SunTrust Bank v. Hardigan

Filing 29

ORDER that the Bankruptcy Court's order denying Appellant's motion to convert or dismiss is affirmed. The Clerk shall terminate all deadlines and motions, and close this case. Signed by Judge J. Randal Hall on 9/19/14. (cmr)

,EG
I INAL
IN THE IJNITED STATES DISTRICT COURT
FOR TrrE SOUTHERNDTSTRTCT OF GEORGTA rr(
SAVAI{NAIi DIVISION

I.'ILT
D

r i l .j J i
'l :.rr lrS C O U R I
i,t DlV.

20
l|{StP AHII;
I9

IN THE MATTER OF:

iLtR

f}F GA.

4 : 13-cv- 00130-

KENNETH R. HARDIGAN,

Debtor
P:nLi,

No.

SUNTRUST BANK,

rnl- -rr

ar. ca

.

12- 40484-LWD

Appe 1I ant ,

KENNETH R.

HARDIGAN,

ORDER

29,

Court's

March

States

Trustee's

(t'Appe| ]ee" )
alEernative,
.jr
rrr

arrri

r L l furrrrq ri n c r
l a
r Y

did

n.l-

2013

to
f.!

err

Order

motions
7

Chapter

when assessing
order.

("Appellant")

Bank

Suntrust

..)nverl-

in

'LL

L

a n n l fL
sPt!

abuse,

convert

to

iu- rh a
r!

t

ihd

this

f r' hqayn f +
l r
vv

a

the

fha

7

l -. \ j - r l

court

and

the

Chapter

aasa

i l-1, Of

f.1

court

trna

the

AFFIR S the

R.
11

Bankruptcy

Fr

BankrLptcy

Kenneth

to

filing

che

Appellant's

denying

Because

dismiss.

from

appeals

rrndFr

United

Hardigan's
or,

in

the

not

err

(.hFnfeI.

1l

did

CirCUmStanceS

Bankruptcy

test

court's

r.
r^h^1
1^^
.HI,IJErree

(Doc.

no.

bankruptcy
Lhat

his

^l,t,Y!

id

I-2

q

r'tf

arn.r

(Doc.

no.

1-6.)

def ermi

rad

f hat

In

S.D.

abilit.y

Lo pay,

held

.rr

of

Lhe

i-11a R^r,k-.rnt,-\/

r_-_ * - - l ^r, _

11 under

chapter

11 U.S.C.

II.
This
U.S.C.

error.

reviews

and

567 F.3d

ifs

L29L,

and

-Ln decermining
under

Bankruptcy
Bankruptcy

l F,oFl concfusions
1296

l-1 U.S.C.

(1lth

Cir.

whether

S 70?(b) (3),

^6h^r'r-^,-

B.R.

Court

'.means

490 B.R.

teSt,,

437,

abuse based

set

forth

pet-ition

459.
c
l FF, _

AnnFl

on

in

The Bankruptcy

at

440

Appe.Ilee's

aiven

Appe-ll ee's

Id.

nr.\CesS.

the

chac

4-5.)

at

c onve
Co n v e rrtt

11

court

did

not

Additional

1y,

n -l ri- i.
I -a _ _ _ , , . ^ r r

f o

a

aE 446-47.

jurisdiction

appelfate

the

11

AI.ID STANDARD OP REVIEW

has

S 158(a) (f)

f -rh q P - e I .
u r^n-

| Li5-

On

tesE

490

S 706(b).

WRISDICTION

Court

Court

Qecl n Lr
d e C - iL -e d r e q C O
to

3.)

consrit-ut.ed

factors,

Hardigan,

al-

t.he Bankruptcy

baSed

circumstances,,

re

(Id.

"

afleged

1-6

undisputed

.h^nl-ar

f ha

Hardigan,

7 petition

(Doc. no.

In

nf

sa

re

Appellant

Chapter

abuse.

