Court Opinion

ID: 2971962
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:42:29.690788+00
Date Added: 2024-06-11T11:43:38.753458
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                            File Name: 05a0090n.06
                            Filed: February 4, 2005

                                           No. 03-2519

                           UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT

In re: RANDY WAYNE DOWDING,                      )
                                                 )
       Debtor.                                   )
                                                 )
____________________________                     )
                                                 )
RANDY WAYNE DOWDING,                             )    ON APPEAL FROM THE UNITED
                                                 )    STATES DISTRICT COURT FOR THE
       Debtor-Appellant,                         )    EASTERN DISTRICT OF MICHIGAN
                                                 )
v.                                               )
                                                 )
OPEN TERRACE ASSOCIATES, LLC,                    )
                                                 )
       Creditor-Appellee.                        )

       Before: NELSON and SUTTON, Circuit Judges; WELLS, District Judge.*

       SUTTON, Circuit Judge. Randy Dowding challenges the bankruptcy court’s order to lift the

automatic stay in his Chapter 11 proceeding and to permit Open Terrace Associates to enforce

ownership interests in two properties. Because Open Terrace was a secured creditor at the time

Dowding filed his bankruptcy petition and because Dowding did not redeem the properties post-

filing, we affirm.

       *
         The Honorable Lesley Wells, United States District Judge for the Northern District of Ohio,
sitting by designation.
No. 03-2519
In re Dowding

                                                  I.

       This bankruptcy dispute stems from a judgment for $76,715.07 that Open Terrace obtained

on August 7, 2000, against Randy Dowding in Michigan state court, due to Dowding’s breach of a

commercial lease. See Open Terrace Associates, LLC v. Dowding, No. 00-05099-CK. On February

16, 2001, pursuant to a writ of execution issued by the Michigan state court in connection with the

judgment, Open Terrace levied upon two of Dowding’s pieces of property located in Jackson

County, Michigan. Open Terrace recorded these notices in March of 2001.

       On July 25, 2001, once again pursuant to the writ of execution, Jackson County’s Deputy

Sheriff sold the properties at auction, both of them to Open Terrace as the high bidder. Open

Terrace then recorded the sales with the County on August 16, 2001. According to Michigan law

and the recorded sales certificates, the parties agree, the sheriff’s sale was to become absolute and

Open Terrace was entitled to a deed of conveyance on September 25, 2002, unless the debtor

subsequently redeemed the properties. See Mich. Comp. Laws § 600.6062.

       One day prior to the expiration of the redemption period (on September 24, 2002), Dowding

filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. As a result of the

filing, Dowding gained a 60-day extended time period to redeem the properties. See 11 U.S.C.

§ 108(b) (“[I]f applicable nonbankruptcy law, an order entered in a nonbankruptcy proceeding, or

an agreement fixes a period within which the debtor . . . [may] cure a default, or perform any other

similar act, and such period has not expired before the date of the filing of the petition, the trustee

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No. 03-2519
In re Dowding

may only . . . cure, or perform, as the case may be, before the later of—(1) the end of such period,

including any suspension of such period occurring on or after the commencement of the case; or (2)

60 days after the order for relief.”).

        Shortly after the additional 60 days elapsed (on November 25, 2002), Open Terrace (on

November 27, 2002) filed a motion for relief from the automatic stay, arguing that Dowding no

longer maintained an interest in the properties after failing to redeem them during the statutory

period. Dowding responded that Open Terrace was an unsecured creditor. The bankruptcy court

granted Open Terrace’s motion on January 22, 2003. Dowding appealed to the district court, which

affirmed on October 4, 2003. He now appeals to us.

                                                 II.

        The Bankruptcy Code requires a bankruptcy court, “[o]n request of a party in interest and

after notice and a hearing,” to grant relief from the automatic stay “for cause, including the lack of

adequate protection of an interest in property of such party in interest” or if “the debtor does not

have an equity in [the] property.” 11 U.S.C. § 362(d)(1)–(2). Applying these principles to this case,

the bankruptcy court correctly concluded that Open Terrace would not receive adequate protection

without relief from the automatic stay, see 11 U.S.C. § 361; and that, at any rate, Dowding’s interest

in the two properties at issue had been extinguished when he failed to redeem them during the 60-

day extended period granted by the filing of his bankruptcy petition, see 11 U.S.C. § 108(b); In re

Glenn, 760 F.2d 1428, 1440 (6th Cir. 1985).

                                                -3-
No. 03-2519
In re Dowding

        Dowding’s arguments to the contrary are unavailing. Dowding first claims that Open

Terrace cannot get relief from the automatic stay because it was not a secured creditor. Not so. The

Bankruptcy Code defines the term “lien” as a “charge against or interest in property to secure

payment of a debt or performance of an obligation,” and recognizes a “judicial lien” as a variety of

“lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding.”

11 U.S.C. § 101(36)–(37); see also 11 U.S.C. § 506(a) (“An allowed claim of a creditor secured by

a lien on property in which the estate has an interest . . . is a secured claim to the extent of the value

of such creditor’s interest in the estate’s interest in such property.”). Open Terrace acquired and

recorded its liens against the Jackson County property in March of 2001, thus becoming a secured

creditor well before Dowding’s bankruptcy filing. See George v. Sandor M. Gelman, P.C., 506
N.W.2d 583, 585 (Mich. Ct. App. 1993).

        This analysis also goes a long way to refuting Dowding’s second argument. Dowding argues

that permitting Open Terrace to enforce its property interests would violate the preference provisions

in 11 U.S.C. § 547(b). Also not so. To the extent any property was transferred prior to the petition,

that transfer occurred at the time of the liens, over a year before the filing of Dowding’s bankruptcy

petition. See, e.g., In re Girard, 57 B.R. 66, 72 (E.D. Mich. Bankr. 1985) (“[T]he material transfers

occurred when the tax liens were recorded, more than 90 days before the debtor’s bankruptcy

petition was filed.”). To the extent Dowding believes that Open Terrace’s post-petition enforcement

of its property rights counts as a preferential “transfer,” he is wrong. Section 547(b) applies only

to “transfer[s] of [ ] interest” that a debtor makes “on or within 90 days before the date of the filing

                                                  -4-
No. 03-2519
In re Dowding

of the petition” or, for insider creditors, “between ninety days and one year before the date of the

filing of the petition.” 11 U.S.C. § 547(b) (emphasis added). On its face, the provision simply has

no relevance when a secured creditor enforces its property rights after the filing of the petition.

                                                 III.

       For these reasons, we affirm.

                                                -5-