Joseph F. Bianco, District Judge:
The instant case involves an appeal from the January 13, 2017 Order dismissing the voluntary bankruptcy proceeding (the "Dismissal Order") of debtor Celestine Wenegieme ("appellant" or "Wenegieme"), pursuant to Chapter 13 of the Bankruptcy Code, in the United States Bankruptcy Court for the Eastern District of New York (the "Bankruptcy Court"), against Chapter 13 Trustee Michael Macco
As set forth below, after a de novo review, the Court finds appellant's arguments on appeal to be without merit and affirms the January 13, 2017 Order of the Bankruptcy Court.
The Court assumes the parties' familiarity with the full facts and procedural history of this action and summarizes the facts and history relevant to the instant appeal based on the Bankruptcy Record on Appeal (ECF No. 3)
On September 6, 2016, appellant filed a Chapter 13 bankruptcy petition in the Bankruptcy Court. (In re Wenegieme, Bkr. Dkt. No. 1.) Appellant sought to preserve his interest in real property located at 215 West 134th Street, New York, New York 10030 (the "Property"). (R-2 at 13, 25, 45-56.) Creditor Goldstein Group Holding ("Goldstein Group") was the holder of a mortgage encumbering the Property and sought to proceed with a foreclosure action in New York State court (the "Foreclosure Action")
After appellant filed his petition in the most recent bankruptcy proceeding (the proceeding underlying this appeal), on September 13, 2016, Goldstein Group moved for an order dismissing the bankruptcy proceeding or, in the alternative, terminating the automatic stay of sale, nunc pro tunc, of the Property. (In re Wenegieme, Bkr. Dkt. Nos. 10-13.) Appellant did not oppose Goldstein Group's motion. (See In re Wenegieme, Bkr. Dkt.) The Bankruptcy Court held a hearing on Goldstein Group's motion on September 19, 2016 (see id.), at which Judge Grossman determined that Goldstein Group had standing to file its motion, and that relief from the automatic stay was warranted for cause pursuant to 11 U.S.C. § 362(d)(1) (see Wenegieme v. Goldstein Grp. Holding, E.D.N.Y., Case No. 16-cv-05368-JFB, "Tr. of Sept. 19, 2016 Hr'g," ECF No. 19-1 at 19-20). Specifically, Judge Grossman found "abuse of the bankruptcy process" by appellant and that there was "no question... based upon the evidence that ha[d] been put before the [Bankruptcy] Court that there [was] ample cause for the relief from the stay that" appellee sought. (Id.)
Accordingly, Judge Grossman issued the Order Granting Motion for Relief from Stay ("Stay Order") on September 23, 2016, granting appellee's motion and directing that:
(In re Wenegieme, Bkr. Dkt. No. 24 at 1-2.) As authorized by the Stay Order, the Property was sold to a third party at a September 7, 2016 public auction held in the Foreclosure Action, and the Property deed was transferred to that party. (Wenegieme v. Goldstein Grp. Holding, "Order Granting Mot. Dismiss," ECF No. 27 at 2.) Appellant appealed the Stay Order to this Court on September 27, 2016 (id., ECF No. 1), and the Court granted the motion to dismiss the appeal of the Stay Order on April 27, 2017 (id., ECF No. 27).
Prior to the close of the appeal of the Stay Order, on January 13, 2017, the Bankruptcy Court issued the Dismissal Order, dismissing the bankruptcy proceeding in its entirety with prejudice to re-filing for one year from entry of the Dismissal Order. (In re Wenegieme, Bkr. Dkt. No. 58.) Appellant then filed this appeal of the Dismissal Order on March 3, 2017. (ECF No. 1.)
As stated supra, on March 3, 2017, Wenegieme filed his notice of appeal from the Bankruptcy Court's January 13, 2017 Order dismissing his bankruptcy case. The U.S. Trustee moved to dismiss the appeal
This Court has jurisdiction to hear appeals from bankruptcy courts under 28 U.S.C. § 158(a), which provides that "[t]he district courts of the United States shall have jurisdiction to hear appeals ... from final judgments, orders, and decrees ... [and] with leave of the court, from other interlocutory orders and decrees ... of bankruptcy judges." 28 U.S.C. § 158(a). Part VIII of the Federal Rules of Bankruptcy Procedure outlines the procedure governing such appeals. Fed. R. Bankr. P. 8001.
