Raymond Ross v.

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 15-2222
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IN RE: RAYMOND ROSS,
Appellant
_____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 2:15-cv-00197)
District Judge: Honorable Gerald J. Pappert
______________
Argued October 25, 2016
______________
Before: VANASKIE, KRAUSE, and NYGAARD, Circuit
Judges
(Opinion Filed: June 6, 2017)
Raymond Ross
P.O. Box 285
Fort Washington, PA 19034
Pro Se
Charles J. Hartwell, Esq. (Argued)
Dethlefs Pykosk Law Group
2132 Market Street
Camp Hill, PA 17011
Counsel for Appellee AmeriChoice Federal Credit Union
William H. Burgess, Esq. [ARGUED]
Kirkland & Ellis
655 15th Street, N.W.
Suite 1200
Washington, D.C. 20005
Court-Appointed Amicus Curiae in Support of Appellant
Raymond Ross
___________
OPINION OF THE COURT
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VANASKIE, Circuit Judge.
Raymond Ross appeals from a broad filing injunction
issued against him by the Bankruptcy Court after he and his
wife used the bankruptcy process to stave off the sheriff’s
sale of their home. Ross argues that, as a matter of law, a
bankruptcy court may never issue a filing injunction against a
Chapter 13 debtor who requests voluntary dismissal under 11
U.S.C. § 1307(b) because doing so would undermine the
2
debtor’s statutory rights. We disagree, and hold that a
bankruptcy court does indeed have the authority to issue a
filing injunction even in the context of approving a debtor’s
§ 1307(b) voluntary dismissal because nothing in the
Bankruptcy Code’s express terms says otherwise.
However, we also find that the Bankruptcy Court’s
filing injunction against Ross cannot survive this appeal due
to this case’s particular circumstances. The Bankruptcy Court
provided no reasoning for the broad nature of its filing
injunction, which went well beyond what had been requested
and what the Bankruptcy Court found appropriate in the case
of Ross’s similarly-situated wife. Accordingly, we will
vacate the injunction and remand this matter for further
proceedings.
I.
Appellant Raymond Ross and his wife Sandra have
lived in their home in Ambler, Pennsylvania, since 1993. In
2003, the Rosses took on a mortgage from Appellee
AmeriChoice Federal Credit Union. The Rosses fell behind
on their payments, and in 2012 AmeriChoice filed a
foreclosure action in Pennsylvania state court. The state court
entered default judgment against the Rosses, and
AmeriChoice scheduled a sheriff’s sale to be held on October
30, 2013. Ross v. AmeriChoice Fed. Credit Union, 530 B.R.
277, 280 (Bankr. E.D. Pa. 2015).
3
The day before the sheriff’s sale, Raymond1—acting
alone, without Sandra—filed the first of the Rosses’ three
relevant Chapter 13 bankruptcy petitions. Raymond’s first
petition triggered Chapter 13’s automatic stay and put a halt
to the sheriff’s sale, but was dismissed about six months later
after Raymond failed to make required payments.
AmeriChoice rescheduled the sheriff’s sale for August 27,
2014.
On the day of the rescheduled sale, Raymond filed a
second Chapter 13 petition—the one that led to this appeal—
stalling the sale for a second time. The Bankruptcy Court
quickly granted AmeriChoice relief from the automatic stay,
and the sheriff’s sale was rescheduled yet again, this time for
October 29, 2014. On that day, however, Sandra filed her
own Chapter 13 petition, delaying the sale of the Rosses’
property a third time. In re Sandra Dixon-Ross, No. 15-CV-
581, 2016 WL 1056776, at *1 (E.D. Pa. Mar. 17, 2016).
Sandra’s case was assigned to the same Bankruptcy Judge
overseeing Raymond’s case, and a week later the court
dismissed Sandra’s petition for failure to obtain required pre-
petition credit counseling. Id.In Raymond’s second case, AmeriChoice filed a
motion under 11 U.S.C. § 1307(c) to either convert
Raymond’s case to Chapter 7 or dismiss it altogether due to
what AmeriChoice saw as Raymond’s bad faith use of the
bankruptcy process. The Bankruptcy Court scheduled a
hearing on the motion. About two weeks prior to the hearing,
1
For sake of clarity, we will refer to Appellant
Raymond Ross hereinafter by his first name only, and his
wife by her first name, Sandra.
4
Raymond filed a motion to postpone the hearing due to a
scheduling conflict and his anticipated absence from the state.
The Bankruptcy Court denied the motion to postpone a week
later. Raymond then requested, the day before his hearing,
that his case be dismissed pursuant to § 1307(b).
