Couple Petitions U.S. Supreme Court To Decide if 'Mootness Rule' Allows Unlawful Sales of Homes by Bankruptcy Trustees, And Deprives Homeowners of Rights During Appeal

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Homeowners Petition Supreme Court for Writ of Certiorari to urge end to Bankruptcy Trustee practice of selling homes with claims of exemption on them, then asserting "mootness rule" to deny homeowners’ appeal rights. Orders by bankruptcy Judges appear to give official "stamp of approval." When homeowner appeals, Bankruptcy Trustee says appeal cannot be heard, because it is "moot," citing a "mootness rule." Some Appeals Courts follow this "Rule;” some don’t. Couple asks Supreme Court to clarify the meaning of this “Rule,” stemming from 11 U.S.C. 363(m) of the Bankruptcy Code, for Appellate Court consistency, and to protect homeowners.

On January 6, 2006, the U.S. Supreme Court will likely begin consideration of a Petition for Writ of Certiori filed by Roger and Christine Fearing of Woodland Hills, California on November 7, 2005. Upon filing for Chapter 11 bankruptcy protection, in January 2000, the Fearings claimed a homestead exemption. No party objected. The Fearings’ case was converted to a Chapter 7 in July 2002. The trustee and bankruptcy court then sold their home, despite their exemption.

References in this Release are to the following cases:

Fearing Petition for Writ of Certiorari, Supreme Court: 05-7491

Link to copy of Petition for Writ:
Fearing Bankruptcy Case, Central District, CA: SFV-00-10940-KL

Griffin Bankruptcy Case, Western District, AR: FS-02-70245-M

The Fearings allege that, in January 2003, Bankruptcy Trustee David Seror, through his attorney/partner Peter Davidson, both of the firm Moldo Davidson Fraioli Seror & Sestanovich LLP, slipped verbiage into an order, which was then signed by Bankruptcy Judge Kathleen Thompson Lax, erroneously approving a sale "free and clear" of their homestead exemption.

Many Americans believe: "You can file bankruptcy and keep your home." Worse than this belief, when debtors do file appeals, some trustees claim those appeals are "moot," and must be dismissed, due to a misunderstood Bankruptcy Code “Mootnees Rule”: 11 U.S.C. 363(m).

"They simply ignored our homestead exemption," said Roger Fearing. "So we began to fight back in the Appellate Courts. But those courts devised a "Rule" that we cannot appeal because our homestead has already been sold, even if illegally. We brought that contested "Rule” to the Supreme Court for interpretation, since the Circuit Courts disagree on its meaning."

The Fearings are not alone. Stephen Griffin of Arkansas filed for Chapter 11 bankruptcy "protection" in 2002 after suffering a heart attack. "Since that devastating moment, he has lost everything for which he had worked a lifetime," said Barbara Griffin, Stephen's wife. "At the time of the filing of his bankruptcy, my husband had a lifetime worth of assets, but a cash flow problem. The Chapter 7 trustee has taken everything, and is now trying to have a U.S. Marshall remove us and our children from our home. If he does he will make a commission."

Richard L. Cox, trustee in the Griffin case, is apparently objecting to Stephen's homestead exemption on the basis that the residence address on his bankruptcy "Schedule C" was not correct. "It was a typographical error," says Barbara Griffin. "The trustee has acknowledged the correct address, and must know that, under Arkansas law, the place we occupy as a residence is 100% exempt from sale if he tries to sell our home, yet he still wants to set us out on the street."

11 U.S.C. 363(m) of the Bankruptcy Code states, in part: "The reversal or modification on appeal of an authorization under subsection (b)…of this section…does not affect the validity of a sale…" The Fearings’ argue that language requires, under "subsection (b)…" of Section 363, that any property to be sold in bankruptcy must be "property of the estate," not exempt property.

The Fearings urge the Supreme Court to consider the meaning of Section 363(m). As both the Fearings and Griffins put it, "No one is immune from financial disaster."

Many trustees assert that the Mootness Rule mandates, once a bankruptcy trustee sells property, even if it were not "property of the estate," and even if the trustee violated the law, that the injured parties are effectively denied access to the courts of appeal because the property has already been sold. The Fearings disagree.

Americans assume that the appeal process is available to any injured party, but there is no clear redress currently available for homeowners who have had their property unlawfully sold by bankruptcy trustees.

The Fearings are therefore looking to the Supreme Court Justices to clarify, for Circuit Courts across the Nation, and for any future homeowner who might become subject to the bankruptcy laws, the correct meaning of 11 U.S.C. 363(m). "Worse than allowing a trustee to sell our exempt homestead," says Mr. Fearing, "a wrong interpretation of 363(m) allows appellate courts to brush aside all debtors’ rights to appeal any trustee's sales, even if those sales are illegal."

"The question," continues Mr. Fearing, "is whether the rule of law will prevail, or whether the selfish interests of certain 'officers of the court,' such as trustees and their attorneys, who apparently manipulate the law for their own personal gain, will carry the day." Mr. Fearing emphasizes that bankruptcy trustees are paid a commission on properties they sell. Therefore, the Fearings argue, these “trustees” have a vested interest in selling as much property as they can…apparently even if they have to bend or violate the law in the process.

"Enough is enough!" say the Fearings and Griffins. Mr. Fearing concludes, "We trust that the Supreme Court Justices will grant our Petition, clarify the law, uphold constitutional protections, and require due process. The American Dream of home ownership deserves no less!”


Roger and Christine Fearing: 818-227-9619

Stephen and Barbara Griffin: 479-739-4632

David Seror, Chapter 7 Trustee in the Fearing Case: 310-551-3100

Peter A. Davidson, attorney/partner to David Seror: 310-551-3100

Richard L. Cox, Chapter 7 Trustee in the Griffin Case: 501-623-1759

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