In re Sijan

611 B.R. 850

IN RE: William SIJAN, Debtor.

Case No. 19-53347

United States Bankruptcy Court, S.D. Ohio, Eastern Division.

Signed February 12, 2020

Michael A Cox, Columbus, OH, for Debtor.

MEMORANDUM OPINION AND ORDER GRANTING DEBTOR'S MOTION FOR SUMMARY JUDGMENT DENYING UNITED STATES TRUSTEE'S MOTION TO DISMISS

C. Kathryn Preston, United States Bankruptcy Judge

This cause came on for consideration of William Sijan's (the "Debtor") Motion for Summary Judgment Denying United States Trustee's Motion to Dismiss (Doc. #20) (the "Motion for Summary Judgment"), filed on October 18, 2019; the United States Trustee's Response to Debtor's Motion for Summary Judgment on Issue Concerning Nature of Medical Debts (Doc. #21), filed by the United States Trustee (the "UST") on November 1, 2019; and the Debtor's Reply to Response of United States Trustee to Debtor's Motion for Summary Judgment (Doc. #22), filed on November 8, 2019. The Court having considered the record and the arguments of the parties, makes the following findings and conclusions.

I. Jurisdiction

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and Amended General Order 05-02 entered by the United States District Court for the Southern District of Ohio, referring all bankruptcy matters to this Court. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Venue is properly before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

II. Factual Background and Procedural History

The facts relevant to this matter are without serious dispute and may be summarized as follows: In January 2018, the Debtor arrived at the emergency room at Broward Health Medical Center in Florida with a fever and breathing difficulty. There, he was diagnosed with severe pneumonia, and after initially refusing admission to the hospital, the medical care providers informed the Debtor that he would die within hours if not hospitalized. He agreed to be admitted to the hospital and was treated in the intensive care unit (the "ICU") for a total of six weeks. For two weeks, he was intubated and placed on a breathing machine; he remained in the ICU for another three weeks, and then was isolated for an additional week. Following the ICU stay, the Debtor underwent physical therapy for 10-12 weeks to regain his strength so that he could attempt to return to work. As a result of the ICU stay, the Debtor was billed $300,550.99.

The Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on May 21, 2019. The schedules reflect total liabilities of $409,527.25, of which $34,193 is described as secured debt and $375,334.25 as nonpriority unsecured debt. The debts consist of an automobile loan ($34,193), credit card debts (approximately $43,248.03), a tax lien ($290), business debt (approximately $6,319.25), and various medical bills (approximately $324,605.97). The medical bills make up nearly three-fourths of the total debt owed; of that, the Debtor owes $300,550.99 for emergency medical treatment. In the Voluntary Petition (Part 6, section 16), the Debtor classified his debts as primarily "medical."¹

On August 5, 2019, the UST filed its Motion of the United States Trustee to Dismiss Pursuant to 11 U.S.C. §§ 707(b)(2) or 707(b)(3) with Memorandum and Affidavit in Support Thereof (Doc. #15) (the "Motion to Dismiss"). The UST sought dismissal of this case on the basis that the Debtor's debts are primarily consumer debts, and that a presumption of abuse arises in this case and/or the totality of the circumstances of the Debtor's financial situation demonstrates abuse. The Debtor argued in his Objection and Response to Trustee's Motion to Dismiss (Doc. #17) and his Motion for Summary Judgment, that 11 U.S.C. § 707(b) does not apply in this case because the majority of his total debt is not consumer debt as defined under 11 U.S.C. § 101(8), because he did not voluntarily incur the majority of his debt, the emergency medical bills.

III. Standard of Review for Motions for Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure, made applicable to contested matters by Federal Rule of Bankruptcy Procedure 9014, provides that the Court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The party seeking summary judgment bears the initial burden of "informing the ... court of the basis for its motion, and identifying those portions of the [record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L.Ed.2d 265 (1986). See also Fed. R. Civ. P. 56(c)(3).

If the movant satisfies this burden, the nonmoving party must then assert that a fact is genuinely disputed and must support the assertion by citing to particular parts of the record. Fed. R. Civ. P. 56(c)(1). The mere allegation of a factual dispute is not sufficient to defeat a motion for summary judgment; to prevail, the nonmoving party must show that there exists some genuine issue of material fact. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247-48, 106 S. Ct. 2505, 91 L.Ed.2d 202 (1986). When deciding a motion for summary judgment, all justifiable inferences must be viewed in a light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Anderson , 477 U.S. at 255, 106 S.Ct. 2505.

