Popular Auto, Inc. v. Reyes-Colon (In Re Reyes-Colon) , 922 F.3d 13 ( 2019 )

United States Court of Appeals
For the First Circuit
Nos. 17-1971, 17-1972
IN RE: EDGAR A. REYES-COLON,
Involuntary Debtor.
POPULAR AUTO, INC.;
BANCO POPULAR DE PUERTO RICO,
Appellees, Cross-Appellants,
v.
EDGAR A. REYES-COLON,
Appellant, Cross-Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Gustavo A. Gelpí, Jr., U.S. District Judge]
Before
Howard, Chief Judge,
Thompson and Kayatta, Circuit Judges.
Michael J. Fencer, with whom Lynne F. Riley, David Koha, and
Casner & Edwards, LLP were on brief, for appellant and cross-
appellee.
Roberto Abesada-Agüet, with whom Sergio E. Criado, Correa-
Acevedo & Abesada Law Offices, PSC, Eldia Díaz-Olmo, Díaz-Olmo Law
Offices, Gerardo Pavía Cabanillas, and Pavía & Lazaro, PSC were on
brief, for appellees and cross-appellants.
April 24, 2019
KAYATTA, Circuit Judge. Edgar Reyes-Colon ("Reyes-
Colon"), a licensed plastic surgeon specializing in facial
cosmetic surgery, allegedly failed to repay certain debts. In
November 2006, one of his creditors, Banco Popular de Puerto Rico
("Banco Popular"), filed an involuntary bankruptcy petition that
a second creditor, Popular Auto (collectively, "the Banks"),
joined. Under 11 U.S.C. § 303(b), fewer than three petitioning
creditors cannot force a debtor into bankruptcy unless the debtor
has fewer than twelve creditors in total. So the parties embarked
on what has now turned into twelve years of litigation concerning
the number of Reyes-Colon's creditors and whether he might somehow
be placed in bankruptcy involuntarily for "equitable" reasons.
For the following reasons, we affirm the decision of the bankruptcy
court to dismiss the petition for want of a third petitioner.
I.
Reyes-Colon obtained a loan from Popular Auto and
guaranteed an affiliate's loan from Banco Popular. On November 22,
2006, after Reyes-Colon allegedly failed to pay his debts, Banco
Popular filed an involuntary bankruptcy petition, forcing Reyes-
Colon into bankruptcy proceedings. Popular Auto joined the
petition shortly thereafter.
In early 2007 the bankruptcy court dismissed the
involuntary petition, concluding that Reyes-Colon had more than
twelve eligible creditors at the time the involuntary petition was
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filed and that, after a reasonable opportunity, Banco Popular had
failed to join a third creditor to maintain the petition under
section 303(b)(1). See In re Reyes-Colon, Nos. PR 07-053, 06-
04675-GAC, 2008 WL 8664760, at *1 (B.A.P. 1st Cir. Nov. 21, 2008).
A year and a half later, the bankruptcy appellate panel ("BAP")
set aside the dismissal and remanded the case. Id. The panel
determined that all creditors should have been given notice and
the opportunity for a hearing before the bankruptcy court dismissed
the case. Id. at *8.
Reyes-Colon did not appeal that panel ruling. Instead,
the parties returned to the bankruptcy court for another three-
plus years of proceedings. On March 2, 2011, Reyes-Colon moved
for summary judgment, again seeking dismissal of the petition.
The bankruptcy court partially granted the motion on May 23, 2012,
holding that Reyes-Colon had fifteen qualified creditors at the
time the involuntary petition was filed. In re Reyes-Colon, 474
B.R. 330, 383, 391 (Bankr. D.P.R. 2012). The court nevertheless
allowed the parties to conduct discovery and present evidence on
whether "special circumstances" existed to excuse compliance with
section 303(b)(1)'s three-creditor requirement and whether Reyes-
Colon had been paying his debts as they became due. Id. at 391.
The bankruptcy court eventually held evidentiary
hearings in late 2015. On September 2, 2016, the bankruptcy court
dismissed the involuntary petition, citing Law v. Siegel, 571 U.S.
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415 (2014). In re Reyes-Colon, 558 B.R. 563, 568 (Bankr. D.P.R.
2016), rev'd, No. 16-2638 (GAG), 2017 WL 6365433 (D.P.R. Aug. 9,
2017). The court found that although Reyes-Colon schemed to
defraud his creditors by misrepresenting his finances, id. at 565,
the court did not have the equitable power to override the
provisions of section 303(b)(1), id. at 568. The Banks appealed
to the district court.
