In re Lee

• Decision Date: 18 April 2012
• Docket Number: BAP No. 11–8053.
• Citation: 56 Bankr.Ct.Dec. 92,467 B.R. 906
• Parties: In re Martha LEE, Debtor–Appellant.
• Court: U.S. Bankruptcy Appellate Panel, Sixth Circuit

467 B.R. 906

56 Bankr.Ct.Dec. 92

In re Martha LEE, Debtor–Appellant.

BAP No. 11–8053.

United States Bankruptcy Appellate Panel of the Sixth Circuit.

April 18, 2012.

Nathan L. Swehla, Lerner, Sampson & Rothfuss, Cincinnati, OH, for Appellee.

Martha Lee, Cincinnati, OH, pro se.

Before: EMERSON, FULTON and SHEA–STONUM, Bankruptcy Appellate Panel Judges.

OPINION

MARILYN SHEA–STONUM, Bankruptcy Judge.

Martha W. Lee, the pro se debtor in this case, appeals from a July 14, 2011 bankruptcy court order granting the Appellee's motion to dismiss the debtor's chapter 11 case for abuse.¹ Consistent with the Judge's remarks at the hearing, the order also granted Appellee's requests for in rem relief against the debtor's real property pursuant to 11 U.S.C. §§ 105 and 362(d)(4) and declared that the case dismissal was with prejudice for a period of 180 days pursuant to 11 U.S.C. § 109(g). The order also included relief not discussed at the hearing.

For the reasons that follow, we affirm in part and remand in part the order of the bankruptcy court.

I. ISSUES ON APPEAL

The issues presented in this appeal are whether the bankruptcy court erred (1) in dismissing the debtor's chapter 11 case for abuse; (2) in dismissing the debtor's case with prejudice for a period of 180 days pursuant to 11 U.S.C. § 109(g); and (3) in granting Appellee permanent in rem relief with respect to the real property at 2309 Kemper Lane in Cincinnati, Ohio pursuant to 11 U.S.C. §§ 105 and 362(d)(4). Additional issues are (1) whether Appellee had standing to move for dismissal of Debtor's case with prejudice pursuant to 11 U.S.C. §§ 349(a) and 1112(b) and (2) whether the order submitted by Appellee and entered by the Court included relief not addressed at the hearing and not available under the statutory provisions on which Appellee relied.

II. JURISDICTION AND STANDARD OF REVIEW

The Bankruptcy Appellate Panel of the Sixth Circuit (“Panel”) has jurisdiction to decide this appeal. The United States District Court for the Southern District of Ohio has authorized appeals to the Panel and no party has timely elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). For purposes of appeal, a final order “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) (citations omitted).

A. Order Dismissing Case and Granting Appellee In Rem Relief from Automatic Stay

An order granting a motion to dismiss a chapter 11 case “for cause” is final for purposes of appeal, AMC Mortg. Co. v. Tenn. Dep't of Revenue (In re AMC Mortg. Co., Inc.), 213 F.3d 917, 920 (6th Cir.2000), as is an order which dismisses a case with prejudice. Cusano v. Klein (In re Cusano), 431 B.R. 726, 729 (6th Cir. BAP 2010). An order granting relief from the automatic stay is also a final, appealable order. State Bank of Florence v. Miller (In re Miller), 459 B.R. 657, 661 (6th Cir. BAP 2011).

The dismissal of a bankruptcy case “for cause” is reviewed for an abuse of discretion as is the determination that said dismissal be with prejudice. Mitan v. Duval (In re Mitan), 573 F.3d 237, 241 (6th Cir.2009); Cusano v. Klein (In re Cusano), 431 B.R. 726, 737 (6th Cir. BAP 2010). A bankruptcy court's decision to lift the automatic stay pursuant to 11 U.S.C. § 362(d) is also reviewed for an abuse of discretion. Trident Assocs. Ltd. P'ship v. Metro. Life Ins. Co. (In re Trident Assoc. Ltd. P'ship), 52 F.3d 127, 130 (6th Cir.1995). “An abuse of discretion occurs only when the [trial] court relies upon clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous legal standard.” Kaye v. Agripool, SRL (In re Murray, Inc.), 392 B.R. 288 (6th Cir. BAP 2008); See also Barlow v. M.J. Waterman & Assocs., Inc. (In re M.J. Waterman & Assocs., Inc.), 227 F.3d 604, 607–08 (6th Cir.2000) (“An abuse of discretion is defined as a ‘definite and firm conviction that the [court below] committed a clear error of judgment.’ ”) (citing Soberay Mach. & Equip. Co. v. MRF Ltd., Inc., 181 F.3d 759, 770 (6th Cir.1999) (alteration in original)). “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.” In re M.J. Waterman & Assocs., Inc., 227 F.3d at 608.

