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In re: Frank J. Levesque and Bonnie R. Levesque, NV-11-1742-DKiPa (2012)

Court: United States Bankruptcy Appellate Panel for the Ninth Circuit Number: NV-11-1742-DKiPa Visitors: 9
Filed: Jun. 25, 2012
Latest Update: Mar. 02, 2020
Summary:  Following argument, the bankruptcy court, 18 announced oral findings of fact and conclusions of law on the, 19 record, citing the Supreme Courts Marrama decision, and granted, 20 the Levesques motion to reopen their bankruptcy case, but denied, 21 their motion to convert to chapter 11.
                                                           FILED
 1                         ORDERED PUBLISHED                 JUN 25 2012

 2                                                    SUSAN M SPRAUL, CLERK
                                                          U.S. BKCY. APP. PANEL
                                                          O F TH E N IN TH C IR C U IT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5
 6   In re:                        )      BAP No.    NV-11-1742-DKiPa
                                   )
 7   FRANK J. LEVESQUE and         )      Bk. No.    10-21796-BAM
     BONNIE R. LEVESQUE,           )
 8                                 )
                    Debtors.       )
 9   ______________________________)
                                   )
10   FRANK J. LEVESQUE; BONNIE R. )
     LEVESQUE,                     )
11                                 )
                    Appellants,    )
12                                 )
     v.                            )      O P I N I O N
13                                 )
     BRIAN D. SHAPIRO, Chapter 7   )
14   Trustee,                      )
                                   )
15                  Appellee.      )
     ______________________________)
16
17                   Argued and Submitted on June 15, 2012
                              at Las Vegas, Nevada
18
                             Filed - June 25, 2012
19
               Appeal from the United States Bankruptcy Court
20                       for the District of Nevada
21        Honorable Bruce A. Markell, Bankruptcy Judge, Presiding
22
23   Appearances:     Edward S. Coleman, Esq. argued for the Appellants;
                      Brian D. Shapiro, Esq. argued for the Appellee.
24
25
26   Before:   DUNN, KIRSCHER and PAPPAS, Bankruptcy Judges.
27
28
 1   DUNN, Bankruptcy Judge:
 2
 3        The debtor appellants Frank and Bonnie Levesque (the
 4   “Levesques”) filed motions (collectively, “Motions”) to reopen
 5   their chapter 71 bankruptcy case and convert it to chapter 11.
 6   The bankruptcy court granted their motion to reopen but denied
 7   their motion to convert.    The Levesques appeal the denial of
 8   their conversion motion.    We AFFIRM.
 9                             Factual Background
10        The facts relevant in this appeal are limited and
11   straightforward.
12        On September 15, 2009, the Levesques were involved in a
13   motor vehicle accident (the “Accident”) that apparently resulted
14   in substantial personal injuries to both Mr. and Ms. Levesque.
15   The Levesques already had fallen behind on their mortgage
16   payments, and their financial problems worsened after the
17   Accident.
18        The Levesques filed a chapter 7 bankruptcy petition on
19   June 24, 2010.   Their bankruptcy counsel was Shawn Christopher of
20   the Christopher Legal Group.    On June 24, 2010, Brian D. Shapiro
21   (“Trustee”) was appointed as the chapter 7 trustee in the
22   Levesques’ bankruptcy case.
23        In their schedules, the Levesques confirmed under penalty of
24   perjury that they did not have any unliquidated claims against
25
26        1
            Unless otherwise specified, all chapter and section
27   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     all “Rule” references are to the Federal Rules of Bankruptcy
28   Procedure, Rules 1001-9037.

