ROBERT N. OPEL, II, Bankruptcy Judge.
Before the Court is Rite Aid Hdqtrs. Corp.'s ("Rite Aid") Motion to Dismiss the Chapter 7 Bankruptcy Petition of Robert A. Hunt ("Debtor") pursuant to 11 U.S.C. § 707(a)
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157(a), (b)(1). This is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (O).
Rite Aid's claim against the Debtor was the subject of prepetition litigation. In June of 2009, Rite Aid sued the Debtor, along with other parties, in Pennsylvania State Court ("State Court Litigation"). Motion (1) to Dismiss Debtor's Chapter 7 Bankruptcy Case or, in the Alternative, (2) to Compel Debtor to Comply with the Court's Order and for Sanctions, ¶¶ 6-7, August 14, 2014, ECF No. 34 [hereinafter ECF No. 34]. Rite Aid sought damages of $2,132,541 in its State Court Litigation claim of unjust enrichment and conversion against the Debtor. ¶ 7, ECF No. 34.
The Motion alleges that three business days prior to the scheduled trial in the State Court Litigation, the Debtor filed his January 29, 2014, Chapter 7 voluntary petition. Id. The State Court Litigation was stayed by the Debtor's bankruptcy filing. Id. at ¶ 21.
Rite Aid commenced an adversary proceeding ("Adversary Proceeding") on April 30, 2014, against the Debtor filed to adversary case number 14-ap-00096. In the Adversary Proceeding, Rite Aid seeks to except its claim from any Chapter 7 discharge.
On March 25, 2014, Rite Aid moved, pursuant to Federal Rules of Bankruptcy Procedure ("FRBP") 2004 ("Rule 2004 Motion"), for an order seeking production of documents and a deposition of the Debtor. Debtor's Response and Objection to Motion of Rite Aid Hdqtrs. Corp. (1) to Dismiss Debtor's Chapter 7 Bankruptcy Case or, in the Alternative (2) to Compel Debtor to Comply With the Court's Order and for Sanctions and Cross-Motion for Relief From Order, ¶ 10, November 5, 2014, ECF No. 37 [hereinafter ECF No. 37]. On May 22, 2014, an Order granting an FRBP 2004 examination was entered ("Rule 2004 Order"). Order Granting Motion for Examination under Rule 2004 of Robert Aaron Hunt, May 22, 2014, ECF No. 29. Rite Aid served the Debtor with a Notice of Rule 2004 Examination and a revised document request to comply with the Rule 2004 Order on June 4, 2014. ¶ 10, ECF No. 34. The Notice of Rule 2004 Examination
Essentially, Rite Aid provides three reasons why I should dismiss the Debtor's Chapter 7 bankruptcy petition. First, that the Debtor's alleged failure to comply with the Rule 2004 Order, which required the Debtor to produce documents and to attend a Rule 2004 Examination, warrants dismissal of the Debtor's bankruptcy petition. ECF No. 35. Second, Rite Aid alleges that the Debtor's "schedules and representations" demonstrate that the bankruptcy petition was filed in bad faith because the Debtor does not seek a fresh start through this bankruptcy, but instead seeks to avoid a single debt, the debt owed to it. Id. Third, Rite Aid alleges that the bad faith nature of the filing is shown by the Debtor continuing to lead an extravagant lifestyle and his ability to pay his debts.
The Debtor counters Rite Aid's three assertions. First, the Debtor asserts that Rite Aid has failed to allege any prejudice as the result of the Debtor's inability to attend the Rule 2004 Examination. ¶ 22, ECF No. 37. Second, that Rite Aid is not the sole creditor of the Debtor and, thirdly, that the Debtor does not live an extravagant lifestyle. Id. at ¶¶ 31-47.
