Colley, Matter of
| Decision Date | 17 April 1987 |
| Docket Number | 86-1626,Nos. 86-1625,s. 86-1625 |
| Citation | 814 F.2d 1008 |
| Parties | Bankr. L. Rep. P 71,756 In the Matter of Joe Ben COLLEY, Debtor. Joe Ben COLLEY, Plaintiff-Appellant v. NATIONAL BANK OF TEXAS, Defendant-Appellee. Joe Ben COLLEY, Plaintiff-Appellant, v. WEST TEXAS WHOLESALE SUPPLY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Eric R. Borsheim, Austin, Tex., for plaintiff-appellant.
Baker & Price, Mark S. Summers, Coffee, Goldston & Ponder, Douglas J. Powell and B. Weldon Ponder, Austin, Tex., for defendant-appellee.
Appeals From the United States District Court for the Western District of Texas.
Before GEE, REAVLEY, and JONES, Circuit Judges.
These appeals filed by the Chapter 13 debtor challenge the district court's affirmance of a bankruptcy court order refusing to reconsider its allowance of appellees' proofs of claim in Colley's bankruptcy. The issues being identical, and the facts similar, we dispose of them together and AFFIRM.
Although old bankruptcy cases, like old soldiers, never die, we shall endeavor to put this one at rest. The disputes between these creditors and Colley originated in 1980 in a state court action against Colley and a co-debtor Cynthia McBee d/b/a Oak Hills Gun Shop to collect debts owed by them. McBee almost immediately filed a Chapter 11 bankruptcy proceeding. The creditors succeeded in winning state court judgments and orders of attachment covering real property owned by Colley on the basis that he had obtained their money under false pretenses. Tex.Civ.Prac. & Rem.Code Sec. 61.002(9) (Vernon 1986). Colley thereupon filed for Chapter 13 relief in 1982. Appellees litigated their respective lien positions on the gun shop inventory, in the McBee bankruptcy, up to the Fifth Circuit.In re McBee, 714 F.2d 1316 (1983). After eventually resolving this portion of their claims in the McBee proceeding, the creditors returned to Colley's bankruptcy and asserted that the remainder of their claims were fully secured by virtue of their attachment liens. Colley objected to their proofs of claim, questioning the calculations of principal, interest and attorneys' fees asserted by each of the creditors, as well as their rights under the writs of attachment. On May 16, 1985, following a trial on the merits, the bankruptcy judge rejected Colley's position and allowed the claims of National Bank of Texas and West Texas Wholesale Supply in full.
Rather than appeal the May 16 orders, Colley filed motions for reconsideration in July, 1985, which were heard by the bankruptcy court in November of that year. Colley's grounds for reconsideration were not materially different from those contained in his original objection to the creditors' proofs of claim, 1 and the bankruptcy court denied reconsideration. This appeal followed.
We have jurisdiction to consider the district court's order denying reconsideration pursuant to 28 U.S.C. Sec. 158(d). See In re W.F. Hurley, Inc., 612 F.2d 392 (8th Cir.1980). We review the bankruptcy court's ruling on the motion to reconsider under the abuse of discretion standard. Id.
The bankruptcy court has power to reconsider the allowance or disallowance of proofs of claim "for cause". 11 U.S.C. Sec. 502(j); Bankruptcy Rule 3008. As the Advisory Committee Note to Bankruptcy Rule 3008 evidences, the bankruptcy court's discretion in deciding whether to reconsider a claim is virtually plenary, as the court may decline to reconsider without a hearing or notice to the parties involved. If reconsideration is granted, the court may readjust the claim in any fashion "according to the equities of the case." 11 U.S.C. Sec. 502(j).
The court's broad discretion should not, however, encourage parties to avoid the usual rules for finality of contested matters. Bankruptcy Rule 9024 incorporates Federal Rule of Civil Procedure 60 into all matters governed by the Bankruptcy Rules except, inter alia, "the reconsideration of an order allowing or disallowing a claim against the estate entered without a contest is not subject to the one year limitation prescribed in Rule 60(b)...." We interpret Rule 9024 to provide that, when a proof of claim has in fact been litigated between parties to a bankruptcy proceeding, the litigants must seek reconsideration of the bankruptcy court's determination pursuant to the usual Rule 60 standard...
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