Opposition Brief — Brooks v. American General Financial Services Services, Inc. (No. 06-25)

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(2) FILED

AUG 7 - 2006

No. 06-25 =

IN THE

Supreme Court of the United States

JACKIE BROOKS,

Petitioner,

AMERICAN GENERAL FINANCIAL SERVICES, INC.,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE E1GHTH CIRCUIT

Cae ene nem —

Seeaanemeee

BRIEF IN OPPOSITION

BENJAMIN C. ACKERLY

Counsel of Record

TYLER P. BROWN

Hunton & WIiLuiams, LLP

Riverfront Plaza, East Tower

951 East Byrd Street

Richmond, Virginia 23219-4074

(804) 788-8200

Attorneys for Respondent

202658 ce

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

QUESTION PRESENTED

Whether Petitioner has presented compelling reasons for

this Court to review the decision of the U.S. Court of Appeals

for the Eighth Circuit, which affirmed the discretionary denial

by the bankruptcy court of Petitioner’s motions to reopen

his bankruptcy case?

CORPORATE DISCLOSURE STATEMENT

PURSUANT TO SUPREME COURT RULE 29.6

No publicly held company directly owns 10% or more

of the stock of Respondent, American General Financial

Services, Inc., formerly known as American General Finance,

Inc. However, Respondent is wholly owned by American

General Finance Corporation, which is wholly owned by

American General Finance, Inc., which is wholly owned by

American General Corporation, which is wholly owned by

American International Group, Inc., a publicly held company.

ill

TABLE OF CONTENTS

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Reasons for Denying the Petition ...............

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Reopen a Bankruptcy Case is Reviewed for

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Il. The Bankruptcy Court Properly Denied the

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A. Petitioner Has Not Complied with His

Bankruptcy Obligations ............

B. Reopening Petitioner’s Case Would

Have Been a Futile Exercise .........

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TABLE OF CITEDAUTHORITIES

Cases:

Arleaux v. Arleaux, 210 B.R. 148 (B.A.P. 8th Cir.

COPED. Noes ees KOKO ew eae CRE eee

Beezley v. California Land Title Co. (In re Beezley),

BUe 0.28 1493 COO IFES) ek eee ies

In re Bianucci, 4 F.3d 526 (7th Cir. 1993) ........

In re Carberry, 186 B.R. 401 (Bankr. E.D. Va. 1995)

ao. 2 SP BRS 8. o OOP DP BOSE OLA OO R CEES AS YS. Oe: Oe C8 Oe OR Se Se

Dworsky v. Canal Street Ltd. P’Ship (In re Canal

Street Ltd. P'ship), 269 B.R. 375 (B.A.P. 8th Cir.

EE a EER CLE

o- 62 8 £8 £8 8-4 6 4 6422 C9 Ot CO 6. e 6.84 86 478: CS O68 eo 8-8 Ee

In re Hardy, 209 B.R. 371 (Bankr. E.D. Va. 1997) ...

Internal Revenue Serv. v. Germaine (In re Germaine),

SZ BR. GIS BAP. SRC. 1993) Co eee

Menk v. Lapaglia (In re Menk), 241 B.R. 896 (B.A.P.

SE ooo a ae hee ee eer ee

In re Patterson, 297 B.R. 110 (Bankr. E.D. Tenn.

(| re prety ope rr h here ery eh parrot

Cited Authorities

Page

In re Phillips, 288 B.R. 585 (Bankr. M.D. Ga. 2002)

BRAND BS NPIS Sn EPS eo pele aw ee Yona 8

In re Potes, 336 B.R. 731 (Bankr. E.D. Va. 2005) ... 8

Price v. Haker (In re Haker), 411 F.2d 568 (5th Cir.