The district court reversed the dismissal order and
remanded to the bankruptcy court. In re Reyes-Colon, 2017 WL
6365433, at *1. It found that the involuntary petition did not
need three or more petitioning creditors because Reyes-Colon had
fewer than twelve eligible creditors when the petition was filed.
Id. The court also found that Reyes-Colon was generally not paying
his debts as they became due, and required entry of an order of
relief against Reyes-Colon on remand pursuant to
section 303(h)(1). Id. This appeal and cross-appeal followed.
II.
Section 303(b) of the Bankruptcy Code requires that an
involuntary petition against a debtor have at least three
petitioning creditors if, at the time the petition was filed, the
debtor had twelve or more eligible creditors. 11 U.S.C.
§ 303(b)(1)-(2). Reyes-Colon argues that he had twelve or more
creditors at the time the petition was filed, and that the
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involuntary petition is therefore insufficient because there are
only two petitioning creditors -- Banco Popular and Popular Auto.
In response, the Banks raise two types of arguments.
First, they claim that Reyes-Colon has procedurally waived his
right to put forward the arguments that might arguably support his
position. Second, they argue on the merits that the bankruptcy
court did indeed err in dismissing their petition.
A.
We begin with the several asserted threshold issues of
waiver raised by the Banks. When the Banks appealed the bankruptcy
court summary judgment rulings at issue to the district court,
they argued, among other things, that the bankruptcy court erred
in determining that Reyes-Colon had fifteen eligible creditors as
of the date the involuntary bankruptcy petition was filed. In
response, as appellee, Reyes-Colon argued only that the Banks had
failed to preserve the creditor numerosity issue. The district
court then ruled that Reyes-Colon had fewer than twelve eligible
creditors as of the date of filing and that he was generally not
paying his debts as they came due. In re Reyes-Colon, 2017 WL
6365433, at *1. In Reyes-Colon's opening brief in this court, he
asserts that the bankruptcy court correctly determined that he had
more than twelve eligible creditors when Banco Popular filed its
petition and that the district court erred in ruling otherwise.
He devotes very little argument to this effect. Rather, he quotes
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the statute's text, argues briefly that the burden of proof rests
on the petitioning creditors, purports to incorporate and refer us
to the bankruptcy court's summary judgment order for further
explanation, and then briefly argues that there was at least one
other creditor overlooked by the bankruptcy court.
The Banks claim waiver by Reyes-Colon, twice over.
First, they say that by failing to present an argument on the
number of creditors to the district court, Reyes-Colon waived the
ability to later defend the bankruptcy court ruling on that issue.
Second, the Banks argue that by failing to develop more fully his
argument in favor of the bankruptcy court ruling in his opening
brief in this court, Reyes-Colon again waived his ability to
contend on appeal that he had twelve or more creditors when the
petition was filed.
These two contentions of waiver pose relatively tricky
issues of appellate procedure on which there is no controlling
precedent that has come to our attention. Title 28 U.S.C.
§ 158(a)-(b) provides for intermediate appeals either to the
district court or to the BAP. See also Fed. R. Bankr. P. 8003-
05. A party who loses that intermediate review may either accept
the loss and return to the bankruptcy court, with the BAP or
district court ruling controlling, see, e.g., In re Hermosilla,
450 B.R. 276, 287-88 (Bankr. D. Mass. 2011), or may appeal to this
court, see 28 U.S.C. § 158(d)(1). In the event of an appeal to
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this court, however, we do not review per se the BAP or district
court ruling. Rather, we "assess[] the bankruptcy court's decision
directly," In re DeMore, 844 F.3d 292, 296 (1st Cir. 2016) (quoting
In re Sheedy, 801 F.3d 12, 18 (1st Cir. 2015)), giving no deference
to the intermediate appellate ruling, see In re IDC Clambakes,
Inc., 852 F.3d 50, 59 (1st Cir. 2017). In short, once a notice of
appeal to this court has been filed, the operative ruling under
review is the bankruptcy court ruling, with the BAP or district
court ruling serving more or less like an amicus brief (albeit one
that can be extremely helpful). In re Old Cold LLC, 879 F.3d 376,
383 n.2 (1st Cir. 2018).
One resulting oddity is that when the BAP or district
court disagrees with the bankruptcy court, the appellant in this
court is the party supporting the ruling under review (the
bankruptcy court ruling). Generally, such a party nevertheless
explains in its initial brief why the BAP or district court erred,
treating the intermediate appellate opinion in effect as if it
were the opening brief. Here, though, the district court opinion
said almost nothing on point (for a reason we will explain next).
