In re Rush

• Decision Date: 24 April 1985
• Docket Number: Bankruptcy No. 80-04078,Adv. No. 81-0192.
• Citation: 49 BR 158
• Parties: In re George S. RUSH, d/b/a Rush Engineers, Debtor. The HOME INSURANCE COMPANY and George S. Rush, d/b/a Rush Engineers, Plaintiffs, v. THOMAS DUCKETT CONSTRUCTION COMPANY, INC., Thomas Duckett and Ronald P. Thompson, Defendants.
• Court: U.S. Bankruptcy Court — Northern District of Alabama

49 B.R. 158 (1985)

In re George S. RUSH, d/b/a Rush Engineers, Debtor The HOME INSURANCE COMPANY and George S. Rush, d/b/a Rush Engineers, Plaintiffs, v. THOMAS DUCKETT CONSTRUCTION COMPANY, INC., Thomas Duckett and Ronald P. Thompson, Defendants.

Bankruptcy No. 80-04078, Adv. No. 81-0192.

United States Bankruptcy Court, N.D. Alabama.

April 24, 1985.

Gus H. Small, Atlanta, Ga., and Thomas J. Knight, Anniston, Ala., for debtor-plaintiff George S. Rush.

David B. Anderson, Birmingham, Ala., for plaintiff Home Ins. Co.

Ronald P. Thompson, Albertville, Ala., and David Lee Jones, Guntersville, Ala., for defendants Thomas Duckett Const. Co., Inc., Thomas Duckett, and Ronald P. Thompson.

INTRODUCTION, CONCLUSIONS, AND ORDER ON MOTION FOR ENFORCEMENT OF ORDER AND SETTLEMENT

L. CHANDLER WATSON, Jr., Bankruptcy Judge.

Introduction—

The above-styled case was commenced by an involuntary petition filed under title 11, chapter 7, United States Code, by The Home Insurance Company and others, in the predecessor to this Court, on July 31, 1980. Said case, however, is not pending before this Court, having been dismissed out of court by an order therein on March 19, 1981.

Shortly before the dismissal of said case, the principal petitioner, The Home Insurance Company, and the alleged debtor, George S. Rush, having settled the many-faceted, huge, and heated unpleasantness between them, commenced this adversary proceeding against a third party (not one of the petitioners). Before the adversary proceeding was three weeks old, attorneys for the plaintiffs and for the defendants, respectively, submitted to the Court an order to be entered in the proceeding, and the order was signed by the bankruptcy judge and filed in the proceeding on March 18, 1981. Attached to the order was a "SETTLEMENT AGREEMENT," executed on behalf of Thomas Duckett Construction Company, Inc., and George S. Rush. This agreement provided for the entry of said order and for various actions and releases on the part of the two signatories. The order entered by the Court did not confirm or approve the settlement agreement but only did or provided as follows: (1) adjudged and declared null and void a sheriff's levy upon, and sale of, certain real property there described; (2) provided that a copy of the order could "be entered on the probate records of Lee County, Alabama"; and (3) recited that the order would "completely dispose of and resolve all issues set forth in the above captioned adversary proceeding." No other order or pleading was entered in the adversary proceeding, after the entry of said order.

The dismissal of the bankruptcy case was ordered after a hearing upon a motion to dismiss by the petitioning creditors and after four objections to dismissal had been overruled by the Court, all upon notice by mail to the parties in interest. At the direction of the bankruptcy judge, the order in the adversary proceeding, entered March 18, 1981, was served by copies sent by certified mail, and the adversary proceeding file shows delivery of such a copy to the office of the attorney of record for The Home Insurance Company, on March 23, 1981.

These matters remained dormant until the attorney for George Rush filed a "MOTION FOR ENFORCEMENT OF ORDER AND SETTLEMENT," on February 10, 1983. For some reason unknown to the bankruptcy judge, the motion was not set for a hearing. Apparently, the attorney for Rush made no further effort to bring the matter before the Court until September 14, 1984, when a Motion for Summary Judgment was filed on behalf of Rush. The latter motion came before the Court for a hearing on October 16, 1984, and there now have been filed separate briefs on behalf of the Home Insurance Company and on behalf of George Rush, contending that the original motion should be granted. A memorandum in opposition to the motion has been filed on behalf of the defendants, and the motion is now submitted for a ruling by the bankruptcy judge.

Conclusions by the Court—

The attorney for Rush alleges in the original motion that "civil actions of defendant were satisfied and released" and "the continuance of the said civil action by said defendant was in violation of said order and settlement. . . ." The motion sheds no further light upon Rush's dissatisfaction with whatever it is that "said defendant" sic has done or is doing. In the brief for Rush, it is asserted that "starting a new court into a dispute which has already had some history creates an additional burden on the judicial system as well as a burden upon the litigants." Obviously, a directive by this Court to Rush to seek relief elsewhere will create no burden upon this portion of the judicial system and creates no unwanted burden upon the defendants, as is demonstrated by their opposition to the granting of the motion.

In the brief, it is also stated that "it would appear that the specific congressional intention is to place all bankruptcy law questions in the federal system." It is a non sequitur to argue from that proposition that this bankruptcy court should give any serious consideration to the granting of Rush's motion, for the bankruptcy case was dismissed at the instance of the petitioning creditors, without any entry of an order for relief. As an aside, one fairly creditable view of the bankruptcy case would be that its primary purpose was to litigate with Rush various claims of the Home Insurance Company, in a forum where a jury trial would not be had and a disposition of the claims would likely be obtained on a more expedited basis than in other courts. As a further aside, the record in the bankruptcy case shows that Home Insurance Company had numerous claims against Rush, for losses running into six or seven figures which were grounded in its having become surety on various bonds as to which Rush was the principal.

The matter before the Court raises the question of whether an adversary proceeding such as the one here may have any life independent of the bankruptcy case in which it is instituted. It appears obvious that the adversary proceeding could not be brought in the bankruptcy court if there were no bankruptcy case in which it might be instituted. In other words, the matters complained of in the adversary proceeding must have some semblance of relationship to a bankruptcy case in order to make it the business of the bankruptcy court. Although there is some contrary authority as to the other question of whether a properly-filed adversary proceeding may have any independent life after the closing of the bankruptcy case as to which it is a satellite,¹ the bankruptcy judge does not see how, in legal theory, the adversary proceeding can survive the closing of the bankruptcy case in which it was commenced, nor does it appear that the bankruptcy court can enter an order in an adversary proceeding which terminated before or at the time that the bankruptcy case was closed, unless the bankruptcy case is reopened.

There may be some question as to whether this adversary proceeding has been terminated other than by the dismissal of the bankruptcy case. Such an order would have been appropriate, if needed, because the adversary proceeding became moot upon the filing of the settlement agreement between Rush and one of the defendants. Although not signatories to that agreement, it is apparent that the other plaintiff, The Home Insurance Company, Inc., was a tacit party to the agreement, as well as were the other two defendants. If an order terminating this adversary proceeding was appropriate and not entered, the termination should now be ordered, nunc pro tunc.

It may be, however, that no termination order was needed, because the settlement agreement executed for George Rush and Thomas Duckett Construction Company, Inc., may well constitute a stipulation for dismissal as provided for in Fed.R.Civ.P. 41(a) made applicable by 1973 Bankr.R. 741, with an exception not relevant here.² Again, the other parties to the adversary proceeding may be said to be parties to the stipulation for dismissal, because it is obvious that all parties to the litigation approved of the written settlement between two of them and the...