
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 95-1074                           FISH MARKET NOMINEE CORPORATION,                                      Appellant,                                          v.                                    JOEL PELOFSKY,                                UNITED STATES TRUSTEE,                                      Appellee.                                 ____________________        No. 95-1483                           FISH MARKET NOMINEE CORPORATION,                                      Appellant,                                          v.                                G.A.A., INC., ET AL.,                                      Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                       [Hon. Rya W. Zobel, U.S. District Judge]                                           ___________________                    [Hon. Richard G. Stearns, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                                  Cyr, Circuit Judge,                                       _____________                             Bownes, Senior Circuit Judge,                                     ____________________                              and Boudin, Circuit Judge.                                          _____________                                 ____________________            Stephen F. Gordon with  whom Peter J. Haley and Gordon & Wise were            _________________            ______________     _____________        on briefs for appellant.            Eric  K.  Bradford,  Office  of  the  United  States  Trustee, for            __________________        appellee Joel Pelofsky, United States Trustee.            Douglas R. Gooding with whom Charles L. Glerum and Choate, Hall  &            __________________           _________________     _______________        Stewart  were on  consolidated  brief for  appellees  G.A.A., Inc  and        _______        H.N.R.G., Inc.                                 ____________________                                  December 22, 1995                                 ____________________                          BOUDIN, Circuit Judge.   Appellant  Fish Market  Nominee                         _____________            Corp.  ("Fish  Market") was  the  owner  of an  entertainment            complex in Baltimore's Inner Harbor area which closed in June            1989.  Fish  Market failed to  pay real estate taxes  for the            years 1989-90 and  1990-91.  The property  was sold at  a tax            sale on May 13, 1991, and, through a subsequent purchase from            the tax sale buyer, appellees G.A.A., Inc. and H.N.R.G., Inc.            eventually acquired non-possessory tax title to the property,            subject to Fish Market's right of redemption.                 On December 7,  1993, GAA and  HNRG obtained an  amended            order  of redemption  from the  Baltimore City  Circuit Court            requiring Fish Market to pay  $1,056,852.79 within 30 days or            lose  its  right of  redemption.   On  January 6,  1994, Fish            Market filed for protection  from its creditors under chapter            11  of the  bankruptcy  code,  11  U.S.C.     1101  et  seq.,                                                                ________            forestalling under the automatic  stay provision (11 U.S.C.              362(a))  any further action by GAA and HNRG to foreclose Fish            Market's redemption rights.                 After an initial meeting of creditors,  11 U.S.C.   341,            the United States  Trustee, also an appellee here,  filed for            dismissal  or (alternatively)  conversion  of the  case to  a            liquidation  under  chapter  7.   Following  a  hearing,  the            bankruptcy judge  granted the motion  to dismiss the  case on            March  31, 1994, noting that Fish Market had no employees, no            ongoing  business operations,  no income,  and no  cash; that                                         -3-                                         -3-            there was no indication  of any agreement for  new financing;            and that the debtor was  unable to pay the property  taxes on            the property and had left the property uninsured.                 Upon dismissal by the bankruptcy court, Fish Market made            an  oral  motion   for  a  stay  pending   appeal  which  was            immediately  denied  by  the  bankruptcy judge.    That  same            afternoon,  GAA and  HNRG  obtained from  the Baltimore  City            Circuit Court final  decrees terminating Fish Market's  right            of redemption.  GAA and HNRG paid just  over $1.4 million for            the  property.   Thereafter,  it was  resold  to the  City of            Baltimore for $1.7 million.                 On  April  7,  1994,  Fish  Market  began  an  adversary            proceeding in the bankruptcy court under 11 U.S.C.    362(h).            It sought damages and  a temporary restraining order vacating            the  final decree  of  the Baltimore  City Circuit  Court and            preventing GAA and  HNRG from taking further action to obtain            possession  of the property;  the premise was  that the state            proceedings  had  violated  the  automatic  stay  of  section            362(a).     The   bankruptcy  court   denied   the  temporary            restraining  order on  April 15  and dismissed  the adversary            proceeding on June 20, 1994.                   Fish  Market then  pursued two  separate appeals  in the            district court.   The first appeal  challenged the bankruptcy            court's dismissal  of the chapter  11 case;  this appeal  was            dismissed as moot on the motion of GAA and HNRG.   The second                                         -4-                                         -4-            appeal challenged the dismissal  of the April 7  complaint in            the adversary  proceeding;  the district  court affirmed  the            order  of  the  bankruptcy  court.   Fish  Market  separately            appealed both district court orders.  We consolidated the two            appeals and now affirm.                    Appeal  from the Dismissal of  the Chapter 11  Case.  We                 ____________________________________________________            consider first  whether Fish  Market's chapter  11 proceeding            was properly  terminated.  Section 1112(b)  of the Bankruptcy            Code,  11 U.S.C.     1112(b), provides  that  a case  may  be            dismissed or converted  to chapter 7  for cause; Fish  Market            poses  no challenge  to  the bankruptcy  court's findings  of            fact, which amply justified the termination of the chapter 11            proceeding.                 Fish  Market nevertheless  insists the  bankruptcy court            erred  by failing to explain its decision to dismiss the case            rather  than to convert it  to a liquidation proceeding under            chapter 7.  Citing In re Superior Siding and Window, Inc., 14                               ______________________________________            F.3d  240,  242  (4th Cir.  1994),  Fish  Market  argues that            conversion  is  a separate  choice  that  must be  explicitly            considered  by the bankruptcy court.  