                                       -2-
 1   any third parties.    On June 28, 2010, the Levesques provided
 2   written answers under penalty of perjury in a bankruptcy
 3   questionnaire, both answering “No” to the following questions:
 4                              . . .
 5        9.    Does anyone owe you any money for any reason?
 6        10.    Do you have any claim against anyone that is not
 7        listed in your Schedules?
 8        11.    Have you filed or do you have a reason to file any
 9        lawsuit against any one for any reason?
10        The Levesques attended their § 341(a) meeting and testified
11   under oath that their schedules were true and accurate.
12        The Levesques received their discharge by order entered on
13   October 4, 2010.    The Trustee was discharged and the Levesques’
14   chapter 7 case was closed by Final Decree entered on October 7,
15   2010.
16        Sometime prior to October 18, 2010, the Levesques retained
17   the Law Office of Henness & Haight (the “Henness Firm”) to pursue
18   recovery of damages (the “Claim”) from Falcon Industries, Inc.
19   (“Falcon”) based on their injuries resulting from the Accident.
20   On October 18, 2010, the Henness Firm made demand on Falcon for
21   $750,000.    On January 5, 2011, the Levesques filed a lawsuit
22   against Falcon (the “Lawsuit”) to assert the Claim.
23        During a deposition of the Levesques taken in the Lawsuit,
24   counsel for Falcon questioned the Levesques and asked them why
25   they had not listed the Claim in their bankruptcy, intimating
26   that they “had committed some fraud.”    Tr. of December 13, 2011
27   Hr’g at 4:1-8.    Thereafter, on November 11, 2011, the Levesques,
28   through new counsel, Edward S. Coleman, filed the Motions.     In

                                        -3-
 1   the combined Motions, the Levesques disclosed the Claim to the
 2   bankruptcy court for the first time.
 3        The Trustee joined the Levesques’ motion to reopen their
 4   bankruptcy case but opposed their motion to convert it to
 5   chapter 11, based on their prior failures to disclose the Claim,
 6   citing Marrama v. Citizens Bank of Mass., 
549 U.S. 365
(2007).
 7   The Levesques filed the affidavit of Ms. Levesque in support of
 8   their motion to convert, stating in substance that the Levesques
 9   failed to disclose the Claim in their schedules and in their
10   testimony at the § 341(a) meeting based on advice from their
11   attorney in light of the fact that there was no pending lawsuit.
12   The Trustee moved to strike Ms. Levesque’s affidavit as filed in
13   violation of the bankruptcy court’s local rules and filed late.
14        The bankruptcy court heard argument on the Motions at a
15   hearing (“Hearing”) on December 13, 2011.   At the Hearing, the
16   bankruptcy court denied the Trustee’s motion to strike Ms.
17   Levesque’s affidavit.   Following argument, the bankruptcy court
18   announced oral findings of fact and conclusions of law on the
19   record, citing the Supreme Court’s Marrama decision, and granted
20   the Levesques’ motion to reopen their bankruptcy case, but denied
21   their motion to convert to chapter 11.
22        The bankruptcy court entered an order reopening the
23   Levesques’ bankruptcy case and denying their motion to convert
24   the case to chapter 11 on December 19, 2011.   The Levesques
25   timely appealed.
26        At oral argument, the Trustee advised that he had been
27   reappointed as the trustee in the Levesques’ reopened chapter 7
28   case.

                                     -4-
 1                               Jurisdiction
 2        The bankruptcy court had jurisdiction under 28 U.S.C.
 3   §§ 1334 and 157(b)(2)(A) and (O).      We have jurisdiction under 28
 4   U.S.C. § 158.
 5                                  Issues
 6        1.   Did the Trustee have standing to be heard on the
 7   Levesques’ Motions?
 8        2.   Did the bankruptcy court abuse its discretion in denying
 9   the Levesques’ motion to convert?
10                            Standards of Review
11        We review de novo whether a party has standing.      Mayfield v.
12   United States, 
599 F.3d 964
, 970 (9th Cir. 2010); Veal v. Am.
13   Home Mortg. Servicing, Inc. (In re Veal), 
450 B.R. 897
, 906 (9th
14   Cir. BAP 2011).
15        We review an order regarding conversion of a case for abuse
16   of discretion.    Rosson v. Fitzgerald (In re Rosson), 
545 F.3d 17
  764, 771 (9th Cir. 2008); Beatty v. Traub (In re Beatty), 162
18 B.R. 853
, 855 (9th Cir. BAP 1994); Marrama v. Citizens Bank of
19   Mass., 
549 U.S. 365
(2007).    We apply a two-part test to
20   determine whether the bankruptcy court abused its discretion.
21   United States v. Hinkson, 
585 F.3d 1247
, 1261-62 (9th Cir. 2009)
22   (en banc).    First, we “determine de novo whether the [bankruptcy]
23   court identified the correct legal rule to apply to the relief
24   requested.”   
Id. Second, we
examine the bankruptcy court’s
25   factual findings for clear error.      
Id. at 1262
and n.20.   We must
26   affirm the bankruptcy court’s factual findings unless we
27   determine that those findings are “(1) ‘illogical,’
28   (2) ‘implausible,’ or (3) without ‘support in inferences that may

