Crowley v. Bankruptcy Court for the District of Nevada et al

Filing 8

ORDER DENYING 4 Motion for Hearing; DENYING 1 Motion for Writ of Mandamus. The Clerk shall close the case. Signed by Chief Judge Robert C. Jones on 03/29/2013. (Copies have been distributed pursuant to the NEF - KR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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MARTIN G. CROWLEY,
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Petitioner,
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vs.
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U.S. BANKRUPTCY COURT FOR THE
DISTRICT OF NEVADA et al.,
Respondents.

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3:13-cv-00151-RCJ-VPC
ORDER

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Petitioner Martin G. Crowley is the Debtor in Chapter 13 Bankruptcy Case No. 12-51908

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pending in this district. In the bankruptcy case, creditor (and real party in interest in the present

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action) Senicia Burke filed a proposed order for a debtor’s exam pursuant to Bankruptcy Rule

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2004. Burke purports to have a state court judgment against Petitioner. Petitioner filed a motion

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for a protective order against the exam, arguing that Burke had no purpose in requesting an exam

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other than to harass Petitioner. The bankruptcy judge signed Burke’s proposed order without a

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hearing on Petitioner’s motion for a protective order. Burke then served Petitioner with a

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subpoena demanding the production of basically any document or other evidence Petitioner

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possessed relevant to his ownership interest in any kind of property whatsoever. The bankruptcy

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judge granted Petitioner’s motion for a stay of the exam until his motion for protective order

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could be heard. At the hearing, Petitioner’s counsel appeared but requested that Petitioner,

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himself an attorney, be permitted to present the arguments himself, which he did. The Court

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denied the motion for protective order. Petitioner complains that the bankruptcy judge refused to

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listen to his arguments and that Burke is attempting to extract a settlement from him via the

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threat of a Rule 2004 exam that is in his view unnecessary.

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It is within the discretion of the bankruptcy court to grant an examination, so long as its

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purpose is within Bankruptcy Rule 2004(b), one purpose of which is to determine the extent of a

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debtor’s property. Burke’s state court judgment is presumably unsecured. Unsecured creditors

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are often subject to “cram down,” i.e., the involuntary judicial avoidance of all or part of the debt

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otherwise lawfully owed. Such parties-in-interest have a uniquely important interest in

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examining the property of a debtor, because the discovery of a debtor’s theretofore undiscovered

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assets (whether purposely hidden or innocently overlooked) can determine whether the creditor

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will receive any satisfaction of the debt owed to her. Rule 2004 includes no textual “good cause”

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requirement, but even assuming such a requirement applies under the case law, surely an

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impending cram down is per se “good cause” for an unsecured creditor to require a Rule 2004

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examination to determine the extent of a debtor’s assets. Petitioner’s argument that Burke has no

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good cause to force an examination because the examination will not help to establish the

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validity of her claim is a red herring. The purpose of the requested examination is to discover

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assets that may indicate Petitioner can pay all or part of the claim. Because the Bankruptcy

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Court’s ruling was not in error, the Petition is denied.

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CONCLUSION
IT IS HEREBY ORDERED that the Petition for Writ of Mandamus (ECF No. 1) and the
Motion for Hearing (ECF No. 4) are DENIED.

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IT IS FURTHER ORDERED that the Clerk shall close the case.

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IT IS SO ORDERED.

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Dated this 29th day of March, 2013.

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_____________________________________
ROBERT C. JONES
United States District Judge
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