Gebhardt v. Hardigan
Filing
25
ORDER affirming the Bankruptcy Court's Order denying Appellant's motion to convert or dismiss; and directing that the Clerk shall terminate all deadlines and motions, and close this case. Signed by Judge J. Randal Hall on 09/19/2014. (jah)
ii.i
I N THE IINITED STATES DISTRICT COI'RT
FOR THE SOUTHERN DISTRICT OF GEORGIA
SAVAI{NAII DIVISION
IN
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THE MATTER
KENNETH R.
HARDIGAN,
Debtor
GUY G. GEBHARDT, ACTING UNITED
STATES TRUSTEE,
Appellant,
V.
KENNETH R.
HARDIGAN,
Appellee.
[0tq
4:13-cv-00125-.lRH
Bankruptcy Case:
No. L2-40484-LWD
ORDER
annea'ls
SunTrust
Kenneth
f rom
R.
or,
in
not
err
Chapter
and the
Bankruptcv
United
and
test
did
States
("Appellee")
to
to
refusing
in
not
when
Court' s Order.
March
uvJ
afternative,
11-
circumstances
uy
UqrrJ\!
LIIg
Hardigan's
the
did
R:nkrttnf r:rz Cottrtt s
ihc
Bank's
Guy
Trustee
states
united
Acting
convert
err
in
assessing
the
motions
abuse,
convert
to
Lhe
the
this
to
a Chapter
to
totality
Court
11
Court
Bankruptcy
7 case
Chapter
applying
denying
7 filing
Because
dismiss.
)
2013 Order
29,
Trustee's
Chapter
("Appel1ant"
Gebhardt
one under
of
AFFIRMS
the
the
BACKGROT'ND
I.
is
Appellee
(Doc.
no.
his
3. )
11
A n n e rl lfeue ' s
u
nl/yu
7 process.
oT,
in
banLrrrntarr natit-i6n
(Doc.
no.
abuse
of
presumpt.ion
no
that.
Court
determined
test"
of
1l- U.S.C.
437,
440
(Bankr.
S.D.
ability
to
pay,
his
Chapter
"total-itv
of
the
circumstances"
AppeIlee's
on
based
the
that
held
11 under
U.S.C.
the
S 158(a) (1)
Court
error,
Court
reviews
and its
5 6 7 F . 3 d 1 , 2 9 I,
to
declined
1l- U.s.C.
II.
This
factors,
appellate
and
Bankruptcy
459.
abuse
in
forth
11
CourL
not
did
Additionally,
petition
to
a
446-47.
jurisdiction
Rules
Court's
Bankruptcy
conclusions
L296 (1-1t.hCir.
given
that
petition
Appellee's
at
490 B.R.
AI{D STAI{DARD OF REVIEW
has
lega1
rd.
"means
t.he
The Bankruptcy
at
B.R.
Bankruptcy
on
set
that
Chapter
constituted
Appellee's
convert
S 706(b) -
iII'RISDICTION
the
490
the
alleged
test
4-5. )
the
a
to
ground
Of
at
5-I4
case
Hardigan,
7 pet.ition
at
5-5
Haggiggn,
re
In
Court
Bankruptcy
Chapter
no.
based on a number of
abuse.
constitute
the
(Doc.
S 707 (b) (3) (B) .
U.S.C.
re
no.
the
based
Appellant
2013) .
Ga.
In
exist.ed.
S 707(b)(2)
on
for
undisputed
the
motion,
on the
ruling
is
an abuse
Constituted
fn
5-5.)
It
convert
to
Georgia.
petition
(Doc.
t.o dismiss
alternative,
t.he
7
f-.)
at
nalure.
in
20L2
23,
Savannah,
Chapter
5-L4
no.
consumer
May
on
his
filed
(Doc.
20L2.
moved
Appellant
Chapter
7,
primarily
are
debts
He
19.)
1-,
on March
bankruptcy
t.hat
at.
5-1
in
residing
cardj-ologist.
a
de novo.
2009) .
8001
pursuanL
et
factualIn
re
seq.
findings
Globe
to
28
On appeal,
for
Mfg.
cl-ear
Corp.,
In
U.S.C. S 707(b) (3),
t1
under
r r nI r . z f o r
aLrrrse of
(l1th
L298-99
it
when
(l1th
the
facL."
findings
Tn
presents
appeal
This
in
erred
u.S.C.
