In re Forbes
| Decision Date | 09 December 1997 |
| Docket Number | 97-6048.,BAP No. 97-6041 |
| Citation | 215 BR 183 |
| Parties | In re Russell Charles FORBES, Debtor. Grace M. FORBES, Appellant, v. Russell Charles FORBES, Appellee. |
| Court | U.S. Bankruptcy Appellate Panel, Eighth Circuit |
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James J. Haller, St. Louis, MO, for appellant.
Norman W. Pressman, St. Louis, MO, for appellee.
Before KRESSEL, HILL, and DREHER, Bankruptcy Judges.
The appellant, Grace M. Forbes ("Grace") is the former spouse and, by virtue of a divorce decree award, a creditor of the Chapter 13 debtor, Russell C. Forbes ("Robert"), the appellee herein. In these consolidated appeals she appeals from the bankruptcy court's approval of post-confirmation modification of Robert's confirmed Chapter 13 plan over her objection and from an order denying her motion for reconsideration of its order approving the sale of real property in which she claims a lien. Robert moved for dismissal of both appeals on grounds of mootness. Resolution of the motion was reserved pending oral argument.
In December 1992, Robert filed a voluntary petition and repayment plan under Chapter 13 of the United States Bankruptcy Code, 11 U.S.C. §§ 1301-1330. At the time of the filing, Grace was Robert's creditor, having been awarded maintenance and a monetary judgment against him pursuant to a divorce decree entered in the City Court of the City of St. Louis, Missouri.1 The monetary judgment was secured by a lien on Robert's property located at 1426-1428 Salisbury Street, St. Louis, Missouri ("Salisbury Street property").
Robert's original Chapter 13 plan was a 60-month plan, and provided for monthly contributions to the trustee totaling $60,000.00. It made no specific reference to any particular secured claim, but rather mentioned these claims only generally. Grace's claim was not treated as a secured claim; rather, it was listed in Robert's schedules as an unsecured nonpriority claim. Robert's plan was confirmed on April 5, 1994, without objection.
Shortly thereafter, in June 1994, Robert sought to modify the previously-confirmed original plan by changing the amount of monthly contributions payable to the trustee. His proposed modified plan for the first time identified Grace as a secured creditor, with a claim of $28,000.00 payable without interest over 42 months at $673.00 per month.2 The bankruptcy court approved this postconfirmation modification without objection.
In August 1994, Robert proposed a second postconfirmation modification to the plan, increasing the length of the plan and changing his periodic contributions to the trustee, but leaving unaltered the treatment it accorded Grace. As extended, total plan payments became $67,600.00.
In early 1997, Robert received a settlement from a cause of action which arose postfiling and postconfirmation, as well as three years after the plan payments began. In March 1997, prompted by receipt of the settlement proceeds, Robert proposed a third post-confirmation modification by again changing the manner of contribution. This time he proposed reducing the term of the plan from 60 months to 40 months by making a single lump sum payment to the trustee of $22,800.00, payable immediately upon court approval of the modified plan, in addition to $45,400.00 previously paid the trustee, for total plan payments of $68,200.00.3 The effect of this proposal was to cash out the entire amount remaining to be paid the trustee by accelerating the payments due in the final 20 months of the plan.
Both Grace and the trustee objected to the proposed modification, alleging that the settlement proceeds constituted a "windfall" which enabled Robert to pay all of his creditors in full. The court overruled the objections, and once again approved Robert's proposed plan modification.
In her appeal from this order, Grace points to Robert's post-confirmation settlement, charging that the proceeds therefrom became property of the estate pursuant to Bankruptcy Code Section 1306. In this connection she contends that the bankruptcy court, preparatory to approving the accelerated distribution, was required to make an independent determination of the criteria set forth in Bankruptcy Code Section 1329(b)(1), which in turn incorporates Section 1325(a). Under Section 1325(a)(4), Grace argues that the bankruptcy court erred in failing to include Robert's "windfall" in its determinations under that Code section's "best interests of creditors" test. She also argues that the court erred by failing to count the "windfall" as "disposable income" under the "best efforts" test of Section 1325(b)(1)(B).