Federal Rule of Bankruptcy Procedure 1017(f) provides the procedural requirements for dismissal and states that FRBP 9014 governs a proceeding to dismiss a case. Fed. R. Bankr.P. 1017(f). Federal Rule of Bankruptcy Procedure 9014 states that in a contested matter, relief shall be requested by motion, and reasonable notice and an opportunity for hearing shall be afforded the party against whom relief is sought. Fed. R. Bankr.P. 9014(a).
Rite Aid served the Motion on August 14, 2014, with proper notice as required by FRBP 9014. Rite Aid has filed its brief in support of its Motion and the Debtor has filed his opposition brief. On September 18, 2014, pursuant to FRBP 9014, a hearing was held on the Motion. At that time the parties stipulated that the claims against the Debtor were primarily non-consumer debts and not subject to § 707(b). The Motion is now ripe for decision.
Whether or not to dismiss a bankruptcy petition is guided by equitable principles. In re Marks, 174 B.R. 37, 39 (E.D.Pa.1994). Section 707 of the Bankruptcy Code provides that:
11 U.S.C. § 707.
The Third Circuit held that a significant difference exists between dismissals under § 707(a), which applies to all debtors, and § 707(b), which applies only to debtors whose debts are primarily consumer in nature. Perlin v. Hitachi Capital Am. Corp., 497 F.3d 364, 370-71 (3d Cir.2007) [hereinafter In re Perlin]. Therefore, I will only consider the application of § 707(a) to the case at bar because the debts of the Debtor are not primarily consumer in nature, as stipulated to by the parties.
Section 707(a) provides three non-exclusive examples of "cause" meriting dismissal. In re Perlin, 497 F.3d at 369. A debtor's lack of good faith may also constitute cause under § 707(a). See, In re Perlin, 497 F.3d at 369; In re Jakovljevic-Ostojic, 517 B.R. 119, 126 (Bankr. N.D.Ill.2014). In analyzing a debtor's good faith, a court must examine the totality of the facts and circumstances.
I will next examine whether cause for dismissal of the Chapter 7 petition has been shown.
Section 707(a)(1) has been applied when creditors have been prevented from collecting debts owed to them for a significant amount of time. In re Aiello, 428 B.R. 296, 300-01 (Bankr.E.D.N.Y.2010). In the case of an involuntary dismissal sought by a creditor, a creditor must show that it suffered prejudice beyond that experienced by "any creditor who is stayed from collecting a debt." Id. at 300. Similar to the case at bar, In re Aiello involved a Chapter 7 no asset case where the debtor's largest creditor sought dismissal of the debtor's Chapter 7 petition under § 707(a). Id. at 296-303. In re Aiello held that bad faith findings under § 707(a) should be limited to "extreme misconduct falling outside the purview of more specific Bankruptcy Code provisions." Id. at 303.
In the case at bar, the passage of time in this case can partly be attributed to the Motion and other discovery motions by Rite Aid. See e.g., ECF No. 15; ECF No. 24; ECF No. 34. To the extent that there is self-created delay, I conclude that such delays cannot fairly be attributed to the Debtor. The fact that a debtor effectively put creditors on hold and delayed the pursuit of state law claims is simply the result of filing bankruptcy and the automatic stay under § 362(a). In re Aiello, 428 B.R. at 300. Without more than a
I note that unsecured creditor claims are generally relegated to the claims allowance process. In re U.S. Physicians, Inc., 236 B.R. 593, 601 (Bankr. E.D.Pa.1999). Also, In re Perlin strongly cautioned against the use of dismissal as a sanction. In re Perlin, 497 F.3d at 373. The Third Circuit stated that dismissal should be "`confined carefully' and utilized only in `egregious cases. . . .'" Id. Dismissal is the ultimate sanction reserved for the most egregious cases. There are other remedies available to a creditor such as seeking costs caused by the delay. I find In re Aiello persuasive.