The Court will review the Bankruptcy Court's legal conclusions de novo and its factual findings for clear error. In re Bayshore Wire Prods. Corp., 209 F.3d 100, 103 (2d Cir. 2000) ("Like the District Court, we review the Bankruptcy Court's findings of fact for clear error, its conclusions of law de novo, and its decision to award costs, attorney's fees, and damages for abuse of discretion." (internal citations omitted)); accord In re Ionosphere Clubs, 922 F.2d 984, 988-89 (2d Cir. 1990). In addition, "[t]he Court may affirm on any ground that finds support in the record, and need not limit its review to the bases raised or relied upon in the decisions below." In re Miller, Nos. 08-cv-4305 (JGK), 08-cv-4306 (JGK), 2009 WL 174902, at *1 (S.D.N.Y. Jan. 26, 2009); Bristol v. DeRosa, No. 09-CV-3730 (JFB), 2010 WL 3924911, at *2 (E.D.N.Y. Sept. 30, 2010).
Section 1307(c) of the Bankruptcy Code provides that "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 ... 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); see also Marramma v. Citizens Bank of Mass., 549 U.S. 365, 373-74, 127 S.Ct. 1105, 166 L.Ed.2d 956 (2007). Section 1307(c) provides a non-exhaustive list of examples of grounds for "for cause" dismissal, including:
11 U.S.C. § 1307(c); see also In re Campora, Nos. 14-CV-5066 (JFB), 14-CV-7123 (JFB), 2015 WL 5178823, at *10 (E.D.N.Y. Sept. 3, 2015) (setting forth the standard for timely payments under 11 U.S.C. § 1326(a)(1)(A) ("Section 1326"), which provides that "[u]nless the court orders otherwise, the debtor shall commence making payments not later than 30 days after the date of the filing of the plan or order for relief, whichever is earlier," and finding that "[a]ppellant's failure to commence making timely payments qualifie[d] [as] a valid ground for dismissal under § 1307(c)(4)").
"Bankruptcy is a privilege and not a right," In re Sochia, 231 B.R. 158, 160 (Bankr. W.D.N.Y. 1999), and in seeking protection under the Bankruptcy Code, a debtor "has the responsibility to inform [himself] of [his] duties" under the Code, In re Ward, 423 B.R. 22, 34 (Bankr. E.D.N.Y. 2010). When a "[d]ebtor has not complied with a number of [his] obligations
The Supreme Court has also held that a debtor's bad faith conduct qualifies as cause to dismiss pursuant to Section 1307(c). Marrama, 549 U.S. at 373-74, 127 S.Ct. 1105. Although bad faith is not explicitly enumerated in Section 1307(c), "it is well established that lack of good faith may also be cause for [conversion or] dismissal under § 1307(c)." In re Prisco, 11-CV-00474 (LEK), 2012 WL 4364311, at *4 (N.D.N.Y. Sept. 24, 2012) (quoting In re Dixon, No. 08-10510, 2009 WL 151688, at *2 (Bankr. E.D. Pa. Jan. 20, 2009), aff'd, No. 09-1451, 2009 WL 1798819 (E.D. Pa. June 24, 2009)); see also In re Plagakis, No. 03 CV 0728 (SJ), 2004 WL 203090, at *4 (E.D.N.Y. Jan. 27, 2004); In re Charles D. Eatman, 182 B.R. 386, 392 (Bankr. S.D.N.Y. 1995). "[D]ebtors who lack good faith cannot be rewarded with the benefits of the bankruptcy process." In re Tornheim, 239 B.R. 677, 686 (Bankr. E.D.N.Y. 1999) (citing In re Natural Land Corp., 825 F.2d 296, 297-98 (11th Cir. 1987)). "A bankruptcy court's determination of `bad faith' is a question of fact, and thus is reviewable under the clearly erroneous standard." In re Plagakis, 2004 WL 203090, at *4 (citing In re Barbieri, 226 B.R. 531, 535 (E.D.N.Y. 1998), rev'd on other grounds, 199 F.3d 616 (2d Cir. 1999); U.S. Fidelity & Guar. Co. v. DJF Realty & Suppliers, 58 B.R. 1008, 1011 (N.D.N.Y. 1986)).
