In re Bussmann

• Decision Date: 31 March 2023
• Docket Number: 21-61160-tmr12
• Parties: In re JAMES ANDREW BUSSMANN, Debtor.
• Court: U.S. Bankruptcy Court — District of Oregon

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In re JAMES ANDREW BUSSMANN, Debtor.

No. 21-61160-tmr12

United States Bankruptcy Court, D. Oregon

March 31, 2023

MEMORANDUM DECISION ON MOTION TO DISMISS ^[1]

THOMAS M. RENN U.S. BANKRUPTCY JUDGE

Introduction:

The present matter comes before the court on the Sisters' Motion to Dismiss Chapter 12 Case filed by Elizabeth Potter, Sara Strain, Jennifer Isenhart, and Mary Kistner (self-identified as the Sisters). ECF No. 179. This memorandum delivers the court's ruling on the motion to dismiss.

Facts:

Debtor, James Bussmann, filed his chapter 12 petition on July 6, 2021. The parties are familiar with the factual details, so I do not restate them here except as directly relevant to this

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ruling. The Sisters argue that Debtor is not eligible for chapter 12 relief, because he does not qualify as a family farmer because a majority of his debts did not arise out of a farming operation. Debtor argues that he is eligible for chapter 12 relief. The parties have submitted their testimony and other evidence, they have completed their briefing and arguments, and the matter is ripe for decision. For the reasons stated below, the motion to dismiss is granted.

Chapter 12 Eligibility Standards:

Chapter 12 eligibility is governed by 11 U.S.C. § 109(f),^[2] which states that "[o]nly a family farmer or a family fisherman with regular annual income may be a debtor under chapter 12 of this title." Section 101(18) states in relevant part that a "family farmer" is an "individual…engaged in a farming operation…not less than 50 percent of whose aggregate noncontingent, liquidated debts (excluding a debt for the principal residence of such individual…unless such debt arises out of a farming operation), on the date the case is filed, arise out of a farming operation owned or operated by such individual…." A "farming operation," as defined in § 101(21), "includes farming, tillage of the soil, dairy farming, ranching, production or raising of crops, poultry, or livestock, and production of poultry or livestock products in an unmanufactured state." This list is not exclusive, and the definition of "farming operation" should be broadly construed. See In re Sugar Pine Ranch, 100 B.R. 28, 31 (Bankr. D. Or. 1989). The debtor has the burden to prove chapter 12 eligibility. See In re Cooper, No. 10-66447, 2011 WL 3882278, at *1 (Bankr. D. Or. Sept. 2, 2011) (citing In re Powers, No. 10-14557, 2011 WL 3663948, at *1 (Bankr. N.D. Cal. Aug. 12, 2011)); see also NetJets Aviation, Inc. v. RS Air, LLC, (In re RS Air, LLC), 638 B.R. 403, 414 (9th Cir. BAP 2022) (subchapter V case) (citing First Nat'l Bank of Durango v. Woods (In re Woods),

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743 F.3d 689, 705 (10th Cir. 2014)). "The Ninth Circuit Court of Appeals has held, in the Chapter 13 context, that 'eligibility should normally be determined by the debtor's originally filed schedules, checking only to see if the schedules were made in good faith.'" In re Osborne, 323 B.R. 489, 492 (Bankr. D. Or. 2005) (citing Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 982 (9th Cir. 2001) (emphasis added in Osborne)). In this case, the schedules can be consulted for a list of creditors and amounts owed, but many of the disputes relate to the nature of the debts which are not described in the schedules.

The Ninth Circuit has not described a test to determine a debtor's eligibility for chapter 12 relief under the requirements of § 109(f). In this District, however, a "totality of the circumstances" test has been applied in chapter 12 cases to determine whether a chapter 12 debtor is engaged in a "farming operation." See Sugar Pine Ranch, at 31; In re Jones, No. 10-65478, 2011 WL 3320504, at *2 (Bankr. D. Or. Aug. 2, 2011); Cooper, at *1; In re Mikkelsen Farms, Inc., 74 B.R. 280, 285 (Bankr. D. Or. 1987). In that analysis, the Oregon courts have considered the following factors:

1. Whether the location of the operation would be considered a traditional farm

2. The nature of the enterprise at the location

3. The type of product and its eventual market, although the court should not be limited to products and produce which are traditionally associated with farming in the state of the court's location. Debtors should not be denied the protection of the Bankruptcy Code merely because their endeavors are not found in the laundry list of Old McDonald's Farm;

4. The physical presence or absence of family members on the farm;

5. Ownership of traditional farm assets;

6. Whether the debtor is involved in the process of growing or developing crops or livestock; and

7. Perhaps the key factor is whether or not the practice or operation is subject to the inherent risks of farming.

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See Jones, at *2-3 (citing Sugar Pine Ranch, at 31).^[3]

Analysis:

In their motion to dismiss, the Sisters point to a number of disputed debts, arguing they are not farming debts and therefore preclude Debtor's eligibility for chapter 12. Before I address the disputed debts, I note the parties have agreed the following farm and non-farm debts are undisputed.

