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RECOMMENDED FOR FULL-TEXT PUBLICATION

File Name: 16b0007p.06

BANKRUPTCY APPELLATE PANEL

OF THE SIXTH CIRCUIT

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In re: JOHN T. MCCOY,

Debtor.

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No. 15-8056

Appeal from the United States Bankruptcy Court 

for the Northern District of Ohio at Youngstown.

No. 11-43318—Kay Woods, Judge.

Decided and Filed: November 29, 2016

Before: HARRISON, PRESTON, and WISE, Bankruptcy Appellate Judges.

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COUNSEL

ON BRIEF: Carlo A. Ciccone, CICCONE LAW OFFICE LLC, Warren, Ohio, for Debtor.

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OPINION

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MARIAN F. HARRISON, Bankruptcy Appellate Panel Judge. John T. McCoy 

(“debtor”) filed this appeal from the bankruptcy court’s denial of his motion to reopen his 

chapter 7 case despite no objections being filed. For the reasons stated below, the Panel reverses 

the bankruptcy court’s ruling.

I. STATEMENT OF ISSUES

Whether the bankruptcy court abused its discretion by denying the debtor’s motion to 

reopen his chapter 7 case in order to avoid judicial liens based on timeliness when no creditor 

objected and there was no evidence of prejudice.

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No. 15-8056 In re: John McCoy Page 2

II. JURISDICTION

The United States District Court for the Northern District of Ohio has authorized appeals 

to the Panel, and no party has timely elected to have this appeal heard by the district court. 

28 U.S.C. § 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right 

pursuant to 28 U.S.C. § 158(a)(1). For purposes of appeal, a final order “ends the litigation on 

the merits and leaves nothing for the court to do but execute the judgment.” Midland Asphalt 

Corp. v. United States, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989) (citations and internal 

quotations omitted). The bankruptcy court's order denying the debtor’s motion to reopen their 

bankruptcy case “is a final and appealable order.” Smyth v. Edamerica, Inc. (In re Smyth), 

470 B.R. 459, 461 (B.A.P. 6th Cir. 2012) (citation omitted).

III. STANDARD OF REVIEW

Whether to grant a motion to reopen is entrusted to the sound discretion of the trial court, 

and the bankruptcy court's decision should not be overturned absent an abuse of discretion. Id. 

(citation omitted). Findings of fact are only set aside if clearly erroneous, and matters of law are 

reviewed de novo. Id. “A court abuses its discretion when it commits a clear error of judgment, 

such as applying the incorrect legal standard, misapplying the correct legal standard, or relying 

upon clearly erroneous findings of fact.” Gourlay v. Sallie Mae, Inc. (In re Gourlay), 465 B.R. 

124, 126 (B.A.P. 6th Cir. 2012) (quoting Auletta v. Ortino (In re Ferro Corp. Derivative Litig.), 

511 F.3d 611, 623 (6th Cir. 2008)). “The question is not how the reviewing court would have 

ruled, but rather whether a reasonable person could agree with the bankruptcy court’s decision; if 

reasonable persons could differ as to the issue, then there is no abuse of discretion.” Barlow v. 

M.J. Waterman & Assocs., Inc. (In re M.J. Waterman & Assocs., Inc.), 227 F.3d 604, 608 (6th 

Cir. 2000) (citations omitted).

IV. FACTS

The debtor filed a voluntary chapter 7 petition on November 18, 2011, and received a 

discharge on March 20, 2012. In his schedules, the debtor listed pre-petition judgment liens held 

by Asset Acceptance LLC, Capital One, Forum Health, LVNV Funding LLC, Palisade 

Collections, and Troy Capital (“creditors”), albeit on Schedule E, incorrectly. The debtor’s 
No. 15-8056 In re: John McCoy Page 3

residence was listed as an asset on Schedule A. The debtor did not claim an exemption in the 

property, and he did not seek to avoid the judicial liens at that time because he intended to sell 

the home after his case was closed. The creditors received notice of the bankruptcy filing and of 

the discharge. The case was then closed on March 23, 2012. 

