In re Copper

• Decision Date: 24 September 2004
• Docket Number: No. 04-8002.,04-8002.
• Citation: 314 B.R. 628
• Parties: In re John Franklin COPPER, Debtor. Athena Chen Copper and the Estate of Sumiko Yamaoka, Plaintiffs-Appellees, v. John Franklin Copper, Defendant-Appellant.
• Court: U.S. Bankruptcy Appellate Panel, Sixth Circuit

Page 628

314 B.R. 628

In re John Franklin COPPER, Debtor.

Athena Chen Copper and the Estate of Sumiko Yamaoka, Plaintiffs-Appellees, v. John Franklin Copper, Defendant-Appellant.

No. 04-8002.

United States Bankruptcy Appellate Panel of the Sixth Circuit.

Argued August 4, 2004.

Decided and Filed September 24, 2004.

Ted I. Jones, Vaughn, Hall, Jones & VanDeveer, Memphis, TN, for Appellant.

R.H. Chockley, Mimi Phillips, Memphis, TN, for Appellee.

Before AUG, GREGG, and HOWARD, Bankruptcy Appellate Panel Judges.

OPINION

AUG, Chief Judge.

The Debtor, John Franklin Copper, appeals the bankruptcy court's denial of his motion to convert his chapter 7 case to one under chapter 13.

I. ISSUE ON APPEAL

Whether the plain language of 11 U.S.C. § 706(a) provides a debtor with a one-time absolute right to convert a case filed under chapter 7 of the Bankruptcy Code to one under chapter 13.

II. JURISDICTION AND STANDARD OF REVIEW

The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States District Court for the Western District of Tennessee has authorized appeals to the BAP. A "final order" of a bankruptcy court may be appealed by right under 28 U.S.C. § 158(a)(1). For purposes of appeal, an order is final if it "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S.Ct. 1494, 1497, 103 L.Ed.2d 879 (1989) (citations omitted).

"[O]rders denying a debtor's request to convert from Chapter 7 to Chapter 13 pursuant to § 706(a) are final orders." Cabral v. Shamban (In re Cabral), 285 B.R. 563, 571 (1st Cir. BAP 2002); see also Miller v. U.S. Trustee (In re Miller), 303 B.R. 471, 472 (10th Cir. BAP 2003) (order denying debtor's motion to convert from chapter 7 to chapter 13 is final, appealable order); see generally Kuntz v. Shambam (In re Kuntz), 233 B.R. 580, 580-81 (1st Cir. BAP 1999).

Questions of law are reviewed de novo. Corzin v. Fordu (In re Fordu), 201 F.3d 693, 696 n. 1 (6th Cir.1999). Under a "de novo" standard of review, the reviewing court decides an issue independently of, and without deference to, the trial court's determination. Razavi v. Commissioner, 74 F.3d 125, 127 (6th Cir.1996). "Whether a bankruptcy court properly denied a debtor's request for conversion is a question of law requiring de novo review on appeal." In re Kuntz, 233 B.R. at 581 (citing Martin v. Martin (In re Martin), 880 F.2d 857, 858 (5th Cir.1989)); In re Miller, 303 B.R. at 473.

The bankruptcy court's factual findings are reviewed for clear error. Fed. R. Bankr.P. 8013 & 7052; Fed.R.Civ.P. 52(a). "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.'" United States v. Mathews (In re Mathews), 209 B.R. 218, 219 (6th Cir. BAP 1997) (quoting Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985)). A determination that a debtor has or has not acted in good faith constitutes a finding of fact reviewed under the "clearly erroneous" standard. Alt v. United States (In re Alt), 305 F.3d 413, 419 (6th Cir.2002); Hardin v. Caldwell (In re Caldwell), 895 F.2d 1123, 1127 (6th Cir.1990).

III. FACTS

The bankruptcy court's Memorandum Order entered November 3, 2003, denied the Debtor's motion to convert his chapter 7 case to one under chapter 13. The order also concluded that the Debtor is not entitled to a discharge pursuant to 11 U.S.C. § 727(a)(4)(A). The Debtor's appeal states, however, that the sole issue presented on this appeal is whether or not the bankruptcy court erred in failing to allow the Debtor to convert his case to one under chapter 13 pursuant to § 706(a) of the Bankruptcy Code. Therefore, we need not consider whether the bankruptcy court properly determined that the Debtor is not entitled to a discharge.

In making its decision to deny the Debtor's discharge, the bankruptcy court made a detailed review and analysis of the Debtor's pre- and post-petition conduct. The court relied on those same findings in making its determination that the Debtor's request to convert should be denied because it was not made in good faith.

