In re Ross-Tousey

• Decision Date: 17 December 2008
• Docket Number: No. 07-2503.,07-2503.
• Citation: 549 F.3d 1148
• Parties: In re Marvin ROSS-TOUSEY and Deborah Tousey, Debtors. Marvin Ross-Tousey and Deborah Tousey, Debtors-Appellants, v. William T. Neary, United States Trustee-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

549 F.3d 1148

In re Marvin ROSS-TOUSEY and Deborah Tousey, Debtors Marvin Ross-Tousey and Deborah Tousey, Debtors-Appellants, v. William T. Neary, United States Trustee-Appellee.

No. 07-2503.

United States Court of Appeals, Seventh Circuit.

Argued September 5, 2008.

Decided December 17, 2008.

P. Matthew Sutko (argued), Sean E. Martin, Department of Justice Executive Office for U.S. Trustees, Washington, DC, for Trustee-Appellee.

George Goyke (argued), Goyke, Tillisch & Higgins, Wausau, WI, for Debtors-Appellants.

Tara Twomey, San Jose, CA, for National Association of Consumer Bankruptcy Attorneys.

Before FLAUM, ROVNER, and WILLIAMS, Circuit Judges.

FLAUM, Circuit Judge.

This appeal involves two jurisdictional issues as well as interpretation of a provision of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"). With regard to the bankruptcy issue, this Court must resolve whether an above-median-income debtor who has no monthly vehicle loan or lease payment can claim a vehicle ownership expense deduction when calculating his disposable income. For the reasons explained below, we reverse the district court.

I. Background

The debtors, Marvin Ross-Tousey and Deborah Tousey, filed a voluntary bankruptcy petition under chapter 7 of the Bankruptcy Code on August 18, 2006. The debtors live in Mattoon, Wisconsin and are each longstanding employees of the Mohican North Star Casino in Bowler, Wisconsin. In connection with their bankruptcy filing, the debtors reported household income above the applicable state median income level.

BAPCPA subjects above-median-income debtors to a means test. The purpose of the means test is to distinguish between debtors who can repay a portion of their debt and debtors who cannot. Under the means test, if a debtor has enough disposable income to pay his unsecured creditors at least $166.67¹ each month (that is, at least $10,000 over five years), the debtor usually should proceed under Chapter 13, which allows for a partial repayment of debt. If the debtor has $166.67 or more of disposable income under the means test, proceedings under Chapter 7—which allows for a complete discharge of debt—are considered presumptively abusive. See 11 U.S.C. § 707(b)(2)(A)(ii)(I).

The means test uses a formula to determine a debtor's ability to pay a portion of his debts. Essentially, the means test takes the debtor's current monthly income ("CMI") and reduces it by amounts corresponding to allowed monthly expenses set out in 11 U.S.C. § 707(b)(2)(A)(ii)-(iv). Pertinent to this appeal, under § 707(b)(2)(A)(ii)(I), debtors are permitted to deduct

the debtor's applicable monthly expense amounts specified under the [Internal Revenue Service's] National Standards and Local Standards, and the debtor's actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides.... Notwithstanding any other provision of this clause, the monthly expenses of the debtor shall not include any payments for debts.

In performing their means test, the debtors here claimed the Internal Revenue Service ("IRS") Local Standard vehicle operating/public transportation allowance of $358 as well as the IRS Local Standard vehicle ownership allowance of $803 (for two vehicles). With these expenses subtracted from their CMI, the debtors' means test resulted in a finding that they had no disposable income. The debtors thus claimed that the presumption of abuse did not arise in their case and that they should be able to discharge their debts under Chapter 7.

On October 30, 2006, the United States Trustee ("UST") filed a motion to dismiss the debtors' case for abuse under section 707(b). Originally, the UST filed the motion under 11 U.S.C. § 707(b)(3)(B), asserting that the debtors' chapter 7 petition was abusive based upon the totality of the circumstances of the debtors' financial situation. A few days later—after the deadline set by § 704(b)(2) for UST motions to dismiss had passed—the UST supplemented its October 30 motion to dismiss, asserting that the case also merited a presumption of abuse under section 707(b)(2) because the debtors should not have taken the $803 Local Standard vehicle ownership deduction. On December 14, 2006, the bankruptcy court denied the UST's motion to dismiss, concluding that the totality of the circumstances did not establish abuse and that no presumption of abuse arose under section 707(b)(2) due to the vehicle ownership deduction. The bankruptcy court interpreted section 707(b)(2)(A)(ii)(I) to allow the debtors to take the vehicle ownership deduction even though the debtors had no monthly loans or leases on their vehicles.

