Matter of Walton, Bankruptcy No. 3-88-00747.

• Decision Date: 27 December 1988
• Docket Number: Bankruptcy No. 3-88-00747.
• Citation: 104 BR 861
• Parties: In the Matter of Scott T. WALTON, Alison G. Walton, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of Ohio

104 B.R. 861 (1988)

In the Matter of Scott T. WALTON, Alison G. Walton, Debtor.

Bankruptcy No. 3-88-00747.

United States Bankruptcy Court, S.D. Ohio, W.D.

December 27, 1988.

Christopher M. Hawk, Dayton, Ohio.

Herbert Ernst, Trustee, Dayton, Ohio.

Al Barkin, U.S. Trustee's Office, Columbus, Ohio.

Patrick Quinn, Asst. U.S. Atty., Dayton, Ohio.

D. Jeffrey Ireland, Dayton, Ohio.

Ronald J. Ofenkrantz, New York City.

John J. Dilenschneider, Columbus, Ohio.

Edward H. Siddens, Dayton, Ohio.

Lawrence S. Walter, Dayton, Ohio.

Robert E. Portune, of counsel, Dayton, Ohio.

Ronald S. Pretekin (Holly Wilson), Dayton, Ohio.

Dennis L. Bailey, Dayton, Ohio.

William D. Forbes, Miamisburg, Ohio.

John Ducker, Dayton, Ohio.

Ted Jenks, Dayton, Ohio.

Jodi Bevevino, Dayton, Ohio.

Peter Donahue, Dayton, Ohio.

DECISION ON ORDER DETERMINING TRUSTEE'S MOTIONS TO ASSUME LAND CONTRACTS TO BE CORE PROCEEDINGS

THOMAS F. WALDRON, Bankruptcy Judge.

PROCEDURAL AND FACTUAL BACKGROUND

Scott T. Walton and Alison G. Walton are debtors in a voluntary Chapter 7 Bankruptcy Case in the United States District Court for the Southern District of Ohio, Western Division at Dayton under Case No. 3-88-00747. Herbert Ernst, Jr. is the Chapter 7 Trustee in this bankruptcy case. Merrill E. Smith and Alice Smith, are the parents of the debtor Alison G. Walton.

On September 12, 1988, counsel for Merrill E. Smith and Alice E. Smith filed a Motion For Determination Of Core Or Non-Core Under 28 U.S.C. § 157 And Memorandum Re: 28 U.S.C. § 1334 (Doc. 134). The issues with regard to that portion of this Motion (Doc. 134) discussing 28 U.S.C. § 1334 (abstention) are set forth in a separately filed report and recommendation to the District Court. The issues with regard to core or non-core determinations are not the subject of a report and recommendation to the District Court; but rather, are determined by the Bankruptcy Judge who enters a Final Order. (28 U.S.C. § 157(b)(3)) The motion (Doc. 134) seeking a non-core determination states, in part,

Merrill E. Smith and Alice Smith, objectors to the Trustee\'s Notice Of Intent to Sell the Vendees interest in two land installment contracts and to the Trustee\'s Motion to Assume these same two land installment contracts did on August 31st file a Motion for abstention and asserted in that Motion that the questions raised by the Trustee\'s Notice of Intent were non-core matters as such are defined by 28 USC § 157. In support of that Motion and further specifically by this Motion, Merrill C. Smith and Alice Smith move the Court for a determination of non-core status of their equitable claim to the land installment contract Vendee\'s rights under the specific contracts described in Trustee\'s Notice of Intent.

. . . .

The Smiths assert:

(1) The land installment contracts are not property of the estate as the interest of the debtors is excluded under 11 USC § 541(d).

(2) The Trustee has not assumed the contracts in compliance with 11 USC § 365(d)(3) and (4).

(3) The land installment contracts are in fact financing devices similar to those contracts as determined in In re Johnson 75 BR 927 (N.D.Ohio 1987).

(4) A sale free and clear as the Trustee proposes is contrary to 11 USC § 363(f).

(5) The Trustee has not complied with Bankruptcy Rule 9014 for contested matters.

These assertions by the Smiths raised, it is believed, significant core issues but none go to the threshold non-core question.

What are the rights of the Smiths to the real estate parcels in Springboro, Warren County, Ohio, and Lakeview, Logan County, Ohio?

The trustee's initial Motions For Extension Of Time To Accept/Reject Executory Land Contracts states that the debtors' schedules list two parcels of real property involving land contracts. The debtor, Alison G. Walton, is listed as the purchaser in each of these land contracts. At the trustee's request (Doc. 22), the court entered an Order Authorizing Extension Of Time For Trustee To Elect To Assume Or Reject Executory Land Contracts (Doc. 23); and, on the same date that the court entered that Order (Doc. 23), counsel for the seller/creditor, Weidner Farms, filed an Objection To The Trustee's Motion For Extension Of Time (Doc. 25). Accordingly, the court vacated its Order (Doc. 23) and set a hearing on the trustee's Motion (Doc. 22) and the Objection To The Trustee's Motion (Doc. 25). Thereafter, an Objection To Motion For Extension Of Time (Doc. 30) was also filed on behalf of the seller/creditors, Goetz. Following the hearing held on the trustee's Motion and these Objections, the court entered an Order extending the time, until July 18, 1988, for the trustee to file an acceptance or rejection of the two land contracts (Doc. 50).