                                      -5-
 1   be drawn from the facts in the record.’” 
Id. 2 Discussion
 3   1.   The Trustee had standing to appear and be heard with respect
          to the Motions.
 4
 5        This appeal is all about control of litigation of the Claim.
 6   The Levesques argue that the Trustee had no standing to file
 7   pleadings and be heard with respect to the Motions because he had
 8   filed his final report and been discharged and, consequently, had
 9   no stake in the relief sought by the Levesques.    Appellants’
10   Opening Brief at 6-7.   The Trustee responds that the Levesques
11   did not raise any issue as to the Trustee’s standing in their
12   pleadings, including the affidavit of Ms. Levesque, presented to
13   the bankruptcy court.   Appellee’s Brief at 8.   We note that
14   counsel for the Levesques did not question the Trustee’s standing
15   at the Hearing.
16        Ordinarily, if an issue is not raised before the trial
17   court, it will not be considered on appeal and will be deemed
18   waived.   See, e.g., Laub v. U.S. Dep’t of Interior, 
342 F.3d 19
  1080, 1087 n.6 (9th Cir. 2003); Crosby v. Reed (In re Crosby),
20   
176 B.R. 189
, 195 (9th Cir. BAP 1994).   However, in light of the
21   significance of the issue of the Trustee’s standing in this
22   context, we exercise our discretion to consider the standing
23   issue raised in the Levesques’ opening brief.    See City of Los
24   Angeles v. County of Kern, 
581 F.3d 841
, 845-46 (9th Cir. 2009).
25        This is an issue of first impression before this Panel.
26   Rule 5010, titled “Reopening Cases,” specifically provides that,
27   “A case may be reopened on motion of the debtor or other party in
28   interest pursuant to § 350(b) of the Code.”    (Emphasis added.)

                                     -6-
 1   The term “party in interest” is not defined in the Bankruptcy
 2   Code or Rules.    The Levesques, as debtors, filed the motion to
 3   reopen their case, and their standing under Rule 5010 is not in
 4   question.    On the other hand, the Trustee’s standing to appear
 5   with respect to the Motions presents some interesting technical
 6   issues that need to be resolved.
 7        We conclude that to deny the Trustee standing to appear and
 8   be heard with respect to the Motions would, in the words of the
 9   Supreme Court’s recent decision (albeit in a different context)
10   in RadLAX Gateway Hotel, LLC v. Amalgamated Bank, be
11   “hyperliteral and contrary to common sense,” for the following
12   reasons.    RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S.
13   Ct. 2065, 2068 (2012).
14        At the outset, it truly would be ironic, and reward
15   disingenuousness, to deny standing to the Trustee as a party in
16   interest to be heard with respect to the Motions at the behest of
17   the Levesques, when at the time the Motions were filed, the
18   Levesques did not own the Claim that was the sole reason for the
19   Motions.    The Claim belonged to their bankruptcy estate.    See
20   §§ 541 (property of the estate) and 554(d) (property not
21   abandoned or administered remains property of the estate); Lopez
22   v. Specialty Rests. Corp. (In re Lopez), 
283 B.R. 22
, 28 (9th
23   Cir. BAP 2002) (An unscheduled claim “that is neither abandoned
24   nor administered remains property of the estate even after the
25   case is closed.”).    The Levesques could not even claim an
26   exemption regarding the Claim until after their bankruptcy case
27   was reopened.    On the other hand, the only reason the Trustee did
28   not administer the Claim before the case closed in October 2011

