United States District Court, N.D. Texas, Dallas Division
In Re BRIAN P. MIN, DEBTOR
BRIAN MIN, Appellee. ALPHA OMEGA CHL INC., Appellant,
J. Boyle United States District Judge.
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.
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.
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Coppell address was out of date and that AO's address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 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.
timely filed its notice of appeal on August 15, 2017. ROA 1,
4. The appeal is fully briefed and thus ripe for review.
STANDARD OF REVIEW
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 facts.” Love v. Tyson Foods, Inc.,
677 F.3d 258, 262 (5th Cir. 2012).
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.
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
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 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 ...