Matter of Hunter
| Decision Date | 24 March 1987 |
| Docket Number | Bankruptcy No. 3-86-01769. |
| Citation | 76 BR 117 |
| Parties | In the Matter of Yolanda HUNTER, Debtor. The HUNTINGTON NATIONAL BANK, Movant, v. Yolanda G. HUNTER, Respondent/Debtor. |
| Court | U.S. Bankruptcy Court — Southern District of Ohio |
Herbert Ernst, Jr., Dayton, Ohio, trustee in bankruptcy.
Lawrence T. Burick, Dayton, Ohio, for Huntington Nat. Bank.
Randall L. Stump, Dayton, Ohio, for debtor.
This is a case arising under 28 U.S.C. § 1334(a) and having been referred to this court is determined to be a core proceeding under 28 U.S.C. § 157(b)(2)(A), in which the Chapter 7 trustee has filed a motion (Doc. 14) requesting the court to reopen the case and set aside his abandonment.
For the reasons set forth herein, the court DENIES the relief requested in the trustee's Motion.
The trustee must have believed the case was closed by an order entered in the case since part of the relief he requested was to have the case reopened. The debtor has paid the required filing fee and received her discharge; however, as a result of the trustee's Motion, the clerk's office did not complete the ministerial act of entering an order closing the case. In so far as the trustee's motion requests a reopening of this case, since an order closing this case has not been entered, his motion is DENIED. In so far as the trustee's motion attempts to "reopen" his final report, which closed his participation in this case, his motion is also DENIED. The balance of this decision is directed to the issues connected with the trustee's request to set aside his abandonment.
On July 10, 1986, Yolanda Hunter, hereinafter the debtor, filed a Chapter 7 petition and on July 25, 1986 filed her Statement of Affairs and Schedules which listed a 1982 Ford Mustang automobile. On July 31, 1986, a Proof of Claim was filed by Huntington National Bank, hereinafter HNB. This proof of claim contained as attachments a copy of a loan agreement dated June 5, 1986 involving the automobile and a copy of the Ohio Certificate of Title noting HNB's lien dated June 24, 1986.
On August 14, 1986, the trustee presided at the Meeting Of Creditors pursuant to 11 U.S.C. § 341 and on August 15, 1986, filed his Notice Of Abandonment Of Burdensome Property and Report Of No Assets (Doc. 8).
On September 19, 1986, HNB filed a motion requesting relief from the stay (11 U.S.C. § 362). This motion was set for hearing on October 16, 1986, at which time HNB presented an order signed by the debtor agreeing to relief from the stay. The trustee did not file any responsive pleading nor appear at the hearing in connection with HNB's motion for relief from the stay.
In response to a request from HNB, the trustee signed a separate Notice Of Abandonment of the automobile. Although the trustee filed his own abandonment and final report and thereafter signed this separate specific abandonment, the trustee subsequently determined that there was a potentially avoidable preference pursuant to 11 U.S.C. § 547 in connection with HNB's security interest in the debtor's automobile.
The issue for determination is whether the circumstances of this case present adequate cause for a trustee to set aside his abandonment in order to administer this potential asset.
The general rule in this area is well settled—once a trustee abandons property, the abandonment is irrevocable. e.g. In re Bryson, 53 B.R. 3, 4 (Bankr.M.D.Tenn. 1985); Wallace v. Enriquez (Matter of Enriquez), 22 B.R. 934, 935 (Bankr.D.Neb. 1982). See also 4 Collier on Bankruptcy, § 554.02, p.p. 554-6 through 554-8 (15th Ed.1984).
The exceptions to this rule appear in cases where a potential asset is concealed from the trustee or information concerning the potential asset has not been properly disclosed so that the trustee can make an informed decision concerning an abandonment. e.g. Murray Mitchell Building Supply Co., Inc. v. Burch Co., Inc. (In re Burch Co., Inc.), 37 B.R. 273, 273 (Bankr. D.S.Car.1983); In re Bryson at 4. In cases where the property has been scheduled by the debtor and information concerning the asset has been properly disclosed to the trustee, if the property has been abandoned in accordance with the applicable provisions of the Bankruptcy Code and Rules, the title to the property revests back to the debtor as if it had never been held by the trustee. In re Tarpley 4 B.R. 145, 146, (Bankr.M.D. Tenn.) Thus, the trustee is divested of control of the property because the property is no longer part of the bankruptcy estate. Matter of Enriquez at 935.
The role of the Chapter 7 Trustee is integral to the administration of a Chapter 7 case. The trustee is given broad authority to obtain and liquidate property of the estate. The trustee's powers include, inter alia, 11 U.S.C. § 363 (), 11 U.S.C. § 365 (), 11 U.S.C. § 542 and § 543 (turnover), 11 U.S.C. § 544 (avoidance of transfers), § 545 (), § 547 (recovery of preferences) § 548 (), § 549 (avoidance of post petition transfers and § 721 (). The trustee is likewise given broad authority to dispose of property of the estate which the trustee believes is not beneficial to the estate. The trustee's powers include, inter alia, 11 U.S.C. § 365 (), 11 U.S.C. § 554 (abandonment) and § 725 ().
Consistent with such broad authority, the trustee is also given significant responsibilities in the administration of a Chapter 7 case (11 U.S.C. § 704). While the trustee is required to act expeditiously in the administration of the case (11 U.S.C. § 704 (1), Bankr.R. 2015), there is no requirement that a trustee file a report, within one day following the meeting of creditors, that there are no assets in the case and all properly scheduled property is abandoned.
While the Bankruptcy Code and Rules (11 U.S.C. § 554(b), Bankr.R. 6007) require the trustee to act promptly to prevent another party from obtaining an order requiring the trustee to abandon property, there is no such time constraint on the trustee in connection with the trustee's own determination that property is burdensome or of inconsequential value in the case (§ 554(a) and (c)).
This court recognizes that an experienced and sophisticated trustee could properly review the information in a debtor's petition, examine any local real estate or personal property records, review any filed proofs of claim, contact counsel for the debtor, the debtor, any creditor or other interested party for additional information, examine the debtor at the Meeting of Creditors, make a final determination concerning property of the estate and file a final report captioned, "Trustee's Notice Of Abandonment Of Burdensome Property And Report Of No Assets" on the day of the Meeting of Creditors or shortly thereafter. If a trustee does not believe she or he can properly make such a final determination by the date of the Meeting of Creditors or shortly thereafter, there is no requirement that the trustee file such a report in such a brief time period. When a trustee does file a final report, it is this court's opinion that the trustee's filing is to be recognized as a determination upon which the court and parties in a case may rely. It would result in unnecessarily burdening the prompt administration of a case, be contrary to the concept of finality in legal proceedings and be beyond the recognized exceptions to the general rule that a trustee's abandonment is irrevocable, for a court or other interested parties to refrain from relying on trustees' filed reports because trustees may subsequently second guess themselves.
The decisions in Matter of Lintz West Side Lumber, Inc., 655 F.2d 786 (7th Cir. 1981) and Rameker v. Berning Garage, Inc. (Matter of Alt) 39 B.R. 902 (Bankr.W. D.Wisc.1984),...
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