Jager v. InFirst Bank (In re Jager)

• Decision Date: 25 November 2019
• Docket Number: Bankr. No. 18-70541-JAD
• Parties: IN RE: Robert W. JAGER and Margaret M. Jager, Debtors. Robert W. Jager and Margaret M. Jager, Movants, v. InFirst Bank f/k/a Indiana First Bank and The Commonwealth of Pennsylvania Department of Environmental Protection, Respondents.
• Court: United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Western District of Pennsylvania

609 B.R. 156

IN RE: Robert W. JAGER and Margaret M. Jager, Debtors.

Robert W. Jager and Margaret M. Jager, Movants,

v.InFirst Bank f/k/a Indiana First Bank and The Commonwealth of Pennsylvania Department of Environmental Protection, Respondents.

Bankr. No. 18-70541-JAD

United States Bankruptcy Court, W.D. Pennsylvania.

Signed November 25, 2019

Robert W. Jager, Woodland, PA, pro se.

Related to ECF No. 192

MEMORANDUM OPINION

The Honorable Jeffery A. Deller, United States Bankruptcy Judge The matter before the Court is a motion captioned as a "Motion to Reconsider " filed by Mr. & Mrs. Jager (collectively, the "Debtors").¹ The Motion to Reconsider concerns this Court's prior order dated September 5, 2019 (the "Dismissal Order"), which dismissed the Debtors' bankruptcy case with prejudice thereby precluding the Debtors from filing another bankruptcy case for a period of 180 days from the date of the Dismissal Order. For the reasons set forth below, the Motion to Reconsider is without merit and shall be denied.

I.Background

The facts of this case, giving rise to the Dismissal Order, are not overly complicated and are set forth in this Court's prior Memorandum Opinion found at InFirst Bank v. Jager (In re Jager), 597 B.R. 796 (Bankr. W.D. Pa. 2019), as well as the memorandum orders entered by this Court at ECF Nos. 144, 166, and 187. The findings and conclusions as set forth in the prior opinions and/or orders of this Court are incorporated herein.

In a nutshell, the Debtors commenced this small business Chapter 11 case on July 30, 2018, and to date they have not been able to present a confirmable plan of reorganization. See 11 U.S.C. § 1121(e)(2) (requiring that a small business plan and disclosure statement be filed no later than 300 days after the petition date) and 11 U.S.C. § 1129(e) (requiring that a small business debtor obtain confirmation no later than 45 days after filing of the plan); see also In re CCT Communications, Inc., 420 B.R. 160, 168 (Bankr S.D.N.Y. 2009) and In re Star Ambulance Service, LLC, 540 B.R. 251 (Bankr. S.D. Tex. 2015), for a discussion of the consequences of failing to meet the small business debtor deadlines.²

Since filing this case, the Debtors have had a number of impediments to proposing and confirming a realistic plan of reorganization. The failure of the Debtors to propose a feasible plan constituted cause for this Court to grant the Debtors' secured lender, InFirst Bank, relief from the automatic stay so that InFirst Bank may pursue non-bankruptcy remedies as to its collateral. In re Jager, supra.³

The impediments in this case also included the Debtors' disagreements with counsel, resulting in Debtors' counsel withdrawing from the case and the Debtors proceeding without the assistance of counsel.⁴ See Motion to Withdraw , ECF No. 115.

The impediments included financial issues in that the Debtors have not presented any plan demonstrating that the Debtors have the financial ability to carry out their obligations. These circumstances have been fully articulated in the Court's prior determinations, and there is no need to restate them herein. See In re Jager, 597 B.R. at 815-818.

Compounding the financial problems of the Debtors is that they are senior citizens⁵ who have been battling various health problems thereby limiting their ability to generate sufficient income to fund their perceived plan.

The income and health issues of the Debtors have additionally prevented them from complying with various environmental enforcement actions that have been levied by the Commonwealth of Pennsylvania. Specifically, the Debtors have long suffered environmental problems with respect to the Debtors' primary asset, which is a 55 acre tract of land (the "Real Property") that contains a farm house, rental house, and a barn with another apartment.

Since September 1, 2015, which is more than four years ago, the Debtors have been subject to a field order (the "Field Order") issued by the Commonwealth of Pennsylvania, Department of Environmental Protection (the "PA DEP"). See Field Order , ECF No. 73-22, pp. 16-18. The Field Order requires the Debtors to remediate approximately 400 tons of horse manure⁶ located on their Real Property to prevent runoff into neighboring streams or waters and other harms.

The Debtors did not comply with the Field Order. After a hearing, an Order was thereafter entered on July 27, 2016 by the Commonwealth Court of Pennsylvania which required, among other things, that the Debtors remove the manure piles within thirty days thereof. See ECF No. 73-23. The Commonwealth Court's July 27, 2016 Order also required that the Debtors, by no later than October 15, 2016, implement a Manure Management Plan with respect to the tons of manure located on the Real Property.