Over the past nine years, the Debtor has taken evasive action to avoid paying his ex-wife, Athena Chen Copper, amounts she was awarded under the parties' divorce decree. The bankruptcy court's Memorandum Order outlines this history in detail. Borrowing substantially from the Memorandum Order, the facts of this case are as follows:

The Debtor is a Stanley J. Buckman Distinguished Professor of International Studies at Rhodes College in Memphis, Tennessee, a post he has held since 1984. He is a world-renowned expert on China and Taiwan, has authored some 25 books on Asian affairs, and travels to Taipei frequently as the guest of various educational and governmental agencies. The Debtor's income from Rhodes College for 2003 was $89,000. In addition, the Debtor received income from various activities such as teaching, lecturing and writing.

The Debtor and Ms. Copper were married in 1967 and divorced on October 15, 1993. In the divorce proceeding, Ms. Copper was awarded $2,000 per month in alimony in futuro and interests in several annuity contracts. In addition, the Debtor was ordered to pay Ms. Copper's parents the sum of $70,657.60, representing sums found to be taken from Ms. Copper's parents, and interest accrued on those amounts.

In February 1997, Ms. Copper learned that the Debtor had converted the value of some of the annuity contracts awarded to her, some $152,211.65, to his own use. The Debtor was found to be in civil contempt of court and ordered to return the misappropriated funds plus attorney fees to Ms. Copper. The Debtor's efforts to prevent Ms. Copper from collecting the amounts due to her include the following:

In January 1997, Ms. Copper had a garnishment issued directed to Rhodes College seeking to collect the amounts owed to her from the Debtor's salary. The Debtor responded by filing a Motion to Set Installment Payments on Garnishment. The motion was granted, but the Debtor never made any installment payments.

On July 1, 1997, the Debtor filed a chapter 7 petition, which was dismissed on July 23, 1997, upon the Debtor's failure to timely complete the filing of documents.

On August 12, 1997, the Debtor filed his second chapter 7 petition. That petition was dismissed on September 29, 1998, when the bankruptcy court refused to exercise jurisdiction over the case pursuant to 11 U.S.C. § 305(a)(1), upon a finding that the case was "in essence, a two-party dispute."

On July 12, 2000, the Debtor filed his third bankruptcy petition. During the twenty-two months between the dismissal of the second petition and the filing of the third petition, the Debtor did not make any payments to Ms. Copper. During that same time period, Ms. Copper again sought payment through garnishment proceedings, the Debtor again responded with a motion to set installment payments, and as noted again filed a petition for chapter 7 relief. That petition was dismissed on August 25, 2000, when the Debtor failed to appear for the meeting of creditors.

Ms. Copper again attempted to dispose of the state court motion to set installment payments. However, on December 6, 2000, before the state court motion could be heard, the Debtor filed his fourth bankruptcy petition under chapter 7. That case was also dismissed on February 15, 2001, when the Debtor again failed to attend the meeting of creditors.

After dismissal of the fourth bankruptcy petition, Ms. Copper was finally successful in getting a hearing on the Debtor's state court motion to set installment payments. The motion was denied and the garnishment reinstated on September 28, 2001. The Debtor responded by filing a fifth petition under chapter 7 on November 8, 2001. That case was dismissed on January 8, 2002, when the Debtor failed to file required documents to complete the filing.

On January 17, 2002, Ms. Copper had the garnishment reissued and, on February 25, 2002, the Debtor filed the instant chapter 7 case, his sixth bankruptcy petition. Ms. Copper filed the adversary action in this case asserting that the debts owed to her are nondischargeable pursuant to 11 U.S.C. § 523(a)(5), (6) and/or (15) and that the Debtor's discharge should be denied pursuant to § 727(a)(4)(A). After the adversary case had been pending for fourteen months, on the Friday before that trial was to start on the following Monday, the Debtor filed his motion to convert his case to one under chapter 13.

The bankruptcy court held its ruling on the motion to convert until the conclusion of the submission of evidence on the dischargeability issues.

In the Memorandum Order the bankruptcy court states that "[i]n the course of trial, the Court discovered a number of serious false statements in the schedules and statement of financial affairs filed by the Debtor in this case." Copper v. Copper (In re Copper), Ch. 7 Case No. 02-23450-L, Adv. No. 02-0610, slip op. at 5 (Bankr.W.D.Tenn. Oct. 31, 2003). The next four pages of the bankruptcy court's Memorandum Order highlight the false statements and inconsistencies made by the Debtor in this case both in his schedules and during his trial testimony.¹ Even though the Debtor gave several explanations for the multitude of false statements and inconsistencies, the bankruptcy court determined that none of the explanations was credible. The bankruptcy court stated:

The Court found the Debtor to be a very difficult witness. He refused, for example, to acknowledge the authenticity of his signature on his bankruptcy petition or on a Consent Order entered in the state court dealing with the payment of [two creditors], claiming that the signatures could have been stamped. He claimed that he does not know...