In re Warren

• Decision Date: 18 June 2009
• Docket Number: No. 07-17226.,07-17226.
• Citation: 568 F.3d 1113
• Parties: In the Matter of Stewart Jay WARREN, Debtor, Andrea A. Wirum, Appellant, v. Stewart Jay Warren, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

568 F.3d 1113

In the Matter of Stewart Jay WARREN, Debtor Andrea A. Wirum, Appellant, v. Stewart Jay Warren, Appellee.

No. 07-17226.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 16, 2009.

Filed June 18, 2009.

John H. MacConaghy, MacConaghy & Barnier, Sonoma, CA, for the appellant.

David Chandler, Santa Rosa, CA, for the appellee.

Appeal from the United States District Court for the Northern District of California, Charles R. Breyer, District Judge, Presiding. D.C. No. CV-07-03244-CRB.

Before THOMAS G. NELSON, ANDREW J. KLEINFELD and MILAN D. SMITH, JR., Circuit Judges.

T.G. NELSON, Circuit Judge:

This appeal requires us to interpret the interplay between two subsections of the Bankruptcy Code, 11 U.S.C. § 521(a)(1) and (i)(1). Under § 521(a)(1), a debtor is required to file a list of creditors and, "unless the court orders otherwise," certain financial information. 11 U.S.C. § 521(a)(1). Under § 521(i)(1), if the debtor fails to file the financial information required by § 521(a)(1) within forty-five days of filing the bankruptcy petition, the case "shall be automatically dismissed effective on the" forty-sixth day. 11 U.S.C. § 521(i)(1). The issue before us is whether the bankruptcy court has discretion to "order[ ] otherwise" and thereby waive the § 521(a)(1) filing requirement by entering an order after the forty-five day filing deadline in § 521(i)(1) has passed.

The bankruptcy court found it did have such discretion and therefore entered an order waiving the § 521(a)(1) filing requirement after the forty-five day filing deadline had passed. The district court reversed, finding dismissal of the case was mandatory under § 521(i)(1).

We have jurisdiction over this appeal under 28 U.S.C. §§ 158(d) and 1291. We hold that the bankruptcy court acted within its discretion in entering the order waiving the § 521(a)(1) filing requirement even though the forty-five day filing deadline set forth in § 521(i)(1) had passed. We therefore reverse and remand to the district court with instructions to remand the case to the bankruptcy court for further proceedings.

FACTS AND PROCEDURAL HISTORY

In September 2006, the State of California issued to a California bank an "Order to Withhold," ordering the bank to freeze Stewart Jay Warren's accounts with the bank and to turn over $93,330.46, which represented the amount Warren owed in overdue child support payments. On October 11, 2006, in an apparent attempt to avoid his child support obligations, Warren filed a Chapter 7 bankruptcy petition. Warren's petition included a list of creditors, but did not include the other financial information required by 11 U.S.C. § 521(a)(1).

On October 12, 2006, the bankruptcy court issued an order notifying Warren that if he did not submit the financial information required by § 521(a)(1) within fifteen days, the court may dismiss his case. Warren did not file the required financial information or otherwise respond to the bankruptcy court's order. The bankruptcy court then issued an order setting a hearing for November 17, 2006, to address whether the court should fine or otherwise sanction Warren and/or his counsel, or dismiss Warren's case for failure to timely file the required financial information.

On November 15, 2006, two days before the hearing was scheduled, trustee Andrea A. Wirum filed a response to the bankruptcy court's order regarding sanctions. The trustee requested that the court not dismiss the case because the trustee needed time to investigate the circumstances surrounding Warren's filing of his petition and his financial situation to determine whether assets were available in the estate that could be administered for the benefit of creditors. Warren did not appear at the November 17, 2006, hearing. The bankruptcy court granted the trustee's request and declined to dismiss the case at that time.

On March 6, 2007, almost five months after he filed his bankruptcy petition, Warren moved to dismiss his case, arguing that because he failed to obtain pre-petition credit counseling or apply for a statutory waiver of the counseling requirement, he failed to qualify as a "debtor" under 11 U.S.C. § 109(h). Before the bankruptcy court ruled on this motion, Warren again moved to dismiss his case, this time arguing that because he failed to file the financial information required by 11 U.S.C. § 521(a)(1) within forty-five days of filing his petition, dismissal of his case was mandated by 11 U.S.C. § 521(i).

On April 9, 2007, the bankruptcy court issued a memorandum explaining that it would be denying both of Warren's motions to dismiss. The bankruptcy court, relying on In re Withers, No. 06-42098 TM, 2007 WL 628078 (Bankr.N.D.Cal. Feb.26, 2007), held:

[D]ismissal is not mandated where the debtor is seeking to take advantage of either § 109(h) or § 521(i) to the prejudice of his creditors. Judicial estoppel bars a debtor from seeking dismissal under § 109(h), and § 521(i) does not require dismissal if the requirements to file schedules and statement of affairs have been waived.