In

exisled.

is

for

1-t.1A
q
ev

.,Asa

--^,,^^
Y! vurru

rh^

molion,

ah'

tt

nature.

j-hp

abuse

the

i nr

Lhac based on a number of

conscicute

rhe

on

his

S 707(b) (3) (B) .

U.S.c.

an

ruling

20L3) .

Ca.

'.totaI i t-v

nn

in

-^r,zorl-

<mi cq

at. 1.)

.la^r^ir

petition

7

chapter

1-8

-^

q.\/.nnrl-,

in

his

consumer

di

nraslr'r'nf

n^

(Doc. no.

constituted

To

(Bankr.

filed

?n1"

rn

S 707 (b) (2\

11 U,S.C.

r-he

?J
z1

i\,.

i -i^h

^aF

He

2aL2.

\'^r?
rtot

rha

raci,4i

primarily

are

debts

l - \i - l : r , , h 1 -^ ' .

of

19. )

on March 7,

!cr.]rL
in

^ q - d r ^ lr^vd i r D L
r - !qi u
Yor

L,

at

BACKGROI]ND

Rules
Court's

8001

pursuant
er

factuaf

de novo.

1n rF

seq.

to

28

On appeal,

findings

for

r:l.)ha Mfn

clear
.^r^

2009).
?

rel i ef

"bankruptcy

courts

Chapter

const i tutes
have

abuse

considerable

and,

discreLion"

abuse
(f1th

1298-99
when

.Lt

" Ithe

of

discretion.

Cir.

2013).

erroneous
(l1rh

courL

of

principle

wrong
facL."

findings

Kufakowski,

In

"

A bankruptcy

the

"applies

dist.rict

re

when chaflenged,

TII.

appeal presencs

This

abuses

of

law

er-ed

U.S.C.

S 707(b) (3) (B) ;

d---.i

in

-^

PLazza,

F,3d

its

or

discretion

makes

F,3d

(1)

cwo issues:

(2J

and

^hh-t-=-F'S

cLearly

moLion

to

---^-1^nr
l - | P P g r - ' j .a

aPPcar,

of

app]ication
reviews

che

this

'thF

of

a,,r.la

grancing

where the
statutory

presumpLion

of

of

11

nrarri

lanceq

5

under

Court
,r1

.h5h1-^,

11

erred
11

"h^dr

abuse

bad

faith;

fn
Appellee's
Lhe

or

financial
che

12)

(1)

petition
circumstances

..."

case,

would
test.

emi cc:

l

not

Lhe

re

.a

. h ri q y-u E ,
rr nl 67

ol

re

of

is

where

courr

filed

abuse

cal culated

Bven

the

^--^

provisions

the

which

1

this

may stiIl

the

pecition

circumstances...of

the

S 707(b) (3) (A-B) .

Bankruptcy

constitute
In

debtor

Lr u.s.c.

See I n

presumpt.ion

A

the
ot

che

nF

an abuse

however,

whether

totality

situation.

presenr

arise,

L e s t . . T h e Court

2013) .

S 707(b) (2) .

U.S.C.

not

"rhe

be

rr^i,rF,c

discretion.

E.he "means test,"

1r

does

di

S 707(b) (1).

debt.or fails
formufa.

f nr

would

U.S.C.

pankrr,^i-\/
rqrr,llurJLL/

rhc,

an abuse of

doe

relief

abuse by considering

debr-or's

of

Bankruptcy

rhe circumstances"

for

deLermination

Code]."

lthe

arises

in

diSmiss

S 707(b) (3) (B)

ch^l

Lhe "rotality

R.enkr,i11l-l-\/

whe-re "Lhe

find

to

,^

convert

Kulakowski, 735 F.3d 7296, L299 (11t.h Cir.

a

I27L

whether Lhe Bankruptcy

rr.lfion

whether

A, DismiaEa1 Under 11 u.s.c.

by

1253,

s 7 0 5( b ) .

u.s.c.

of

7I9

L296,

DISCUSSION

rienvinr-r Ar.npl1^nf 'q

CorrrF

i-

re

735

review Is]

2013) .

Clr.

