Hansmeier v. McDermott (In re Hansmeier)
Hansmeier v. McDermott (In re Hansmeier)
Opinion of the Court
Debtor Paul Hansmeier appeals the December 3, 2015 order of the bankruptcy court
BACKGROUND
Debtor filed a petition for relief under chapter 13 of the bankruptcy code. The United States Trustee filed a motion under 11 U.S.C. § 1307(c) to convert Debtor’s case to chapter 7.
Debtor objected to the United States Trustee’s motion. Debtor’s objection was unverified and was not supported by an affidavit.
The matter came before the bankruptcy court in due course. Following a hearing, at which no additional evidence was offered or received, the bankruptcy court ruled from the bench and memorialized its decision in an order granting the United States Trustee’s motion and converting Debtor’s chapter 13 case to chapter 7. Debtor timely appealed.
STANDARD OF REVIEW
We review the bankruptcy court’s decision to convert a chapter 13 case to chapter 7 for cause within the meaning of § 1307(c) for an abuse of discretion. See Paulson v. Wein (In re Paulson), 477 B.R. 740, 744 (8th Cir. BAP 2012) (applying abuse of discretion standard to our review of a bankruptcy court’s decision to dismiss a debtor’s chapter 13 case for cause within the meaning of § 1307(c)).
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.
DISCUSSION
On appeal, Debtor’s principal argument is the bankruptcy court erred in “refusing” to hold an evidentiary hearing on the United States Trustee’s motion.
Debtor did not raise this issue before the bankruptcy court, either in his objection to the United States Trustee’s motion
We do not believe this to be such an exceptional case. Debtor did not request and was thus not denied an evidentiary hearing: He did not give the bankruptcy court any reason to even suspect he wanted an evidentiary hearing. He did not support his objection to the United States Trustee’s motion with an affidavit, as he was required by local rule to do if he believed facts were at issue. He did not identify any proposed witnesses in his objection, as he was required by local rule to do if he anticipated offering oral testimony. He did not offer, or request an opportunity to offer, anything other than the argument of his attorney at the hearing on the United States Trustee’s motion. And he remained silent when the bankruptcy court proceeded to issue its bench ruling. Under the circumstances, “[t]he only injustice that would occur here is if we were to consider [his] argument ].” Hervey, 252 B.R. at 768.
Moreover, Debtor’s reliance on Rule 9014(d) is misplaced. Rule 9014(d) does not require an evidentiary hearing on every motion. Rather,
[subdivision (d) [was] added to clarify that if [a] motion cannot be decided without resolving a disputed material issue of fact, an evidentiary hearing must be held at which testimony of witnesses is taken in the same manner as testimony is taken in an adversary proceeding or at a trial in a district court civil case.
Fed.R.Bankr.P. 9014, advisory committee’s note to 2002 amendment (emphasis added).
In this case, the bankruptcy court was not called upon, much less required, to resolve any disputed material issues of fact. Debtor’s objection to the United States Trustee’s motion purported to dispute some — but not all — of the facts proffered by the United States Trustee. However, as previously noted, Debtor’s
Debtor’s remaining argument focuses on his belief that his proposed “100% plan”
First, while we agree a confirmable “100% plan” would be evidence of a debt- or’s good faith, we do not agree such evidence would necessarily “trump” other evidence of cause and leave the bankruptcy court with no choice but to deny a motion to convert a debtor’s chapter 13 case to chapter 7. In any event, Debtor offered no evidence to demonstrate his plan was in fact confirmable. Debtor’s attorney argued (and continues to argue) Debtor would prevail on his objections to three large unsecured claims and his proposed plan would then be confirmable. However, as discussed above, argument is not evidence. And we agree with the bankruptcy court: The evidence presented by the United States Trustee called into serious doubt Debtor’s ability to confirm a plan.
Second, the bankruptcy court did not premise its decision to convert Debtor’s chapter 13 case to chapter 7 solely on its concerns regarding Debtor’s proposed plan.
While Debtor challenged certain of these findings in his reply brief, he did not do so in his opening brief. “[We] do[ ] not consider issues raised for the first time on appeal in a reply brief unless the appellant gives some reason for failing to raise and brief the issue in his opening brief.” Jenkins v. Winter, 540 F.3d 742, 751 (8th Cir. 2008) (internal quotation marks omitted). Debtor offers no reason why he failed to raise and brief any challenges to these findings in his opening brief. Consequently, he has waived the right to challenge them. Id.
