JOHN E. HOFFMAN, JR., Bankruptcy Judge.
As often happens in bankruptcy practice, a seemingly simple and straightforward request for relief — here made by the United States Trustee ("UST") — has raised difficult procedural questions. The UST moves pursuant to Federal Rule of Bankruptcy Procedure 7015 and Local Bankruptcy Rule ("LBR") 9013-1(c) for leave to amend a motion to dismiss the Debtors' case under § 707(b)(3). The Debtors oppose the UST's motion. Because neither Rule 7015 nor LBR 9013-1(c) is applicable here, and because the UST has conceded that it has no basis under § 707(b)(3) to dismiss the Debtors' case, the Court denies as moot the UST's motion for leave to amend and likewise denies its underlying motion to dismiss.
The Court has jurisdiction to hear and determine this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. This is a core proceeding. See 28 U.S.C. § 157(b)(2).
Sherief Gharraph ("Sherief") and Rasha Hetata ("Rasha," and collectively with Sherief, "Debtors") filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on September 10, 2012.
Notwithstanding the initial determination that there was no presumption of abuse, the UST filed a motion to dismiss the case under 11 U.S.C. § 707(b)(3) ("Dismissal Motion") (Doc. 15), on the grounds that the UST disagreed with the Debtors' characterization of their debts as business debts and that, with certain modifications to Schedule I, the Debtors had the ability to pay general, unsecured creditors up to 38% of their claims. The Debtors then filed an amended Schedule D adding a secured business debt, and an amended Schedule F listing an additional 11 creditors as business accounts. Thus, the percentage of creditors denominated as holding business debt increased to approximately ninety percent, and the dollar amount of the business debt accounted for approximately fifty-five percent of the total debt.
After an agreed-upon extension of time, the Debtors filed a response in opposition to the Dismissal Motion ("Response") (Doc. 23). The Court then issued an order setting a preliminary pretrial conference ("Pretrial Order") (Doc. 24). The Pretrial Order stated, in part, "This contested matter shall be subject to the Federal Rules of Bankruptcy Procedure, Part VII, as provided in Fed. R. Bankr.P. 9014(c), and, to the extent set forth in this order, the pretrial procedures provided for in LBR 7016-1(c)." Pretrial Order at 1.
Approximately two weeks after the issuance of the Pretrial Order, the UST filed a motion for leave to file an amended motion to dismiss ("Motion for Leave") (Doc. 26), in which he asserted that he learned after the filing of the Dismissal Motion that the Debtors' debts were primarily non-consumer in nature, making § 707(b)(3) inapplicable. The next day, the UST filed an amended motion for leave to file an amended motion to dismiss ("Amended Motion for Leave") (Doc. 28). By way of the Amended Motion for Leave, the UST asks to amend his Dismissal Motion to remove the request to dismiss under § 707(b)(3) and to instead seek dismissal under § 707(a) or, in the alternative, to seek conversion of the case to a case under Chapter 11 pursuant to § 706(b). The UST now argues that because Sherief has obtained post-petition employment, the Debtors are no longer "needy" and have an ability to repay creditors. Amended Motion for Leave at 3. The Debtors filed an objection to Amended Motion for Leave ("Objection") (Doc. 32).
The UST's Amended Motion for Leave is brought under Rule 7015 of the Federal Rules of Bankruptcy Procedure ("Bankruptcy Rule(s)"), which incorporates Rule 15 of the Federal Rules of Civil Procedure ("Civil Rule(s)"). Civil Rule 15(a) provides, in relevant part, as follows:
The UST makes two arguments in support of the relief requested: (1) that because less than 21 days elapsed between the filing of the Response and the filing of the Amended Motion for Leave, the Dismissal Motion may be amended as a matter of course; and (2) the UST should be permitted to amend the Dismissal Motion "because justice so requires it." Am. Mot. for Leave at 3. Citing LBR 9013-1(c),
Rule 7015 does not apply under the circumstances of this case. The Court's Pretrial Order stated that this contested matter would be "subject to the Federal Rules of Bankruptcy Procedure, Part VII, as provided in Fed. R. Bankr.P. 9014(c)." Rule 9014(c) provides that "the following rules shall apply: 7009, 7017, 7021, 7025, 7026, 7028-7037, 7041, 7042, 7052, 7054-7056, 7064, 7069 and 7071." Fed. R. Bankr.P. 9014(c). Absent from this list is Rule 7015. While Rule 9014(c) does provide that "[t]he court may at any stage in a particular matter direct that one or more of the other rules in Part VII shall apply," the Court here has not directed the application of any other of the Part VII rules.
The Court has found no case law explaining why Bankruptcy Rule 7015 is carved out from the list of Civil Rules that Bankruptcy Rule 9014(c) makes applicable to contested matters (which, unless a specific Bankruptcy Rule provides otherwise, are initiated by motion). It may simply be that motion practice is not subject to the more formal pleading requirements imposed in adversary proceedings by Civil Rule 10 (which is made applicable in adversary proceedings by Bankruptcy Rule 7010). The drafters of the Civil Rules no doubt recognized that judicial economy would not be served by requiring parties to seek leave of court every time a motion is amended.
Further, Civil Rule 15(a) speaks of amendments to a "pleading." Bankruptcy Rule 7007, which incorporates Civil Rule 7, provides that "[o]nly these pleadings are allowed: (1) a complaint; (2) an answer to a complaint; (3) an answer to a counterclaim designated as a counterclaim; (4) an answer to a crossclaim; (5) a third-party complaint; (6) an answer to a third-party complaint; and (7) if the court orders one, a reply to an answer." Motions are not listed among the allowed "pleadings."
In short, a motion for leave to amend a motion is not necessary and is not contemplated by Bankruptcy Rule 7015.
LBR 9013-1(c) — on which the UST also relies — is likewise not applicable here. The local rule merely states that no additional memoranda after the initial motion, reply and response will be considered except upon leave of court. The local rule does not speak to, prohibit or restrict in any fashion the filing of amended motions.
Without saying so in their papers, both parties appear to be operating under the belief that the UST must amend the current Dismissal Motion or find himself time-barred in any attempt to file a new motion to dismiss under § 707(a) or to convert the case under § 706(b). An action under either section may, however, be brought at any time. Only a motion to dismiss a case for abuse under § 707(b) or (c) is subject to the 60-day deadline imposed by Bankruptcy Rule 1017(e)(1). See Fed. R. Bankr.P. 1017(e)(1) ("[A] motion to dismiss a case for abuse under § 707(b) or (c) may be filed only within 60 days after
For the reasons stated above, the Amended Motion for Leave is