Bankr. E.D.N.C.: In re McGregor – Lack of Jurisdiction to Enforce Order following Dismissal

Summary:

Turnover of a vehicle held by a Raeford Collision and subject to a possessory mechanic’s lien was resolved subject to a Consent Order, which required the MacGregor to provide the title to the vehicle so that a lien could be recorded with the North Carolina DMV. When the MacGregor’s Chapter 13 case was dismissed and they failed to produce the title, Raeford Collision sought an order “divesting title” or to sequester the vehicle and to hold the McGregors in contempt.

The bankruptcy court held that, while it would have had authority to grant relief in an open case, because a dismissal is a final appealable order and neither had a reservation of jurisdiction nor had been appealed, the bankruptcy court not able to “affect the rights of litigants before it . . . and the court lacks subject matter jurisdiction to decide it.” In re Westgate Nursing Home, Inc., 518 B.R. at 256; see also Fox v. Bd. of Trs. of the State Univ. of New York, 42 F.3d 135, 140 (2d Cir. 1994). That notwithstanding, the bankruptcy court did continue and found that dismissal of the case, pursuant to 11 U.S.C. § 349(b), “rolls back the clock and the parties’ relative rights in estate property existing as of the minute before a bankruptcy petition’s filing are reinstated.” As such another court with competent jurisdiction could reinstate the mechanic’s lien previously held by Raeford Collision.

Commentary:

As will surprise no one, the McGregors did file a second Chapter 13, but in order to avoid the inevitable bad faith objections, did tender the title to the vehicle and fully comply with the terms of the previous Consent Order. Additionally worthy of note, were the serious allegations of bad acts by Raeford Collision both prior to and during the bankruptcy.

For a copy of the opinion, please see:

McGregor – Lack of Jurisdiction to Enforce Order following Dismissal

About

1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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