On December 2, 2015, the debtor filed a motion to reopen his chapter 7 case in order to 

avoid these judgment liens so that he could refinance rather than sell. Proper notice was 

provided to all interested parties; however, no parties objected. At the hearing held on December 

17, 2015, counsel for the debtor admitted that “it was an oversight on my part that I didn’t go 

through with the actual terminations of the liens at the time it was open.” (Hearing Transcript 

3:25-4:2, Bankr. Case 11-43318, ECF No. 31, Dec. 17, 2015). He also stated that circumstances 

for the debtor had changed because he originally intended to sell the house and pay off the liens, 

but that was no longer his intent. At the hearing, the bankruptcy court denied the motion after a 

colloquy with the debtor’s counsel:

THE COURT: I don’t find any basis to reopen the case at this point in time so you 

can take an action that you should have taken four years ago. These weren’t 

recently discovered, they were well-known. You knew that there were judgment 

liens, and you chose not to do what needed to be done at that time. That was a 

strategic decision that now has an impact that the debtor doesn’t like, but that’s 

what is out there.

MR. CICCONE: Your Honor, I understand. And I would just ask that you 

reconsider because of – I didn’t want the debtor to suffer because of something 

that I had failed to do.

THE COURT: Maybe you’re going to suffer. You could end up with a 

malpractice claim for all I know, unless the debtor was the one who made the 

decision not to go forward with avoiding those liens. And if he did, he’s going to 

have to live with that decision.

* * * *

You know, there are a lot of judges who won’t reopen cases at all under these 

circumstances. I generally do when they’re a no-asset case, and when it looks like 

it really was a mistake. I don’t know what happened here, but it isn’t that they 

were recently discovered. These judgment liens existed at the time the case was 

filed, and they were scheduled as judgment liens, not even as unsecured claims. 
No. 15-8056 In re: John McCoy Page 4

So it wasn’t just the debtor knew that he owed the money. He knew that there 

were judgments out against him, and that –

* * * *

Not only that there were judgments, but that there were liens as a result of those 

judgments.

MR. CICCONE: I understand, Your Honor. I mean that’s my best – I come here 

before you to tell you what the circumstances were. I’m not, you know, passing 

off any kind of fault or anything like that. So I just would leave it up to the Court 

and – I understand your decision.

THE COURT: At some point in time, there has to be finality. This debtor got a 

discharge three and a half years ago.

* * * *

And the case was closed a long time ago. The equities just don’t favor reopening 

the case. 

MR. CICCONE: Right, Your Honor, okay. I understand that, but like you said, 

there was a difference in circumstances in that if he was going to sell the home at 

the time –

THE COURT: He would have had to pay them off.

MR. CICCONE: And that’s the strategy that I used when I – when I brought this 

case to, you know, open the case. But has since decided that because the 

mortgage has a seven percent interest rate, and he wants to stay in the home, he 

was trying to refinance with the same company, CitiMortgage in this case, and 

they won’t refinance because of the outstanding liens that are against the property.

THE COURT: And that makes sense because the liens then would be earlier in 

time than the refinancing.

* * * *

But what I don’t understand is if he was willing to pay these liens in full from the 

proceeds of the sale of his house, why he now isn’t willing to pay them in full 

from the financing. It’s the same issue.

MR. CICCONE: Well, Your Honor, the bank is refusing all kind of refinancing 

because of the liens. They won’t go – they won’t even let him proceed with 

making a decision whether they want to refinance, and he’s stuck with paying the 
No. 15-8056 In re: John McCoy Page 5

seven percent now, and has been, because that’s been the rate on the loan for the 

last 15 years, and has had a change of heart, and that’s why we’ve decided to 

pursue it.

THE COURT: Why – there appears to be no reason whatsoever that you wouldn’t 

have avoided these liens back in 2012. Because then they would have been 

unsecured, the liens would have been avoided, his personal liability would have 

been discharged, and there would no longer be liens on the house. That seems 

like a poor decision to have made, but you actually made a strategic decision to do 

that.

MR. CICCONE: That’s correct, Your Honor. I’m not –

THE COURT: So this wasn’t something that you didn’t know about; you knew 

about it. You made a decision not to do something when you could have in 2012.

I’m not going to reopen this case under these circumstances. I’m going to deny 

your motion, and the Court will enter an order.