Tn

court]

abuse

Hardigan,

Courl
under
49O

found
the

B.R.

thaL

totality
437,

459

q

/D.rLr

c^

relied

courr
maarrr

n

r
I r Yn f r

rr'l

?n1?l

r.\n

m^ki n.t

following

the

on

n.rf

Tn

q.

.lah'

.)c

irs

deferminafion

(1)

faccors:
/")

-ha

whcrhcr

B .kr
- *a-n . - - u p r c y

f-h F-.

to

abillty
ha.1l. r|ll^l-^\,

repay

a

.aUSed

\r/: c

"'sqr

h.r:n
.\-

ah:ntar

1?

ha^^t-i.l-a
rrm6ini

n^fr,l',

reduce

.radi

(7 )

'in.rrrrFd:

and

uA r,,li.an

4qn

Lo

446

pay

roerr'l

t

cFa-l-

P

41'l

638,

Frs l
rr
, , } J s c nl al .q-r ir J , L , i e !:q , r ^ r sl y L l I n } J l t u _ f r s
Lr r
/ha
rrn^ira.i

constitut.ed

were

debcs

incurred

$qnandin.T

qlaraF,.

l- .)rq.

svstem.

Ar nJa l
u r

Id.

In

Aynr l
n y n u : cE s

at

faccors
\\AnnAl

l^hr/<

1:rF

h.LeS

As
ability

t.wo

the

l-h.rrr-h

facLors

/-rr

a,,rrrrt
11

of
were

debts
In

re

1n

/.i-in.r

and

Annallaa,q

I.e

hal.l

Annal

h-.).,padin.r.

not

J:'

a

Appellee's

honorahlv

$--n^,

f -

estate

pre-bankruptcy

a

and

f r^dl.

rFel

calamiLyi

fair]w

concrary

lao,c

I rh eF
!
r

,

Ehrough

ina,

:hiIil-rr

dictaE.ed

unforeseeable

Af f Fmnf

r - rh ^
Ll e

:q"rs

FF

't

to

rhe
pay

is

^t

firsc

to

to

the

Court's

with

!---l--1rnl-

!ctrr^!

case based

rha

on

ability

r.^,,y-

Appe-LIee's
-t4_21

appl ication

Firsl-

CIaimS.

a ja]/.j.^F^r,

r ha

refevanc
Rri

el

Bankruptcy

the

-a^^n/i

not

ih^i

dF-lf
n-i

l-/r

uyLe/

-rr

451-5'7.

shoul-d have dismissed
5nd

lpF

q
r^r;1

I cF

chalLenging
n^^al

r aer

AnnFl

.l-

debtor

income.

?n]'1,\

Ga

and

^l-li l il-\r

t.he
the

s

nrnrri

IG\

debE.Or'S

q D

/.1..:n-61

years

over

rha

t^

L.I

which

other

an

l i j r \ t/
-

11

2010)).

R:nkl.lrrrt-

l-,,, :

r ht i
q,

daht

depriving

nf

Ga.

abuse,

ranarr

l/'1

ahrn-ef

?

arr

/RArrkr

f .\rrnd

c
r

-l

ah^nl-or

-a*i

f^r

FFflir-q

without

(5.D.

toward

colfapse

.a

44'7

a^rrrf

alilTihi'i1-v

dFhl- .\r,

e-ah|lrtv

642

R:nLrrrnl-.'\/

ho

l.ha

r i --

tha

p

B.R.

vJ.\,rld

= r ^n6

/c\

expenses

Lh-

/-r)

dFhf.)r'q

in

(81

pointed

market

-rAa.li

l-^rc.

debt-or's

nA.Fssr I i Fs :

'rha

fho

.liql-rihrri-inn

the

Truax,

/4\

rFliF+.

L'i1-h

-rsgeLaquE

^.l.mit-1''

<'rArlan

ny

rrnfnrpqFFn

the

to

Ehis

t r : r ' L r , rgh L ! j ^ \ ,
Pr

Court

lqrrJlr

r rn-.)no-..rr

abilicy

of

pay.

to
ra

Day tactor

l iA.l

(Doc.

