Grace M. Forbes v. Russell C. Forbes ( 1998 )

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
No. 97-6100EM
In re: *
*
Russell Charles Forbes, *
*
Debtor. *
*
* Appeal from the United
States
Grace M. Forbes, * Bankruptcy Court
for the
* Eastern District of
Missouri
Appellant, *
*
v. *
*
Russell Charles Forbes, *
*
Appellee. *
Submitted: January 13, 1998
Filed: February 19, 1998
Before KRESSEL, William A. HILL, and DREHER, Bankruptcy
Judges.
KRESSEL, Bankruptcy Judge.
Grace Forbes appeals from an order of the bankruptcy court1 entering a discharge of
her former husband, Russell Charles Forbes, and an order denying her Motion to Vacate
Order Discharging Debtor and Motion to Reopen Case. We affirm.
BACKGROUND
This appeal involves the latest in the acrimonious litigation between Grace and
Russell Forbes following their divorce.2 The issue presently before the court concerns an
unresolved two-year-old motion to dismiss.
In May of 1995, Grace made a motion to dismiss Russell’s Chapter 13 case or, in the
alternative, to declare her marital property claim non-dischargeable.3 The bankruptcy court
held a hearing on the motions on June 15, 1995. At the hearing, the court directed Russell
to list the property for sale and to make a motion for approval of the sale once a buyer was
located. The court indicated that it would entertain the dismissal motion in conjunction with
the motion to convey real estate. Both parties agreed to the indefinite continuance. A buyer
was subsequently obtained, a hearing was held to approve the sale and the sale was
approved.4 However, the parties neglected to reset the motion to dismiss on the court’s
calendar. The bankruptcy court subsequently approved Russell’s modification of his plan.5
When the trustee reported to the court that Russell had completed all payments
contemplated by the modified plan, the bankruptcy court entered an order discharging the
1
The Honorable Barry S. Schermer, United States Bankruptcy Judge for the Eastern
District of Missouri.
2
A more detailed history of the bankruptcy case can be found in our earlier opinion in
Forbes v. Forbes, 215 B.R. 183 (B.A.P. 8th Cir. 1997) (Forbes I).
3
The parties’ divorce decree awarded Grace $65,000.00 secured by a lien on two parcels
of real estate owned by Russell.
4
We affirmed the bankruptcy court’s approval of the sale in Forbes I.
5
We also affirmed the bankruptcy court’s approval of the modified plan in Forbes I.
2
debtor on July 30, 1997. Grace subsequently moved to vacate the discharge order and to
reopen the case.6 On September 25, 1997, the court denied the motion.7
DISCUSSION
On appeal, Grace argues that the bankruptcy court’s failure to rule on her motion to
dismiss violated her constitutional rights and entitles her to relief from judgment under Fed.
R. Civ. P. 59 and 60. We review the bankruptcy court’s findings of fact for clear error and
its conclusions of law de novo. Fed. R. Bankr. P. 8013; First Nat’l Bank of Olathe v.
Pontow, 111 F.3d 604, 609 (8th Cir. 1997); Chamberlain v. Kula (In re Kula), 213 B.R. 729,
735 (B.A.P. 8th Cir. 1997). The clear error test is met when the reviewing court is left with
the “definite and firm conviction that a mistake has been committed.” Anderson v. City of
Bessemer City, 470 U.S. 564, 573 (1985) (quoting United States v. United States Gypsum
Co., 333 U.S. 364, 395 (1948)).
Mootness
We note at the outset that Grace’s motion to dismiss was rendered moot by the
discharge entered on July 30, 1997. 11 U.S.C. § 1328(a) specifically compels the entry of
a discharge once the debtor has made all payments under the plan:
As soon as practicable after completion by the debtor of all payments under
the plan, unless the court approves a written waiver of discharge executed by
the debtor after the order for relief under this chapter, the court shall grant the
debtor a discharge. . . .
11 U.S.C. § 1328(a).8
6
Although the motion did not articulate a basis for vacating the discharge order, a
subsequent memorandum obliquely referred to Fed. R. Bankr. P. 9023 and 9024, which
incorporate Fed. R. Civ. P. 59 and 60 into bankruptcy cases.
7
The court’s order also denied Grace’s post-discharge “Motion for Leave to File a Claim
After the Bar Date.” Grace does not challenge this portion of the order on appeal.
8
While the statute contains one exception to the prompt entry of discharge, there is no
exception in situations where a motion to dismiss is pending.
3
While it is troubling that the bankruptcy court never ruled on Grace’s motion to
dismiss, the record does not reveal any effort on Grace’s part to seek a hearing or call the
pending motion to the court’s attention, or to otherwise obtain a decision on the motion to
dismiss.9 Grace knew that Russell’s modified plan provided for him to make a payment of
$22,800.00 to complete his payment obligations. Once this was done, she knew or should
have known that the discharge would be entered immediately. She neither sought nor
obtained any sort of stay of the order approving Russell’s modified plan, nor any delay in
the entry of Russell’s discharge. In other words, even though Grace was entitled to be heard,
her inaction resulted in her motion becoming moot.
