MEMORANDUM
Debtor/Appellant Raymond Ross (“Ross”) sought to voluntarily dismiss his Chapter 13 bankruptcy case after Appellee AmeriChoice Federal Credit Union (“Am-eriChoice”) moved to dismiss Ross’ case or convert it to a Chapter 7 bankruptcy. The day after Ross filed his motion, the Bankruptcy Court granted AmeriChoice’s motion, dismissed Ross’ case with prejudice, and enjoined Ross from filing a subsequent bankruptcy petition without the permission of the Bankruptcy Court. The Bankruptcy Court did not issue a written opinion, but specified that its reasons for granting AmeriChoice’s motion were stated in open court. Ross appeals to this Court under 28 U.S.C. § 158(a), which gives district courts jurisdiction to hear appeals of final judgments, orders, and decrees of the bankruptcy courts.
The Court affirms the' Bankruptcy Court’s order. Although the Bankruptcy Court erred in considering and granting AmeriChoice’s motion in the face of Ross’ motion to voluntarily dismiss, that error is harmless. Ross’ remaining arguments are without merit. The Bankruptcy Court was well within its discretion to dismiss Ross’ case with prejudice and enjoin him from future filings. Likewise, the Bankruptcy Court did not err in basing its decision on reasons stated in open court rather than issuing a written opinion. Finally, any error that may have occurred with regard to whether a hearing took place on Ameri-Choice’s motion is harmless.
FACTUAL AND PROCEDURAL BACKGROUND
During the relevant time period, Ross owned and resided at a property located in Maple Glen, Pennsylvania (the “Property”). (See Appellant’s Br. at 7, Doc. No. 4.) AmeriChoice held a mortgage on the Property. (See id. at 9.) On May 23, 2012, AmeriChoice filed a mortgage foreclosure complaint against Ross and his wife Sandra Dixon-Ross in state court.
Ross filed a Chapter 13 bankruptcy petition the day before the scheduled sheriffs sale, thereby delaying that sale under the automatic stay provision of the Bankruptcy Code. (See Appellant’s Br. at 10.) Attorney Anthony Frigo initially represented Ross. (Id.) Several months after the petition was filed, however, Ross replaced Fri-go with attorney James Kutkowski. (Id. at 12.) '"Shortly after Kutkowski entered his appearance, the trustee filed a motion to dismiss the case. (Id. at 13.) The Bankruptcy Court granted the trustee’s motion on April 23, 2014. (Id.) Ross then filed- a pro se motion for relief from the order dismissing the case. (Id.) After the Bankruptcy Court held a hearing on Ross’ motion, Ross agreed to withdraw it based on a payment agreement he had come to with AmeriChoice. (Id.)
Proceedings continued in state court. AmeriChoice eventually rescheduled the sheriffs sale of the Property for August 27, 2014. (Appellee’s Br. at 7.) Ross submitted a number of filings in state court to avoid the sale. These filings were unsuccessful. Ross then filed a second Chapter 13 petition on the day the sale was scheduled, again delaying it under the automatic stay provision. (Chap. 13 Voluntary Pet.,
In the interim, AmeriChoice filed a motion for relief from the automatic stay. (Mot. for Relief from Stay, Bankr.Doc. No. 16.) Ross opposed this motion. (Resp. in Opp’n, Bankr.Doc. No. 23.) The Bankruptcy Court heard oral argument on the motion. (Hr’g on Mot. for Relief from Stay, Bankr.Doc. No. 28.) At the hearing, AmeriChoice argued that Ross had filed his petition in bad faith to frustrate the sheriffs sale. (Hr’g. Tr. 8:21-9:7, Bankr. Doc. No. 31,) After the hearing, the Bankruptcy Court modified the automatic stay so that AmeriChoice could foreclose on its mortgage and proceed with the sheriff s sale. (Order Granting Mot. for Relief from Stay, Bankr.Doc. No. 29.)
One month after the Bankruptcy Court modified the automatic stay, AmeriChoice moved to havei the case'dismissed or converted to a Chapter 7 proceeding pursuant to 11 U.S.C. § 1307(c)
The day before the hearing, Ross filed a motion to voluntarily dismiss the case pursuant to 11 U.S.C. § 1307(b)
Ross raises the following issues on appeal:
1. Whether the Bankruptcy Court erred in ignoring and disregarding Ross’ motion to dismiss the case pursuant to 11 U.S.C. § 1307(b) that Ross filed on December 16, 2014.
