In Re: Carl E. Pertuset And Vera Pertuset
| Decision Date | 24 August 2010 |
| Docket Number | No. 10b0007n.06,No. 09-17636,No. 10-8024,10b0007n.06,10-8024,09-17636 |
| Parties | In re: CARL E. PERTUSET and VERA PERTUSET,Debtors. CARL E. PERTUSET and VERA PERTUSET, Appellants. v. AMERICAN SAVINGS BANK, FSB Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
ON BRIEF: Susan M. Argo, GRAYDON HEAD & RITCHEY LLP, Cincinnati, Ohio, for Appellee. Carl E. Pertuset, Vera Pertuset, McDermott, Ohio, pro se.
Appeal from the United States Bankruptcy Court for the Southern District of Ohio, at Cincinnati.
Before: HARRIS, McIVOR, and SHEA-STONUM, Bankruptcy Appellate Panel Judges.
In this appeal, Carl E. Pertuset and Vera Pertuset ("Debtors") appeal the bankruptcy court's order dismissing their petition for relief under Chapter 12 of the Bankruptcy Code. The bankruptcy court dismissed the case pursuant to 11 U.S.C. § 1208(c)(3) and (c)(9) because the Debtors failed to file a plan as required under 11 U.S.C. § 1221, and due to continuing diminution of the estate and the absence of a reasonable likelihood of rehabilitation. For the reasons that follow, we AFFIRM the order of the bankruptcy court.
Whether the bankruptcy court erred in dismissing the Debtors' Chapter 12 case pursuant to 11 U.S.C. § 1208(c)(3) and (c)(9).
The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States District Court for the Southern District of Ohio has authorized appeals to the Panel, and neither party has timely elected to have this appeal heard by the district court. 28 U.S.C. §§ 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). The bankruptcy court's order dismissing the Debtors' case is a final, appealable order. In re Anderson, 397 B.R. 363, 365 (B.A.P. 6th Cir. 2008).
The bankruptcy court's dismissal of the Debtors' case is reviewed for abuse of discretion. Id. An abuse of discretion is established when the reviewing court is left with a definite and firm conviction that the court below committed a clear error of judgment. Mich. Div.-Monument Builders of N. Am. v. Mich. Cemetery Ass'n, 524 F.3d 726, 739 (6th Cir. 2008). "'An abuse of discretion occurs only when the [trial] court relies upon clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous legal standard.'" Kaye v. Agripool, SRL (In re Murray, Inc.), 392 B.R. 288, 296 (B.A.P. 6th Cir. 2008) ). In determining whether an abuse of discretion has occurred, we ask "'whether a reasonable person could agree with the bankruptcy court's decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion.'" Id. (quoting Mayor and City Council of Baltimore, Md. v. West Virginia (In re Eagle-Picher Indus., Inc.), 285 F.3d 522, 529 (6th Cir. 2002).
The bankruptcy court's conclusions of law are reviewed de novo. See Riverview Trenton R.R. Co. v. DSC, Ltd. (In re DSC, Ltd.), 486 F.3d 940, 944 (6th Cir. 2007). "Under a de novo standard of review, the reviewing court decides an issue independently of, and without deference to, the trial court's determination." Menninger v. Accredited Home Lenders (In re Morgeson), 371 B.R. 798, 800 (B.A.P. 6th Cir. 2007) (citation omitted). The court's findings of fact are reviewed under the clearly erroneous standard. See In re DSC, Ltd., 486 F.3d at 944. "A finding of fact is clearly erroneous 'when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.' " Id. (quoting Anderson v. City of Bessemer City, North Carolina, 470 U.S. 564, 573, 105 S. Ct. 1504, 1511 (1985)).
The Debtors, pro se, filed a voluntary petition for relief under Chapter 12 of the Bankruptcy Code on November 16, 2009. Several days later, the Debtors moved to employ attorney George Leicht ("Leicht") on their behalf. A meeting of creditors was held on January 15, 2010, at which the Debtors were represented by Leicht. On January 19, 2010, Leicht filed a motion to dismiss the Debtors' case. On February 1, 2010, the Debtors, pro se, filed a motion to withdraw the motion to dismiss citing a "mistake," and moving to terminate Leicht. On February 2, 2010, Leicht filed a motion to withdraw as counsel for the Debtors. His motion was granted on February 19, 2010.