In re Aiello provides that the party moving to dismiss for cause under § 707(a) bears the burden of proving cause by a preponderance of the evidence. In re Aiello, 428 B.R. at 299; In re Forever Green Athletic Fields, Inc., 500 B.R. 413, 426 (Bankr.E.D.Pa.2013) (a debtor seeking dismissal of an involuntary Chapter 7 petition must rebut by a preponderance of the evidence the presumption of good faith that petitioning creditors enjoy), aff'd sub nom. Forever Green Athletic Fields, Inc. v. Dawson, 514 B.R. 768 (E.D.Pa.2014); In re Gearhart, No. 1:10-BK-00741MDF, 2010 WL 4866179, at *3 (Bankr.M.D.Pa. Nov. 23, 2010) (the movant bears the burden of proving by a preponderance of the evidence that the bankruptcy petition constitutes abuse under § 707(b)).
Similar to the creditor in Aiello, Rite Aid has failed to prove by a preponderance of the evidence actual prejudice beyond that experienced by any creditor stayed from collecting its debt. Rite Aid alleges that unreasonable delay by the Debtor's bankruptcy petition has caused prejudice to Rite Aid because it cannot prosecute its claims against the Debtor in the State Court Litigation. However, I fail to see how this is unusual or peculiar to Rite Aid, especially when the passage of time in this case can be partly attributed to this Motion and discovery motions by Rite Aid. Rite Aid is no different than the other unsecured creditors of the Debtor. Thus, the fact that the Debtor put Rite Aid's State Court Litigation on hold is a "mere byproduct of having filed bankruptcy," and the delay in collecting debts, without more, cannot alone constitute cause for dismissal under § 707(a)(1). See, In re Aiello, 428 B.R. at 300.
Rite Aid also alleged that the Debtor's failure to attend the Rule 2004 Examination on August 12, 2014, caused unreasonable delay and prejudice. The only case law that Rite Aid cites for the proposition that the failure to attend a Rule 2004 examination results in unreasonable delay and prejudice was In re Delone, 06-10087DWS, 2006 WL 3898390 (Bankr. E.D.Pa. May 31, 2006). In re Delone stands for the proposition that a debtor who failed to comply with the statutory requirements of paying the filing fee, obtaining credit counseling under § 109(h), or attending the meeting of creditors as necessitated by § 341 may be considered to have caused unreasonable delay and prejudice to creditors. In re Delone, 2006 WL 3898390, at *3. Further, the debtor in Delone had filed two prior Chapter 13 cases and then filed yet another bankruptcy under Chapter 7, and subsequently sought to convert to Chapter 13. In re Delone, 2006 WL 3898390, at *1. Thus, In re Delone is distinguishable because it addressed the failure to meet the statutory requirements of a bankruptcy filing, rather than an alleged failure to fully comply with a Rule 2004 examination.
In the case at bar, any harm to Rite Aid has already been mitigated. On October 10, 2014, I entered an Order (ECF No. 41)
The Bankruptcy Court for the Western District of Pennsylvania held that a debtor's refusal to answer questions at a Rule 2004 examination did not constitute cause for dismissal. In re Fekos, 148 B.R. 10, 12 (Bankr.W.D.Pa.1992). In Fekos, a secured creditor sought dismissal of the Chapter 7 case because the debtor refused to answer questions at a Rule 2004 deposition. In re Fekos, 148 B.R. at 11. The creditor asserted that this in itself constituted cause for dismissal under § 707(a). Id. Although In re Fekos involved the debtor's Fifth Amendment privilege against self-incrimination, the case still stands for the limited proposition that, absent egregious facts, failure to comply with a Rule 2004 examination is not sufficient for dismissal under § 707(a)(1). Further, the court in Fekos required only a good faith attempt to comply with the spirit of the Bankruptcy Code and Rules. Id. at 12. In Fekos, Judge Markovitz found that the debtor's refusal to answer questions did not affect the trustee's ability to administer assets. Similarly, here I find that the Debtor's alleged actions have not affected the trustee's ability to administer assets.
