Lpp Mortg., Ltd. v. Brinley
| Decision Date | 24 November 2008 |
| Docket Number | No. 07-6211.,07-6211. |
| Citation | 547 F.3d 643 |
| Parties | LPP MORTGAGE, LTD., and William W. Lawrence, Trustee, Plaintiffs-Appellees, v. Stuart C. BRINLEY; Fredrick L. Radcliffe, Jr., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED: Richard A. Schwartz, Kruger, Schwartz & Morreau, Louisville, Kentucky, for Appellants. Rick D. DeBlasis, Lerner, Sampson & Rothfuss, Cincinnati, Ohio, for Appellees. ON BRIEF: Richard A. Schwartz, Kruger, Schwartz & Morreau, Louisville, Kentucky, for Appellants. Rick D. DeBlasis, Shannon O'Connell Egan, Cynthia M. Roselle, Lerner, Sampson & Rothfuss, Cincinnati, Ohio, for Appellees.
Before: MOORE and COOK, Circuit Judges; HOOD, Senior District Judge.*
Debtors-Appellants Stuart C. Brinley ("Brinley") and Fredrick L. Radcliffe, Jr.("Radcliffe") (collectively, "Appellants") appeal the district court's opinion and order affirming the bankruptcy court's order which allowed the Trustee, William W. Lawrence, to revoke his abandonment of Appellants' real property. For the reasons set forth below, we affirm the district court's opinion and order.
On February 15, 2001, Brinley filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Western District of Kentucky. On February 27, 2001, Brinley filed with the bankruptcy court, pursuant to 11 U.S.C. § 521(1), a list of creditors, a schedule of assets and liabilities, a schedule of current income and current expenditures, and a statement of his financial affairs. In the schedule of assets and liabilities, Brinley listed a one-half interest in a house and lot located at 1007 Johnson Farm Road, Louisville, Kentucky (the "Property").
On April 9, 2001, pursuant to § 522(f) of the Bankruptcy Code, Brinley filed a motion to avoid the judgment lien that PNC Bank, Kentucky, Inc., held on the Property. LPP Mortgage, Ltd. ("LPP"), the successor by assignment of the judgment lien, timely filed an objection to Brinley's motion. On July 24, 2001, while the motion to avoid the lien was pending, the Trustee filed a motion to close the bankruptcy case. The Trustee's Final Report was accepted by the bankruptcy court on November 28, 2001. On May 24, 2002, the bankruptcy court decided Brinley's motion to avoid the lien, holding that LPP's lien was avoided in the amount of $18,418.00, leaving LPP with a judgment lien of $94,000.00 on the Property.
On May 31, 2002, Brinley appealed to the United States District Court for the Western District of Kentucky. During the pendency of the appeal, on October 21, 2002, the bankruptcy court entered a final decree, the Trustee was discharged, and Brinley's bankruptcy case was closed. On April 2, 2003, the district court issued an opinion reversing the bankruptcy court's decision and completely eliminating LPP's lien on the property. LPP and Brinley cross-appealed to this Court. On March 22, 2005, this Court issued an opinion reversing in part and affirming in part the decision of the district court. Using the statutory framework of 11 U.S.C. § 522(f)(1), this Court concluded that LPP's judgment lien survived in the amount of $13,654.91 and was avoided to the extent of $98,763.44. Stuart C. Brinley v. LPP Mortgage, Ltd. (In re Brinley), 403 F.3d 415 (6th Cir.2005).
On April 25, 2005, the bankruptcy court set aside the final decree and reopened the bankruptcy case. On June 22, 2005, pursuant to this Court's direction, the bankruptcy court ordered that LPP was to retain a judgment lien in the amount of $13,654.91 and that the remainder of the lien was avoided. On August 2, 2005, the bankruptcy court entered a final decree and closed the bankruptcy case.
On October 20, 2005, LPP filed a motion to reopen the bankruptcy case and a motion pursuant to 11 U.S.C. § 551 to preserve for the benefit of the bankruptcy estate the unencumbered equity in Brinley's Property that was created by virtue of the partial avoidance of LPP's lien.1 On October 21, 2005, the bankruptcy court ordered that the case be reopened. On June 20, 2006, Brinley filed an objection to LPP's motion to preserve unencumbered equity arguing, inter alia, that the Trustee had abandoned his interest in the Property, thus making § 551 inapplicable.
