In re Sandberg
| Citation | 629 B.R. 452 |
| Decision Date | 24 March 2021 |
| Docket Number | Bankruptcy No. 20-80615 |
| Parties | IN RE: Michael J. SANDBERG, Debtor. |
| Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois |
James E. Stevens, Barrick, Switzer, Long, Balsley & Van Ev, Rockford, Il, for Debtor.
Lydia Meyer, Fiona M. Whelan, Lydia S. Meyer, Trustee, Rockford, IL, for Trustee.
Thomas M. Lynch, United States Bankruptcy Judge The United States Trustee moves for the dismissal of the Debtor Michael J. Sandberg's bankruptcy under section 707(b) on the ground that granting relief would constitute an abuse of the provisions of chapter 7 of the Bankruptcy Code. The Debtor having failed to rebut the presumption of abuse reflected in his Form 122A-2 Chapter 7 Means Test Calculation, the motion will be granted, in part.
The district court has "original and exclusive jurisdiction of all cases under title 11." 28 U.S.C. § 1334(a). In accordance with 28 U.S.C. § 157(a), the district court has referred this and all other cases under title 11 to this court. N.D. Ill. R. 40.3.1(a). As the motion seeks to dismiss the bankruptcy case, the matter is a core matter over which this court has authority to enter final orders. 28 U.S.C. § 157(b)(2)(A), (O). See In re Adolph, 441 B.R. 909, 910 (Bankr. N.D. Ill. 2011).1
The Debtor commenced this chapter 7 case on March 24, 2020. Mr. Sandberg's Form 122A-1 Statement of Current Monthly Income and Form 122A-2 Means Test Calculation filed with his petition indicated "above-median" income giving rise to a presumption of abuse in the case. (ECF Nos. 2, 3.) On June 15, 2020, the U.S. Trustee moved to dismiss the case under section 707(b). The matter was fully briefed (ECF Nos. 29, 33, 36, and 42), following which the court held an evidentiary hearing on October 13, 2020. During the trial, the Debtor and his former spouse testified via videoconference pursuant to Fed. R. Civ. P. 43(a) and the court's Third Amended General Order No. 20-05.2 The court also takes judicial notice of the contents of the docket in this matter when appropriate. See Levine v. Egidi , No. 93 C 188, 1993 WL 69146, at *2 (N.D. Ill. Mar. 8, 1993) (); In re Miceli , 587 B.R. 492, 496 (Bankr. N.D. Ill. 2018) ().
The court has considered the evidence and arguments presented by the parties at the trial and reaches this decision after careful consideration of the substance and credibility of the testimony and the exhibits admitted in evidence, and any reasonable inferences to be drawn therefrom, together with the stipulations of the parties. From its review, this court finds the salient facts to be as follows.
The Debtor filed his petition for relief under chapter 7 through counsel on March 24, 2020. His debts consist primarily of consumer debts. Mr. Sandberg has lived in a home owned by his girlfriend in Crystal Lake, Illinois, since shortly before the petition date. He previously lived in Missoula, Montana, where his former spouse lives. Their two high-school age sons also live in Missoula, where their sons were born and have lived their entire lives. Mr. Sandberg shares custody of the sons with his ex-wife ("50/50"). After the couple divorced in 2010, Mr. Sandberg moved out but continued to reside in Montana until late 2015, when he moved to a location in Idaho, two to three hours away. Dissatisfied with his job in Idaho, he took a position in Illinois and, in 2016, moved to that state. Other than for a brief period spent in Arkansas in mid-2019, the Debtor has resided in Illinois ever since.
Mr. Sandberg is currently the Director of Field Operations at a construction company, reporting directly to the owner. He has worked at his current job for approximately four years, a situation he describes as a "stable job" at a "good environment." He testified that recruiters frequently call him, but in his view, none of the opportunities offered are comparable to his current position.
The Debtor's Form 122A-1 Statement of Current Monthly Income listed his average monthly gross wages to be $9,923.07 during the six calendar months preceding his petition. He listed no other income. Mr. Sandberg's statement declared his annualized income to be $119,076.84, which is greater than the benchmark median income for a household of three in Illinois of $82,268.00. (ECF No. 2.)4
Listing above-median income, the Debtor also completed and filed a Form 122A-2 Chapter 7 Means Test Calculation. In it he listed deductions to income totaling $8,041.22. The deductions resulted in his listing $1,881.85 in monthly disposable income, or $112,911 available over the next sixty months. (ECF No. 3.) His Form 122A-2 acknowledges the statutory presumption of abuse arises, but asserts various "special circumstances that justify additional expenses," namely: average monthly expenses of $1,630.00 for "Travel to see minor children (lodging, food, auto rental, airfare)"; $700.00 for "Vehicle Gas and Maintenance for job"; and $345.00 for "Student Loan Payments." (ECF No. 3.)