Under In re Fekos, the Debtor has made a good faith attempt at complying with the Rule 2004 examination. First, the Debtor's counsel did provide some documents responsive to Rite Aid's request on July 11, 2014. ¶ 12, ECF No. 34. Second, the Debtor defended against Rite Aid's request for discovery sanctions, in part, by providing medical records documenting the Debtor's recent medical problems. Id. Therefore, because of the Debtor's attempts to comply with the Rule 2004 examination and the Debtor's documented medical issues, I conclude that Rite Aid has failed to establish that the delay in the Rule 2004 examination constitutes cause for dismissal.
I am guided by the Third Circuit's decisions in Tamecki and In re Perlin, which established the grounds for dismissal based on cause, including when a debtor files a Chapter 7 petition in bad faith. See, In re Tamecki, 229 F.3d 205 (3d Cir. 2000); In re Perlin, 497 F.3d 364. I must consider the totality of the circumstances when conducting a § 707(a) inquiry regarding an allegedly bad faith filing. In re Perlin, 497 F.3d 364.
In considering whether cause exists for dismissal under § 707(a), In re Tamecki is instructive. Although the Bankruptcy Code does not define "cause," In re Tamecki held that § 707(a) allows a bankruptcy court to dismiss a bankruptcy petition for cause when a petitioner fails to demonstrate his good faith in filing. In re Tamecki, 229 F.3d at 207. Further, the decision to dismiss a petition for lack of good faith is within the bankruptcy court's discretion. Id. Good faith is not defined in the Bankruptcy Code, however, courts have held that good faith requires at least a showing of honest intention. Id.
Additionally, once a party calls a petitioner's good faith into question, the burden shifts to the petitioner to prove his good faith. Id. However, courts can only determine good faith on an ad hoc basis and must determine whether the petitioner
Similarly, In re Perlin held that a court should examine the totality of the circumstances as to where the petition falls on the "spectrum" from clearly acceptable to blatantly abusive. In re Perlin, 497 F.3d at 372. The Third Circuit cautioned that a bankruptcy court's discretion is not without limitations. Id. at 373. First, a lack of good faith should not be "lightly inferred." Id. Second, dismissal should be limited to only "egregious cases that entail concealed or misrepresented assets and/or sources of income, lavish lifestyles, and intention to avoid a large single debt based upon conduct akin to fraud, misconduct or gross negligence." Id. However, the court in Perlin went on to provide that a court may properly consider a debtor's income and expenses in assessing purported debtor misconduct. Id.
In re Glunk is also helpful in providing factors a bankruptcy court should consider for the dismissal of a Chapter 7 case for bad faith. In re Glunk, 342 B.R. 717, 734 (Bankr.E.D.Pa.2006). There were five factors the court in Glunk considered:
In re Glunk, 342 B.R. at 734. In re Glunk concluded that any of one the five factors by itself could be legally sufficient to warrant dismissal of a Chapter 7 case under § 707(a). My colleague, Judge France, considered the In re Glunk factors in her decision In re Woods, 1:10-bk-01359MDF, 2011 WL 4807932, at *4 (Bankr.M.D.Pa. Oct. 11, 2011).
Next, I will analyze the In re Glunk factors to determine whether the Debtor's good faith was called into question by Rite Aid and whether the burden shifted to the Debtor to prove his good faith.
The first factor looks to whether the debtor has an extravagant lifestyle. Rite Aid argues that the Debtor's reaffirmation of three motor vehicle and one boat loan constitute an extravagant lifestyle that the Debtor seeks to continue. ¶ 32, ECF No. 34. The four vehicles that Rite Aid characterizes as extravagant are: (1) a 2001 Lotus with a scheduled value of $30,000 subject to a secured claim of $25,762; (2) a 2006 Mercedes SLK with a scheduled value of $15,000 subject to a secured claim of $15,190; (3) a 2004 Range Rover with a scheduled value of $10,000
Income and expenses are an important consideration for whether the reaffirmation of the three motor vehicles and one boat constitute an extravagant lifestyle. In re Glunk, 342 B.R. at 736. The Debtor has monthly income of $10,790 according to Schedule I. Schedules A-J and Summary of Schedules, ECF No. 7. The secured debt payments under the four reaffirmation agreements total $1,734.71. This represents approximately 16% of the Debtor's monthly income.