Raymond did not appear at the hearing on
AmeriChoice’s motion. AmeriChoice did appear, and
indicated that its preference would be for the Bankruptcy
Court to convert Raymond’s case to Chapter 7; dismissal was
its second choice. If the Bankruptcy Court decided to
dismiss, AmeriChoice requested that the court also issue one
of two proposed filing injunctions: a filing injunction
“barring future filings [of both Raymond and Sandra Ross]
for 180 days,” or a filing injunction “barring the use of the
automatic stay in any future filings by either one of them.”
(Addendum to Amicus Br. at 24 (transcript of hearing).) The
Bankruptcy Judge expressed due process concerns with the
prospect of issuing an order that extended to Sandra because
the hearing was held only in Raymond’s case and Sandra had
not been given notice. The Judge instead suggested that if
AmeriChoice wanted a filing injunction entered against
Sandra, it should return to Sandra’s case and request one
there. Neither the Bankruptcy Judge nor AmeriChoice
mentioned or discussed Raymond’s request for dismissal at
the hearing. Following the hearing, the Bankruptcy Court
issued an Order dismissing Raymond’s case “with prejudice,”
and further providing that “the Debtor is not permitted to file
another bankruptcy case without express permission from this
Court.” (App. 205.)
AmeriChoice took the Bankruptcy Judge’s advice and
a week later filed a motion in Sandra’s case, requesting that a
filing injunction be entered against her as well. In re Sandra
5
Dixon-Ross, 2016 WL 1056776, at *1. AmeriChoice
suggested as relief the same two alternatives it had proposed
in Raymond’s case: a general restriction on all Sandra’s
filings for 180 days, or an order granting blanket relief from
the automatic stay for any claims against the Rosses’ Ambler
property for the indefinite future. Id. It did not request the
broad restriction that the court had already entered against
Raymond. The Bankruptcy Judge granted the motion, but
this time the order extended only to what AmeriChoice
requested: Sandra was “enjoined from filing another
bankruptcy for 180 days of the date of this Order,” and the
automatic stay was not to “operate against actions to enforce
[AmeriChoice’s] mortgage foreclosure judgment” on the
Rosses’ property. In re Sandra Dixon-Ross, No. 14-18608, at
*1 (Bankr. E.D. Pa. Jan. 21, 2015). Sandra lost an appeal in
the district court, and did not further appeal her case.
Raymond unsuccessfully appealed his second case to the
District Court, Ross, 530 B.R. at 282, and then filed the
present appeal.
In the midst of this litigation, AmeriChoice completed
the sheriff’s sale, only to have the foreclosure undone when
the Pennsylvania Superior Court held that the Rosses never
received proper notice in the state action. AmeriChoice Fed.
Credit Union v. Ross, 135 A.3d 1018, 1023-26 (Pa. Super. Ct.
2015). The Rosses also filed a federal action against
AmeriChoice and other defendants, and eventually the parties
entered into a near-global settlement, where the Rosses
promised to make payments on their debt and AmeriChoice
promised to abandon its foreclosure action. See Ross v.
AmeriChoice Fed. Credit Union, No. 15-2650, ECF No. 28
(E.D. Pa. Mar. 31, 2016).
6
The lone unsettled issue is the Bankruptcy Court’s
filing injunction against Raymond, which remains in place.2
II.
The Bankruptcy Court had jurisdiction under 28
U.S.C. § 157. The District Court had jurisdiction under 28
U.S.C. § 158(a)(1) to review the Bankruptcy Court’s
dismissal order. And we have appellate jurisdiction under 28
U.S.C. § 1291. Our task is to “stand in the shoes” of the
District Court and review the Bankruptcy Court’s decision
anew. In re Pransky, 318 F.3d 536, 542 (3d Cir. 2003)
(quoting In re Krystal Cadillac Oldsmobile GMC Truck, Inc.,
142 F.3d 631, 635 (3d Cir. 1998)). “[W]e review a
bankruptcy court’s ‘legal determinations de novo, its factual
findings for clear error, and its exercises of discretion for
abuse thereof.’” In re Miller, 730 F.3d 198, 203 (3d Cir.
2013) (quoting In re Michael, 699 F.3d 305, 308 n.2 (3d Cir.
2012)). The issuance of a filing injunction is an exercise of
discretion. Abdul-Akbar v. Watson, 901 F.2d 329, 331 (3d
Cir. 1990).
2
Raymond proceeds pro se in this appeal. Because of
the important and unsettled nature of the power of a
bankruptcy court to issue a filing injunction in response to a
Chapter 13 debtor’s motion for voluntary dismissal, we
appointed counsel to serve as an Amicus Curiae on behalf of
Raymond in this appeal. We express our gratitude to court-
appointed amicus, who provided valuable assistance to the
Court.