S 707 (b) (3) (B) ;
d e n r z in c r A n o e l l a n t t
1,253, 7,27r
F. 3d
7L9
(2)
and
to
11
under
dismi-ss
erred
Court
11
11 under
a Chapter
to
convert
BankruptcY
the
Bankruptcy
t.he
whether
to
whether
motion
APPeI Iant's
CrPPsAr
of
application
Kulakowski,
the
"the
presumption
of
abuse by
j-n bad
debtor's
faith;
11
abuse
does
considering
or
financial-
(2)
the
fails
formula.
"the
situation
would
11
not
(1)
arise,
whether
totality
abuse
an
of
however,
which
the
" 7r u.s.c.
3
provisions
of
is
calculated
court
filed
abuse
where
Even
the
debtor
the
the
presumption
A
S 707 (b) (2) .
of
re
7 case
a Chapter
of
"means test,"
U.S.C.
S e e In
discretion.
dismissalbe
T h e Court
20L3) -
S 707 (b) (1) .
U. S. C.
debtor
statutory
a
re1ief
of
for
Courtts
test.
circumstances"
an abuse of
for
Code provides
granting
where the
arises
the
Rankrrtnl-r:rz
fhe
735 F.3d 1296, L299 (11th Cir.
Code] . "
lthe
of
"totality
The Bankruptcy
where
r r: rh ra l l e nr y err e s
ur c
v q f
Anncllanf
nlrl/errqrru
r
determination
this
reviews
S 707 (b) (3) (B)
Under L1- u.S.c.
'l
An
vII
find
makes clearly
or
s 706(b).
A. Dismissal
by
(1)
issues:
s motion
.'yI
rtrY
u.s.c.
of
discretion
DISCUSSION
two
denying
Court
vvrr_),
faw
of
1296,
F.3d
its
abuses
Piazza,
re
735
20l.3) .
Cir.
III.
i n
Kulakowski,
principle
wrong
of
"applies
erroneous
re
court
review Is]
court]
district
2OI3) . A bankruptcy
Cir-
have considerable
courts
" Ithe
In
"
discretion.
abuse
constitutes
relief
"bankruptcy
when challenged,
and,
discretion"
7
Chapt.er
whether
determining
the
circumstances.
this
may st.ill
petition
. . of
s 707(b)(3) (A-B)
the
In
petition
AppelIee's
(Bankr.
the
portion
meaningful
of
by
or
Chapter
rel-ief
13
necessities;
(B)
incurred;
and
Hardigan,
490 B.R.
446 B.R.
to
pointed
pay
'result.
638,
be
collapse
market
impaired
Annel
snree":
creditorsi
and AppeIIee
ryurrvrrrY
Id.
system.
In
should
of
rrlr'Ir'v++\
r
and,
makes
dismissed
second,
"j-ntent,
-l
ee
and
income.
In
re
(citing
In
re
dictated
and
to
attempting
contrary
f resh
real
eslaLe
the
calamity;
through
fairly
a
Appell-ee's
l-l- proceeding;
not
ability
Appellee's
held
Court
dealt
was not
Bankruptcy
the
challenging
have
were
a
Appellee's
pre-bankruptcy
honorably
"game" the
with
bankruptcy
451'-57 .
Appellant
test,
alone
at
years
over
"qnendi no
factors
unforeseeable
an
constituted
of
debtor
debts
the
a
to
ability
the
20L3)
aJ-though
that,
a Chapter
by
(6)
and
provide
to
case,
Ga.
S.D.
Bankruptcy
the
debts
debLor's
the
other
abuse,
toward
repay
11
Chapter
Ga. 2010) ).
found
Court
incurred
were
debts
(S.D.
to
which
over
(Bankr.
for
depriving
wj-thout
of
was caused
ability
l-3
Chapter
period
447
642
efforts
a
repay
to
abilit.y
eligibility
debtor's
stability
437,
Specif ically,
would
start
a
time
the
Bankrupt.cy
The
in
the
0)
(3)
the
expenses
debtor's
the
Truax,
(5)
Bankruptcy
the
t.he bankruptcy
whet.her
debtor's
the
distribution
"meaningful"
reduce
(4)
;
creditors;
with
negotiate
(2)
sudden calamity;
or
an unforeseen
(1)
459
437 ,
B. R.
determination,
factors:
debts ;
49 0
Hardigan ,
its
making
following
on
rel-ied.
Court
re
In
totality
the
under
abuse
constitute
test .
201-3). In
ca.