The Court does not appreciate the wisdom of each of the reaffirmation decisions the Debtor has made here. However, each motor vehicle at least serves the transportation needs of the Debtor. In regard to the boat, Rite Aid cites In re Falch for the proposition that the Debtor's $323.87 monthly expense for the boat constitutes a lack of good faith. ¶ 33, ECF No. 34. However, In re Falch is distinguishable from the present case. First, the debtor in Falch expended more than $2,700 monthly on his boat. In re Falch, 450 B.R. 88, 91-2 (Bankr.E.D.Pa.2011). Second, the value of the boat in Falch was approximately $170,000. In re Falch, 450 B.R. at 91. The debtor in Falch had monthly income of approximately $7,809.44. Id. Under the totality of the circumstances, the court concluded that the retention of the boat for recreational use constituted a lifestyle that was extravagant and constituted bad faith. Id. at 98.
Rite Aid also cites In re Boyle to demonstrate that the Debtor's boat is an extravagant expense. However, In re Boyle, like In re Falch, is also distinguishable from the present case. First, In re Boyle involved a § 707(b) motion to dismiss unlike this case where the Motion was brought under § 707(a). In re Boyle, 412 B.R. 108, 109 (Bankr.W.D.N.Y.2009). Second, the boat's value in Boyle was $70,520. In re Boyle, 412 B.R. at 109. Third, the debtors spent more than $800 per month on boating expenses. Id. at 112. The court found that under § 707(b) the boat expense was an abuse sufficient for dismissal because it represented more than 20% of the debtors' income. Id. at 113.
Here, the Debtor's payment for the boat under the reaffirmation agreement is $323.87. Further, the scheduled value of the Debtor's boat is $25,000. I do conclude that the boat payment is essentially a recreational expense. However, I cannot conclude that a payment of $323.87, compared to the Debtor's monthly income, demonstrates an extravagant lifestyle. In Boyle, the debtors had a monthly expense related to their boat of more than $800 and in this case the monthly expense is only scheduled at $323.87. Further, the boat in Boyle was almost three times the scheduled value of the Debtor's boat, and the boat in Falch was approximately seven times the scheduled value of the Debtor's boat.
Additionally, the Debtor's monthly scheduled expense for the boat represents
Likewise, I cannot conclude that the value of the Debtor's house evidences an extravagant lifestyle. According to the Debtor's bankruptcy schedules, the house has negative equity with a mortgage balance greater than the value of the house. Schedules A-J and Summary of Schedules, ECF No. 7. In Glunk, the debtors lived in a $3 million to $5 million residence. In re Glunk, 342 B.R. at 737. Still, the court in Glunk did not find that the value of the residence was a sufficient reason to dismiss the case without some other factors involved. Id. Instead, the court considered whether there were prepetition machinations such as diverting assets which would otherwise be available to satisfy a creditor's claim under applicable nonbankruptcy law. Id. at 737-38. In this case, there are no allegations of prepetition transfers or concealment of such assets.
Rite Aid also asserts that the Debtor has relatively little debt beyond Rite Aid's claim. However, in addition to Rite Aid's $2,132,541 claim, the Debtor has over $430,000 in additional scheduled unsecured debt, a scheduled mortgage of $402,675, and scheduled secured claims against his cars and boat of $76,247 with the scheduled value of the vehicles and the boat totaling $80,000. Unlike In re Glunk, where the debtors had liquid assets of over $500,000 and a residence of $3 million to $5 million, here the Debtor has minimal unencumbered liquid assets. See, In re Glunk, 342 B.R. at 737; Schedules A-J and Summary of Schedules, ECF No. 7.