The Debtors did not comply with the July 27, 2016 Order, and on February 1, 2017, the Debtors were found by the Commonwealth Court to be in contempt. See ECF No. 73-24. Neither of these Orders were appealed by the Debtors.

The February 1, 2017 Order of the Commonwealth Court again set forth a time period for the Debtors to comply with applicable environmental obligations, which were then again violated by the Debtors. The February 1, 2017 Order of the Commonwealth Court also mandated that the Debtors "close the animal operation at the property," which was ignored by the Debtors.⁷

In fact, as of the commencement of the instant bankruptcy case on July 30, 2018, the Debtors had complied with neither the Field Order, nor the July 27, 2016 and February 1, 2017 Orders of the Commonwealth Court.

Of course, debtors-in-possession are required to comply with environmental laws because bankruptcy, as a general matter, is no excuse for failure to comply. See 28 U.S.C. § 959(b) ; see also 11 U.S.C. § 1129(a)(3) (requiring as a pre-condition to plan confirmation that the plan be proposed in good faith and not by any means forbidden by law).

Stated in other words, environmental obligations imposed by law must be complied with, and a debtor may not evade or avoid environmental compliance obligations. See e.g., Penn Terra Ltd. v. Dept. of Envtl. Res., 733 F.2d 267 (3d Cir. 1984) ; Midlantic Nat'l Bank v. New Jersey Dept. of Envtl. Protection, 474 U.S. 494, 106 S.Ct. 755, 88 L.Ed.2d 859 (1986).

After the commencement of the instant bankruptcy case, and through the present, the Debtors have lacked the appropriate resources and/or capabilities that are necessary to remediate the manure problem. These facts formed one of the bases of this Court's conclusion that the Debtors cannot propose or confirm a feasible plan of reorganization. See In re Jager, supra. It also constituted one of the reasons for the Court granting InFirst Bank relief from the automatic stay. Id.

Throughout the pendency of this bankruptcy case, the Debtors made various promises to remediate the manure. None of the promises were kept.

For example, at the September 6, 2018 hearing on InFirst Bank's motion for relief from stay, it was represented that the manure would be remediated by December 1, 2018.

Then, on November 8, 2018, the Debtors filed a pre-trial statement advising that "Debtors have the ability to remediate all environmental issues within a five-month period with inspections by the DEP to monitor the clean up process." See Debtors' Amended Pre-Trial Memorandum With Stipulation of Facts , ECF No. 72, at ¶9. Essentially, by this filing the Debtors acknowledged that the December 1, 2018 commitment could not be met and, instead, they represented that the manure could be remediated by April 8, 2019. Almost a week after filing this pre-trial statement, on November 14, 2018, Mr. Jager testified that he actually needed only three months to remediate the manure (i.e, that Mr. Jager would have it remediated by February 14, 2019). These periods, however, passed without remediation by the Debtors.

With no reorganization in prospect, on March 29, 2019 the Court issued an Order Directing Debtors to Show Cause Why This Bankruptcy Case Should Not Be Dismissed and Setting Rule to Show Cause Hearing (the "Rule to Show Cause"). See ECF No. 144. By the Rule to Show Cause, the Court set forth its concerns regarding the lack of feasibility occasioned by the Debtors' financial affairs and their inability to remediate the environmental violations cited by the PA DEP. The Rule to Show Cause required that the Debtors show cause as to why this case should not be dismissed for cause under 11 U.S.C. § 1112.

A hearing on the Rule to Show Cause was ultimately held on June 28, 2019, where it was abundantly clear based on the Debtors' admissions that the Debtors still had not remediated the manure on the Real Property. Given the extensive period of time the Debtors already had to remediate the property, as well as their advanced age (coupled with limited access to equipment, other assistance and economic resources), it appeared unlikely that the Debtors could remediate the manure. These circumstances reflected that any plan the Debtors could propose providing for the retention of the Real Property is patently un-confirmable as being not feasible since the Debtors are unable to solve their environmental problem. Notwithstanding these circumstances, the Debtors still desired an opportunity to go forward with this Chapter 11 case, with the Debtors representing that they could complete their environmental obligations within sixty days.

Sympathetic to the Debtors situation, but recognizing that ample cause existed for the Court to immediately dismiss this bankruptcy case, the Court inquired as to whether the Debtors would agree to dismiss their Chapter 11 case with prejudice if the Debtors failed to remediate the manure within the further sixty day period as suggested by the Debtors. The Debtors agreed, thereby resulting in the Court issuing and entering its Order of July 2, 2019 which stated:

[i]n recognition of their ongoing environmental problems and the barriers they create to plan feasibility, at the June 28^t

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