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 2019-06

Vanessa Williams v. Carl Takano ( 2019 )


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  •                                                                            FILED
NOT FOR PUBLICATION
JUN 12 2019
UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: CARL CLIFFORD SISON                       No.   18-16162
TAKANO; LEILANI LEACH TAKANO,
______________________________                   D.C. No. 15-00108
VANESSA L. WILLIAMS,
MEMORANDUM*
Appellant,
v.
CARL CLIFFORD SISON TAKANO;
LEILANI LEACH TAKANO,
Appellees.
Appeal from the United States District Court
for the District of Guam
Frances Tydingco-Gatewood, District Judge, Presiding
Submitted June 10, 2019**
Honolulu, Hawaii
Before: THOMAS, Chief Judge, and CALLAHAN and CHRISTEN, Circuit
Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Creditor Vanessa Williams appeals the district court’s denial of her motions
in the bankruptcy proceedings of Carl and Leilani Takano. Because the parties are
familiar with the facts, we do not recount them here. We have jurisdiction
pursuant to
    28 U.S.C. § 1291
    , and we affirm.
We review a district court’s denial of a motion to dismiss for cause under
    11 U.S.C. § 707
    (a) for an abuse of discretion. Sherman v. SEC (In re Sherman),
    491 F.3d 948
    , 969 (9th Cir. 2007). Decisions committed to the bankruptcy court's
discretion, such as a decision on whether to convert a case from one Chapter to
another, will be reversed only if “based on an erroneous conclusion of law or when
the record contains no evidence on which [the bankruptcy court] rationally could
have based that decision.” Benedor Corp. v. Conejo Enters., Inc. (In re Conejo
Enters., Inc.),
    96 F.3d 346
    , 351 (9th Cir. 1996) (alteration in original) (quoting
Vanderpark Props., Inc. v. Buchbinder (In re Windmill Farms, Inc.),
    841 F.2d 1467
    , 1472 (9th Cir. 1988) (quotations omitted)).
I
The district court did not abuse its discretion in denying Williams’s motion
to dismiss for cause. Under
    11 U.S.C. § 707
    (a), a court may dismiss a bankruptcy
case for cause, including, but not limited to, unreasonable delay resulting in
prejudice to the creditors. Neary v. Padilla (In re Padilla),
    222 F.3d 1184
    , 1191
2
(9th Cir. 2000) (noting the list under § 707(a) is “illustrative and not exhaustive”).
The district court found that Williams had not attempted to show prejudice and that
the delay was partially self-created and thus not unreasonable. Further the court
considered that any delay attributable to the Takanos did not have a substantial
affect on the administration of the estate.
Contrary to Williams’s assertion, the district court’s focus on whether
Williams had established prejudice was not erroneous. The district court was
simply assessing whether Williams had established cause based on the enumerated
circumstance found in § 707(a)(1): “unreasonable delay by the debtor that is
prejudicial to creditors.” Similarly, the district court did not preclude Williams’s
claim because she was not a trustee. After concluding that Williams had not
established cause by demonstrating unreasonable delay prejudicial to creditors, the
district court correctly noted that simply not being “timely” is not a ground for
Williams to have the case dismissed because that motion may only be made by a
trustee under § 707(a)(3). The court did not abuse its discretion in determining that
Williams had failed to establish circumstances constituting cause to dismiss the
case under § 707(a).
II
3
The district court did not abuse its discretion in denying Williams’s motion
to convert the case to a Chapter 11 case. Under
    11 U.S.C. § 706
    (b), a court has
broad discretion to convert to a Chapter 11 case based on what “will most inure to
the benefit of all parties in interest.” H.R. Rep. No. 95-595, at 380 (1977), as
reprinted in 1978 U.S.C.C.A.N. 5963; S. Rep. No. 95-989, at 94 (1978), as
reprinted in 1978 U.S.C.C.A.N. 5787. Although the district court did not
explicitly address the Takanos’ ability to pay, it weighed the interests of the parties
and concluded that Williams had not provided any evidence tending to show that
an involuntary conversion would benefit the parties. Neither had Williams
identified how a conversion would benefit the Takanos. Finally, in addition to
noting that an involuntary conversion could leave the Takanos “trapped in a
chapter 11 proceeding they do not need, do not want, and cannot manage,” the
district court found that an involuntary conversion ran contrary to the Takanos’
interest in a quick discharge of their debts and a fresh start. The district court did
not abuse its discretion in denying Williams’s motion for a conversion under §
706(b).
AFFIRMED.
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