Grason v. Illinois Department of Revenue

Filing 14

ORDER entered by Judge Richard Mills on 8/2/2017. The Court ADOPTS the Report and Recommendation to the District Court, d/e 4 of the United States Bankruptcy Judge. The Bankruptcy Appeal is DISMISSED. Pending motions are terminated and, this case is CLOSED. (MAS, ilcd)

E-FILED

Thursday, 03 August, 2017 09:11:18 AM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
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IN RE: RONALD J. GRASON,
Debtor,
RONALD J. GRASON,
Plaintiff-Appellant,
v.
ILLINOIS DEPARTMENT OF
REVENUE,
Defendant-Appellee.

NO. 17-3129

OPINION
RICHARD MILLS, U.S. District Judge:
Bankruptcy appeal.
Debtor Ronald J. Grason filed a notice of appeal from the United States
Bankruptcy Court and, on June 16, 2017, was granted permission to proceed in
forma pauperis on appeal. Subsequently, the Court Vacated the Order authorizing
the Debtor to proceed in forma pauperis on appeal.
Pursuant to Title 28, United States Code Section 157(c)(1), United States
Chief Bankruptcy Judge Mary P. Gorman filed a Report and Recommendation [d/e
4] to the District Court, wherein Judge Gorman recommended the dismissal of the

Debtor’s appeal due to his failure to follow the United States Bankruptcy Court’s
Orders and his apparent inconsistencies between filings in the bankruptcy court
and United States District Court. The Debtor has filed objections to Judge
Gorman’s Report and Recommendation.
I.
The Report and Recommendation states that Grason commenced his adversary
proceeding on September 26, 2016, seeking a determination as to the dischargeability
of certain Illinois income tax debts. The bankruptcy court entered an order granting
judgment in favor of Grason as to the 2006 Illinois income tax debt and against him
as to the 2007, 2008 and 2012 income tax debts. Grason filed a motion to reconsider.
At a hearing, Judge Gorman denied the motion and stated that a detailed written order
would issue. On May 15, 2017, two days before the written order issued, Grason
filed a notice of appeal to this Court. He also filed a motion to waive filing fee on
appeal.
In his motion to waive filing fee before the bankruptcy court, Grason stated
“his status of in forma pauperis has been continually recognized before the United
States District Court, [the Seventh] Circuit Court of Appeals, and the United States
Supreme Court.” He did not provide further details or attach an affidavit or other
sworn statement or any other documentary support regarding his inability to pay the

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filing fee on appeal. The bankruptcy court denied Grason’s motion, while noting his
extensive history of filing bankruptcy cases and his ability to pay the fees associated
with those filings. Grason was ordered to pay the filing fee by June 7, 2017. He did
not file a motion to reconsider or notice of appeal of the order denying the request to
waive the filing fee.
Judge Gorman states that on June 5, 2017, Grason filed a document with the
bankruptcy court stating that he had sought leave from the district court to proceed
in forma pauperis on his appeal and asking the Court to stay its order requiring
payment of the filing fee by June 7, 2017, pending a decision by this Court. On the
affidavit filed with this Court, which was attached to his filing with the bankruptcy
court, Grason listed monthly Social Security Income of $2,128.40 and $2,124 in
monthly expenses, though the items he listed added up to $2,083 in monthly
expenses. Grason also stated that, as of May 30, 2017, he had only $200 in cash and
no money in any bank account. On June 16, 2017, this Court granted Grason’s
request to proceed in forma pauperis. That order was vacated on July 10, 2017.
On June 27, 2017, the bankruptcy court held a hearing on Grason’s June 5th
correspondence. Grason failed to appear at the hearing. Judge Gorman denied
Grason’s request to stay enforcement of the order requiring payment of the filing fee
and stated on the record that she would be issuing a Report and Recommendation to

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this Court, recommending that Grason’s appeal be dismissed for his failure to pay the
required filing fee for his appeal. On June 29, 2017, the Report and Recommendation
was filed.
Judge Gorman also states that Grason filed a new Chapter 13 case in the
bankruptcy court on June 5, 2017. Grason’s Statement of Financial Affairs and
schedules filed soon thereafter reflected that he had monthly Social Security income
of $2,128.40 and $1,444 in total monthly expenses, though the monthly expenses he
listed added up to $1,394. Grason also disclosed having $400 in cash and another
$458.19 in a bank account.
II.
An appeal of the bankruptcy court’s orders may be taken by filing a notice of
appeal to the district court, along with the payment of the applicable fee. See Fed. R.
Bankr. P. 8001(a), 8003(a)(3)(C). The filing fee can be waived by either the
bankruptcy court or district court. See 28 U.S.C. § 1930(f); see Bernegger v. King,
2011 WL 1743880, at *2 (E.D. Wis. May 6, 2011) (extending to debtors on appeal
the Seventh Circuit’s holding in In re Richmond, 247 F. App’x 831, 832 (7th Cir.
2007), that § 1930(f) provides both bankruptcy courts and district courts with the
authority to allow creditors to proceed in forma pauperis in adversary proceedings).
Additionally, a party seeking to appeal to the court of appeals must first seek leave