The UST appealed and the district court reversed with regard to the section 707(b)(2) presumption of abuse, holding that the debtors could not claim the vehicle ownership deduction under section 707(b)(2)(A)(ii)(I) for vehicles the debtors owned outright. See Neary v. Ross-Tousey (In re Ross-Tousey), 368 B.R. 762, 768 (E.D.Wis.2007). (The district court did not address the UST's alternative argument, made under section 707(b)(3)(B), that the totality of the debtors' circumstances demonstrated abuse.) The district court therefore concluded that the presumption of abuse arose in the debtors' case and remanded to the bankruptcy court for further proceedings to determine whether the debtors could rebut the presumption of abuse. Id. at 768-69.

The debtors appealed to this court. The UST moved to dismiss the appeal for lack of finality because the bankruptcy court had not yet determined whether the debtors had special circumstances sufficient to rebut the presumption. However, the debtors responded by stating that they had no special circumstances to raise on remand. Due to that concession, the UST agreed that this Court had jurisdiction in its reply brief. This Court denied the UST's motion to dismiss the appeal on February 15, 2008.

II. Discussion

A. Jurisdiction

Before turning to the merits of this appeal, the Court addresses two jurisdictional questions.

1. Finality

The first jurisdictional question is whether there is a final order appropriate for appellate review in this case. This court has jurisdiction over "appeals from all final decisions, judgments, orders, and decrees entered" by a district court pursuant to its review of final decisions of a bankruptcy court. 28 U.S.C. § 158(d)(1). In other words, we have jurisdiction only "if both the bankruptcy court's order and the district court's order reviewing that original order are final decisions." Zedan v. Habash, 529 F.3d 398, 402 (7th Cir.2008) (citing In re Salem, 465 F.3d 767, 771 (7th Cir.2006)). There are thus two questions to address regarding finality in this case: (1) whether the bankruptcy court made a final decision when it denied the UST's motion to dismiss, and (2) whether the district court made a final decision when it reversed that determination.

With regard to the first question, normally a denial of a motion to dismiss is not an appealable final order. See Hammond v. Kunard, 148 F.3d 692, 695 (7th Cir.1998). However, the Seventh Circuit has observed that finality in the bankruptcy context is considerably more flexible than in an ordinary civil appeal. See Zedan, 529 F.3d at 402. Finality does not require the termination of the entire bankruptcy proceeding; rather, an adjudication by the bankruptcy court "is definitive because it cannot be affected by the resolution of any other issue in the proceeding, and therefore no purpose would be served by postponing the appeal to the proceeding's conclusion." In re Oakley, 344 F.3d 709, 711 (7th Cir.2003) (district court order that overturned bankruptcy court's order sustaining trustee's objection was final and appealable because "it definitely adjudicated the debtor's entitlement to a definite amount of money"). We have also held that "[a]n impending ministerial act does not make a decision non-final, for routine action on remand is unlikely to precipitate a later appeal." In re A.G. Financial Service Center, Inc., 395 F.3d 410, 413 (citing In re Lopez, 116 F.3d 1191, 1192 (7th Cir.1997)).

Here, the bankruptcy court denied the UST's motion to dismiss under sections 707(b)(2) and 707(b)(3)(B). This decision resolved all of the contested issues on the merits and left only the distribution of estate assets to be completed. Because distribution of assets is a ministerial act, see In re Official Comm. of Unsecured Creditors, 943 F.2d 752 (7th Cir.1991), the denial of the motion to dismiss was appropriate for appeal to the district court. See also In re Wade, 991 F.2d 402, 406 (7th Cir.1993) ("A final order in a bankruptcy case, [sic] is one that resolves all contested issues on the merits and leaves only the distribution of the estate assets to be completed.").²

The district court's order was also final and appealable. As mentioned above, the district court reversed the bankruptcy court's denial of the motion to dismiss and remanded to the bankruptcy court for further proceedings. See Ross-Tousey, 368 B.R. at 768-69. Normally an order dismissing a case is appealable; the issue here is whether the district court's remand to the bankruptcy court made the district court's order "non-final." We have held that "even if the decision of the bankruptcy court is final, a decision by the district court which remands the case to the bankruptcy court for further proceedings is not final unless the contemplated further proceedings are of a purely ministerial character...." Lopez, 116 F.3d at 1192; see also In re Fox, 762 F.2d 54, 55 (7th Cir.1985) (a district court order remanding the case to the bankruptcy court may qualify as final if "all that remains to do on remand is a purely mechanical, computational, or in short `ministerial' task, whose performance is unlikely either to generate a new appeal or to affect the issue that the disappointed par...