Court Opinion

ID: 2963829
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:15:49.201534+00
Date Added: 2024-06-11T11:21:32.784295
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                 ____________________
        No. 95-1074

                           FISH MARKET NOMINEE CORPORATION,

                                      Appellant,

                                          v.

                                    JOEL PELOFSKY,
                                UNITED STATES TRUSTEE,

                                      Appellee.
                                 ____________________
        No. 95-1483

                           FISH MARKET NOMINEE CORPORATION,

                                      Appellant,

                                          v.

                                G.A.A., INC., ET AL.,

                                      Appellees.
                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                       [Hon. Rya W. Zobel, U.S. District Judge]
                                           ___________________

                    [Hon. Richard G. Stearns, U.S. District Judge]
                                              ___________________
                                 ____________________

                                        Before

                                  Cyr, Circuit Judge,
                                       _____________

                             Bownes, Senior Circuit Judge,
                                     ____________________

                              and Boudin, Circuit Judge.
                                          _____________
                                 ____________________

            Stephen F. Gordon with  whom Peter J. Haley and Gordon & Wise were
            _________________            ______________     _____________
        on briefs for appellant.
            Eric  K.  Bradford,  Office  of  the  United  States  Trustee, for
            __________________
        appellee Joel Pelofsky, United States Trustee.

            Douglas R. Gooding with whom Charles L. Glerum and Choate, Hall  &
            __________________           _________________     _______________
        Stewart  were on  consolidated  brief for  appellees  G.A.A., Inc  and
        _______
        H.N.R.G., Inc.

                                 ____________________

                                  December 22, 1995
                                 ____________________

         

                 BOUDIN, Circuit Judge.   Appellant  Fish Market  Nominee
                         _____________

            Corp.  ("Fish  Market") was  the  owner  of an  entertainment

            complex in Baltimore's Inner Harbor area which closed in June

            1989.  Fish  Market failed to  pay real estate taxes  for the

            years 1989-90 and  1990-91.  The property  was sold at  a tax

            sale on May 13, 1991, and, through a subsequent purchase from

            the tax sale buyer, appellees G.A.A., Inc. and H.N.R.G., Inc.

            eventually acquired non-possessory tax title to the property,

            subject to Fish Market's right of redemption.

                 On December 7,  1993, GAA and  HNRG obtained an  amended

            order  of redemption  from the  Baltimore City  Circuit Court

            requiring Fish Market to pay  $1,056,852.79 within 30 days or

            lose  its  right of  redemption.   On  January 6,  1994, Fish

            Market filed for protection  from its creditors under chapter

            11  of the  bankruptcy  code,  11  U.S.C.     1101  et  seq.,
                                                                ________

            forestalling under the automatic  stay provision (11 U.S.C.  

            362(a))  any further action by GAA and HNRG to foreclose Fish

            Market's redemption rights.

                 After an initial meeting of creditors,  11 U.S.C.   341,

            the United States  Trustee, also an appellee here,  filed for

            dismissal  or (alternatively)  conversion  of the  case to  a

            liquidation  under  chapter  7.   Following  a  hearing,  the

            bankruptcy judge  granted the motion  to dismiss the  case on

            March  31, 1994, noting that Fish Market had no employees, no

            ongoing  business operations,  no income,  and no  cash; that

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            there was no indication  of any agreement for  new financing;

            and that the debtor was  unable to pay the property  taxes on

            the property and had left the property uninsured.

                 Upon dismissal by the bankruptcy court, Fish Market made

            an  oral  motion   for  a  stay  pending   appeal  which  was

            immediately  denied  by  the  bankruptcy judge.    That  same

            afternoon,  GAA and  HNRG  obtained from  the Baltimore  City

            Circuit Court final  decrees terminating Fish Market's  right

            of redemption.  GAA and HNRG paid just  over $1.4 million for

            the  property.   Thereafter,  it was  resold  to the  City of

            Baltimore for $1.7 million.

                 On  April  7,  1994,  Fish  Market  began  an  adversary

            proceeding in the bankruptcy court under 11 U.S.C.    362(h).

            It sought damages and  a temporary restraining order vacating

            the  final decree  of  the Baltimore  City Circuit  Court and

            preventing GAA and  HNRG from taking further action to obtain

            possession  of the property;  the premise was  that the state

            proceedings  had  violated  the  automatic  stay  of  section

            362(a).     The   bankruptcy  court   denied   the  temporary

            restraining  order on  April 15  and dismissed  the adversary

            proceeding on June 20, 1994.  

                 Fish  Market then  pursued two  separate appeals  in the

            district court.   The first appeal  challenged the bankruptcy

            court's dismissal  of the chapter  11 case;  this appeal  was

            dismissed as moot on the motion of GAA and HNRG.   The second

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            appeal challenged the dismissal  of the April 7  complaint in

            the adversary  proceeding;  the district  court affirmed  the

            order  of  the  bankruptcy  court.   Fish  Market  separately

            appealed both district court orders.  We consolidated the two

            appeals and now affirm.   

                 Appeal  from the Dismissal of  the Chapter 11  Case.  We
                 ____________________________________________________

            consider first  whether Fish  Market's chapter  11 proceeding

            was properly  terminated.  Section 1112(b)  of the Bankruptcy

            Code,  11 U.S.C.     1112(b), provides  that  a case  may  be

            dismissed or converted  to chapter 7  for cause; Fish  Market

            poses  no challenge  to  the bankruptcy  court's findings  of

            fact, which amply justified the termination of the chapter 11

            proceeding.

