Theresa Marshall v. Mark McCarty

United States Bankruptcy Appellate Panel
For the Eighth Circuit
___________________________
No. 18-6024
___________________________
In re: Theresa Marshall
lllllllllllllllllllllDebtor
------------------------------
Theresa Marshall
lllllllllllllllllllllDebtor - Appellant
v.
Mark T. McCarty
lllllllllllllllllllllTrustee - Appellee
____________
Appeal from United States Bankruptcy Court
for the Eastern District of Arkansas - Little Rock
____________
Submitted: February 19, 2019
Filed: February 28, 2019
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Before SALADINO, Chief Judge, NAIL and DOW, Bankruptcy Judges.
____________
NAIL, Bankruptcy Judge.
Debtor Theresa Marshall appeals the September 4, 2018 order of the
bankruptcy court1 granting Chapter 13 Trustee Mark T. McCarty's ("Trustee") motion
to dismiss Debtor's bankruptcy case. We have jurisdiction over this appeal pursuant
to 28 U.S.C. § 158(b). We affirm.
BACKGROUND
Debtor filed a petition for relief under chapter 13 of the bankruptcy code.
In Part 5 of her petition, Debtor was advised "[t]he law requires that you receive a
briefing about credit counseling before you file for bankruptcy" and was instructed
to check one of four boxes to indicate whether she had received such a briefing.
A debtor checking the first box represents: "I received a briefing from an
approved credit counseling agency within the 180 days before I filed this bankruptcy
petition, and I received a certificate of completion." A debtor checking this box is
instructed to attach a copy of the certificate.
A debtor checking the second box represents: "I received a briefing from an
approved credit counseling agency within the 180 days before I filed this bankruptcy
petition, but I do not have a certificate of completion." A debtor checking this box
is instructed to file a copy of the certificate within fourteen days.
A debtor checking the third box certifies: "I asked for credit counseling
services from an approved agency, but was unable to obtain those services during
the 7 days after I made my request, and exigent circumstances merit a 30-day
temporary waiver of the requirement." A debtor checking this box is instructed to
"attach a separate sheet explaining what efforts you made to obtain the briefing, why
1
The Honorable Richard D. Taylor, United States Bankruptcy Judge for the
Eastern and Western Districts of Arkansas.
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you were unable to obtain it before you filed for bankruptcy, and what exigent
circumstances required you to file this case."
A debtor checking the fourth box represents: "I am not required to receive a
briefing about credit counseling because of [incapacity, disability, or active duty]."
A debtor checking this box is instructed to "file a motion for waiver of credit
counseling with the court."
Debtor checked the first box, thereby representing she had received the
requisite briefing within the 180 days before she filed her petition and had received
a certificate of completion. Debtor did not, however, attach a copy of such a
certificate.
Citing Debtor's failure to file a certificate of completion, a certification of
exigent circumstances, or a request for a waiver of the credit counseling requirement
due to incapacity, disability, or military service, Trustee filed a motion to dismiss
Debtor's case. Debtor responded, first by filing a certificate of counseling that
showed Debtor had received the requisite briefing four weeks after she filed her
petition and then by filing an objection to Trustee's motion to dismiss. In her
objection, Debtor attempted to excuse her failure to receive the requisite briefing
within the 180 days before she filed her petition by claiming–seemingly
inconsistently–she "did not remember that she needed to do credit counseling before
she filed Chapter 13" and she "misread question and believed that credit counseling
that she had previously taken on/about October 26, 2016 met credit counseling
requirement."2
2
The underlining here and throughout our opinion where we quote Debtor is
Debtor's, not ours.
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Following a hearing, the bankruptcy court granted Trustee's motion and
dismissed Debtor's case with a 180-day bar to refiling. Debtor timely appealed.
STANDARD OF REVIEW
In the section of her brief headed "ISSUES," Debtor poses two issues:
(1) whether the bankruptcy court erred in dismissing her case; and (2) whether the
bankruptcy court erred in barring her from refiling for 180 days.3 We review both the
bankruptcy court's decision to dismiss Debtor's case and the bankruptcy court's
decision to bar Debtor from refiling for 180 days for an abuse of discretion. Marshall
v. McCarty (In re Marshall), 407 B.R. 359, 361 (B.A.P. 8th Cir. 2009).
A court abuses its discretion when a relevant factor that
should have been given significant weight is not
considered; when an irrelevant or improper factor is
considered and given significant weight; or when all proper
factors and no improper ones are considered, but the court
commits a clear error of judgment in weighing those
factors.
City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 702 F.3d 1147, 1152
(8th Cir. 2013).
DISCUSSION
With respect to the first issue Debtor poses, the bankruptcy code establishes
certain eligibility requirements for individual debtors:
3
In a later section of her brief headed "ISSUES APPEALING," Debtor purports
to raise a number of other issues. These additional "issues" are better characterized
as arguments in support of Debtor's contention that the bankruptcy court erred in
dismissing her case and barring her from refiling, and we treat them as such below.
