Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-87-02171/USCOURTS-ca10-87-02171-0/pdf.json

Parties Involved:
Norma Rae Hayes
Appellant
Norman Jay Hayes
Appellant
Production Credit Association of the Midlands
Appellee

Document Text:

FIL~ D IN THE UNITED STATES COURT OF APP~Qd St.at::is Court of Appeals 

'fcnth Circuit 

FOR THE TENTH CIRCUIT 

NORMAN JAY HAYES and NORMA RAE ) 

HAYES, d/b/a Standing Star Ranch, ) 

) 

Plaintiffs-Appellants, ) 

) 

V • ) 

) 

PRODUCTION CREDIT ASSOCIATION ) 

OF THE MIDLANDS, ) 

) 

Defendant-Appellee. ) 

ORDER AND JUDGMENT* 

FEB 10 1992 

ROBERT L. HOECKER 

Clerk 

No. 87-2171 

(D. C. No. C86-0323) 

(D. Wyoming) 

Before HOLLOWAY, BARRETT and LOGAN, Circuit Judges. 

Appellants-debtors appeal from the district court's 

affirmance of the bankruptcy court's order dismissing their 1986 

Chapter 11 bankruptcy petition. They assert the bankruptcy court 

erred by sua sponte dismissing their Chapter 11 petition and 

vacating the automatic stay. Debtors further contend the 

bankruptcy court erred by ordering a modification of the debtors' 

plan of reorganization filed in their pending 1983 Chapter 11 

proceeding. We affirm for essentially the same sound reasons 

given by the district court and the bankruptcy judge. The 

district court's order on the principal issue is attached as 

Appendix A to this order. 

* This order and judgment has no precedential value and shall not 

be cited, or used by any court within the Tenth Circuit, except 

for purposes of establishing the doctrines of the law of the case, 

res judicata, or collateral estoppel. 10th Cir. R. 36.3. 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 1 
PROCEDURAL AND FACTUAL BACKGROUND 

On January 24, 1982, the Production Credit Association of the 

Midlands ("P.C.A.") filed a Judgment and Decree of Foreclosure 

against the debtors in Park County, Wyoming. Execution was stayed 

pursuant to said Judgment and Decree, and debtors were given an 

opportunity to pay the judgment over a period of time. The 

debtors subsequently defaulted on their payments and a foreclosure 

sale was set for March 4, 1983. On March 3, 1983, the debtors 

filed a petition for relief under Chapter 11 of the Bankruptcy 

Code. On February 14, 1984, the amended plan of reorganization 

was confirmed. 

The plan established the value of P.C.A.'s claim secured by 

real property at $1,400,000 and provided that this value would be 

paid at 12% interest in semi-annual payments over five years. The 

plan specified that if the debtors defaulted on any of these 

semi-annual payments, the debtors would promptly place deeds to 

the collateral real property in the possession of an escrow agent. 

If, after the deeds had been placed in escrow, the debtors 

defaulted on any other payments due under the plan, or upon the 

occurrence of one of the other specified events, such as failure 

to pay the taxes when due, then P.C.A. was entitled to cause the 

escrow agent to send notice to the debtors of default. If the 

debtors did not cure such default within a specified time 

thereafter, then the plan provided that P.C.A. was entitled to 

accelerate the entire debt, receive the deeds and proceed against 

the property. Amended Reorganization Plan filed Dec. 29, 1983, 

Case No. 83-120. On December 25 , 1985, the debtors de faulted 

2 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 2 
under the plan. Following notice and an opportunity to cure the 

default, the deeds were to be delivered to P.C.A. on May 12, 1986 . 

One week before that deadline, on May 5, 1986, the debtors filed a 

second petition seeking relief under Chapter 11. 

On June 18, 1986, the bankruptcy court he ard argument 

regarding P.C.A.'s motion to dismiss the second petition. On July 

30, 1986, the court entered its order wherein it lifted the 

automatic stay, dismissed the case, and made a finding after an 

evidentiary hearing that the debtors had materially defaulted with 

respect to the confirmed plan and would dismiss the 1983 case 

unless the debtors submitted a plan to the court to modify the 

plan. This decision was appealed to the federal district court in 

Wyoming which affirmed. Debtors did not seek nor obtain a stay 

after the bankruptcy court dismissed their second Chapter 11 

petition on July 30, 1986. 