Constitutional Arguments
Grace contends that the bankruptcy court’s entry of the discharge order when her
motion to dismiss was still pending violated her rights to due process and equal protection
under the Fifth and Fourteenth Amendments of the United States Constitution. Even if the
motion to dismiss was not moot, we note that Grace’s constitutional arguments were never
raised in the bankruptcy court when she made her motion to vacate the discharge order. It
is axiomatic that an appellate court will not consider arguments on appeal that were never
presented to the trial court. Singleton v. Wulff, 428 U.S. 106, 120 (1976) (“It is the general
rule . . . that a federal appellate court does not consider an issue not passed upon below.”);
United States v. Long, 857 F.2d 436, 448 (8th Cir. 1988) (“It is both inappropriate and
unwise for an appellate court to consider on appeal issues that the trial court has not had an
opportunity to consider and with respect to which a record has not been developed.”).
Therefore, we do not consider her constitutional arguments on appeal.
Entitlement to Discharge
Grace also makes the somewhat metaphysical argument that, since her motion to
dismiss was still pending, a plan did not really exist and therefore the debtor did not really
9
We concentrate on that portion of the undecided motion which seeks dismissal of the
debtor’s case. Any request to determine the dischargeability of Grace’s debt should be brought
by complaint if brought in the bankruptcy court and, as far as we are able to determine, is neither
time-barred nor mooted by the entry of Russell’s discharge.
4
complete payments under the plan and so was not entitled to a discharge. This argument,
while imaginative, does not comport with any provision of the Bankruptcy Code.
Notwithstanding a pending motion to dismiss, the debtor’s plan is still a plan and
confirmation of that plan still constitutes confirmation.
Federal Rules of Civil Procedure
Grace also contends that she is entitled to relief from the discharge order under Rules
59 and 60 of the Federal Rules of Civil Procedure. We review the bankruptcy court’s denial
of Grace’s Rule 59 and Rule 60 motions under an abuse of discretion standard. See Twin
City Constr. Co. v. Turtle Mountain Band of Chippewa Indians, 911 F.2d 137, 139 (8th Cir.
1990) (abuse of discretion standard applied to Rule 59(e) motion); Sanders v. Clemco Indus.,
862 F.2d 161, 169 (8th Cir. 1988) (abuse of discretion standard applied to Rule 60(b)
motion).
Rule 59
Grace invokes Fed. R. Civ. P. 59 as a basis for her motion to vacate. Rule 59 allows
a party seeking relief to obtain either a new trial or an amended judgment. Whether Grace
is seeking a new trial under Rule 59(a) or an amended judgment under Rule 59(e), the rule
is inapposite in this case. There never was a trial on the issue of discharge nor is it clear
what kind of amended judgment would be entered. We conclude that the bankruptcy court
did not abuse its discretion in denying Grace relief under Fed. R. Civ. P. 59.
Rule 60(b)(1)
Lastly, Grace seeks relief under Fed. R. Civ. P. 60(b). Under the rule, a court “may
relieve a party or a party’s legal representative from a final judgment, order, or proceeding
for . . . mistake, inadvertence, surprise, or excusable neglect.” Fed. R. Civ. P. 60(b)(1).
Grace contends that the bankruptcy court’s failure to rule on her pending motion to dismiss
constitutes “mistake” under the rule. It is clear that judicial oversight can provide grounds
for Rule 60(b)(1) relief. Spangle v. Ming Tah Elec. Co., 866 F.2d 1002, 1003 (8th Cir.
1989) (“[W]e recognize that rule 60(b)(1) can be used to obtain relief from judgments
entered through judicial inadvertence.”); CRI, Inc. v. Watson, 608 F.2d 1137, 1143 (8th Cir.
1979)
5
(“In this circuit, relief may be granted under Rule 60(b)(1) for judicial error when
inadvertence is shown.”).
However, relief from judgment under Rule 60(b)(1) is an extraordinary remedy
“which may be granted only upon an adequate showing of exceptional circumstances.”
United States v.Young, 806 F.2d 805, 806 (8th Cir. 1986). Rule 60(b)(1) relief will not be
granted merely upon a showing of mistake. The movant must establish a meritorious
defense, lack of prejudice to the plaintiff and freedom from culpability. Hoover v. Valley
West D M, 823 F.2d 227, 230 (8th Cir. 1987). We have already determined that the
Bankruptcy Code required entry of the discharge and that Grace bears some measure of the
blame by failing to press her dismissal motion. Therefore, we conclude that the bankruptcy
court did not abuse its discretion in refusing to vacate the discharge order.
CONCLUSION
Since we conclude that the entry of the court’s discharge was appropriate and that it
did not abuse its discretion in refusing to vacate the order of discharge, we affirm.
A true copy.
Attest:
CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR THE
EIGHTH CIRCUIT.
6