And Reyes-Colon claims to be happy with the bankruptcy court's
opinion, with one small exception. So, Reyes-Colon in his opening
brief simply refers us to the bankruptcy court's summary judgment
order to demonstrate, in his words, "that [the Banks] failed to
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carry their burden of proof that, as of the petition date, Reyes-
Colon had fewer than 12 eligible creditors."
This court has held that "[a]rguments incorporated into
a brief solely by reference to district court filings are deemed
waived." United States v. Burgos-Montes, 786 F.3d 92, 111 (1st
Cir. 2015). But that rule comes from cases where the appellant
has lost in the district court and is seeking to alter a judgment
or order through appellate review. There is no controlling
precedent that deems it a defalcation of any type for an appellant
who defends a lower court ruling to rest on that ruling. If a
party truly feels content to rely on the opinion of the bankruptcy
court as if it were the party's brief, and given that the appellant
in a case like this files his brief before the appellee files a
brief criticizing the bankruptcy court decision, we see no reason
to deem the defense of that decision to be waived because it is
not restated at length in the opening brief.
This is not to say that waiver poses no risk to those
who adopt such an approach. Any argument not in the bankruptcy
court's opinion will, by definition, be absent from the opening
brief and might be treated as waived. But see Buntin v. City of
Bos., 813 F.3d 401, 404 (1st Cir. 2015) (observing that this court
is not "wedded to the district court's reasoning," but may affirm
"on any basis made evident by the record"). Nor is anything we
say here intended to preclude a party in a case such as this from
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seeking a procedural order changing the order of briefing. Indeed,
perhaps a rule deeming the "appellant" to be the party asking us
to reverse or vacate the bankruptcy court ruling might make sense.
As matters now stand, though, we reject the Banks' arguments that
Reyes-Colon has waived his defense of the bankruptcy court's ruling
by failing to do more than incorporate it by reference in his brief
to this court.
The second potential waiver poses a more difficult
question: To what extent should we require the party who prevails
in the bankruptcy court to shepherd on intermediate review by the
district court (or the BAP) any arguments that the party will later
want to raise before this court? Because we look through the
ruling of the intermediate court and review the bankruptcy court
ruling directly, see In re DeMore, 844 F.3d at 296, one might
logically reason that either party need simply go through the
motions of an intermediate appeal if that party believes that the
case will end up in this court anyway. Permitting parties to treat
the intermediate appeal in that manner, however, would be the
equivalent of allowing the parties to forgo a stage of review
generally mandated by 28 U.S.C. § 158.1 Furthermore, it would
deprive this court of the benefit of the intermediate court's
considered assessment of the arguments raised on appeal. Here,
1 In limited circumstances, bankruptcy decisions may be
directly appealed to this court. See 28 U.S.C. § 158(d)(2)(A).
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for example, Reyes-Colon's parsimonious brief focused on issue
preservation may well have accounted for the district court's
truncated discussion of the number of creditors. We therefore
lack the benefit of any extended analysis of the creditor
numerosity issue by the district court. That benefit can be
substantial in bankruptcy cases, with the BAP in particular being
well suited to notice collateral effects of potential rulings that
might not be obvious to this court or to the parties. See In re
Old Cold LLC, 879 F.3d at 383 n.2.
At least two circuits have held that the losing party in
the bankruptcy court cannot raise on appeal to the circuit court
arguments not presented to the district court on intermediate
review. See In re Bradley, 501 F.3d 421, 433 (5th Cir. 2007);
United States v. Olson, 4 F.3d 562, 567 (8th Cir. 1993). We are
aware of no authority, however, addressing the failure of a party
who prevails in the bankruptcy court to restate on intermediate
review arguments adopted by the bankruptcy court in an opinion
explaining its ruling. In that situation, waiver would serve
little purpose because the district court (or the BAP) would
obviously know what arguments the district court adopted as
persuasive.
The closer question is what to do with an argument not
contained in the bankruptcy court opinion and also not raised on
intermediate appeal. One might say that because we can rely on
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arguments not presented in the first instance below to sustain a
judgment, see Buntin, 813 F.3d at 404, the presence of an
intermediate level of review should not alter our ability to rely
on such arguments here. Alternatively, it would seem to serve all
interests to encourage parties to present all arguments to the
district court or the BAP to enhance the utility of the mandated
intermediate level of review. Ultimately, we need not resolve
this unusual question of potential waiver because Reyes-Colon
raises no such arguments. Rather, as we will explain, we can
affirm the judgment here by relying only on the arguments apparent
from the opinion of the bankruptcy court.