2. Whether the Bankruptcy Court erred by continuing proceedings in the case after Ross filed his motion to voluntarily dismiss the case.'
3. Whether the Bankruptcy Court erred in imposing an injunction against Ross having no time limitations or geographic limitations and preventing Ross from filing any future bankruptcy case anywhere without the express prior permission of the Bankruptcy Court.
4. Whether the Bankruptcy Court erred. in dismissing the case with prejudice.
5. Whether the Bankruptcy Court erred in specifying the dismissal was “for the reasons stated in open Court” rather than issuing a written opinion, findings of fact, or conclusions of law.
6. Whether the Bankruptcy Court erred in stating in the order that a hearing was held on December 17, 2014 when the Bankruptcy Court's docket shows that a hearing was not held on that date.
(See Stmt, of Issues on Appeal, Bankr.Doc. No. 59.). The Court analyzes issues 1 and 2 together as an attack on the Bankruptcy Court’s procedures, and analyzes issues 3 and 4 together as an attack on the substance of the order.
STANDARD OF REVIEW
This is an appeal from a final order of a bankruptcy court pursuant to 28 U.S.C. § 158(a). This Court reviews “the bankruptcy court’s legal determinations de novo, its factual findings for clear error and its exercise of discretion for abuse thereof.” In re Trans World Airlines, Inc.,
DISCUSSION
The Bankruptcy Court erred in granting AmeriChoice’s Section 1807(c) motion after Ross filed his Section 1307(b) motion, but that error was harmless.
Ross first contends that the Bankruptcy Court erred in “ignoring and disregarding [Ross’] motion to dismiss the case ... pursuant to 11 U.S.Code § 1307(b) ... and by continuing proceedings in the case” after Ross filed this motion. (Appellant’s Br. at 5.) He argues that his right to dismiss under § 1307(b) is absolute and that by disregarding his motion, the Bankruptcy Court ignored “the voluntary nature of a Chapter 13 proceeding and the statutory intent of [§ 1307(b)].” (Id. at 21-22.) AmeriChoice contends that Ross had no absolute right to dismiss his case under § 1307(b). (Appellee’s Br. at 10.) It argues that the Bankruptcy Court properly disregarded Ross’ motion and instead dismissed the case pursuant to Ameri-Choice’s motion upon a finding of bad faith. (Id.) The Court reviews the Bankruptcy Court’s decision to grant Ameri-Choice’s § 1307(c) motion in the face of Ross’ § 1307(b) motion for abuse of discretion. See In re Myers,
11 U.S.C. § 1307 pertains to conversion or dismissal of Chapter 13 bankruptcy cases. Subsection (b) reads: “On request' of the debtor at any time, if the case has not been converted under section 706, 1112, or 1208 of this title, the court shall dismiss a case under this chapter. Any waiver of the right to dismiss under this subsection is unenforceable.” Subsection (c) reads, in relevant part: “[0]n request of a party in interest or the United States trustee 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 cause.... ” “For cause” under this subsection includes bad faith. Myers,
The issue of whether a debtor’s right under § 1307(b) to voluntarily dismiss a petition is absolute or tempered by a bad faith exception is the subject of much disagreement and debate in the federal courts. Neither the U.S. Supreme.Court nor the Third Circuit Court of Appeals, however, has yet to weigh in on this debate. The Court, therefore, surveys the law in this area to inform its decision. See Phila. World Hockey Club, Inc. v. Phila. Hockey Club, Inc.,
Prior to 2007, the absolute right debate was defined by two decisions from separate Courts of Appeal. On the one hand were courts that found an absolute right to voluntarily dismiss under § 1307(b). The reasoning behind these decisions was espoused by the Second Circuit Court of Appeals in the case In re Barbieri,
Many other courts came to the saíne conclusion regarding a debtor’s right to dismiss under § 1307(b). See, e.g., In re Harper-Elder,
On the other side of the debate were those courts that found a bad faith exception to a debtor’s right to voluntarily dismiss. The Eighth Circuit Court of Appeals’ decision In re Molitor,
Other courts shared these concerns and agreed with the “honest but unfortunate debtor” rationale. See, e.g., In re Gaudet,
The U.S. Supreme Court’s 2007 decision in Marrama v. Citizens Bank of Mass.,
The Supreme Court held that Marrama had forfeited his right to proceed under Chapter 13. Id. at 371. The Court began its analysis by looking at the following two subsections in 11 U.S.C. § 706:
(a) The debtor may convert a case under this chapter to a case under chapter 11, 12, or 13 of this title at any time, if' the case has not been converted under section 1112, 1208, or 1307 of this title. Any waiver of the right to convert a case under this subsection is unenforceable, (d) Notwithstanding any other provision of this section, a case may not be converted to a case under another chapter of this title unless the debtor may be a debtor under such chapter.
