Warren v. Wirum ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In the Matter of: STEWART JAY 
WARREN,
Debtor,
No. 07-17226
ANDREA A. WIRUM,  D.C. No.
CV-07-03244-CRB
Appellant,
OPINION
v.
STEWART JAY WARREN,
Appellee.

Appeal from the United States District Court
for the Northern District of California
Charles R. Breyer, District Judge, Presiding
Argued and Submitted
April 16, 2009—San Francisco, California
Filed June 18, 2009
Before: Thomas G. Nelson, Andrew J. Kleinfeld and
Milan D. Smith, Jr., Circuit Judges.
Opinion by Judge T. G. Nelson
7263
IN THE MATTER OF WARREN 7265
COUNSEL
John H. MacConaghy, MacConaghy & Barnier, Sonoma, Cal-
ifornia, for the appellant.
7266 IN THE MATTER OF WARREN
David Chandler, Santa Rosa, California, for the appellee.
OPINION
T.G. NELSON, Circuit Judge:
This appeal requires us to interpret the interplay between
two subsections of the Bankruptcy Code, 11 U.S.C.
§ 521(a)(1) and (i)(1). Under § 521(a)(1), a debtor is required
to file a list of creditors and, “unless the court orders other-
wise,” certain financial information. 11 U.S.C. § 521(a)(1).
Under § 521(i)(1), if the debtor fails to file the financial infor-
mation required by § 521(a)(1) within forty-five days of filing
the bankruptcy petition, the case “shall be automatically dis-
missed effective on the” forty-sixth day. 11 U.S.C.
§ 521(i)(1). The issue before us is whether the bankruptcy
court has discretion to “order[ ] otherwise” and thereby waive
the § 521(a)(1) filing requirement by entering an order after
the forty-five day filing deadline in § 521(i)(1) has passed.
The bankruptcy court found it did have such discretion and
therefore entered an order waiving the § 521(a)(1) filing
requirement after the forty-five day filing deadline had
passed. The district court reversed, finding dismissal of the
case was mandatory under § 521(i)(1).
We have jurisdiction over this appeal under 28 U.S.C.
§§ 158(d) and 1291. We hold that the bankruptcy court acted
within its discretion in entering the order waiving the
§ 521(a)(1) filing requirement even though the forty-five day
filing deadline set forth in § 521(i)(1) had passed. We there-
fore reverse and remand to the district court with instructions
to remand the case to the bankruptcy court for further pro-
ceedings.
FACTS AND PROCEDURAL HISTORY
In September 2006, the State of California issued to a Cali-
fornia bank an “Order to Withhold,” ordering the bank to
IN THE MATTER OF WARREN 7267
freeze Stewart Jay Warren’s accounts with the bank and to
turn over $93,330.46, which represented the amount Warren
owed in overdue child support payments. On October 11,
2006, in an apparent attempt to avoid his child support obliga-
tions, Warren filed a Chapter 7 bankruptcy petition. Warren’s
petition included a list of creditors, but did not include the
other financial information required by 11 U.S.C. § 521(a)(1).
On October 12, 2006, the bankruptcy court issued an order
notifying Warren that if he did not submit the financial infor-
mation required by § 521(a)(1) within fifteen days, the court
may dismiss his case. Warren did not file the required finan-
cial information or otherwise respond to the bankruptcy
court’s order. The bankruptcy court then issued an order set-
ting a hearing for November 17, 2006, to address whether the
court should fine or otherwise sanction Warren and/or his
counsel, or dismiss Warren’s case for failure to timely file the
required financial information.
On November 15, 2006, two days before the hearing was
scheduled, trustee Andrea A. Wirum filed a response to the
bankruptcy court’s order regarding sanctions. The trustee
requested that the court not dismiss the case because the
trustee needed time to investigate the circumstances surround-
ing Warren’s filing of his petition and his financial situation
to determine whether assets were available in the estate that
could be administered for the benefit of creditors. Warren did
not appear at the November 17, 2006, hearing. The bank-
ruptcy court granted the trustee’s request and declined to dis-
miss the case at that time.
On March 6, 2007, almost five months after he filed his
bankruptcy petition, Warren moved to dismiss his case, argu-
ing that because he failed to obtain pre-petition credit coun-
seling or apply for a statutory waiver of the counseling
requirement, he failed to qualify as a “debtor” under 11
U.S.C. § 109(h). Before the bankruptcy court ruled on this
motion, Warren again moved to dismiss his case, this time
7268 IN THE MATTER OF WARREN
arguing that because he failed to file the financial information
required by 11 U.S.C. § 521(a)(1) within forty-five days of
filing his petition, dismissal of his case was mandated by 11
U.S.C. § 521(i).
