In re Trotta
| Decision Date | 21 March 2019 |
| Docket Number | Bky. No. 18-11335-elf |
| Citation | 597 B.R. 269 |
| Parties | IN RE: Vincent A. TROTTA, Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Robert J. Lohr, II, Lohr and Associates, Ltd., West Chester, PA, for Debtor.
Michael H. Kaliner, Michael H. Kaliner Trustee, Doylestown, PA, for Trustee.
O P I N I O N
Armand Neal DeSanctis, Jr. and Jennifer K. DeSanctis ("the DeSanctises") have moved to dismiss the chapter 7 bankruptcy case of debtor Vincent Trotta ("the Debtor").
The DeSanctises are the Debtor's largest secured and unsecured creditors, as well as the parents of the Debtor's separated spouse. They assert that granting the Debtor relief would be an abuse of the Bankruptcy Code. See 11 U.S.C. § 707(b)(3).
I find that the DeSanctises have not carried their burden of proof to show the kind of abuse that warrants dismissal. I will deny the motion and permit case administration to continue.
The Debtor filed this chapter 7 bankruptcy on February 28, 2018, with the relevant Schedules and Statements. (Doc. # 1) ("Schedules").
On June 5, 2018, the DeSanctises filed an adversary complaint requesting a determination that a debt owed to them by the Debtor is nondischargeable as a student loan pursuant to 11 U.S.C. § 523(a)(8). (Doc. # 17). On the same day, the DeSanctises filed the instant Motion to Dismiss the bankruptcy case ("the Motion"). (Doc. # 18). The Debtor filed a response to the Motion on June 19, 2018. (Doc. # 22).
I held an evidentiary hearing on the Motion on August 23, 2018, at which the Debtor and his separated spouse, Christina Trotta ("Mrs. Trotta"), testified. Following the hearing, the parties submitted memoranda in support of their positions, as requested by the court. .
Based on the credibility and demeanor of the trial witnesses, the plausibility of their testimony, the existence of corroborating circumstantial, testimonial or documentary evidence, the totality of the evidentiary record presented at the trial and my consideration of the parties' post-trial submissions, I make the following findings of fact.
the Debtor; the Debtor's marriage
1. The Debtor is a 34-year-old man, employed as an Operations Specialist at Ferullo Insurance Agency for 16 years. (August 23, 2018 Transcript at 110) (hereafter "Tr.").
2. The Debtor and Mrs. Trotta were married in 2007. (Id.).
3. The Debtor and Mrs. Trotta have two sons, ages 3 and 10 (at the time of the hearing). (Tr. at 16; Schedule I/J).
4. In recent years, the Debtor's annual income has ranged from $ 75,000.00 to approximately $ 150,000.00, depending on his commissions. (Tr. at 36).
5. Mrs. Trotta is employed by her father, movant Armand DeSanctis, earning roughly $ 50,000.00 a year. (Tr. at 38).
6. The Debtor and Mrs. Trotta separated on June 25, 2017. (Tr. at 99).
7. The separation was precipitous in that the Debtor left the marital premises with little of his separate property. Also, the separation was acrimonious, resulting in substantial litigation between the parties in the initial months thereafter.
8. In the recent years prior to their separation, the Debtor and Mrs. Trotta were not able to live within their means, despite their combined income. (Tr. at 32, 36, 131).
9. While married, the Debtor and Mrs. Trotta sent their older son to private school, employed a nanny for child care, and drove a succession of luxury cars. (Tr. at 21, 25, 35).
10. The Debtor and Mrs. Trotta sustained their spending habits via use of credit cards and gifts and loans received from family members, mainly Mrs. Trotta's parents, the DeSanctises. (Tr. at 58, 117).
11. For example, the DeSanctises financed the purchase of the Debtor and Mrs. Trotta's marital home, purchasing a roughly $ 900,000.00 home for the couple and taking a mortgage for the same amount. (Amended Schedule A/B; Schedule D).
12. After the June 25, 2017 separation, divorce proceedings commenced, but as of the hearing date, the Debtor and Mrs. Trotta were still married. (Tr. at 99).
13. Also following their separation, Mrs. Trotta initiated protection from abuse proceedings against the Debtor. (Tr. at 33).
14. A temporary protective order was granted to Mrs. Trotta, but not made permanent. (Tr. at 97-98)
15. To cover the variety of legal expenses, including the retention of counsel, as well as the cost of the clothing and furniture that he needed after his abrupt separation from Mrs. Trotta, the Debtor borrowed $ 30,000.00 from his mother. (Tr. at 42-43).
