642 B.R. 8
Bankr. D. Idaho2022Background
- Debtor Marilynn Thomason filed a Chapter 13 petition on July 16, 2021, listing substantial assets but only minimal liabilities and proposing a $4.81/month plan for 36 months that would pay a single creditor (Fall River Electric).
- Trustee repeatedly objected to confirmation: plan not feasible, not filed in good faith, and fails to provide the minimum trustee compensation required by 11 U.S.C. § 330(c) (at least $5/month).
- WaFd Bank filed a proof of claim; the bankruptcy court allowed WaFd’s secured claim at $139,565.81 after Debtor’s objection, and Debtor appealed that ruling (and separately appealed an order granting stay relief to a separate creditor, Trust).
- Debtor filed multiple amended plans; none provided for WaFd’s allowed secured claim or for the minimum trustee compensation, and Debtor did not obtain a stay pending appeal.
- Trustee moved to dismiss under 11 U.S.C. § 1307(c); the court considered whether it retained jurisdiction despite Debtor’s pending appeals, concluded it did, and evaluated the dismissal grounds.
- The court dismissed the Chapter 13 case under § 1307(c)(5), concluded the plan failed §§ 1325(a)(1),(3),(5),(7) and § 330(c), denied further leave to amend, and declined conversion to Chapter 7.
Issues
| Issue | Debtor's Argument | Trustee/WaFd's Argument | Held |
|---|---|---|---|
| Jurisdiction to dismiss during pending appeals | Pending appeals divest the court of jurisdiction to dismiss the case | Court retains jurisdiction over matters not resolved by the appealed orders; may act absent a stay | Court retained jurisdiction; appeals were not "so closely related" to the dismissal motion to bar action |
| Minimum trustee compensation under § 330(c) | Proposed $4.81/month plan was offered (no stay sought) | Plan fails to provide the statutory floor ($5/month) and thus is unconfirmable | Plan fails § 330(c); does not meet § 1325(a)(1); confirmation denied |
| Treatment of WaFd’s allowed secured claim (§ 1325(a)(5)) | Debtor: claim is "under appeal" and not provided for in plan | WaFd & Trustee: absent a stay, Debtor must provide for the allowed secured claim in the plan | Debtor must provide for WaFd’s allowed claim; plan omits treatment and fails § 1325(a)(5) |
| Dismissal vs. conversion and leave to amend | Debtor sought to continue the case and to amend plan further | Trustee sought dismissal; conversion not requested | Dismissal under § 1307(c)(5) is warranted; no further leave to amend; conversion to Chapter 7 denied |
Key Cases Cited
- Sherman v. SEC (In re Sherman), 491 F.3d 948 (9th Cir. 2007) (lower court retains jurisdiction to implement or enforce orders on appeal but may not alter them)
- Neary v. Padilla (In re Padilla), 222 F.3d 1184 (9th Cir. 2000) (appeal does not deprive court of jurisdiction over matters unrelated to the appeal)
- In re Rudnick, 62 F.3d 1425 (9th Cir. 1995) (appeal from an order does not deprive jurisdiction over matters not resolved by that order)
- In re Hagel, 184 B.R. 793 (9th Cir. BAP 1995) (court may dismiss Chapter 13 after denial of confirmation even when a related order is on appeal)
- Barnes v. Barnes (In re Barnes), 32 F.3d 405 (9th Cir. 1994) (debtor bears burden to prove each element of § 1325 for confirmation)
- Chinichian v. Campolongo, 784 F.2d 1440 (9th Cir. 1986) (all requirements of § 1325 must be satisfied for plan confirmation)
- Nelson v. Meyer (In re Nelson), 343 B.R. 671 (9th Cir. BAP 2006) (court ordinarily should give debtor an opportunity to propose a modified plan after denial, but not unlimited amendments)
- Welsh v. United States (In re Welsh), 711 F.3d 1120 (9th Cir. 2013) (good-faith inquiry for Chapter 13 plans considers whether debtor acted equitably)