On April 9, 2007, the bankruptcy court issued a memoran-
dum explaining that it would be denying both of Warren’s
motions to dismiss. The bankruptcy court, relying on In re
Withers, No. 06-42098 TM, 2007 WL 628078 (Bankr. N.D.
Cal. Feb. 26, 2007), held:
[D]ismissal is not mandated where the debtor is
seeking to take advantage of either § 109(h) or
§ 521(i) to the prejudice of his creditors. Judicial
estoppel bars a debtor from seeking dismissal under
§ 109(h), and § 521(i) does not require dismissal if
the requirements to file schedules and statement of
affairs have been waived.
On April 13, 2007, the bankruptcy court issued an order
waiving the requirement that Warren file all the financial
information required by § 521(a)(1).1 And on April 20, 2007,
1
The order issued by the bankruptcy court was designated nunc pro tunc
to November 15, 2006. “Nunc pro tunc signifies now for then, or in other
words, a thing is done now, which shall have [the] same legal force and
effect as if done at [the] time when it ought to have been done.” United
States v. Allen, 153 F.3d 1037, 1044 (9th Cir. 1998). This “inherent power
of the court to make its records speak the truth,” id., “is a limited one, and
may be used only where necessary to correct a clear mistake and prevent
injustice.” United States v. Sumner, 226 F.3d 1005, 1009-10 (9th Cir.
2000). The power does not, however, allow the court “to alter the sub-
stance of that which actually transpired or to backdate events to serve
some other purpose. Rather, its use is limited to making the record reflect
what the . . . court actually intended to do at an earlier date, but which it
did not sufficiently express or did not accomplish due to some error or
inadvertence.” Id. at 1010 (citations omitted). Here, there is no indication
the bankruptcy court actually decided to waive the § 521(a)(1) filing
requirement until just prior to issuing its order denying Warren’s motions
to dismiss, and that it designated its order as nunc pro tunc in an attempt
to backdate the order to fall within the § 521(i)(1) forty-five day filing
deadline and to thereby “alter the substance of that which actually tran-
spired.” Sumner, 226 F.3d at 1010. This use of nunc pro tunc is inappro-
priate. See id.IN THE MATTER OF WARREN 7269
the bankruptcy court issued an order denying Warren’s
motions to dismiss.
Warren appealed the bankruptcy court’s refusal to dismiss
his case, and the district court reversed and remanded to the
bankruptcy court with instructions to dismiss. The district
court determined that the bankruptcy court did not have dis-
cretion to waive the § 521(a)(1) filing requirement after the
forty-five day filing deadline set forth in § 521(i)(1) passed,
and that dismissal of the case was mandatory.
STANDARD OF REVIEW
We review the district court’s decision on appeal from a
bankruptcy court de novo. Metcalf v. Golden (In re Adbox,
Inc.), 488 F.3d 836, 839 (9th Cir. 2007). We review the bank-
ruptcy court’s denial of a motion to dismiss de novo. See id.
at 840. We may affirm the bankruptcy court’s decision on any
ground fairly supported by the record. Leavitt v. Soto (In re
Leavitt), 171 F.3d 1219, 1223 (9th Cir. 1999).
ANALYSIS
[1] The provision of the Bankruptcy Code at issue in this
case, 11 U.S.C. § 521, was amended by the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005
(“BAPCPA”), Pub. L. No. 109-8, 119 Stat. 23 (2005), to
expand a debtor’s duties of financial disclosure. Under
§ 521(a)(1), a debtor is now required to file a list of creditors,
and, “unless the court orders otherwise,” various other
detailed financial information.2 See 11 U.S.C. § 521(a)(1). If
2
Section 521(a)(1) provides:
(a) The debtor shall—
(1) file—
(A) a list of creditors; and
7270 IN THE MATTER OF WARREN
a debtor fails to file the required financial information within
forty-five days after filing his petition, his case will be “auto-
matically dismissed effective on the 46th day after the date of
the filing of the petition.”3 11 U.S.C. § 521(i)(1).
[2] The issue before us is whether the bankruptcy court has
discretion, after the passing of the forty-five day filing dead-
line set forth in § 521(i)(1), to “order[ ] otherwise” and
thereby waive the § 521(a)(1) filing requirement. This is an
issue of first impression in this circuit. The only circuit court
to address this issue is the First Circuit. See Segarra-Miranda
v. Acosta-Rivera (In re Acosta-Rivera), 557 F.3d 8, 9 (1st Cir.
2009) (holding that bankruptcy court retains discretion to
waive the § 521(a)(1) filing requirement even after the
§ 521(i)(1) filing deadline has passed).