B.
Having determined that Reyes-Colon has not waived his
ability to maintain that the bankruptcy court correctly dismissed
the petition for the reasons stated by that court, we turn now to
the merits of the Banks' critique of the bankruptcy court's
reasoning. That critique consists of three arguments: the
bankruptcy court erred by not placing on Reyes-Colon the burden of
proving that he had twelve or more eligible creditors; the
bankruptcy court erred by not finding that the Banks presented
evidence sufficient to show that Reyes-Colon did not have twelve
or more eligible creditors; and that, in any event, the bankruptcy
court erred by not employing equitable discretion to allow the
petition. We consider each argument in turn.
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1.
The bankruptcy court found that fifteen of Reyes-Colon's
creditors were eligible to be counted towards section 303(b)(1)'s
creditor numerosity requirement. In re Reyes-Colon, 474 B.R. at
383.2 The Banks claim that the bankruptcy court erred by
effectively placing on the Banks the burden of proving that there
were fewer than twelve creditors.
The Banks misapprehend how proof of creditor numerosity
works in this instance. As the BAP correctly stated in a prior
intermediary appeal in this case:
The burden of proof with respect to
establishing that the Appellee had less than
12 creditors rested with the petitioning
creditor. Once the debtor answers that there
are more than 12 creditors and files a list in
compliance with Bankruptcy Rule 1003(b), the
petitioning creditors bear the burden to put
the debtor to the test.
In re Reyes-Colon, 2008 WL 8664760, at *4; see also Atlas Mach. &
Iron Works, Inc. v. Bethlehem Steel Corp., 986 F.2d 709, 715 (4th
Cir. 1993); In re Zapas, 530 B.R. 560, 567 (Bankr. E.D.N.Y. 2015).
In re Fox, No. 93 C 5773, 1994 WL 484596, at *1 (N.D. Ill. Sept. 2,
1994), is not to the contrary. In Fox, the debtor's list of
2
The fifteen eligible creditors were: (1) Banco Popular;
(2) Popular Auto; (3) R&G Financial Corporation; (4) MediCoop;
(5) Eurobank; (6) Westernbank; (7) Bank of America; (8) Miami Dade
County Tax Collector; (9) COS Insurance; (10) Puerto Rico
Telephone; (11) Banco Santander; (12) Citibank; (13) Dorado Beach
HOA; (14) Liberty Cable; and (15) Sun Com. See In re Reyes-Colon,
474 B.R. at 390.
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creditors was both unverified and not submitted as part of the
debtor's motion for summary judgment. Id. at *3.
The Banks next contend that Reyes-Colon failed to
produce a list of creditors sufficient to place any burden of proof
on the Banks. Reyes-Colon in fact filed a list in compliance with
Bankruptcy Rule 1003(b), listing fifty-eight creditors. See Fed.
R. Bankr. P. 1003(b) ("If the answer to an involuntary petition
filed by fewer than three creditors avers the existence of 12 or
more creditors, the debtor shall file with the answer a list of
all creditors with their addresses, a brief statement of the nature
of their claims, and the amounts thereof."). Later, Reyes-Colon
conceded that he had only twenty-two creditors in addition to Banco
Popular, as listed in his expert witness report attached to his
summary judgment motion. This action, the Banks argue, was a
rejection of the original Rule 1003(b) list. Therefore, they
reason, the bankruptcy court could no longer rely on the
Rule 1003(b) list to shift the burden of proving the number of
eligible creditors onto the Banks.
The Banks mischaracterize Reyes-Colon's actions in
submitting and relying on his expert report as "rejecting" his
Rule 1003(b) list. When asked which list of creditors Reyes-Colon
intended to be operative at a status conference hearing in
April 2011, Reyes-Colon stated that it was the list "in the expert
witness report." In this manner, the debtor simply pared down his
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original list, hardly a cause for complaint by the petitioning
creditors. That the expert report was not in the typical form one
would expect a Rule 1003(b) list to take is no matter in this
instance. First, Banco Popular itself stressed to the bankruptcy
court that the relevant creditors list had become the smaller list
found in the expert report, stating that it was willing to "waive
the request of the sworn statement" by Reyes-Colon, as long as
Reyes-Colon "accept[ed] that the list of creditors that is going
to be used is the list submitted by the expert witness on his
report." Second, the bankruptcy court noted that it would treat
the list attached to Reyes-Colon's expert report as an amended
list. Amended Rule 1003(b) lists are not prohibited and are not
uncommon. See, e.g., In re Acis Capital Mgmt., 584 B.R. 115, 132
(Bankr. N.D. Tex. 2018); In re Bos, 561 B.R. 868, 873 (Bankr. N.D.