                                      -7-
 1   was because the Levesques failed to disclose it, and no other
 2   potential “party in interest” is more knowledgeable about the
 3   Levesques’ bankruptcy case than the Trustee.
 4        Procedurally, this appeal presents an unusual fact pattern.
 5   Ordinarily, the Levesques’ motion to reopen would have been set
 6   for hearing separately.   After it was granted for the purpose of
 7   further administration of estate assets, the Trustee or a new
 8   chapter 7 trustee would have been appointed or reappointed.   As
 9   noted above, the Trustee was reappointed in this case.   If
10   thereafter, the Levesques’ motion to convert was set for hearing,
11   there would be no question as to the Trustee’s standing to appear
12   and be heard with respect to the motion to convert.   However, the
13   Levesques filed the Motions in a single pleading, and the Motions
14   were scheduled to be heard together.
15        In these circumstances, we are inclined to follow what
16   appears to be the majority approach, recognizing the standing of
17   a discharged chapter 7 trustee to appear and be heard as a party
18   in interest in proceedings relating to reopening a closed case
19   for administration of undisclosed assets.   The rationale for that
20   position is well stated in the opinion of the district court in
21   White v. Boston (In re White), 
104 B.R. 951
, 954 (S.D. Ind.
22   1989):
23        [T]he argument [against standing] is overly
          formalistic. Followed to its logical conclusion, it
24        would also preclude creditors from seeking a reopening
          to administer undisclosed assets on the grounds that
25        they would merely be former creditors. Moreover, it is
          established case law that a trustee’s powers are
26        terminated only when the estate has been properly
          closed. It would be incongruous to permit a debtor who
27        has failed to disclose assets to use this failure (and
          the subsequent erroneous closing) as a shield against
28        reopening. The distinction between a “trustee” and a

                                     -8-
 1        “former trustee” urged by the debtors is semantic
          rather than substantive, and does not effect a
 2        talismanic change in the trustee’s legal status.
          Therefore, the mere closing of an estate cannot in
 3        [and] of itself prohibit trustee standing. (Emphasis
          in original.)
 4
 5   See In re Linton, 
136 F.3d 544
, 546 (7th Cir. 1998) (“A
 6   bankruptcy proceeding can be reopened for cause, . . . § 350(b),
 7   by ‘the debtor or other party in interest.’ [Rule] 5010.   The
 8   term ‘party in interest’ is not defined, but is generally held to
 9   include the trustee.”) (citations omitted and emphasis added);
10   Mendelsohn v. Ozer, 
241 B.R. 503
, 506 (E.D.N.Y. 1997); In re
11   Sweeney, 
275 B.R. 730
, 735-36 (Bankr. W.D. Pa. 2002); In re Avis,
12   
1996 WL 910911
, at *2 n.1 (Bankr. E.D. Va. 1996); In re
13   Winebrenner, 
170 B.R. 878
, 881 (Bankr. E.D. Va. 1994); In re
14   Stewart, 
154 B.R. 711
(Bankr. N.D. Ill. 1993); In re Stanke, 41
15 B.R. 379
, 381 (Bankr. W.D. Mo. 1984) (“As one of the few persons
16   informed as to the case, the trustee is a natural person to hold
17   and to exercise the power to move to reopen if his duty is
18   unfinished.”).
19        In the White case, the debtors sought to overturn on appeal
20   the bankruptcy court’s decision to grant the trustee’s motion to
21   reopen a closed case to administer assets not listed on the
22   debtors’ schedules.   The case law cited by the White court for
23   the proposition that a trustee’s authority is only terminated
24   when a case is “properly” closed includes this Panel’s decision
25   in Gross v. Petty (In re Petty), 
93 B.R. 208
(9th Cir. BAP 1988).
26   In Petty, the trustee moved to reopen a closed chapter 7 case to
27   recover an alleged preference that was under investigation at the
28   time that the bankruptcy case was closed administratively.    The