On April 13, 2007, the bankruptcy court issued an order waiving the requirement that Warren file all the financial information required by § 521(a)(1).¹ And on April 20, 2007, the bankruptcy court issued an order denying Warren's motions to dismiss.

Warren appealed the bankruptcy court's refusal to dismiss his case, and the district court reversed and remanded to the bankruptcy court with instructions to dismiss. The district court determined that the bankruptcy court did not have discretion to waive the § 521(a)(1) filing requirement after the forty-five day filing deadline set forth in § 521(i)(1) passed, and that dismissal of the case was mandatory.

STANDARD OF REVIEW

We review the district court's decision on appeal from a bankruptcy court de novo. Metcalf v. Golden (In re Adbox, Inc.), 488 F.3d 836, 839 (9th Cir.2007). We review the bankruptcy court's denial of a motion to dismiss de novo. See id. at 840. We may affirm the bankruptcy court's decision on any ground fairly supported by the record. Leavitt v. Soto (In re Leavitt), 171 F.3d 1219, 1223 (9th Cir. 1999).

ANALYSIS

The provision of the Bankruptcy Code at issue in this case, 11 U.S.C. § 521, was amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), Pub.L. No. 109-8, 119 Stat. 23 (2005), to expand a debtor's duties of financial disclosure. Under § 521(a)(1), a debtor is now required to file a list of creditors, and, "unless the court orders otherwise," various other detailed financial information.² See 11 U.S.C § 521(a)(1). If a debtor fails to file the required financial information within forty-five days after filing his petition, his case will be "automatically dismissed effective on the 46th day after the date of the filing of the petition."³ 11 U.S.C. § 521(i)(1).

The issue before us is whether the bankruptcy court has discretion, after the passing of the forty-five day filing deadline set forth in § 521(i)(1), to "order[ ] otherwise" and thereby waive the § 521(a)(1) filing requirement. This is an issue of first impression in this circuit. The only circuit court to address this issue is the First Circuit. See Segarra-Miranda v. Acosta-Rivera (In re Acosta-Rivera), 557 F.3d 8, 9 (1st Cir.2009) (holding that bankruptcy court retains discretion to waive the § 521(a)(1) filing requirement even after the § 521(i)(1) filing deadline has passed).

We believe the approach taken by the First Circuit is consistent with the language of § 521 and congressional intent in enacting BAPCPA. We therefore hold, consistently with the First Circuit, that a bankruptcy court retains discretion to waive the § 521(a)(1) filing requirement even after the forty-five day filing deadline set forth in § 521(i)(1) has passed. See In re Acosta-Rivera, 557 F.3d at 9, 13-14; see also In re Parker, 351 B.R. 790, 801-02 (Bankr.N.D.Ga.2006).

We begin our analysis by examining the statutory language of § 521 to determine the interplay between subsections (a)(1) and (i)(1). See Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 739, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989) ("The starting point for our interpretation of a statute is always its language."). Subsection (a)(1), which grants courts the power to "order[ ] otherwise," does not include a deadline within which the court must enter such an order. See 11 U.S.C. § 521(a)(1)(B). Nor does any other subsection of § 521 state that there is a time limit within which a court may "order[ ] otherwise." See 11 U.S.C. § 521. Subsection (i)(1) does set forth a forty-five day deadline within which the § 521(a)(1) filing requirement must be met, but this deadline is directed toward debtors, not the court. See 11 U.S.C. § 521(i)(1). Further, subsection (i)(1) does not refer to the court's power to "order[ ] otherwise" to waive the § 521(a)(1) filing requirement. See 11 U.S.C. §§ 521(a)(1)(B), (i)(1). We find the language of § 521 to be ambiguous on whether subsection (i)(1)'s forty-five day filing deadline limits the power of a court to "order[ ] otherwise" and waive the § 521(a)(1) filing requirement. See 11 U.S.C. §§ 521(a)(1)(B), (i)(1).

Given the ambiguity in the statutory language, we must "evaluate the alternative readings in light of the purpose of the statute." Burns v. Stone Forest Indus., Inc., 147 F.3d 1182, 1184 (9th Cir. 1998); see also Creative Computing v. Getloaded.com LLC, 386 F.3d 930, 935 (9th Cir.2004). This requires examination of a statute's words, so that we may "see whether one construction makes more sense than the other as a means of attributing a rational purpose to Congress." Longview Fibre Co. v. Rasmussen, 980 F.2d 1307, 1311 (9th Cir.1992)

Section 521's grant of judicial power to "order[ ] otherwise" predates BAPCPA. See 11 U.S.C. § 521(1) (2004).⁴ Thus, when Congress overhauled § 521 to expand the financial information debtors are required to file with their...