.\r-

Othef

no.

14,

\

contention,

Appellant

mosc jmporlant,

and

aLleges
driving,

that
factor

the
in

,'che
che

.
lL-v/ L- q r\ r a l i iL\y/
r

.\f

qaF
Fa

\lIvrvrI]:J

p .r

1-h:1-

light
(6th

al1

of
Cir.

rules

Fmnh^si

zincr

fhaf

debtor's
t-ha

abitity

La

In

icself,
In

is

("Congress

find
1998)

Cir.

to

ra.l

CO,

repay,

in

r23,

L26

"alone

may

court

may

886 F.2d

of

6L9,

(1rth

factor

Lhar_

decide

at

4.

Can

be

dispositive

.lpm.]ns- -at- in('

f .I,,

t.hac may be

a

"whether

debt.s can al-one be
Lesf

the

income,

F.3d

considered.

2012)
found

thaL

Ehat

In

re

pay,

in

(emphasis added)

to

B. R.

have reguired

could

153

have

courlS

424

disposable

to

any per

whenever

Cir.

insuf tic-ient.

Lavin,

dir-f af F Such

abuse'

One

declined

one factor
623

.1.1no-

alone."

L,,.t-

her

or

bankruptcy

tuLure

basis
ir

his

a

Thev

debts

re Larne44q"reject ledl

that

Circuit

pay

repay

Pdy

out

jt--.

but

is

re

so

to

r6d,i

to

'substantial-

debt

on

many other

Tn [act,

e.g. ,

to

7A2 F.3d

and of

f tLy

for

his

Eleventh

pay

h^t-

Krohn,

EhaE

r-^r 5r i t-\r-^f-the-CirCUmStanceS

to

Witcher,

repay

ahil

abllicy

drJf

wrr

rii cmi es4l

the

,rrd6r

Iy

state

dismissal

co

utifized,

re

abil icy

the courL in

fact,

fnrhjdrlincr

i c

has an ability

rn

rn

have found

(1st

4

1,

l_\1'f

m=\/

);

the

however,

sole'

able

16 . )

dismissal").

mandating
is

aL

st.and-ingalone,

F.3d

debtor

warrant

relv

In

the

Lhat

cases,

a result.

153

(stating

to

ne-rrssihlv

if

(Id.

cases where courts

^^,,.i'

circumstances"

the

1989)

These

debtor

abuse'r

of

be sufficient

Lamanna,

re

sh.rll-'rn1--r'

f ha

'subsLantial

find

se

Tn

c.,,

sufficient,

to repay creditors

the abilicy
ahrrqa

:r:-,/ci

a number of

cites

Appell-ant

arguing,

/l'^l,.li

. i r^'.m__:-^6c

rl_p

abi]ity

compel dismissaf

558,

(Bankr.

563

dismissal

to

for
M.D.

based solely

abuse.
FIa.

See,
2OtO)

on a debtor's

'

fn 2005, Congrress amended section 707(b) (3) co calf for "abuse', rather
than
abuse" with
the Bankruptcy
A-buse Prevention
and Consumer
"subslanlial
Protection Act ('*BAPCPA"). See In re Walker, 383 B.R. 830, 836 (Bankr. N.D.
,'Ie

2onRl

F-.eIsc

BAPCPA case
^^.,r+F
|'^

/!i

faw

L:,.a
emi

ad

t^^t
.

.f

in
aA

^h.hFay

rhe

sirnif".it\l

determining

i.

whecher
^aFA

r
?

^.aa

h,,/a1'.ni-

i""t"

Ir,.,
l-^

.-rrrr<

abuse
oa^f

f^-

is

.^nFin,,F

present.

