Hudson vs. Shields, (5th Cir. 1999)

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IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 98-60711 Summary Calendar In the Matter Of: N. HANEY HUDSON Debtor.

N. HANEY HUDSON, Appellant, versus H. ALEX SHIELDS, JR., Appellee.

Appeal from the United States District Court for the Southern District of Mississippi USDC No. 4:98-CV-85-LN August 3, 1999 Before EMILIO M. GARZA, BENAVIDES, and STEWART, Circuit Judges.

PER CURIAM: * Plaintiff-Appellant N. Haney Hudson appeals the district courtÂ’s September 18, 1998 order dismissing his Chapter 11 bankruptcy petition. After a thorough review of the record and briefs, we affirm.

F ACTUAL AND P ROCEDURAL B ACKGROUND I n 1989, Defendant-Appellee H. Alex Shields (“Shields”) agreed to sell 148 acres to the Debtor N. Haney Hudson (“Hudson”) for the sum of $350,000.00. Shields personally financed the sale to Hudson who, in turn, executed a deed of trust in favor of Shields for the full amount of the indebtedness. The deed of trust was duly filed in the land records office of the Chancery Court of Clarke County, Mississippi, on May 15, 1989. On July 2, 1990, Hudson sought relief from his debts pursuant to Chapter 11 of the United States Bankruptcy code. A subsequent addendum to Hudson’s plan reorganization required him to make payments to Shields. Hudson’s failure to make payment led Shields to conduct a foreclosure sal e o f Hudson’s property on July 31, 1991. Hudson was successful in preventing the foreclosure on the property.

Since then, the parties have been involved in a protracted legal dispute in which Shields has primarily sought to foreclose on the property and collect on the debt Hudson owes him. On July 14, 1997, Hudson filed a mo tion in the bankruptcy court to lift an order which was holding various motions in abeyance pending the resolution of all issues in state court. The bankruptcy court granted this motion on July 25, 1997. On March 4, 1998, the bankruptcy court held a trial on ShieldsÂ’s motion to dismiss the chapter 11 claims or convert them to chapter 7 claims. The bankruptcy court dismissed the chapter 11 claims in a May 8, 1998 order and the district court subsequently affirmed in a September 18, 1998 order. Hudson now appeals.

S TANDARDS OF R EVIEW We review a bankruptcy court's decision t o dismiss a Chapter 11 petition for abuse of discretion. S ee In re Elmwood Development Co ., 964 F.2d 508, 509 (5 th Cir. 1992). We review the district courtÂ’s determinations of law de novo . S ee In re Martin , 880 F.2d 857, 858 (5 th Cir. 1989).

D ISCUSSION Hudson endeavors to bring a plethora of issues before this court yet it is clear from the record that resolution of this case requires us to address a sole issue: whether the district court abused its discret ion in affirming the dismissal of HudsonÂ’s chapter 11 case. After a thorough review of t he record, the briefs and the applicable law, we agree with the district court and affirm.

It is beyond dispute that Hudson has fai led t o make any plan payments to creditors, as required by 11 U.S.C. § 1101 (2)(c) following the June 1991 confirmation of his plan. Hudson also made only one plan payment to Shields in May 1991 as required by the addendum to his plan. Cause for dismissal exists where, as here, (1) t he debtor exhibits an § 1112(b)(7)-(8). On this basis, we agree with the district court and find no abuse of discretion.

We further find that the court below properly dismissed this action rather than convert it into a chapter 7 case. HudsonÂ’s sparse assets which are already encumbered cannot convey any benefit to the estate or any creditors; therefore, there w as no basis for conversion. Finding no error, we affirm.

C ONCLUSION We agree with the district court and adopt its reasoning as our own. AFFIRMED.

* Pursuant to 5 TH C IR . R. 47.5, the court has determined th at t his opinion should not be published and is not precedent except under the limit ed circumstances set forth in 5 TH C IR . R. 47.5.4

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