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[A]n individual may not be a debtor under this title unless
such individual has, during the 180-day period ending on
the date of filing of the petition by such individual,
received from an approved nonprofit budget and credit
counseling agency . . . an individual or group briefing
(including a briefing conducted by telephone or on the
Internet) that outlined the opportunities for available credit
counseling and assisted such individual in performing a
related budget analysis.
11 U.S.C. § 109(h)(1).
An exception is made for debtors who reside in districts for which the United
States Trustee determines approved nonprofit budget and credit counseling agencies
cannot provide the necessary credit counseling services. 11 U.S.C. § 109(h)(2)(A).
Another exception is made for debtors who submit with their petition a certification
that describes exigent circumstances, states the debtor requested credit counseling but
was unable to obtain such counseling within seven days of making the request, and
persuades the bankruptcy court to grant the debtor a temporary waiver of the credit
counseling requirement. 11 U.S.C. § 109(h)(3)(A); Fed.R.Bankr.P. 1007(b)(3)(C)
and (c). A final exception is made for debtors who the bankruptcy court determines,
on the debtor's request filed with the petition and after notice and a hearing, are
unable to complete credit counseling due to incapacity, disability, or active military
duty in a military combat zone. 11 U.S.C. § 109(h)(4); Fed.R.Bankr.P. 1007(b)(3)(D)
and (c).
In this case, despite checking the box on her petition to represent she had
received credit counseling within the 180 days before she filed her petition, Debtor
did not claim–much less offer any proof–she actually received such counseling within
the time allowed. She did not suggest the United States Trustee has determined there
are no nonprofit budget and credit counseling agencies in the Eastern District of
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Arkansas that can provide the required credit counseling services. She did not
submit–with her petition or otherwise–the required certification to obtain a temporary
waiver of the credit counseling requirement due to exigent circumstances. And she
did not file–with her petition or otherwise–the required request that the bankruptcy
court determine she was unable to complete credit counseling due to incapacity,
disability, or active military duty in a military combat zone.
The record supports both Trustee's contention that Debtor did not satisfy the
requirements of § 109(h) and thus could not be a debtor under the bankruptcy code
and the bankruptcy court's decision to grant Trustee's motion to dismiss. That being
so, we cannot say the bankruptcy court abused its discretion in dismissing Debtor's
case. Dixon v. LaBarge (In re Dixon), 338 B.R. 383, 389-90 (B.A.P. 8th Cir. 2006).
Debtor nevertheless argues the bankruptcy court erred in "accepting a defective
proof of claim from alleged creditor, Deutsche Bank Trust" and "[n]o paperwork was
filed with court by servicer Wells Fargo Home Mortgage, or alleged trustee, Deutsche
Bank National Trust." Debtor also argues the bankruptcy court erred in dismissing
her case "when there was a question of legal standing by alleged creditor Deutsche
Bank Trust and proper paperwork has never been tendered or made to submit by
court" and "when opposing counsel filed notice of appearance and proof of claim (1)
day before hearing of August 30, 2018 . . . [and] received relief from stay and right
by court to sell debtors [sic] home of (26) twenty-six years."4 These arguments
appear to relate to a different matter entirely, and Debtor does not explain how they
have any bearing on her eligibility to be a debtor under the bankruptcy code.
4
Debtor does not seem to be referring to Trustee or Trustee's attorney when she
says "opposing counsel."
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Debtor also argues the bankruptcy court erred in dismissing her case "when
there was a question of fraud on the court by opposing counsel[,]"5 "when [a] recusal
motion was before [the] bankruptcy court . . . [and] there was a judicial complaint
against opposing counsel[,]" "where there was no hearing held, no witness from
opposing side to testify, no violation by debtor in payments to Trustee, etc.[,]" "when
proper notice was not given to prepare for Hearing of August 30, 2018[,]" and "when
order/judgement [sic] was (1) week from being null and void." Again, Debtor does
not explain how these arguments have any bearing on her eligibility to be a debtor
under the bankruptcy code.
Some of Debtor's arguments, however, warrant further discussion. First,
Debtor's motion to recuse was one of several related matters on the bankruptcy court's
calendar. The bankruptcy court considered and denied Debtor's motion before
addressing Trustee's motion to dismiss. Debtor appealed the bankruptcy court's order
denying her motion, and we dismissed her appeal for lack of jurisdiction. Theresa
Marshall v. Wells Fargo Bank N.A. (In re Marshall), No. 18-6025 (B.A.P. 8th Cir.
Sept. 27, 2018).
Second, as we noted above, the bankruptcy court did hold a hearing on
Trustee's motion to dismiss. The bankruptcy court heard the testimony of one of
Trustee's staff attorneys. Debtor was afforded an opportunity to cross-examine
Trustee's witness, but she declined, stating: "No, that's pretty much what – what
happened." Debtor was also afforded an opportunity to present her own witnesses,
but she again declined.
