Haffey v. Crocker (In re Haffey)

576 B.R. 540
CourtBankruptcy Appellate Panel of the Sixth Circuit
DecidedNovember 28, 2017
DocketNo. 15-8018; No. 15-8027
StatusPublished
Cited by10 cases

This text of 576 B.R. 540 (Haffey v. Crocker (In re Haffey)) is published on Counsel Stack Legal Research, covering Bankruptcy Appellate Panel of the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Haffey v. Crocker (In re Haffey), 576 B.R. 540 (bap6 2017).

Opinion

OPINION

C. KATHRYN PRESTON, Bankruptcy Appellate Panel Judge.

In these consolidated appeals, Debtor Shane Haffey (“Debtor”), appeals the dismissal of his chapter 12 bankruptcy case. He asserts that he was denied due process when the Bankruptcy Court dismissed his case following an expedited hearing. Assistant United States Trustee John Daugherty (“Trustee”), and creditor Deutsche Bank Trust Company Americas (“Deutsche Bank”) assert that dismissal was appropriate given that the case had been pending over a year, Debtor was not profitable, Debtor was unable to propose a confirmable plan, and Debtor had engaged in dilatory tactics. For the reasons stated below, the Panel AFFIRMS.

ISSUES ON APPEAL

1. Whether the Bankruptcy Court violated the Debtor’s due process rights by holding a hearing on June 2, 2015, on issues that had been scheduled to be heard on June 25, 2015, without giving Debtor adequate notice and opportunity to be heard?

2. Whether the Bankruptcy Court erred by dismissing the chapter 12 case pursuant to 11 U.S.C. § 1208?

JURISDICTION AND STANDARD OF REVIEW

The Bankruptcy Appellate Panel of the Sixth Circuit (“BAP”) has jurisdiction to decide this appeal. The United States District Court for the Eastern District of Kentucky has authorized appeals to the Panel, and neither party has timely elected to have this appeal heard by the district court. 28 U.S.C. §§ 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). The Bankruptcy Court’s order dismissing the Debtor’s case is a final, appealable order. In re Anderson, 397 B.R. 363, 365 (6th Cir. BAP 2008).

The question whether a bankruptcy court has committed a due process violation is reviewed under a de novo standard. See In re Royal Manor Mgmt., Inc., 525 B.R. 338, 346 (6th Cir. BAP 2015), aff'd sub nom., Grossman v. Wehrle (In re Royal Manor Mgmt., Inc.), 652 Fed.Appx. 330 (6th Cir. 2016), cert. denied, — U.S. -, 137 S.Ct. 831, 197 L.Ed.2d 69 (2017). See United States v. Sanders, 452 F.3d 572, 576 (6th Cir. 2006) (“A due process claim raising a mixed.question of law and fact is reviewed de novo.”)

The Bankruptcy Court’s dismissal of Debtor’s ease is reviewed for an abuse of discretion. Pertuset v. Am. Sav. Bank, FSB (In re Pertuset), No. 10-8024, 2010 WL 3422455, at *1 (6th-Cir. BAP Aug. 24, 2010). “‘An abuse of discretion occurs only when the [trial] court relies upon clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous legal standard.’” Kaye v. Agripool, SRL (In re Murray, Inc.), 392 B.R. 288, 296 (6th Cir. BAP 2008) (quoting Volvo Commercial Fin. LLC the Americas v. Gasel Transp. Lines, Inc. (In re Gasel Transp. Lines, Inc.), 326 B.R. 683, 685 (6th Cir. BAP 2005)). “The question is not how the reviewing court would have ruled, but rather whether a reasonable person could agree with the bankruptcy court’s decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion.” Behlke v. Eisen (In re Behlke), 358 F.3d 429, 438 (6th Cir. 2004) (citation omitted), “The findings of a bankruptcy court which support dismissal of the bankruptcy case are factual determinations which are reviewed under the clearly erroneous standard.” In re Cline, No. 11-8075, 2012 WL 1957935 (6th Cir. BAP June 1, 2012) (quoting Riverview Trenton R.R. Co. v. DSC, Ltd. (In re DSC, Ltd.), 486 F.3d 940, 944 (6th Cir. 2007) (internal citations and quotation marks omitted)).

FACTS

Debtor and his non-debtor spouse Heather McKeever (“McKeever”) own and operate a livestock and horse farm in Lexington, Kentucky known as Sandlin Farms. Debtor and McKeever have filed several lawsuits over the years in an attempt to invalidate the mortgage of Deutsche Bank against the property. All attempts have failed. Most recently, the United States Supreme Court denied certiorari of the Sixth Circuit Court of Appeals’ affirmance of a district court order granting summary judgment to Deutsche Bank and dismissing Debtor and his wife’s complaint against Deutsche Bank.

Sandlin Farms purportedly filed a petition for relief under chapter 12 of the Bankruptcy Code on April 2, 2014. Shortly after filing, Debtor amended the petition to name himself individually, d/b/a Sandlin Farms, as the debtor. Approximately five months after the case was filed, Debtor filed a chapter 12 plan. The plan did not propose to pay the mortgage loan on the farm property, declaring that the lien was not valid and, as a result, there existed no claim. The plan also failed to propose payment of a mortgage loan on property in South Carolina claiming that the lien against that property also was invalid. Creditors Deutsche Bank and Bank of America objected.

Debtor requested and was granted a continuance of the confirmation hearing on his proposed plan in order to file adversary proceedings to avoid the liens on both properties. Debtor filed the adversary complaints on October 22,2014.

Trustee filed a motion to dismiss the chapter 12 case on January 29, 2015 due to inaccurate monthly reports and Debtor’s inability to generate sufficient income to implement his plan if the liens were determined valid. The Bankruptcy Court initially scheduled a hearing for February 19, 2015. Debtor filed a response to the motion on February 17, 2015. Debtor requested a continuance on the hearing on the motion to dismiss until after April 15, 2015. Trustee reluctantly agreed due to adverse weather conditions on the date that the hearing was to originally occur.

The Bankruptcy Court dismissed the adversary proceeding against Deutsche Bank on February 2, 2015, holding that the adversary proceeding was barred by res judi-cata. Debtor appealed.1 On March 30, 2015, Debtor voluntarily dismissed the adversary proceeding against Bank of America challenging the lien on the South Carolina property. Following the dismissal of the adversary proceedings, Debtor did not take any action to re-notice the confirmation hearing or amend the plan.

On April 8, 2015, Debtor filed a motion to stay proceedings in the chapter 12 case pending appeal of the dismissal of his adversary proceeding against Deutsche Bank. On April 23, 2015, the Bankruptcy Court held a hearing on the motion for stay pending appeal. The Bankruptcy Court denied the motion and entered an order setting an evidentiary hearing on the Trustee’s motion to dismiss for cause pursuant to 11 U.S.C. § 1208. The. hearing was scheduled for June 25, 2015 with discovery to be completed by June 11, 2015. Debtor appealed again.2

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Bluebook (online)
576 B.R. 540, Counsel Stack Legal Research, https://law.counselstack.com/opinion/haffey-v-crocker-in-re-haffey-bap6-2017.