Following the entry of the July 30, 1987 order, P.C.A. 

proceeded to foreclose its security interest in the real estate 

and personal property of the debtors. As a result, the quit claim 

deeds were delivered to P.C.A. by the escrow agent and recorded in 

Park County, Wyoming, on August 14, 1986. 

Subsequent to the recording of the quit claim deeds, the 

debtors' motion for modification of the plan was heard in the 

first Chapter 11 case. In the bankruptcy court's September 3, 

1986 order, it ruled the debtors' proposed modification did not 

comply with the provisions of Chapter 11 and that it would be 

denied. The court then dismissed the first Chapter 11 petition 

3 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 3 
for material default under the terms of the confirmed, but not y e t 

consummated plan. 

On January 3, 1987, the bankruptcy court denied the de btors' 

motion for reconsideration of its September 3, 1986 dismissa l of 

the first Chapter 11 proceeding. The bankruptcy court held the 

debtors to be in material default because: 

[T]he debtors had defaulted on the payments due to 

the secured creditor, Federal Land Bank, under the Plan; 

at the time of the August 19, 1986 hearing, the debtors 

were six payments behind in their obligations to the 

Federal Land Bank; the debtors were in default of their 

obligations to the P . C. A. under the confirmed Plan; the 

debtors failed to make the semi-annual payments to the 

P.C.A.; the debtors had missed all five payments due 

under the Plan for the personal property secured to the 

P.C.A.; the debtors had missed five payments due to 

I.F.G. Leasing under the Plan; and the debtors failed 

to pay the taxes on the real property securing the 

P.C.A. lien provided under the Plan. 

Brief of Appellee, Ex. "4" at 4-5. 

On September 28, 1987, the district court affirmed the 

bankruptcy court's dismissal of the 1983 Chapter 11 proceeding. 

The debtors did not appeal that district court ruling to this 

court. The appellants-debtors did appeal the district court's 

affirmance of the bankruptcy court's dismissal of their second 

Chapter 11 proceeding, as noted . 

ANALYSIS 

A. 

At the outset, we note that the parties addre ssed the issue 

of mootness at argument which was raised sua sponte by this court. 

We are not convinced, however, that we should bypass the meri ts of 

this case because of the debtors' failure to obtain a stay of both 

bankruptcy dismissals and their failure to appeal the dismissal of 

4 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 4 
their first Chapter 11 proceeding. See, e.g., Matter of King 

Resources Co., 651 F.2d 1326, 1331-32 (10th Cir. 1980) (me rits of 

appeal addressed where issues concerning allegedly erroneous 

confirmed plan are raised by debtors who failed to obtain stay and 

subsequent purchases of debtor's assets had been made, due to 

possible effect of appeal on further proceedings). 

B. 

Debtors argue the bankruptcy court did not have authority to 

dismiss their 1986 Chapter 11 proceeding, despite the existence of 

their pending 1983 Chapter 11 proceeding. The debtors also assert 

the bankruptcy court erred by not following the proper procedural 

requirements when it dismissed the petition and lifted the 

automatic stay. We find that both arguments lack merit. 

The district court's order affirming the bankruptcy court's 

dismissal of the second Chapter 11 proceeding reviewed the 

conflict in case law regarding sua sponte dismissals of Chapter 11 

proceedings by bankruptcy courts. Compare In re Moog, 774 F.2d 

1073, 1076-77 (11th Cir. 1985) (absent evidence of lack of good 

faith by petitioner, bankruptcy court committed error by 

sua sponte dismissal of Chapter 11 petition before debtor had 

opportunity to file reorganization plan) with In re Smith, 85 B.R. 

872, 873 (Bankr. W.D. Okla. 1988). Although noting the 

restrictive language in 11 u.s.c. § 1112(b) which arguably 

precludes the bankruptcy court from dismissing a Chapter 11 case 

on its own motion, the district court held§ 1112(b) did not 

preempt a bankruptcy court's inherent authority to act sua sponte. 