^,.i^an-a

i^h

/l.r\
"^?

in
,

\

Ig_.
A6r

r v : h ^ 1 P ,r , , , - qy \ y
r^

Prs

(,'[B]ankruptcy

av-:-r-^

...heLher

'abiliry
of

pay.'

to

fnsc.ead,

'toEaIity

the

more

someLhing
pay.") i
r pAnlr

Rudmose, No.
(i^

i\f n

^rnnaqi

l- i.rn

anF'

Ann- r-.ifi.n

^f

secOnd

Fha

'h^.

reasons

sufficienL
con:r:rcl

r.'

nr

-nl

financial

his

why

with

dealings

that

factors

have

situation,

"

which

debLs

the

c^_ I ^'.'ir^

rJ:r.rinrn

4qn

E

based

417,

on

and

Court

abused

its

based on ability
c

Brief

455

a

reduced

(Bankr.

la

S.D.

review

briefs,

I

alone

by
or

of

by

-

fair

qaartrF.l

iL

and

is

oI

of

the
Iind

manner in

the

Appellee

sofd

debr,

and wilf,
Tn

Lhe ocher

or

I.e

.

BankruDtcv
thaL

t.o find

oLher

"financial

n r o n F r * \ , ,u I .

2013)

true

honorabfe

I'!vyEr

ca.

loa'ql

a meaningful

While

that

either

ran.al

repay

unsecured

cannot.

refusing

--OVide

Appellee's

fact

S

y!

prospecc.s,

his

careful-

dj scretion
Eo pay

I rif

in

Fir^a'lw

on a mufritude

financial
the

Snoni

t.\

L7, )

aL

relied

and

CoUrt,

factors

to

AnnFl I ee, s

future

rel-a

abiLity

also

abuse").

I

rclarr:nr

Ehe

n_.\/

^hn\rp

remaining

*3

at

f ^f

$ u ' i r rl s t
n

Lhe totality

on

estate,

Lhe parties'

Order

rnr'lrrqi

real

p

it

incurred,

hsnl,rrrnrnr/.

Thus,

itc

his

were

his

his

to

a - i
.
d rDi ll _Ft, _ r t y + o p a y
c

Rank r

/-w

t\^rFrFl

add-essed

bearing

including

surrendered

-

creditors,

fhp

LLJ

the

(Appellant's

cnrrrf

his

of

and oucweigh

debts. "

R a n l - r r r n t. \ /

i-ha

any

.,e qaq
ahn

show

ability

of a case for

:l isl- F.l

factors

Ier-rirrclrr

siLuation

amount of

dismissal

qu^r n, k! r r r n!t
u
J
r !

fhc

qatraral

addresSeS

seven

UST must

WL 4882059,

2010

' ' l
L y ]n .o^_ /rl o F rn\afL
L. -

^ ^e n v - r la' r
g n6 e l i

Claj-m

ocher

qlrsyEJ

r4rrL

:a.PPEf

s

Lhe

evaluation

mathemat.ical

lr-i t i na

to justify

alone is not sufficient
-l

2n1 n\

- -^
al I S o

__lrcs

debl-or's

10-74514*WLH,

q

Nnv

1-h.eF

Annel

the

requires

Thus,

circumstances.'

just

than

re

fn

che

of

707(b) (3i(B)

section

the

abuse

facrors

Court, s

Bankruprcy
of

refied

process
on in

B , c o n v e r s i o n u n d e r 1 L U . S . C , S 7 0 5( b )
next

Appelfant
Ayn
n Pns o

s

As

q

l I oe'

.-a qo

above,

discussed

Fl1

the

na--v l
g

7

Chapter
.l^ac

af f er

and

n^j-

nrnrzido

decision

95-989, at

Lhac,

end

a

11.

upon

have relied

courts
secrion

of

,ehi I i -r,

f ,,r

-pnav

parties

(3)

reconversion;
pfan;

(4)

and

See In

conversion.
2Ol2) i

In

/ r c _ r rri rnr c
\-r t J
y
ThF
f i ndi

rhilil-.t/

nf

Iikelihood

f a.f

of

Lhe disputed

within

.

