Opinion ID: 3010961
Heading Depth: 2
Heading Rank: 1

Heading: Form of Proceedings

Text: Manus argues that the debtor should have sought the relief requested in the Application by way of an adversary proceeding, commenced by a complaint, pursuant to Bankruptcy Rule 7001.4 Appellees counter, and the Bankruptcy Court and the District Court agreed, that proceeding by way of motion, as opposed to a separate adversary proceeding, was in accordance with the Bankruptcy Rules. We agree with the reasoning of the Bankruptcy Court and District Court on this issue and will affirm this aspect of the District Court's order. ___________________________________________________ 4. Bankruptcy Rule 7001 states, in pertinent part, the following: An adversary proceeding ... is a proceeding ... (2) to determine the validity, priority, or extent of a lien or other interest in property, other than a proceeding under Rule 4003(d), ... (7) to obtain an injunction or other equitable relief, ... [or] (9) to obtain a declaratory judgment relating to any of the foregoing. ___________________________________________________ The parties agree that the Federal Rules of Bankruptcy Procedure do not explicitly prescribe a procedure for establishing cure claim amounts payable upon the assumption of executory contracts. They also agree that case law concerning this issue is lacking. Appellant argues that the Application sought both declaratory and injunctive relief concerning the debtor's relationship with Manus and thus requires an adversary proceeding under Rule 7001(7) and (9). Appellant also argues that the purpose and effect of the Application was to determine the extent of Manus's interest in the Gas Purchase Agreement and thus falls under Rule 7001(2). We do not agree with Manus that the relief sought in the Application falls under the auspices of Rule 7001. We do not read the Application as seeking to determine the validity, priority, or extent of a lien or other interest in property, since the contract had already been assumed and thus, there was no property at issue. Further, we do not view the relief as equitable in nature, since the basic relief sought by the Application was not classic equitable relief, such as specific performance, but was the establishment of reserves and cure amounts. See In re Robertson, 206 B.R. 826, 829 (Bankr.E.D.Va.1996) (determining that request for dismissal of bankruptcy proceedings was properly made by motion, and was not equitable relief, by looking at the essence of the basic relief sought). While many court orders in bankruptcy proceedings could arguably be considered as providing equitable relief, we do not believe that this means that every filing seeks equitable relief as referenced in Rule 7001(7), as appellant suggests. See In re Vance, 120 B.R. 181, 191-92 (Bankr.N.D.Ok.1990) (stating that the distinction between an order and an injunction is often unclear and a matter of degree; holding that debtor's request to compel the trustee to conclude the creditor's meeting was not equitable relief). The reading of Rule 7001(7) appellant urges would render meaningless other rules that require certain requests to the court to be made by motion and application, contrary to general principles of statutory interpretation. The Court of Appeals for the Tenth Circuit came to a similar conclusion in State Bank v. Gledhill (In re Gledhill), 76 F.3d 1070, 1078 (10th Cir.1996), where it applied principles of statutory construction to reject a broad interpretation of Rule 7001(7),finding that such an interpretation would negate the specific provision for making certain requests by motion in Rule 60(b). The court in In re Gledhill held, therefore, that a request to vacate relief from an automatic stay, even though such a request invoked equity powers to revive a stay, was properly made by motion. Id. We find appellees' argument that this situation is governed by Rules 6006 and 9014 to be a more logical and practical application of the Bankruptcy Rules. Rule 6006(a) states that [a] proceeding to assume, reject, or assign an executory contract or unexpired lease, other than as part of a plan, is governed by Rule 9014. Bankruptcy Rule 9014 states, in pertinent part, the following: In a contested matter in a case under the Code not otherwise governed by these rules, relief shall be requested by motion, and reasonable notice and opportunity for hearing shall be afforded the party against whom relief is sought. Technically, the setting of cure claim amounts is not otherwise governed by the Bankruptcy Rules, and thus falls under the auspices of Rule 9014. Further, as stated by the District Court, determining the amount necessary to cure existing defaults is necessarily related to the assumption or rejection of executory contracts. We conclude that, viewing Rules 6006 and 9014 together, the Rules anticipate that this type of issue would be resolved by motion practice. We view Rules 6006 and 9014 as suited to the instant situation and as providing a betterfit than the procedural characterization urged by appellant. Aside from the Rules discussed herein, Manus has not referred us to any authority stating that the setting of cure claim amounts may not proceed by motion and must proceed by way of complaint as an adversary proceeding. Manus has not convinced us that a party must commence an adversary proceeding to set cure claim amounts. We hold, therefore, that proceeding by motion in these circumstances was proper.5 _________________________________________________________ 5. Although the parties did not raise this point, we note that O'Brien actually sought to set the cure claim amounts by neither adversary proceeding nor a motion as such, but by application. There is no definition of application in the current Bankruptcy Rules despite its repeated use in the Rules. Prior to the 1983 amendments, however, the Bankruptcy Rules contained a definition of application, which included any request to the court for relief that is not a pleading or a proof of claim. Bankr.R. 901(4). The Advisory Committee explained that an application was appropriate [w]hen the bankrupt or trustee or other party seeks an order involving no adverse party. Advisory Committee Note to former Bankr.R. 901(4). The current Bankruptcy Rules do not appear to have disturbed this meaning and usage. The Rules generally require a motion when notice to an opposing party is necessary, and only allow an application if no such notice is required. See 6 Norton Bankr.Law & Practice 2d § 138:14 (West 1999). For example, the current rules allow a party to file an application for permission to pay a filing fee in installments, Bankruptcy Rule 1006, for an order of employment, Bankruptcy Rule 2014, and for a party seeking compensation or reimbursement for services rendered, Bankruptcy Rule 2016 _________________________________________________________