                                     -9-
 1   preference defendants appealed the judgment that ultimately was
 2   entered in favor of the trustee by the bankruptcy court.     
Id. at 3
  210-11.
 4        Although the trustee’s standing to reopen the case was not
 5   raised as an issue in Petty, the Panel did discuss the impact of
 6   an undisclosed estate asset on case closure:
 7        [S]ince the debtors’ potential interest in the subject
          real estate was not disclosed in the bankruptcy
 8        petition the case was never fully administered within
          the meaning of § 350(a), and therefore not properly
 9        closed under that section. . . . Once it has been
          established that the case was not properly closed and
10        may be reopened to administer the assets of the
          debtor’s estate it would be anomalous to bar the
11        collection of the very assets sought to be recovered
          because the case was closed.
12
13   
Id. at 212.
  Likewise, in such circumstances, it would be
14   anomalous not to treat the trustee, the most knowledgeable party
15   concerning administration of the estate, as a party in interest
16   for purposes of Rule 5010, exercising residual authority with
17   respect to any undisclosed estate assets.
18        We recognize that the discharge of the Trustee in
19   conjunction with the original closing of the Levesques’ chapter 7
20   case raises a technical question as to his authority to
21   administer or otherwise deal with the Claim during the period
22   between the date of entry of the closing order and the date of a
23   new trustee appointment following the reopening of the case.
24   However, under § 323(a), the trustee in a bankruptcy case is “the
25   representative of the estate.”
26        Although the trustee is not vested with the title of
          the debtor under the Code, section 323(a) gives the
27        trustee full authority to represent the estate and to
          dispose of the debtor’s nonexempt property that makes
28        up the estate.

                                      -10-
 1               The trustee is required to collect and reduce to
            money the nonexempt property of the estate, and
 2          therefore is entitled to administer the property of the
            estate wherever located, including the debtor’s
 3          prepetition causes of action.
 4   3 Collier on Bankruptcy ¶ 323.02[1] (Alan N. Resnick and Henry J.
 5   Sommer, eds., 16th ed. 2012) (emphasis added).
 6          In addition, the bankruptcy court in In re Sweeney
 7   questioned the assumption that a discharged trustee has no
 8   authority to act on behalf of the estate when § 727(e) expressly
 9   authorizes the trustee to request a revocation of the debtor’s
10   discharge after the discharge has been granted and after the
11   bankruptcy case has been closed.2         In re 
Sweeney, 275 B.R. at 12
  735.
13          Clearly, the Levesques had no authority to administer the
14   Claim on behalf of the estate.      Also, as we previously have
15   noted, it was the Levesques, rather than the Trustee, who filed
16   the motion to reopen.
17          There are decisions denying a discharged trustee standing to
18   move to reopen a chapter 7 case to administer assets.         See, e.g.,
19   In re DeLash, 
260 B.R. 4
(Bankr. E.D. Cal. 2000) (citing In re
20   Ayoub, 
72 B.R. 808
, 812 (Bankr. M.D. Fla. 1987)); In re Thomas,
21   
236 B.R. 573
, 576-77 (Bankr. E.D.N.Y. 1999).         Two rationales
22
23          2
                Section 727(e) provides that:
                   The trustee, a creditor, or the United States
24
                   trustee may request a revocation of a discharge–-
25                 (1) under subsection (d)(1) of this section within
                   one year after such discharge is granted; or (2)
26                 under subsection (d)(2) or (d)(3) of this section
27                 before the later of–-(A) one year after the
                   granting of such discharge; and (B) the date the
28                 case is closed. (Emphasis added.)

