In Re Markey

144 B.R. 738, 1992 Bankr. LEXIS 1412
CourtUnited States Bankruptcy Court, W.D. Michigan
DecidedSeptember 14, 1992
Docket15-02966
StatusPublished
Cited by12 cases

This text of 144 B.R. 738 (In Re Markey) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.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 Markey, 144 B.R. 738, 1992 Bankr. LEXIS 1412 (Mich. 1992).

Opinion

AMENDED OPINION AND ORDER GRANTING SANCTIONS PURSUANT TO 11 U.S.C. § 362(h)

JO ANN C. STEVENSON, Bankruptcy Judge.

I.

This proceeding arises in a case referred to this court by the Standing Order of Reference entered in this district on July 24, 1984 and is determined to be a core proceeding pursuant to 28 U.S.C. § 157(b)(1) and (2). Budget Service Co. v. Better Homes of Virginia, Inc., 804 F.2d 289, 292 (4th Cir.1986). The court is authorized to enter final judgment in this proceeding subject to the right of appeal provided by 28 U.S.C. § 158(a).

The following constitutes the court’s findings of fact and conclusions of law in accordance with Fed.R.Bankr.P. 7052. In reaching its determination, the court considered the demeanor and credibility of the three witnesses who testified, Bessie Bradish, Roy C. Markey and Laurence D. Fowler. The admitted exhibits, whether or not each specific item of evidence is referred to *741 in the court’s decision, were also considered. Although no request to admit the following items into evidence was received, they were also considered as they were presented as part of the court record with neither party objecting thereto: (1) State Court Complaint and Answer; (2) Interrogatories and Answers thereto; (3) the Motion for Summary Disposition and brief in support filed by Mrs. Bradish in the state court case; (4) the transcript of proceedings in front of Ingham County Circuit Court Judge James R. Giddings on Mrs. Bradish’s motion for summary disposition; and (5) the transcript of proceedings in front of United States Bankruptcy Judge James D. Gregg on Mrs. Bradish’s motion for lift of stay in the Betty Markey case.

This contested matter involves the most egregious series of violations of the automatic stay ever witnessed by this judge. This case was commenced by the filing of an involuntary chapter 7 petition against the Debtor, Roy C. Markey, on January 1, 1987. Mr. Markey filed a voluntary petition under chapter 11 on January 6, 1988. At Mr. Markey’s request the case was converted to a chapter 7 proceeding on December 12, 1989, and remains pending today. Prior to the September 10, 1992 hearing Mr. Markey represented himself in chapter 7, and has done a capable job within the limitations of a layperson with little bankruptcy experience.

The Debtor and his wife, Betty Markey, are the vendees in a land contract to purchase their home located at 1973 Hagadorn Road, Mason, Michigan. This home was scheduled by Mr. Markey as being property by the entireties and therefore exempt under state law.

The vendor on the land contract is respondent Bessie Bradish. In October 1990, after bankruptcy proceedings had been instituted, the Markeys had been in default under the land contract for some six months. The court finds that Mrs. Bradish, an elderly widow, appears to have little business experience and little or no understanding of legal matters. Wisely, she recognized that she needed assistance of counsel. She turned to respondent Laurence D. Fowler, an attorney of some 30 years experience in the practice of law. Mrs. Bradish and Mr. Fowler both testified that she informed him of the bankruptcy proceedings at the time she retained him. By accepting Mrs. Bradish’s case, Mr. Fowler held himself out as being competent to practice bankruptcy law.

Shortly after being retained Mr. Fowler filed a motion for relief from stay in this case, which was date stamped by the clerk of the court as received on October 29, 1990. The parties agree that the clerk of the court advised Mr. Fowler that the matter could not be set for hearing because it was not accompanied by the required $60.00 filing fee. They further agree that the fee was never paid nor was a hearing requested and thus scheduled.

Shortly after being retained Mr. Fowler contacted Peter Teholiz, attorney for the chapter 7 trustee in Mr. Markey’s case. Mr. Fowler provided Mr. Teholiz with a copy of a land contract which showed only Mr. Markey as vendee. As best the court can surmise, this land contract may have been superseded by a later document showing both Mr. Markey and his wife as vendees. In any event, Mr. Fowler testified that Mr. Teholiz indicated an intent to verify whether the property was held solely by Mr. Markey. Mr. Teholiz apparently told Mr. Fowler that if this were the case the property would be administered through the bankruptcy estate and Mrs. Bradish would be paid upon sale.

Based upon this conversation, Mr. Fowler stopped pursuing his motion for relief from stay. In a later conversation with Mr. Teholiz, Mr. Fowler learned, however, that the estate would not be asserting an interest in the property. Apparently there was some discussion between the attorneys regarding In re Terrell, 892 F.2d 469 (6th Cir.1989), as to the effect of the possible deemed rejection of the Bradish-Markey land contract pursuant to 11 U.S.C. § 365(d)(1).

Mr. Fowler’s next action borders on the unbelievable. He testified that he did not read the Terrell case. Nor did he recommence lift of stay proceedings. In *742 stead, based upon Mr. Teholiz’ statements he assumed that an order of abandonment would soon enter. This assumption is an incorrect reading of Terrell. That opinion merely holds that a land contract is an executory contract subject to the dictates of § 365. Thus if the trustee fails to assume an executory contract within 60 days of the filing or of conversion to chapter 7 the contract will be deemed rejected. Terrell does not hold that upon rejection of the land contract the property subject to the contract is abandoned. In Ben-Dak Investment Co. v. Vertich (In re Vertich), 5 B.R. 684, 6 B.C.D. 846 (Bankr.D.S.D.1980) the bankruptcy court deemed that the chapter 7 trustee had rejected a Contract of Deed under § 365(d)(1). Seeking to foreclose on the Contract of Deed, the creditor correctly filed a motion for relief from stay. As Judge Ecker explained:

The rejection of the contract, however, did not waive any interest in the property Debtors had under equitable or state law as a result of the contract being terminated and the subsequent foreclosure, the Trustee succeeding to any such rights of the Debtors.

Id. 5 B.R. at 686, 6 B.C.D. at 847. Although the stay was lifted, the court specifically stated that the equity of redemption remained property of the estate which the trustee could protect by intervening in state court or by obtaining a purchaser.

In the usual case, as in Vertich,

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Bluebook (online)
144 B.R. 738, 1992 Bankr. LEXIS 1412, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-markey-miwb-1992.