In re Geberegeorgis

Citation310 B.R. 61
Decision Date24 May 2004
Docket NumberNo. 03-8007.,03-8007.
PartiesIn re Sirak W. GEBEREGEORGIS, Debtor. Sirak W. Geberegeorgis, Debtor-Appellee, v. Al Gammarino, Creditor-Appellant.
CourtBankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Sixth Circuit

ON BRIEF: Al Gammarino, Cincinnati, OH, for Appellant. Eric W. Goering, Cincinnati, OH, for Appellee.

Before: LATTA, RHODES, and WHIPPLE, Bankruptcy Appellate Panel Judges.

OPINION

WHIPPLE, Bankruptcy Judge.

Creditor Al Gammarino (Gammarino) appeals the bankruptcy court's order granting Debtor Sirak W. Geberegeorgis' (Debtor) motion to vacate its prior order dismissing Debtor's Chapter 13 case and allowing him to resume performance of his confirmed Chapter 13 plan. The bankruptcy court determined that cause existed for vacating the dismissal order because the conditions that resulted in dismissal, namely Debtor's illness and failure to make plan payments, had been resolved, and Gammarino would not be prejudiced by reinstatement of the case. The Panel finds that the bankruptcy court did not abuse its discretion in vacating the prior order of dismissal and AFFIRMS the bankruptcy court's order.

I. ISSUE ON APPEAL

The issue is whether the bankruptcy court abused its discretion by vacating its order of dismissal and allowing Debtor to resume performance of his confirmed Chapter 13 plan.

II. JURISDICTION AND STANDARD OF REVIEW

The Panel has jurisdiction to decide this appeal from a final order of the bankruptcy court. The United States District Court for the Southern District of Ohio has authorized appeals to the Bankruptcy Appellate Panel. 28 U.S.C. § 158(b). The "final order" of a bankruptcy court may be appealed by right under 28 U.S.C. § 158(a)(1).

For purposes of appeal, the Supreme Court defines an order as final if it "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S.Ct. 1494, 1497, 103 L.Ed.2d 879 (1989) (internal quotations and citations omitted). Courts view the concept of finality in a more pragmatic and flexible way in bankruptcy proceedings than in other civil proceedings, "[t]o avoid the waste of time and resources that might result from reviewing discrete portions of the action only after [a bankruptcy case concludes or] a plan of reorganization is approved." Lindsey v. O'Brien, Tanski, Tanzer & Young Health Care Providers of Conn. (In re Dow Corning Corp.), 86 F.3d 482, 488 (6th Cir.1996); see Cottrell v. Schilling (In re Cottrell), 876 F.2d 540, 541-42 (6th Cir.1989). Accordingly, an order that concludes a particular adversarial matter within the larger case should be deemed final and reviewable in a bankruptcy setting. Lindsey, 86 F.3d at 488; In re James Wilson Assocs., 965 F.2d 160, 166, (7th Cir.1992); Martin Bros. Toolmakers, Inc. v. Indus. Dev. Bd. (In re Martin Bros. Toolmakers, Inc.), 796 F.2d 1435, 1437-38 (11th Cir.1986).

Upon dismissal of the case, Gammarino was permitted to pursue his collection rights and remedies free of the automatic stay and Debtor's confirmed Chapter 13 plan. In re Hill, 305 B.R. 100, 105 (Bankr.M.D.Fla.2003) ("Although a case may remain open after dismissal, the automatic stay of § 362 of the Bankruptcy Code terminates when the case is dismissed."). Vacation of the dismissal order reinstated Debtor's Chapter 13 case, and Gammarino's rights under the confirmed Chapter 13 plan. At that point, all that was left to do was Debtor's performance and the Chapter 13 Trustee's administration of Debtor's already confirmed Chapter 13 plan. Absent separate future defaults or other disputes related to the confirmed Chapter 13 plan, there were no further orders required by the bankruptcy court and Gammarino was again bound by the terms of the plan. 11 U.S.C. § 1327(a). The order vacating the dismissal concluded the dispute over dismissal such that it is a final order immediately appealable by Gammarino without waiting until completion of the Chapter 13 plan and Debtor's discharge. See 11 U.S.C. §§ 1322(d), 1328.

In addition, the procedural basis for the bankruptcy court's order was ultimately Fed.R.Civ.P. 60(b), which applied to Debtor's Chapter 13 case through Fed. R. Bankr.P. 9024. The Sixth Circuit has held that an order ruling on a Rule 60(b) motion is appealable. Mallory v. Eyrich, 922 F.2d 1273, 1277 (6th Cir.1991) (citing Browder v. Director, Illinois Dept. of Corrections, 434 U.S. 257, 263 n. 7, 98 S.Ct. 556, 54 L.Ed.2d 521 (1978); Honneus v. Donovan, 691 F.2d 1, 2 (1st Cir.1982)).

