stay itself.
2. Jurisdiction
The parties have raised some but not all of the jurisdictional issues we address below. We have an independent duty, however, to consider jurisdictional issues. WMX Tech., Inc. v. Miller, 104 F.3d 1133, 1135 (9th Cir.1997).
Bankruptcy jurisdiction is governed primarily by 28 U.S.C. Section 1334 ("Section 1334")5 and has been described as a "swamp." Menk, 241 B.R. at 902. Two poorly-charted areas of that swamp are the bankruptcy court's jurisdiction after dismissal of a case, and to what extent closing a case bears on jurisdiction.
Dismissing and closing a bankruptcy case are two distinct events. Dismissal allows creditors and debtors to get on with their non-bankruptcy business and resolve their disputes in appropriate fora. Among other things, dismissal generally ends the automatic stay and revests property of the estate in the entity in which such property was vested immediately before the commencement of the case. 11 U.S.C. §§ 349(b)(3) and 362(c)(1) and (2)(B). "The basic purpose of [Section 349(b)] is to undo the bankruptcy case,...
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