The Debtor's Student Loans Expenses. At trial the Debtor provided evidence that only $265 in monthly student loan payments will come due. It was conceded that the difference between this amount and the listed expense was due to a computational error inasmuch as one of the loans, actually payable quarterly, was mistakenly listed as a monthly obligation.
Employment-Related Transportation Expenses. The Debtor's testimony also revealed a misapprehension of his monthly vehicle gas and maintenance expense deduction claimed. It turns out that the $700 figure claimed in his filings did not reflect the Debtor's out-of-pocket expenses, but rather the $700 per month travel reimbursement he is paid by his employer (in addition to scheduled wages). This $700 amount is not reflected in his calculation of monthly income in his Form 122A-1, although his contemporaneously filed Schedule I lists a $700 monthly "Expense Check from Delauter." (ECF No. 1.) Although the Debtor testified that the payment was intended to cover mileage, tolls, wear and tear, fuel, and "everything" related to his driving expenses, he failed to identify or substantiate any specific out-of-pocket expenses he incurs. To the contrary, he testified that he never "added it up."5 Thus, even to the extent the $700 monthly payment accurately reflects reimbursements for actual driving expenses, the Debtor failed to show that these expenses exceeded the vehicle operation costs he already deducted from income in his means test calculations.
Claimed Deductions for Family Visits. With respect to the deduction for periodic family visitations, the Debtor claims that he travels to Montana approximately once a month to see his sons. At trial, the Debtor presented evidence concerning ten trips to Montana he took in 2019. His proof indicated he took one trip in each of January, February, April, May, August, and December, and two trips in October and two in November of that year. He also offered evidence of a single trip to Montana in early February 2020. The longest of the trips, near Christmas 2019, lasted five days. Most lasted only two or three days, with the Debtor typically arriving either late Friday evening or on Saturday morning, and returning on Sunday. The Debtor's girlfriend travelled with him on less than half of the trips. On those occasions, he testified, she reimbursed him for her airfare and her half of the total expenses incurred.
For these trips, the Debtor's roundtrip airfare including taxes and fees as reflected in the bank records ranged from $352.44 to $731.48, with a single outlier of $1,181, apparently for a trip commencing on Christmas Day. It is clear from the notation in his credit card statement that the December charges totaling $1,181 were for two separate roundtrip tickets, and the Debtor testified that such charge was for both the Debtor and his girlfriend, who he testified later paid him for her ticket. The statement record for the November airline charge similarly breaks the charge into two charges of $338 each. Charges for other trips on other airlines list only a single charge to an airline, though some are as high as $731. From the Debtor's testimony, the court concludes that the airfare in the $600 and $700 range reflected in the Debtor's records are likely for two tickets for which he was later reimbursed, and that therefore the average airfare he actually incurred per trip was more likely in the range of $300 to $400.6
The Debtor's parents live in Montana, approximately a thirty-minute drive from the airport. However, the Debtor usually stayed at a hotel located ten minutes from the airport. He explained that he did so because the hotel is more convenient. The Debtor presented bank and credit card statements which reflected the hotel expenses for only three of the trips in 2019. He also testified that when he stayed at a hotel his sons stayed with him. The bank and credit card statements show that the Debtor incurred charges at a Holiday Inn in Montana of $262.17 for the December 2019 trip, $198.95 at the Fairmont Hot Springs for the late November 2019 trip7 and $419.02 to Best Western in Montana for the September 2019 trip. Other than perhaps in the Debtor's self-prepared credit card and bank summaries, which the court finds not admissible (see infra p. ––––), the Debtor did not provide specific or documentary evidence to substantiate other lodging charges he incurred during his Montana trips.
Most of his trips were for only one or two nights, and he failed to show that there was no alternative lodging available for less than $200 per trip. The Debtor's testimony concerning these visits—that he usually picked up his sons Friday evening and they stayed with him until he returned them to their mother on Sunday morning—was credibly...
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