Therefore, Rite Aid has failed to carry its burden to put in question the Debtor's good faith due to his alleged extravagant lifestyle and the ability to pay creditors. I conclude that this In re Glunk factor weighs against dismissal.
Rite Aid asserts that the Debtor's current bankruptcy will disproportionately impact Rite Aid compared to almost every other scheduled creditor. Rite Aid further alleges that the bankruptcy case will not affect even one of the Debtor's secured creditors. Rite Aid also argues that the Debtor filed this bankruptcy to avoid the State Court Litigation and Rite Aid's scheduled $2.1 million claim. Rite Aid does hold the largest unsecured claim representing approximately 83.%
Further, In re Glunk also stated that even where there is one primary creditor, there must still be some other reason for a finding of disproportionate impact on a particular creditor. In re Glunk, 342 B.R. at 736. This includes "prepetition machinations to avoid payment, transfer of assets beyond the reach of the main creditor or some undue interference with an orderly
In re Aiello is also persuasive on the issue of a disproportionate impact on a particular creditor. As noted previously in this Opinion, the fact that a debtor effectively put creditors on hold and delayed the pursuit of state law claims is simply the result of filing bankruptcy and the automatic stay under § 362(a). In re Aiello, 428 B.R. at 300. Without more, a delay in collecting debts alone does not constitute cause for dismissal even if it has a disproportionate impact on a particular creditor. Thus, the fact that the Debtor's petition halted the State Court Litigation is not in and of itself evidence of bad faith. I acknowledge that Rite Aid leveled serious allegations against the Debtor in the State Court Litigation. However, as of the date of this Opinion, there has been no judicial determination that Rite Aid's disputed claim against the Debtor arose from fraud or other misconduct.
I find that the Adversary Proceeding, which seeks nondischargeability of Rite Aid's claim, also lessens any potential harm to Rite Aid that may result from any delay in concluding the State Court Litigation. I make no findings as to the ultimate outcome of the nondischargeability action.
However, I do find that bankruptcy relief would have a disproportionate impact on Rite Aid because Rite Aid's claim represents such a significant percentage of the total scheduled unsecured claims. On balance, I conclude this In re Glunk factor weighs slightly in favor of cause for dismissal.
Rite Aid argues that the Debtor's bankruptcy petition is an attempt to manipulate the judicial process and deny Rite Aid the opportunity to adjudicate its claims in state court. Rite Aid asserts that In re Myers is dispositive on this factor. However, In re Myers was a Chapter 13 case. In re Myers, 491 F.3d 120, 123 (3d Cir. 2007). Further, there the Third Circuit held that the debtor filed in bad faith because: (1) the debtor filed the petition after the conclusion of a state court bench trial, but before the ruling was entered; (2) the bankruptcy filing was a tactic to prevent adverse rulings; (3) the creditor's claim represented the vast majority of the debtor's debt; (4) the debtor did not meet the filing requirements for a Chapter 13 petition; and (5) the debtor had violated a state court order. In re Myers, 491 F.3d at 125. In Myers, the debtor violated a state court order when she allowed her husband to withdraw money from two entities controlled by the debtor prior to filing bankruptcy. The Third Circuit found this important to the good faith analysis. In re Myers is clearly distinguished from the case at bar.
