Oral argument was scheduled for September 25, 2009. 1

Redmond filed an emergency motion to reschedule argument

on September 24, 2009. We vacated oral argument and

now decide the case on the briefs. See FED. R. APP. P. 34(B);

7TH CIR. R. 34(e).

In the

United States Court of Appeals

For the Seventh Circuit

No. 08-4288

JAMES A. REDMOND,

Plaintiff-Appellant,

v.

FIFTH THIRD BANK, f/k/a PINNACLE BANK,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 08-cv-00961—Blanche M. Manning, Judge.

DECIDED OCTOBER 20, 2010 1

Before EASTERBROOK, Chief Judge, and KANNE and

SYKES, Circuit Judges.

SYKES, Circuit Judge. In 1996 James Redmond defaulted

on his home mortgage and filed for Chapter 13
2 No. 08-4288

bankruptcy protection against his lender Pinnacle Bank

(“Pinnacle”), now known as Fifth Third Bank. The bankruptcy court entered an Agreed Order, pursuant to

which Redmond made monthly payments and owed a

“balloon payment” for the balance of the mortgage on

April 1, 1998. To obtain financing for this balloon payment, Redmond requested a payoff letter from Pinnacle

detailing his debt obligations. Redmond disputed the

charges in the payoff letter and subsequently failed to

secure a loan to cover the payment. He then defaulted

for a second time, and Pinnacle initiated state foreclosure proceedings. Redmond moved to reopen his

bankruptcy case in 2005, four years after it had been

closed and three weeks before trial in the state foreclosure suit. He contended that the charges Pinnacle

was seeking in the foreclosure suit were in violation of

the bankruptcy court’s orders and the automatic stay.

The bankruptcy court denied the motion, and a year

later Redmond filed a second motion to reopen along

with a motion for sanctions against Pinnacle for violating

the terms of the bankruptcy plan. These motions, too,

were denied. The case shuttled back and forth between

the district court and the bankruptcy court, and when

the denial of reopening was finally affirmed, Redmond

appealed to this court.

We affirm. Bankruptcy judges are given broad discretion to reopen closed bankruptcy cases, and we see no

abuse of discretion here. The bankruptcy judge declined

to reopen on multiple appropriate grounds: The motion

was not timely, the state court was an appropriate forum

to litigate Redmond’s potential claims, and his bank-
No. 08-4288 3

ruptcy arguments were in any event meritless.

Further, Redmond was not denied a fair hearing; the

bankruptcy judge gave him ample opportunity to

present his claims.

I. Background

In February 1996 James Redmond defaulted on his

home mortgage, and Pinnacle initiated foreclosure proceedings. Redmond staved off foreclosure by filing

for Chapter 13 bankruptcy protection. The bankruptcy

judge entered an Agreed Order, which reduced Pinnacle’s arrearage, stayed foreclosure proceedings, and

required Redmond to make monthly payments on the

mortgage in addition to a final balloon payment on

April 1, 1998.

As the April 1 deadline approached, Redmond sought

to refinance his mortgage to cover the upcoming

balloon payment. Redmond requested a payoff letter

from Pinnacle so that he could close on the refinance

loan in time to pay the balloon note. Pinnacle provided

two payoff letters—the second containing a higher

payoff amount than the first. Redmond demanded an

explanation of the charges; he claims that due to Pinnacle’s

failure to explain the difference, he could not refinance

his mortgage. Redmond then failed to make the balloon

payment and defaulted on the mortgage for a second

time, after which Pinnacle initiated a second foreclosure

suit in state court. (Pinnacle contended, and the bankruptcy judge agreed, that the automatic stay as to Pinnacle’s mortgage lien dissolved when Redmond did not
4 No. 08-4288

Redmond argued that the automatic stay could not have 2

been lifted at the time the balloon payment was due on April 1,

1998, because Pinnacle gave him no notice. The bankruptcy

court rejected this argument, concluding that under the

Agreed Order, the stay dissolved automatically and did not

require notice.

make the balloon payment. ) Redmond received a bank- 2

ruptcy discharge in May 1999, and his case was closed

in May 2001.

