In re Vance

• Decision Date: 24 May 2011
• Docket Number: No. 10–30922–WRS.,10–30922–WRS.
• Citation: 538 B.R. 862
• Parties: In re Carl VANCE, Debtor.
• Court: U.S. Bankruptcy Court — Middle District of Alabama

538 B.R. 862

In re Carl VANCE, Debtor.

No. 10–30922–WRS.

United States Bankruptcy Court, M.D. Alabama.

May 24, 2011.

538 B.R. 863

Von G. Memory, Memory & Day, Montgomery, AL, for Debtor.

MEMORANDUM DECISION

WILLIAM R. SAWYER, Bankruptcy Judge.

This Chapter 7 case comes before the Court on the motion for reconsideration filed by United Bank. (Doc. 76). For the reasons set forth below, the motion is DENIED.

I. FACTS

The Debtor filed a petition in bankruptcy pursuant to Chapter 7 of the Bankruptcy Code on April 10, 2010. (Doc. 1). In

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the original Notice of Chapter 7 Bankruptcy Case, the Court did not establish a claims bar date. (Doc. 7). However, on May 4, 2010, the Court issued a notice of a claims bar date which was set for August 4, 2010. (Doc. 16). On May 12, 2010, United Bank filed a timely notice of claim. (Claim 1). United Bank claimed that it was secured in the amount of $4,253,035.00.

On September 10, 2010, the Trustee objected to the claim of United Bank contending that the claim was not secured and that it should be allowed as unsecured. (Doc. 62). Pursuant to the Court's local rules, United Bank had 30 days to respond. LBR 3007–1. The Trustee's objection contained a prominent notice of the Claimant's obligation to respond within 30 days. United Bank did not timely respond and on October 14, 2010, the Court sustained the Trustee's objection, which had the effect of allowing the Bank's claim as unsecured. More than three months later, United Bank moved to reconsider the Court's October 14 Order. (Doc. 76). United Bank did not give any reason for either its failure to timely respond to the Trustee's objection or why it waited three months to move for reconsideration.

II. LAW

This Court has jurisdiction to hear this matter pursuant to 28 U.S.C. § 1334(b). This is a core proceeding within the meaning 28 U.S.C. § 157(b)(2)(B). This is a final order. There are two issues to be decided here. The first is whether the Court should reconsider its order of October 14, 2010, sustaining the Trustee's objection to the claim of United Bank. Second, if the Court considers United Bank's claim on its merits, whether it is secured in a bank deposit owned by the Debtor as of the date of the petition.

A. Reconsideration Pursuant to Section 502(j)

The first question presented here is what standard should be applied to United Bank's motion to reconsider. Section 502(j) of the Bankruptcy Code provides, in part, that “a claim that has been allowed or disallowed may be reconsidered for cause. A reconsidered claim may be allowed or disallowed according to the equities of the case.” 11 U.S.C. § 502(j). Bankruptcy Rule 3008 provides that “a party in interest may move for reconsideration of an order allowing or disallowing a claim against the estate. The Court after a hearing on notice shall enter an appropriate order.” Considering both the Code and related Bankruptcy Rule, it is apparent that no firm time limit is given for motions to reconsider orders allowing or disallowing claims. The Bankruptcy Court is to determining whether the moving party has made a showing of “cause.” Moreover, such “cause” is considered “according to the equities of the case.” 11 U.S.C. § 502(j).

There is no mechanical test which one may apply to determine whether cause is shown. Rather the determination turns on facts and circumstances of each case. International Yacht and Tennis, Inc. (In re International Yacht and Tennis, Inc.), 922 F.2d 659 (11th Cir.1991) (holding that Bankruptcy Court erred when it applied 10 day provision of Bankruptcy Rule 8002 to motion to reconsider); Fidelity Financial Services, Inc. v. Montgomery County Department of Human Resources (In re Davis), 237 B.R. 177, 181–82 (M.D.Ala.1999) (cause is discretionary with the Court); In re Rayborn, 307 B.R. 710, 720–21 (Bankr.S.D.Ala.2002) (bankruptcy courts have considerable discretion but “cause” not standardless).

The standard to be applied depends upon, “among other things, when

538 B.R. 865

the motion to reconsider a claim is made.” Davis at 182. Motions made more than 10 days after entry of the order on a claim are governed by reference to Bankruptcy Rule 9024. Id. When one refers to Rule 9024, which incorporates Rule 60, Fed. R. Civ. P., it is readily apparent that United Bank has not alleged any of the grounds provided in either Bankruptcy Rule 9024 or Rule 60, Fed. R. Civ. P. Indeed, United Bank cites no grounds at all, instead citing to the language of § 502(j), which provides that the Bankruptcy Court may reconsider a claim at any time, ignoring the requirement that cause must be shown. See, In re Durham, 329 B.R. 899, 901 (Bankr.M.D.Ga.2005) (burden on moving party to show cause): In re Tri–State Ethanol Co., LLC,...