In Re: James E. Baumann

Filing 18

ORDER -- The Bankruptcy Court's orders (Docs. 1-2, 1-3, 1-4) are AFFIRMED. This appeal is DISMISSED. Signed by Judge Roy B. Dalton, Jr. on 8/21/2015. (VMF)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
In re:
JAMES E. BAUMANN,
Debtor.
Bankr. Case No. 6:14-bk-3297-ABB

JAMES E. BAUMANN,
Appellant,
v.

Case No. 6:15-cv-27-Orl-37

PNC BANK, N.A.; and
BANK OF AMERICA, N.A.,
Appellees.
ORDER
This cause is before the Court on the following:
1.

Brief for Appellant, James E. Baumann (Doc. 7), filed January 23, 2015;

2.

Reply [sic] Brief for Appellee PNC Bank, N.A. (Doc. 9), filed February 2,
2015;

3.

Reply Brief for Appellant, James. E. Baumann (Doc. 10), filed February 17,
2015;

4.

Appellee, Bank of America, N.A.’s Answer Brief (Doc. 16), filed March 4,
2014; and

5.

Reply Brief for Appellant, James E. Baumann (Doc. 17), filed March 17,
2015.

Debtor/Appellant James E. Baumann, proceeding pro se, takes this appeal from the

Bankruptcy Court’s orders: (1) reconsidering dismissal of, and reinstating, his Chapter 13
case (Doc. 1-2); (2) granting Appellee PNC Bank, N.A. (“PNC”) relief from the automatic
stay (Doc. 1-3); and (3) granting Appellee Bank of America, N.A. (“BANA”) relief from the
automatic stay (Doc. 1-4). (Doc. 7.) Upon consideration, and after a full briefing
(see Docs. 7, 9–10, 16–17), the Court finds that the orders of the Bankruptcy Court
are due to be affirmed for the reasons set forth below.
BACKGROUND
The record on appeal is sparse (see Docs. 1, 6, 8, 15), but it reflects the following:
On March 24, 2014, Appellant filed a voluntary petition for reorganization under
Chapter 13 of the U.S. Bankruptcy Code, 11 U.S.C. § 1301. (See Doc. 1-1, pp. 1–2.)
At the time of the filing, Appellees PNC and BANA were attempting, in state court, to
foreclose their interests in two of Appellant’s real properties—a Deltona home and West
Palm Beach condominium. (See Doc. 8-1, pp. 12:18–13:3, 15:12–16:7.) The filing of
Appellant’s voluntary petition caused the state-court proceedings to be automatically
stayed pursuant to 11 U.S.C. § 362(a)(1). (See Doc. 8-1, p. 16:3–6.)
In response, Appellees appeared in the bankruptcy case and filed proofs of their
relevant claims. (See Docs. 6, 15-1 (incorporating the relevant proofs of claims into the
record on appeal).) Appellant objected to the proofs. (See Doc. 8-1, p. 13:10–29.)
On September 10, 2014, the Bankruptcy Court held a confirmation hearing on
Appellant’s proposed Chapter 13 plan—which did not address Appellees’ mortgage
claims at all. (See Doc. 1-1, p. 7; Doc. 8-1, pp. 4:15–25, 5:23–6:8.) At the hearing,
Appellant explained that he did not provide for payment to Appellees because he intended
to avoid both of their claims. (See Doc. 1-1, p. 12; Doc. 8-1, pp. 4:15–25, 5:23–6:19.) In

