In Re Petro
OPINION
This case comes before the Court for a determination of whether the debtors should be held in contempt for their filing of a Chapter 13 petition one (1) year subsequent to their previous Chapter 13 petition having been dismissed with prejudice; and, whethеr the Order to Dismiss with Prejudice should be modified. After a hearing and careful consideration, the Court has determined that the debtors are in contempt of this Court for the filing of their September 18, 1981 Chapter 13 petition (Bankruptcy No. 81-03827K), and the April 15, 1981 Order dismissing the debtors’ April 15, 1980 Chapter 13 petition (Bankruptcy No. 80-00972K) with prejudice will not be modified. 1
The essential facts of this case are as follows: On April 15, 1980, the debtors, Louis J. and Joan C. Petro, filed for relief under Chapter 13 of the Bankruptcy Code. On December 12, 1980, pursuant to a рeti
On January 14, 1981, a meeting of creditors was held, payments were still not being made upon the proposed plan, and the debtors had failed to submit a proper plan. On March 2, 1981, the trustee filed a second motion to dismiss. A hearing was held, after notice tо the debtors, on April 15, 1981. This Court Ordered that the case be dismissed with prejudice. The Court also permitted Erwin Miller, Esquire, counsel to the debtors, to withdraw from the case.
Subsequent to the dismissal with prejudice, Commercial Banking Corporation, a creditor of the debtors, arranged for the scheduling of a Sheriff’s Sale of the debtors’ property. The sale was to occur on September 23, 1981. On September 18, 1981, the debtors filed a Chapter 13 petition. They were represented by H. Lee Weinrebe, Esquire, at that timе. On September 22, 1981, the new Chapter 13 case was transferred from the Honorable Emil F. Goldhaber to the Honorable William A. King, Jr., in accordance with the assignment practices of the Court.
On November 16, 1981, this Court issued an Order to Show Cause Why the Debtors Should not be held in Contempt. On November 30, 1981, Commercial Banking Corporation filed an application to hold debtors in contempt, assess counsel fees and damages, and dismiss or convert the present Chapter 13 case. On December 1, 1981, the debtors filеd an application to modify the April 15,1981 Order of Dismissal with prejudice. Debtors were represented by H. Lee Weinrebe, Esquire, and Edward J. DiDona-to, Esquire, at that time. H. Lee Weinrebe, Esquire, petitioned the Court to allow him to withdraw as counsel. On Decembеr 10, 1981, a hearing was held, H. Lee Weinrebe, Esquire, was permitted to withdraw; the Court held under advisement its own Show Cause Order and the debtors’ petition for modification, Commercial Banking Corporation’s application was held in suspense. Briefs were submitted.
Bеfore a party can be in contempt of Court, there must be a “specific and definite” Order of the Court which the party has violated, and the party must have had actual knowledge of that Order.
Fidelity Mortgage Investors
v.
Camelia Builders, Inc.,
The debtors make two (2) contentions as to why they should not be held in contempt; that the Order dismissing the debtors’ Chapter 13 petition was improperly given and, therefore, a violation of that Order does not constitute contempt; and that the debtors did not know that the dismissal with prejudice precluded a subsеquent Chapter 13 petition.
The first contention of the debtors is clearly without merit. All orders and judgments of courts must be obeyed. “If a person to whom a judge directs an order believes that order is incorrect, the remedy is to appeal, but, absent a stay, he must comply promptly with the order pending appeal.”
Maness v. Meyers,
The debtors’ second assertion is that they did not know that the dismissal with prejudice precluded them from filing a subsequent Chapter 13 petition. This claim goes to whether the Order was sufficient “specific and definite” to support a finding оf contempt. The debtors do not contend that a dismissal with prejudice does not, in fact, preclude their subsequent filing, only that they did not know that it did. Their lack of knowledge is alleged to be based, in part, upon the failure of the debtors’ counsel to advise them correctly. Even if the debtors could show that their conduct was based upon the erroneous advice of counsel, such is not a defense to civil contempt.
