Source: http://openjurist.org/464/f3d/263/harris
Timestamp: 2015-09-04 21:20:06
Document Index: 334419205

Matched Legal Cases: ['§ 1301', '§ 1301', '§ 547', '§ 547', '§ 547', '§ 548', '§ 548', '§ 548', '§ 548', '§ 548', '§ 1307', '§ 1307']

464 F3d 263 Harris | OpenJurist
464 F. 3d 263 - Harris Home
464 F3d 263 Harris 464 F.3d 263
In re Robert E. HARRIS, Debtor,Robert E. Harris, Appellant,Albany County Office, Appellee,Mark Swimelar, Trustee.
Docket No. 04-2164-BK(L).
Docket No. 04-3652-BK(CON).
Argued: May 12, 2006.
Robert E. Harris, Albany, NY, pro se.
Tonia L. Summers, Assistant County Attorney (Michael C. Lynch, County Attorney on the brief), Albany, NY, submitted a brief for Appellee.
Debtor-appellant Robert E. Harris appeals from a judgment of the United States District Court for the Northern District of New York (Sharpe, J.), dated June 14, 2004, dismissing debtor's appeal from orders of the Bankruptcy Court for the Northern District of New York (Littlefield, B.J.), dated July 21, 2003 and October 15, 2003, for failure to include in the designation of record on appeal the transcript of a June 23, 2003 bankruptcy hearing as required by Federal Rules of Bankruptcy Procedure 8001 ("Rule 8001") and 8006 ("Rule 8006"). Harris also appeals the district court's denial of his motion for reconsideration of the June 14, 2004 dismissal order. We hold that the district court abused its discretion under Rule 8001 when it dismissed debtor's case for failure to include the June 23 transcript in the designation of record without first giving debtor notice and opportunity to respond and without determining whether a lesser sanction would have been appropriate. The judgment of the district court is VACATED, and the case REMANDED for proceedings not inconsistent with this opinion.
Debtor owned commercial rental properties at 323 State Street ("323 State Street") and 38 South Main Avenue ("38 South Main") (collectively, "the Properties") in Albany, New York. Because Harris fell behind in his property tax payments on the Properties in the 1990s, the County of Albany (the "County") brought a tax foreclosure action against him in 1997 in County Court and obtained final judgment in its favor on December 26, 2000. The County soon thereafter executed and recorded the deeds to the Properties. Harris appealed the foreclosure judgment and, on April 17, 2001, the Albany County Court amended its December 2000 judgment nunc pro tunc to indicate that the deeds conveyed to the County full and complete title to both Properties.
On January 24, 2001, Harris filed a voluntary bankruptcy petition pursuant to Chapter 13 of the United States Bankruptcy Code, 11 U.S.C. §§ 1301-1330, in which he included his ownership interests in 323 State Street and 38 South Main. Upon the filing of this petition, Harris obtained an automatic stay of all federal and state proceedings against the bankruptcy estate, including the Properties. See 11 U.S.C. § 1301(a). A trustee for the estate, Mark Swimelar, was then appointed.
The County responded to the bankruptcy petition by moving to lift the stay on the two foreclosed Properties. On September 24, 2002, the bankruptcy court granted the County's motion, concluding that the two Properties were not part of the bankruptcy estate and hence not subject to the automatic stay. Harris then appealed the decision of the bankruptcy court to the district court for the Northern District of New York (Hurd, J.) on the grounds that because the foreclosure action was a preferential or fraudulent transfer under 11 U.S.C. §§ 547 and 548, the bankruptcy court erred in lifting the stay concerning both Properties. In a November 8, 2002 decision, Judge Hurd reversed the lower court's decision, holding that it had erred by not considering whether the foreclosure action was a preferential or fraudulent transfer under §§ 547 and 548 and entered a stay pending the lower court's decision on the transfer issue.
On remand, the bankruptcy court held that Harris had abandoned his § 547 claim because he had not addressed it in his brief and that, in any event, it was meritless because, under Chapter 7, a secured creditor like the County would have received 100 percent of its claim.
The bankruptcy court then considered Harris's claim that the tax foreclosure was fraudulent because Harris received less than the "reasonably equivalent value" for the properties under 11 U.S.C. § 548, which states in pertinent part that:
[t]he trustee may avoid any transfer . . . of an interest of the debtor in property . . . incurred by the debtor, that was made or incurred on or within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily . . . received less than a reasonably equivalent value in exchange for such transfer or obligation; and . . . was insolvent on the date that such transfer was made.
11 U.S.C. § 548(a)(1)(B). The County argued that a tax foreclosure action should be considered a "reasonably equivalent value" under the statute because of the Supreme Court's decision in BFP v. Resolution Trust Co., 511 U.S. 531, 114 S.Ct. 1757, 128 L.Ed.2d 556 (1994), which held that the "reasonably equivalent value" of a foreclosed property is the price received at the foreclosure auction so long as the state's foreclosure requirements are met. Id. at 545-46. Harris, on the other hand, maintained that a tax foreclosure without a public sale could not be considered similar to the foreclosure auction at issue in BFP, and that the transfer was fraudulent because he had received less than the reasonably equivalent value of the Properties.
In its March 11, 2003 decision, the bankruptcy court agreed with Harris's view of § 548, noting that BFP did not extend to "strict tax foreclosure proceedings [like Harris's] where property is transferred with little judicial oversight and without competitive bidding and a public sale." Indeed, the amount of a property owner's tax debt, the court noted, bears no relationship to the value of the property confiscated without public sale. The court observed, however, that based on the property values as stated in debtor's bankruptcy petition, the "taxes exceeded the Debtor's Schedule A value of 38 South Main Street by over 20% and of 323 State Street by almost 50%."1 The court gave both Harris and the County the opportunity to file documents that would prove amounts or values other than those stated in record.
While Harris did file appraisals of the Properties pursuant to the bankruptcy court's order, it does not appear that the County ever filed any documentation regarding the § 548 claim despite having obtained an extension of time from the bankruptcy court to do so. In subsequent submissions, the County ignored the § 548 issues and instead objected to Harris's proposed reorganization plan, required under the bankruptcy statutes for providing payments to creditors. The County asserted that Harris had not submitted all of the schedules for his expenses and that the proposed plan — then the seventh one he had submitted-was not feasible because, inter alia, it listed no living expenses other than $109 per month for food and failed to include the payment of post-petition property taxes.
On May 29, 2003, the United States Trustee moved to dismiss the voluntary bankruptcy petition pursuant to 11 U.S.C. § 1307(c) on the grounds that Harris had failed to make timely payments on his reorganization plan and that his unreasonable delay was prejudicial to creditors. Section 1307(c) provides in pertinent part that "on request of a party in interest or the United States trustee and after notice and a hearing, the court . . . may dismiss a case under this chapter . . . for cause, including . . . unreasonable delay by the debtor that is prejudicial to creditors." 11 U.S.C. § 1307(c)(1).
On June 23, 2003, the bankruptcy court held a hearing on the Trustee's motion to dismiss. Present at the hearing were the County, the Trustee, Harris and counsel for several of Harris's other creditors. At the beginning of the hearing, the bankruptcy court inquired into whether Harris was current with his tax filings, as it had asked at the last hearing. Harris responded that the tax filings were not complete. The Court noted that these failures betrayed a lack of seriousness on Harris's part to carry out his duties under the bankruptcy laws and merely evinced his intent to delay.
Harris objected to the court's characterization of the proceedings on the ground that the first issue to be decided was ownership of the Properties and that after that issue was decided, he could take care o