After seven years of litigation, the state foreclosure

proceedings were slated for trial on July 18, 2005. On

June 30, 2005, three weeks before the trial date and four

years after his bankruptcy case had been closed, Redmond

filed a motion to reopen the bankruptcy proceedings.

Redmond claimed that Pinnacle was seeking through its

payoff letters and the foreclosure action to recover fees

above what it was owed under the Agreed Order and

the bankruptcy plan. On July 12, 2005, Redmond’s

counsel made an appearance to argue the motion, and

the bankruptcy judge denied it on the ground that the

state court could properly entertain his claims.

Meanwhile, Pinnacle filed a pleading in the state-court

foreclosure proceeding in which it disclosed the specific

sums at issue in the 1998 payoff letters. This prompted

Redmond to file a second motion to reopen in

2006—almost a year after the court had denied his first

one. This time he included a request for sanctions for

alleged violations of the bankruptcy court’s orders. At a

June 29, 2006 hearing, the bankruptcy court denied the
No. 08-4288 5

Before issuing its remand order, the district court dismissed

3

Redmond’s appeal for lack of prosecution and then sanctioned

Redmond’s counsel for needlessly causing Pinnacle to litigate

his motion to vacate the dismissal. The district judge later

reinstated the appeal.

The bankruptcy court continued a hearing three times 4

before denying the motion to reopen. The docket does not

indicate why the court continued the hearing three times,

but during this intervening time period, one of Redmond’s

attorneys withdrew at his request, which may have accounted for some of the delay.

On appeal the district judge admonished both parties that 5

the failure to file timely briefs would result in dismissal and

requests for extensions of time would be strongly disfavored.

Redmond then filed (and was granted) two extensions of time

(continued...)

motion, finding that Redmond’s dispute with Pinnacle

over the amount owed under the mortgage did not implicate any bankruptcy order. Redmond appealed, and

the district court reversed and remanded with instructions to consider whether Pinnacle had improperly

sought payment of prepetition debts prohibited by the

Agreed Order. On remand the bankruptcy court again 3

denied the motion. The judge held that (1) the motion 4

was untimely; (2) any remaining issues could be resolved in the state-court proceedings; and (3) Redmond’s

bankruptcy arguments were facially meritless.

Redmond again appealed, claiming that the bankruptcy judge had not followed the district court’s remand

instructions. This time the district court affirmed the

5
6 No. 08-4288

(...continued) 5

to file his initial brief. Despite these extensions, Redmond

filed his brief four days late, and it was twelve pages over

the page limit. 

bankruptcy court’s order denying the motion to reopen. Redmond appealed, and on the eve of oral argument before this court, he filed an “emergency” motion

to reschedule the argument. We vacated the oral argument and took the case on the briefs.

II. Discussion

Redmond challenges the bankruptcy court’s denial of

his second motion to reopen his closed bankruptcy case.

The decision to reopen a bankruptcy case is within the

broad discretion of the bankruptcy court. In re Bianucci,

4 F.3d 526, 528 (7th Cir. 1993). A bankruptcy court may,

for example, reopen a case for “the correction of errors,

amendments necessitated by unanticipated events that

frustrate a plan’s implementation, and the need to

enforce the plan and discharge.” In re Zurn, 290 F.3d 861,

864 (7th Cir. 2002) (citations omitted). Although we

review de novo the district court’s affirmance of the

bankruptcy court’s order denying the motion, the bankruptcy court’s order itself is entitled to deference; the

denial of a motion to reopen a closed bankruptcy case

is reviewed for abuse of discretion. See In re Ingersoll,

Inc., 562 F.3d 856, 863 (7th Cir. 2009) (“We review a

district court’s decision to affirm the bankruptcy court

de novo, which allows us to assess the bankruptcy
No. 08-4288 7

court’s judgment anew, employing the same standard

of review the district court itself used.” (citations omitted)). A bankruptcy judge may consider a number of

nonexclusive factors in determining whether to reopen,

including (1) the length of time that the case has been

closed; (2) whether the debtor would be entitled to relief

if the case were reopened; and (3) the availability of

nonbankruptcy courts, such as state courts, to entertain

the claims. See In re Antonious, 373 B.R. 400, 405-06

(Bankr. E.D. Pa. 2004).