Fla. 2016); In re DemirCo Grp. (N. Am.), L.L.C., 343 B.R. 898,
901-02 (Bankr. C.D. Ill. 2006). In short, Reyes-Colon complied
with Rule 1003(b) by providing the initial and then amended list
of creditors. So, the burden did indeed shift to the Banks to
dispute the existence or eligibility of the creditors.
The Banks next argue that, by moving for summary
judgment, Reyes-Colon assumed the burden of proof on the creditor
numerosity issue. But Rule 56 does not alter which party bears
the burden of proof on any issue. Rather, it controls what happens
to a party that has the burden and fails to meet it sufficiently.
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See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) ("Rule 56(c)
mandates the entry of summary judgment . . . against a party who
fails to make a showing sufficient to establish the existence of
an element essential to that party's case, and on which that party
will bear the burden of proof at trial." (emphasis added)); see
also Delgado v. Aero Inv. Corp., 601 F. App'x 12, 15 (1st Cir.
2015); In re Rothery, 143 F.3d 546, 549 (9th Cir. 1998) (explaining
that after a creditor has carried its burden of coming forward
with evidence that the debtor had fewer than twelve creditors at
the time the involuntary petition was filed, the debtor's "bare
allegation" of more than twelve creditors is insufficient to defeat
summary judgment).
For all of these reasons, the bankruptcy court properly
placed the burden of proving creditor ineligibility onto the Banks.
See In re Reyes-Colon, 474 B.R. at 363-64. Because the Banks
failed to present evidence as to seven of the listed creditors,
the bankruptcy court correctly determined that those seven
creditors remained eligible for purposes of section 303(b)(1).
2.
The Banks next contend that they did come forward with
evidence sufficient to carry their burden with respect to four of
the remaining eight creditors found by the district court to be
eligible creditors. One of those creditors is Miami Dade County
Tax Collector. The Banks argue to us that Miami Dade County Tax
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Collector is not an eligible creditor because it received a post-
petition voidable transfer. See 11 U.S.C. § 303(b)(2) (excluding
certain voidable transfers from consideration in determining
creditor numerosity). But the Banks do not contest Reyes-Colon's
contention that they failed to raise this challenge in the
bankruptcy court. And our law is clear that this type of failure
in a civil case precludes a party from advancing the argument to
secure a reversal of the court in which the party did not raise
the argument, absent "extraordinary circumstances." In re Net-
Velázquez, 625 F.3d 34, 40 (1st Cir. 2010).
That leaves the Banks able only to claim that the
district court erred in finding that Westernbank, Bank of America,
and Citibank were eligible creditors. Even if the Banks were
correct on all three, Reyes-Colon would still have had, at a
minimum, twelve eligible creditors at the time the involuntary
petition was filed, triggering the requirement that there be at
least three petitioning creditors under section 303(b)(1).
3.
We turn, finally, to the Banks' argument that special
circumstances warrant an equitable exception to the creditor
numerosity requirements in this case because Reyes-Colon schemed
to defraud his creditors. See In re Reyes-Colon, 558 B.R. at 565.
"Congress has given bankruptcy courts the authority to
'issue any order, process, or judgment that is necessary or
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appropriate to carry out the provisions' of the Bankruptcy Code."
In re Oak Knoll Assocs., L.P., 835 F.3d 24, 34 (1st Cir. 2016)
(quoting 11 U.S.C. § 105(a)); see also Marrama v. Citizens Bank of
Mass., 549 U.S. 365, 375–76 (2007) (noting that bankruptcy courts
have the "inherent power . . . to sanction 'abusive litigation
practices'" (quoting Roadway Express, Inc. v. Piper, 447 U.S. 752,
765 (1980))). This court has cautioned, however, that this
expression of authority should not be construed as being "'a roving
writ, much less a free hand' to provide equitable relief." In re
Oak Knoll Assocs., L.P., 835 F.3d at 34 (quoting In re Jamo, 283
F.3d 392, 403 (1st Cir. 2002)).