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to appeal in forma pauperis from the district court and 28 U.S.C. § 158(c)(2) provides
that a bankruptcy appeal “shall be taken in the same manner as appeals in civil
proceedings generally are taken to the courts of appeals from the district courts and
in the time provided by Rule 8002 of the Bankruptcy Rules.” Accordingly, the Court
concludes that the same logic should apply in an appeal to the bankruptcy court to the
district court and, therefore, a motion to proceed in forma pauperis should first be
presented to the bankruptcy court.
In her Report and Recommendation, Judge Gorman notes that before filing his
motion to proceed in forma pauperis in this Court, Grason sought and was denied
leave by the bankruptcy court to waive the filing fee on appeal. The Report and
Recommendation states that although the bankruptcy court and the district court have
authority to rule on such a motion, Grason sought relief in the bankruptcy court and
was bound by that court’s ruling absent a contrary ruling on appeal. He did not
appeal the bankruptcy court’s ruling on the motion to waive filing fee on appeal.
Rather, he sought independent relief from this Court without disclosing the fact that
he had sought and was denied a fee waiver in the bankruptcy court.
This Court agrees with Judge Gorman that dismissal for failure to pay the
applicable fee is warranted under these circumstances. Grason was granted additional
time by the bankruptcy court to pay the filing fee. Instead of paying the fee, Grason

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asked the bankruptcy court to stay enforcement of its order requiring payment
pending a decision on the alternative relief he sought in this Court. In seeking a
waiver of fees, Grason did not advise this Court that he had sought and been denied
the same relief in the bankruptcy court. This Court cannot overlook Grason’s noncompliance with the bankruptcy court’s order.
Judge Gorman further states that when Grason filed his Notice of Appeal and
Motion to Waive Filing Fee on Appeal, he was already anticipating filing a new
Chapter 13 case. The Report and Recommendation notes that Grason presumably
was aware of the income requirements of Chapter 13 eligibility and understood that
he could not meet the income and expense requirements for a waiver of the filing fee
on appeal and still be eligible for Chapter 13 relief. This explains why Grason’s
monthly expenses are nearly $700 higher on his district court affidavit than in his
Chapter 13 disclosures, even though Grason’s Chapter 13 case was filed within a
week of his motion to proceed in forma pauperis in this Court. Specifically, there is
a $100 difference in rent, a $415 difference in utilities and the $105 difference in
clothing, laundry and dry-cleaning expenses. The Court agrees with Judge Gorman
that Grason was obviously aware that a lack of income was required to obtain a fee
waiver and a surplus of income was required for Chapter 13 eligibility.

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Judge Gorman observes that all of the filings in the bankruptcy court suggest
that Grason is able to pay the filing fee. If Grason had filed an affidavit containing
the financial information disclosed in his Chapter 13 case, the bankruptcy court
would have denied his request for a fee waiver. Significantly, if Grason had filed an
affidavit in the bankruptcy court similar to that which he filed in the district court, it
would have hindered his ability to file his Chapter 13 case. As Judge Gorman notes,
it appears that Grason wants to have it both ways and is playing games at the expense
of both courts.
The Report and Recommendation concludes by noting that Grason has a long
history of filing bankruptcy court cases and has demonstrated an ability to pay the
fees associated with those cases. He has filed eight bankruptcy cases within the last
nine years. Grason did not ask that the filing fee be waived in any of the cases,
though he did typically request to pay the filing fee in installments. Grason has paid
the filing fee in full in only four of his cases since 2008.
In his Objection to the Report and Recommendation, Grason contends he has
had a serious decline in his financial circumstances in recent years. His sole source
of income in recent years has been Social Security. However, Grason fails to address
the apparent inconsistencies between his filings in bankruptcy court and this Court.
Moreover, Grason offers no explanation as to why he sought to evade the bankruptcy

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court’s order requiring payment of the filing fee by proceeding directly to the
district court, instead of filing a motion to reconsider or appealing the denial of
the in forma pauperis motion.
The Court agrees with Chief Bankruptcy Judge Gorman that Grason
first sought relief in the bankruptcy court and was bound by that ruling barring a
contrary ruling on appeal. He did not appeal and instead sought independent
relief in this Court without disclosing the proceedings concerning his request for
a fee waiver in the bankruptcy court. Because of Grason’s lack of candor and
his non-compliance with the bankruptcy court’s orders, in addition to what
appear to be inconsistencies between filings in the bankruptcy court and district
court, the Court agrees with Chief Bankruptcy Judge Gorman that dismissal of the
appeal is appropriate based on all of the circumstances.
Ergo, the Court hereby ADOPTS the Report and Recommendation to
the District Court [d/e 4] of the United States Chief Bankruptcy Judge.
This Appeal is DISMISSED.
The Clerk will terminate any pending motions [d/e 9 & 12] and close this
case.
ENTER: August 2, 2017
FOR THE COURT:

/s/ Richard Mills
Richard Mills
United States District Judge

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