Reischel v. Manufacturers & Traders Trust Co.

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted March 29, 2007*
Decided April 2, 2007
Before
Hon. FRANK H. EASTERBROOK, Chief Judge
Hon. JOEL M. FLAUM, Circuit Judge
Hon. TERENCE T. EVANS, Circuit Judge
No. 06-3301
BENEDICT J. REISCHEL, Appeal from the United States
Debtor-Appellant, District Court for the Eastern District
of Wisconsin
v.
No. 03-C-286
MANUFACTURERS & TRADERS
TRUST COMPANY, Rudolph T. Randa,
Creditor-Appellee. Chief Judge.
ORDER
Benedict Reischel filed a petition for bankruptcy in violation of a 180-day
filing bar that a bankruptcy court had entered after he willfully failed to prosecute
a previous bankruptcy petition. Manufacturers & Traders Trust Company
(“Manufacturers”), one of Reischel’s creditors, argued that this violation justified
relief from the automatic stay on its mortgage foreclosure. The court agreed, lifted
the stay, and then dismissed Reischel’s petition. He appealed and the district court
*
After an examination of the briefs and the record, we have concluded that oral
argument is unnecessary. Thus, the appeal is submitted on the briefs and the record. See
Fed. R. App. P. 34(a)(2).
No. 06-3301 Page 2
affirmed. Because Reischel’s petition violated the bankruptcy court’s injunction, we
also affirm.
Reischel has twice filed for protection under the Bankruptcy Code. His first
petition was dismissed on September 11, 2002 after he failed to appear both at the
meeting of creditors and at a hearing to oppose a motion to dismiss the case. The
bankruptcy court found that Reischel willfully failed to obey court orders and to
prosecute his case. Based on this finding, the court barred Reischel from refiling for
bankruptcy for a period of 180 days. See 11 U.S.C. § 109(g)(1). Reischel appealed
the imposition of the 180-day bar and, after the bar had expired, the district court
affirmed. In September 2004 we vacated the district court’s affirmance because
Reischel’s appeal had become moot when the bar expired. See In re Reischel, No.
03-4128 (7th Cir. Sept. 24, 2004).
In the meantime, in February 2003—a month before the bar
expired—Reischel filed his second bankruptcy petition. Manufacturers responded
with an emergency motion for relief from the automatic stay so that it could
foreclose on a mortgage it held on Reischel’s home. On February 21, 2003, when
Reischel failed to appear at a telephonic conference scheduled to rule on the motion,
the bankruptcy court determined that the petition violated the 180-day bar and
thus constituted “cause” to lift the automatic stay. See 11 U.S.C. § 362(d). The
state-court foreclosure action was confirmed a few days later. The court then held a
hearing on March 13th to rule on whether the petition should be dismissed. When
Reischel failed to appear at that hearing, the bankruptcy court dismissed his case
under § 109(g) because the petition had been filed during the 180-day bar.
Reischel appealed to the district court both the February 21st decision to lift
the automatic stay and the March 13th dismissal of his petition. In affirming both
orders, the district judge agreed that violating the 180-day bar constituted cause to
lift the automatic stay and grounds to dismiss the petition.
We note at the outset that, contrary to Reischel’s claim, this appeal is not
moot merely because the 180-day bar has expired. Manufacturers (having obtained
relief from the automatic stay) foreclosed on Reischel’s home a month before the bar
expired. Because a decision in Reischel’s favor could affect the foreclosure sale, his
appeal is not moot. See Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990); Brown
v. Bartholomew Consol. Sch. Corp., 442 F.3d 588, 596 (7th Cir. 2006); Cf. In re
Resource Tech. Corp., 430 F.3d 884, 886-87 (7th Cir. 2005) (finding justiciable
review of decision to approve settlement even though resulting transaction was
complete and “unscrambling [it] might be difficult” because that nonetheless could
be done) cert. denied, 127 S.Ct. 43 (2006).
No. 06-3301 Page 3
We therefore take up the merits. We review the bankruptcy court’s rulings
for an abuse of discretion and its underlying factual findings for clear error. See
Colon v. Option One Mortgage, 319 F.3d 912, 916 (7th Cir. 2003); In re Hall, 304
F.3d 743, 746 (7th Cir. 2002). Reischel argues that the bankruptcy court erred by
lifting the automatic stay because Manufacturers failed to serve him with the
emergency motion and notice of the hearing in an appropriate and timely manner.
Reischel is mistaken. Relief from the automatic stay must be requested by
motion and the debtor must be afforded “reasonable notice and opportunity” for a
hearing. See Fed. R. Bankr. P. 4001(a)(1); 9014(a). That motion and notice may be
served by sending copies via first class mail to the address that the debtor
designated in his petition. See id. 9014(b); 7004(b)(9). The bankruptcy court found,
not clearly erroneously, that Manufacturers complied fully with these mandates.
Reischel takes issue that the hearing occurred only three days after Manufacturers
filed its motion, not the five days suggested by Fed. R. Bankr. P. 9006(d). But the
court may fix a different time period—even by an ex parte order. See id. And there
is no reason to regard the three-day period here as an abuse of discretion, especially
considering that the court scheduled a telephonic hearing. In addition, the
bankruptcy court’s decision to lift the stay was itself not an abuse of discretion
given the undisputed violation of the 180-day filing bar, and Reischel does not argue
otherwise. (Reischel says only his filing was “inadvertent” but the injunction did
not permit accidental filings).
Reischel’s arguments about the dismissal of his petition are equally
unavailing. He contends that we erred in not reviewing his previous challenge to
the 180-day bar by deeming the appeal moot. But the mootness ruling is not open
for reexamination. Although a dismissal based on justiciability grounds does not
bar later litigation of the merits, the dismissal does have res judicata effects as to
the justiciability issue itself. See DiGiore v. Ryan, 172 F.3d 454, 466 (7th Cir. 1999)
overruled on other grounds by Whetsel v. Network Prop. Servs., LLC, 246 F.3d 897(7th Cir. 2001); Bunker Ramo Corp. v. United Bus. Forms, Inc., 713 F.2d 1272, 1277
(7th Cir. 1983) . Reischel could, then, argue only that dismissal of his second
petition was improper because the bankruptcy court abused its discretion in
imposing the bar when it dismissed the first petition. But Reischel makes no such
argument and, in any event, his repeated failure to attend meetings and hearings
constitutes precisely the type of behavior contemplated by § 109(g) that justifies
imposing a filing bar. See 11 U.S.C. § 109(g)(1); In re Montgomery, 37 F.3d 413,
415-16 (8th Cir. 1994).
Reischel lastly asserts that we lack the authority to affirm the bankruptcy
court’s dismissal because the United States Trustee’s Office opted not to participate
in this appeal. Our jurisdiction is not dependent on that Office’s participation but
rather the undisputed finality of the district court’s disposition. 28 U.S.C. § 1291.
No. 06-3301 Page 4
Reischel has also filed a motion to supplement the record, which we deny as
unnecessary because the documents he refers to are already in the record. In any
event, the argument that he wishes to advance based on the documents has been
forfeited because he did not raise the argument below. See Republic Tobacco Co. v.
North Atlantic Trading Co., Inc., 381 F.3d 717, 728 (7th Cir. 2004).
The judgment is AFFIRMED.