The granting of relief under Fed.R.Civ.P. 60(b) is reviewed for abuse of discretion. Mallory, 922 F.2d at 1279; Cincinnati Ins. Co. v. Byers, 151 F.3d 574, 578 (6th Cir.1998). Therefore, the Panel will affirm the order presently on appeal unless the Panel has "a definite and firm conviction that the court below committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors." Union Oil Co. of Cal. v. Serv. Oil Co., 766 F.2d 224, 227 (6th Cir.1985); Cincinnati Ins. Co., 151 F.3d at 578. "The question is not how the reviewing court would have ruled, but rather whether a reasonable person could agree with the bankruptcy court's decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion." Barlow v. M.J. Waterman & Assocs. (In re M.J. Waterman & Assocs.), 227 F.3d 604, 608 (6th Cir.2000) (citations omitted).

III. FACTS

Debtor filed his Chapter 13 petition in the United States Bankruptcy Court for the Southern District of Ohio on March 1, 2000. Among his assets is his business, a Dairy Mart, located in Cincinnati, Hamilton County, Ohio. The business property is subject to a first mortgage held by Provident Bank and a second mortgage held by Gammarino. The bankruptcy court confirmed Debtor's Chapter 13 plan on March 22, 2001, overruling Gammarino's objections.

Debtor was hospitalized for congestive heart failure in September of 2002. Debtor fell behind in his plan performance obligations, missing payments outside of the plan on the first mortgage to Provident Bank; monthly plan payments to the Chapter 13 Trustee due in August, September and October, 2002; and payment of post-petition real property taxes. As a result, the bankruptcy court granted Provident Bank relief from stay on September 24, 2002. The Chapter 13 Trustee also filed on September 18, 2002, and properly noticed and served, a motion to dismiss the case due to Debtor's failure to make plan payments. Debtor did not oppose the Chapter 13 Trustee's motion to dismiss, and on October 17, 2002, the bankruptcy court granted the motion.

Shortly thereafter, on October 28, 2002, Debtor filed a motion to reopen the case, vacate the dismissal order and resume payments. Gammarino filed a written objection to Debtor's motion. The Chapter 13 Trustee also initially opposed Debtor's motion. Prior to the hearing, Debtor, Provident Bank, and the county taxing authorities reached an agreement whereby Debtor could bring his delinquent post-petition payments current.

At the hearing, Gammarino opposed vacating the dismissal order and reinstating the case. His primary objections were that 11 U.S.C. § 350 did not support the relief requested and that he would be prejudiced by reinstating Debtor's Chapter 13 case. A representative of the Chapter 13 Trustee's office reported that Debtor had provided requested business reports and had been able to make two of the missed plan payments, each in the amount of $3,650.00, immediately before the hearing. With a permitted suspension of the missed payments, which the bankruptcy court also granted, Debtor's plan could still be completed within the statutory maximum of sixty months. 11 U.S.C. § 1322(d). The Chapter 13 Trustee's report also showed that Gammarino had been paid $39,429.45 through the plan prior to dismissal. As a result, at the hearing, the Chapter 13 Trustee's representative orally withdrew her objection to Debtor's motion.

By the time of the hearing, testimony and proffered evidence showed that Debtor was current on his post-petition real property tax payments to the Hamilton County treasurer and to the first mortgage holder, Provident Bank. Neither objected to vacating the dismissal order. With the liens ahead of his second mortgage brought current, the bankruptcy court offered Gammarino, the sole remaining objector, the opportunity to explain how he would be prejudiced by vacating the dismissal order. Gammarino said that he wanted finality, and the ability to proceed with a foreclosure proceeding in state court on his second mortgage. He had not, however, commenced a foreclosure proceeding in the months between the dismissal and the time of the hearing.

The bankruptcy court considered the evidence and found that cause, including benefit to Debtor and his creditors, existed to reinstate the case. The court entered an order vacating the dismissal on January 13, 2003. The order states:

For the reasons stated at the hearing, including the fact that the Chapter 13 Trustee withdrew her objection at the hearing and the fact that the Debtor made arrangements to bring his payments current with both the first mortgage holder, Provident Bank, and the Hamilton County Treasurer, we hereby find the Debtor's motion to be well-taken.

The bankruptcy court's order specifically states that the portion of Debtor's motion requesting that the court "reopen" the case is moot because the case was never closed. This appeal timely followed.

IV. DISCUSSION

The Panel will first address Gammarino's procedural argument. Debtor's motion was titled "Motion to Reopen Case, Vacate Order of Dismissal and Resume Payment." Debtor's written motion cited only 11 U.S.C. § 350(b) and Local Bankruptcy Rule 5010 as authority for the relief he sought, although he orally cited both 11 U.S.C. § 105 and Fed.R.Civ.P. 60(b) at the hearing. Both § 350(b) and Local Bankruptcy ...

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