UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK
October 28, 2009
MARK W. SWIMELAR, IN HIS OFFICIAL CAPACITY AS CHAPTER 13 TRUSTEE, APPELLANT/TRUSTEE,
WILLIAM WESLEY BAKER, D/B/A THE STAGE DOOR, APPELLEE/DEBTOR,
The opinion of the court was delivered by: Hon. Glenn T. Suddaby, United States District Court Judge
MEMORANDUM DECISION and ORDER
The above-captioned action is a bankruptcy appeal, filed by Mark W. Swimelar in his official capacity as Chapter 13 Trustee ("Trustee"), from a Decision and Order issued by United States Bankruptcy Judge Margaret Cangilos-Ruiz on March 30, 2009, overruling the Trustee's objections to the Chapter 13 Payment Plan proposed by William Wesley Baker ("Debtor"). For the reasons set forth below, the Trustee's appeal is denied, and Bankruptcy Judge CangilosRuiz's decision is affirmed.
I. RELEVANT BACKGROUND
On September 26, 2007, Debtor filed a petition for relief pursuant to Chapter 13 of the United Stated Bankruptcy Code. (Dkt. No. 1, Part 3.) On October 3, 2007, Debtor filed a Chapter 13 Payment Plan in which he proposed paying the Trustee one hundred dollars ($100) per month for thirty-six (36) months, and an annuity payment of fifteen thousand dollars ($15,000) on April 29, 2009. (Dkt. No. 1, Part 7.) On July 18, 2008, the Trustee filed objections to Debtor's proposed Chapter 13 Payment Plan, arguing, inter alia, that the Plan, which proposes a twenty-three percent (23%) dividend to unsecured creditors, does not satisfy the best-interest-of-creditors test of 11 U.S.C. § 1325(a)(4). (Id.) In particular, the Trustee argued that Debtor could not claim as exempt (from the proposed Plan) one hundred and forty thousand dollars ($140,000) of annuity payments in which Debtor had a beneficial interest. (Id.)*fn1
On March 30, 2009, Bankruptcy Judge Cangilos-Ruiz issued a Decision and Order overruling the Trustee's objections and concluding that Debtor could claim as exempt the referenced annuity. (Dkt. No. 1, Part 3.) See also In re Baker, No. 07-32440, 2009 WL 2872830 (Bankr. N.D.N.Y. March 30, 2009) (Cangilos-Ruiz, B.J.). On April 27, 2009, the Trustee filed with this Court an appeal from Bankruptcy Judge Cangilos-Ruiz's Decision and Order. (Dkt. No. 1, Part 1.) On May 18, 2009, the Trustee submitted a brief in support of his appeal. (Dkt. No. 5.) During the weeks that followed, Appellee/Debtor failed to submit a response brief, and the deadline by which to do so has passed. On August 27, 2009, the Court issued a Text Order notifying the parties that the Trustee's appeal would be heard on submission of the papers.
II. APPLICABLE LEGAL STANDARD
"Rule 8013 of the Federal Rules of Bankruptcy Procedure provides that a reviewing court may 'affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree,' or it may remand with instructions for further proceedings." In re Smorto, 07-CV-2727, 2008 WL 699502, at *4 (E.D.N.Y. Mar. 12, 2008) (citing Fed. R. Bankr. P. 8013). "The Court will review the Bankruptcy Court's legal conclusions de novo and its factual findings for clear error." In re Smorto, 2008 WL 699502, at *4 (citations omitted). "The question of a debtor's knowledge and intent under § 727(a)(4) is a matter of fact..." Id. (citations omitted).
Where an appellee has failed to file a responsive brief in a bankruptcy appeal, generally the appropriate remedy is not the automatic granting of the appellant's appeal, but a review of the merits of the appeal, and the preclusion of the appellee from being heard at oral argument. The relevant rule--Fed. R. Bankr. Proc. 8009--sets a time limit for appellee's brief but is silent on the issue of whether a sanction should be issued against a non-filing appellee See Fed. R. Bankr. Proc. 8009. However, decisions addressing such failures to file commonly look to Fed. R. App. Proc. 31 (after which Fed. R. Bankr. Proc. 8009 was adapted) for guidance in deciding what sanction might be appropriate.*fn2 Appellate Rule 31 provides, in pertinent part, "[a]n appellee who fails to file a brief will not be heard at oral argument unless the court grants permission." Fed. R. App. Proc. 31(c).
After carefully reviewing the Bankruptcy Court's Decision and Order of March 30, 2009, as well as the Trustee's brief in support his appeal therefrom, the Court can find no error (clear or otherwise) in the Bankruptcy Court's legal conclusions de novo,nor can the Court find any error (clear or otherwise) in the Bankruptcy Court's factual findings. As a result, the Court denies the Trustee's appeal, and affirms Bankruptcy Judge Cangilos-Ruiz's Decision and Order of March 30, 2009, for the reasons stated therein. See In re Baker, No. 07-32440, 2009 WL 2872830 (Bankr. N.D.N.Y. March 30, 2009) (Cangilos-Ruiz, B.J.). The Court would add only two points.
First, as pointed out by Bankruptcy Judge Cangilos-Ruiz in her Decision and Order, Debtor's right to collect the annuity payments is a legal or equitable interest in the property, and therefore the right to collect the payments is an asset of the bankruptcy estate. See In re Jacob, 08-CV-1092, 2009 WL 3319931, at *2 (N.D.N.Y. Oct. 16, 2009) (Hurd, J.). Second, as also pointed by Bankruptcy Judge Cangilos-Ruiz in her Decision and Order, Debtor paid consideration for the annuity contract in that he gave up his right to pursue a lawsuit against the insurance company that set up the annuity policy in exchange for that insurance company setting up the policy. See In re Tappan, 277 B.R. 491, 491-92 (Bankr. W.D.N.Y. 2002).*fn3
For all these reasons, the Trustee's appeal is denied, and Bankruptcy Judge CangilosRuiz's Decision and Order of March 30, 2009, is affirmed.
ACCORDINGLY, it is
ORDERED that the Trustee's appeal is DENIED; and it is further
ORDERED that Bankruptcy Judge Cangilos-Ruiz's Decision and Order of March 30, 2009, is AFFIRMED. The clerk is directed to enter judgment in favor of the Appellee and close this case.