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fact, the only creditor that Appellant recognized was Space Coast Credit Union, which
had a claim to his automobile. (See Doc. 8-1, pp. 6:5–8, 16:25–18:4.) At the close of the
confirmation hearing, the Bankruptcy Court concluded that Appellant’s proposed plan
failed to provide for payment to all secured creditors and was therefore not feasible.
(See id. at 4:24–25, 6:1–4.) Accordingly, the Bankruptcy Court dismissed Appellant’s
case. (See id.)
Appellant moved for reconsideration of the dismissal order, and the Bankruptcy
Court set the motion for an October 22, 2014 hearing. (See id. at 1, 4:9–10.) At the
hearing, Appellant argued that the Bankruptcy Court should not have considered
Appellees’ claims during the confirmation hearing because Appellant had objected to
them and because Appellees “lack Article III standing.” (See id. at 12:18–14:20.) Without
expressly addressing Appellant’s standing argument, the Bankruptcy Court concluded
that Appellant’s objections to the validity of Appellees’ claims were “state court matter[s]”
better addressed in the foreclosure proceedings. (See id. at 17:25–18:3.) However, at the
suggestion of the Trustee (id. at 16:25–17:4), the Bankruptcy Court agreed to reinstate
Appellant’s case strictly in order to resolve the car-creditor’s claim (id. at 18:5–7). To
effectuate that result, the Bankruptcy Court reopened the case but lifted the automatic
stay as to Appellees so that they could “go back to state court.” (Id.)
In a series of three written orders submitted by the Trustee and by Appellees, the
Bankruptcy Court memorialized its verbal orders from the reconsideration hearing, but it
did not expand on the underlying rationale. (Docs. 1-2, 1-3, 1-4.) As Appellant notes, the
latter two orders imply that Appellees orally moved for stay relief at the hearing, but, in
reality, it was the Trustee that suggested relief. (See Docs. 1-3, 1-4 (referring to ore tenus

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motions made “on behalf of” Appellees).) Appellant appeals all three orders. (Doc. 7.)
STANDARDS
The Court has jurisdiction over this appeal from orders of the Bankruptcy Court
pursuant to 28 U.S.C. § 158. The Court reviews the Bankruptcy Court’s factual findings
for clear error and its legal conclusions de novo. In re. Globe Mfg. Corp., 567 F.3d 1291,
1296 (11th Cir. 2009). The Court reviews the Bankruptcy Court’s decision to lift the
automatic stay for abuse of discretion. 1 In re Dixie Broad., Inc., 871 F.2d 1023, 1026
(11th Cir. 1989).
DISCUSSION
Liberally construing his pro se briefing, 2 Appellant contends that the Bankruptcy
Court erred in four respects: (1) by implicitly concluding that Appellees had standing to
appear in his Chapter 13 case; (2) by granting stay relief at the suggestion of the Trustee
rather than PNC and BANA themselves; (3) by granting stay relief based on the limited
record before it; and (4) by granting stay relief without appropriate notice and a hearing,
thereby depriving him of procedural due process. (See Doc. 7, pp. 8–13.) The Court will
address each issue in turn.

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Appellant misconstrues the Bankruptcy Court’s orders lifting the automatic stay
(Docs. 1-3, 1-4) as orders granting summary judgment (see Doc. 7, p. 4). For that reason,
he confuses the appropriate standard of review. (See id. (citing Fed. R. Civ. P. 56).)
2 The contours of Appellant’s arguments shift from briefing to briefing.
(Compare Doc. 7 with Docs. 10, 17.) While the Court liberally construes Appellant’s
arguments, see In re Milian, 589 F. App’x 522, 523 (11th Cir. 2015), it declines to address
those raised for the first time in his reply briefs, In re Egidi, 571 F.3d 1156, 1163
(11th Cir. 2009) (“Arguments not properly presented in a party's initial brief or raised for
the first time in the reply brief are deemed waived.”). Moreover, the Court notes that it has
carefully considered all arguments raised in Appellant’s initial brief (Doc. 7), and any not
expressly addressed in this Order are rejected.

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I.

Standing
Appellant first contends that Appellees lack standing to appear in his Chapter 13

