In Re Walton
OPINION AND ORDER DISMISSING DEBTOR’S CASE AND PROHIBITING FURTHER PETITIONS FOR A PERIOD OF TWO YEARS
This matter came on to be heard upon The Commercial Savings Bank’s motion to dismiss and for sanctions, American Heart Association and American Cancer Society’s memorandum in support of said motion and Debtor’s objection thereto, at which the following appearances were made: Bruce J. Beck, attorney for the Commercial Savings Bank; Webb I. Yorys, attorney for American Heart Association and American Cancer Society; John J. Hunter, Jr., attorney for Agricultural Credit Corp.; Suzanne C. Mandross, chapter 12 trustee; and William J. Walton, Debtor, рro se. Debtor has also filed, this date, a post-hearing pleading titled “emergency notice and demand claim of ownership.” Upon consideration thereof, the court finds that Debtor’s case should be dismissed and that he should be prohibited from filing any petition for relief under thе Bankruptcy Code for a period of two years.
FACTS
Debtor, on December 11, 1989, filed a voluntary petition under chapter 12 of title 11. On January 9, 1990, Debtor filed his schedules listing four secured creditors having claims totalling $540,402 and four unsecured creditors having claims totalling $1,730,269.31. See Schedules A-2 and A-3. Dеbtor’s schedules further indicate that his estimated currently monthly income is
On December 26, 1989, The Commercial Savings Bank (CSB) filed the instant motion to dismiss and for sanctions, alleging that this court lacks jurisdiction of this matter, “that there is a complete absence of any reasonable likelihood of any rehabilitation of the Debtor and for fraud.” CSB states, аnd the court takes judicial notice, that Debtor previously filed a chapter 12 petition in this court on May 5, 1987. See Case No. 87-00984. That chapter 12 case was converted to a chapter 11 case and dismissed pursuant to court order on December 8, 1987. Subsequently, Debtor filed a chapter 12 petition in the U.S. Bankruptcy Court, Southern District of Ohio, Eastern Division, Case No. 2-88-05131, which petition was dismissed pursuant to court order as a result of Debtor's failure to qualify under chapter 12 and of improper venue.
Counsel for CSB further stated, and Debtor did not refute, that at his § 341 hearing Debtor stated he owns no farm equipment, that he has had no income since 1987 and that he has filed no income tax return since 1985. The chapter 12 trustee stated that it was her understanding, from Debtor’s testimony at that hearing, that by filing the instant petition Debtor seeks to litigate the issue of оwnership of several pieces of property. In fact, Debtor, in his objection, requests “that a hearing be held to settle such ownership issue.”
Debtor’s objection to CSB’s motion states, and Debtor opined at the hearing held on January 31, 1990, that he does not own any propеrty, but that if he does own property previously transferred to the Wheatly Company, which transfer was deemed fraudulent pursuant to a October 19, 1989 Wyandotte County Common Pleas Court Judgment Entry, then he is entitled to protect that property under title 11. See Notice of Filing of Supplemental Exhibits, Exhibit 1-A (January 12, 1990). Debtor insists this court previously determined that said transfer was lawful. These same assertions are repeated in Debtor’s post-hearing pleading. See supra. Further, Debtor requested conversion of his case to a case under chapter 11 if the court finds he is ineligible for relief under chapter 12.
American Heart Association (Heart) and American Cancer Society (Cancer), on January 24, 1990, filed a memorandum in support of CSB’s motion, reiterating that Debt- or is ineligible for relief under chapter 12. Further, Heart and Cancer contend that Debtor should be sаnctioned, prohibiting him from abusing the court system by filing repetitive bankruptcy petitions which result in considerable expenditure of time and expense, both judicial and private. Heart and Cancer have also filed a motion for relief from stay, seeking relief in order to foreclose their mortgage upon real property previously owned by Debtor and in which Debtor may continue to have an interest. Heart and Cancer’s attorney orally requested resolution of that motion at the hearing held on CSB’s motion. Heart and Cancer acknowledgе that although record title is held by the Wheatley Company, said premises were conveyed to the Wheatley Company by Debtor and may have lacked consideration “such that Debtor could be deemed to be the true owner of the mortgaged premises.” Motion for Rеlief from Stay at 3. Heart and Cancer assert that relief should be granted for the reason that “if the conveyance is deemed valid, then Debtor does not have an equity in the mortgaged premises and, as evidenced by the fact that Debtor voluntarily conveyed it, and the mortgаged premises would not be necessary to an effective reorganization. Id. at 4.
DISCUSSION
Res Judicata
Initially, the court will address the land ownership issue. CSB seeks to foreclose upon property previously transferred from Debtor and his wife to the Wheatley Company, which transfer has been voided. See Notice of Filing of Supplemental Exhibits, Exhibit 1-1 at 1 (January 12, 1990).
