In re Moore

IN RE: JOHNNY RAY MOORE, DEBTOR.

CASE No. 19-51257(JAM)

UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION

March 10, 2020

CHAPTER 13

ECF No. 37

Appearances

Roberta Napolitano

10 Columbus Boulevard

Hartford, CT 06106

Chapter 13 Trustee

Mr. Johnny Ray Moore

Pro se Debtor

MEMORANDUM OF DECISION AND ORDER DISMISSING CASE WITH PREJUDICE WITH A THREE-YEAR BAR TO REFILING

Julie A. Manning, Chief United States Bankruptcy Judge

I. Background

Johnny Ray Moore (the "Debtor"), proceeding pro se, filed a Chapter 13 Petition on September 20, 2019 (the "Debtor's 2019 Bankruptcy Case"). On December 11, 2019, the Chapter 13 Trustee (the "Trustee") filed a Motion to Dismiss the Debtor's 2019 Bankruptcy Case, arguing that the Debtor's liabilities exceed the eligible debt limits for a Chapter 13 case, and that the filing of the 2019 Bankruptcy Case was not in good faith and seeking a two-year bar to refiling (the "Motion to Dismiss with Prejudice"). ECF No. 37. On January 7, 2020, the Debtor filed an objection to the Motion to Dismiss with Prejudice. A hearing was held on the Motion to Dismiss with Prejudice on January 16, 2020, which was later continued to February 25, 2020.

During the continued hearing on the Motion to Dismiss with Prejudice, the Trustee and the Debtor advanced oral arguments in support of their respective positions. After a review of the relevant pleadings, the record in the Debtor's 2019 Bankruptcy Case, and consideration of the arguments made during the hearing, the Court granted the Motion to Dismiss with Prejudice and stated that a written decision and order would be forthcoming. For the reasons stated on the record during the February 25^th hearing, and for the reasons that follow, the Motion to Dismiss with Prejudice is granted.

II. Discussion

A. The Debtor is not eligible to be a Chapter 13 debtor

Section 1307, which governs dismissal of Chapter 13 cases, provides, in part, as follows:

(c) Except as provided in subsection (f) of this section, on request of a party in interest or the United States trustee and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 7 of this title, or may dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause...

11 U.S.C. § 1307(c). Subsection (c) further provides "a non-exhaustive list of events that would be considered 'for cause.'" In re Ciarcia, 578 B.R. 495, 499 (Bankr. D. Conn. 2017). Section 109(e) of the Bankruptcy Code provides that only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated, secured debts of less than $1,257,850.00 is eligible to be a debtor under Chapter 13. See 11 U.S.C. § 109(e). "[I]f the court finds the debtor to be ineligible for chapter 13, the court has discretion either to dismiss or to convert the case, depending on the best interests of the creditors and the estate." 8 Collier on Bankruptcy, ¶ 1307.4, p. 1307-13 (Alan N. Resnick & Henry J. Sommers eds., 16th ed.). "Cause" under section 1307(c) "may include a debtor's failure to meet eligibility requirements." In re Villaverde, 540 B.R. 431, 433 (Bankr. C.D. Cal. 2015) (citing Smith v. Rojas (In re Smith),435 B.R. 637, 649 (9th Cir. BAP 2010) (affirming dismissal of chapter 13 case due to debtor exceeding the § 109(e) debt limits)).

The secured claims filed in the Debtor's 2019 Bankruptcy Case total $1,793,380.52, well above the secured debt limit set forth in section 109(e). As the Trustee argued during the February 25^th hearing, even the secured debt on only the Debtor's primary residence, 15 Sachem Drive, Stratford, Connecticut, which is $1,270,859.91, exceeds the secured debt limit. Accordingly, the Debtor is not eligible to be in Chapter 13 and his case is dismissed under sections 1307(c) and 109(e).

B. Cause exists to dismiss the Debtor's case with prejudice and to

prevent an abuse of the bankruptcy process

While dismissal of a case is generally without prejudice, section 349(a) "expressly grants a bankruptcy court the authority to dismiss a case with prejudice to a subsequent filing of any bankruptcy petition." In re Casse, 219 B.R. 657, 662 (Bankr. E.D.N.Y. 1998), subsequently aff'd, 198 F.3d 327 (2d Cir. 1999). Section 349(a) provides that "[u]nless the court, for cause, orders otherwise, the dismissal of a case under this title does not bar the discharge, in a later case under this title, of debts that were dischargeable in the case dismissed; nor does the dismissal of a case under this title prejudice the debtor with regard to the filing of a subsequent petition under this title, except as provided in section 109(g) of this title." 11 U.S.C. § 349. Therefore, "if 'cause' exists, a court is authorized, pursuant to § 349(a), to dismiss a bankruptcy case with prejudice to refiling." Casse, 219 B.R. at 662.