See 11 U.S.C. § 105(a) {"The bankruptcy court may issue any order, 

5 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 5 
process, or judgment that is necessary or appropriate to carry out 

the provisions of this title."). While this provision became 

effective after the dismissal of the debtors' second Chapter 11 

petition, we agree with the view of the district judge that "the 

Amendment was not included with an intent to change the law, but 

rather to codify and clarify the existing powers of the Bankruptcy 

Court." Order Affirming Decision of the Bankruptcy Court at 7-8 

(Judge Kerr's Order attached as an Appendix hereto). In Freshman 

v. Atkins, 269 U.S. 121, 124 (1925), the Supreme Court in a 

similar situation held a court on its own motion may dismiss a 

second bankruptcy petition if it includes the same debts as a 

pending bankruptcy proceeding. See also In Re Smith, 85 B.R. 872, 

873-74 (Bankr. W.D. Okla. 1988). 

We feel that to protect the integrity and administration of 

the bankruptcy proceedings, debtors should not be permitted to 

simultaneously maintain two proceedings involving the same debts. 

To allow such a situation would encourage debtors to abuse the 

protections afforded by the bankruptcy law. Because the debtors' 

property was already within the protection of the first Chapter 11 

proceeding, the bankruptcy court properly dismissed the second 

proceeding sua sponte and the district court's affirmance of that 

ruling was correct. 1 

c. 

The debtors assert further that the district c ourt erred in 

1 

Because we find the district court properly dismissed the 

1986 petition, the issue of whether the automatic stay in that 

case was improvidently lifted is moot. 

6 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 6 
affirming the bankruptcy court's order that they submit a plan to 

modify the amended plan confirmed by the court in the original 

Chapter 11 case. Specifically, the debtors argue that because the 

original amended plan had been fully administered under Local 

Bankruptcy Rule 1033, the bankruptcy court was without authority 

to order a modification. We disagree and find the debtors' 

argument to be without merit. 

The bankruptcy court clearly found the debtors had materially 

defaulted under the plan. Because of this finding, the bankruptcy 

court extended an opportunity for the debtors to file a proposed 

modification of the confirmed plan of reorganization. The 

proposed modification submitted by the debtors was rejected by the 

court as not complying with the provisions of 11 u.s.c. 

§ 1129(a)(2). Therefore, the court correctly determined that the 

debtors' 1983 case should be dismissed for material default, as 

allowed under 11 U.S.C. § 1112(b)(8). 

D. 

Finally, debtors' reliance on 11 U.S.C. § 1144 is misplaced. 2 

There has never been any allegation of fraud in procuring the 

confirmation order. Pursuant to 11 U.S.C. § 945(a) the bankruptcy 

court may retain jurisdiction over the case for such time as is 

necessary for the successful implementation of the plan. 

2 

11 u.s.c. § 1144 states in part: 

[o]n request of a 

180 days after 

confirmation, and 

may revoke such 

fraud . . .. 

party in interest at any time before 

the date of the entry of the order of 

after notice and a hearing, the court 

order if such order was procured by 

7 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 7 
Additionally, the bankruptcy court here was express ly grant ed 

continuing jurisdiction by the debtors to consider any proposed 

modifications. Amended Reorganization Plan filed Dec. 29, 1983, 

Part VII, 1 8 . Thus, we find the bankruptcy court acted properly 

and did not abuse its discretion in ordering the debtors to file a 

proposed modification to the confirmed plan. 

AFFIRMED. 

Entered for the Court 

William J. Holloway, Jr. 

Circuit Judge 

8 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 8 
IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF WYOMING 

NORMAN JAY HAYES and ) 

NORMA RAE HAYES d/b/a ) 

Standing Star Ranch, ) 

) 

Appellants, ) 

) 

vs. ) No. C86-322-K 

) 

PRODUCTION CREDIT ) 

ASSOCIATION OF THE MIDLANDS, ) 

) 

Appel lee. ) 

) 

NORl.'1AN JAY HAYES and ) 

NORMA RAE HAYES d/b/a ) 

Standing Star Ranch, ) 

) 

Appellants, ) 

) 

vs. ) No. C86-323-K 

) 

PRODUCTION CREDIT ) 

ASSOCIATION OF THE MIDLANDS, ) 

) 

Appellee. ) 

·-·, \ , _ ,- I ; ~- i 

("'' .... ,. ·" _, -:-.'- ~ 

•. '• I r, •: • • 'i ,_ ; •. ': 