On February 26, 2010, American Savings Bank, FSB ("ASB"), a creditor of the Debtors by virtue of several loans totaling over $300,000, filed a motion to dismiss the Debtors' case pursuant to 11 U.S.C. § 1208(c)(1) for gross mismanagement of the estate, § 1208(c)(3) for failure to timely file a plan, § 1208(c)(9) for continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation, and because the Debtors allegedly fail to satisfy the requirements of a family farmer for filing under Chapter 12 as set forth in § 109(f). On March 23, 2010, the Debtorsfiled an untimely response to the motion to dismiss. On April 7, 2010, they filed a "Notice of Mistake" in which they asserted that they had inadvertently overlooked the need to file a repayment plan, and purported to set forth a plan. The purported plan set forth in the "Notice of Mistake" was untimely and did not comply with 11 U.S.C. § 1222.
The bankruptcy court held a hearing on ASB's motion to dismiss on April 8, 2010, at which Carl E. Pertuset ("Pertuset") testified. On April 9, 2010, the bankruptcy court issued an order granting the motion to dismiss the Debtors' Chapter 12 case pursuant to § 1208(c)(3), failure to timely file a plan, and (c)(9), continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation. Because the court found that the case should be dismissed pursuant to § 1208(c)(3) and (c)(9), it declined to address the issue of whether the Debtors satisfy the requirements of a family farmer for filing under Chapter 12 as set forth in § 109(f).
On April 15, 2010, the Debtors timely filed a notice of appeal of the bankruptcy court's order dismissing their case.
The Debtors filed their petition for relief under Chapter 12 of the Bankruptcy Code on November 16, 2009. 11 U.S.C. § 1221 required that they file a repayment plan not later than 90 days after filing their petition, or February 16, 2010. The Debtors did not timely file a plan as required.
On April 7, 2010, the Debtors filed a "Notice of Mistake" in which they asserted that they had inadvertently overlooked the need to file a repayment plan, and purported to set forth a plan. This untimely purported plan in no way complied with the requirements for a Chapter 12 plan set forth in 11 U.S.C. § 1222. Rather, this "plan" simply generically stated that creditors would be paid pro rata at the interest rate of 6% "if no post-confirmation interest rate is stated for a creditor...." In fact, Pertuset testified at the hearing on the motion to dismiss that he had not filed a complete Chapter 12 plan.
In their brief submitted to this Panel, the Debtors argue that the bankruptcy court erred in dismissing their case based upon the failure to timely file a plan because they paid the required filingfees. 11 U.S.C. § 1208(c)(3), however, provides that on request of a party in interest, the bankruptcy court may dismiss a case under Chapter 12 for failure to file a plan timely under § 1221. Because the Debtors failed to timely file a plan, the bankruptcy court did not err in dismissing the Debtors' case pursuant to 11 U.S.C. §1208(c)(3). The Debtors' argument regarding the payment of filing fees is irrelevant because the court did not dismiss their case for failure to pay the fees.
11 U.S.C. § 1208(c)(9) provides that on the request of a party in interest, the bankruptcy court may dismiss a Chapter 12 case for cause, including "continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation...." After hearing the testimony of Pertuset, the bankruptcy court concluded that the Debtors
In their purported plan, the Debtors state that they will fund their plan through the liquidation of an accounts receivable-a multi-billion dollar maritime judgment lien assigned for the benefit of creditors. The Debtors had been assigned a partial interest in this maritime judgment lien allegedly worth $1.75 million, and proposed to collect on the judgment lien to pay their creditors. The bankruptcy court found, however, that collection of the lien is "subject to a litany of issues which would hinder the Debtors in attempting to liquidate it as an asset." Because it found that the lien has been avoided by the United States Bankruptcy Court for the Middle District of Alabama, and the Debtors paid no consideration for their interest in it, the court questioned the legitimacy of the lien, finding it "dubious at best," and calling into doubt the Debtors' ability to liquidate it.
In their appeal to this Panel, the Debtors argue that the bankruptcy court erred in dismissing their case pursuant to 11 U.S.C. § 1208(c)(9) because: (1) consideration in the form of 21 silver dollars was in fact given in consideration for the maritime lien assignment as allegedly evidenced by the affidavit of assignment; (2) that despite their presentation of valid insurance coverage the bankruptcy court incorrectly found that they "failed to provide convincing evidence of full insurance coverage;" (3) the...
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