In re Christensen

• Decision Date: 16 October 2015
• Docket Number: Bankruptcy Case No. 09-20299-PRW
• Parties: In re: MICHAEL CHRISTENSEN, Debtor.
• Court: U.S. Bankruptcy Court — Western District of New York

In re: MICHAEL CHRISTENSEN, Debtor.

Bankruptcy Case No. 09-20299-PRW

UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF NEW YORK

October 16, 2015

Chapter 7

DECISION AND ORDER DENYING DEBTOR'S MOTION TO REOPEN

PAUL R. WARREN, United States Bankruptcy Judge

Nearly six years after his discharge was revoked¹ and over four years after his case closed, Michael Christensen ("Debtor") has moved to reopen his Chapter 7 case, under 11 U.S.C. § 350(b) (ECF BK No. 55). It is the Debtor's stated intention, if this motion is granted, to then move to vacate this Court's Order revoking his discharge and to also move under § 522(f) of the Code to remove a judgment lien from unidentified real property ("Property") (Id.). The default judgment—entered against the Debtor in an adversary proceeding brought by the Chapter 7 Trustee ("Trustee"), occasioned by the Debtor's repeated failure to turn over Estate assets—awarded the Trustee a money judgment in the total amount of $5,763.65 and revoked the Debtor's discharge unconditionally under 11 U.S.C. § 727(d)(3) (ECF AP No. 7).² The Debtorclaims that cause exists to reopen under 11 U.S.C. § 350(b) because the Debtor has paid off the money judgment, entitling him to relief from this Court's order under Rule 60(b)(5) FRCP and Rule 9024 FRBP (ECF BK No. 55 ¶ 3).³ As for the proposed motion to avoid a judgment lien under 11 U.S.C. § 522(f), the Debtor presumably⁴ will claim that the judgment lien impaired his homestead exemption as of the date of filing, six years ago (Id. ¶ 2).

Because the punitive portion of the Court's order and judgment—revoking the Debtor's discharge without condition—can never be "satisfied" by payment of the money judgment, the Debtor's motion to reopen, to then move to vacate the order revoking discharge, is DENIED, under 11 U.S.C. § 350(b). The Debtor's motion to reopen, to then file a motion to avoid a judgment lien, is also DENIED, under 11 U.S.C. § 350(b). The Debtor has not carried—or even mentioned—his burden to demonstrate that he would likely prevail on his proposed motion, in failing to show the value of the Property as of the date of filing, that the judgment is a judicial lien that impairs his homestead exemption, that no harm would be worked on the judgmentcreditor due to the passage of time, and that proper service of the motion was made on parties in interest.

I.JURISDICTION

The Court has jurisdiction of this matter under 28 U.S.C. §§ 157(a), 157(b)(1) and 1334. This is a core proceeding under 28 U.S.C. § 157(b)(1). This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Rule 7052 FRBP.

II.FACTS

The Debtor filed a case under Chapter 7 on February 10, 2009 (ECF BK No. 1). According to Schedule D, Citifinancial obtained a $15,017.87 judgment against the Debtor on June 29, 2006, based on a deficiency balance due on an automobile loan (ECF BK No. 1, Schedule D). That judgment appears—based solely on the Debtor's statements—to have been recorded, so as to become a lien on his real property. The Statement of Intention indicates that the Debtor intended to file a motion to avoid this judgment lien, under 11 U.S.C. § 522(f), to remove the lien from his Property (ECF BK No. 1, Statement of Intention). During the pendency of his case, the Debtor's attorney sent the Debtor at least two letters—both of which were filed with the Court by his attorney—advising the Debtor that an appraisal of the Property needed to be obtained and that a motion should be filed under 11 U.S.C. § 522(f) to avoid the lien remaining on the Property (ECF BK Nos. 15, 20). The Debtor did nothing. No motion to avoid the judgment lien was ever filed. No appraisal was ever obtained. And time trundled along.

The Debtor's lack of cooperation continued. The Debtor ignored the Trustee's informal requests to turn over non-exempt assets, including income tax refunds for the year 2008, bank account balances, and cash at the time of filing—totaling $4,763.65—resulting in a motion to compel by the Trustee (ECF BK No. 19). The Court entered an Order directing the Debtor to turn-over the sum of $4,763.65 (ECF No. 22). When the Debtor did not comply with the Court's turn-over Order, the Trustee commenced an adversary proceeding against the Debtor, seeking a money judgment in the amount of $4,763.65 (plus the Estate's attorney fees and costs) and requesting an order revoking the Debtor's discharge (ECF AP No. 1). The Debtor did not answer the Trustee's complaint or otherwise appear. A default judgment was entered on January 21, 2010 (ECF AP No. 7). The judgment awarded the Trustee a money judgment of $5,763.65 and ordered that the Debtor's discharge be revoked (Id.).