5
Debtor repeats this argument three times. She does not, however, describe the
alleged fraud or specifically identify Trustee or Trustee's attorney as the perpetrator
of the alleged fraud. It is likely Debtor is referring to Deutsche Bank National Trust
Company, which she named in the June 27, 2018 motion she references in her brief.
In that motion, Debtor asked the bankruptcy court to dismiss for fraud upon the court
certain unspecified motions filed by Deutsche Bank National Trust Company.
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Third, nothing in the record suggests Debtor did not receive notice of either the
originally scheduled hearing or the continued hearing on Trustee's motion to dismiss.
And Debtor does not explain how either of those notices was not "proper."
Finally, Debtor does not identify the order or judgment to which she is
referring in her final argument or explain how that order or judgment would be
rendered null and void. If she is referring to the bankruptcy court's order granting
Trustee's motion to dismiss, we are unaware of any reason why that order would have
been rendered null and void by anything happening in Debtor's case or elsewhere
within a week of the hearing on Trustee's motion to dismiss. And if she is referring
to some other order or judgment, we are likewise unaware of any reason why such an
order or judgment would call into question the correctness of the bankruptcy court's
decision to dismiss Debtor's case.
With respect to the second issue Debtor poses, we previously held, in an earlier
case also involving Debtor and Trustee, a bankruptcy court has the power to bar a
debtor from refiling:
Bankruptcy courts invariably derive from § 105(a) or
§ 349(a) of the Code the power to sanction bad-faith serial
filers by prohibiting further bankruptcy filings for over 180
days. In evaluating whether to bar subsequent filings,
courts have recognized that a dismissal order that bars
subsequent litigation is a severe sanction warranted only by
egregious misconduct. Court orders prohibiting refiling
often occur where a debtor files a series of bankruptcy
petitions that are strategically timed to thwart a secured
creditor from foreclosing on its collateral or where the
debtor files a subsequent petition in violation of a previous
order. Thus, Courts in this circuit have barred refiling to
allow a creditor to exercise its rights under state law where
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serial filings abuse the bankruptcy process and cannot be
prevented by an injunction under § 109(g).[6]
Marshall, 407 B.R. at 363 (citations, internal quotation marks, ellipses, and brackets
omitted).
That earlier case was Debtor's fourth chapter 13 case since 1995, "all of which
were filed on the eve of foreclosure." Id. at 361. Debtor's second and third
chapter 13 cases were dismissed for Debtor's failure to comply with "strict
compliance orders" that required Debtor to make all her plan payments on time. Id.
Finding Debtor's fourth chapter 13 case to be "abusive in the extreme," the
bankruptcy court dismissed it and barred her from refiling for one year. Id. On
appeal, we affirmed the bankruptcy court's decision. Id. at 363.
Debtor admits this is her sixth bankruptcy case,7 and she admits she filed it
because she was once again about to lose her home.8 In deciding to bar her from
6
Section 109(g) prohibits an individual who has been a debtor under the
bankruptcy code within the preceding 180 days from being a debtor under the
bankruptcy code if the previous case was dismissed for the debtor's willful failure to
abide by court orders or to appear before the court in proper prosecution of the case
or if the previous case was voluntarily dismissed following the filing of a motion for
relief from the automatic stay. 11 U.S.C. § 109(g).
7
Debtor's fifth chapter 13 case was also dismissed. In re Theresa Marshall,
Bankr. No. 4:16-bk-15651 (Bankr. E.D. Ark. Dec. 6, 2017). Debtor appealed, and we
dismissed her appeal for a variety of reasons, including the fact that while her appeal
was still pending, she filed the chapter 13 case that led to the instant appeal. Theresa
Marshall v. Mark T. McCarty (In re Marshall), No. 18-6008 (B.A.P. 8th Cir.
Aug. 13, 2018). Debtor then appealed to the Eighth Circuit court of appeals, and that
court dismissed her appeal as untimely. Theresa Marshall v. Mark T. McCarty (In
re Marshall), No. 18-3142 (8th Cir. Oct. 16, 2018).
8
Despite Debtor's efforts, she was evicted from her home on October 31, 2018.
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filing a seventh bankruptcy case for 180 days, the bankruptcy court found Debtor's
"bankruptcy and bankruptcies have simply been, in many ways, an abuse of the
system."
On appeal, Debtor does not challenge the bankruptcy court's finding. In light
of our holding in Marshall, 407 B.R. at 363, and the shorter bar to refiling imposed
by the bankruptcy court in this case, we cannot say the bankruptcy court abused its
discretion in barring Debtor from refiling for 180 days.9
CONCLUSION
For the reasons stated, we are not persuaded the bankruptcy court abused its
discretion either in dismissing Debtor's case or in barring Debtor from refiling for 180
days. Consequently, we affirm the bankruptcy court's September 4, 2018 order
granting Trustee's motion to dismiss Debtor's case.
9
By our calculation, the 180 days will, in any event, expire on March 3, 2019,
rendering this issue moot.
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