Farber v. Rizzo,
The debtors are attempting to persuade this Court to impute a subjective element into the “specific and definite” standard. But civil contempt, as distinguished from criminal contempt, has lоng been viewed as a vehicle to force parties to comply with Court Orders and to compensate others for injuries caused as a result of the disobedience. To require that the disobeying party willfully disobey the Order would effectively sterilize the tool. This is not to suggest that the Court, in exercising its equity jurisdiction, should not take such a factor into consideration. This Court will not, however, go so far as to make willfulness a necessary finding in order to impose the sanction of civil contempt. In this case, it is the opinion of this Court that minimal weight be given to the debtors’ claim that they were unaware of the import of the Court’s April 15, 1981 Order. The debtors were represented by counsel; they were present at the dismissal hearing and at the hearing, they were told by thе Court that the petition was being dismissed with “prejudice”. If they did not understand the effect of such a dismissal, they could and should have spoken up at the hearing. If they were misinformed by counsel, their remedy is to be pursued in a more appropriate mannеr than disobedience. The debtors are hereby found to be in contempt of this Court.
Also, before this Court is the debtors' application for a modification of the April 15, 1981 Order dismissing their April 15, 1980 Chapter 13 petition with prejudice. The debtors set forth two (2) bases upon which they contend this Court should modify its previous Order: the notice of the dismissal hearing was constitutionally deficient, and the “cause” required by § 1307 of the Code for dismissal with prejudice was absent.
The notice provided to the debtors for the dismissal hearing wаs clearly sufficient. The debtors contend that the notice failed to inform them of the possibility that a dismissal could preclude subsequent Chapter 13 findings. Due process requires notice of such a nature that it is “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections”.
Mullane v. Central Hanover Bank & Trust Co.,
The debtors’ final argument is that there was insufficient “cause” to dismiss their case with prejudice as is required by § 1307(c) and § 349(a) of thе Code. Section 1307(c) 3 provides for dismissal of a Chapter 13 case for “cause”. Section 349(a) 4 provides that a dismissal will be without prejudice unless the Court, for “cause”, Orders otherwise, neither § 349(a), nor the legislative history thereof, give the Court any guidаnce as to what would constitute sufficient “cause” for a dismissal with prejudice. It appears, however, and, this Court now holds, that there must exist something greater than that which, alone, would constitute “cause” for a dismissal under § 1307(c). Thus, if a debtor merely failеd to file a plan timely, there would be sufficient “cause” to Order a dismissal under § 1307(c), but, in the absence of other factors, there would be insufficient “cause” for a dismissal with prejudice under § 349(a).
Thus, where there exists a multiplicity of factors which would be sufficient to meet the cause requirement of § 1307, the cumulative effect will be considered in determining whether there exists sufficient cause for a dismissal with prejudice pursuant to § 349(a). Chapter 13 of the Bankruptcy Code provides a very liberal vehicle thrоugh which debtors can alter their contracted mode of paying their debts. The success of a Chapter 13 repayment plan is almost wholly dependent upon the sincerity of the debtors’ desire to pay back their debts. In a case, such as this оne, where the debtors demonstrate an absence of that sincerity, time and again, through reckless disregard for the provisions of the Code and the authority of the Bankruptcy Court, it is clear that their case is ripe for a dismissal with prejudice. In this case, the debtors continually failed to make payments on their proposed plan; the debtors ignored the directive of the Court to make payments; the debtors failed to appear at a meeting of creditors, and they continually failed to file plans which conformed to the requirements of Chapter 13. These factors, considered in the aggregate, constitute “cause” for dismissal with prejudice pursuant to § 349(a) of the Code.
Notes
. This Opinion constitutes the findings of fact and conclusiоns of law required by Rule 752 of the Rules of Bankruptcy Procedure.
. This is not to say that under no circumstances would due process require information concerning substantive rights. In
Memphis Light, Gas & Water Division v. Craft,
. § 1307(c) provides in full that:
(c) Except as provided in subsection (e) of this section, on request of a party in interest and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 7 of this title, or may dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for causе, including—
(1) unreasonable delay by the debtor that is prejudicial to creditors;
(2) nonpayment of any fees and charges required under chapter 123 of title 28;
(3) failure to file a plan timely under section 1321 of this title;
(4) denial of confirmation of a plan undеr section 1325 of this title and denial of additional time for filing another plan or a modification of a plan;
(5) material default by the debtor with respect to a term of a confirmed plan;
(6) revocation of the order of confirmation under sеction 1330 of this title, and denial of confirmation of a modified plan under section 1329 of this title; and
(7) termination of a confirmed plan by reason of the occurrence of a condition specified in the plan.
. § 349(a) provides that:
(a) Unless the court, for cause, orders otherwise, the dismissal of a case under this title does not bar the discharge, in a later case under this title, of debts that were discharge-able in the case dismissed.