                                        -11-
 1   support this result.   First, when a bankruptcy case is reopened,
 2   the United States Trustee (“UST”) appoints a new trustee, but
 3   only following a determination by the bankruptcy court “that a
 4   trustee is necessary to protect the interests of creditors and
 5   the debtor or to insure efficient administration of the case.”
 6   Rule 5010.   Once that determination is made, the UST may or may
 7   not reappoint the original trustee.      Handbook for Chapter 7
 8   Trustees (hereafter, “Handbook for Chapter 7 Trustees”), U.S.
 9   Dep’t of Justice, Executive Office of the United States Trustee,
10   July 1, 2002, at p. 8-44.   Until reappointment by the UST, the
11   discharged trustee arguably is not authorized to represent the
12   bankruptcy estate and receive compensation for doing so and
13   accordingly, would have no standing to move to have the case
14   reopened or appear in proceedings relating to the case.      See In
15   re 
Thomas, 236 B.R. at 576-77
.     The bankruptcy court further
16   arguably would be treading improperly upon the UST’s prerogatives
17   in recognizing standing for a former trustee in advance of such
18   reappointment.    See In re 
DeLash, 260 B.R. at 6-8
; In re Ayoub,
19 72 B.R. at 812
.
20        Second, other parties with standing, such as the UST and
21   creditors, ostensibly are available to move to reopen bankruptcy
22   cases to administer assets.   See In re 
DeLash, 260 B.R. at 6-7
;
23   In re 
Thomas, 236 B.R. at 577
.     The UST is explicitly authorized
24   under the Bankruptcy Code to “appear and be heard on any issue in
25   any case or proceeding under this title,” except for filing a
26   plan under chapter 11.   § 307.    However, that does not mean in
27   practice that the UST appears in every situation where it is
28   authorized to do so.   The UST has limited resources to apply to

                                       -12-
 1   the many tasks it is delegated to perform concerning various
 2   bankruptcy proceedings, and typically, the UST does not initiate
 3   the bulk of motions to reopen closed cases.   In fact, as noted by
 4   the bankruptcy court in In re 
DeLash, 260 B.R. at 6
n.3, the
 5   Handbook for Chapter 7 Trustees states (at page 8-44 in the
 6   July 1, 2002 edition) that, “[I]f the court has officially closed
 7   a case, the trustee, the [UST], or some other party in interest,
 8   will have to file a motion to reopen the case. . . .”    (Emphasis
 9   added.)
10        Relying on “creditors” to move to reopen a case is
11   problematic, both on technical and practical grounds.    First, as
12   a technical matter, if the discharge has been entered, do the
13   “former” creditors of the debtor have standing to move to reopen
14   the case?   The DeLash court discounted that argument, asserting
15   that under the distribution scheme mandated by the Bankruptcy
16   Code, prepetition creditors are entitled to distributions from
17   estate assets that have not previously been administered.    “Given
18   this right, it would be illogical to argue that a creditor of a
19   discharged chapter 7 debtor is a former creditor without standing
20   to reopen the case.”   In re 
DeLash, 260 B.R. at 7
.   Accepting
21   that position, it would appear that prepetition creditors would
22   satisfy the “pecuniary interest” test for standing stated in
23   Fondiller v. Robertson (In re Fondiller), 
707 F.2d 441
, 442-43
24   (9th Cir. 1983), if they took the initiative to file a motion to
25   reopen.
26        However, if one depends on prepetition creditors to take the
27   laboring oar on motions to reopen, one confronts the reality that
28   it effectively asks the former creditors to expend 100 cent

                                     -13-
 1   dollars currently on proceedings to reopen a case that, like the
 2   Levesques’ bankruptcy case, may have been closed for months or
 3   even years, for the benefit of a speculative recovery that has to
 4   be shared pro rata with other like-situated prepetition
 5   creditors.   Realistically, the financial incentives for such
 6   conduct generally are slim to nonexistent, and in such
 7   circumstances, the prepetition creditors are not likely parties
 8   to take the lead on motions to reopen.
 9        Based on our analysis of the applicable law and foregoing
10   authorities in this context, our ultimate conclusion is that it
11   would exalt form over substance, to the detriment of creditors
12   and the bankruptcy estate, if the Trustee were not recognized as
13   having standing to appear and be heard with respect to the
14   Motions.   No party was in a better position than the Trustee to
15   advise the bankruptcy court as to the status and history of the
16   Levesques’ bankruptcy case and administration of their estate.
17   We conclude that the Levesques’ argument that the Trustee had no
18   standing to appear regarding the Motions lacks merit.
19   2.   The bankruptcy court did not abuse its discretion in denying
          the Levesques’ motion to convert the reopened case to
20        chapter 11.
21        Under § 706(a), a “debtor may convert a case under this
22   chapter to a case under chapter 11, 12, or 13 of this title at
23   any time, if the case has not been converted under section 1112,
24   1208, or 1307 of this title.”   In spite of the straightforward
25   language of § 706(a), in Marrama v. Citizens Bank of Mass., 549
26 U.S. 365
(2007), the Supreme Court held that the apparently
27   absolute right of the debtor to convert a chapter 7 case to
28   chapter 13 could be curtailed in the “atypical” case of a