As a threshold matter, Redmond’s contention that the

bankruptcy court did not afford him a full and fair

hearing is without basis in law or fact. As a matter of

law, there is no question that bankruptcy courts may

rule on motions to reopen without a hearing. See In re

Jones, 261 B.R. 479, 483 (Bankr. N.D. Ala. 2001) (denying

a motion to reopen without a hearing). Further, § 350(b)

of the Bankruptcy Code, which governs the closing and

reopening of cases, makes no provision for hearings or

other procedures available to debtors. 11 U.S.C. § 350(b)

(2006). Even though Redmond is not entitled to a

hearing as a matter of law, the record is clear that he

was given ample opportunity to present his claims. The

bankruptcy judge held a hearing before denying each of

Redmond’s motions to reopen. After the district judge’s

remand order, the bankruptcy court held another

hearing (after three continuances) before issuing a thorough opinion denying the motion. Given this procedural

history, Redmond’s argument that he was not given a

fair hearing is untenable. He had over four years and

three chances to persuade the bankruptcy judge to

reopen his case—and he failed.
8 No. 08-4288

A. Timeliness

The passage of time weighs heavily against reopening. The longer a party waits to file a motion to reopen

a closed bankruptcy case, the more compelling the

reason to reopen must be. In re Case, 937 F.2d 1014,

1018 (5th Cir. 1991) (citing Reid v. Richardson, 304 F.2d

351, 355 (4th Cir. 1962)). In assessing whether a motion

is timely, courts may consider the lack of diligence of

the party seeking to reopen and the prejudice to the

nonmoving party caused by the delay. In re Frontier

Enters., Inc., 70 B.R. 356, 359 (Bankr. C.D. Ill. 1987).

While the passage of time in itself does not constitute prejudice to the opposing party, a delay may be

prejudicial when combined with other factors such as

court costs and attorney’s fees in state-court foreclosure

proceedings. Bianucci, 4 F.3d at 528-29. We held in

Bianucci that a two-year delay that caused the creditor

to incur costs in state-court foreclosure proceedings was

a sufficient basis to deny reopening. Id. In Bianucci the

debtor filed the motion to reopen two years after the

case had been closed and five months after he became

aware of the creditor’s lien on his property. Id. at 529.

As the bankruptcy court noted here, Redmond’s delay

“dwarfs” the two-year delay in Bianucci. Redmond received the payoff letters at the root of this dispute in

1998, and he proceeded to litigate the matter for seven

years in state court. In 2005, three weeks before trial in

state court and four years after the case had been closed,

Redmond finally moved to reopen his bankruptcy case.

The timing of the motion strongly suggests that it was
No. 08-4288 9

a stalling tactic to delay the state-court foreclosure proceeding. By 2005 the judge who had presided over the

bankruptcy case had retired, and the records had been

archived. In the meantime Pinnacle had incurred costs

in the state-court proceeding—the exact ground for

prejudice in Bianucci.

Redmond argues that he could not have filed his

motion to reopen until 2005, when Pinnacle provided

him with a breakdown of the charges it was seeking in

its 1998 payoff letters. But he actively disputed the

charges as long ago as 1998, and nothing prevented

him from bringing the matter to the attention of the

bankruptcy court at that time. We have rejected the

notion that “anyone who has been a debtor in bankruptcy has eternal access to federal court for all

disputes related in some way to the debts handled in

the bankruptcy proceeding.” Zurn, 290 F.3d at 864.

The bankruptcy court did not abuse its discretion in

rejecting the motion to reopen as untimely.

B. Facial Validity of Redmond’s Bankruptcy Claims

The motion’s lack of timeliness was one of three

reasons given by the bankruptcy judge for denying the

motion to reopen. The judge also held that Redmond’s

arguments had no substantive merit. Redmond contended that Pinnacle’s actions in the state-court foreclosure suit violated various bankruptcy-court orders.

