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In re U.S. Tommy, Inc.

United States Bankruptcy Appellate Panel of the Sixth Circuit

March 22, 2019

In re: U.S. Tommy, Inc., Debtor.

          Argued: February 12, 2019

          Appeal from the United States Bankruptcy Court for the Northern District of Ohio at Cleveland. No. 17-16150-Jessica E. Price Smith, Judge

         ARGUED:

          Richard Nemeth, NEMETH & ASSOCIATES, LLC, Cleveland, Ohio, Leonard J. Pappas, Cleveland, Ohio, for Appellant.

          Heather E. Heberlein, BUCKLEY KING LPA, Cleveland, Ohio, for Appellee.

         ON BRIEF:

          Richard Nemeth, NEMETH & ASSOCIATES, LLC, Cleveland, Ohio, for Appellant.

          Heather E. Heberlein, BUCKLEY KING LPA, Cleveland, Ohio, for Appellee.

          Before: DALES, OPPERMAN and WISE, Bankruptcy Appellate Panel Judges.

          OPINION

          TRACEY N. WISE, BANKRUPTCY APPELLATE PANEL JUDGE.

         Debtor/Appellant U.S. Tommy, Inc. ("Debtor") appeals the bankruptcy court's pre-confirmation dismissal of its chapter 11 case pursuant to § 1112(b)[1] about seven months after it was filed. The bankruptcy court granted a creditor's written motion to dismiss, but that motion did not raise the arguments that the bankruptcy court ultimately found to be cause for dismissal. As a result, Debtor contends that the bankruptcy court erred in dismissing its case based on grounds not contained in the creditor's motion and argues that the court should have conducted an evidentiary hearing before dismissing the case. For the reasons stated, we affirm.

         ISSUES ON APPEAL

         Debtor raises two issues on appeal:

1. Whether the bankruptcy court abused its discretion in granting a creditor's motion to dismiss when none of the grounds set forth in the motion had merit at the time of dismissal?
2. Whether the bankruptcy court erred in granting the motion to dismiss without giving the parties an opportunity to present evidence?

         JURISDICTION

         The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this timely appeal from the June 5, 2018 order of the United States Bankruptcy Court for the Northern District of Ohio dismissing Debtor's bankruptcy case. The United States District Court for the Northern District of Ohio has authorized appeals to the Panel, and no party elected to have this appeal heard by the district court. 28 U.S.C. §§ 158(b)(6), (c)(1). Under 28 U.S.C. § 158(a)(1), this Panel has jurisdiction to hear appeals "from final judgments, orders, and decrees" issued by the bankruptcy court. The order dismissing Debtor's chapter 11 proceeding is a final and appealable order. AMC Mortg. Co., Inc. v. Tenn. Dep't of Revenue (In re AMC Mortg. Co., Inc.), 213 F.3d 917, 920 (6th Cir. 2000).

         FACTS

         Debtor owns the University Hotel and Suites in Cleveland, Ohio. The improved real estate is Debtor's principal asset. In 2011, Debtor's first-position secured lender on the hotel, Grand Pacific Holdings Corp. ("GP"), [2] filed a foreclosure proceeding in Ohio state court. Thereafter, the parties reached a settlement by which GP agreed to dismiss the foreclosure proceeding during a forbearance period, and Debtor agreed that upon its default or the expiration of that period GP could reinstate the proceeding and seek entry of a stipulated judgment in GP's favor granting GP the right to foreclose its lien. In March 2017, after Debtor's default, GP moved the state court to reinstate the foreclosure case ...


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