Kelley v. Centennial Bank (In re Kelley)

488 B.R. 97, 2013 WL 331590
CourtUnited States Bankruptcy Appellate Panel for the Eighth Circuit
DecidedJanuary 30, 2013
DocketBAP No. 12-6050
StatusPublished
Cited by3 cases

This text of 488 B.R. 97 (Kelley v. Centennial Bank (In re Kelley)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kelley v. Centennial Bank (In re Kelley), 488 B.R. 97, 2013 WL 331590 (bap8 2013).

Opinion

SCHERMER, Bankruptcy Judge.

The Debtors Raymond Kelley and Karen Patrice Kelley, (the “Debtors”) appeal from an August 31, 2012 order of the bankruptcy court1 requiring the Debtors to convey to Centennial Bank (the “Bank”) real property. We have jurisdiction over this appeal from the final order of the bankruptcy court. See 28 U.S.C. § 158(b). For the reasons set forth below, we affirm.

ISSUE

The issue in this appeal is whether the bankruptcy court erred in its interpretation of the phrase “abandon the properties to Centennial Bank,” as used in its earlier order and in the Debtors’ confirmed Chapter 11 plan, to require the Debtors to convey real property to the Bank.2 We hold that the bankruptcy court acted within its discretion when it interpreted its order and the Chapter 11 plan to mean that the Debtors were required to convey the real property to the Bank.

BACKGROUND

On May 18, 2010, the Debtors filed a petition for relief under Chapter 13 of Title 11 of the United States Code (the “Bankruptcy Code”). A few months later, the Debtors’ case was converted to Chapter 11.

The Bank, a long-time creditor of the Debtors with a security interests in various parcels of the Debtors’ real property, objected to confirmation of the Debtors’ Chapter 11 plan and filed a motion to [99]*99dismiss their bankruptcy case. As part of an Agreed Order, the Bank agreed to withdraw its motion to dismiss and its objection to confirmation of the plan provided that, within a certain period of time, the Debtors file an amended plan incorporating language from the Agreed Order. The Agreed Order states:

Debtor and Centennial will jointly market the following properties for one year from the effective date of the Plan. In the event the properties do not sell within that period of time, Debtor will abandon the properties to Centennial Bank:
a. 80 acres of land on Friendship Road;
b. 30 acres of land on Friendship Road;
c. Mayflower Car Wash, Miller Street, Mayflower, AR;
d. Vacant lot next to Mayflower Car Wash;
e. Gold Creek Car Wash, Mayflower, AR;
f. Vacant lot 639 Hwy. 365, Mayflower, AR.

The Debtors filed an amended Chapter 11 plan that incorporates as its Paragraph 2.08.5 the language set forth above. The amended plan also incorporates other required language from the Agreed Order. The bankruptcy court confirmed the amended plan (the “Confirmed Plan”).

The Agreed Order and Confirmed Plan address details regarding the sale of the properties listed in Paragraph 2.08.5 of the Confirmed Plan, including contingencies that could arise, such as disagreement about price. In addition, the Agreed Order and Confirmed Plan make separate provisions for times when the Bank may file ex parte motions for relief from the automatic stay for the Debtor’s failure to comply with their other obligations under the Confirmed Plan, such as failure by the Debtors to keep tax and insurance on various properties current.

The one' year period in the Agreed Order and in Paragraph 2.08.5 of the Confirmed Plan expired without a sale of the properties and the Debtors did not convey the properties to the Bank. Thereafter, the Bank filed a “Petition” with the bankruptcy court, seeking an order directing the Debtors to convey the properties to the Bank. The Debtors objected to the Bank’s Petition. After a hearing, the bankruptcy court stated its position on the record and in a written order dated August 31, 2012 (the “August 31, 2012 Order”), noting that the evidence produced at the hearing showed that the Debtors had not cooperated with the Bank’s efforts to market and sell the properties and that the properties had not been sold. The bankruptcy court interpreted the phrase “abandon the properties to Centennial Bank” used in the Agreed Order and in Paragraph 2.08.5 of the Confirmed Plan and enforced its Agreed Order and Confirmed Plan. The Debtors were required to “execute the necessary documents to convey to Centennial the parcels of real property referred to in the ... Agreed Order, and included in Paragraph 2.08.5 of the Debtor’s confirmed Chapter 11 plan.”

STANDARD OF REVIEW

The bankruptcy court’s August 31, 2012 Order required it to interpret the phrase “abandon the properties to Centennial Bank” from the Agreed Order and the Confirmed Plan. A bankruptcy court’s interpretation of its own order is reviewed for an abuse of discretion. Trilogy Dev. Co., LLC v. J.E. Dunn Const. Co. (In re Trilogy Dev. Co.), 468 B.R. 835, 837 (8th Cir. BAP 2012) (citation omitted). A bankruptcy court’s “interpretation of the confirmed plan is entitled to deference as an interpretation of its own order and ‘should be reviewed under the abuse of discretion standard.’ ” JCB, Inc. v. Union [100]*100Planters Bank, N.A., 539 F.3d 862, 869 (8th Cir.2008) (quoting Gen. Elec. Capital Corp. v. Dial Bus. Forms, Inc. (In re Dial Bus. Forms, Inc.), 341 F.3d 738, 744 (8th Cir.2003)). “An abuse of discretion will be found only if the court’s judgment was based on clearly erroneous factual findings or on erroneous legal conclusions.” Trilogy Dev. Co., LLC, 468 B.R. at 837 (citation omitted). The abuse of discretion standard and the clearly erroneous standard are almost the same in their application. Boyher v. Radloff (In re Boyher), 467 B.R. 672, 675 (8th Cir. BAP 2012) (citation omitted). “A finding is ‘clearly erroneous’ when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (quoting U.S. v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)).

DISCUSSION

The Debtors argue that the term “abandon,” in the phrase “abandon the properties to Centennial Bank” as used in the Agreed Order and the Confirmed Plan, should not be interpreted to require the Debtors to convey the properties to the Bank. Rather, the Debtors maintain that the bankruptcy court should have interpreted “abandon” as a term of art under Bankruptcy Code § 554 to mean to abandon from the bankruptcy estate and revert to its pre-petition status as property of the Debtors, accordingly, the Bank might be allowed, at most, relief from the automatic stay to pursue its state law remedies.3

The Agreed Order and the Confirmed Plan do not define the term “abandon” as used in the phrase “abandon the properties to Centennial Bank.” But the bankruptcy court is in the best position to interpret the meaning of its own orders. Trilogy Dev. Co., LLC, 468 B.R. at 838 (citation omitted). And the bankruptcy court did not abuse its discretion in its interpretation.

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Bluebook (online)
488 B.R. 97, 2013 WL 331590, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kelley-v-centennial-bank-in-re-kelley-bap8-2013.