,~ ... ,. ,, .. :c; .. '.i - 0 ! v 'O· , " .,_ "' .~,. : · 4 U 

ORDER AFFIRMING DECISION OF THE BANKRUPTCY COURT 

The above-entitled matter having come on regularly for 

hearing before the Court on appeal from the decision of the United 

States Bankruptcy Court, District of Wyoming; appellants appearing 

by and through their attorney, Paul Hunter, and appellee appearing 

Appendix A, Page 1 

j UL 1 ~ ' 98., 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 9 
by and through its attorney, Jerry Yaap; and the Court having 

heard the arguments of counsel and having carefully reviewed and 

considered said appeal, the briefs and record herein, and all 

matters p·ertinent thereto, and being fully advised in the premises , 

FINDS : 

That appellant-debtors appeal from an order of the 

Bankruptcy Court which (1) dismissed case number 86-00367, the 

debtors' second filing of a Chapter 11 Petition for Reorganization ; 

(2) terminated the Automatic Stay Order; and (3) allowed debtors 

ten days to submit plans to the Court to consummate the confirmed 

plan of reorganization in debtors' first filed Chapter 11 Petition 

for Reorganization, case number C83-00120. 

Appellant-debtors challenge the authority of the Bankruptcy 

Court to sua sponte dismiss the Chapter 11 proceeding in 86-00367 

and challenge the Bankruptcy Court's sua sponte granting of relief 

from stay [without noticeJ and the Court's order requiring modification of the debtors' [consummated] plan of reorganization. 

The facts show that the debtors originally filed a Petition 

for Reorganization under Chapter 11 on March 3, 1983 and pursuant 

to order of the Bankruptcy Court of February 14, 1984, the debtors' 

plan of reorganization was confirmed. Pursuant to the plan, the 

-2-

EXH TBI'I' " S " Page 3 7 

Appendi x A, Page 2 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 10 
debtors were required to make semi-annual payments of $70,000.00 

to the appellee Production Credit Association of the Midlands (PCA). 

The debtors defaulted on their December 31, 1985 payment and pursuant 

to the plan, deeds held in escrow were delivered to the PCA on 

May 12, 1986 after default and notice of default had been given to 

the debtors. The appellant-debtors, however, filed a second 

Petition for Reorganization under Chapter 11 on May 6, 1986. 

Contrary to appellants' ass.ertions, a hearing was held on 

June 20, 1986 upon a letter from PCA's counsel treated as a motion 

to modify the stay order. Upon hearing, the Bankruptcy Judge found 

that the confirmed plan in case number 83-00120 had not been consummated, that the plan, therefore, was not subject to being included 

in another plan under Chapter 11, and that debtors had materially 

defaulted with regard to the plan. 

The Court, however, gave the appellant-debtors an opportunity 

to submit plans to consummate the confirmed plan under 83-00120. 

The debtors failed to timely file such plan and the 83-00120 case 

was later dismissed upon motion of the appellee PCA, for cause 

pursuant to 11 q.S.C. § 1112(b). 

While there appears to be a conflict in the case law as 

to the Bankruptcy Court's authority to dismiss a Chapter 11 case 

sua sponte, this Court is of the opinion that the Bankruptcy Court's 

-3-

EXHIB:T "5" Page 38 

Appendix A, Page 3 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 11 
sua sponte dismissal of case number 83-00367 was proper under a l l 

the facts and circumstances. 

Some courts have held that strict construction of 11 U.S. C. 

§ 1112(b) in light of the legislative history on the matter precludes 

the Bankruptcy Court's dismissal of a Chapter 11 case on its own 

motion and that dismissal may be effected only upon request of a 

"party in interest." See e.g. In Re Moog, 774 F . 2d 1073 (11th Cir. 

1985); In Re Tiana Queen Motel, 749 F.2d 146 (2~d Cir. 1984); In Re 

Gusam Restaurant Corp . , 737 F.2d 274 (2nd Cir. 1984). Section 1112(b) 

provides in part that: 

Except as provided in subsection (c) of this 

section, on request of a aarty in interest or the 

United States trustee, an after notice and a 

hearing, the court may convert a case under t his 

chapter to a case under chapt_er 7 of this title or 

may dismiss a case under this chapter, whichever i s 

in the best interest of creditors and t he estate, 

for cause, including- . .. 