On April 8, 2010, the Court entered an Order, excepting from abandonment the money judgment against the Debtor, under 11 U.S.C. § 554(d) (ECF BK No. 29). The money judgment had evidently not been paid at that time. However, the Trustee's Final Report and Application for Compensation, filed in September of 2010, indicates that the Debtor eventually paid $5,827.15 to the Trustee (ECF BK No. 34, Exhibit B). The Debtor's bankruptcy case closed in May of 2011.

Over four years later,⁵ the Debtor filed the motion to reopen, under § 350(b) of the Code, proposing to further move to vacate the judgment revoking his discharge and to also move toavoid Citifinancial's judgment lien against the Property (ECF BK No. 55). The scant five-paragraph motion contains little factual detail and no citation of authority to support the motion, other than a passing mention of Rule 60(b)(5) FRCP, 11 U.S.C. § 350(b), and 11 U.S.C. § 522(f) (See id.). Attached to the motion is an affirmation of the Debtor, asserting that he paid "all funds required and satisfied the . . . default judgment" (ECF BK No. 55, Affirmation ¶ 2). Following his payment of the money judgment in 2010, the Debtor states that he did not contact his attorney "until late 2014 or early 2015,⁶" asserting that he "did not think it was necessary; since having met my obligation, there was nothing else required of me" (Id. ¶ 3).

At the October 8, 2015 hearing on the motion to reopen, Debtor's counsel appeared. Neither the Trustee or any party in interest responded to the Debtor's motion. The Court reserved ruling on the motion. This written Decision and Order disposes of the motion.

III.CONCLUSIONS OF LAW

A. The Debtor Has Failed to Demonstrate "Cause" to Reopen.

The Bankruptcy Code vests bankruptcy courts with discretion to determine whether to reopen a closed case "to administer assets, to accord relief to the debtor, or for other cause." 11 U.S.C. § 350(b) (emphasis added); see also Rule 5010 FRBP. In determining whether "cause" exists to reopen a closed case, courts "may consider numerous factors including equitable concerns, and ought to emphasize substance over technical considerations." In re Wiggins, No.12-13341, 2013 Bankr. LEXIS 3587, at *3 (Bankr. S.D.N.Y. Aug. 29, 2013) (quoting In re Wilson, 492 B.R. 691, 695 (Bankr. S.D.N.Y. 2013)); see also In re Emmerling, 223 B.R. 860, 864 (B.A.P. 2d Cir. 1997) (discussing cause to reopen for equitable concerns). The factors for the Court to consider include:

(1) the length of time that the case was closed;

(2) whether a nonbankruptcy forum has jurisdiction to determine the issue which is the basis for reopening the case;

(3) whether prior litigation in the bankruptcy court determined that a state court would be the appropriate forum;

(4) whether any parties would suffer prejudice should the court grant or deny the motion to reopen;

(5) the extent of the benefit to the debtor by reopening; and

(6) whether it is clear at the outset that no relief would be forthcoming to the debtor by granting the motion to reopen.

Wilson, 492 B.R. at 695.

Here, the Court finds that the last factor is determinative—cause to reopen is absent if the Debtor would not be entitled to any relief. See In re Chalasani, 92 F.3d 1300, 1307 (2d Cir. 1996) (denying a motion to reopen where the relief sought after reopening would not be granted, therefore rendering the act of reopening meaningless); see also In re Pennington-Thurman, 499 B.R. 329, 332 (B.A.P. 8th Cir. 2013) (holding that it is appropriate for the Court to examine the merits of a proposed motion in considering a motion to reopen, and it is not an abuse of discretion to deny the motion to reopen where the proposed motion is lacking in merit); Wiggins, 2013 Bankr. LEXIS 3587, at *4. The Court necessarily turns its attention to the merits of the Debtor's proposed motion to vacate the order revoking his discharge under Rule 60(b)(5) FRCP and the proposed motion to avoid judgment liens under 11 U.S.C. § 522(f). See In re Gill, 529 B.R. 31, 37 (Bankr. W.D.N.Y. 2015).

B. The Punitive Portion of the Order Revoking Discharge Cannot Be "Satisfied" Under Rule 60(b)(5) FRCP.

The Debtor's proposed motion to vacate the Order revoking his discharge is brought under Rule 60(b)(5) FRCP and Rule 9024 FRBP, which provide that the Court may set aside a final judgment if "the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been vacated; or applying it prospectively is no longer equitable." The Debtor's motion makes no reference to the specific prong of Rule 60(b)(5) FRCP on which he relies. At oral argument, after the Court invited counsel to specify the theory for relief under Rule 60(b)(5), counsel indicated that the Debtor was relying on the first prong of the Rule—"the judgment has been satisfied, released or discharged." Fed. R. Civ. P. 60(b)(5). When pressed by the Court, it became clear that the Debtor's position is that—even though the Debtor had been so noncompliant in turning over Estate property as to result in the commencement of an adversary proceeding and the entry of a money judgment against him and an Order revoking his discharge—the Debtor had earned the right to "buy back" his discharge. In the Debtor's view, because he eventually paid the...