SN otcd ee bd eee haxdan aie aM web 6

Rockland Trust Co. v. Sheerin (In re Sheerin), 21

Uk. Soe CAT. TOE BPRS) nh ch vccvevecss 7,8

In re Schicke, 290 B.R. 792 (B.A.P. 10th Cir. 2003)

cia Wen De Gath dis be kteee shew eae een 8

State Bank of India v. Chalasani (In re Chalasani),

Ee Be gr fe ae, | nee 6, 7,8

Systems & Servs. Technologies, Inc. v. Davis (In re

Davis), 314 F.3d 567 (11th Cir. 2002) ......... 6

Thompson v. Virginia (In re Thompson), 16 F.3d 576

(4th Cir. 1994), cert. denied, 512 U.S. 1221, 114

S. Ct. 2709, 129 L. Ed. 2d 836 (1994) ........ 6

Wragg v. Federal Land Bank of New Orleans, 317

Sa EE oka asiehees F640 wet aaBaecaeR 5, 6

Cited Authorities

Page

Statutes: ‘

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Rules:

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INTRODUCTION

Petitioner has not presented compelling reasons to grant

his Petition for a Writ of Certiorari. See Sup. Ct. R. 10. The

subject of the Petition is the Order of the U.S. Court of

Appeals for the Eighth Circuit (the “Eighth Circuit”)

affirming a bankruptcy court’s denial of Petitioner’s motions

to reopen his bankruptcy case. Denial of such a motion is

reviewed under an abuse of discretion standard. The Eighth

Circuit’s decision is not in conflict with a decision of this

Court or another Court of Appeals. Nor does this appeal

involve an important federal question that- has not been

resolved by this Court. Accordingly, the Petition should be

denied.

STATEMENT OF THE CASE

Petitioner has been a debtor in three Chapter 13

bankruptcy cases in the U.S. Bankruptcy Court for the Eastern

District of Missouri (the “Bankruptcy Court”). The first was

filed in 1995, the second in 2000, and the third in 2001. See

Motion for Relief from Stay and to Ratify Foreclosure Sale

(“Motion for Relief”), June 5, 2001, Bankr. E.D. Mo., Case

Number 01-43603, Docket Number 36. Each case was

dismissed prior to Petitioner obtaining a discharge due to

his failure to make all payments required by his Chapter 13

plan. See id.; Order, August 20, 2003, Bankr. E.D. Mo., Case

Number 01-43603, Docket Number 97.

Following dismissal of the 1995 bankruptcy, Respondent

sought to foreclose on real property on which it maintained

a mortgage lien to secure the loan provided to Petitioner and

his wife. Petitioner, however, filed two additional bankruptcy

petitions on the eve of scheduled foreclosure sales, which

stayed the foreclosure sales. See Motion for Relief.

In the third bankruptcy, Case No. 01-43603-399,

Respondent sought and obtained relief from the automatic

stay of 11 U.S.C. § 362(a) to conduct a foreclosure sale.

Order, April 19, 2001, Bankr. E.D. Mo., Case Number 01-

43603, Docket Number 18. Following an ex parte hearing

on the motion for relief from stay, the Bankruptcy Court

granted relief to Respondent, which then conducted the

foreclosure sale that day. /d.; see Order, July 9, 2002, U.S.

Dist. Ct. E.D. Mo., Case Number 4:01CV1435, Docket

Number 34 (“July 9 Order”). Respondent purchased the

property at the foreclosure sale. Jd. The Bankruptcy Court

later vacated the ex parte relief from stay order, conducted

an evidentiary hearing on the motion, granted relief from

stay and ratified the foreclosure sale (the “Relief from Stay

Order”). See Order, July 17, 2001, Bankr. E.D. Mo., Case

Number 01-43603, Docket Number 45; Transcript of

Hearing, October 18, 2001, Bankr. E.D. Mo., Case Number

01-43603, Docket Number 60.

Petitioner appealed the Relief from Stay Order, and the

U.S. District Court for the Eastern District of Missouri (the

“District Court”) affirmed. July 9, 2002 Order. Petitioner then

appealed to the Eighth Circuit, which remanded the case to

the Bankruptcy Court to report on two factual issues, namely

(1) whether Petitioner 5 ad paid Respondent in full, or in part,

and received a discharge in the first bankruptcy, and (2) if

Petitioner was indebted to Respondent, the rate of interest,

if any, applicable to the debt. Opinion, March 24, 2003,

Eighth Circuit, Case Number 02-3041.

On remand, the Bankruptcy Court determined that the

bankruptcy case in which the appeal was taken, the third

bankruptcy case, had been dismissed on March 14, 2002,

while the Relief from Stay Order was on appeal. Order,

August 20, 2003, Bankr. E.D. Mo., Case Number 01-43603,

Docket Number 97. The Bankruptcy Court concluded that,

because the automatic stay no longer was applicable due to

the dismissal of the bankruptcy, Respondent’s motion for

relief from the automatic stay was moot. /d. As a result, the

Bankruptcy Court denied the relief from stay motion by Order

entered August 20, 2003 (the “Relief Denial Order’’). Jd.