The Court then looked to § 1307(c). That section provides that a Chapter 13 proceeding may be dismissed or converted to a Chapter 7 proceeding “for cause.” It also includes a nonexclusive list of acts and omissions that constitute “cause” to justify conversion or dismissal. The Court acknowledged that prepetition bad faith was not on that list, but recognized that “[bjankruptcy courts nevertheless routinely treat dismissal for prepetition bad-faith conduct as implicitly authorized by the words ‘for cause.’ ” Marrama,
Consequently, it concluded, Marrama’s bad faith made -him ineligible for relief under Chapter 13 so that denial of his motion to convert was authorized pursuant to § 706(d). Id. at 374,
Even though Marrama did not involve § 1307(b) in any way, some courts used the decision to read a bad faith exception into that subsection. For example; the Ninth Circuit Court of Appeals in In re Rosson,
Similarly, the Fifth Circuit Court of Appeals cited Marrama to “hold that the right to dismiss under 11 U.S.C. § 1307(b) is subject to a limited exception for bad-faith conduct or abuse of the bankruptcy process .... ” In re Jacobsen,
These two decisions notwithstanding, Marrama certainly did not settle the absolute right debate. It is true that a number of courts have found the Rosson/Jacobsen line of reasoning persuasive. See, e.g., In re Mitrano,
Other courts, however, have determined that Marrama has no effect on the analysis of the statutory language of § 1307(b). See, e.g., In re Procel,
Indeed, courts within this Circuit have different takes on the issue. Compare Taylor v. Winnecour,
The Court agrees with the line of cases recognizing an absolute right to dismiss under § 1307(b), Marrama notwithstanding. As with any exercise in statutory interpretation, the Court begins with the text of the statute. In re Phila. Newspapers, LLC,
The language of § 1307(b) is unambiguous. It grants the debtor an absolute right to dismiss a Chapter 13 case, so long as the case has not been converted under §§ 706, 1112, or 1208 of the Bankruptcy Code. It states that if the debtor requests dismissal, the court “shall dismiss [the] case.” The term “shall” “creates an obligation impervious to judicial discretion.” Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach,
Although it is unnecessary for the Court to look beyond the unambiguous statutory text, the Court notes that recognizing a debtor’s absolute right to dismiss under § 1307(b) is consistent with the purely voluntary nature of Chapter 13 proceedings. 11 U.S.C. § 303(a) specifies that only Chapter 7 liquidation proceedings can be commenced involuntarily against a personal debtor. Additionally, 11 U.S.C. § 1321 puts the debtor in control of any proposed Chapter 13 payment plan. Indeed, Congress and courts have recognized that involuntary Chapter 13 proceedings could compel debtors to work for their creditors in violation of the Thirteenth Amendment’s prohibition on involuntary servitude. See, e.g., In re Paolino, No. 85-00759,
Marrama does not demand a different result. First, the Supreme Court in Mar-rama did not interpret the language of § 1307(b). It interpreted § 706(a), which has more permissive language than does § 1307(b). Compare 11 U.S.C. § 706(a)
Nor will the Court read § 105(a) in a way that would allow bankruptcy courts to disregard clear statutory language. While the equitable powers of bankruptcy courts under § 105(a) maybe broad, they are not unlimited. In re Olson,
AmeriChoice argues that giving a debtor an- absolute right to dismiss would “condone [and] enable further bad faith conduct by a debtor who is faced with a •Motion to Dismiss under 11 U.S.C. § 1307(c).” (Appellee’s Br. at 10.) The courts that have read a bad faith exception into § 1307(b) share this concern. See, e.g., Molitor,
Then, while the bankruptcy court must ultimately grant the debtor’s motion and dismiss the case, it can do so with prejudice, and it can place conditions ^on ■ the dismissal if it finds them appropriate. See, e.g., In re Mangual, No. 10-00124,
[E]ven those courts that hold the right to dismiss to be absolute recognize their authority to attach strings to the dismissal. Section 1307(b) is not self-executing; the debtor must make a formal motion, serve it in accordance with Fed. R. Bankr.P. 1017(d), and the court must enter a dismissal order. The dismissal order may impose sanctions and conditions if the circumstances indicate fraud, bad faith or abusive tactics.