Evaluation of whether a debtor had "bad faith in filing and maintaining a Chapter 13 case requires a careful examination of the totality of the circumstances on a case-by-case basis." In re Tornheim, 239 B.R. at 686 (citing In re Klevorn, 181 B.R. 8, 11 (Bankr. N.D.N.Y. 1995)). Courts have determined that debtors had bad faith in Chapter 13 cases including where "the debtor has previously filed for bankruptcy," and where "the debtor filed solely to obtain an automatic stay," among other circumstances. In re Plagakis, 2004 WL 203090, at *4.
In this case, the Bankruptcy Court found that, based on the record and the trustees' information regarding appellant's conduct at a December 22, 2016 hearing, the case should be dismissed as a matter of law. The court stated in its Dismissal Order that "after due deliberation and for good cause shown it is hereby ORDERED, that the Motion is granted and the Case is dismissed." (In re Wenegieme, Bkr. Dkt. No. 71, "Transcript & Notice Regarding Dec. 22, 2016 Hearing," at 14:2-15 (emphasis added).)
The court made its ruling in part based on the U.S. Trustee's information regarding appellant's failure to make payments — evidencing a lack of intent to ever make payments — and repeat bankruptcy filings, both indicating bad faith. (Id., Bkr. Dkt. No. 58 at 1-2.) As to appellant's failure to make payments, the attorney for the U.S. Trustee stated that:
Discussing the grounds for dismissal on the basis of bad faith, the attorney for the U.S. Trustee stated:
(Id. at 6:3-9.)
Trustee Macco discussed appellant's failure to appear for examinations at the meetings of creditors, pointing to this conduct as a ground for dismissal. (Id. at 9:10-10:19.) Section 341(a) requires that a meeting of creditors be convened, at which the trustee examines the debtor "within a reasonable time after the order for relief." 11 U.S.C. § 341(a). Trustee Macco told the court that Wenegieme:
(In re Wenegieme, Bkr. Dkt. No. 71 at 9:10-10:19.)
The Bankruptcy Court agreed with the trustees' position regarding appellant's failure to make payments and bad faith conduct, stating that "[a]s a matter of law, the Court should and will dismiss the case. The reasons have all been set forth on the record. The reasons have been set forth in the [U.S. Trustee's] motion. The reasons have been set forth by the trustee [Macco]. The reasons have been set forth by the Goldstein folks." (Id. at 14:2-6.)
Having carefully reviewed de novo the record and arguments, this Court concludes that the Bankruptcy Court properly dismissed appellant's bankruptcy proceeding for cause, both in light of appellant's failure to fulfill debtors' duties listed in Section 1307(c), and in light of his serial filings. Appellant filed his plan on October 27, 2016, but had still made no payments as of the December 22, 2016 hearing. (Id. at 9:17-22.) Looking to the Section 1326 standard for timely payments, appellant failed to meet the 30-day requirement. Further, as was made clear on the record, appellant's repeat filings, as well as his failures to provide mandatory disclosures, to appear at meetings, and to make other payments, all evince bad faith. Based on the Court's de novo review of this evidence, the Court concludes that the Bankruptcy Court correctly dismissed the case pursuant to § 1307(c).
The Court also concludes that the Bankruptcy Court correctly dismissed this action with prejudice. "Whether to dismiss a case with prejudice is committed to the sound discretion of the court." In re Montalvo, 416 B.R. 381, 388-89 (Bankr. E.D.N.Y. 2009) (dismissing a case with prejudice pursuant to 11 U.S.C. § 349(a) for one year after concluding that debtor's conduct amounted to "part of a scheme to delay, hinder, and defraud [the creditor]")).
For the foregoing reasons, after de novo review, Wenegieme's appeal of the Bankruptcy Court's dismissal is denied. The Court affirms the rulings of the Bankruptcy Court in all respects. The Clerk of the Court shall close the case.
SO ORDERED.
The "ECF No. 3" filings containing the Bankruptcy Record on Appeal were divided into four parts, which the Court identifies as "R-1" through "R-4."
