Woods v. Kenan

173 F.3d 770, 1999 Colo. J. C.A.R. 2273, 16 Colo. Bankr. Ct. Rep. 91, 1999 U.S. App. LEXIS 6975, 34 Bankr. Ct. Dec. (CRR) 258, 1999 WL 212108
CourtCourt of Appeals for the Tenth Circuit
DecidedApril 13, 1999
Docket98-6063
StatusPublished
Cited by70 cases

This text of 173 F.3d 770 (Woods v. Kenan) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Woods v. Kenan, 173 F.3d 770, 1999 Colo. J. C.A.R. 2273, 16 Colo. Bankr. Ct. Rep. 91, 1999 U.S. App. LEXIS 6975, 34 Bankr. Ct. Dec. (CRR) 258, 1999 WL 212108 (10th Cir. 1999).

Opinion

STEPHEN H. ANDERSON, Circuit Judge.

This is an appeal from a decision of the Bankruptcy Appellate Panel (BAP). The appellants, Maurice G. and Teresa J. Woods (the Woods), argue that at the closing of their Chapter 11 bankruptcy case in 1993, certain properties of the bankruptcy estate were irrevocably abandoned to them by operation of law. Thomas J. Kenan, who served as Chapter 11 trustee and as trustee under the confirmed plan of reorganization, argues that the case was properly reopened, that any abandonment was subsequently revoked, and that the properties in question were validly sold to third parties. Because we agree that the bankruptcy court had authority under 11 U.S.C. § 350(b) to reopen the case, and that under Fed.R.Civ.P. 60(b) it effectively vacated the original order closing the case, we hold that the abandonment was revoked and that the debtors have no interest in the properties.

I. BACKGROUND

The Woods filed a Chapter 11 bankruptcy petition in December 1984. In May 1987, Thomas Kenan was named trustee of the bankruptcy estate, which at that time included a number of fractional interests in oil and gas properties. The central issue *773 in this case is the ownership of those interests, which have been described as “very small interests in a large number of properties,” essentially constituting a “revenue stream.” Appellants’ App. Vol. I at 68 (testimony of Kenan in bankruptcy court, April 24,1997).

The trustee asserts that his sale of the properties to Andrews Royalty, Inc., Gary J. Lamb, and Jon M. Morgan, doing business as Packard Partners (Packard), is valid. The Woods, however, claim that all the properties were irrevocably abandoned to them by operation of law when an order closing the bankruptcy case was entered before sale of the properties was consummated. In the alternative, they argue that certain properties were not included in any valid sale, alleging that in written agreements and conveyances the trustee repeatedly failed to describe in full detail the numerous properties constituting the “revenue stream.” They also insist that some of the oil and gas interests were specifically abandoned to them by the trustee in a 1987 motion. In order to address these claims, we find it necessary to lay out the lengthy history of this case in some detail.

A.

In 1987, soon after Kenan’s appointment as trustee, Maurice Woods advised Kenan of certain causes of action he believed he had against third parties, for oil and gas properties which were previously owned by his father and which he claimed should have been conveyed to him. After examining the merits of these claimed causes of action, the trustee determined that pursuing them would be burdensome to the estate, and on August 3, 1987, filed a motion to abandon them to the debtors. The United States Bankruptcy Court for the Western District of Oklahoma approved this motion on August 19,1987.

On July 10, 1991, the trustee’s proposed plan of reorganization was confirmed; it appointed Kenan to administer the plan, pursuing the business of the estate until such efforts were no longer justified, at which time he was to sell the estate’s interest in the oil and gas properties. By April 1993 the trustee had determined that it was no longer prudent to continue the business of the estate, and therefore arranged for the sale of the oil and gas properties.

On April 21, 1993, the trustee filed a motion asking the bankruptcy court to approve a proposed sale. This motion was set for hearing on May 14, 1993. On May 6, 1993, the case came up for hearing on the bankruptcy court’s routine disposition docket. At this hearing the trustee noted the filing of his Motion to Approve Sale and reported that the sale of the properties and distribution of the proceeds would complete the administration of the estate. The bankruptcy court requested that the trustee file his final report and application for final decree at the trustee’s earliest convenience.

At some point, the trustee was approached by additional parties interested in buying the oil and gas properties, and he successfully requested that the hearing on the Motion to Approve Sale be continued until July 9, 1993, so that he could obtain the highest possible value for the properties; the motion was eventually heard on August 18, 1993. Nevertheless, on May 13, 1993, the trustee filed his final report and made application for a final decree. On June 3, 1993, the bankruptcy court entered a final decree stating that “[t]he estate of [the Woods] has been fully administered, the trustee, Thomas J. Ken-an is discharged as trustee of the estate ..., and the case is closed.” Appellants’ App. Vol. I at 186.

On July 15, 1993, Kenan filed a document titled “Trustee’s Further Description of Oil and Gas Properties,” referring to his previously filed Motion to Approve Sale, and describing more fully some of.the oil and gas properties of the estate. When on August 18,1993, the bankruptcy court held a hearing on Kenan’s Motion to Approve Sale filed April 21, 1993, the Woods were *774 present and represented by counsel. The Woods objected to the sale of the properties, but not on the ground that the bankruptcy case was already closed. The bankruptcy court entered an order granting Kenan’s motion and approving the sale of the properties described in the April 21, 1993, and July 15, 1993, filings. Kenan thereafter prepared and delivered instruments of conveyance to the purchasers, Packard, for the price of $72,000. At some point, Kenan’s $5,000 trustee’s bond was exonerated.

At some time following the order approving the sale to Packard, the Woods began sending letters to the entities that were purchasing production from the oil and gas properties, alleging the following defects in the transfer of the properties: (1) some properties had not been specifically described in Kenan’s filings; (2) some instruments of conveyance, although recorded in the appropriate counties, had undated notarizations and were therefore void; (3) some or all of the properties had reverted to the Woods by operation of law. Following these allegations, some purchasers of production began suspending payments to Packard. In July 1995, Packard notified Kenan that Maurice Woods had written to at least two purchasers of production contending that all transfers from Kenan to Packard were void because the final decree closing the case was entered before the bankruptcy court’s August 18, 1993, order approving the transfers.

B.

Because of the Woods’ challenges to the validity of the transfers, on July 27, 1995, Kenan filed a motion in the bankruptcy court to reopen the Woods’ case. On August 22, 1995, the court held a hearing on the motion, and on August 30, 1995, issued an order reopening the case and vacating its prior order closing the case. In its findings of fact, the court found that any premature closing of the case “was due to inadvertence or excusable neglect,” and stated that “[c]losing of the case occurred [during a time period in which] there was an administrative effort by the Assistant United States Trustee’s office, the Clerk, and others to close old cases.” Appellee’s App. at 5-6.

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173 F.3d 770, 1999 Colo. J. C.A.R. 2273, 16 Colo. Bankr. Ct. Rep. 91, 1999 U.S. App. LEXIS 6975, 34 Bankr. Ct. Dec. (CRR) 258, 1999 WL 212108, Counsel Stack Legal Research, https://law.counselstack.com/opinion/woods-v-kenan-ca10-1999.