In re Greenberg,
[Sufficient safeguards against abuse are already present without the need to evade the plain language of § 1307(b). Possible remedies include Rule 11 sanctions, allowing parties to pursue state law remedies, filing an involuntary petition under § 303, referring conduct to the United States Attorney’s Office for possible criminal prosecution, and most importantly, conditioning the dismissal pursuant to 11 U.S.C. § 349....
In re Campbell, No. 07-457,
Here, the Bankruptcy . Court erred by dismissing Ross’ Chapter 13 case pursuant to AmeriChoice’s § 1307(c) motion rather than pursuant to Ross’ § 1307(b) motion. As explained above, however, Ross’ § 1307(b) motion was not self-executing. Therefore, the Bankruptcy Court did not err in “continuing proceedings in the case” after Ross filed that motion. Ultimately, the outcome — dismissal pf the case — was the same even had the Bankruptcy Court properly granted Ross’ motion instead of AmeriChoice’s mo-\ tion. Additionally, as explained above, the Bankruptcy Court had the authority to condition the dismissal as it did, no matter
The Bankruptcy Court did not err in dismissing Ross’ case unth prejudice and enjoining Ross from filing another bankruptcy case without permission from the Bankruptcy Court.
Ross next attacks the substance of the Bankruptcy Court order in that it dismissed Ross’ case with prejudice and enjoined Ross from' future bankruptcy filings. As stated above, the Bankruptcy Court had the discretion to place both of these conditions on the dismissal. See, e.g., In re LeGree,
The only ground for dismissal or conversion that AmeriChoice raised in its § 1307(c) motion was Ross’ alleged bad faith. (Mot. to Convert ¶¶ 77-90.) Ross makes no mention of these allegations in his opening brief, even though they form the basis of the Bankruptcy Court’s dismissal. Ross cannot demonstrate that the Bankruptcy Court abused its discretion simply by making a conclusory allegation that it did so. See U.S. v. Voigt,
Bad faith exists “where the purpose of the bankruptcy filing is to defeat state court litigation without a reorganization purpose.” Forever Green Athletic Fields, Inc. v. Dawson,
Here, Ross’ alleged bad faith was central to AmeriChoice’s motion for relief from the automatic stay. The Bankruptcy Court held oral argument on that motion,, a transcript of which Ross designated as part of the record on appeal.
[TJhere’s really no spilt of authority on the question of your obligation to make payments during the pendency of this case. And you haven’t done that, and you filed the case, on both occasions, to frustrate a sheriffs sale on the very eve of the sale. That’s highly indicative of bad faith, and very compelling.
(Hr’g Tr. 14:24-15:9) (interjections omitted)
Mr. Ross, as I’ve pointed out, the specifics of the amount of the debt that — that may be remaining after your payment of $10,000, pursuant to the agreement you made in the last case, would not change the fact that they have a foreclosure judgment. They’ve had it for a long time. That you didn’t make any payments in this case. That you filed both cases to frustrate the sale. And that you’ve taken these exact arguments in front of the Judge who has the case in Montgomery County and have been denied any and all relief. So it’s difficult for me to reach any other conclusion than that this case is — is designed simply to frustrate next week’s sale. And, frankly, with respect, I’m not going to permit that.
(Hr’g Tr. 15:17-16:6) (interjections omitted). These factual findings are not clearly erroneous. Indeed, that are not even in dispute.
As the Bankruptcy Court noted, Ross’ tactics are “textbook examples of bad faith efforts to frustrate State Court litigation.” (Hr’g Tr. 19:4-8); see, e.g. In re Mondelli,
Given Ross’ history of filing for bankruptcy immediately before a scheduled sheriffs sale of the Property and his failure to make payments while the case was pending, the Bankruptcy Court was well within its discretion to dismiss the case with prejudice and enjoin Ross from filing future cases without permission from the Bankruptcy Court.
The Bankruptcy Court did not err in issuing its order without an opinion, findings of fact, or conclusions of law.