case and therefore the Bankruptcy Court’s contrary conclusion was error. 3 (See Doc. 7,
pp. 9–11.) Appellant is mistaken. 4
The crux of Appellant’s contention is that Appellees have to “prove” that they are
his creditors in order to have standing. (Doc. 7, pp. 8–9.) Not so. Bankruptcy cases
implicate two types of standing—“Article III” and statutory”—and both are measured by
allegations, not proven facts. See In re Smith, 522 F. App’x 760, 764–66 (11th Cir. 2012).
Article III standing arises out of the Constitution’s case-or-controversy requirement
and demands that parties invoking federal jurisdiction demonstrate “a personal stake in
the outcome of a case.” Id. at 764 (citing E.F. Hutton & Co., Inc. v. Hadley, 901 F.2d 979,
984 (11th Cir.1990)). Because Article III standing is determined at the outset of a case, it
is decided based on “allegations” in the invoking party’s filings. See id. (citing Hollywood
Mobile Estates Ltd. v. Seminole Tribe of Florida, 641 F.3d 1259, 1265 (11th Cir. 2011)).
Statutory standing stems from the Bankruptcy Code, which permits only a “party
in interest” to seek relief from the automatic stay or to object to a Chapter 13 plan.
See 11 U.S.C. §§ 362(d), 1324(a). A “creditor” is a party in interest for purposes of the
Bankruptcy Code. Cf. Greer v. O'Dell, 305 F.3d 1297, 1302 (11th Cir. 2002) (implying as
much through citation, and reasoning that the “Bankruptcy Code and Rule 17 of the
Federal Rules of Procedure each have liberal standing provisions, designed to allow a
3

Appellant implies that the Bankruptcy Court necessarily concluded that Appellees
have standing when it disregarded his contrary argument at the reconsideration hearing.
(See Doc. 7, pp. 8–9.) For argument’s sake, the Court agrees.
4 Standing is a jurisdictional issue subject to de novo review. See Dermer v. MiamiDade Cnty., 599 F.3d 1217, 1220 (11th Cir. 2010).

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party to appear as long as it has a direct stake in the litigation under the particular
circumstances”). Under the Code, a “creditor” is an entity with a preexisting “claim against
the debtor,” 11 U.S.C. § 101(10)(A), and a “claim” is any “right to payment, whether . . .
disputed [or] undisputed,” id. § 101(5)(A) (emphasis added).
Here, Appellees demonstrated both Article III and statutory standing by appearing
in Appellant’s bankruptcy case and filing proofs of their claims on Appellant’s real
properties. (See Docs. 6, 15-1) Disputed or not, those proofs evinced alleged “claims”
that made Appellees “parties in interest” with a tangible stake in Appellant’s Chapter 13
case. See In re Smith, 522 F. App’x at 765 (holding that a purportedly secured creditor’s
alleged “tangible financial interest in getting the [debtors’ real property] out from under the
jurisdiction of the bankruptcy court so that it could foreclose on the property . . . was
sufficient to confer Article III standing”). 5 That is all that is required to show standing.
II.

The Trustee’s Suggestion
Appellant next argues that the Bankruptcy Court erred by granting Appellees “relief

from the automatic stay through orders submitted by an attorney who had not filed a
Notice of Appearance, based on a suggestion made by the Trustee.” (Doc. 7, p. 6;
see also id. at 8 (protesting that “there were no Ore Tenus motions made at the hearing
for Reconsideration”). The underlying rationale for this argument appears to be that
11 U.S.C. §§ 362(d) and (g)—taken together and read in isolation from the rest of the
5

Also in Smith, 522 F. App’x at 765, the U.S. Court of Appeals for the Eleventh
Circuit approvingly cited In re James Wilson Assocs., 965 F.2d 160, 168 (7th Cir. 1992),
in which the Seventh Circuit held that a “secured creditor dragged into a bankruptcy
proceeding against his will by the automatic stay provision of the Bankruptcy Code”
demonstrated “standing in an Article III sense” by alleging a “tangible financial interest in
getting his security out from under the jurisdiction of the bankruptcy court so that he can
foreclose it.”

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Bankruptcy Code—require a motion from an “interested party” before the Bankruptcy
Court can grant stay relief. (See Doc. 7 (citing provisions of 11 U.S.C. § 362).)
The Court is not persuaded. As explained in 11 U.S.C. § 105(a), “[n]o provision of
[the Bankruptcy Code] providing for the raising of an issue by a party in interest shall be
construed to preclude the court from, sua sponte, taking any action or making any
determination necessary or appropriate to enforce or implement court orders or rules, or
to prevent an abuse of process.” The Bankruptcy Court here acted largely or entirely of
its own accord when it lifted the stay, and the Bankruptcy Code entitled it to do so. See id.;
see also In re McDaniels, 213 B.R. 197, 201 (Bankr. M.D. Ga. 1997) (“[T]he Court
concludes that it may sua sponte relieve the automatic stay as to all creditors in the case
while, at the same time, continuing the pendency of this case in order to permit the state
law foreclosure rights of [the creditors] to be exhausted.”).
III.

