In re Steeley, Bankruptcy No. 98-05272-BGC-13.

Citation243 BR 421
Decision Date25 January 1999
Docket NumberBankruptcy No. 98-05272-BGC-13.,1999.
PartiesIn re Janet D. STEELEY, Debtor.
CourtUnited States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Alabama

243 B.R. 421 (1999)

In re Janet D. STEELEY, Debtor.

Bankruptcy No. 98-05272-BGC-13.

United States Bankruptcy Court, N.D. Alabama, Southern Division.

Order Denying Reconsideration April, 1999.

January 25, 1999.

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Janet D. Steeley, pro se

Thomas Tutten, Birmingham, AL, for Magna Mortgage Company.

Alan Levine, for SouthTrust Bank.

Order Denying the Debtor's Motion to Retain Jurisdiction and Granting Magna Mortgage Company's Motion to Transfer

BENJAMIN COHEN, Bankruptcy Judge.

The matters before the Court are the Debtor's Motion to Retain Jurisdiction filed on August 10, 1998, and the oral Motion to Transfer made by Magna Mortgage Company at the hearing on both matters held on September 23, 1998. Janet Steeley, the debtor; Thomas Tutten, the attorney for Magna Mortgage Company; and Alan Levine, the attorney for SouthTrust Bank, appeared at that hearing.1 The matters were submitted on the arguments of the parties and the record in this case.

I. Background

Ms. Steeley has filed six Chapter 13 cases in this Court.2 The fifth was filed in the Eastern Division of this Court on January 21, 1998.3 Because of the possibility of a conflict between that court and the debtor, the judge in that division transferred the case to the Northern Division on February 2, 1998. On May 12, 1998, the judge in the Northern Division entered an order lifting the automatic stay in favor of Magna Mortgage Company, the creditor secured by a mortgage on the debtor's home. On the same day the Court entered a similar order in favor of SouthTrust Bank, the secured creditor on the debtor's automobile. On July 13, 1998, the Court dismissed the debtor's case.

In May 1998 and June 1998 the debtor filed appeals of the above-three orders and made requests for stays on appeal. The requests for stays were denied.

On August 10, 1998, after filing her appeals, but before any decisions were rendered on those appeals, Ms. Steeley filed her sixth and most recent Chapter 13 case. That case was filed in the Southern Division of this Court along with the Motion to Retain Jurisdiction now pending before this Court. In that motion, Ms. Steeley asked this Court to retain control of her case rather than to transfer the case to another division.

At the hearing on her motion, Ms. Steeley argued that the orders in her fifth case lifting the stay for the secured creditors, the one dismissing her case, and the one denying her stays of those orders on appeal, were entered unfairly. Ms. Steeley explained that she filed the instant case to protect her home from foreclosure. And when asked by this Court why she filed the current case in this division, rather than in the division of her residence and the division in which she filed her previous cases, Ms. Steeley further explained, "All I want to do is pay my creditors and have a chance in a fair and equitable court in which to get my plan approved and pay my creditors." Unofficial transcription.

At the same hearing, in response to Ms. Steeley's motion and arguments, the attorney for Magna Mortgage Company made, without objection from Ms. Steeley, an oral

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Motion to Transfer the case to either the Eastern or the Northern Divisions of this Court. After the hearing, and on October 1, 1998, the Chapter 13 trustee for the Southern Division of this Court filed a Trustee's Objection to Confirmation and Motion to Dismiss.4

II. Procedure

Clearly, Ms. Steeley's reason for filing the current (and sixth) bankruptcy case was to protect her home from foreclosure. But equally clear is that Ms. Steeley's motives for filing the case in the Southern Division of this Court were to prevent the operation of the orders entered against her in her fifth Chapter 13 case and to seek another forum in which she believed she could obtain a different result.

The Court of Appeals for the Eleventh Circuit, in Shell Oil Co. v. Waldron (In re Waldron), 785 F.2d 936, 941 (11th Cir. 1986), cert. dismissed, 478 U.S. 1028, 106 S.Ct. 3343, 92 L.Ed.2d 763 (1986), instructs that if a debtor's Chapter 13 petition appears to be tainted, the debtor's motives must be questioned.5 The per curiam opinion in Waldron reads in part:

We hold that with section 1325(a)(3) Congress intended to provide bankruptcy courts with a discretionary means to preserve the bankruptcy process for its intended purpose. Accordingly, whenever a Chapter 13 petition appears to be tainted with a questionable purpose, it is incumbent upon the bankruptcy courts to examine and question the debtor\'s motives. If the court discovers unmistakable manifestations of bad faith, . . . confirmation must be denied.
Unmistakable manifestations of bad faith need not be based upon a finding of actual fraud, requiring proof of malice, scienter or an intent to defraud. We simply require that the bankruptcy courts preserve the integrity of the bankruptcy process by refusing to condone its abuse.
The cornerstone of the bankruptcy courts has always been the doing of equity. The protections and forgiveness inherent in the bankruptcy laws surely require conduct consistent with the concepts of basic honesty. Good faith or basic honesty is the very antithesis of attempting to circumvent a legal obligation through a technicality of the law.