Even if that were not so, however, the bankruptcy court’s findings are not clearly erroneous: Its findings are amply supported by the facts set forth in the United States Trustee’s verified motion. And, as discussed above, while Debtor disagrees with the bankruptcy court’s findings, the record contains no evidence to the contrary.
Based on its findings, the bankruptcy court concluded there was sufficient cause to convert Debtor’s chapter 13 case to chapter 7. We agree.
[A] Chapter 13 petition filed in bad faith may be dismissed or converted “for cause” under 11 U.S.C. § 1307(c). Such cause includes filing a bankruptcy petition in bad faith. The bad faith determination focuses on the totality of the circumstances, specifically: (1) whether the debtor has stated his debts and expenses accurately; (2) whether he has made any fraudulent representation to mislead the bankruptcy court; or (3) whether he has unfairly manipulated the bankruptcy code.
Molitor v. Eidson (In re Molitor), 76 F.3d 218, 220 (8th Cir. 1996) (internal citations omitted). Each of these factors was present in this case.
CONCLUSION
Finding no abuse of discretion in its decision, we affirm the bankruptcy court’s December 3,2015 order granting the United States Trustee’s motion to convert Debtor’s chapter 13 case to chapter 7.
. The Honorable Kathleen H. Sanberg, Chief Judge, United States Bankruptcy Court for the District of Minnesota.
. Pursuant to § 1307(c), "on request of ... the United States trustee and after notice and a hearing, the court may convert a case under [chapter 13] to a case under chapter 7 ... for cause,” including, but not limited to, eleven enumerated grounds.
. Pursuant to local rule, if facts are at issue, the party making a motion must serve and file an affidavit or verification of the motion. Loc. R.Bankr.P. (D. Minn.) 9013-2(a). A verification is an "affidavit or unsworn declaration, affixed to or endorsed on a document, which states in substance that the factual allegations made in the document are true and correct according to the best of the verifier’s knowledge, information and belief.” Loc.R.Bankr.P. (D. Minn.) 9001-1(13).
.Pursuant to local rule, if facts are at issue, a party opposing a motion must include an opposing affidavit in its response. Loc. R.Bankr.P. (D. Minn.) 9013-2(b).
. This is a gross mischaracterization of the record. As discussed below, the bankruptcy court did not refuse to hold an evidentiary hearing on the United States Trustee’s motion.
. Pursuant to local rule, "If a party ... responding to a motion anticipates offering oral testimony, the ... responsive documents shall state the name, address and substance of the testimony of the proposed witness.” Loc. R.Bankr.P. (D. Minn.) 9013-2(c)(l). Debtor’s objection to the United States Trustee’s motion did not identify any proposed witnesses.
.The situation presented is analogous to that encountered by bankruptcy and other trial courts in considering motions for summary judgment. In that context, if the moving party meets its burden, the party opposing the motion must establish a genuine factual issue. Residential Funding Co. v. Terrace Mortg. Co., 725 F.3d 910, 915 (8th Cir. 2013). The party opposing the motion may not rest on mere allegations or pleading denials, Conseco Life Ins. Co. v. Williams, 620 F.3d 902, 910 (8th Cir,2010), or "merely point to unsupported self-serving allegations.” Anda v. Wickes Furniture Co,, 517 F.3d 526, 531 (8th Cir. 2008) (quoted in Residential Funding, 725 F.3d at 915), Instead, the party opposing the motion must substantiate its allegations with admissible, probative evidence that would permit a finding in its favor on more than speculation or conjecture, Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoted in Spaulding v. Conopco, Inc., 740 F.3d 1187, 1190-91 (8th Cir. 2014)); F.D.I.C. v. Bell, 106 F.3d 258, 263 (8th Cir. 1997) (citing Kiemele v. Soo Line R.R. Co., 93 F.3d 472, 474 (8th Cir. 1996), and JRT, Inc. v. TCBY Systems, Inc., 52 F.3d 734, 737 (8th Cir. 1995)).
. By this, Debtor means if confirmed, his proposed plan would have paid allowed unsecured claims in full, with interest.
. The bankruptcy court’s findings regarding Debtor’s proposed plan were clearly cumulative: "The Court also finds that cause exists to convert the case ... because the Debtor has failed to timely file a [confirmable] plan.” (Emphasis added.)
. The current status of the disciplinary action is unknown.
Reference
- Full Case Name
- IN RE: Paul HANSMEIER, Debtor Paul Hansmeier, Debtor-Appellant v. Daniel McDermott, U.S. Trustee-Appellee
- Cited By
- 6 cases
- Status
- Published