The bankruptcy judge held that Pinnacle’s actions—

issuing payoff letters and initiating a foreclosure proceeding after Redmond had defaulted and the auto-
10 No. 08-4288

matic stay had been lifted—were not attempts to collect

in violation of the bankruptcy stay or other orders.

We agree.

As an initial matter, we cannot accept Redmond’s

contention that the bankruptcy court disregarded the

district court’s remand instructions. In the remand

order, the district judge took issue with the bankruptcy

court’s distinction between a lien placed on real, as opposed to personal, property because both types of liens

could violate the terms of a bankruptcy plan. The

district court directed the bankruptcy judge to “d[i]g

deeper,” take into account “all relevant factors,” and

make “all necessary inquiries” into whether Redmond

had cause to reopen his bankruptcy case. As a general

matter, the bankruptcy judge was free to base his

postremand ruling on factors relevant to but not specifically addressed in the remand order, see United States v.

Morris, 259 F.3d 894, 898 (7th Cir. 2001), and here

the district court expressly directed the bankruptcy

judge to do so.

And the bankruptcy judge did exactly what he was

instructed to do: He considered all relevant factors in

determining whether to reopen Redmond’s case. The

judge issued a lengthy opinion in which he analyzed in

detail whether Pinnacle had violated the automatic stay,

the Agreed Order, the Chapter 13 plan, or the discharge

injunction. Specifically, the bankruptcy court held that

Pinnacle had not sought to collect prepetition debt in

violation of the bankruptcy plan by issuing the payoff

letters. This is the exact issue Redmond claims the

judge failed to decide earlier.
No. 08-4288 11

Redmond also ignores the fact that when the case

returned to the district court after remand, the district

court affirmed the denial of reopening. We have held

that a district court is “clearly in the best position to

know the scope of its own remand order,” and its

affirmance of the bankruptcy court’s ruling indicates

that its concerns were adequately addressed. Ingersoll,

562 F.3d at 864. Tellingly, Redmond quotes at length

from the district court’s remand order, but disregards

the affirmance after remand.

As for Redmond’s specific allegations of error, we

agree with the district court that none have merit. He

argues that Pinnacle’s inclusion of certain prepetition

debts in the payoff letters violated (1) the automatic

stay, (2) the Agreed Order, (3) the Chapter 13 plan, and

(4) the bankruptcy discharge. We take each of these

arguments in turn, beginning with the automatic stay.

The bankruptcy court properly concluded that the

payoff letters did not violate the automatic-stay provision of § 362(a) of the Bankruptcy Code. 11 U.S.C. § 362(a).

Section 362(a) prohibits collection activities in violation

of the stay, such as attempting to convert an unsecured

prepetition claim into a secured claim, attempting to

obtain possession of property of the Chapter 13 estate, or

attempting to perfect a lien against property of the

estate. See Mann v. Chase Manhattan Mortg. Corp., 316

F.3d 1, 3-4 (1st Cir. 2003) (citing 11 U.S.C. § 362(a)).

Payoff letters, however, are not acts of collection

and therefore do not constitute violations of the automatic stay. As the bankruptcy judge explained, the

payoff letters were “simply statements of the bank’s
12 No. 08-4288

Redmond suggests that inaccurate payoff letters constitute 6

violations of the automatic stay. This argument is unavailing.

Section 362(a) makes no distinction between collection activities based on the accuracy of the amount claimed. 11 U.S.C.

§ 362(a).

Other courts have held that payoff letters are not attempts 7

at collection and do not violate automatic stays. See In re Saylor,

No. 3:07-cv-229-WKW, 2008 WL 2397344, at *5 (M.D. Ala.

June 9, 2008) (creditor had not “acted” for purposes of § 362(a)

by sending a “transaction history report” and payoff letter at

(continued...)

position as to what was owed” issued in response to

Redmond’s demand. Banks furnish payoff letters at the

debtor’s request to help the debtor prepare to pay off a

loan. To hold that a payoff letter violates an automatic

stay would be preposterous; it would enable debtors to

draw banks into violations of bankruptcy law merely by

requesting a statement of what they owed.

