In re Velez

1

In re: Gloria Janeth Velez, Debtor(s). In re: Steven Hyde Gordon, Debtor(s). In re: John William Panin, Debtor(s). In re: Robert Murray, Debtor(s).

Nos. 23-70362-AST, 23-70261-AST, 23-70235-AST, 23-70430-AST

United States Bankruptcy Court, E.D. New York

April 10, 2023

DECISION AND ORDER DISMISSING CHAPTER 13 CASES WITH PREJUDICE

Alan S. Trust Chief United States Bankruptcy Judge

Pending before this Court are four motions to dismiss with prejudice (the "Motions") filed by Krista M. Preuss, the Chapter 13 trustee (the "Trustee"), in the Chapter 13 cases of Gloria J. Velez, Steven Hyde Gordon, John William Panin, and Robert Murray (each a "Debtor," and together the "Debtors"). In the Motions, the Trustee seeks two forms of relief: first, the Trustee requests that Debtors' cases be dismissed for cause under Section 1307(c) of title 11 of the United States Code (the "Bankruptcy Code")^[1] and second, the Trustee requests that the cases be dismissed with prejudice for a period of one (1) year because the Debtors have repeatedly filed cases for the purpose of frustrating creditors.^[2] Each Debtor has filed multiple cases in less than two years in which they failed to comply with the basic requirements imposed on them by the Bankruptcy Code and Rules. For the following reasons, the Court grants the Motions and bars each of the Debtors from refiling another Chapter 13 case for a period of one (1) year.

JURISDICTION

This Court exercises the jurisdiction vested in the U.S. District Court pursuant to 28 U.S.C. § 1334(a) and the Standing Orders of Reference in effect in the Eastern District of New York dated August 28, 1986, and as amended on December 5 2013, but made effective nunc pro tunc as of June 23, 2011. Venue lies pursuant to 28 U.S.C. § 1408. This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(A). The Court has the authority to hear and determine the issues raised under 28 U.S.C. § 157(b)(1).

GENERAL BACKGROUND

These cases were filed between January 23, 2023, and February 7 2023. On February 17, 2023, the Trustee filed the Motions. [Case No. 23-70362, Dkt Item 15; Case No. 23-70261, Dkt Item 14; Case No. 23-70235, Dkt Item 13; Case No. 23-70430, Dkt Item 9]. The Debtors, each proceeding pro se, did not file any opposition to the Motions. On March 9, 2023, the Court held hearings on the Motions.^[3] At the conclusion of the hearings, the Court took the Motions under submission.

In each of these cases, the Debtors failed to file mandatory documents required pursuant to Bankruptcy Rule 1007(b) and Section 521(a) of the Bankruptcy Code.^[4] These include Debtors' schedules of assets and liabilities; schedules of income and expenses; statements of financial affairs (with one limited exception)^[5]; Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period; and 60 days of payment advices. Further, none of these Debtors has filed a proposed Chapter 13 plan or commenced making plan payments to the Trustee as required by Sections 1321 and 1326. These filing deficiencies establish cause to dismiss the present cases. In addition, while each of these Debtors are repeat filers, they all failed to file an affidavit of changed circumstance as required by Local Bankruptcy Rule 2003-1(a)(v).^[6]

Among the reasons for prejudicial dismissal set forth in the Motions is the Trustee's contention that these Debtors have filed at least three (3) bankruptcy cases in the past two (2) years in which they failed to comply with the most basic requirements imposed on them by the Bankruptcy Code and Rules. This Court may and does infer that these repeat or serial filings without proper prosecution of their cases were done for the purpose of frustrating creditors and lack good faith. The following chart details the Debtors' prior filings and bases for dismissal for those cases:

Case Name and No.

Date Filed

Date Dismissed

Reason for Dismissal

Gloria Janeth Velez (22-71139)

May 19, 2022

July 5, 2022

Section 521(i) deficiencies

Gloria Janeth Velez (22-72719)

October 5, 2022

November 7, 2022

Failure to provide acceptable photo identification pursuant to Administrative Order No. 653.

Steven Hyde Gordan (22-70841)

April 25, 2022

June 10, 2022

Section 521(i) deficiencies

Steven Hyde Gordan (22-72439)

September 14, 2022

October 31, 2022

Section 521(i) deficiencies

John William Panin (21-71499)

August 22, 2021

October 7, 2021

Section 521(i) deficiencies

John William Panin (22-72654)

September 30, 2022

November 15, 2022

Section 521(i) deficiencies

Robert Murray (22-71127)

May 18, 2022

July 5, 2022

Section 521(i) deficiencies

Robert Murray (22-72551)

September 23, 2022

November 8, 2022

Section 521(i) deficiencies

Because the facts of each case and the legal issues are similar, this Court has determined to issue a single opinion regarding all of these cases. The detailed facts of each case will be analyzed in the fact section below.

