Sill v. Glaze (In re Sill), BAP No. CC-17-1300-SKuL

In re: STASHA LAUREN SILL, Debtor.

STASHA LAUREN SILL, Appellant, v. SUSAN GLAZE; CYNTHIA WEBB; ROD DANIELSON, Chapter 13 Trustee, Appellees.

BAP No. CC-17-1300-SKuL

UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT

Submitted: May 24, 2018

June 6, 2018

NOT FOR PUBLICATION

BAP No. CC-17-1312-SKuL (Related)

Bk. No. 6:17-bk-16994-MH

MEMORANDUM^*

Submitted Without Oral Argument on May 24, 2018^**Appeal from the United States Bankruptcy Court for the Central District of California

Honorable Mark D. Houle, Bankruptcy Judge, Presiding

Appearances: Appellant Stasha Lauren Sill pro se on brief; Daniel R. Forde of Hoffman & Forde on brief for appellees Susan Glaze and Cynthia Webb; Elizabeth A. Schneider on brief for appellee Rod Danielson, Chapter 13 Trustee.

Before: SPRAKER, KURTZ, and LAFFERTY, Bankruptcy Judges.

INTRODUCTION

Stasha Lauren Sill appeals from an order denying her motion to continue the automatic stay in her second chapter 13¹ bankruptcy case filed within a year. Sill also appeals from an order dismissing the second case. Sill's main argument on appeal concerns the adequacy of her counsel's representation. She contends that the bankruptcy court's adverse rulings were the result of her counsel's acts and omissions. According to Sill, she should not have been held responsible for her counsel's alleged mistakes inrepresenting her. We disagree. On this record, it is far from clear that the adverse rulings were the result of anything Sill's counsel did or did not do. Regardless, Sill is legally responsible for her counsel's acts and omissions. Accordingly, we AFFIRM.

FACTS

Sill commenced her first chapter 13 case in July 2017 (Case No. 6:17-bk-15864-MH). That case was dismissed without prejudice in August 2017 at the time of the confirmation hearing. The bankruptcy court dismissed the first chapter 13 case because Debtor was incarcerated at the time of the confirmation hearing and her proposed plan was clearly not feasible.

Sill commenced her second chapter 13 case within days of the dismissal of her first case. In successive cases, § 362(c)(3) provides that the automatic stay expires thirty days after filing unless extended by the bankruptcy court upon a showing of good faith. Sill thus filed a motion to continue the stay as permitted under § 362(c)(3)(B) to prevent her secured creditors from foreclosing on her residence. Sill asserted that the stay should continue because she filed her second bankruptcy case in good faith. According to Sill, she rearranged her living situation in order to be able to afford her plan payments. Sill asserted that her mother and brother had moved in with her and were contributing to her monthly expenses. Sill further asserted that her uncle was willing to contribute any remaining amounts for her plan payments necessary to ensure an effective reorganization. Sill also maintained she wassearching for employment now that she no longer was incarcerated and that she also received oil rights income. These changed circumstances, Sill insisted, evidenced her ability to pay her secured creditors as part of her chapter 13 reorganization.

Susan Glaze² and Cynthia Webb, creditors who assert a claim secured by an interest in Sill's residence, opposed the motion. Among other things, Glaze and Webb claimed that Sill had no equity in the property and that it was not necessary for her reorganization. Sill admitted these facts in the motion which listed a secured claim of $425,054 and a property value of $414,465. Glaze and Webb further pointed out that their underlying loan to Sill had fully matured prior to her first bankruptcy filing. Glaze and Webb argued that the number of discrepancies in Sill's bankruptcy court documents evidenced Sill's bad faith in filing the second bankruptcy. These discrepancies included: (1) the amount owed to Glaze and Webb, (2) the amount in arrears, and (3) the value of her residence.

Glaze and Webb also asserted that Sill had failed to establish a change in her financial circumstances that would permit her to confirm and perform a feasible chapter 13 plan. They noted that, even though Sill no longer was incarcerated, she remained unemployed and her plan was dependent onthousands of dollars per month in family contributions. As Glaze and Webb also noted, there was little or no evidence demonstrating her relatives' willingness or ability to financially support her throughout the course of her chapter 13 plan. In particular, Sill presented no evidence that her family had financially supported her in the past. Glaze and Webb further complained that the net income Sill's mother and brother alleged they received each month was not supported by the income documentation they submitted. Meanwhile, Sill's uncle did not submit anything indicating his willingness and ability to financially support Sill.

Sill and her counsel failed to appear at the hearing on the stay motion. The bankruptcy court denied the motion based on the arguments made and evidence presented in the secured creditors' opposition, the failure of either Sill or her attorney to appear, and Sill's failure to establish that she had reliable financial resources available to support a feasible chapter 13 plan.

