In re: Marshall Samuel Sanders
CC-15-1284-FKiKu
| 9th Cir. BAP | Jul 15, 2016Background
- Debtor Marshall Sanders (pro se) filed a Chapter 13 petition on June 15, 2015 — his fifth bankruptcy in ~5 years; his wife Lydia Sanders has multiple filings as well.
- Trustee filed a one‑page Notice that he "may make an oral motion to dismiss or convert" at the August 25, 2015 confirmation hearing if the plan was not confirmed.
- Multiple creditors (Wells Fargo, Bank of America) and the U.S. Trustee/IRS objected to plan confirmation, citing negative disposable income, omitted debts (including large student loans), inaccuracies in schedules, and failure to provide for certain claims.
- At the August 25 hearing the Trustee orally requested dismissal; the court gave Sanders extensive opportunity to respond, denied his motion to convert, and dismissed the case with a 180‑day refiling bar.
- Sanders appealed only on due process grounds, arguing inadequate notice and insufficient opportunity to be heard; he did not challenge the substantive bases for dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dismissal violated due process for lack of notice | Sanders: Trustee’s one‑page Notice and creditor filings were insufficient and untimely; he lacked particularized facts and time to prepare | Appellees: Notice + objections and prior court ruling sufficiently informed Sanders of deficiencies; no formal motion required | Court: No due process violation — notice was adequate under all circumstances; Sanders had opportunity to be heard |
| Whether debtor had reasonable opportunity to be heard | Sanders: He was "flat‑footed" and could not fully present arguments | Appellees: Hearing transcript shows the court repeatedly invited and heard Sanders’ responses | Court: Sanders was heard at length and responded to each ground; no deprivation of hearing |
| Whether failure to follow local/formal motion rules alone voids dismissal | Sanders: Rule violations amount to due process breach | Appellees: Rule violations do not automatically equal due process violation; substance matters | Court: Procedural rule noncompliance is not per se a due process violation when notice and hearing are otherwise adequate |
| Whether any procedural defect caused prejudice | Sanders: More notice might have led to different arguments/outcome | Appellees: Sanders raises no substantive argument that would have changed result | Court: No prejudice shown; even if notice deficient, debtor cannot show it would have made a difference |
Key Cases Cited
- Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306 (1950) (due process requires notice reasonably calculated to inform interested parties and opportunity to be heard)
- In re Rosson, 545 F.3d 764 (9th Cir. 2008) (procedural defects require a showing of prejudice to reverse a conversion/dismissal)
- In re Blendheim, 803 F.3d 477 (9th Cir. 2015) (due process notice is flexible; actual notice can satisfy due process)
- United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010) (actual notice of a plan’s contents can satisfy due process)
- In re Tennant, 318 B.R. 860 (9th Cir. BAP 2004) ("after notice and a hearing" is flexible; court may act sua sponte in appropriate circumstances)
- In re Seare, 515 B.R. 599 (9th Cir. BAP 2014) (due process review is de novo for claims of inadequate notice)