Rite Aid also cites In re Massie in support of the Debtor's alleged bad faith. However, In re Massie involved a Chapter 12 debtor who sought to dismiss her own case and a creditor who sought to convert the Chapter 12 case to Chapter 7 pursuant to § 1208(d). In re Massie, 231 B.R. 249, 250 (Bankr.E.D.Va.1999). Further, in Massie, the debtor had inexcusable discrepancies between the assets owned by the debtor and those listed on the debtor's schedules. In re Massie, 231 B.R. at 252. The parties also presented testimony to the court on the discrepancies. Id. The debtor had minimal debt besides the amount at dispute in the case, which was held by a single creditor. Id. at 253. The debtor also admitted that she filed only to stop the creditor's state court action against her mother's property. Id. Based
Additionally, Rite Aid alleges that the Debtor filed the petition with the sole intent to avoid the State Court Litigation. This claim lacks factual support and does not rise to the level of egregious conduct needed to implicate bad faith. See, In re Tamecki, 229 F.3d at 207. Unlike In re Massie, the Debtor has not admitted to filing his petition for the sole purpose of halting the State Court Litigation. Further, the Debtor has not filed multiple bankruptcies and the Debtor's schedules demonstrate that Rite Aid is not the only creditor with a claim against the Debtor's estate. I find that this supports that the Debtor is not manipulating the judicial process.
Rite Aid also alleges that the Debtor's bankruptcy schedules claimed income of only $8,000 in 2013, but that the Debtor produced bank statements for eleven months of that year which demonstrate he deposited over $200,000 into his account during that time. ¶ 44, ECF No. 34. Although this allegation is concerning, there was no documentary evidence provided to substantiate it.
I find this In re Glunk factor weighs against dismissal.
No argument was presented suggesting fraudulent prepetition conduct or inadequate disclosure in the bankruptcy process. Neither Rite Aid nor the Debtor briefed this factor. I will consider this In re Glunk factor as neutral concerning cause for dismissal.
The final In re Glunk factor looks at whether it would be fundamentally unfair to allow a debtor to obtain relief under Chapter 7. In re Woods, 2011 WL 4807932, at *7. A significant consideration is that Rite Aid filed the Adversary Proceeding to except from discharge its $2,132,541 claim. Therefore, Rite Aid will have an opportunity to obtain a judicial determination as to whether Rite Aid's claim is nondischargeable under the provisions of § 523. If so proven, the Debtor would remain personally liable to Rite Aid.
What then if the Adversary Proceeding results in a finding that Rite Aid's claim is dischargeable? "A discharge under § 727 of the Bankruptcy Code is the primary tool used to afford debtors a fresh start. Congress has described the discharge as the `heart' of bankruptcy law's fresh start provisions." Bielan, Miklos & Makrogiannis v. Vasquez, No. ADVPRO 08-1409-DHS, 2010 WL 1644175, at *2 (Bankr.D.N.J. Apr. 21, 2010), (citing, Rosen v. Bezner, 996 F.2d 1527, 1531 (3d Cir.1993)). The grant of discharge would thus further an important bankruptcy goal.
I conclude that the fifth In re Glunk factor weighs against cause for dismissal.
Rite Aid has failed to provide sufficient evidence to shift the burden to the Debtor to prove that his case was filed in good faith. Under the In re Glunk factors, there was insufficient evidence that the Debtor concealed or misrepresented assets and/or sources of income, has a lavish lifestyle, or the intention to avoid a large single debt based on conduct akin to fraud, misconduct, or gross negligence.
In re Perlin determined that the ability to repay creditors alone is not itself sufficient cause for dismissal. In re Perlin, 497 F.3d at 374. The Third Circuit required that there be other "aggravating" facts. Id. In Perlin, the debtors had annual
In this case the Debtor has scheduled monthly income of $10,790, compared to the debtors in Perlin who had pre-2007 monthly income of approximately $30,833. Further, there are no substantiated allegations that the Debtor "schemed to conceal or misrepresent income, inflated [his] expenses to hide income, filed misleading statements or schedules in an effort to defraud [his] creditors, unduly interfered with the judicial process, or engaged in any other misconduct." Id. Thus, I cannot conclude that the Debtor has a lavish lifestyle or that the burden shifted to the Debtor to prove his good faith.
After giving due consideration to all relevant In re Glunk factors and the totality of the circumstances, I conclude cause for dismissal has not been shown.
Therefore, for the above reasons, Rite Aid's Motion to Dismiss the Debtor's Chapter 7 Bankruptcy is DENIED. An order will be entered consistent with the foregoing opinion.