S.D.
not
would
t.hat
found
court
Bankruptcy
Lhe
case,
circumstances
the
of
present
the
the
two
the
claims.
case
Bankruptcy
unscrupulous
based
Court's
First,
the
on
ability
Court
behavior
the
improperly
or
of
application
Bankruptcy
to
relied
unethical-
pay
this
Court
factor
on issues
dealings.
"
{Annellant's
his
by
creditors
re
B4I F.2d
pay
his
will,
debts
a
of
dismissal
a
that
state
to
pay.
ability
to
pay
Circuj-t
decllned
her
test
circumstances
(11th
In
rn
€.g.,
'ability
pay.'
narr /'\ '
Tn
(Bankr.
N.D.
v q
of
more
y
.
I
t
re
on
solely
the
t.he
Eleventh
pay
to
ability
his
t.otality-of-theto
Witcher ,
than
just
Nov.
563
pay
7 02
but
one
61-9
,
623
is
F. 3d
8,
that
the
debtor's
10-745L4-WLH,
20I0 )
ability
dismissal-
for
(Bankr.
M.D.
(citing
evaluaLion
show
to
ability
WL 4882059,
several
2010)
UST must
the
mathematical
20L0
See,
abuse.
Fla.
in
on a debtor's
solely
Thus,
pay,
to
707(b) (3) (B) requires
circumstances.'
Rudmose, No.
Ga.
compel
558,
section
the
found
dj-smj-ssal- based
required
fnstead,
the'totality
something
re
have
to
B.R.
424
cou1d have
to
courLs
insufficient
Lavin,
re
("Congress
of
is
itself,
and of
fn
considered.
warrant
Emphasi-ztng that
ability
that
demonstrating
[, ] "
under
Fla.
however,
cases,
rely
debtor's
dispositive
aJ-one be
many other
fact,
a
"whelher
s-Dto
can be utilized,
that
707 (b)
(emphasis added).
20L2)
Cir.
decide
may be
t.hat
f actor
to
sufficient
a result.
such
dictate
(Bankr-
These
to
ability
section
permissibly
may
but. one factor
is
is
abuse")
for
court
They do not
can
debts
case
bankruptcy
ability
or
7
Chapter
a
fr]
e.9.,
See,
debtor's
607
595,
alone,
standing
("a
justify
alone,
36a B.R.
Henebury,
pay,
19BB)
Cir.
standing
to
("ability
200'7)
(9th
9I1
re
In
dismissal");
908,
repay
to
ability
abuse.
find
Appellant
arguing,
Lhe
found
to
alone,
standing
weight
corresponding
so
In
to
ability
IAppe1lee'sl
giwen
have
AppelIant
contention,
of
a7.)
at
courLs
where
sufficient,
KeI1y,
(Id.
court."
cases
several
cit.es
nature
shoul-d have been
...
creditors
first
the
to
"overwhelming
bankruptcy
the
As
21.)
at
the
that
alleges
repay
Brief
cases
for
at
*3
the
proposition
alone
second
Appellant's
with
issue
of
good
fait.h,
good
faith
are
iridications
debtor's
is
it
true
aFpellee's
"financiaf
situation,
prospects,
the
in
fact
Appellee
that
debt,
unsecured
his
of
financialand
t.he
his
reduced
little
retain
437,
a
totality
estate,
bankruptcy,
and
on
incurred,
real
490 B.R.
fair
future
were
21-.)
at
relied
the
the
(Bankr.
455
S.D.
2013).
based
Thus,
and
the
Court
abused
based
on ability
it.s
careful-
revi-ew
briefs,
parties'
Order
its
a
on
his
debts
following
Hardigan,
re
on
the
Brief
afso
bearing
surrendered
wil-I,
In
it
including
"
which
or
sold
and
propert.y.
secured
ca.
manner
have
t.hat
factors
other
of
mu]titude
to
Appellee's
addressed
creditors,
his
with
dealinqs
honorable
subjective
relating
(Appellant's
Court
Court's
Specifically,
of
factors
any
t.hat
irrelevant.
Bankruptcy
the
use
court's
the
arguing
above.
l-isted
factors
abuse").
Bankruptcy
the
pay
to
an ability
a case for
of
addresses
seven
takes
Appellant
While
other
that
hold
dismissaf
claim
the
of
application
justify
to
noL sufficient
is
generally
also
"courts
that
I
by
discretion
pay
to
cannot
refusing
or
alone
find
that
find
to
the
Court' s
Bankrupt.cy
of
process
relied
on
abuse
factors
t.he other
by
Bankruptcy
the
of
in
analysis.