Anncl

orru

claim

under
monLhs;

Chapter
and

7

IJvLErrLr

ha.l

of

between

B.R.

i n

l ce

confirmation

in

ihp

Appellee
al"f

in

683,

conversion

d_!

7

824, 853

deLermj-ning whether a
debror,s

o'r.)

a

of

n.js

f Or

chapter

benefit

would

(Bankr.

(8.A. P.

Bth

from

N.D.

Cir.

11

ca.

2013)

^^nF]--^F
i^
e ( J l t r - L . L l l L d L I U-r\t l

r9t

ah:l

the

{1)

i nmF.ji aFF.

.-\r.lcr

m:.|a

i rrr

rn

11 plan

and a

would

S. Rep. No.

454 B.R.

692-94

570

unsecured

rhe

not mandatory; the Court

oF

a Chaprer

section

la:rrinc

inceresc."

interest

i f c

a

based on what will

confirmation

465 B.R.

489

},qy

of

...)nr/af t

to convert.").

ahsa"l,-c

parties

(-.)rrrf

R A r ^k r u nu r / L e j v
a
! t
!sr n

noe

continued

lL v
-^

-he

Gordon,

Schlehuber,

re

nn

re

is

interesred

This

incroad

Lobera,

factors

likelihood

whet.her the

c

would be appropriace:

("\

the

f Of

M&-j__!e.!_.,

'n^1/

S 706(b) .

in

Tn re

on various

dFh-

f act

an

of

,.-.\r'rf

the court,

in any decision

conversion

706(b)

Lo

S 706 (b) .

nf

Globe

request

rF.rrrirFmFnt-

see afso

discretion

Tn re

-ha

(Bankr. D.N.M. 2011) (" lSection 706(b)]
should use its

F i nd i nrrs

11 U.S.C.

:ddifinn,al

(L978\;

pr,r

rerri

hc.er_i rn

"sound d.iscretion

940

11 U.S.C.

failu.re

2009).

Lo the benefit. of alI

mosL inure

11 under

ar

law de novo.

of

Chapcer

:nrz

the

to

a

C.)rrrf.'s

wif l-

Clr.

'r-c

nof

ro

case

f-hant

provides

?06(b)

Seccion

R ar k r r n f . ' v

the

court

567 F.3d 129l., L296 (l1th

yqr

:

and conclusions

error

clear

challenges

r-ho

d F l - , t -q ,

rFnrl/

was "dubious,'

cont.racror;
creditors

not

f _^-l_ ol w f n g
.

benefit

if
could
all

t ha

g_iven

che

case

be

paid

parLies

Tn re

involved.

490 B.R.

Hqrdigan,

43'7,

447,

451-53

(Bankr.

S.D.

that

the

Ga. 2013).
upon
r1.nLF,^1'

^\/

a

a^r,rr'c

secE.-ion ?06(b)
nor

err

in

f:.1-rr>l

those

to

k,FrF

the

record,
n.rr

of

the

I

nlo:r'lrr

find

Frr.\na.vrq

deferential

highly

findings

Lo converL

refusing

the

f indinrre

applyinq

and

Accordingly,

of

rev.iew

carefuL

facL,

standard
Court

Ehe Bankrupccy

case co chapler

of
did

11.':

CONCIJUSION

As

above,

discussed

order

denwino

shal]

terminate

Annellant,
alf

the

Court.

s motion

deadlines

oRDER ENTERED aL Augusta,

to

AFFIRMS the
convert

or

Bankruptcy
dismiss.

and moEions,
Georgia,

and cl.osE this
)
this
ot
/?4"V

Court's
The Cferk

case.
Septembe.r,

20L4 .

STATES DISTRICT JUDGE
RN DISTRICf OF GEORGIA

'

The CourE does not address the Bankruptcy
Court/s
discussion
of the
interplay
between sections
706(b) and 707(b) because there
is
sufficient
evidence in tt\e record to determine thaL the BankrupLcy Court did noc err in
reF,.-ir^

Fli6

caqF

In.lar

ear.1-i-"1

/h)
"^4

o

alone.