Moreover, the language of Pinnacle’s payoff letters

confirms the finding that they were not attempts to

collect. The March 19, 1998 letter, for example, explains

that it is a “statement of the amount required to be paid

off on April 1, 1998” (the date the balloon payment

was due). The amounts given in the letter are “subject to

a final confirmation,” and the itemization of charges

clearly indicates the “Total Amount [is] Due on April 1,

1998.”6

Redmond relies on In re Sullivan, 367 B.R. 54 (Bankr.

N.D.N.Y. 2007), but that case is distinguishable and

in any event contrary to the weight of authority.7
No. 08-4288 13

(...continued) 7

debtor’s request (citing In re Redmond, 380 B.R. 179, 187 (Bankr.

N.D. Ill 2007))); Sullivan v. First Horizon Home Loan, No.

02-10657, 2003 Bankr. LEXIS 2091, at *2 (Bankr. E.D. Pa. Nov. 23,

2003) (“Neither the internal posting of fees to an account, nor

their inclusion on a payoff statement implicate the automatic

stay because neither is an act or effort to collect the fees.”). In a

related context, courts have held that merely recording an

amount owed in a creditor’s internal bookkeeping does not

violate the automatic stay. See Mann v. Chase Manhattan Mortg.

Corp., 316 F.3d 1, 3-4 (1st Cir. 2003) (holding that absent an

overt attempt to recover, the creditor’s internal bookkeeping

does not violate the automatic stay); In re Sims, 278 B.R. 457, 471

(Bankr. E.D. Tenn. 2002) (same). These holdings reinforce

the conclusion that payoff letters based on the amounts reflected in these records, when not accompanied by affirmative

steps to collect, do not violate the automatic stay.

The Sullivan court’s holding may also have been influenced

8

by the fact that the creditors conceded at an evidentiary

(continued...)

Unlike the present case, Sullivan involved additional

creditor conduct that clearly violated the automatic

stay. That is, the creditor in Sullivan did more than just

issue a payoff letter; it also prevented the sale of the

debtor’s property by withholding an abstract of title

until the debtor had paid the debt. Id. at 63-65. Further,

the automatic stay in Sullivan had not yet been lifted

and therefore the creditor’s subsequent collection activities violated an ongoing stay. By contrast, the automatic

stay in this case had terminated at the time the balloon

payment went unpaid, and therefore Pinnacle could

initiate the state-court foreclosure suit without violating it.8
14 No. 08-4288

(...continued) 8

hearing that the payoff letter was a “request” for legal fees. In re

Sullivan, 367 B.R. 54, 62 (Bankr. N.D.N.Y. 2007). Pinnacle

did not make a similar concession.

We also conclude that the bankruptcy judge did not

abuse his discretion in rejecting Redmond’s claim that

Pinnacle violated the Agreed Order. The bankruptcy

judge found that Pinnacle could not have violated the

Agreed Order because the order “did not require the

bank to do or refrain from doing anything that affected

Redmond.” The Agreed Order simply (1) reinstated the

automatic stay, (2) froze the first foreclosure proceeding, and (3) permitted Redmond to pay off his mortgage on or before the balloon payment date. Because