Upon receipt of the Relief Denial Order from the

Bankruptcy Court, the Eighth Circuit dismissed the appeal

as moot. Order, January 8, 2004, Eighth Circuit, Case

Number 02-3041.

Petitioner subsequently filed motions to reopen the third

bankruptcy case, pursuant to 11 U.S.C. § 350(b)', on March

30, 2004, and March 31, 2004 (the “Motions to Reopen”).

Motions to Reopen, Bankr. E.D. Mo., Case Number 01-43603,

Docket Numbers 103, 104. The Motions to Reopen state that

Petitioner “wants to bring an action for clarification of

whether [Respondent’s] motion . . . for relief from stay was

denied because there was no stay in the Bankruptcy Case

No. 95-42416-399 and that an order be issued to convey the

property back to [Petitioner].” Jd. The Bankruptcy Court

summarily denied the Motions to Reopen. Order, April 7,

2004, Bankr. E.D. Mo., Case Number 01-43503, Docket

Number 105.

' Section 350 of the Bankruptcy Code provides as follows:

(a) After an estate is fully administered and the court

has discharged the trustee, the court shall close the case.

(b) A case may be reopened in the court in which

such case was closed to administer assets, to accord

relief to the debtor, or for other cause.

On appeal, the District Court affirmed the denial of the

Motions to Reopen. Order, March 28, 2005, U.S. Dist. Ct.

E.D. Mo., Case Number 4:04CV526, Docket Number | 2. The

District Court also denied Petitioner’s motion for

reconsideration. Order, April 8, 2005, U.S. Dist. Ct. E.D.

Mo., Case Number 4:04CV526, Docket Number 14. The

Eighth Circuit summarily affirmed. Order, August 17, 2005,

Eighth Circuit, Case Number 05-2330. Petitioner’s petition

for rehearing and for a rehearing en banc in the Eighth Circuit

both were denied. Order, October 21, 2005, Eighth Circuit,

Case Number 05-2330. The Petition for a Writ of Certiorari

concerns the Eighth Circuit’s decision affirming the denial

of the Motions to Reopen.

Petitioner incorrectly asserts that his Petition challenges

the jurisdiction of the Bankruptcy Court and the propriety of

that court’s entry of the Relief from Stay Order and the Relief

Denial Order in light of the dismissal of his 1995 bankruptcy

case. Those issues are not involved in this appeal. The Relief

from Stay Order was appealed by Petitioner, but that appeal

was dismissed as moot by the Eighth Circuit following receipt

of the Relief Denial Order. Petitioner did not timely appeal

the entry of the Relief Denial Order or the Eighth Circuit’s

dismissal of his prior appeal as moot. Instead of appealing

those orders, he sought to reopen his bankruptcy, and when

that effort failed through appeals to the Eighth Circuit, he

lodged the present Petition. Accordingly, the Petition properiy

should address only the denial of the Motions to Reopen,

not the issues that he might have raised in appeals he never

timely pursued. Also, contrary to Petitioner’s assertion,

neither his Petition, the Relief from Stay Order nor the Relief

Denial Order concern his 1995 bankruptcy case; they concern

only the 2001 bankruptcy case.

REASONS FOR DENYING THE PETITION

The decisions below do not conflict with a decision of

this Court or any Court of Appeals. Courts uniformly have

held that the denial of a motion to reopen a bankruptcy case

is reviewed for an abuse of discretion. Moreover, the decision

of the Bankruptcy Court in this case was not an abuse of its

discretion. Accordingly, Petitioner has not established

compelling reasons for this Court to grant his Petition.

See Sup. Ct. R. 10.

I. A Bankruptcy Court’s Denial of a Motion to Reopen a

Bankruptcy Case is Reviewed for Abuse of Discretion

Pursuant to 11 U.S.C. § 350(b), “a [bankruptcy] case

may be reopened in the court in which such case was closed

to administer assets, to accord relief to the debtor, or for

other relief.” The appellate courts below properly reviewed

the Bankruptcy Court’s decision not to reopen the bankruptcy

case under an abuse of discretion standard. Dworsky v. Canal

Street Ltd. P'ship (In re Canal Street Ltd. P ship), 269 B.R.