(B) unless the court orders otherwise—
(i) a schedule of assets and liabilities;
(ii) a schedule of current income and current expendi-
tures;
(iii) a statement of the debtor’s financial affairs and, if
section 342(b) applies, a certificate . . . .;
(iv) copies of all payment advices or other evidence of
payment received within 60 days before the date of the
filing of the petition, by the debtor from any employer
of the debtor;
(v) a statement of the amount of monthly net income,
itemized to show how the amount is calculated; and
(vi) a statement disclosing any reasonably anticipated
increase in income or expenditures over the 12-month
period following the date of the filing of the petition
....
11 U.S.C. § 521(a)(1) (2006).
3
Although § 521(i) includes some exceptions to this forty-five day filing
deadline, none of those exceptions apply to this case. See 11 U.S.C.
§ 521(i)(1), (3), (4).
IN THE MATTER OF WARREN 7271
We believe the approach taken by the First Circuit is con-
sistent with the language of § 521 and congressional intent in
enacting BAPCPA. We therefore hold, consistently with the
First Circuit, that a bankruptcy court retains discretion to
waive the § 521(a)(1) filing requirement even after the forty-
five day filing deadline set forth in § 521(i)(1) has passed. See
In re Acosta-Rivera, 557 F.3d at 9, 13-14; see also In re Par-
ker, 351 B.R. 790, 801-02 (Bankr. N.D. Ga. 2006).
[3] We begin our analysis by examining the statutory lan-
guage of § 521 to determine the interplay between subsections
(a)(1) and (i)(1). See Cmty. for Creative Non-Violence v. Reid,
490 U.S. 730, 739 (1989) (“The starting point for our inter-
pretation of a statute is always its language.”). Subsection
(a)(1), which grants courts the power to “order[ ] otherwise,”
does not include a deadline within which the court must enter
such an order. See 11 U.S.C. § 521(a)(1)(B). Nor does any
other subsection of § 521 state that there is a time limit within
which a court may “order[ ] otherwise.” See 11 U.S.C. § 521.
Subsection (i)(1) does set forth a forty-five day deadline
within which the § 521(a)(1) filing requirement must be met,
but this deadline is directed toward debtors, not the court. See
11 U.S.C. § 521(i)(1). Further, subsection (i)(1) does not refer
to the court’s power to “order[ ] otherwise” to waive the
§ 521(a)(1) filing requirement. See 11 U.S.C. §§ 521(a)(1)(B),
(i)(1). We find the language of § 521 to be ambiguous on
whether subsection (i)(1)’s forty-five day filing deadline lim-
its the power of a court to “order[ ] otherwise” and waive the
§ 521(a)(1) filing requirement. See 11 U.S.C. §§ 521(a)(1)(B),
(i)(1).
Given the ambiguity in the statutory language, we must
“evaluate the alternative readings in light of the purpose of the
statute.” Burns v. Stone Forest Indus., Inc., 147 F.3d 1182,
1184 (9th Cir. 1998); see also Creative Computing v.
Getloaded.com LLC, 386 F.3d 930, 935 (9th Cir. 2004). This
requires examination of a statute’s words, so that we may “see
whether one construction makes more sense than the other as
7272 IN THE MATTER OF WARREN
a means of attributing a rational purpose to Congress.” Long-
view Fibre Co. v. Rasmussen, 980 F.2d 1307, 1311 (9th Cir.
1992)
[4] Section 521’s grant of judicial power to “order[ ] other-
wise” predates BAPCPA. See 11 U.S.C. § 521(1) (2004).4
Thus, when Congress overhauled § 521 to expand the finan-
cial information debtors are required to file with their bank-
ruptcy petition, it left intact this “order[ ] otherwise” provision
granting judicial power to waive some or all of the financial
filing requirements. “We do not regard that as a mere fortuity.
Nor do we think that a slip of the pen accounts for the fact
that the provision does not now contain an explicit deadline
for ordering otherwise. In this context, we have a high regard
for congressional silence,” In re Acosta-Rivera, 557 F.3d at
12, and we decline to import by implication into the “order[ ]
otherwise” provision a limitation that such order must be
entered before the passing of the forty-five day filing deadline
set forth in § 521(i)(1).
[5] Declining to interpret § 521(i)(1)’s forty-five day filing
deadline as a limitation on a court’s authority to “order[ ] oth-
erwise” also furthers and is consistent with Congress’s pur-
pose in enacting BAPCPA. Congress’s core purpose in
enacting BAPCPA was to prevent abusive bankruptcy filings.
See H.R. Rep. No. 109-31(I) (2005), reprinted in 2005
U.S.C.C.A.N. 88, 2005 WL 832198, at *2, *5; see also In re
Acosta-Rivera, 557 F.3d at 12-13 (“The amendments to sec-
tion 521 are part of an abuse-prevention package.”); cf. Port-
land 76 Auto/Truck Plaza, Inc. v. Union Oil Co. of Cal., 153
F.3d 938, 944 (9th Cir. 1998) (“The statute and not the legis-
lative history tells us what solution Congress adopted for the
problem, but the legislative history is useful to determine
4
Prior to BAPCPA, § 521 provided: “The debtor shall—(1) file a list of
creditors, and unless the court orders otherwise, a schedule of assets and
liabilities, a schedule of current income and current expenditures, and a
statement of the debtor’s financial affairs . . . .” 11 U.S.C. § 521(1) (2004).