                                     -14-
 1   fraudulent or “bad faith” debtor, in order “to prevent an abuse
 2   of process.”   
Id. at 3
75 & n.11.      As pointedly remarked at the
 3   outset of the Marrama decision, “The principal purpose of the
 4   Bankruptcy Code is to grant a fresh start to the honest but
 5   unfortunate debtor.”   
Id. at 3
67 (citing Grogan v. Garner, 498
 
6 U.S. 279
, 286, 287 (1991)) (internal quotation marks omitted).
 7        While the Levesques’ motion to convert requested a
 8   conversion from chapter 7 to chapter 11, rather than to chapter
 9   13, the language of § 706(a) applies the same whether the chosen
10   chapter for conversion is chapter 11 or chapter 13.
11   Consequently, there is no dispute between the parties as to the
12   application of § 706(a), as interpreted by Marrama, in this
13   appeal.   Since the bankruptcy court referred explicitly to the
14   Marrama decision in its oral findings and conclusions, we
15   conclude that the bankruptcy court applied the correct legal
16   standard in deciding the Levesques’ motion to convert.
17        The Levesques argue, however, that the bankruptcy court did
18   not give adequate weight to the evidence of the Levesques’ good
19   faith in relying on the advice of their counsel, as set forth in
20   Ms. Levesque’s affidavit, and that they “effectively canceled”
21   any failure to disclose their Claim by filing the Motions.       They
22   earnestly spin the facts in their favor, but their argument
23   misapprehends the standards applicable to analyze whether the
24   bankruptcy court clearly erred in its fact findings.
25        As noted above, in determining whether the bankruptcy court
26   abused its discretion, we must affirm the bankruptcy court’s fact
27   findings unless we determine that those findings are illogical,
28   implausible, or without any support from inferences that may be

                                     -15-
 1   drawn from the evidentiary record.     
Hinkson, 585 F.3d at 1262
and
 2   n.20.   If the bankruptcy court’s analysis of the evidence makes
 3   sense consistent with the entire record, we may not reverse even
 4   if we were convinced that we might have weighed the evidence
 5   differently.   Anderson v. City of Bessemer City, N.C., 
470 U.S. 6
  564, 574 (1985).   See Int’l Ass’n of Firefighters, Local 1186 v.
 7   City of Vallejo (In re City of Vallejo), 
408 B.R. 280
, 289 (9th
 8   Cir. BAP 2009).
 9        In this case, the bankruptcy court was very careful in its
10   fact findings in support of denial of the motion to convert.     It
11   did not find that the Levesques had committed fraud, and it did
12   not determine that the Levesques had “lied.”    However, the
13   bankruptcy court did find that the Levesques “didn’t tell the
14   truth and certainly signed things under oath and under penalty of
15   perjury that were not true.”   Tr. of December 13, 2011 Hr’g at
16   21:3-5.   The record, as discussed above, amply supports those
17   findings.   In addition, the bankruptcy court questioned the
18   Levesques’ credibility based on their failure to pursue any claim
19   against their former bankruptcy counsel, whose advice they claim
20   led them to their failures of disclosure and thus allegedly put
21   them in their present predicament.
22        Based on the record presented in this appeal, we can discern
23   no error, let alone clear error, of fact that would lead us to
24   conclude that the bankruptcy court abused its discretion in
25   denying the Levesques’ motion to convert.
26                               Conclusion
27        For the foregoing reasons, we AFFIRM.
28

                                     -16-

Source:  CourtListener

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