375, 379 (B.A.P. 8th Cir. 2001). Under this standard, a

bankruptcy court’s denial of a motion to reopen should not

be reversed unless the appellate court has a definite and firm

conviction that the bankruptcy court committed a clear error

of judgment in the conclusion it reached. /d.

In a case decided prior to enactment of the modern US.

Bankruptcy Code, this Court addressed the standard for

reviewing the denial of a motion to reopen a bankruptcy

proceeding. In Wragg v. Federal Land Bank of New Orleans,

317 U.S. 325, 327 (1943), the Court held that “[w]Je do not

differ with the conclusion of both courts below that it was

within the sound discretion of the bankruptcy court to decline

to reopen the original order of dismissal.” Courts have

applied the decision in Wragg in considering a motion to

reopen under § 350(b) of the Bankruptcy Code. See, e.g.,

In re Edmonds, 27 B.R. 468, 469 (Bankr. E.D. Tenn. 1983)

(citing Wragg for its holding that “it is within the sound

discretion of the bankruptcy judge to either reopen a case or

refuse to do so”).

Application of an abuse of discretion standard in the

Eighth Circuit was consistent with the standard uniformly

applied by other Circuits in reviewing the denial of a motion

to reopen a bankruptcy case. See, e.g., Jn re Systems & Servs.

Technoloxies, Inc. v. Davis (In re Davis), 314 F.3d 567, 570

(11th Cir. 2002) (review of bankruptcy court’s order refusing

to reopen is governed by abuse of discretion standard); State

Bank of India v. Cha!asani (In re Chalasani), 92 F.3d 1300,

1307 (2d Cir. 1996) (bankruptcy court did not abuse its

discretion denying motion to reopen adversary proceeding

because debtor had failed to comply with discovery and

reopening would prejudice creditor); Thompson y. Virginia

(In re Thompson), 16 F.3d 576, 581-82 (4th Cir. 1994), cert.

denied, 512 U.S. 1221, 114 S. Ct. 2709, 129 L. Ed. 2d 836

(1994) (decision to reopen a bankruptcy case rests with

discretion of bankruptcy court); /n re Bianucci, 4 F.3d 526,

528 (7th Cir. 1993) (bankruptcy court did not abuse its

discretion denying debtor’s motion to reopen bankruptcy to

avoid lien two years after case was closed); Beezley v.

California Land Title Co. (In re Beezley), 994 F.2d 1433,

1435 (9th Cir. 1993) (per curiam) (oankruptcy court did not

abuse its discretion denying debtor’s motion to reopen to

add creditor because reopening would not have resulted in

any effective relief because bankruptcy was a no asset, no

bar date case); Price v. Haker (In re Haker), 411 F.2d 568,

569 (Sth Cir. 1969) (per curiam) (denial of motion to reopen

to pursue newly discovered asset was not abuse of discretion

because chance of recovery to creditors from asset was too

remote); Dworsky, 269 B.R. at 379 (bankruptcy court’s denial

of creditor’s motion to reopen case five years after confirmation

was not abuse of discretion); Rockland Trust Co. v. Sheerin (In

re Sheerin), 21 B.R. 438, 440 (B.A.P. 1st Cir. 1982) (bankruptcy

court did not abuse its discretion by refusing to reopen case to

pursue untimely complaint to determine non-dischargeability

of debt).

Il. The Bankruptcy Court Properly Denied the Motions

to Reopen

A. Petitioner Has Not Complied with His Bankruptcy

Obligations

In affirming the Bankruptcy Court’s denial of Petitioner’s

Motions to Reopen, the District Court held that “(b]ecause of

{Petitioner’s] failure to comply with the rules and requirements

of a debtor in a Chapter 13, I cannot conclude that the bankruptcy

court’s decisions denying [Petitioner’s] motions to reopen his

bankruptcy case were an abuse of discretion.” The Eighth Circuit

summarily affirmed the District Court’s decision.