IN THE MATTER OF WARREN 7273
what the problem was.”). Allowing bankruptcy courts discre-
tion to waive the § 521(a)(1) filing requirement even after the
filing deadline has passed will discourage bankruptcy abuse
because a court may decline to dismiss the debtor’s case if it
determines the debtor is abusing and manipulating the bank-
ruptcy system. In contrast, limiting the bankruptcy court’s
authority to waive the § 521(a)(1) filing requirement to the
forty-five day period after the filing of the petition will
encourage bankruptcy abuse because an abusive and manipu-
lative debtor could guarantee his case would be dismissed
simply by declining to comply with the § 521(a)(1) filing
requirement. “With Congress’s core purpose in mind, we are
reluctant to read into the statute by implication a new limit on
judicial discretion that would encourage rather than discour-
age bankruptcy abuse. It is safe to say that Congress, in enact-
ing BAPCPA, was not bent on placing additional weapons in
the hands of abusive debtors.” In re Acosta-Rivera, 557 F.3d
at 13.
[6] Interpreting § 521 to grant authority to “order[ ] other-
wise” even after § 521(i)(1)’s forty-five day filing deadline
has passed not only furthers congressional intent, but also pre-
serves “the authentic value of automatic dismissal.” Id. at 13.
When a party moves for an order dismissing an incomplete
petition, the court can do one of three things: (1) dismiss the
case, (2) decline to dismiss the case if an exception applies,
or (3) determine, in its discretion, that the missing information
is not required or that denial of dismissal is necessary to pre-
vent a debtor from abusing and manipulating the bankruptcy
system. Id. This approach “recognizes that missing informa-
tion may or may not be required, in a practical sense, depend-
ing upon what is deemed material by the court many months
(or even years) after the bankruptcy petition has been filed.”
Id. at 14. “This would seem to be a likely reason for Congress
to have entrusted the bankruptcy court with discretion to mod-
ify disclosure requirements on the fly.” Id. And “[c]ommon
sense suggests that Congress never intended to strip the bank-
ruptcy court of the flexibility needed to respond intelligently
7274 IN THE MATTER OF WARREN
to” a debtor who is attempting to manipulate the system sim-
ply because the forty-five day filing deadline has passed. Id.
at 14. Thus, where a bankruptcy court reasonably determines
that there is no continuing need for the information or waiver
of the filing requirement is necessary “to prevent automatic
dismissal from furthering a debtor’s abusive conduct, the
court has discretion to take such an action.” Id.
We recognize that our interpretation of § 521 is in conflict
with the majority of the bankruptcy and district courts to
address this issue. See, e.g., In re Bonner, 374 B.R. 62, 64-65
(Bankr. W.D.N.Y. 2007) (holding dismissal under § 521(i) is
automatic and that an order waiving the § 521(a)(1) filing
requirement must be filed before the expiration of the period
set out in § 521(i)); In re Calhoun, 359 B.R. 738, 740-41
(Bankr. E.D. Mo. 2007); In re Lovato, 343 B.R. 268, 270
(Bankr. D.N.M. 2006); In re Ott, 343 B.R. 264, 268 (Bankr.
D. Colo. 2006); In re Fawson, 338 B.R. 505, 514 (Bankr. D.
Utah 2006). Those courts have taken the view that
§ 521(i)(1)’s forty-five day deadline for filing the § 521(a)(1)
financial information “applies to courts and debtors alike.” In
re Acosta-Rivera, 557 F.3d at 12. This view “reads into the
filing deadline a restriction on bankruptcy courts’ authority
gleaned by implication from the ‘automatic dismissal’ provi-
sion.” Id. Admittedly, this reading of § 521 does have some
appeal in that it would “all but guarantee” dismissal at a
party’s request once the forty-five day filing deadline has
passed and thereby arguably would address Congress’s con-
cern with “the recent escalation of consumer bankruptcy fil-
ings.” Id. at 13. However, such a reading also would allow
abusive and manipulative debtors to gain automatic dismissal
and thereby encourage bankruptcy abuse. We decline to read
§ 521 in this manner.
[7] We hold that the bankruptcy court acted within its dis-
cretion in issuing its order waiving the § 521(a)(1) filing
requirement even though the § 521(i)(1) forty-five day filing
deadline had passed. We therefore reverse and remand with
IN THE MATTER OF WARREN 7275
instructions to the district court to remand the case to the
bankruptcy court for further proceedings.
REVERSED AND REMANDED.