In addition to the authority to dismiss a case for cause set forth in section 349(a), section 105(a) provides that "[n]o provision of this title shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process." Section 105(a) providesbankruptcy courts with a general grant of power to police dockets and afford appropriate relief. See 2 Collier on Bankruptcy, ¶105.01[2], p. 105-9 (Alan N. Resnick & Henry J. Sommers eds., 16th ed.) (citing In re Oi Brasil Holdings Cooperatief U.A., 578 B.R. 169, 201 (Bankr. S.D.N.Y. 2017), reconsideration denied, 582 B.R. 358 (Bankr. S.D.N.Y. 2018) ("Section 105(a) is understood as providing courts with discretion to accommodate the unique facts of a case consistent with policies and directives set by the other applicable substantive provisions of the Bankruptcy Code.")). Thus, section 105(a) empowers the Court to act as necessary to prevent an abuse of the bankruptcy process.

The facts and circumstances surrounding the Debtor's 2019 Bankruptcy Case support the conclusion the case was not filed in good faith and was filed to hinder, delay, or frustrate creditors, which is an abuse of the bankruptcy process. There are several reasons underlying this conclusion.

First, the Debtor is unable to propose a feasible, confirmable Chapter 13 Plan. The Debtor's Statements and Schedules demonstrate that, in addition to his primary residence, the Debtor owns several other properties. The First Amended Chapter 13 Plan proposes to make monthly payments of $2,500.00 to cure existing arrearages on all of the properties. The Debtor lists as secured creditors the entities who hold the first and second mortgages on his primary residence, but proposes to make no payments on those debts. During the February 25^th hearing, the Trustee demonstrated that a Chapter 13 plan that provided for payment of the secured debt arrearages on all of the Debtor's properties would require a monthly payment of $12,253.57, and a Chapter 13 plan that provided for payment of the secured debt arrearage on only the Debtor's primary residence would require a monthly payment of $11,232.28. The Debtor's Schedules I and J, however, establish that he has a monthly income of $10,003.00. It is evident that the FirstAmended Chapter 13 Plan proposed by the Debtor is unconfirmable, and, even more, that it would be impossible for the Debtor to fund any feasible plan.

Second, filings in the Debtor's 2019 Bankruptcy Case demonstrate that he is attempting to relitigate issues this Court has already ruled upon in a prior Chapter 13 case filed by the Debtor (the "Debtor's 2016 Bankruptcy Case"). For example, also scheduled for hearing on February 25^th were the Debtor's Objections to Claims 5, 6, and 7. ECF Nos. 66, 65, 71. Claims 5, 6, and 7 are filed as secured claims, each secured by real properties owned by the Debtor. The Debtor objected to Claims 5, 6, and 7, positing that because he received a discharge in a previously filed Chapter 7 Case¹, he has no personal liability to pay those claims.

This Court overruled the Debtor's objections to the same claims in the Debtor's 2016 Bankruptcy Case: See ECF Nos. 207, 215, 208 in Case No. 16-51133. As explained in the rulings overruling the Debtor's objections to claims in the Debtor's 2016 Bankruptcy Case, although a bankruptcy discharge eliminates a borrower's personal liability with respect to real property secured by a lien, the Chapter 7 discharge does not eliminate a lien on the property and a lender is still permitted to proceed with its in rem rights with respect to the property if timely payments are not made. See 11 U.S.C. § 727(b); Johnson v. Home State Bank, 501 U.S. 78, 80 (1991) ("[A] bankruptcy discharge extinguishes only one mode of enforcing a claim—namely, an action against the debtor in personam—while leaving intact another—namely, an action against the debtor in rem."). Furthermore, the United States Supreme Court and courts in thisjurisdiction have held that liens on real property and other secured interests pass through bankruptcy unaffected. See Dewsnup v. Timm, 502 U.S. 410 (1992); see also Curwen v. Whiton, 557 B.R. 39, 43 (D. Conn. 2016). Therefore, a bankruptcy discharge precludes a secured creditor from pursuing a deficiency judgment against the debtor personally, but it leaves intact the secured creditor's in rem right to foreclose if payments are not made. Id. As the United States Supreme Court held in Johnson, 501 U.S. at 84

Even after the debtor's personal obligations have been extinguished, the mortgage holder still retains a "right to payment" in the form of its right to the proceeds from the sale of the debtor's property. Alternatively, the creditor's surviving right to foreclose on the mortgage can be viewed as a "right to an equitable remedy" for the debtor's default on the underlying obligation. Either way, there can be no doubt that the surviving mortgage interest corresponds to an "enforceable obligation" of the

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