the payoff letters did not constitute collection activity in

violation of the stay, they cannot have violated the

Agreed Order either. Furthermore, the payoff letters

were issued at Redmond’s request and had no relation to

the frozen foreclosure proceedings. Finally, the payoff

letters in no way prevented Redmond from paying his

claim, so they were fully consistent with the Agreed

Order’s provision requiring Redmond to pay his

mortgage on or before the balloon payment date. When

Pinnacle ultimately filed its second foreclosure suit

in state court, Redmond had already defaulted for

a second time and the automatic stay had been lifted

pursuant to the terms of the Agreed Order. Therefore,

neither the payoff letters nor the foreclosure suit

could have violated the Agreed Order.
No. 08-4288 15

Redmond does not appear to have a valid claim

that Pinnacle violated the Chapter 13 plan. He contends

that the payoff letters improperly included payments

that were to be made under the bankruptcy plan and that

in effect Pinnacle was seeking to collect that amount

twice—once from Redmond and a second time from

the Chapter 13 trustee. The payoff letters, however,

reflected Redmond’s outstanding debt without regard

to how that balance was to be paid. The inclusion of

unpaid plan amounts in the payoff letters was not an

attempt to collect those amounts twice because it was

not an attempt to collect in the first place. In addition,

the bankruptcy judge noted that if Redmond had paid

the plan amounts as part of his balloon payment, the

plan could have been modified to extinguish further

payments. It also makes sense that the payoff letters

would reflect the entire debt, including that owed under

the plan, because according to Redmond, he needed to

know the outstanding balance in order to refinance

the mortgage.

Redmond relies heavily on the holding in In re Barton

that collection of a debt in excess of the amount allowed

in a Chapter 13 plan may form a basis for bankruptcy

sanctions. 359 B.R. 681 (Bankr. N.D. Ill. 2006). Barton

is inapposite, however. It involved neither a motion to

reopen nor payoff letters solicited by the debtor;

instead, the creditor in that case refused to accept the

Chapter 13 trustee’s payments of real-estate taxes

under the confirmed plan and subsequently attempted

to collect those taxes plus interest outside of the bankruptcy case. Id. at 683-84. Pinnacle, by contrast, did not
16 No. 08-4288

refuse to accept Redmond’s payments under the plan

and then turn around to collect the full debt, plus interest, via a state-court foreclosure after the plan had been

discharged. Rather, Redmond defaulted by failing to pay

his mortgage under the plan, which resulted in the

lifting of the automatic stay. Once the stay was lifted,

Pinnacle proceeded against him in state court on the

default. Barton’s holding regarding bankruptcy sanctions

for debt collection outside of a bankruptcy plan therefore has no relevance to this case.

Finally, we agree with the bankruptcy judge’s conclusion that Pinnacle did not violate the discharge injunction. The judge rejected this contention for two reasons. First, Redmond’s debt to Pinnacle was never discharged because he defaulted by failing to make the

balloon payment in accordance with the Agreed Order.

Second, as the bankruptcy judge explained, even if there

had been a discharge under § 524(a) of the Bankruptcy

Code, the discharge “could never have affected the

bank’s right to foreclose on its lien.” The judge noted that

a § 524(a) discharge only affects personal judgments

against the debtor, not in rem foreclosure proceedings.

Since the lien was neither avoided under another provision of the Code nor paid in full, Pinnacle was entitled

to recover its property in a foreclosure proceeding regardless of whether the debt had been discharged

under the plan.

As the bankruptcy judge held, a closed bankrupty

proceeding should not be reopened “where it appears

that to do so would be futile and a waste of judicial re-
No. 08-4288 17

sources.” In re Carberry, 186 B.R. 401, 402 (Bankr. E.D. Va.

1995)); see Antonious, 373 B.R. at 406 (bankruptcy court

may deny motion to reopen where it is clear at the outset

the debtor would not be entitled to relief); Arleaux v.

Arleaux, 210 B.R. 148, 149 (B.A.P. 8th Cir. 1997) (motion

to reopen denied on ground that it would provide no

relief to the debtor). That was certainly the case here.

C. Availability of State-Court Forum

As if more were needed, the bankruptcy judge

properly held that the state-court forum was appropriate to litigate Redmond’s potential claims. The

amount needed to cure a mortgage default is a question

of state law; § 1322(e) of the Bankruptcy Code expressly

provides that the amount necessary to cure a default is

determined “in accordance with the underlying

agreement and applicable nonbankruptcy law.” 11 U.S.C.

§ 1322(e). The state court could therefore adequately

entertain Redmond’s challenges to the amounts

Pinnacle was claiming.

Redmond argues that he could not bring his claims

in state court because bankruptcy courts have exclusive

jurisdiction over sanctions under § 362(h) of the Bankruptcy Code. Id. § 362(h). This argument is meritless.

For the reasons we have explained, Redmond has no

basis for sanctions under bankruptcy law.

AFFIRMED.

10-20-10