In re Gomes

63 B.R. 300, 1986 Bankr. LEXIS 5737
CourtDistrict Court, D. Rhode Island
DecidedJuly 8, 1986
DocketBankruptcy No. 8100106
StatusPublished
Cited by1 cases

This text of 63 B.R. 300 (In re Gomes) is published on Counsel Stack Legal Research, covering District Court, D. Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Gomes, 63 B.R. 300, 1986 Bankr. LEXIS 5737 (D.R.I. 1986).

Opinion

SUPPLEMENTAL FINDINGS ON APPEAL

ARTHUR N. VOTOLATO, Jr., Bankruptcy Judge.

On remand from the United States District Court for the District of Rhode Island.

This case, which has developed into a classic example of how creditors may be abused through manipulation of the judicial process, was commenced by the filing of a Chapter 13 petition by Alfred Gomes in February 1981. After hearing on a motion to convert filed by a secured creditor, Mary Angotti (formerly Mary Fawthrop and also the former wife of the debtor), and in light of Mr. Gomes’ lack of credibility and consistently poor track record before this Court, an order was entered on March 8, 1982, providing, inter alia, that

[i]n the event that any payment due to the trustee is not paid on or before the exact date it is due, the case is automatically converted to one under Chapter 7 of the Bankruptcy Code and the trustee is ordered to immediately submit to the Court an Order providing for the conversion of the case.1

Predictably, the debtor defaulted, and pursuant to the above order the case was converted to Chapter 7 on November 18, 1982. Because the debtor appealed,2 we issued formal Findings of Fact and Conclusions of Law, dated January 6, 1983, 26 B.R. 124 (Bankr.R.1.) (Exhibit 1, attached), setting forth the grounds for conversion under 11 U.S.C. § 1307(c).3 On January 20, [302]*3021983, we granted the debtor’s motion for stay pending appeal. See Bankruptcy Rule 8005.

On December 21, 1984, Chief Judge Francis J. Boyle vacated the stay we had ordered pending appeal, and remanded the matter to the Bankruptcy Court “for further proceedings to establish a record” (C.A. No. 84-0114B). In January 1985, shortly after the District Court lifted the stay, Mary Angotti purchased the debtor’s residence (206 North Road, South Kingstown, Rhode Island) at a foreclosure sale instituted and conducted by Fleet National Bank.4

Proceeding according to what we understood to be Judge Boyle’s remand instructions, a hearing was held on January 9, 1985, to establish a record for review. On February 21, 1985, a transcript of that hearing was forwarded to the District Court, together with the remainder of the record. The matter was again remanded to this Court by Judge Boyle, who entered the following order on July 26, 1985:

Upon review of the appellate record this matter is remanded to the Bankruptcy Court for a determination of the issues presently pending including the arguments presented to this Court that this bankruptcy has been illegally converted....
This Court’s Order of December 21, 1984 is amended to correctly reflect the action taken by this Court, that is a remand to the Bankruptcy Court to “get the record straightened out,” and not for the purpose of “establishing) a record.”

After remand, the possibility of settlement was raised by counsel at a status conference in August 1985, and negotiations followed. It soon became apparent that the dispute could not be resolved by agreement, and we determined that the prudent course would be to reconsider and to hear arguments anew as to the propriety of our November 18, 1982 order of conversion, which is the subject of Mr. Gomes’ appeal. Following that hearing, on October 22, 1985, the debtor was granted leave (with the consent of the trustee) to file yet another amended plan, with updated schedules, after which the feasibility of proceeding under Chapter 13 would again be considered. The plan (Exhibit 2, attached), filed on October 31, 1985, proposed to pay creditors 100% over four years, but omitted to state that the plan was contingent upon: 1) voiding the January 1985 foreclosure sale, 2) dispossessing the present owners and occupants, and 3) bringing the property back into the estate. When that (not previously disclosed) contingency was announced by debtor’s counsel at a hearing on November 1, 1985, the trustee objected and renewed his argument in favor of enforcement of the conversion order. The matter was then taken under advisement.

The debtor contends that the broad grant of authority in 11 U.S.C. § 105(a)5 requires us to vacate the order of conversion, and to return the parties “to the position that [they occupied] prior to termination of the automatic stay by the United States District Court.” He also maintains [303]*303that “the Court ... has the authority to treat the [foreclosure by Fleet] as a post-petition transfer and to avoid.the preference gained by Fleet ... [under] 11 U.S.C. § 549.” Debtor’s Memorandum at 2, 3. In several respects, the debtor’s suggestion is preposterous, beginning with the fact that the foreclosure sale was conducted subsequent to the entry of Chief Judge Boyle’s order vacating the stay.6 Secondly, and forgetting for the moment the total lack of merit in debtor’s argument, he has taken none of the necessary procedural steps to obtain the relief which he seeks—complaints against the Bank, Angotti, and the present owners would have tó be brought, before the bizarre relief which debtor requests would even be before the Court. But this debtor continues to dispense with such formalities.

Even if we were being asked to reconsider an order that this Court was capable of reviewing, we would hold that “[t]he necessity for conserving the integrity of sales conducted pursuant to orders of this Court and the District Court dictates that the debtor cannot now ... vacate the foreclosure sale.” Trustee’s Memorandum at 2. See Greylock Glen Corp. v. Community Savings Bank, 656 F.2d 1, 4 (1st Cir.1981). See also Advisory Committee Note to Bankruptcy Rule 8005 (“unless an order approving a sale of property ... is stayed pending appeal, the sale of property to a good faith purchaser ... shall not be affected by the reversal or modification of such order on appeal”). Because the foreclosure sale was conducted subsequent to Judge Boyle’s unappealed December 21 order, the relief requested by the debtor is not authorized under 11 U.S.C. § 5497 or any other provision of the Code,8 and this Court, especially, is not authorized to fashion any new substantive rights for the debtor under § 105(a). In other words, to grant the relief sought by the debtor would require the Bankruptcy Court to reverse the District Court. Based upon all of the foregoing reasons, as well as the entire, tortured record in this case (see Exhibit 3, docket sheet attached), the debtor’s request that he be allowed to proceed under Chapter 13, which request is contingent upon voiding a January 1985 foreclosure sale, is denied, with prejudice, as is confirmation of Mr. Gomes’ latest proposed plan.

The Findings of Fact and Conclusions of Law, dated January 6, 1983, contain our reasons for providing for automatic conversion.

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63 B.R. 300, 1986 Bankr. LEXIS 5737, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-gomes-rid-1986.