Contrary to Debtor’s assertion at the hearing, there is no “division between courts” regarding ownership of this property and, unfortunately for Debtor, this court will not create one. The оwnership of the property has been adjudicated by the Wyandotte County Common Pleas Court. See supra Exhibit 1-A. Reexamination of this issue is barred by res judicata. That is
the precise issue in the later proceedings have been raised in the prior proceeding ... the issue was actually litigatеd and ... the determination was necessary to the outcome.
Spilman v. Harley,
Motion to Dismiss
CSB seeks dismissal, in which Heart and Cancer join, of Debtor’s case pursuant to 11 U.S.C. §§ 101, 109 and 1208. Section 109(f) provides that “only a family farmer with a regular annual income may be a debtor under chapter 12 of this title.”
Family farmer with regular annual income means family farmer whose annual income is sufficiently stable and regular to enable such family farmer to make payments under a plan under chapter 12 of this title.
11 U.S.C. § 101(18). Further, family farmer means—
individual ... engаged in a farming operation whose aggregate debts do not exceed $1,500,000 ... and such individual ... receive from such farming operation more than 50 percent of such individual’s ... gross income for the taxable year preceding the taxable year in which the case conсerning such individual ... was filed.
11 U.S.C. § 101(17)(A).
Applying the statutory requirements to Debtor’s case, the court finds that Debtor is ineligible for relief under chapter 12. Upon review of the record, the court finds that Debtor has no annual income and his aggregate debts exceed $1,500,000. On the basis of Debtor’s own pleadings, he fails to qualify for chapter 12 relief.
See also Walton,
Further, Debtor’s chapter 12 petition should be dismissed. As previously stated, and as listed in Debtor’s statement of financial affairs, Debtor’s instant chapter 12 petition represents the third petition • filed in two different courts within the last three years. Dеbtor’s original joint chapter 12 petition, filed May 5, 1987 and later converted to a chapter 11 case, was dismissed on December 8, 1987. That opinion and order of dismissal was affirmed on appeal. Debtor and his wife filed separate chapter 12 cases in the U.S. Bankruptсy Court for the Southern District of Ohio, in 1988; Debtor’s petition was dismissed on January 25, 1989.
See Walton,
The Code has an implied requirement of good faith in filing a bankruptcy petition,
In re Turner,
In
In re Caldwell,
(1) the amount of the proposed payments and the amount of the debtor’s surplus;
(2) the debtor’s employment history, ability to earn and likelihood of future increases in income;
(3) the probable or expected duration of the plan;
(4) the accuracy of the plan’s statements of the debts, expenses and percentage repayment of unsecured debt and whether any inaccuracies are in an attempt to mislead the court;
(5) the extent of preferential treatment between classes of creditors;
(6) the extent to which secured claims are modified;
(7) the type of debt sought to be discharged and whether any such debt is nondischargeable in Chapter 7;
(8) the existence of special circumstances such as inordinate medical expenses;
(9) the frequency with which the debtor has sought relief under the Bankruptcy Reform Act;
(10) the motivation and sincerity of the debtor in seeking Chapter 13 relief; and
(11) the burden which the plan’s administration would place upon the trustee.
s¡< jjc * He
[supplemented with]
(1) whether the debtor is attempting “to abuse the spirit of the Bankruptcy Code,” is a legitimate factor to consider;
(2) “good faith” does not necessarily require substantial repayment of the unsecured claims.
Id.
at 859 (citations omitted). These factors were adopted and applied to determining Debtor’s lack of good faith in filing a chapter 12 petition in
Wickliffe,
This court concurs; chapter 13 good faith factors apply to chapter 12. Utilizing the sixth circuit’s factors, the court finds most relevant Debtor’s employment history, his frequency of seeking relief under the Code, his motivation and sincerity and his attempt to abuse the Code. As stated, Debtor has no income and has been without income since 1987. He has filed three petitions within the last three years. His motivation for seeking title 11 protection appears to be his “desire for delay and increase the already substantial costs incurred by other parties.”
Walton,
Furthermore, a number of courts have held that a Debtor’s successive filings constitute prima facie evidence of bad faith, necessitating Debtor’s affirmative showing of the existence of good faith and a changе in circumstances between the filings.
See Wickliffe,
Upon review of the record, the court finds that Debtor has acted in bad faith and his petition should be dismissed. Further, Debtor should be prohibited from filing аnother petition for relief under the Bankruptcy Code for a period of two years. The court has found cause for dismissal with prejudice and, further, that Debtor’s conduct mandates such prohibition.
See Lerch v. Federal Land Bank of St. Louis,
Relief from Stay
Based upon the foregoing, Heart and Cancer’s motion for relief from stay will not be addressed. However, if circumstances, unforeseen by this court, necessitate a hearing on said motion, a request for an expedited hearing will be granted. It is therefore.
ORDERED that Debtor’s chapter 12 petition be, and it hereby is, dismissed. It is further
ORDERED that Debtor shall not file, and the Clerk of Court shall not accept from the Debtor for filing, another petition for relief under the Bankruptcy Code before February 5, 1992.