Alpha Omega CHL Inc et al v. Min
Filing
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OPINION: The bankruptcy court acted within its discretion when it found that Alpha Omega CHL, Inc. (AO) failed to establish cause to reopen Brian Min's (Min) bankruptcy proceedings, this Court AFFIRMS the bankruptcy court's denial of AO's motion. (Ordered by Judge Jane J. Boyle on 5/2/2018) (axm)
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
In Re:
BRIAN P. MIN, DEBTOR
ALPHA OMEGA CHL INC.,
Appellant,
v.
BRIAN MIN,
Appellee.
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CASE NO. 16-33804-SGJ-7
CHAPTER 7
CIVIL ACTION NO. 3:17-CV-02160-B
OPINION
Alpha Omega CHL, Inc. (AO) was a creditor of Brian Min (Min) and has appealed the
bankruptcy court’s denial of its motion to reopen Min’s bankruptcy proceedings. A bankruptcy court
may reopen a case for, among other reasons, “cause.” AO argues there is cause to reopen Min’s case
because AO had no notice of Min’s bankruptcy proceedings and therefore no opportunity to
participate. AO further contends that the bankruptcy court abused its discretion by placing the
burden on AO to show that it did not receive notice. But because the movant bears the burden of
establishing cause to reopen a case, this Court holds that the bankruptcy court acted within its
discretion when it denied AO’s motion and therefore AFFIRMS the bankruptcy court.
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I.
BACKGROUND
A. Factual Background1
Min filed for Chapter Seven bankruptcy on September 29, 2016, ROA 8, and received his
discharge on January 11, 2017, ROA 12. Min owed one of the discharged debts to AO. ROA 206.
But AO claims to have received no notice of Min’s bankruptcy, Doc. 12, Appellant’s Br., 9, and did
not attend the creditors’ meeting, file a claim, or otherwise appear in Min’s bankruptcy proceedings,
ROA 192, 194. Min listed AO as a creditor with the address 340 S. Heartz Road, Coppell, Texas
75019-5816, and sent notice of the proceedings to that address and to William Chu, ROA 8, 22, 73,
AO’s attorney in a state-court civil case in which AO sued Min over the same debt at issue here,
ROA 206. Neither notice was returned as undeliverable. ROA 8. And the same day that Min filed
for bankruptcy, he filed suggestions of bankruptcy in both the trial and appellate court in which AO’s
case against him was pending. ROA 206. Electronic notices of the suggestions of bankruptcy Min
filed in the state courts were electronically served on Chu and Chu’s associate David Paulson. ROA
206, 481. A read receipt indicates that Chu or Paulson viewed the notice containing the suggestion
of bankruptcy, and on October 4, 2016 the state appellate court sent a letter to Chu advising him
that AO’s case had been abated on account of Min’s bankruptcy. Id. Min’s bankruptcy case was
closed as a no-asset case on February 3, 2017. ROA 12.
AO says it did not receive notice of Min’s bankruptcy because the Coppell address was out
of date and that AO’s address registered with the Texas Secretary of State since 2015 has been 2760
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The Court takes the facts from the Record on Appeal, denoted in citations “ROA.”
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FM 917, Mansfield, Texas. Doc. 12, Appellant’s Br., 13; ROA 196, 510.
B. Procedural History
On May 3, 2017, AO filed a motion to reopen Min’s bankruptcy case, arguing that the case
should be reopened because AO never received notice of nor had the chance to participate in Min’s
proceedings. ROA 129. After Min responded and AO replied, the bankruptcy court held an
evidentiary hearing on AO’s motion at which the court admitted all of the parties’ exhibits and heard
testimony from several witnesses. ROA 481–556. The bankruptcy court denied AO’s motion to
reopen the case, reasoning at the hearing that Min’s sending notice to AO’s Coppell address and to
William Chu was reasonable and therefore that AO failed to meet its burden of establishing cause
to reopen Min’s case. ROA 554. The written order denying AO’s motion states only that AO’s
motion was denied for the reasons given in the record. ROA 6.