16. The Debtor spent the money he borrowed from his mother and is now unrepresented in the marital separation proceedings in state court. (Tr. at 54).
17. On December 8, 2017, the Common Pleas Court of Delaware County entered stipulated support and custody orders. (Exs. 3 & 4). The relevant terms are as follows:
18. The Debtor was obliged to pay his older son's 2017-2018 school tuition, which required him to pay $ 5,900.00 through monthly payments of $ 525.00. (Tr. at 25).
19. As of the hearing date in this matter, the Debtor was, at most, one month behind on support obligation insofar as it required payments to Mrs. Trotta. (Tr. at 161).
the bankruptcy filing and the Debtor's postpetition lifestyle
20. The February 28, 2018 bankruptcy filing was precipitated by the DeSanctises efforts to collect on their loans to the Debtor and to foreclose on the marital home. (Tr. at 96-97).
21. The Debtor amended his Schedules A/B, C and Statement of Financial Affairs ("SOFA") on July 30, 2018 and his Schedule E/F on August 22, 2018. (Doc. #'s 25, 26, 27, 28, 30).
22. The Debtor's Schedule D shows that he has over $ 1 million in secured debt, $ 964,000.00 of which is attributable to the DeSanctises loan on the marital home.
23. The Debtor also owes $ 44,882.00 to Santander Consumer USA for a 2015 Mercedes that he claims he has not seen since 2017 because Mrs. Trotta drives it. (Doc. # 1, Sch. D).
24. The Debtor's unsecured debt consists of:
25. Also listed on Schedule D was a $ 16,250.00 debt for another Mercedes. Technically, this is not the Debtor's secured debt. He disclosed that this vehicle is leased by his sister, but he pays for and drives the car. The lease payments are $ 350.00 less than the monthly payments for his previous Mercedes. (Doc. # 1, Sch D; Tr. at 31-35, 37, 49).
26. The Debtor did not list the Internal Revenue Service as a creditor in his bankruptcy schedules.
27. Other than ownership interest in the marital residence and the Mercedes automobile referenced in Finding of Fact No. 21, in his Schedules, the Debtor initially disclosed ownership of: household goods and furnishings, firearms, jewelry, an interest in 401K plan ($ 31,000.00)-- all of which was claimed as exempt in Schedule C. (Doc. # 1, Sch. B, C).
28. In his Amended Schedule B, filed on July 30, 2018, the Debtor disclosed ownership of one (1) Rolex watch, valued at $ 4,000.00 to $ 5,000.00, and stated that he believed the watch to be located at the marital residence. (Doc. # 25, Amended Schedule B).
29. Since 2017, the Debtor has been living in a two-bedroom, two-bathroom apartment. Though the unit is leased in the name of his mother, the Debtor pays the monthly rent. (Tr. at 15, 88-92).
30. The monthly cost for the apartment (with mandatory parking pass) is $ 2,475.00. (Doc.# 1, Sch J; Tr. at 15, 83). This amount does not include utilities, which are scheduled separately as expenses on Schedule I/J. (Doc. # 1).
31. The Debtor's other noteworthy expenses are:
32. The Debtor anticipates that his income, currently listed in his bankruptcy schedules as $ 9,745.73 in gross pay per month, will be $ 1,000.00 less per month in the upcoming months because frequent court appearances will result in a reduction in his earned commissions. (Tr. at 109, 139); (Schedule I/J).
33. The Debtor's expenses exceed his income. The Debtor's monthly net income is negative $ 1,173.56. (Doc.# 1, Sch I/J).
Sections 707(a) and 707(b) of the Bankruptcy Code both provide for involuntary dismissal of chapter 7 cases.
Section 707(a) identifies three (3) non-exclusive grounds that constitute "cause" for dismissal. Another ground for dismissal under § 707(a), not stated explicitly in the statute, is the lack of good faith in filing the chapter 7 case. See In re Tamecki, 229 F.3d 205, 207 (3d Cir. 2000).
Section 707(b), which applies only to an individual debtor "whose debts are primarily consumer debts," as modified by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109–8, 119 Stat. 23 (2005) ("BAPCPA"), is now a lengthy provision that authorizes dismissal of a chapter 7 bankruptcy case "if [the court] finds...
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