(Hearing Transcript 4:3-7:7, Bankr. Case 11-43318, ECF No. 31, Dec. 17, 2015). 

The bankruptcy court entered an order denying the motion that same day, stating:

The Court held a hearing on the Motion on December 17, 2015, at which 

Mr. Ciccone appeared on behalf of the Debtor. Mr. Ciccone represented to the 

Court that, although the judgment liens were improperly scheduled, the Debtor 

and Mr. Ciccone had knowledge of the judgment liens when this case was filed. 

Mr. Ciccone stated that he made the strategic decision not to seek to avoid the 

judgment liens while this case was pending because the Debtor had previously 

intended to surrender his residence. Mr. Ciccone provided no further explanation 

why he did not seek to avoid the judgment liens on behalf of the Debtor while this 

case was pending.

The Court finds that the Debtor, by and through Mr. Ciccone, has failed to state 

cause to reopen this case, which has been closed for more than three and one-half 

years. The Debtor and Mr. Ciccone had knowledge of the judgment liens when 

this case was filed, but Mr. Ciccone did not to seek to avoid the judgment liens 

while this case was pending. As a consequence, the Court hereby denies the 

Motion for an Order to Reopen Case.

(Order Denying Motion for an Order to Reopen Case at 2-3, Bankr. Case 11-43318, ECF No. 21) 

(internal footnote omitted).
No. 15-8056 In re: John McCoy Page 6

V. DISCUSSION

Pursuant to 11 U.S.C. § 350(b), “[a] case may be reopened in the court in which such 

case was closed to administer assets, to accord relief to the debtor, or for other cause.” When 

determining whether to reopen, many courts “consider the equities of each case with an eye 

toward the principles which underlie the Bankruptcy Code.” In re Kapsin, 265 B.R. 778, 780 

(Bankr. N.D. Ohio 2001) (citation omitted). “Courts have long held that avoidance of a judicial 

lien falls within the ambit of ‘cause’ to reopen a case, because it presents the potential for relief 

to the debtor.” In re Oglesby, 519 B.R. 699, 703 (Bankr. N.D. Ohio 2014) (citations omitted). 

This does not mean that all motions to reopen to avoid liens should be granted. In re Tarkington, 

301 B.R. 502, 506 (Bankr. E.D. Tenn. 2003). The Tarkington court recognized that “the 

appropriate inquiry is ‘whether the delay associated with the reopening of the case is 

accompanied by a demonstration of prejudice to the creditor as a result of the debtor's conduct.’” 

Id. at 507 (quoting In re Frasier, 294 B.R. 362, 367 (Bankr. D. Colo. 2003)).

While the affected creditors did not object to the debtor’s motion to reopen, the 

bankruptcy court denied the motion. The bankruptcy court reasoned that the debtor and his 

attorney had knowledge of the judgment liens when the bankruptcy case was filed but did not 

seek to avoid the liens while the case was pending for strategic reasons. Noting that they waited 

more than three and one-half years after the case was closed, the court concluded that the debtor 

failed to illustrate cause to reopen the case. 

Neither 11 U.S.C. § 350(b) nor Federal Rule of Bankruptcy Procedure 5010 impose a 

limit on the time to file a motion to reopen, and the “[p]assage of time alone . . . does not 

necessarily constitute prejudice to a creditor sufficient to bar the reopening of a case.” In re 

Frasier, 294 B.R. 362, 367 (emphasis in original) (citations omitted). See also In re Bianucci, 

4 F.3d 526, 528 (7th Cir. 1993) (delay alone would not preclude reopening case, but delay 

combined with other factors would bar reopening case). The bankruptcy court did not find that 

any prejudice would result by reopening the case, or the existence of other factors which would 

bar reopening the case. Conversely, the debtor illustrated cause in that avoidance of the lien 

would provide him relief.
No. 15-8056 In re: John McCoy Page 7

VI. CONCLUSION

For the reasons stated, the bankruptcy court’s order denying the debtor’s motion to 

reopen his Chapter 7 case is REVERSED and the case is REMANDED with instructions to the 

bankruptcy court to permit the case to be reopened.