601 B.R. 913
Bankr. M.D. Penn.2019Background
- Debtors (Robert and Mary Ellen Swigert) owned Baye Auto and personally guaranteed a sale agreement secured by three vintage cars (the "Pledged Vehicles").
- Debtors filed Chapter 13 on April 4, 2017; they listed two pledged vehicles as exempt and did not schedule a secured claim for Ruth/Dawn Conversions, who later sought relief from the automatic stay to repossess the vehicles.
- After an evidentiary hearing, the court granted relief from stay on June 22, 2018, finding no equity and that the vehicles were not necessary to reorganization.
- A state-court writ of seizure issued October 4, 2018; Debtors filed a second Chapter 13 petition on October 13, 2018 while the first case remained pending and before voluntarily dismissing the prior case.
- Movants (Ruth/DCI) moved to dismiss the second case as a bad-faith filing; the bankruptcy court found Debtors timed the refiling to evade 11 U.S.C. § 109(g)(2) and to re-impose an automatic stay to prevent repossession.
Issues
| Issue | Ruth/DCI (Movants) Argument | Swigert (Debtors) Argument | Held |
|---|---|---|---|
| Whether concurrent Chapter 13 filings are per se prohibited | Concurrent filings abused process and should be barred | No per se bar exists; concurrent petitions can be permissible | No per se prohibition; court analyzes good faith instead |
| Whether §109(g)(2) barred the refiling | Debtors timed refiling to avoid §109(g)(2) and thus abused the statute | Debtors filed before dismissing prior case so §109(g)(2) not triggered | §109(g)(2) did not strictly apply because petition preceded dismissal, but timing showed intent to circumvent it |
| Whether the second petition was filed in bad faith under Myers and §1307(c) | Filing was timed and motivated to thwart repossession and prior order; constitutes bad faith | Filing was to protect property and was procedurally permissible | Petition lacked good faith (timing, motive, prejudice to Movants); dismissal for cause under §1307(c) warranted |
| Appropriate remedy (including refiling bar) | Dismissal with prejudice and 180-day refiling bar to restore parties to pre-filing position | Opposed severe sanction | Court granted dismissal with prejudice and 180-day bar to refiling |
Key Cases Cited
- Freshman v. Atkins, 269 U.S. 121 (1925) (concurrent bankruptcy petitions may be examined for abuse; courts should prevent attempts to circumvent prior proceedings)
- In re Myers, 491 F.3d 120 (3d Cir. 2007) (bad-faith dismissal under §1307(c) requires assessing debtor's purpose and totality of circumstances)
- In re Sidebottom, 430 F.3d 893 (7th Cir. 2005) (court took a contrary view that concurrent filings may be per se prohibited)
- In re Blendheim, 803 F.3d 477 (9th Cir. 2015) (concurrent filings permissible in some circumstances; courts examine conditions and good faith)
- In re Tamecki, 229 F.3d 205 (3d Cir. 2000) (debtor's purpose and bad-faith analysis inform dismissal decisions)