Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Hoover

United States Court of Appeals, First Circuit

June 29, 2016

IN RE: JOHN E. HOOVER, III, Debtor,
v.
WILLIAM K. HARRINGTON, United States Trustee for Region 1, Appellee. DAVID G. BAKER, Appellant,

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Timothy S. Hillman, U.S. District Judge]

          David G. Baker pro se for appellant.

          John Postulka, Trial Attorney, Executive Office for U.S. Trustees, Department of Justice, with whom Eric K. Bradford, Trial Attorney, Office of the United States Trustee, Department of Justice, Ramona D. Elliott, Deputy Director/General Counsel, Executive Office for U.S. Trustees, Department of Justice, P. Matthew Sutko, Associate General Counsel, Executive Office for U.S. Trustees, Department of Justice, Noah M. Schottenstein, Trial Attorney, Executive Office for U.S. Trustees, Department of Justice, William K. Harrington, United States Trustee for Region 1, Richard T. King, Assistant United States Trustee, and Lisa D. Tingue, Trial Attorney, Office of the United States Trustee, Department of Justice, were on brief, for appellee.

          Before Lynch, Kayatta, and Barron, Circuit Judges.

          KAYATTA, Circuit Judge.

         Attorney David G. Baker appeals an order of the U.S. Bankruptcy Court imposing a sanction on him for twice describing the applicable law in a manner that it deemed to be misleading. Finding that the bankruptcy court did not abuse its discretion in construing Baker's submissions as sufficiently misleading so as to warrant a sanction, we affirm.

         I.

         Baker is a very experienced bankruptcy practitioner who regularly appears before the U.S. Bankruptcy Court. In this case, he represented the Debtor, John E. Hoover, III ("Hoover"), who sought relief under Chapter 11 of the U.S. Bankruptcy Code. Hoover, through Baker, filed his bankruptcy petition on March 15, 2014, four days before the day on which Bank of America, N.A. ("BOA") was to sell his business property in foreclosure. Hoover's petition was also prompted by the significant tax debt that he owed to the Massachusetts Department of Revenue.

         In the wake of Hoover's March 15 filing for bankruptcy protection, BOA did not proceed with the foreclosure sale as previously scheduled. Instead, BOA continued the sale to June 18, 2014, sending Hoover on April 7 a written notice of the rescheduled date. BOA also suggested to Hoover its intent to file a motion for relief from the automatic stay. Seven days later, on April 14, Baker on behalf of Hoover filed a motion seeking sanctions against BOA for violating the automatic stay provisions of the U.S. Bankruptcy Code. See 11 U.S.C. § 362. In that motion, Baker argued that rescheduling the foreclosure sale constituted an improper continuation of debt collection activity under § 362 that warranted sanctions and a cancellation of the rescheduled sale.

8. Where a creditor has notice, continuation of a mortgage foreclosure sale post-petition, without obtaining relief from the automatic stay, is a willful violation. See In re Lynn-Weaver, 385 B.R. 7 (Bkrtcy.D.Mass. 2008), citing In re Heron Pond, LLC, 258 B.R. 529 (Bkrtcy.D. Mass. 2001) (both by Hillman, J.); Hart v. GMAC Mortgage Corp., 246 B.R. 709 (Bkrtcy.D.Mass. 2000) (Feeney, J.).
9. The cases cited in the previous paragraph held, in essence, that a single continuance of a foreclosure sale is not a stay violation so long as the creditor seeks relief from the stay prior to the sale date. However, Judge Hillman's holding in Heron Pond was based on "the obscurity of the prevailing legal rule (at least prior to this decision)". That decision was about 13 years ago, and the Lynn-Weaver decision was 6 years ago. The "prevailing legal rule" is no longer obscure. See also In re Derringer, 375 B.R. 903 (10th Cir. BAP, 2007).

(citation formatting and spacing as in original).

         On April 18, four days after Hoover filed this motion, BOA filed a motion seeking relief from the automatic stay. Hoover, nonetheless, persisted with his claim that, by continuing the sale for several months without having first obtained relief from the stay, BOA violated the stay. On June 2, 2014, the bankruptcy court issued an order denying Hoover's motion for sanctions against BOA.[1]

         Separately, Baker also filed on Hoover's behalf an objection to a motion filed by the U.S. Trustee (the "Trustee") to convert Hoover's bankruptcy case to a case filed under Chapter 7 of the U.S. Bankruptcy Code, or to dismiss it. The Trustee's motion concerned cash that the debtor was spending even though the cash was subject to a tax lien. The Trustee argued that this cash constituted "cash collateral" under 11 U.S.C. § 363(a), and, therefore, could not be spent without the permission of the court.

         Baker's attempt to parry the Trustee's motion focused on a claim that "cash collateral" only consists of cash or other property that is subject to a consensual lien. As Baker now admits, no case law so holds. Nevertheless, Baker claimed that the statute itself supported the argument. In his objection that he filed with the bankruptcy court, he wrote that "'cash collateral' means cash or other property 'subject to a security interest as provided in section 552(b) . . .'." Having thus limited the meaning of "cash collateral" to cash subject to a security interest under 11 U.S.C. § 552(b), Baker argued that such a security interest can only arise by agreement; hence, cash in which a creditor has an interest by an involuntary lien is not "cash collateral." The applicable statute, though, plainly does not read as Baker's hybrid paraphrase and partial quote portrayed it (that cash collateral "means" cash or other property subject to a "security interest"). To the contrary, it provides that cash collateral "means cash . . . or other cash equivalents . . ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.