Court Opinion

ID: 18458
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:14:39+00
Date Added: 2024-06-11T15:04:39.762598
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                               FOR THE FIFTH CIRCUIT

                                        No. 98-60711
                                      Summary Calendar

In the Matter Of:               N. HANEY HUDSON
                                                                                          Debtor.

N. HANEY HUDSON,

                                                                                      Appellant,

                                               versus

H. ALEX SHIELDS, JR.,

                                                                                           Appellee.

                            Appeal from the United States District Court
                              for the Southern District of Mississippi
                                    USDC No. 4:98-CV-85-LN

                                           August 3, 1999

Before EMILIO M. GARZA, BENAVIDES, and STEWART, Circuit Judges.

PER CURIAM:*

          Plaintiff-Appellant N. Haney Hudson appeals the district court’s September 18, 1998 order

dismissing his Chapter 11 bankruptcy petition. After a thorough review of the record and briefs, we

affirm.

                             FACTUAL AND PROCEDURAL BACKGROUND

          In 1989, Defendant-Appellee H. Alex Shields (“Shields”) agreed to sell 148 acres to the

          *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

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Debtor N. Haney Hudson (“Hudson”) for the sum of $350,000.00. Shields personally financed the

sale to Hudson who, in turn, executed a deed of trust in favor of Shields for the full amount of the

indebtedness. The deed of trust was duly filed in the land records office of the Chancery Court of

Clarke County, Mississippi, on May 15, 1989. On July 2, 1990, Hudson sought relief from his debts

pursuant to Chapter 11 of the United States Bankruptcy code. A subsequent addendum to Hudson’s

plan reorganization required him to make payments to Shields. Hudson’s failure to make payment

led Shields to conduct a foreclosure sale of Hudson’s property on July 31, 1991. Hudson was

successful in preventing the foreclosure on the property.

       Since then, the parties have been involved in a protracted legal dispute in which Shields has

primarily sought to foreclose on the property and collect on the debt Hudson owes him. On July 14,

1997, Hudson filed a motion in the bankruptcy court to lift an order which was holding various

motions in abeyance pending the resolution of all issues in state court. The bankruptcy court granted

this motion on July 25, 1997. On March 4, 1998, the bankruptcy court held a trial on Shields’s

motion to dismiss the chapter 11 claims or convert them to chapter 7 claims. The bankruptcy court

dismissed the chapter 11 claims in a May 8, 1998 order and the district court subsequently affirmed

in a September 18, 1998 order. Hudson now appeals.

                                      STANDARDS OF REVIEW

       We review a bankruptcy court's decision to dismiss a Chapter 11 petition for abuse of

discretion. See In re Elmwood Development Co., 964 F.2d 508, 509 (5th Cir. 1992). We review the

district court’s determinations of law de novo. See In re Martin, 880 F.2d 857, 858 (5th Cir. 1989).

                                             DISCUSSION

       Hudson endeavors to bring a plethora of issues before this court yet it is clear from the record

that resolution of this case requires us to address a sole issue: whether the district court abused its

discret ion in affirming the dismissal of Hudson’s chapter 11 case. After a thorough review of the

record, the briefs and the applicable law, we agree with the district court and affirm.

       It is beyond dispute that Hudson has failed to make any plan payments to creditors, as

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required by 11 U.S.C. § 1101 (2)(c) following the June 1991 confirmation of his plan. Hudson also

made only one plan payment to Shields in May 1991 as required by the addendum to his plan. Cause

for dismissal exists where, as here, (1) t he debtor exhibits an “inability to effectuate substantial

consumation of a confirmed plan;” and (2) the debtor is in material default with respect to a

confirmed plan. See 11 U.S.C. § 1112(b)(7)-(8). On this basis, we agree with the district court and

find no abuse of discretion.

          We further find that the court below properly dismissed this action rather than convert it into

a chapter 7 case. Hudson’s sparse assets which are already encumbered cannot convey any benefit

to the estate or any creditors; therefore, there was no basis for conversion. Finding no error, we

affirm.

                                              CONCLUSION

          We agree with the district court and adopt its reasoning as our own. AFFIRMED.

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