The second appeal presented concerns the sale of the Salisbury Street property, upon which Grace claims a lien. The bankruptcy court ordered an independent appraisal of this property in July 1994.4
At various times during the proceedings in the bankruptcy court, Robert moved to convey the Salisbury Street property to Grace by quitclaim deed, thereby attempting to receive an "allowance of secured claim credit of $55,000.00," presumably in satisfaction of Grace's secured claim. For reasons not disclosed in the record, the bankruptcy court refused to allow the conveyance.
Thereafter, Robert entered into a sale contract on the property, which was made subject to the bankruptcy court's approval, for the sum of $28,000.00. The sale was set for August 8, 1996, and, after hearing, the court granted Robert's motion to sell the property for that amount.
Grace then moved the court to reconsider its order permitting sale of the property. The court held a hearing on the matter, and subsequently denied her motion.
On appeal, Grace makes three challenges to the bankruptcy court's sale order. First, she alleges that the order is based upon factual and procedural errors. Next, she argues that the court failed to provide adequate protection for her lien, thereby failing to meet the requirements of 11 U.S.C. § 363(e). Lastly, she contends that the court's April sale order denied her procedural due process.
On appeal, the bankruptcy court's findings of fact are reviewed for clear error and its legal determinations are reviewed de novo. O'Neal v. Southwest Missouri Bank of Carthage (In re Broadview Lumber Co.), 118 F.3d 1246, 1250 (8th Cir.1997); Natkin & Co. v. Myers (In re Rine & Rine Auctioneers, Inc.), 74 F.3d 848, 851 (8th Cir.1996); Hartford Cas. Ins. v. Food Barn Stores, Inc. (In re Food Barn Stores, Inc.), 214 B.R. 197, 199 (8th Cir. BAP 1997); see also FED. R.BANKR.P. 8013.5 "A finding is `clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed." Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948)); see United States v. Garrido, 38 F.3d 981, 984 (8th Cir.1994); Chamberlain v. Kula (In re Kula), 213 B.R. 729, 735-36 (8th Cir. BAP 1997). If the bankruptcy court's account of the evidence is plausible in light of the entire record viewed, it must be upheld even though we might have weighed the evidence differently had we been sitting as the trier of fact. Anderson, 470 U.S. at 573-74, 105 S.Ct. at 1511; Vaughn v. Sexton, 975 F.2d 498, 506 (8th Cir.1992), cert. denied, 507 U.S. 915, 113 S.Ct. 1268, 122 L.Ed.2d 664 (1993).
"Whether property is included in the bankruptcy estate is a question of law." Ramsay v. Dowden (In re Central Arkansas Broad. Co.), 68 F.3d 213, 214 (8th Cir.1995). Hagel v. Drummond (In re Hagel), 184 B.R. 793, 795 (9th Cir. BAP 1995) (citations omitted); see also Leavitt v. Soto (In re Leavitt), 209 B.R. 935, 938 (9th Cir. BAP 1997) (). The bankruptcy court's denial of a motion for reconsideration is reviewed for an abuse of discretion.6 Bellus v. United States, 125 F.3d 821, 822 (9th Cir.1997); Employment Sec. Div. v. W.F. Hurley, Inc. (In re W.F. Hurley, Inc.), 612 F.2d 392, 395-96 (8th Cir.1980).
As a threshold matter, we first address Robert's motion to dismiss Grace's consolidated appeals as moot. Robert argues that Grace's appeal from the bankruptcy court's order approving the postconfirmation plan modification became moot when the court granted Robert a discharge in bankruptcy, as required under Code Section 1328, after he completed making all of his payments under the modified plan. We disagree.
"It has long been settled that a federal court has no authority `to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before it.'" Church of Scientology v. United States, 506 U.S. 9, 12, 113 S.Ct. 447, 449, 121 L.Ed.2d 313 (1992) (quoting Mills v. Green, 159 U.S. 651, 653, 16 S.Ct. 132, 133, 40 L.Ed. 293 (1895)). Thus, "the `existence of a live case or controversy is a constitutional prerequisite to the jurisdiction of the federal courts.'" In re Grand Jury Subpoenas Duces Tecum, 78 F.3d 1307, 1310 (8th Cir.) (), cert. denied, ___ U.S. ___, 117 S.Ct. 432, 136 L.Ed.2d 331 (1996); Arkansas AFL-CIO v. FCC, 11 F.3d 1430, 1435 (8th Cir.1993) (en banc).
An appeal is moot in this sense "only if events have taken place during the pendency of the appeal that make it `impossible for the court to grant any effectual relief whatever.'" In re...
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