In Re Adolph
441 B.R. 909
Bankr. N.D. Ill.2011Background
- Happ, creditor, and Adolph were former partners in Eclectic Products & Resources, Inc., with a prior default judgment against Adolph that he obtained an order vacating by paying a sum to Happ's counsel.
- Adolph filed Chapter 7 bankruptcy on September 3, 2009, instead of making the payment.
- Happ moved on October 5, 2010 to dismiss the case under § 707(b) on bad-faith grounds, and later filed a nine-page supplement under § 707(a).
- Happ also commenced an adversary proceeding alleging claims under § 523(a) and § 727(a) related to dischargeability and discharge objections.
- Adolph argued bad faith cannot ground dismissal under § 707(a) and that § 707(b) did not apply, since the case did not involve consumer debts and the motion was untimely.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can bad faith be a ground for dismissal under § 707(a)? | Happ argues bad faith is a dismissal ground under § 707(a). | Adolph contends bad faith is not a § 707(a) ground; remedy lies under § 707(b) or an adversary action. | Bad faith cannot be grounds for § 707(a) dismissal. |
| May bad faith be considered under § 707(b) given post-BAPCPA changes? | Happ relies on § 707(b) to address abuse including bad faith. | Adolph asserts § 707(b) applies only to consumer-debt cases and post-BAPCPA specifics limit its use here. | Even under § 707(b), dismissal is unavailable because the motion is untimely and debts are not primarily consumer debts. |
| Are Adolph's debts primarily consumer debts? | Happ may argue improper classification supports § 707(b) dismissal. | Adolph has no consumer debts; all listed debts are business debts. | Debts are not primarily consumer debts; § 707(b) does not apply. |
Key Cases Cited
- In re Perlin, 497 F.3d 364 (3d Cir. 2007) (discusses bad faith and § 707(a) vs § 707(b) scope)
- In re Tamecki, 229 F.3d 205 (3d Cir. 2000) (early bad-faith dismissal discussion under § 707(a))
- Industrial Ins. Servs., Inc. v. Zick (In re Zick), 931 F.2d 1124 (6th Cir. 1991) (recognizes distinction between procedural § 707(a) grounds and bad faith)
- Padilla, 222 F.3d 1184 (9th Cir. 2000) (discusses § 707(a) and bad faith considerations)
- Huckfeldt, 39 F.3d 829 (8th Cir. 1994) (addressing grounds for dismissal under § 707(a))
- Sherman, 491 F.3d 948 (9th Cir. 2007) (bad faith as a factor in dismissal considerations)
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (U.S. 1992) (statutory interpretation: specific vs general provisions)
- Gulevsky (In re Gulevsky), 362 F.3d 961 (7th Cir. 2004) (specific statute governs over general statute under misconduct context)