7
III.
Raymond’s appeal raises two main issues: (1) whether
the Bankruptcy Code prohibits a bankruptcy court from
issuing a filing injunction against a debtor who requests
voluntary dismissal under 11 U.S.C. § 1307(b), and
(2) whether this case’s particular facts and circumstances
indicate that the Bankruptcy Court abused its discretion in
issuing a broad filing injunction. We hold that the answer to
the first question is no, but find the answer to the second is
yes.
A.
Raymond’s first argument is that bankruptcy courts
may not impose a filing injunction after a debtor has
motioned for voluntary dismissal pursuant to 11 U.S.C.
§ 1307(b). Bankruptcy courts possess a general statutory
authority to “issue any order, process, or judgment that is
necessary or appropriate to carry out the provisions of” the
Bankruptcy Code. 11 U.S.C. § 105(a). And bankruptcy
courts “may also possess ‘inherent power . . . to sanction
‘abusive litigation practices.’” Law v. Siegel, 134 S. Ct.
1188, 1194 (2014) (quoting Marrama v. Citizens Bank of
Mass., 549 U.S. 365, 375-76 (2007)). But these broad
“equitable powers . . . are not without limitation.” In re
Combustion Eng’g, Inc., 391 F.3d 190, 236 (3d Cir. 2004).
As relevant here, for example, a bankruptcy court’s general
authority does not extend to actions that conflict with
“specific,” “explicit,” and “express” terms of the Bankruptcy
Code. Law, 134 S. Ct. at 1195-97.
In this vein, Raymond argues the Bankruptcy Court’s
filing injunction is not authorized by its general authority
8
because it conflicts with the express terms of § 1307(b).
Section 1307(b) states that a bankruptcy court “shall” dismiss
a Chapter 13 case on the “request” of the debtor unless the
debtor’s case has already been converted from some other
chapter of the code. 11 U.S.C. § 1307(b).3 There is a split in
authority as to just how mandatory this right to dismissal
really is, and the Third Circuit has yet to weigh in. Some
courts hold that the statute’s command is mandatory and
grants a debtor an “absolute” right to dismissal—if a debtor
requests dismissal, then the court must dismiss; no
exceptions. See, e.g., In re Barbieri, 199 F.3d 616, 620-21
(2d Cir. 1999) (reasoning that reading a bad faith exception
into § 1307(b) would undermine § 303’s procedures
governing the initiation of an involuntary Chapter 7 case); In
re Procel, 467 B.R. 297, 308 (S.D.N.Y. 2012) (applying
Barbieri’s rule after holding that Barbieri was not overruled
or abrogated by Marrama, 549 U.S. at 365); In re Williams,
435 B.R. 552, 560 (Bankr. N.D. Ill. 2010) (same). Other
courts read the statute to contain an exception that permits a
bankruptcy court to delay ruling on a bad faith debtor’s
request for dismissal and instead first address a creditor’s
competing motion to dismiss the case or convert it to
3
The precise language of section 1307(b) is as
follows:
On request of the debtor at any time, if the case
has not been converted under section 706, 1112,
or 1208 of this title, the court shall dismiss a
case under this chapter. Any waiver of the right
to dismiss under this subsection is
unenforceable.
9
Chapter 7. See, e.g., In re Jacobsen, 609 F.3d 647, 649 (5th
Cir. 2010) (holding that Marrama requires the court to read-
in a bad faith exception); In re Rosson, 545 F.3d 764, 772,
773 n.12 (9th Cir. 2009) (same). Raymond argues we should
side with Barbieri, and therefore the Bankruptcy Court erred
in granting AmeriChoice’s motion over Raymond’s dismissal
request because a debtor’s § 1307(b) right to dismissal is
absolute.
But we need not weigh in on this split in authority
today, because even if Raymond were correct, and § 1307(b)
required the Bankruptcy Court to grant Raymond’s request
for dismissal before considering AmeriChoice’s motion, the
Bankruptcy Court could have just as easily attached its filing
injunction to Raymond’s requested dismissal order.