The Sixth Circuit Court of Appeals has articulated the following standard to apply when evaluating a motion for summary judgment:

[T]he moving [party] may discharge its burden by "pointing out to the ... court ... that there is an absence of evidence to support the nonmoving party's case." The nonmoving party cannot rest on its pleadings, but must identify specific facts supported by affidavits, or by depositions, answers to interrogatories, and admissions on file that show there is a genuine issue for trial. Although we must draw all inferences in favor of the nonmoving party, it must present significant and probative evidence in support of its [position]. "The mere existence of a scintilla of evidence in support of the [nonmoving party's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party]."

Hall v. Tollett , 128 F.3d 418, 422 (6th Cir. 1997) (citations omitted). A material fact is one whose resolution will affect the determination of the underlying action. See Tenn. Dep't of Mental Health & Mental Retardation v. Paul B. , 88 F.3d 1466, 1472 (6th Cir. 1996). An issue is genuine if a rational trier of fact could find in favor of either party on the issue. See Schaffer v. A.O. Smith Harvestore Prods., Inc. , 74 F.3d 722, 727 (6th Cir. 1996). "The substantive law determines which facts are ‘material’ for summary judgment purposes." Hanover Ins. Co. v. Am. Eng'g Co. , 33 F.3d 727, 730 (6th Cir.1994). In determining whether each party has met its burden, the court must keep in mind that "[o]ne of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses ...." Celotex , 477 U.S. at 323-24, 106 S.Ct. 2548.

IV. Discussion

One of the primary goals of Chapter 7 relief is to offer debtors a "fresh start" through discharge "in exchange for liquidation of the debtor's assets for the benefit of his creditors." In re Krohn , 886 F.2d 123, 125 (6th Cir. 1989). The remedy of bankruptcy is intended to relieve honest debtors from indebtedness and provide a "fresh start." Id. The bankruptcy system balances the goal of providing a "fresh start" with the desire to prevent abuse. In re Hardigan , 490 B.R. 437, 458 (Bankr. S.D. Ga. 2013).

For this reason, the Bankruptcy Code includes provisions, such as 11 U.S.C. § 707(b), which is intended to prevent debtors from obtaining Chapter 7 shelter if they have an ability to pay their creditors, and § 727, which is intended to keep unscrupulous debtors from obtaining bankruptcy relief. In re Krohn , 886 F.2d 123, 126 (6th Cir. 1989) ; Wise v. Wise (In re Wise) , 590 B.R. 401, 429 (Bankr. E.D. Mich. 2018) (citing Robin Singh Educ. Servs., Inc. v. McCarthy (In re McCarthy) , 488 B.R. 814, 825 (1st Cir. BAP 2013) ); see also H.R. REP. NO. 109-31, pt. 1, at 2 (2005) (stating that the provisions Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 were enacted to deter abuse in consumer bankruptcy filings).

A. Dismissal under 11 U.S.C. § 707(b)

The Debtor moves for summary judgment denying the UST's Motion to Dismiss brought under 11 U.S.C. § 707(b)(2) or (3), on the grounds that § 707(b) does not apply. Section 707(b)(1) states in pertinent part:

After notice and a hearing, the court, on its own motion or on a motion by the United States trustee ... may dismiss a case filed by an individual debtor under this chapter whose debts are primarily consumer debts ... if it finds that the granting of relief would be an abuse of the provisions of this chapter.

11 U.S.C. § 707(b)(1) (emphasis added).

A pre-trial conference was held in this matter on September 18, 2019. At the pre-trial, the parties agreed that the debts for the Debtor's emergency medical treatment are higher than all other types of debts and are the Debtor's primary type of debt. See In re Hlavin , 394 B.R. 441, 446-47 (Bankr. S.D. Ohio 2008) (stating that "primarily consumer debts" means the aggregate dollar amount of consumer debts exceeds 50% of the debtor's total liabilities). Thus, the critical determination here is whether the Debtor's emergency medical debts are considered consumer debts for purposes of 11 U.S.C. § 707(b).

B. Definition of "consumer debts" under 11 U.S.C. § 101(8)

The term "consumer debt" is defined as "debt incurred by an individual primarily for a personal, family, or household purpose." 11 U.S.C. § 101(8). The Bankruptcy Code refers to "consumer...