AO timely filed its notice of appeal on August 15, 2017. ROA 1, 4. The appeal is fully briefed
and thus ripe for review.
II.
STANDARD OF REVIEW
A bankruptcy court may reopen a case for cause. 11 U.S.C. § 350(b); Fed. R. Bankr. P 5010.
The burden of proof is on the movant to establish that a case should be reopened. First, Nat’l Bank
Bank of Jeffersonville v. Goetz (In re Goetz), No. 03-39850-H3-11, Adversary No. 08-3341, 2009
Bankr. LEXIS 5521, at *6 (S.D. Tex. April 24, 2009). A district court will reverse a bankruptcy
court’s decision on a motion to reopen only if the bankruptcy court abused its discretion. In re Faden,
96 F.3d 792, 796 (5th Cir. 1996). A bankruptcy court abuses its discretion if it “(1) relies on clearly
erroneous factual findings; (2) relies on erroneous conclusions of law; or (3) misapplies the law to the
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facts.” Love v. Tyson Foods, Inc., 677 F.3d 258, 262 (5th Cir. 2012).
III.
ANALYSIS
AO argues that the bankruptcy court abused its discretion by relying on an erroneous
conclusion of law. Doc. 12, Appellant’s Br., 10. According to AO, the bankruptcy court erroneously
put the burden on AO to establish that it did not receive notice of Min’s proceedings even though
the law requires the debtor to establish that creditors received notice of proceedings. Id. at 12.
Indeed, the bankruptcy judge stated that “[AO] did not meet its burden of showing lack of notice
and therefore cause to reopen the bankruptcy.” ROA 554.
But the bankruptcy court correctly placed the burden of proof on AO. The party moving to
reopen a case under § 350(b) bears the burden of establishing cause to reopen the case. Goetz, 2009
Bankr. LEXIS, at *6. AO’s cause for reopening the case was that it did not receive notice of Min’s
bankruptcy and therefore could not participate. The bankruptcy court denied the motion because
it found the notice Min sent to AO’s former address and to AO’s attorney reasonable. ROA 554.
The decision whether to reopen a case under § 350(b) is committed to the sound discretion of the
bankruptcy court, Faden, 96 F.3d at 796, and this Court holds that the bankruptcy court acted
within its discretion by finding the notice Min sent reasonable under the circumstances and denying
AO’s motion.
AO’s argument fails because it conflates the burden of proof applicable to its § 350(b) motion
with the burden of proof that would possibly apply to the 11 U.S.C. § 523(a)(3) claim AO wants to
make if Min’s case is reopened. Section 523 exempts from discharge a debt
neither listed nor scheduled under section 521(a)(1) of this title, with the name, if
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known to the debtor, of the creditor to whom such debt is owed, in time to permit
. . . timely filing of a proof of claim and timely request for a determination of
dischargeability of such debt under one of such paragraphs, unless such creditor had
notice or actual knowledge of the case in time for such timely filing and request.
§ 523(a)(3)(B). If a debt is neither listed nor scheduled, a debtor must show that the creditor
corresponding to the debt had notice or actual or knowledge of the case. U.S. Small Bus. Admin. v.
Bridges, 894 F.2d 108, 111 (5th Cir. 1990).
AO has the cart before the horse. First, it must establish cause to reopen Min’s proceedings.
Goetz, 2009 Bankr. LEXIS, at *6. Only were the case reopened would Min bear the burden of
showing that AO had notice or actual knowledge of the proceedings and would bear that burden
only if Min’s debt to AO were unlisted. See § 523(a)(3). The bankruptcy court thus correctly placed
the burden on AO to show that it did not receive adequate notice of Min’s bankruptcy.
IV.
CONCLUSION
Because the bankruptcy court acted within its discretion when it found that AO failed to
establish cause to reopen Min’s bankruptcy proceedings, this Court AFFIRMS the bankruptcy
court’s denial of AO’s motion.
SO ORDERED.
SIGNED: May 2, 2018.
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