Raymond argues that such a conclusion cannot be correct
because it would undermine the purpose of several other
Bankruptcy Code provisions that already address the problem
of repeat-filers and bad-faith debtors: § 727(a)(8) and
§ 1328(f), which limit the availability of two discharges to the
same petitioner; § 362(b)(4), which diminishes the effect of
the automatic stay for repeat-filers; and § 109(g), which
effectively imposes a 180-day filing injunction on a certain
subset of repeat-filers who act in bad faith. But whether or
not the Bankruptcy Court’s filing-injunction order
undermines these sections’ purposes is not the question; all
that matters is the “express” and “explicit” terms of the
Bankruptcy Code. For example, in Marrama v. Citizens
Bank, the Supreme Court upheld an order as falling under the
bankruptcy court’s general authority, and brushed back an
argument that its decision would undermine the purpose of
other Code provisions. See 549 U.S. at 375; see also id. at
380 (Alito, J., dissenting) (arguing the majority did not
10
adequately consider the “purpose” of other Code provisions).
What mattered to the Court was that there was “[n]othing in
the text” of the Code that prohibited the bankruptcy court’s
order. Id. at 374-75. By comparison, when the Supreme
Court reversed an order in Law v. Siegel for exceeding the
bankruptcy court’s general authority, it held that the order
conflicted with the “explicit mandates” and “express terms”
of 11 U.S.C. § 522, in light of two specific aspects of that
section. 134 S. Ct. at 1196 (referencing specific textual
language granting debtors the right to seek exemptions and a
“meticulous” and “detailed” list of exceptions and
limitations). Raymond’s case is much more like Marrama
than Law v. Siegel. Raymond highlights “nothing in the text”
of § 1307(b) that prohibits the entry of a filing injunction
alongside a § 1307(b) dismissal order, and the purposes
behind the other cited statutory provisions are irrelevant.
Raymond also argues against this conclusion by comparing
§ 1307(b) to the analogous Federal Rule of Civil Procedure
governing voluntary dismissals by a plaintiff, Rule 41(a)(1).4
4
Rule 41(a)(1) provides:
(a) Voluntary Dismissal.
(1) By the Plaintiff.
(A) Without a Court Order. Subject to Rules
23(e), 23.1(c), 23.2, and 66 and any applicable
federal statute, the plaintiff may dismiss an
action without a court order by filing:
11
Rule 41 states in its text that a notice of voluntary dismissal is
effective without a court order and the dismissal is without prejudice
if the plaintiff requests dismissal and has not previously had “any
federal- or state-court action based on or including the same claim”
voluntarily dismissed. Fed. R. Civ. P. 41(a)(1)(B). Thus, Raymond
suggests that had the Federal Rules of Civil Procedure governed the
Bankruptcy Court’s procedures in Raymond’s case, the Bankruptcy
Judge arguably would have been prohibited from entering the filing
injunction because Raymond’s § 1307(b) request for voluntary
dismissal was his first.5 The problem with this Rule 41 analogy,
(i) a notice of dismissal before the opposing
party serves either an answer or a motion for
summary judgment; or
(ii) a stipulation of dismissal signed by all
parties who have appeared.
(B) Effect. Unless the notice or stipulation
states otherwise, the dismissal is without
prejudice. But if the plaintiff previously
dismissed any federal- or state-court action
based on or including the same claim, a notice
of dismissal operates as an adjudication on the
merits.
5
Raymond’s first bankruptcy petition was dismissed
involuntarily in response to a motion to dismiss filed by the
Trustee; it was not dismissed voluntarily. See In re Raymond
Ross, No. 13-19412, at *1 (Bankr. E.D. Pa. Apr. 23, 2014)
(dismissal order). Prior to dismissal, Raymond and
AmeriChoice apparently entered into a stipulation in an
attempt to relieve AmeriChoice from the automatic stay and
12
however, is once again the text of § 1307(b): whereas Rule 41
requires in specific and express terms that dismissal is automatic and
without prejudice, § 1307(b) contains no similar textual hook.
The Bankruptcy Court therefore possessed the general
authority to issue a filing injunction against Raymond.
B.
The Bankruptcy Court’s filing injunction against
Raymond is still problematic, however, due to the specific
circumstances of this case. A court may not issue orders that
are “arbitrary or irrational,” and we may vacate decisions for
an abuse of discretion on that basis. United States v. Bailey,
840 F.3d 99, 117 (3d Cir. 2016). Furthermore, when
reviewing for abuse of discretion, we grant less deference to
court decisions that are unaccompanied by reasoning. Id.Although we may affirm a judgment of a lower court for any
reason supported by the record, Brightwell v. Lehman, 637
F.3d 187, 191 (3d Cir. 2011), we are not obligated to search
the record for reasons to affirm and may vacate or remand if
the lower court declines to provide reasoning supporting its
decision.6
avoid future litigation between the parties. AmeriChoice’s
Mot. to Convert or Dismiss, Ex. P ¶¶ 10-13, Bankr. E.D. Pa.