The Record
Third, Appellant argues that the record before the Bankruptcy Court did not support

stay relief. (See Doc. 7, p. 12.) Again, the Court disagrees.
Pursuant to 11 U.S.C. § 362(d)(1), bankruptcy courts may lift the automatic stay
“for cause.” Filing a bankruptcy petition in “bad faith” qualifies as “cause” justifying stay
relief. In re Phoenix Piccadilly, Ltd., 849 F.2d 1393, 1394 (11th Cir. 1988). “Bad faith” is
a somewhat nebulous term in the bankruptcy context, but it at least covers situations
where a debtor intends to “abuse the judicial process and the purposes of the
reorganization provisions” or to “delay or frustrate the legitimate efforts of secured
creditors to enforce their rights.” See id.
Although the Bankruptcy Court did not expressly cite § 362(d)(1) in its orders lifting

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the stay (Docs. 1-2, 1-3, 1-4), the transcript of the reconsideration hearing reveals the
court’s clear concern that Appellant’s petition reflected bad faith filing (See, e.g., Doc. 8-1,
pp. 11:25–12:11, 15:7–16:7.) With Appellees’ proofs of claims before it (see Doc. 1-2
(citing Appellees’ proofs)), as well as Appellant’s concession that he filed his Chapter 13
petition at least partially for “protection” from the pending state-court foreclosure
proceedings (Doc. 8-1, pp. 12:18–13:3, 15:22–25), the Bankruptcy Court evidently
concluded that the stay should be lifted as to Appellees in order to prevent abuse of the
reorganization process. (See id. at 17:25–18:3 (concluding that the dispute over
Appellees’ mortgage interests was “a state court matter,” and granting relief “to the two
mortgage holders to go back to state court”).) That conclusion is reversible only for an
abuse of discretion, In re Dixie Broad., Inc., 871 F.2d at 1026, and the Court cannot say
that the Bankruptcy Court abused its discretion here. See In re Phoenix Piccadilly,
849 F.2d at 1395 (finding that a debtor’s concession that it filed its petition “to fight . . . a
foreclosure action” evinced bad faith filing).
IV.

Procedural Due Process
Finally, Appellant submits that, by granting stay relief at a dismissal-

reconsideration hearing, the Bankruptcy Court “blindsided” him and deprived him of
procedural due process. (Doc. 7, pp. 8, 12.) Appellant does not cite any authority for this
proposition (see id.), and indeed, the law runs contrary to it. While 11 U.S.C. § 362(d)
suggests that “notice and a hearing” are required before the Bankruptcy Court can lift the
automatic stay, 11 U.S.C. § 102(1) clarifies that “notice and a hearing,” as that phrase is
used in the Code, means only “such notice” and “such opportunity for a hearing as is
appropriate in the particular circumstances.” (emphasis added). Significantly, in a hearing

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involving a motion to dismiss, “the possibility of relief in the nature of lifting the automatic
stay is implicit.” In re McDaniels, 213 B.R. at 201.
At the dismissal-reconsideration hearing here, with the possibility of stay-relief
implicit, the Bankruptcy Court permitted Appellant the uninterrupted opportunity to say
“everything” that he wanted heard. (Doc. 8-1, pp. 12:12–14:21.) That is all the process
Appellant was due under the circumstances.
CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED:
1.

The Bankruptcy Court’s orders (Docs. 1-2, 1-3, 1-4) are AFFIRMED.

2.

This appeal is DISMISSED.

3.

The Clerk is DIRECTED to close the file.

DONE AND ORDERED in Chambers in Orlando, Florida, on August 21, 2015.

Copies:
Counsel of Record

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