A failure by a debtor to comply with the rules and

requirements of bankruptcy is adequate grounds to deny the

debtor’s motion to reopen his bankruptcy case. See State Bank

of India, 92 F.3d at 1307 (affirming denial of motion to reopen

adversary proceeding because debtor had failed to comply with

discovery). In this case, Petitioner has had three bankruptcy cases

dismissed prior to making all payments required by his Chapter

13 plan. In the latter two cases, the filings were made on the eve

of foreclosure sales scheduled by Respondent. In these

circumstances, the denial of Petitioner’s Motions to Reopen was

not an abuse of discretion.

B. Reopening Petitioner’s Case Would Have Been a

Futile Exercise

The reopening of a bankruptcy case does not alone grant

substantive relief to the movant. The reopening merely grants

the opportunity to seek relief in a bankruptcy case that previously

was closed. See State Bank of India, 92 F.3d at 1307-08; Internal

Revenue Serv. v. Germaine (In re Germaine), 152 B.R. 619

(B.A.P. 9th Cir. 1993).

If the relief sought to be obtained upon the reopening of

the case is not available to the movant, it is not an abuse of

discretion for a bankruptcy court to deny the reopening to avoid

a futile exercise. See Beezley, 994 F.2d at 1435 (reopening would

not have resulted in effective relief because bankruptcy was no

asset, no bar date case); Rockland Trust Co., 21 B.R. at 440

(reopening inappropriate to pursue untimely complaint); Jn re

Schicke, 290 B.R. 792, 798 (B.A.P. 10th Cir. 2003) (“A

bankruptcy court that refuses to reopen a Chapter 7 case that

has been closed will not abuse its discretion if it cannot afford

the moving party any relief in the reopened case.”); Arieaux v.

Arleaux, 210 B.R. 148, (B.A.P. 8th Cir. 1997) (upholding

decision denying debtor’s motion to reopen bankruptcy when

to do so would provide no relief to debtor); Jn re Potes, 336

B.R. 731, 732 (Bankr. E.D. Va. 2005) (motion to reopen should

be denied if “‘no useful purpose can be served by reopening...

.””) (citing In re Carberry, 186 B.R. 401 (Bankr. E.D. Va. 1995));

In re Patterson, 297 B.R. 110, 114 (Bankr, E.D. Tenn. 2003)

(“the court will not reopen a case if doing so would be futile’’)

(quoting In re Phillips, 288 B.R. 585, 587 (Bankr. M.D. Ga.

2002)); In re Hardy, 209 B.R. 371, 379-80 (Bankr. E.D. Va.

1997) (denying debtor’s motion to reopen when doing so would

be futile because underlying claim lacked merit).

Petitioner’s 2001 bankruptcy case was dismissed in 2002

on motion of the Chapter 13 Trustee due to the failure of

Petitioner to comply with his Chapter 13 Plan. Upon the

dismissal, the property of the estate revested in the debtor,

pursuant to 11 U.S.C § 349(b)(3),? and the automatic stay

of 11 U.S.C. § 362 terminated,’ pursuant to 11 U.S.C.

§ 362(c)(1).4

? Section 349(b)(3) provides as follows:

(b) Unless the court, for cause, orders otherwise, a

dismissal of a case other than under section 742 of this

title —

(3) revests the property of the estate in the entity

in which such property was vested immediately before

the commencement of the case under this title.

> Similarly, the automatic stay terminated upon the dismissal of

the 1995 bankruptcy. Thus, Respondent was not stayed from

collecting the debt Petitioner owed Respondent, and Petitioner had

no obligation to seek to reopen the 1995 bankruptcy to seek relief

from stay in the 2001 case to continue with the scheduled foreclosure

sale.

* Section 362(c)(1) provides as follows:

(h) of this section —

(1) the stay of an act against property of the

estate under subsection (a) of this section continues until

such property is no longer property of the estate; ....

The reopening of a bankruptcy case does not reinstate

the automatic stay. Menk v. Lapaglia (In re Menk), 241 B.R.

896 (B.A.P. 9th Cir. 1999). Thus, even if Petitioner’s

bankruptcy case had been reopened, the relief from stay issue

would have remained a moot issue. Accordingly, reopening

would have been a futile exercise.

CONCLUSION

Petitioner has not established compelling reasons for this

Court to grant his Petition for a Writ of Certiorari.

Accordingly, Respondent respectfully requests that the Court

deny the Petition.

Respectfully submitted,