In re Theoclis, Bankruptcy No. 97-43081-HJB.
| Decision Date | 08 October 1997 |
| Docket Number | Bankruptcy No. 97-43081-HJB. |
| Citation | 213 BR 880 |
| Parties | In re Thomas K. THEOCLIS, Debtor. |
| Court | U.S. Bankruptcy Court — District of Massachusetts |
Richard M. Pesto, Southwick, MA, Michael J.Rye, Springfield, MA.
Before the Court for determination is the "Debtor's Motion for Stay Pending Appeal" (the "Stay Motion"), filed by Thomas K. Theoclis (the "Debtor"). The Stay Motion seeks a stay pending appeal of this Court's order of September 18, 1997 granting a "Motion for Relief From Stay" (the "Ivanov Motion"), filed by Dimitri Ivanov and Lilia Ivanov (singly, "Mr." or "Mrs. Ivanov"; jointly, the "Ivanovs").
On or about August 5, 1993, the Debtor granted a mortgage to Springfield Institution for Savings (the "Bank") in property located at 42 Bliss Street in West Springfield, Massachusetts (the "Bliss Property"), as security for a loan in the original principal amount of $89,000. That loan subsequently fell into default, and the Bank scheduled a foreclosure sale for the property on May 6, 1997 at 12:00 p.m. Mr. Ivanov was the high bidder, with a bid of $45,000. On the same day, at 1:14 p.m., the Debtor commenced this case under Chapter 13.
On July 25, 1997, the Ivanovs filed the Ivanov Motion seeking relief from the automatic stay under 11 U.S.C. § 362, in order to commence a summary process action against the Debtor in the state court. The Ivanovs argued that they were the owners of the Bliss Property and that the debtor refused to vacate the premises voluntarily. The Debtor filed an opposition to the Ivanov Motion, arguing that the foreclosure sale was a fraudulent transfer or was otherwise improper because (i) the sale price of $45,000 was less than the value of $80,000 believed by the Debtor to be the property's "reasonable equivalent value"; (ii) the sale was "chilled" by the auctioneer's announcement that the Bank had received information that a bankruptcy filing was possible, but no case had as yet been commenced; and (iii) the closing on the sale post-dated the bankruptcy case filing. The Court held a nonevidentiary hearing on the Ivanov Motion on August 20, 1997. At the hearing, the Court found meritless the Debtor's arguments that the sale could be overturned because of the alleged insufficiency of the sale price, or because the auctioneer had properly proclaimed the state of the bankruptcy court record. However, an affidavit of a witness (Harvey Miller) offered by the Debtor raised, in the Court's mind, a genuine issue as to when the memorandum of sale was executed relative to the time of case commencement. An evidentiary hearing was set for September 2, 1997, and later extended to September 18, 1997 on the request of the Bank.
At the evidentiary hearing, the Court took testimony from a Bank representative, the auctioneer, Harvey Miller, and the Ivanovs. After hearing the evidence, the Court concluded that (1) the auctioneer's pronouncement as to the state of the bankruptcy court record was neither improper nor chilled the sale; (2) the alleged insufficiency of the sale price (even if true) did not make the sale fraudulent; and (3) Mr. Ivanov executed the memorandum of sale (and thereby the Debtor's equity of redemption was foreclosed) before the time of case commencement (1:14 p.m. on May 6, 1997). Furthermore, at trial, two other issues were for the first time seized upon by the Debtor. First, the evidence disclosed that Mr. Ivanov had not originally registered with the auctioneer. Rather, Mr. Ivanov's sometime-partner had registered and assigned to Mr. Ivanov his right to bid. Second, the Bank ultimately conveyed the Bliss Property not to Mr. Ivanov (the successful bidder and the party to the memorandum of sale), but to Mrs. Ivanov, without the benefit of an instrument of assignment between Mr. Ivanov and Mrs. Ivanov. The Court found the first of these new issues insufficient to invalidate the sale, and the second, even if a title defect, irrelevant since (a) the Debtor's equity of redemption had been foreclosed upon at least as early as the execution of the memorandum of sale and was no longer part of the estate at the time of the closing; and (b) Mrs. Ivanov was one of the movants to the Ivanov Motion.
Based on the Court's findings and rulings of September 18, 1997, the Court granted the Ivanov Motion. The Debtor's Notice of Appeal to the District Court and Stay Motion followed.
It is well settled that the standards to be applied by the Court in the face of a motion to stay the effect of its order are as follows:
In re Miraj, 201 B.R. 23, 26 (Bankr.D.Mass. 1996); In re Froment, 171 B.R. 170, 172 (Bankr.D.Mass.1994); In re Pub. Serv. Co., 116 B.R. 347, 348 (Bankr.D.N.H.1990); In re Great Barrington Fair and Amusement, Inc., 53 B.R. 237, 239 (Bankr.D.Mass.1985); see Equal Employment Opportunity Comm'n v. Astra USA Inc., 94 F.3d 738, 742 (1st. Cir.1996). Allowance of the motion requires the presence of each of the foregoing factors, at least in some degree. In re Miraj, 201 B.R. at 26. And application by the trial court of the first factor (likelihood of success on the merits of the appeal) is best understood as a determination that the movant has a "substantial case" or a "strong case on appeal." Id. at 26-27.
The Debtor has not demonstrated that he has a "substantial" or a "strong" case on appeal. The Debtor's complaint that the sale price was insufficient is itself deficient, without more. In the case of BFP v. Resolution Trust Corp., 511 U.S. 531, 545, 114 S.Ct....
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