On September 28, 2017, roughly a week after the hearing on the stay continuance motion, the bankruptcy court held a confirmation hearing on Sill's proposed chapter 13 plan.³ Only the chapter 13 trustee appeared at the confirmation hearing. Neither Sill nor her counsel appeared. The trustee advised the bankruptcy court that Sill had not made any chapter 13 planpayments and had failed to personally appear for the § 341(a) meeting of creditors held earlier that same day. The trustee further advised the court that, at the meeting of creditors, he had told Sill's counsel that he would be recommending to the court dismissal of the bankruptcy case, with a 180-day bar to refiling.

Based on the trustee's representations, the bankruptcy court dismissed the bankruptcy case. The bankruptcy court entered its case dismissal order that same day, on September 28, 2017. Sill timely filed a notice of appeal from the case dismissal order and the order denying the stay continuance motion.⁴

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and 157(b)(2)(A) and (G). We have jurisdiction under 28 U.S.C. § 158.

ISSUES

1. Did the bankruptcy court abuse its discretion when it denied the stay continuance motion?

2. Did the bankruptcy court abuse its discretion when it dismissed Sill's chapter 13 case?

STANDARDS OF REVIEW

We review orders granting or denying relief concerning the automaticstay for an abuse of discretion. Benedor Corp. v. Conejo Enters., Inc. (In re Conejo Enters., Inc.), 96 F.3d 346, 351 (9th Cir. 1996). We similarly review orders dismissing chapter 13 cases. Ellsworth v. Lifescape Med. Assocs., P.C. (In re Ellsworth), 455 B.R. 904, 914 (9th Cir. BAP 2011).

A bankruptcy court abuses its discretion if it applies an incorrect legal rule or if its factual findings are illogical, implausible or without support in the record. Id. (citing USAA Fed. Sav. Bank v. Thacker (In re Taylor), 599 F.3d 880, 887-88 (9th Cir. 2010)).

DISCUSSION

A. Denial of Motion to Continue Stay.

With one exception not relevant here, the automatic stay terminates by its own terms thirty days after the debtor's bankruptcy filing, when the debtor has filed a prior bankruptcy case that was dismissed within one year of the second bankruptcy filing. § 362(c)(3)(A). However, pursuant to § 362(c)(3)(B), the debtor or any other interested party may seek to extend the automatic stay that otherwise would expire thirty days after the second petition is filed. The movant must demonstrate that the case was filed "in good faith as to the creditors to be stayed." § 362(c)(3)(B); see also Reswick v. Reswick (In re Reswick), 446 B.R. 362, 368-69 (9th Cir. BAP 2011).

Under certain circumstances, a presumption of bad faith arises that the movant may rebut only by presenting clear and convincing evidence of the debtor's good faith. § 362(c)(3)(C); In re Reswick, 446 B.R. at 369. But thebankruptcy court here made no finding that any of the factors triggering the presumption of bad faith existed. Accordingly, Sill only needed to demonstrate her good faith by a preponderance of the evidence. In re Elliott-Cook, 357 B.R. 811, 814-15 (Bankr. N.D. Cal. 2006); In re Montoya, 342 B.R. 312, 316 (Bankr. S.D. Cal. 2006).

In assessing the debtor's good faith, the bankruptcy court typically considers the totality of the circumstances. In re Elliott-Cook, 357 B.R. at 814; see also In re Nath, 2017 WL 1194735, at *4 (S.D.N.Y. 2017) (listing cases). The pertinent factors often are similar to those considered in order to determine the debtor's good faith in proposing a chapter 13 plan. In re Elliott-Cook, 357 B.R. at 814. The good faith assessment is not meant to be rigid. In re Elliott-Cook, 357 B.R. at 814; see also Nelson v. Meyer (In re Nelson), 343 B.R. 671, 677 n.10 (9th Cir. BAP 2006) (discouraging formulaic attempts to apply specific factors with mathematical precision). As a practical matter, the § 362(c)(3)(B) good faith analysis in the chapter 13 context frequently will hinge on two factors: "1) why the previous [chapter 13] plan failed, and 2) what has changed so that the present [chapter 13] plan is likely to succeed." In re Elliott-Cook, 357 B.R. at 815; see also In re Jackola, 2011 WL 2518930, at *3 (Bankr. D. Haw. 2011) ("probably the most important indicia of good faith is a realistic prospect of success in the second case, contrary to the failure of the first case.").

Here, the bankruptcy court effectively found that there was insufficientevidence of a change in Sill's financial circumstances that would permit her to confirm and perform a feasible chapter 13 plan. On appeal, Sill has not challenged this critical finding or, for that matter, any of the findings the bankruptcy court relied upon in denying the stay continuance motion.

With respect...