Redmond v. Fifth Third Bank, f/k/a Pinnacle Bank

Summarized by John Eggum , Foran Glennon Palandech Ponzi & Rudloff
15 years 4 months ago

Citation:

(7th Circuit, Dec 31,1969)

Tag(s):

7th Circuit

Ruling:

In Redmond, the Seventh Circuit affirmed the denial of a motion to reopen that was filed by the Debtor four years after his chapter 13 case was closed, and three weeks before the trial date set for the Debtor's state law foreclosure case. Citing In re Bianucci, 4 F.3d 526 (7th Cir. 1993), the Court of Appeals noted that motions to reopen are within the broad discretion of the bankruptcy court, and remarked on several non-exclusive factors that a court may consider, including: (1) the length of time the case has been closed, (2) whether the movant would be entitled to relief if the case were reopened; (3) whether another court of competent jurisdiction was available to handle the movant's claims/allegations; (4) whether unanticipated events frustrated the provisions of a confirmed plan, and (5) the need to enforce the plan and discharge. In re Zurn, 290 F.3d 861 (7th Cir. 2002); In re Antonious, 373 B.R. 400 (Bankr. E.D. Pa. 2004). Notably, the court stated that although the passage of time weighs heavily against reopening, the passage of time in itself does not constitute prejudice to the party opposing the motion. However, the passage of time may be prejudicial when combined with other factors such as court costs and attorney's fees in another proceeding. Under the circumstances, the court found numerous reasons to affirm. The Debtor's allegations of a violation of the automatic stay and violations of various court orders had been determined by the bankruptcy judge to be without substantive merit, the timing of the motion "strongly" suggested that it was filed as a stalling tactic, and, given the lack of merit of the stay-related claims, any plausible claims that remained could be adjudicated in state court.

Procedural context:

Appeal following district court's order affirming the bankruptcy court's denial of Debtor's "Motion for Leave to File Motion to Enforce Debtor's Chapter 13 Plan and This Court's Agreed Order of 6/25/1999, and Motion to Reopen Chapter 13 Case - to Stay Pending State Court Action," filed as docket number 111 in case 96-03162.

Facts:

James Redmond, the Debtor, initially defaulted on his home mortgage in early 1996. He then filed a chapter 13 case to repay the arrearages due to his lender, Pinnacle Bank (now Fifth Third Bank). An "Agreed Order" was thereafter entered, which stayed the pending foreclosure proceeding and required the Debtor to make regular monthly payments through April 1, 1998, when a balloon payment would come due. Redmond sought to refinance the mortgage prior to the time the balloon payment was due, but a dispute arose regarding the payoff amount of the loan. This resulted in the filing of a second foreclosure proceeding (which was not in violation of the stay because of a provision of the Agreed Order). Redmond completed his chapter 13 plan and received a discharge in May of 1999. The dispute over the payoff letter, however, continued to be litigated in Illinois state court for seven years. A trial date was then set for July 18, 2005. Redmond's motion to reopen was filed June 30, 2005 -- four years, one month, and six days after his bankruptcy case was closed. The motion was denied and Debtor appealed. The district court reversed and remanded with instructions. The bankruptcy denied the motion a second time, Debtor appealed, and the district court affirmed. This appeal followed.

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