Case No. 14-16866, Docket No. 41. But that stipulation did
not purport to resolve Raymond’s first Chapter 13 case in its
entirety, and was not the basis for the Bankruptcy Court’s
dismissal.
6
See United States v. Garza, 593 F.3d 385, 391 (5th
Cir. 2010) (holding that the district court abused its discretion
13
Here, three aspects of the filing injunction, none of
which were explained by the Bankruptcy Court, together
suggest the Bankruptcy Judge abused his discretion in issuing
the broad and indefinite filing injunction. First, the filing
injunction went beyond what AmeriChoice requested.
AmeriChoice only asked that the Bankruptcy Court either
restrict Raymond’s filings for 180 days or bar the application
of the automatic stay to AmeriChoice’s attempts to sell the
Rosses’ property. The Bankruptcy Court, however, barred
Raymond from making any bankruptcy filings anywhere for
the indefinite future—there was no temporal or geographic
limitation—except when the court grants its express
permission.
Second, the filing injunction against Raymond is
several degrees harsher than the filing injunction against
Sandra, even though the same Bankruptcy Judge oversaw
each spouse’s case and gave no indication that the two are not
similarly situated. Similarly, even though it appears that
Raymond and Sandra are similarly situated, the Bankruptcy
Court limited its filing injunction in Sandra’s case to what
when it sua sponte transferred a case to a not very convenient
venue and did not provide reasoning); Mattel, Inc. v. Walking
Mountain Productions, 353 F.3d 792, 816 (9th Cir. 2003)
(vacating the district court’s award of damages under the
Lanham Act for lack of reasoning); Stuebben v. Gioiosi (In re
Gioioso), 979 F.2d 956, 961 (3d Cir. 1992) (remanding to the
bankruptcy court because it failed to “provide a sufficient
basis for reviewing its exercise of discretion” in imposing
sanctions under Rule 9011).
14
AmeriChoice requested while in Raymond’s case went
beyond their request.
Third, 11 U.S.C. § 109(g) is persuasive authority that a
180-day filing restriction may have been sufficient in
Raymond’s case. As mentioned above, that section imposes
an effective 180-day filing restriction on debtors who have
either (1) willfully failed “to abide by orders of the court” or
“to appear before the court in proper prosecution of the case,”
or (2) requested and received dismissal in advance of a court
ruling on a creditor’s request for relief from the automatic
stay. 11 U.S.C. § 109(g). Thus, the section imposes a 180-
day filing restriction on a certain subset of bad faith debtors.
The section almost certainly did not apply here because
Raymond appeared before the Bankruptcy Court, apparently
followed the court’s orders, and did not file his motion in
response to AmeriChoice’s previously-granted motion for
relief from the automatic stay but rather its motion to dismiss
or convert Raymond’s case. Nonetheless, if 180 days is often
sufficient for the bad faith debtor contemplated by §109(g),
180 days may have been sufficient for Raymond too.
These three aspects of the Bankruptcy Court’s filing
injunction together, left unexplained by any court reasoning,
lead us to the conclusion that the court abused its discretion in
issuing such a broad filing injunction. If any one of these
factors had not been present, or if the Bankruptcy Court had
provided oral or written reasoning describing a legitimate
rationale for the broad nature of its filing injunction, then
perhaps we would have arrived at a different result, because
even broad filing restrictions are common and often justified.
See, e.g., Olson v. Ramsey Cty., No. 15-3131, 2015 WL
5778478, at *7 (D. Minn. Oct. 1, 2015) (restricting the
plaintiff, for the indefinite future, from “filing new cases in
15
this District Court unless he is represented by counsel or
receives prior written authorization from a judicial officer in
this District Court”); Riches v. Parcells, No. 1:07-cv-1891,
2008 WL 117887, at *2 (E.D. Cal. Jan. 10, 2008) (restricting
the Clerk of Court, for the indefinite future, from accepting
any of the plaintiff’s future civil complaints if the plaintiff has
not paid the filing fee). Nevertheless, a broad filing
injunction is an “extreme remed[y]” that “should be narrowly
tailored and sparingly used.” In re Packer Ave. Assocs., 884
F.2d 745, 747 (3d Cir. 1989). Given both the breadth of the
injunction in this case and the Bankruptcy Court’s failure to
articulate why such an injunction was warranted by Ross’s
conduct, a remand is warranted.7
IV.
We will vacate the Bankruptcy Court’s filing-
injunction order and remand the case to the Bankruptcy Court
for further proceedings consistent with this opinion.
7
Because we vacate the filing injunction on this basis,
we need not address Raymond’s final argument in the
alternative, that the Bankruptcy Court violated his procedural
due process rights.
16