Ross next attacks the form of the Bankruptcy Court’s order in thatfit did not include a written opinion, findings of fact, or conclusions of law. Ross does not cite any legal authority to show why these documents were required. He does not even brief the point after listing it in his statement of issues to be- presented on appeal. Nevertheless, to the extent a bankruptcy court is required to issue an opinion, it is generally meant to ensure a meaningful appellate review. See, e.g., In re Kempner,
Any error the Bankruptcy Court made in stating in its order that a hearing was held on December 17, 2011 when the Bankruptcy Court docket shows that a hearing was not held on that date was harmless.
Finally, Ross argues that the Bankruptcy Court erred in stating in its order that a hearing was held on AmeriChoice’s § 1307(c) motion on December 17, 2014 when the case docket states that a hearing was not held on that day. (Appellant’s Br..at 6.) Once again, Ross includes this point in his statement of issues to be presented on appeal and in his summary of the argument, but does not substantively brief the issue.
The Bankruptcy Court had scheduled a hearing on AmeriChoice’s § 1307(c) motion for December 17. (See Bankr. Doc. No. 44.) Ross requested that the hearing be delayed, but the Bankruptcy Court denied the request. (Bankr. Doc. Nos. 46, 50.) There is nothing in the record to show that the hearing was cancelled. It is therefore not entirely clear if or why the scheduled hearing did not go forward. AmeriChoice states that the hearing was held, but that Ross failed to appear. (Appellee’s Br. at 8.) Ross notably does not dispute this statement.
In any event, the Court cannot see how what is likely nothing more than a clerical error could have prejudiced Ross in any way. Both Ross and AmeriChoice submitted briefing on the issue of bad faith in connection with AmeriChoice’s § 1307(c) motion. The Bankruptcy Court heard oral argument on Ross’ alleged bad faith in connection with AmeriChoice’s motion for relief from the automatic stay. The Bank
CONCLUSION
The Court holds that the bankruptcy court abused its discretion by ruling on AmeriChoice’s § 1307(c) motion to convert or dismiss after Ross had filed a motion for voluntary dismissal under § 1307(b). That error, however, was harmless. The Bankruptcy Court did not err in proceeding in the case after Ross had filed his § 1307(b) motion, dismissing the case with prejudice, enjoining Ross from filing another bankruptcy case without permission of the Bankruptcy Court, or issuing its order without a written opinion, findings of fact, or conclusions of law. Finally, any error contained in the order regarding whether a hearing was held on December 17, 2014. is harmless. The Bankruptcy Court’s order is affirmed.
An appropriate order follows.
ORDER
AND NOW, this 7th day of May, 2015, upon consideration of Appellant’s Opening Brief (Doc. No. 4), Appellee’s Brief (Doc. No. 6), and Appellant’s Reply Brief (Doc. No. 8), it is ORDERED that:
1. The Bankruptcy Court’s Decembér 17, 2014 Order (Bankr.No. 14-16866, Bankr.Doc. No. 53) is AFFIRMED;
2. The Clerk of Court shall mark this case CLOSED.
Notes
. There is no dispute that the Bankruptcy Court's order dismissing Ross' Chapter 13 case with prejudice is a final order for purposes of 28 U.S.C. § 158(a). See In re Andersen,
. The relevant state court proceedings span nearly three years, are apparently still ongoing, and include a plethora of filings. The Court highlights only those portions of the state court proceedings that are relevant to this appeal.
. 11 U.S.C. § 1307(c) reads in relevant part, "[0]n request of a party in interest or the United States trustee 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 cause.... ”
. 11 U.S.C. § 1307(b) reads, “On request of the debtor at any time, if the case has not been converted under section 706, 1112, or 1208 of this title, the court shall dismiss a case under this chapter. Any waiver of the right to dismiss under this subsection is unenforceable.”
.Ross’ § 1307(b) motion was not entered on the Bankruptcy Court docket until the day after the Bankruptcy Court granted Ameri-Choice’s motion, and there is no evidence that the Bankruptcy Court was aware of Ross’
. 11 U.S.C. § 105(a) reads, "The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua.sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.”
. This is the only transcript that Ross designated as part of the record on appeal. As discussed below, there is a dispute as to whether the Bankruptcy Court held a hearing on AmeriChoice’s § 1307(c) motion. However, given the Bankruptcy Court's statement that its reasons for granting the order at issue were stated in open court, the Court considers the only hearing transcript designated by Ross to determine whether the Bankruptcy Court abused its discretion in dismissing the case with prejudice and enjoining Ross from future filings.