Farm Debts	-
$13,067	John Deere Financial - Gator Loan (Claim 4)
$13,651	Northwest Farm Credit - "Water Loan"[4]

Non-Farm Debts	-
$47,591	Flagstar mortgage on North Bend residential rental (Claim 5)
$13,591	Oregon Community Credit Union recreational trailer loan (no POC)
$27,187	Rogue Credit Union - co-signed loan for stepson's car (Claim 1)

In reviewing the remaining debts, I consider their relationships to the businesses associated with Debtor. Those businesses include JWB Livestock, LLC, JWB Cranberries, LLC, Bussmann Cranberries, LLC, and Stone Age Farm. I consider each of the businesses and their associated debts to determine whether the debts arose out of a farming operation. I address at the end those debts that are not clearly associated with a single business.

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I. JWB Livestock, LLC

First, the disputed debts related to JWB Livestock, LLC, are the Bank of America - JWB Livestock Visa Bill (Exhibit 8), and the Northwest Community Credit Union Tahoe Loan (Exhibit 17).^[5]

To determine whether the associated debts arise out of a farming operation, I start by determining whether JWB Livestock, LLC, is a farming operation. The Sisters argue that JWB Livestock, LLC, is not a "farming operation" as described in § 101(21) but is instead a cattle broker which buys cattle at auction and immediately ships them directly to a buyer. During the hearing, Debtor testified about the history of JWB Livestock, LLC, stating that it was in the business of raising, buying, and selling cattle for over twenty years. He testified that young cows were brought to the farm to acclimate, then were shipped elsewhere. Debtor also testified, however, that JWB Livestock, LLC, stopped running its own herd around 2017, noting that his father would go to the cattle auctions, purchase cattle, and ship them to the buyer without ever bringing the cattle to Debtor's farmland.

Based on Debtor's testimony, it is clear the nature of the business has evolved over the years. I find that prior to 2017, JWB Livestock, LLC, was a farming operation. Applying the totality of the circumstances test, factors 6 and 7 weigh heavily in favor of that finding. Debtor was involved in the process of developing livestock (factor 6), which he testified that he raised on his land, and his practice was subject to the inherent risks of farming (factor 7). The success of the operation was tied directly to whether the cattle survived and could be sold. Starting in

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2017, however, Debtor testified that the nature of his operation had changed, noting that cattle were purchased at auction and then shipped directly to a buyer. "As one Oregon bankruptcy court succinctly stated: 'The mere purchase and sale of farm by-products is not necessarily a 'farming operation.''" Cooper, at *2 (citing Fed. Land Bank of Columbia v. McNeal (In re McNeal), 848 F.2d 170, 172 (11th Cir. 1988)). I find that, at that point in 2017, JWB Livestock, LLC, was no longer a farming operation either involved in the process of developing livestock or inherently tied to the risks of farming.

The debts associated with JWB Livestock start with the Bank of America - JWB Livestock Visa Bill, dated August 25, 2021. Exhibit 8. Debtor testified that Bank of America sent the bill to himself, James A. Bussmann, Sr., and JWB Livestock, LLC. Debtor filed his voluntary petition on July 6, 2021, after the time that JWB Livestock, LLC, shifted from a cattle farming operation to a cattle brokerage. Although he failed to provide any invoices or receipts supporting the charges, Debtor testified that this credit card was used for business related to JWB Livestock, LLC, including expenses like vehicle maintenance for vehicles that he drove to the cattle auction. Based on evidence that the credit card was used exclusively for the business of JWB Livestock, LLC, I find that the debt represented by the Bank of America - JWB Livestock Visa Bill in the amount of $436.28 did not arise out of a farming operation and is not a farm debt. It will be counted as a non-farm debt in the eligibility calculation.

Next, I discuss the Northwest Community Credit Union Tahoe Loan in the amount of $30,807.40.^[6] Exhibit 17. Debtor testified that the Tahoe originally belonged to his former spouse,

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Wendy Bussmann, and was her daily driving car. This background was corroborated by the testimony of Elizabeth Potter who stated that she knew the Tahoe was Wendy Bussmann's and saw Wendy Bussmann driving it prior to Debtor's ownership of the vehicle. Debtor testified that when he was getting a divorce, he took out the loan in October 2018 to purchase the vehicle from his former spouse because she could no longer afford it. He further testified that...