B. Conversion
Under
convert
Appellant
argues
that.
section
a1so
app1y.
Court
will
the
to
Chapter
case
Appellee's
that
705 (b)
the
findinqs
Court
not
Brief
of
apply
at
fact
25.)
for
As
clear
to
S 706(b).
when
concl-uded
erred
where
failure
11 U.S.C.
11 under
Bankruptcy
shou]d
(Appellant's
revi-ew
a
Court's
Bankruptcy
challenges
next
Appellant
S 705 (b)
L]- u. S. C.
it
707 (b)
section
cou]d
discussed
above,
error
concfusions
and
the
of
In
faw de novo.
(11-th
1296
L29L,
2009\ .
Cir.
706 (b)
Sectj-on
party
and
7
case
to
decision
to
the
qq-sRe
al-
q4O
(Bankr.
D.N.M.
section
ability
to
repay
(4)
and
re
In
(relying
re
to
fact:
of
under
continued
j-nvofved.
Tn re
had
the
7
Chapter
Appettee
all
Hardigan,
11 plan
a
would
490 B.R.
437,
44'7,
N.D.
20a3)
following
repay
debts;
was "dubj-ous"
if
could
all
451-53
Ga.
.
the
benefit
11
from
Cir.
contract.or;
not
for
benefit
8th
credit.ors
unsecured
conversion
to
a
Chapter
(Bankr.
made
ability
and
a
conf irmation)
order,
a Chapter
grounds
would
(B-A. P.
for
its
of
between
and
months;
in
Court
debtor's
the
of
692-94
57o
pay and potent.ial
Appellee
cl-aim
disputed
683,
B.R.
489
the
853
whether
immediate
interest
in
465 B.R.
Gordon,
confirmation
of
likelihood
parties
Court,
Bankruptcy
find.ings
the
Schl-ehuber ,
on abilit"y
The
wit.hin
whether
(1)
confirmation
of
likelihood
824,
determining
of
absence
will
Rep. No.
S.
454 B.R.
appropriate:
be
the
Q)
the
See In
conversion.
20L2) ;
debt. i
(3)
reconversion;
plan;
would
conversion
706(b)
on what
mandatory;
in
factors
on various
relied
have
Courts
the
converL.")
to
any decision
in
discretion
based
not
is
secLion
leaving
Lobera,
706 (b) ]
(" lsection
a
convert
This
interest."
in
re
fn
al-so
may
instead
court,
parties
aII
see
Q978) ;
20LI)
its
use
should
of
benefit
the
of
discretion
"sound
interested
an
S 706 (b) .
requiremenLs,
additional
of
court
1-1. 1-1 U. S. C.
Chapter
any
the
inure
most
a
provide
not
does
to
the
hearing,
a
and
reguest
upon
that,
provides
noti-ce
after
Chapter
the
567 F.3d
Corp. ,
Mfg.
Globe
re
the
gJ-ven
the
case
be
paid
parties
(Bankr.
S-D.
Ga. 2013) Upon
Bankruptcy
a
careful
Court's
revj-ew
factual-
of
findings
the
record,
were not
I
clearly
f ind
that
erroneous.
the
and
Accordingly,
section
705 (b)
not
in
err
to
refusinq
the
applying
the
fact,
case
the
convert
to
of
findings
those
standard
deferential
highly
to
Bankruptcy
'l
dh=nl-ar
vrrs}/
ev!
1
Court
of
did
I
CONCLUSION
As
discussed
flrdar
donrri
nn
sha1l
terminate
Anno
all
above,
I I :nl_
t q
t.he
motion
to
AFFIRMS
f he
convert
or dismiss.
and motions,
deadl-ines
oRDER ENTERED at
Court
Augusta,
Georgia,
Rankrrrntr:rr
a n d C L O S El h i s
this
/94O
",
Courtt
s
The Clerk
case.
september,
20]-4
H
UNITED STATES DISTRICT
DISTRICT
1
,JUDGE
OF GEORGIA
discussion
of the
The Court does not address the Bankruptcy Court's
is
sufficient
706 (b) and 707 (b) because there
interplay
between sections
Court did not err in
the Bankruptcy
that
to determine
in the record
evidence
705(b) alone.
refusing
convert the case under section
to
8
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