McDow v. Dudley
662 F.3d 284
| 4th Cir. | 2011Background
- Dudleys filed a Chapter 13 petition, converted to Chapter 7, at which time the US Trustee moved to dismiss as abusive under §707(b).
- Trustee asserted presumptive abuse via means test under §707(b)(2) and possible abuse under §707(b)(3) based on totality of circumstances.
- Bankruptcy court held §707(b) does not apply to converted Chapter 13 cases and granted summary judgment for Dudleys; US Trustee appealed.
- District court dismissed the appeal as non-final, creating a question whether a §707(b) denial is a final, appealable order.
- During the appeal, the bankruptcy court discharged the Dudleys; the Trustee argued discharge was improper while the appeal proceeded.
- Court ultimately held that a bankruptcy court’s order denying a §707(b) motion to dismiss as abusive is a final order appealable to the district court and vacated the district court’s dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is a §707(b) denial final and appealable? | McDow: denial is final, discrete issue; speedy review necessary. | Dudley: denial is not final; case should complete. | Yes; denial is final and appealable. |
| Does §707(b) denial differ from other dismissals for finality? | Means-test framework creates threshold, time-sensitive review; finality favored. | Denial just allows case to continue; not final. | Finality recognized; threshold abuse issue merits immediate review. |
| Should the district court review be delayed until discharge or resolution of the Chapter 7 case? | Delay would waste resources and impair efficiency; abuse issue should be resolved promptly. | Interlocutory review avoids premature conclusions and preserves orderly proceedings. | Delay avoided; immediate appeal appropriate to resolve abuse issue. |
Key Cases Cited
- In re Computer Learning Ctrs., Inc., 407 F.3d 656 (4th Cir. 2005) (finality in bankruptcy may be pragmatic; may review finalizes discrete issues)
- In re Ross-Tousey, 549 F.3d 1148 (7th Cir. 2008) (denial of §707(b) dismissal final; threshold abuse review)
- In re Rudler, 576 F.3d 37 (1st Cir. 2009) (finality of §707(b) denial; efficiency and policy considerations)
- In re Koch, 109 F.3d 1288 (7th Cir. 1997) (finality of abuse denial supports immediate appeal)
- In re Christian, 804 F.2d 46 (3d Cir. 1986) (early bankruptcy dismissal standards influencing finality)
- In re Cortez, 457 F.3d 448 (5th Cir. 2006) (finality of denial of abuse motions under §707(b))
- In re Donovan, 532 F.3d 1134 (11th Cir. 2008) ( Eleventh Circuit view on §707(b) denial not addressing all contexts)