(emphasis added). The court in Moog discussed the legislative 

history wherein the Senate version of§ 1112(b) containing language 

expressly giving the court power to dismiss or convert a Chapter 11 

on its own motion, was not adopted. The Moog court concluded t hat 

the congressional intent was to preclude a Bankruptcy Court's sua 

sponte action under§ 1112(b). In Re Moog, 774 F . 2d at 1076 . Even 

this view, however, does not always preempt a Bankruptcy Court ' s 

inherent power to dismiss a case in order to _preserve the integrit y 

- 4-

EXHIBIT " 5" PaCJe 3'3 

Append tx A, Page 4 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 12 
of the bankruptcy system under certain circumstances. Id. at 

1076-1077 . 

Some courts have taken the view that Bankruptcy Courts 

may dismiss cases sua sponte where to do so "perpetuates t he proper 

use of the bankruptcy mechanism, " In Re Ray, 46 B.R. 424 , 426 (S. D. 

Ga . 1984); and that the Bankruptcy Court has an inherent power to 

act sua sponte to dismiss, independently of grounds specified in 

either§ 305(a) or§ 1112(b) of Title 11. Matter of Century City , 

Inc., 8 B.R. 25, 29 (D.N .J. 1980). In the case of In Re Stahl, 

Asano, Shigetomi & Associates, 7 B.R. 181 (D. Haw . 1980), the court 

stated that "without the power to dismiss sua sponte the court would · 

be powerless to dismiss a suit except on the motion of a party ." 

Id. at 186. 

In the case of Matter of Nikron , Inc., 27 B.R. 773 , 777 

(E.D. Mich. S.D. 1983) , the court in discussing the legislative 

intent behind§ 1112(b) stated that: 

Both the House and Senate recognized that 'bankruptcy 

affects too many people to allow it to proceed untended by an impartial supervisor' whether by a 

bankruptcy judge, the United States Trustee or some 

other entity. It is reasonable to conclude that 

Congress did not intend to place the bankruptcy 

judge 'on a pedestal watching the estates under his 

jurisdiction ..• dissipate themselves through lack 

of supervision. ' Congress did not intend, at least 

in non-pilot districts, that bankruptcy judges sit 

idly by and blithely ignore abuses that could lead 

-5-

SXHIBIT "5" Paqe 40 

Appendi x A, Page 5 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 13 
to the compromise of the bankruptcy system and 

the integrity of the court. A court has the 

inherent power and duty to control its docket, 

to preserve its integrity, and to insure that 

the legislation administered by the court will 

accomplish the legislative purpose. In re 

Coram. A statute is not to be applied 'strictly 

in accord with its literal meaning where to do 

so would pervert its manifest purpose.' In re 

Adamo, 619 F.2d at 222. Based upon the foregoing reasons, it is the holding of this court 

that a court has the sua sponte power to convert 

or dismiss a chapter 11 case. 

(footnotes omitted). See also In Re Cricker, 46 B.R. 229 (N.D. 

Ind. 1985); In Re Harvey Probber, Inc., 44 B.R. 647 (D. Mass. 

1984); Matter of East Town Properties, 31 B.R. 507 (E.D. Wis. 

1983) ; In Re G-2 Realty Trust, 6 B.R. 549 (D. Mass. 1980). 

This Court is of the opinion that§ 1112(b) cannot preclude 

sua sponte dismissal of a case in all circumstances and that the 

Bankruptcy Court still retains an inherent power to dismiss a case 

upon its own motion under proper circumstances. This view taken 

in light of§ lOS(a) and the 1986 amendment thereto, is net unreasonable. 

The Report of The National Bankruptcy Conference's Position 

On The Court System Under The Bankruptcy Amendments And Federal 

Judgeship Act Of 1984, And Suggestions For Rules Promulgation, 

23 Harv. J. on Legis. 357, 360-361 (1986), provides that : 

-6-

EXHIBIT "S" Page 41 

Appendix A, Page 6 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 14 
Section 113 of the· 1984 Amendments appears 

to repeal section 1481 of title 28. The repealed 

section provided that '[a] bankruptcy court shall 

have the powers of a court of equity, ·taw, and 

admiralty, but may not enjoin another court or 

punish a criminal contempt not committed in the 

presence of the judge of the. court or warranting 

a punishment of imprisonment.' 