ANALYSIS

The Court first notes that each of these cases is subject to automatic dismissal under Section 521(i)(1), which provides:

Subject to paragraphs (2) and (4) and notwithstanding section 707(a), if an individual debtor in a voluntary case under chapter 7 or 13 fails to file all of the information required under subsection (a)(1) within 45 days after the date of the filing of the petition, the case shall be automatically dismissed effective on the 46th day after the date of the filing of the petition.

11 U.S.C. § 521(i)(1) (emphasis added). Because the Motions were filed before the automatic dismissal of these cases, the Court retains jurisdiction to consider the Motions. See In re Merlo, 646 B.R. 389, 392 (Bankr E.D.N.Y. 2022).

In the Motions, the Trustee requests dismissal under Section 1307(c) but does not specify which of the specific provisions of Section 1307(c) she relies on. Therefore, the Court has considered the most applicable provisions due to the sheer number of deficiencies outlined in the Motions.

Cause exists to dismiss under Sections 1307(c)(1)-(4)

Section 1307(c) of the Bankruptcy Code enables the court to either dismiss a chapter 13 case or to convert it to chapter 7, "whichever is in the best interests of creditors and the estate, for cause." 11 U.S.C. § 1307(c). This section further identifies a non-exhaustive list of grounds that constitute cause. See 11 U.S.C. § 1307(c)(1)-(11). Here, the Court finds and concludes that there are several statutory grounds to dismiss the Debtors' cases.

Dismissal under Sections 1307(c)(1)-(4) is proper because the Debtors have not filed a plan in any of their cases; have not commenced making payments to the Trustee; have failed to pay the chapter 13 filing fee; and have failed to file numerous of the schedules, statements, and other required documents, including affidavits identifying any changed circumstances from their previous filings.^[7]

Cause also exists to dismiss for lack of good faith

The Court also finds that each of the Debtors' cases should be dismissed for lack of good faith. To determine whether a case should be dismissed for lack of good faith, a court must look at the totality of the circumstances. See In re Armstrong, 409 B.R. 629, 634 (Bankr. E.D.N.Y. 2009). The totality of the circumstances analysis, "should take into consideration whether the debtor has abused the 'provision, purpose or spirit' of the Bankruptcy Code and whether the filing is 'fundamentally fair' to creditors." Id. (quoting In re Love, 957 F.2d 1350, 1357 (7th Cir. 1992)).

In applying the totality of the circumstances test, courts have looked at many lack of good faith factors.^[8] However, when a debtor commences a "barebones" chapter 13 case, meaning that he or she files no schedules, no list of creditors, no list of assets, and no disclosure of income and expenses, the debtor leaves the court and creditors unable to assess many of these lack of good faith factors. However, the applicable factors here, being previously bankruptcy filings and the current filing made solely to obtain the benefit of the automatic stay, when paired with missing all or substantially all mandatory Section 521 disclosures in these cases, demonstrate a lack of good faith in the filing of the present cases.

Cause exists to dismiss these cases with prejudice

Dismissal of a bankruptcy case is generally without prejudice. However, courts have the statutory authority to dismiss a bankruptcy case with prejudice to refiling. Section 349(a) of the Bankruptcy Code provides that "[u]nless the court, for cause, orders otherwise, the dismissal of a case under this title does not . . . 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(a). Both the Second Circuit and the Eastern District of New York have discussed the court's authority to dismiss a bankruptcy case with prejudice to refiling. See Casse v. Key Bank Nat'l Ass'n (In re Casse), 198 F.3d 327, 336 (2d Cir. 1999); Miles v. Chase Bank, 2022 WL 842073, at *3 (E.D.N.Y. Jan. 24, 2022); see also In re Montalvo, 416 B.R. 381, 388-89 (Bankr. E.D.N.Y.2009).

Section 109(g) provides that a debtor is ineligible to file a bankruptcy case for 180 days if "[a prior] case was dismissed by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case" or if "the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay . . . ." 11 U.S.C. § 109(g)(1)-(2). The Second and Fourth Circuits have determined that Section 349(a) does not limit a bankruptcy court's power, in an appropriate case, to prohibit a serial filer from filing petitions...