In Siegel, 571 U.S. at 421, the Supreme Court held that
bankruptcy courts "may not contravene specific statutory
provisions" when they exercise their statutory and inherent
powers. The bankruptcy court had "surcharge[d]" a debtor's
homestead exemption to defray costs incurred by the bankruptcy
trustee who uncovered the debtor's fraudulent misrepresentations.
Id. at 420. The Supreme Court reversed, holding that the
Bankruptcy Code's exemption section, 11 U.S.C. § 522, "does not
give courts discretion to grant or withhold exemptions based on
whatever considerations they deem appropriate. Rather, the
statute exhaustively specifies the criteria that will render
property exempt." Id. at 423-24, 428. The Court acknowledged
that its holding "may produce inequitable results for trustees and
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creditors in other cases," but recognized that Congress, in
creating the Bankruptcy Code, "balanced the difficult choices that
exemption limits impose on debtors with the economic harm that
exemptions visit on creditors." Id. at 426-27 (quoting Schwab v.
Reilly, 560 U.S. 770, 791 (2010)).
Siegel may not restrict the bankruptcy court's
discretion in all instances. See, e.g., United States v. Colón-
Ledée, 772 F.3d 21, 29 n.10 (1st Cir. 2014). But it makes clear
that the bankruptcy court cannot "override explicit mandates of
other sections of the Bankruptcy Code." Siegel, 571 U.S. at 421
(quoting 2 Collier on Bankruptcy ¶ 105.01[2], 105-06 (16th ed.
2013)); see also In re Tempnology, LLC, 879 F.3d 389, 401 (1st
Cir. 2018) (citing Sunbeam Prod., Inc. v. Chi. Am. Mfg., LLC, 686
F.3d 372, 375 (7th Cir. 2012) ("What the Bankruptcy Code provides,
a judge cannot override by declaring that enforcement would be
'inequitable.'")), cert. granted in part sub nom., Mission Prod.
Holdings, Inc. v. Tempnology, LLC, 139 S. Ct. 397 (2018). Here,
the bankruptcy court would have plainly contravened section 303(b)
if it bypassed the involuntary petition's creditor numerosity
deficiency via the "special circumstances" doctrine. Allowing the
case to proceed with only two petitioning creditors would have
flown in the face of the Code's directive that there be three
petitioning creditors when a debtor has more than twelve creditors
at the time the involuntary petition was filed. 11 U.S.C.
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§ 303(b). Siegel forecloses employing equity to waive this plain
statutory requirement.
The Banks nonetheless point to In re Zenga, 562 B.R. 341
(B.A.P. 6th Cir. 2017), a decision by the Sixth Circuit BAP, to
support their argument that the "special circumstances" doctrine
can be utilized to overcome section 303 deficiencies post-Siegel.
In Zenga, a creditor filed an involuntary petition against debtors.
Id. at 345. The debtors moved to dismiss, asserting that they had
twelve or more creditors at the time of filing, and that the
involuntary petition was deficient under section 303(b)(1)'s
creditor numerosity requirement. Id. The bankruptcy court did
not waive the statutory numerosity requirement. Rather, it
estopped the debtors from presenting evidence that they had more
than eleven creditors based on their responses to post-judgment
sworn interrogatories that were served in prior state court
proceedings. Id. at 345-46.
Had Reyes-Colon led the Banks or the bankruptcy court to
believe that he only had eleven or fewer creditors, a court post-
Siegal might well have found him estopped from now presenting
argument to the contrary. See Perry v. Blum, 629 F.3d 1, 8 (1st
Cir. 2010) (explaining that judicial estoppel "prevent[s] a
litigant from taking a litigation position that is inconsistent
with a litigation position successfully asserted by him in an
earlier phrase of the same case or in an earlier court
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proceeding"). But the Banks make no such claim. Rather, they
assert that he has conducted himself fraudulently to avoid paying
his debts and claiming more creditors than he has. In such a case,
estoppel has no role to play, and Siegal otherwise provides no
basis for simply deeming the creditor numerosity requirement to be
inapplicable. Dismissal of the involuntary petition was therefore
proper.3
III.
For the foregoing reasons, the bankruptcy court's
decision is affirmed.
3 Because we affirm for the reasons stated in the bankruptcy
court opinion, we need not address Reyes-Colon's alternative
argument for dismissal (that the involuntary petition was filed in
bad faith as an improper collection tool), nor do we need to
inquire as to whether that argument was waived.
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