The short answer to the            argument is that Fish Market waived it by failing to raise it            in  the  bankruptcy  court.    In  re  Mark  Bell   Furniture                                           ______________________________            Warehouse, Inc., 992 F.2d 7, 9 (1st Cir. 1993).              _______________                 The district court granted appellee's motion to  dismiss            Fish  Market's  appeal on  mootness  grounds without  further                                         -5-                                         -5-            explanation.  Apparently, the district court thought that the            transfer  of the  property meant  that  there was  nothing of            substance left  in the estate.   It  could be argued  that so            long as the appeal in the adversary proceeding remained open,            Fish  Market   retained  some   hope,  however  forlorn,   of            recovering its right of  redemption.  We need not  pursue the            mootness issue  further, preferring  to affirm on  the merits            the bankruptcy court's dismissal of the chapter 11 case.                 Appeal  from the Dismissal  of the Adversary Proceeding.                 ________________________________________________________            In  the adversary  proceeding,  Fish Market  argued that  the            state court proceedings to  foreclose its right of redemption            were  independently   unlawful  because  they   violated  the            automatic stay of 11  U.S.C.  362(a), as extended by  Fed. R.            Civ. P. 62(a)  for 10 days after dismissal of  the chapter 11            case.   This  alleged violation,  Fish Market  argues, should            entitle it at  least to damages,  if not to  a return of  its            interest  in  the property  by  reestablishing  its right  of            redemption.                   It  is common  ground  that state  court proceedings  to            foreclose  a right of redemption are barred during the period            while  the  automatic stay  is  in  effect.   Section  362(a)            protects the estate of the debtor from adverse claims  unless            the  court lifts  the stay  in particular  instances, see  11                                                                  ___            U.S.C.    362(d), or unless such  claims fall within codified            exceptions  not applicable here.   But the stay under section                                         -6-                                         -6-            362(a) itself expired as soon as  the judgment dismissing the            chapter  11 case  was entered, 11  U.S.C.   362(c);  In re De                                                                 ________            Jesus Saez, 721 F.2d 848, 851 (1st Cir. 1983), unless Fed. R.            __________            Civ. P. 62  operated to extend  the stay, a question  we have            never decided.                 Excepting  injunctions,  receivership actions,  and some            accountings,  Rule 62(a)  provides that  "no execution  shall            issue  upon a judgment nor shall proceedings be taken for its            enforcement until the expiration of 10 days after its entry."            The  rule primarily serves to  give one against  whom a money            judgment is entered time  to post a supersedeas bond  to stay            enforcement  of that judgment pending appeal.  It is clear in            this  case that no action by the appellees was an "execution"            on  the  judgment of  dismissal.1    The only  question  that            remains  is  whether   GAA's  and   HNRG's  commencement   of            proceedings in  state court to terminate  Fish Market's right            of redemption  constituted "enforcement" of  the judgment  of            dismissal.                   Contrary to Fish Market's  position, Rule 62(a) does not            purport  to make  a judgment  ineffective  for 10  days after            entry; on the  contrary, the judgment retains  full force and            effect for other purposes--e.g.,  res judicata.  Instead Rule                                       ____   ____________            62(a) merely  stays proceedings to enforce  the judgment, for                                               _______                                            ____________________                 1"Execution"  refers  to  process issued  to  enforce  a            judgment--for  example,  an order  to  the  marshal to  seize            assets to pay such a judgment.  Fed. R. Civ. P. 69.                                         -7-                                         -7-            example, discovery  to determine  the location of  a judgment            debtor's  property available  to satisfy  the judgment.   Cf.                                                                      ___            Huron Holding Corp.  v. Lincoln Mine Operating  Co., 312 U.S.            ___________________     ___________________________            183, 189  (1941)  (noting  that  although  supersedeas  stays            execution it does  not impair the finality  of the judgment).            We hold that a state court proceeding to foreclose a right of            redemption is  not "enforcement"  of a judgment  dismissing a            chapter 11 case.2        To  conclude,  the dismissal  of the            chapter 11 proceeding was a proper disposition on the present            record.  As  for the adversary  proceeding, we conclude  that            Fed.  R.  Civ. P.  62(a)  does  not  extend section  362(a)'s            automatic  stay  for  10 days  after  a  chapter  11 case  is            dismissed,  resolving the issue left  open by In  re De Jesus                                                          _______________            Saez, 721 F.2d 848.              ____                 Accordingly, the  decision of the district  court in No.            95-1483 is affirmed;  the decision of  the district court  in                       ________            No. 95-1074 is modified to affirm the bankruptcy court on the                           ________            merits and, as modified, is affirmed.                                         ________                                            ____________________                 2Accord  In re  Whatley, 155  B.R. 775 (Bankr.  D. Colo.                  ______  ______________            1993),  aff'd, 169 B.R. 698  (D. Colo. 1994),  aff'd, 54 F.3d                    _____                                  _____            788 (10th Cir. 1995); In re Weston, 101 B.R. 202 (Bankr. E.D.                                  ____________            Cal.  1989), aff'd 123 B.R. 466 (9th Cir. B.A.P. 1991), aff'd                         _____                                      _____            967  F.2d 596 (9th Cir.  1992), cert. denied,  113 S. Ct. 973                                            ____________            (1993).                                         -8-                                         -8-