A hearing was held on July 25, 2006, at which time the Trustee orally joined in LPP's motion to preserve the unencumbered equity for the bankruptcy estate. On August 17, 2006, the bankruptcy court granted LPP's motion to have the unencumbered equity preserved for the benefit of the bankruptcy estate. In its memorandum, the bankruptcy court found that the Trustee's technical abandonment of the property was revocable under Federal Rule of Civil Procedure 60(b) and that equity dictated that the abandonment be revoked. On August 25, 2006, Brinley filed a Notice of Appeal to the United States District Court for the Western District of Kentucky. The district court affirmed the decision of the bankruptcy court. Brinley appealed.
On February 15, 2001, Radcliffe filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Western District of Kentucky. On February 27, 2001, Radcliffe filed with the bankruptcy court, pursuant to 11 U.S.C. § 521(1), a list of creditors, a schedule of assets and liabilities, a schedule of current income and current expenditures, and a statement of his financial affairs. In the schedule of assets and liabilities, Radcliffe listed a fee simple interest in a house and lot located at 2600 Six Mile Lane, Louisville, Kentucky (the "Property"). Radcliffe claimed an exemption in the Property in the amount of $6,000.00. On April 9, 2001, Radcliffe filed a motion to avoid the judgment lien of PNC Bank, Kentucky, Inc., pursuant to 11 U.S.C. § 522(f). LPP, the successor by assignment of the judgment lien, filed a timely objection to Radcliffe's motion. On May 24, 2002, the bankruptcy court entered its decision granting in part and denying in part Radcliffe's motion to avoid. The bankruptcy court held that LPP's lien was avoided in the amount of $48,418.35, leaving LPP with a judgment lien of $64,000.00 on the Property. On May 31, 2002, Radcliffe appealed the decision to the United States District Court for the Western District of Kentucky. On October 21, 2002, while the appeal was pending, the bankruptcy court closed Radcliffe's bankruptcy case.
On March 31, 2003, the district court issued its opinion reversing the bankruptcy court and completely eliminating LPP's lien on the property. LPP appealed to this Court. Following the holding in In re Brinley, 403 F.3d 415, this Court opined that LPP's lien was avoided in its entirety. LPP Mortgage, Ltd. v. Frederick L. Radcliffe, Jr., 2005 WL 712746 (6th Cir. March 30, 2005).
On October 19, 2005, LPP filed a motion to reopen the bankruptcy case and a motion pursuant to 11 U.S.C. § 551 to preserve for the benefit of the bankruptcy estate the unencumbered equity in Radcliffe's property that was created by virtue of avoidance of LPP's lien. On October 20, 2005, the bankruptcy court reopened the bankruptcy case. On June 20, 2006, Radcliffe filed an objection to LPP's motion arguing, inter alia, that the Trustee had abandoned his interest in the Property, thus making § 551 of the Bankruptcy Code inapplicable.
A hearing was held on July 25, 2006, at which time the Trustee orally joined in LPP's motion to preserve the unencumbered equity for the benefit of the estate. Using the same analysis as in Brinley, on August 17, 2006, the bankruptcy court entered an order granting LPP's motion to have the unencumbered equity preserved for the benefit of the bankruptcy estate. Radcliffe appealed to the United States District Court for the Western District of Kentucky. The district court, after consolidating Appellants' appeals, affirmed the decisions of the bankruptcy court. Radcliffe and Brinley appealed to this Court.
When reviewing an order of a bankruptcy court on appeal from a decision of a district court, this Court "review[s] the bankruptcy court's order directly and give[s] no deference to the district court's decision." In re Lee, 530 F.3d 458, 463 (6th Cir.2008) (citing Rogan v. Bank One, Nat'l Ass'n (In re Cook), 457 F.3d 561, 565 (6th Cir.2006)). The bankruptcy court's findings of fact are reviewed for clear error. Id. Conclusions of law made by the bankruptcy court are reviewed de novo. Id. Equitable determinations made by bankruptcy courts are reviewed for an abuse of discretion. In re Eagle-Picher Indus., Inc., 285 F.3d 522, 527 (6th Cir.2002).
For the first time on appeal, appellants argue that LPP lacked standing to file motions seeking to preserve the avoided liens (or unencumbered equity) for the benefit of the bankruptcy estate. The precise nature of appellants' standing argument is not clear. We will assume that appellants argue that LPP lacked Article III standing. Although the issue of standing was not raised in the courts below, Article III "standing ... is jurisdictional and not subject to waiver." Lewis v. Casey, 518 U.S. 343, 349 n. 1, 116 S.Ct. 2174, 135 L.Ed.2d 606 (1996). We must independently satisfy ourselves that the federal courts have subject-matter jurisdiction. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). To satisfy the standing requirements of Article III, a party must show: "(1) it has suffered an `injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Friends of the...
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