Bank of Boston v. Wallace

• Decision Date: 06 March 1998
• Docket Number: Civil Action No. 97-12759-EFH.
• Citation: 218 BR 654
• Parties: BANK OF BOSTON, Appellant, v. William B. WALLACE and Joan M. Wallace, Appellees.
• Court: U.S. District Court — District of Massachusetts

218 B.R. 654 (1998)

BANK OF BOSTON, Appellant, v. William B. WALLACE and Joan M. Wallace, Appellees.

Civil Action No. 97-12759-EFH.

United States District Court, D. Massachusetts.

March 6, 1998.

Matthew J. McGowan, Salter McGowan Swartz & Sylvia, Inc., Providence, RI, for Appellant.

Brian A. Feeney, Jepsky & Sack, Harwich, MA, for Appellees/Debtors.

MEMORANDUM AND ORDER

HARRINGTON, District Judge.

This is an appeal from an October 10, 1998 Order of the Honorable William C. Hillman, United States Bankruptcy Judge. The Order approved the August 19, 1997 Reaffirmation Agreement between Bank of Boston ("the Bank") and William B. Wallace and Joan M. Wallace ("the Debtors"). The appeal is before this Court pursuant to 28 U.S.C. § 158(a).

Background Facts

On July 6, 1995, the Debtors received a home equity credit line from the Bank. In return, the Debtors executed and delivered a promissory note in the principal amount up to $25,000 ("the Note"). At the same time, the Debtors granted the Bank a mortgage to their home at 2 Piccadilly Road in Sandwich, Massachusetts ("the Property").

On May 19, 1997, the Debtors filed a Chapter 7 petition for relief. At the time of the filing, the Debtors maintained their interest in the Property and owed the Bank $24,586.89 on the Note. During the Chapter 7 case, the Debtors and the Bank executed a Reaffirmation Agreement, under which the Debtors agreed to reaffirm their obligations under the Note. The Reaffirmation Agreement was filed with the Bankruptcy Court on August 19, 1997. Eight days later the Debtors received a discharge of their Chapter 7 case.

On September 9, 1997, the Bankruptcy Court issued a Show Cause Order directing that the Debtors attend an October 10, 1997 hearing concerning the Reaffirmation Agreement. The Bank was also served with a copy of the Show Cause Order. On September 29, 1997, the Bank filed a Motion to Reconsider and Vacate the Show Cause Order. In its motion, the Bank argued that under Bankruptcy Code § 524(c)(6)(A), the Bankruptcy Court has no authority to review reaffirmation agreements relating to real property. At the October 10, 1997 hearing, counsel for the Bank highlighted the legal points included in the Bank's Motion to Reconsider and Vacate. After hearing the Bank's argument, the Court denied the Motion and proceeded to the merits of the Show Cause hearing.

The Debtors' counsel informed the Court that changed circumstances allowed the Debtors to reaffirm their obligations under the Note and enabled them to continue making payments to the Bank. The Bankruptcy Court was satisfied with this representation and formally approved the Reaffirmation Agreement between the Debtors and the Bank.

On December 17, 1997, the Bank filed a Notice of Appeal regarding the Court's denial of its Motion to Reconsider and to Vacate the Show Cause Order.

The Mootness Doctrine

The Bank's appeal asks this Court to review the actions of the Bankruptcy Court and to determine whether the Bankruptcy Court abused its discretion in (1) issuing its September 9, 1997 Order to Show Cause; (2) conducting the Show Cause hearing on October 10, 1997; and (3) approving the Reaffirmation Agreement executed by the parties.

Although these are interesting questions in the abstract and the bankruptcy practice appears anxious to have an appellate decision regarding the Bankruptcy Court's role, if any, in reviewing reaffirmation agreements, before examining the merits of the appeal, this Court must face the threshold issue of mootness.

The constitutional doctrine of mootness ensures that federal courts refrain from rendering judgments, or advisory opinions in expired disputes. The mootness doctrine is based on the fundamental jurisdictional tenet that federal courts are limited to hearing live cases and controversies. U.S. Const. Art. III, § 2. As such, appeals should be dismissed as moot where an appellate court lacks the power to provide an effective remedy for an appellant should it find in its favor on the merits. Mills v. Green, 159 U.S. 651, 653, 16...