In Re Somers
448 B.R. 677
Bankr. S.D.N.Y.2011Background
- Debtors Theresa L. Somers and Rosemary Caggiano are legally married under Vermont law (Oct 2010) and filed a joint Chapter 7 on Oct 29, 2010.
- They own their residence as joint property and hold two cars, two motorcycles, two joint checking accounts, and a joint 401(k).
- They jointly own 200 shares in Termona Pizzeria & Deli, LLC and 200 shares in R & T Woodbourne Realty, LLC, and have personally guaranteed joint business debt totaling $259,292 secured and $248,842 joint.
- Schedule F lists $61,928.54 in joint unsecured debt; debts include credit cards and business debt.
- On Jan–Feb 2011 they co-signed reaffirmation agreements with American Suzuki Financial Services and Wells Fargo Home Mortgage.
- The United States Trustee moved to dismiss under 11 U.S.C. § 707(a) on grounds related to DOMA; the case progressed with a joint petition and ongoing trustee investigation; the court denied dismissal, finding no sufficient cause and noting cooperation with creditors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DOMA creates cause to dismiss a joint petition under §707(a). | Trustee—DOMA invalidates joint filing; petition improper. | Somers & Caggiano—DOMA not a basis to dismiss; seek to preserve joint administration. | No sufficient cause under §707(a) to dismiss. |
| Whether dismissal or severance is appropriate to address DOMA concerns. | Trustee seeks dismissal/severance to resolve DOMA issue. | Debtors urge continued joint administration; no bad faith shown. | Dismissal not warranted; joint administration benefits all parties. |
| Whether dismissal is in the best interests of debtors and creditors. | Dismissal protects creditors; otherwise prejudice may arise. | Maintaining joint case preserves fresh start for debtors and minimizes costs for creditors. | Not in best interests to dismiss or sever; continue joint case. |
| Whether court should reach constitutional questions related to DOMA given current briefing. | N/A | N/A | Court will not conduct constitutional analysis; not required or briefed. |
Key Cases Cited
- In re Dinova, 212 B.R. 437 (2d Cir. BAP 1997) (case-by-case analysis for dismissal under 707(a) when not enumerated causes apply)
- In re Schwartz, 58 B.R. 923 (Bankr.S.D.N.Y. 1986) (considerations for dismissal include best interests of creditors and debtors)
- In re Malone, 50 B.R. 2 (Bankr.E.D. Mich. 1985) (joint petition by non-married couple; law on joint filing under §302)
- In re Favre, 186 B.R. 769 (Bankr.N.D. Ga. 1995) (joint petition eligibility requires legal marriage under §302; pre-DOMA dicta)
- In re Smith, 507 F.3d 64 (2d Cir. 2007) (standard for debtor-initiated dismissal under §707(a))