Id. (emphasis added).

Although Ms. Steeley did not attempt to hide her desire to have another court consider her circumstances, (her motion for this Court to retain and adjudicate her pending petition was most certainly filed to promote that desire), this Court finds that Ms. Steeley's petition does indeed appear to be tainted.6 Thus, in accordance

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with Waldron, this Court must examine Ms. Steeley's motives to determine whether this case was filed in good faith.7 Thereafter this Court must determine the proper venue of the case.8

III. Was this Case Filed in Bad Faith?

To decide whether the case was filed in good faith, as a matter of law this Court has applied the standards required by Waldron.9 Factually, the Court has

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considered the above and the debtor's bankruptcy history, her options, and her actions

A. The Debtor's Bankruptcy History

Although the debtor wishes this Court to do so, the instant case cannot be considered independent of the debtor's previous cases, independent of the rulings made against her in her previous cases, or independent of the debtor's appeals of the rulings made against her in previous cases. In contrast, a detailed review of some of Ms. Steeley's prior cases is necessary, not only because Ms. Steeley asserts that the treatment she received in those prior cases is the basis for her contention that she should be afforded the special permission to, in effect, move her case from one division to another, but also because that same history establishes one basis for this Court's finding that Ms. Steeley is not entitled to such relief.10

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This Page Contains Footnotes.

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1. Case No. 86-05559

Ms. Steeley's First Chapter 13 Case

Ms. Steeley filed her first Chapter 13 case in the Eastern Division of this Court on July 21, 1986, as a joint case with her husband. That case, case no. 86-05559, was dismissed January 9, 1987.

2. Case No. 87-03471

Ms. Steeley's Second Chapter 13 Case

Ms. Steeley filed her second Chapter 13 case in the Eastern Division of this Court on April 16, 1987, also as a joint case with her husband. That case, case no. 87-03471, was dismissed on July 17, 1990.

3. Case No. 90-12916

Ms. Steeley's Third Chapter 13 Case

Ms. Steeley filed her third Chapter 13 case in the Eastern Division of this Court on April 13, 1990, also as a joint case with her husband.11 The judge in that division entered an order of recusal and the case was transferred to the Southern Division of this Court on June 22, 1990. On July 2, 1990, the case was transferred to the Western Division.

On May 22, 1990, before the second transfer, Ms. Steeley filed a complaint against Life Insurance Company of Alabama, the mortgagee of her residence, the same residence that would become the subject of similar disputes in Ms. Steeley's fourth, fifth and sixth cases.12

On August 28, 1995 the Chapter 13 trustee filed a Motion to Dismiss Case. On September 25, 1995, the debtor filed a second complaint against Life Insurance Company of Alabama.

On October 3, 1995, the Western Division Court granted the trustee's motion to dismiss the case, dismissed the pending complaints and denied the debtors' motion for reconsideration of the matters involving the complaints.

4. Case No. 97-42508

Ms. Steeley's Fourth Chapter 13 Case

Ms. Steeley filed her fourth Chapter 13 case in the Eastern Division of this Court on August 5, 1997. On August 8, 1997, that case, case no. 97-42508 was transferred to the Northern Division.

On August 21, 1997 SouthTrust Bank filed a Motion for Relief from Automatic Stay and Co-Debtor Stay regarding a 1990 Thunderbird.

Also on August 21, 1997, Ms. Steeley filed a Motion to Transfer Case to the Southern Division of this Court. Ms. Steeley argued that a transfer was appropriate because her residence in Gadsden, Alabama and work place in Anniston, Alabama were closer to this Court's, Birmingham,

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Alabama location than the Northern Division's, Decatur, Alabama site. Ms. Steeley also argued for transfer because the law firms representing her creditors were based in the Southern Division. SouthTrust Bank filed a formal opposition to the transfer arguing that the case was related to the case of James Wesley Steeley, Jr. a/k/a Steelfax Systems, case no. 97-42032, a case of Ms. Steeley's husband's then pending in the Northern Division. The bank further argued that there were certain motions for relief from the stay that should be heard concurrently

On October 2, 1997, the Northern Division Court entered an order denying SouthTrust's motion for relief from stay on the conditions that the debtor...

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