B. Motions Filed on June 29 and 30, 2011

In addition to the issues set forth above, Debtor has also asserted that the bankruptcy court erred by refusing to grant four motions she filed on June 29 and 30, 2011: (1) motion for a jury trial on the issue of dismissal of her case with prejudice, (2) motion to waive the filing fee or extend the time within which to pay the fee, (3) “Motion for disqualifying the Robel [sic] Properties LLC's attorney's qualification,” and (4) motion to postpone a ruling on Appellee's motion to dismiss. The bankruptcy court did not set a hearing on any of the four motions, nor did the court treat those motions as objections to Appellee's motion to dismiss Debtor's case. The deadline for filing a response to Appellee's Motion to Dismiss was June 2, 2011. As a result, the motions filed by Debtor on June 29 and 30, 2011, were past the responsive deadline and the bankruptcy court was under no obligation to consider them as responses since they were untimely. Although the bankruptcy court acknowledged at the June 30, 2011 hearing that Debtor had filed the motions, it did not rule on those motions. (“The only motion before the court now is the one filed by JP/Morgan Chase.” (June 30, 2011 Transcript of Hearing at 14–15, Bankr. Case No. 11–12011)). Consequently, there is no order, interlocutory or otherwise, for this Panel to review with respect to the motions filed by Debtor on June 29 and 30, 2011.

III. FACTS

Over the last three years, Martha W. Lee, (“Debtor”), has filed 3 skeletal petitions in the Southern District of Ohio. On October 20, 2009, Debtor filed a chapter 13 petition for bankruptcy relief which was dismissed on March 5, 2010, for failure to file a plan and/or schedules (case number 09–16913) (the “Chapter 13 Case”). Two months later, Debtor filed a pro se chapter 7 petition which was dismissed on October 19, 2010, upon the Chapter 7 Trustee's motion to dismiss for failure to produce proper documentation at the first and fourth settings of her § 341 meeting of creditors (case number 10–13250) (the “Chapter 7 Case”). On April 5, 2011, Debtor filed another pro se petition, this time under chapter 11, out of which the current appeal arises.

According to the schedules in her chapter 11 case, Debtor is the title owner of ten parcels of real estate in New Jersey and Ohio, including 2309 Kemper Lane in Cincinnati, Ohio (the “Kemper Lane Property”).² Schedule D indicates that Chase Home Finance holds the first mortgage on the property. Debtor listed the amount of Chase Home Finance's claim as $175,246 with an unsecured portion of $55,246.

According to Schedule I, Debtor's monthly income consists of $1,000 from operation of a food truck and $5,340.00 in rental income from real property. There is nothing in the petition which indicates which particular parcels of real property generate this income or which parcels are currently occupied; however, Debtor stated in her objection to Appellee's motion to dismiss her case that “most of the properties are currently vacant.”

On May 12, 2011, Appellee filed a motion to dismiss Debtor's case “for cause” (“Motion to Dismiss”) ³ The dispute between Appellee and Debtor centers around the Kemper Lane Property which has a somewhat long and complicated history vis a vis the parties.

After Debtor originally defaulted on the mortgage on the Kemper Lane Property in July 2008, Chase Home Finance filed a state court foreclosure complaint against the property on November 24, 2008. Chase Home Finance proceeded with the foreclosure action until October 20, 2009, when Debtor's Chapter 13 Case stayed the state court action. Following dismissal of Debtor's Chapter 13 case on March 5, 2010, Chase Home Finance filed a Notice of Termination of Stay in state court and the foreclosure action resumed.

The foreclosure action was stayed once again when Debtor filed the Chapter 7 Case on May 12, 2010. Chase Home Finance filed a motion for relief from the automatic stay in that case and that motion was granted without objection on August 16, 2010. Chase Home Finance resumed its foreclosure action on September 3, 2010, by filing a Motion to Reactivate Proceeding in the state court. The state court granted that motion on September 16, 2010; however, the foreclosure proceeding was stayed a third time when Debtor filed her chapter 11 petition on April 5, 2011. Debtor has made no payments on the Kemper Lane Property since July 2008. The estimated outstanding mortgage arrearage is $65,597.32.

In the Motion to Dismiss, Appellee asserted that Debtor lacked good faith in filing her chapter 11 petition and, in filing three unsuccessful petitions for relief, Debtor was abusing the bankruptcy process and asked that Debtor's case be dismissed “for cause.” Appellee also asserted that “unless this case is immediately dismissed and sanctions in the form of a permanent bar from filing or a 180 day bar from filing further petitions for relief is ordered with the dismissal, Debtor will again attempt to frustrate Creditor's right to have its collateral sold at Sheriff's sale.” (Mot. To Dismiss at 5). Appellee sought this relief pursuant to 11 U.S.C. §§ 109(g) and 349(a). Lastly, Appellee sought in rem relief against the Kemper Lane Property pursuant to 11 U.S.C. § 105 and asked the bankruptcy court to grant it “in rem relief in the form of a permanent bar...