On July 14, 1988, the trustee filed Trustee's Motion For Approval Of Assumption/Acceptance Of Executory Contract (Land Contract) Concerning Property Located At: 11213 Lake Drive, Lakeview, Ohio 43331 (Lakeview property). This Motion indicated that the purchase price for the real property which is the subject of this land contract is $75,000.00 and that the balance owing on the land contract, as of July 1, 1988, is $58,176.40 and that an appraisal (Doc. 73), filed by the appraiser appointed by the court, reported the value of this property (Lakeview) to be $89,900.00. The Motion requested that the court approve the Trustee's assumption/acceptance of this land contract.

On July 15, 1988, the trustee filed Trustee's Motion For Approval Of Assumption/Acceptance of Executory Contract (Land Contract) Concerning Property Located At: 5426 Weidner Road, Springboro, Ohio 45005 (the Springboro property). This Motion stated that the purchase price for the real property which is the subject of this land contract is $124,000.00 and that the balance owing, as of June 2, 1988, is $98,867.32 and that an appraisal reported a value of this property (Springboro) to be $125,000.00. The Motion requested, subject to certain conditions, that the court approve the trustee's assumption/acceptance of this land contract.

Thereafter the trustee filed a Notice Of Intent To Sell The Debtors' Interest In The Land Contract Involving The Lakeview Property (Doc. 81) and a Notice Of Intent To Sell The Debtors' Interest In The Land Contract Involving The Springboro Property (Doc. 85). The debtor's parents, Merrill Smith and Alice Smith (the Smiths) filed an Objection to the trustee's intention to sell the Springboro property (Doc. 95) and the Lakeview property (Doc. 96). These Objections each conclude "that the trustee has no equitable interest in said property and the claim of the trustee should be abandoned". The Smiths also filed a Memorandum Contra To The Trustee's Motion For Approval Of Assumption/Acceptance Of The Executory Contract Involving The Lakeview Property (Doc. 97) and a similar Memorandum Contra concerning the Springboro property (Doc. 98). Thereafter, the Smiths supplemented their Memoranda concerning the trustee's proposed sale (Doc. 102 and Doc. 103). The Trustee filed Responses to the Smith's memoranda (Doc. 114 and Doc. 115).

The Smiths then filed this Motion (Doc. 134) arguing that these proceedings by the trustee are non-core proceedings. This motion is the subject of this decision.

The court, by a separate Order, has scheduled a hearing to determine the issues presented by the trustee's Motion and and various Objections filed. The substantive determination of these issues must await the presentation of evidence and argument by the interested parties. The procedural determination of whether or not these issues are core or non-core proceedings, however, does not require the presentation of further evidence.

DISCUSSION OF APPLICABLE LAW

It is clear from the multitude of decisions discussing 28 U.S.C. § 157 that determining whether a particular proceeding is a core proceeding or a non-core proceeding requires a thorough review of the underlying claims and issues to determine whether the constitutional concerns expressed in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982) and reflected in Congress' legislative response, the Bankruptcy Amendments and Federal Judgeship Act of 1984, Public Law 98-353, (BAFJA), as they have been further refined in applicable Circuit Court decisions requires the Bankruptcy Judge to enter a final determination of these causes and issues (28 U.S.C. § 157(b)(1)), or submit proposed findings of fact and conclusions of law to the District Court (28 U.S.C. § 157(c)(1)). As this court has previously noted,

As a result of the legislative intent to give the broadest constitutionally permissible definition to core proceedings, evidenced both by congressional statements and the non-exclusive listings in § 157(b)(2), in proceedings where the existence of jurisdiction has been determined, unless it appears that a particular proceeding contains the required characteristics of non-core, the proceeding will be determined a core proceeding. Matter of Commercial Heat Treating of Dayton, Inc., 80 B.R. 880 (Bankr.S.D. Ohio 1987);

See also In re Southern Indus. Banking Corp., 809 F.2d 329 (6th Cir.1987), In re Salem Mortg. Co., 783 F.2d 626 (6th Cir. 1986); White Motor Corp. v. Citibank, N.A., 704 F.2d 254 (6th Cir.1983); In re Harbour, 840 F.2d 1165 (4th Cir.1988), In re Arkansas Communities, Inc., 827 F.2d 1219 (8th Cir.1987), Matter of Wood, 825 F.2d 90 (5th Cir.1987), In re Mankin, 823 F.2d 1296 (9th Cir.1987), In re Arnold Print Works, Inc., 815 F.2d 165 (1st Cir. 1987).

Among the obvious reasons explaining the struggle by various courts to determine whether or not a specific proceeding is a core or a non-core proceeding is the absence of a definition of a core or a non-core proceeding. Neither Northern Pipeline nor BAFJA contain definitions of a core or a non-core proceeding. Both Northern Pipeline and BAFJA merely provide examples of core or non-core proceedings. In Commercial Heat Treating, ...