Matter of Mission Carpet Mills, Inc., Bankruptcy No. 80-1051-GKD.

• Decision Date: 02 March 1981
• Docket Number: Bankruptcy No. 80-1051-GKD.
• Parties: In the Matter of MISSION CARPET MILLS, INC., d/b/a Century Carpet Mills, Debtor. RUSCH FACTOR DIVISION, BVA Credit Corporation, Appellant, v. Gary MILLER, Appellee.
• Court: Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Ninth Circuit

10 B.R. 494 (1981)

In the Matter of MISSION CARPET MILLS, INC., d/b/a Century Carpet Mills, Debtor.

RUSCH FACTOR DIVISION, BVA Credit Corporation, Appellant, v. Gary MILLER, Appellee.

Bankruptcy No. 80-1051-GKD.

United States Bankruptcy Appellate Panels, Ninth Circuit.

Submitted January 22, 1981.

Decided March 2, 1981.

Hal L. Coskey, Coskey, Coskey & Boxer, Los Angeles, Cal., for appellant.

Jerome B. Smith, Stone & Wolfe, and Lawrence Bass, Gendel, Raskoff, Shapiro & Quittner, Los Angeles, Cal., for appellee.

Before KATZ, DAVIS and GEORGE, Bankruptcy Judges.

OPINION

GEORGE, Bankruptcy Judge:

The instant appeal comes from a determination of Bankruptcy Judge Barry Russell, of the Central District of California, that a August 13, 1980 meeting of creditors called pursuant to Section 341(a) of the Code be reopened for the purpose of allowing one creditor, Avondale Mills, to file a new proof of claim and/or power of attorney with respect to the election of a trustee in the above-entitled Chapter 7 case. In so doing, Judge Russell noted that the intentions of Avondale at that time were unclear to the Court.

Plaintiff/Appellant has requested that the Panel 1) reverse Judge Russell's decision to reopen the Section 341(a) meeting which allowed Avondale to file a new proof of claim and/or a power of attorney, 2) remove the elected trustee, and 3) deem the alternate nominee to have been elected as trustee.

Upon review, we find that Judge Russell was justified in his decision to allow the reopening of the Debtor's Section 341(a) meeting for the purpose of allowing Avondale to file a final proof of claim and/or power of attorney and to thereby cast its vote for the permanent trustee.

I. BACKGROUND

At the August 13, 1980 Section 341(a) meeting of creditors for Mission Carpet Mills, Inc., an election of trustee was properly requested and a sufficient number of creditors, with the requisite amount of claims, were present. The following claims were voted: For Gary Miller (the Interim Trustee)

                  Warn Brothers, dba Crescent Truck Lines   $  3,708.07
                  Calspun Mills                              415,538.72
                  Citizens and Southern Bank                 320,716.80
                  California Carpet Finishing                  8,088.00
                  Multitex Corp. of California                43,785.00
                                                            ___________
                The Total Vote for Gary Miller              $791,836.59
                For Carlyle Michelman (Alternate Nominee)
                  National Services                         $ 56,253.87
                  Allied Chemical Fibers                     190,076.69
                  Avondale Mills                             325,157.03
                  Martin Processing                          100,785.66
                  Rusch Factors                               79,160.24
                                                            ___________
                The Total Vote for Carlyle Michelman        $751,433.49
                

An issue was raised prior to the vote relating to Multitex's status as both a secured and unsecured creditor. The United States Trustee conducting the Section 341(a) meeting allowed Multitex to vote the unsecured portion of its claim. Subsequent litigation between Multitex and the Debtor's estate removed this issue from consideration in the instant appeal.

Avondale's representative, prior to the vote, filed a power of attorney, which was voted for the alternate trustee, Carlyle Michelman. After the vote was taken, the representative of Citizens and Southern Bank informed the United States Trustee that he had spoken with an officer of Avondale and that another power of attorney had been given to an entity known as A.C.I. The United States Trustee then certified the interim trustee, Gary Miller as permanent trustee. It was later determined that this second power of attorney went to the same representative as the first power of attorney. Because the exclusion of Avondale from the computation would not have affected the results, with Multitex included, no further inquiry was made at that time. However, Avondale's vote becomes critical with the exclusion of Multitex's vote.

At the time of the hearing on the Application for Resolution of Election Dispute before Judge Russell, Avondale's second power of attorney, the existence of which had been raised at the conclusion of the Debtor's Section 341(a) meeting, was shown to have been signed by a different corporate official giving...