                 Fish  Market nevertheless  insists the  bankruptcy court

            erred  by failing to explain its decision to dismiss the case

            rather  than to convert it  to a liquidation proceeding under

            chapter 7.  Citing In re Superior Siding and Window, Inc., 14
                               ______________________________________

            F.3d  240,  242  (4th Cir.  1994),  Fish  Market  argues that

            conversion  is  a separate  choice  that  must be  explicitly

            considered  by the bankruptcy court.  The short answer to the

            argument is that Fish Market waived it by failing to raise it

            in  the  bankruptcy  court.    In  re  Mark  Bell   Furniture
                                           ______________________________

            Warehouse, Inc., 992 F.2d 7, 9 (1st Cir. 1993).  
            _______________

                 The district court granted appellee's motion to  dismiss

            Fish  Market's  appeal on  mootness  grounds without  further

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            explanation.  Apparently, the district court thought that the

            transfer  of the  property meant  that  there was  nothing of

            substance left  in the estate.   It  could be argued  that so

            long as the appeal in the adversary proceeding remained open,

            Fish  Market   retained  some   hope,  however  forlorn,   of

            recovering its right of  redemption.  We need not  pursue the

            mootness issue  further, preferring  to affirm on  the merits

            the bankruptcy court's dismissal of the chapter 11 case.

                 Appeal  from the Dismissal  of the Adversary Proceeding.
                 ________________________________________________________

            In  the adversary  proceeding,  Fish Market  argued that  the

            state court proceedings to  foreclose its right of redemption

            were  independently   unlawful  because  they   violated  the

            automatic stay of 11  U.S.C.  362(a), as extended by  Fed. R.

            Civ. P. 62(a)  for 10 days after dismissal of  the chapter 11

            case.   This  alleged violation,  Fish Market  argues, should

            entitle it at  least to damages,  if not to  a return of  its

            interest  in  the property  by  reestablishing  its right  of

            redemption.  

                 It  is common  ground  that state  court proceedings  to

            foreclose  a right of redemption are barred during the period

            while  the  automatic stay  is  in  effect.   Section  362(a)

            protects the estate of the debtor from adverse claims  unless

            the  court lifts  the stay  in particular  instances, see  11
                                                                  ___

            U.S.C.    362(d), or unless such  claims fall within codified

            exceptions  not applicable here.   But the stay under section

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            362(a) itself expired as soon as  the judgment dismissing the

            chapter  11 case  was entered, 11  U.S.C.   362(c);  In re De
                                                                 ________

            Jesus Saez, 721 F.2d 848, 851 (1st Cir. 1983), unless Fed. R.
            __________

            Civ. P. 62  operated to extend  the stay, a question  we have

            never decided.

                 Excepting  injunctions,  receivership actions,  and some

            accountings,  Rule 62(a)  provides that  "no execution  shall

            issue  upon a judgment nor shall proceedings be taken for its

            enforcement until the expiration of 10 days after its entry."

            The  rule primarily serves to  give one against  whom a money

            judgment is entered time  to post a supersedeas bond  to stay

            enforcement  of that judgment pending appeal.  It is clear in

            this  case that no action by the appellees was an "execution"

            on  the  judgment of  dismissal.1    The only  question  that

            remains  is  whether   GAA's  and   HNRG's  commencement   of

            proceedings in  state court to terminate  Fish Market's right

            of redemption  constituted "enforcement" of  the judgment  of

            dismissal.  

                 Contrary to Fish Market's  position, Rule 62(a) does not

            purport  to make  a judgment  ineffective  for 10  days after

            entry; on the  contrary, the judgment retains  full force and

            effect for other purposes--e.g.,  res judicata.  Instead Rule
                                       ____   ____________

            62(a) merely  stays proceedings to enforce  the judgment, for
                                               _______

                                
            ____________________

                 1"Execution"  refers  to  process issued  to  enforce  a
            judgment--for  example,  an order  to  the  marshal to  seize
            assets to pay such a judgment.  Fed. R. Civ. P. 69.

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            example, discovery  to determine  the location of  a judgment

            debtor's  property available  to satisfy  the judgment.   Cf.
                                                                      ___

            Huron Holding Corp.  v. Lincoln Mine Operating  Co., 312 U.S.
            ___________________     ___________________________

            183, 189  (1941)  (noting  that  although  supersedeas  stays

            execution it does  not impair the finality  of the judgment).

            We hold that a state court proceeding to foreclose a right of

            redemption is  not "enforcement"  of a judgment  dismissing a

            chapter 11 case.2        To  conclude,  the dismissal  of the

            chapter 11 proceeding was a proper disposition on the present

            record.  As  for the adversary  proceeding, we conclude  that

            Fed.  R.  Civ. P.  62(a)  does  not  extend section  362(a)'s

            automatic  stay  for  10 days  after  a  chapter  11 case  is

            dismissed,  resolving the issue left  open by In  re De Jesus
                                                          _______________

            Saez, 721 F.2d 848.  
            ____

                 Accordingly, the  decision of the district  court in No.

            95-1483 is affirmed;  the decision of  the district court  in
                       ________

            No. 95-1074 is modified to affirm the bankruptcy court on the
                           ________

            merits and, as modified, is affirmed. 
                                        ________

                                
            ____________________

                 2Accord  In re  Whatley, 155  B.R. 775 (Bankr.  D. Colo.
                  ______  ______________
            1993),  aff'd, 169 B.R. 698  (D. Colo. 1994),  aff'd, 54 F.3d
                    _____                                  _____
            788 (10th Cir. 1995); In re Weston, 101 B.R. 202 (Bankr. E.D.
                                  ____________
            Cal.  1989), aff'd 123 B.R. 466 (9th Cir. B.A.P. 1991), aff'd
                         _____                                      _____
            967  F.2d 596 (9th Cir.  1992), cert. denied,  113 S. Ct. 973
                                            ____________
            (1993).

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