It is the oosition of the Conference that 

following the 1984 Amendments, the bankruptcy 

court may still 'issue any order, process, or 

judgment that is necessary or appropriate to carry 

out the provisions of this title [title 11].' 

[Referring to 11 U.S.C. § lOS(a)] It is also the 

Conference's position that since the district court 

has the powers of a court of equity, law, and admiralty, such powers may be referred to the bankruptcy court as a unit of the district court. The 

Rules should so provide. 

(footnotes omitted). The 1986 amendme~t to§ lOS(a) seems to 

clarify the inherent authority of the Bankruptcy Court to act 

sua sponte. That statute now provides: 

The court may issue any order, process, or 

judgment that is necessary or appropriate to carry 

out the provisions of this title. No ~revision of 

this title providing ·for the raising o an issue by 

a party in interest shall be construed to preclude 

the court from sua s onte takin an action or 

ma inf any etermination necessaz or appropriate 

to en orce or implement court or ers or rules, or 

to prevent an abuse of process. 

(underlined portion, 1986 amendment). 

While this amendment became effective after the dismissal 

of appellants' second Chapter 11 petition, this Court is pers1.iaded 

-7-

EXHIBIT "5" Page 42 

Appendix A, Page 7 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 15 
that the Amendment was not included with an intent to change the 

law, but rather to codify and clarify the existing powers of the 

Bankruptcy Court. 

In an "Overview of the Bankruptcy Act of 1986," commentators 

have made the following persuasive statements regarding§ l0S(a). 

After the 1984 Amendments there was some doubt 

whether or not the power granted by this Section of 

the Code could be exercised by a Bankruptcy Judge. 

This amendment was designed to empower the Bankruptcy 

Judge to act under appropriate circumstances on its 

own motion to assure that all orders issued by the 

court will be enforced and to enter such orders and 

issue such processes as are necessary to implement 

court orders and to prevent an abuse of process. This seemingly broad language might conceivably include the power of the Bankruptcy Judge to cite for 

contempt one who violated a valid order issued by the 

court, a power granted to the district courts under 

the All Writs Statute, 28 USC §1657. At the very 

least, however, this amendment makes it clear a 

Bankruptcy Judge may issue orders to protect debtors 

a~ainst abuse of process. to protect the integrity 

o the bankruptcy system, and to assure that all 

lawful orders of the bankruptcy courts are obeyed. 

(emphasis added). Norton, Bankruptcy Law and Practice, An Overview Of The Bankruptcy Judges, United States Trustees, And Family 

Farmer Bankruptcy Act Of 1986 at pages 20 and 21. 

This Court, therefore, concludes that under all the facts 

and circumstances of this case, the Bankruptcy Court did not act 

contrary to the law nor abuse its discretion in dismissing the 

second Chapter 11 petition, case number 86-00367, where the confirmed plan under the first Chapter 11 petition had not been 

consummated and the debtors had defaulted on ·said plan. The law 

-8-

EXHIBIT "5" Page 43 

Appendix A, Page 8 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 16 
provides that "when a bankruptcy action is pending, a subsequent 

action which purports to effect the same debt cannot be maintained." 

In Re Belmore, 68 B.R. 889, 891 (M.D. Pa. 1987). In the Belmore 

case, the court noted that this rule was necessary to provide for 

orderly administration of justice, protection of the court's 

jurisdiction, and prevention of abuse of the bankruptcy laws. Id. 

The Bankruptcy Court's dismissal action in the instant case was 

proper to protect the integrity of the bankruptcy system. 

Furthermore, this Court does not find that the Bankruptcy 

Court erred in lifting the automatic stay or requiring the debtors 

to submit a plan to consummate the confirmed plan in the original 

reorganization case, number 83-00120. · 

NOW, THEREFORE, IT IS 

ORDERED that the order and decision of the Bankruptcy 

Court appealed from herein, be, and the same is, hereby affirmed 

and said appeal be, and the same is, hereby dismissed. 

DATED this 8th day of July, 1987. 

EWINO T. K~RP 

UNITED STATES DISTRICT JUDGE 

-9-

E:<HIBIT "5" Pag~ 44 

Appendix A, Page 9 

Appellate Case: 87-2171 Document: 010110222515 Date Filed: 02/10/1992 Page: 17