In re Dixon

500 B.R. 869, 80 U.C.C. Rep. Serv. 2d (West) 452, 2013 WL 1397464, 2013 Bankr. LEXIS 1427
CourtUnited States Bankruptcy Court, E.D. Michigan
DecidedApril 5, 2013
DocketNo. 12-60750
StatusPublished
Cited by1 cases

This text of 500 B.R. 869 (In re Dixon) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Dixon, 500 B.R. 869, 80 U.C.C. Rep. Serv. 2d (West) 452, 2013 WL 1397464, 2013 Bankr. LEXIS 1427 (Mich. 2013).

Opinion

OPINION REGARDING (1) “MOTION TO SET ASIDE ORDER DATED 10/31/2012;” AND (2) “DEBTOR’S MOTION FOR SANCTIONS AND TO ENFORCE OCTOBER 31, 2012 [ORDER] TO RETURN 2002 SUZUKI MOTORCYCLE TO DEBTOR”

THOMAS J. TUCKER, Bankruptcy Judge.

This Chapter 7 case requires to Court to decide the following question of Michigan law: when a judgment creditor causes a motorcycle to be sold at an execution sale, what events must occur before ownership of the motorcycle changes from the judgment debtor to the purchaser?

I. Background and facts

The question just noted is important in this case because the Debtor’s motorcycle was sold at an execution sale, by auction, on the day the Debtor filed this bankruptcy case. The Debtor contends that the sale was a violation of the automatic stay under 11 U.S.C. § 362(a), and therefore is voidable, because the sale occurred after the bankruptcy petition was filed.1 The Court Officer involved in the sale, Michael Jones, disagrees, and contends that the sale was completed before the bankruptcy case was filed.

The Debtor in this case filed his voluntary Chapter 7 bankruptcy petition on September 12, 2012 at 4:44 p.m. Before he did so, a judgment creditor caused an execution seizure of the Debtor’s 2002 Suzuki motorcycle. An execution sale was noticed for September 12, 2012 at 4:00 p.m. Court Officer Victor Lotyz conducted the sale, assisted by Court Officer Michael Jones. It is undisputed that the Court Officer began and ended the public auction of the motorcycle minutes before Debtor filed his bankruptcy petition, and, therefore, before the automatic stay arose under 11 U.S.C. § 362(a). It is also undisputed that the successful (and only) bidder at the sale was R.J. Luczak Enterprises, whose President is Rick Luczak.

On October 10, 2012, Debtor filed a motion to void the sale and to compel the return of the motorcycle to him.2 His motion named as respondents the Court Officer Michael Jones and the purchaser. After no timely response was filed to the motion, Debtor filed a certificate of no response and the Court entered an order granting the motion. The order, signed on October 31, 2012 and entered on November 1, 2012, stated, in pertinent part:

IT IS FURTHER ORDERED that the sale of Debtor’s 2002 Suzuki Motorcycle, as described in the Motion, is declared to be void because the sale was done in violation of the automatic stay, and the motorcycle must be returned to the Debtor immediately.3

On November 5, 2012, Court Officer Michael Jones filed a motion to vacate the November 1 Order. Debtor then filed, on [871]*871November 9, 2012, a motion to enforce the November 1 Order and for sanctions.4

The Court held a hearing on these motions on December 5, 2012. The Court ordered the Debtor and the Court Officer to file post-hearing briefs on the issue of “when the execution sale by auction of Debtor’s 2002 Suzuki motorcycle was complete and final.” The parties timely filed their briefs.

This opinion addresses the issue briefed, in part, by answering the legal question posed at the beginning of this opinion. And given the Court’s answer to that legal question, the Court concludes that an evi-dentiary hearing is required in order to fully resolve the motions.

II. Jurisdiction

This Court has subject matter jurisdiction over this bankruptcy case and this contested matter under 28 U.S.C. §§ 1334(b), 157(a) and 157(b)(1), and Local Rule 83.50(a) (E.D.Mich.). This is a core proceeding under 28 U.S.C. § 157(b)(2)(0).

This proceeding also is “core” because it falls within the definition of a proceeding “arising under title 11” and of a proceeding “arising in” a case under title 11, within the meaning of 28 U.S.C. § 1334(b). Matters falling within either of these categories in § 1334(b) are deemed to be core proceedings. See Allard v. Coenen (In re Trans-Industries, Inc.), 419 B.R. 21, 27 (Bankr.E.D.Mich.2009). This is a proceeding “arising under title 11” because it is “created or determined by a statutory provision of title 11,” see id., namely Bankruptcy Code § 362(a). And this is a proceeding “arising in” a case under title 11, because it is a proceeding that “by [its] very nature, could arise only in bankruptcy cases.” See Allard v. Coenen, 419 B.R. at 27.

III. Discussion

A. Article 2 of the Michigan UCC and the Court Officer’s argument

The Court Officer relies on Mich. Comp. Laws Ann. § 440.2328(2), which is part of Article 2 of the Uniform Commercial Code (“UCC”), as adopted in Michigan. UCC Article 2 applies generally to “transactions in goods,” unless “the context otherwise requires,” see Mich. Comp. Laws Ann. § 440.2102. And the word “goods” is defined broadly enough to include a motorcycle. See Mich. Comp. Laws Ann. § 440.2105(l)(with exceptions not applicable here, “goods” means “all things ... which are movable at the time of identification to the contract for sale.”)

Section 440.2328(2) says that “[a] sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner.” The parties agree that this event — in effect, the “fall of the hammer” — occurred before the Debt- or’s bankruptcy petition was filed (ie., before 4:44 p.m. on September 12, 2012). But Debtor argues that, notwithstanding this statute, the sale of his motorcycle was not yet completed when the auctioneer announced that the auction was complete “by the fall of the hammer or in other customary manner.” Debtor argues that § 440.2328(2) does not establish the point at which the execution sale of Debtor’s motorcycle was complete. The parties have cited no cases applying or construing § 440.2328(2).

From the undisputed facts, it is clear that a contract arose between the Court Officer (in his capacity as such) and the [872]*872purchaser at the moment the hammer fell at the auction sale. See J & L Inv. Co., LLC v. Dep’t of Natural Res., 233 Mich.App. 544, 593 N.W.2d 196, 199, 200 (1999) (a contract is formed at an auction when “the auctioneer signifies acceptance of the highest bid, i.e., at the ‘fall of the hammer’ ”). The time when such contract for sale of the motorcycle arose is potentially important, in turn, because of a provision in UCC Article 2 stating that under certain circumstances, title to goods passes “at the time and place of contracting” for their sale. Mich. Comp. Laws Ann. § 440.2401 states, in pertinent part:

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Related

In re Dixon
528 B.R. 710 (E.D. Michigan, 2015)

Cite This Page — Counsel Stack

Bluebook (online)
500 B.R. 869, 80 U.C.C. Rep. Serv. 2d (West) 452, 2013 WL 1397464, 2013 Bankr. LEXIS 1427, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-dixon-mieb-2013.