Breen v. Buttman (a.k.a. Guttman); In Re: John S. and Teresa J. Breen (U.S.D.C. Md.) (Not Approved for Publication)

Filed May 8, 2007. Opinion by Judge Richard D. Bennett.

This case was an appeal from the Order of United States Bankruptcy Judge Robert A. Gordon denying a Motion to Reconsider filed by Appellant-Debtors John S. Breen and Theresa J. Breen ("Appellants").

The Appellants filed a chapter 7 bankruptcy on May 17, 2002. On August 28, 2002, an Order of Discharge was entered and the case was closed on September 15, 2005. In 2003, before the bankruptcy case was closed, Appellant John Breen filed a complaint against his former employer in the Circuit Court for Baltimore County (the "State Court Litigation") alleging numerous causes of action based in large part from the allegation that Mr. Breen was not paid the full value of commissions earned while working as a finance manager for a car dealership.

In response to a motion to dismiss by the defendants in the State Court Litigation, Appellants filed a motion to reopen their bankruptcy case, which was granted "for the limited purpose of permitting the Debtor(s) to determine the estate’s interest in the state court action..." The Bankruptcy Court also ordered that a trustee be appointed in the reopened case (the "Trustee").

On May 31, 2006, the Trustee sought the Bankruptcy Court's approval of a settlement that he reached with the defendants in the State Court Litigation. The Appellants objected to the proposed settlement on the grounds that "'[t]he Debtor, John Breen, has an individual interest, separate and distinct from the estate, in the State Litigation, to which the Trustee’s authority does not extend.'"

The Bankruptcy Court found "'[T]hat (a) but for the amount of $500, the causes of action set forth in the Complaint and Amended Complaint pending in the Circuit Court of Baltimore County, ... are property of the bankruptcy estate, (b) the Trustee has good and sufficient cause for settling the State Litigation ... and (c) John Breen (the "Debtor") is entitled to an exemption in the amount of $5,028.51.'"

The Appellants appealed two issues: "(a) Whether the Bankruptcy Court erred in exercising jurisdiction over debtor’s post-petition wages and other state law claims and by extending the Trustee's authority to administer non-estate property?;" and "(b) Whether the Bankruptcy court erred in concluding that claims based upon post-petition events, during debtor's post-petition employment, and giving rise to post-petition damages, are property of the Chapter 7 bankruptcy estate?"

In rejecting the Appellants' arguments, the Court found that (1) "the Bankruptcy Court possessed 'related to' jurisdiction over the State Court Litigation;" (2) "the Trustee possessed authority to pursue the settlement of the" State Court Litigation; (3) "the Bankruptcy Court provided the Appellants with a full and fair opportunity to present evidence establishing the existence and value of post-petition claims before approving the proposed settlement;" and (4) the Bankruptcy Court's factual findings were not clearly erroneous.

Orders of the United States Bankruptcy Judge Robert A. Gordon are AFFIRMED.

The full opinion is available in PDF format.

In re Michelle D. Tubman (U.S. Bankruptcy Ct., MD)

Filed March 26, 2007—Opinion by Judge Robert A. Gordon

Debtor, who had a Chapter 13 case dismissed within the preceding 1-year period, moved to extend the automatic stay in her current Chapter 13 case, after the expiration of the 30-day post-petition period. After an initial hearing, the Debtor filed a motion for declaratory judgment as to the extent of the termination of the stay under Section 362(c)(3)(A) and sought imposition of a stay under Section 105(a). A secured creditor, holder of a deed of trust on Debtor’s residence, objected to both motions, arguing that the automatic stay under Section 362(a) had expired in toto by operation of law. The Bankruptcy Court held that: (1) the automatic stay terminated by operation of law on the 30th day post-petition under Section 362(c)(3)(A), (2) an untimely filed motion cannot serve to reimpose the automatic stay under Section 362(c)(3)(B), (3) the termination of the stay under Section 362(c)(3)(A) was limited in scope and the stay, while terminating as to the Debtor, did not terminate as to property of the estate, and (4) the alternative relief requested by Debtor under Section 105(a) appeared unnecessary in light of the Court’s ruling.

The devision is available in PDF.