ATTORNEY FOR APPELLANT
: ATTORNEY FOR APPELLEE:
TONY WALKER MARY KAY THANOS
COURT OF APPEALS OF INDIANA
Highland, Indiana Dyer, Indiana
FRANK SANCHEZ, )
vs. ) No. 45A03-0208-CV-282
MARY K. THANOS, )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable Julie Cantrell, Judge
Cause No. 45D09-9912-SC-3743
January 13, 2003
Appellant-defendant Frank Sanchez appeals the denial of his motion to correct error with
respect to the cause of action brought against him by his former legal
counsel, appellee-plaintiff Mary K. Thanos, for the recovery of attorneys fees. Specifically,
Sanchez claims that the trial court abused its discretion because it had no
subject matter jurisdiction to hear this case after his petition for bankruptcy was
filed. Concluding that the trial court erred in denying Sanchezs motion to correct
error, we reverse.
The facts most favorable to the judgment are that Thanos represented Sanchez in
his 1999 divorce action. However, Thanos had to sue Sanchez to recover
her fee of $736. A body attachment was issued for Sanchez by
the trial court on May 4, 2001, after he failed to appear at
a scheduled hearing. On September 14, 2001, Sanchez was arrested and posted
a cash bond of $975. The trial court set the matter for
a final hearing to be held on October 17, 2001, but on October
16, 2001, Sanchez filed a bankruptcy petition in the Northern District of Indiana
United States Bankruptcy Court. After receiving an order on October 16, 2001,
from the Bankruptcy Court, the trial court stayed the proceedings.
On January 22, 2002, the Bankruptcy Court discharged Sanchezs debts under Chapter 7
of the Bankruptcy Code.
The bankruptcy petition included the dispute with Thanos over the fees that were
allegedly owed and listed her as an unsecured creditor. Appellants App. p.
13. However, the petition did not list the cash bond of $975
as an asset. After the Bankruptcy Court discharged his debts, Sanchez filed
a motion to dismiss in the trial court on June 17, 2002, on
account of the discharge order. The trial court denied the dismissal and
released the cash bond to Thanos on July 2, 2002, in satisfaction of
the legal fees allegedly owed to Thanos. In its order denying Sanchezs
motion, the trial court stated that the Plaintiff is not listed in the
bankruptcy. Appellants App. p. 6.
On July 18, 2002, Sanchez filed a motion to correct error, noting that
Thanos was listed as a creditor in Sanchezs bankruptcy petition. The trial
court denied the motion to correct error, on July 31, 2002, stating that:
The Court did incorrectly state in its order of 7-2-02 that the Plaintiff
was not listed in the Defendants Bankruptcy. However, the Court is correct
in noting the Defendants Bankruptcy does not list the bond posted for this
case as an asset in his Bankruptcy. Therefore, the Bankruptcy Court in
granting discharge did not know about the bond that the Defendant posted.
Sanchez now appeals.
DISCUSSION AND DECISION
In addressing the issue that Sanchez has placed before us today, we note
that a discharge in bankruptcy operates as an injunction against the commencement or
continuation of an action . . . to collect, recover or offset any
such debt as a personal liability of the debtor. In re Gladys
E. Shondel, 950 F.2d 1301, 1306 (7th Cir. 1991) (omission in original) (quoting
11 U.S.C. § 524). Additionally, after a petition for bankruptcy is filed,
a bankruptcy court has exclusive jurisdiction of all of the property, wherever located,
of the debtor as of the commencement of such case, and of property
of the estate. 28 U.S.C. § 1334(e) (emphasis added). Furthermore, a
bankrupts property that has not been administered or expressly abandoned by the bankruptcy
trustee at the time the case is closed remains within the bankruptcy estate,
subject to the trustee holding title as representative of the estate. Davis
v. Avco Finance, 158 B.R. 1000 (Bankr. N.D. Ind. 1993). Thus, only
the Bankruptcy Court has jurisdiction to adjudicate adverse claims with respect to a
bankrupts assets left in the estate after the estate is closed. In
re Rubin, 378 F.2d 104, 109 (3d Cir. 1967).
After discharge, a bankruptcy case may be reopened in the court in which
such case was closed to administer assets, to accord relief to the debtor,
or for other cause. 11 U.S.C. § 350(b). A creditor who
would be benefited by the re-opening of the case may bring the petition
for re-opening. Miller v. Shallowford Community Hosp., Inc., 767 F.2d 1556, 1559
(11th Cir. 1985).
Upon filing of Sanchezs petition for bankruptcy, the Bankruptcy Court obtained jurisdiction over
his property, including the power to settle claims over disputed assets. See
Rubin, 378 F.2d at 109. By federal statute, the Bankruptcy Court had
exclusive jurisdiction over his property. 28 U.S.C. § 1334(e). Because the
Bankruptcy Court had exclusive jurisdiction over all of Sanchezs property upon the filing
of the bankruptcy petition, the Lake Superior Court lost subject matter jurisdiction over
the cash bond.
Sanchezs petition recognized that Thanos was an unsecured creditor to whom he owed
a legal fee. Appellants Br. p. 13. If Thanos, a creditor,
will be benefited by the re-opening of Sanchezs case, her proper recourse is
to petition the Northern District of Indiana United States Bankruptcy Court to re-open
Sanchezs case. See Miller, 767 F.2d at 1559. In short, the
trial court lacked subject matter jurisdiction to award the cash bond to Thanos
and erred in denying Sanchezs motion to correct error.
RILEY, J., and MATHIAS, J., concur.
We note that Sanchezs brief failed to substantially comply with
Indiana Rules of Appellate Procedure 46(A)(5), (A)(8)(b), and (A)(10) in that it omitted
a statement of the course of proceedings, the standard of review on appeal,
and the written opinion of the trial court, respectively. Notwithstanding this, we
address the merits of his case because Sanchezs brief provides sufficient argument for
us to decide whether the trial court erred in its decision.