MEMORANDUM & OPINION
Appellant and Petitioning Creditor Wilk Auslander LLP
This case relates back to a 2006 dispute between Murray and his former employer, Rodman & Renshaw. While employed by Rodman & Renshaw, Murray made certain disclosures about what he believed to be improper business practices within the company to the United States Senate Finance Committee. (Fed.Appx. 45-47.)
After the Judgment was entered against Murray, the Law Firm, still representing Rodman & Renshaw, engaged in post-judgment discovery of Murray’s assets and liabilities. (Id. at 49.) Murray and his wife each served responses, which demonstrated that Murray is unemployed and his only material asset is an interest in a tenancy by the entirety that he shares with his wife in a cooperative apartment they live in with their two daughters. (Id. at 49, 51.) The shares that represent the interest in the apartment are encumbered by a mortgage held by Bank or America, N.A. in the approximate amount of $590,000. (Id. at 51, 11.5) The apartment was appraised at approximately $2.98 million as of January 2013. (Id. at 51.) In February 2014, Appellant had it appraised at approximately $4.6 million. (Id. at 11.6.)
On January 11, 2013, Rodman & Ren-shaw filed for voluntary Chapter 7 bankruptcy. (Id. at 422 (citing In re Rodman & Renshaw LLC, No. 13-10087 (REG) (Bankr. S.D.N.Y.).) Pursuant to an agreement settling outstanding legal fees, the Rodman & Renshaw bankruptcy trustee assigned the Judgment to the Law Firm, provided that Rodman & Renshaw would share in any recovery on it. (Id. at 335-40.) After the assignment, the Law Firm caused the New York County Sheriffs Office to levy on Murray’s shares in the cooperative apartment, thereby securing a lien on them effective February 26, 2013. (Id. at 249-51.)
II. Procedural History
The Law Firm commenced this action by filing an Involuntary Petition on February 6, 2014, which it amended the next day. (Id. at 9-11.) As explained by Judge Gerber, and admitted by Appellant, the Law Firm — despite already having secured a lien — sought to pursue bankruptcy remedies, rather than rely on state law judgment enforcement mechanisms, so that it could force the sale of the apartment:
As a judgment creditor, the Law Firm has the ability, under non-bankruptcy law (here, New York law), to execute on Mr. Murray’s interest in the Apartment and to cause it to be sold in a judgmentexecution sale. But the judgment the Law Firm acquired was solely against Mr. Murray — and not against his wife. And the sale of Mr. Murray’s interest alone would fetch less in a sale than it would if he were the sole owner, because New York state law respects the rights of a tenant by the entirety. New York law would permit the Law Firm to execute on Mr. Murray’s interest in the Apartment, but not the entire interest held by both Mr. Murray and his wife.
By contrast, the Bankruptcy Code includes provisions with the potential to increase the amount that can be realized when jointly held property is sold. Section 363 of the Code provides in substance that when the requirements of section 363(h) ,.. and its companion provisions are satisfied, a bankruptcy trustee can sell the jointly held property free and clear of both owners’ interests, without the co-owners[’] consent, leaving the nondebtor only with a right of first refusal to match the sale offer (and thus to stay in residence), and with her share of the proceeds of the forced sale.
(Id. at 422-24 (citations omitted).)
On March 18, 2015, Murray filed a motion to dismiss the Involuntary Petition under 11 U.S.C. §§ 308(0 and 305(a), 28 U.S.C. § 1334(c), and Federal Rule of Bankruptcy Procedure 1003(a), and for an award of attorneys’ fees and damages. (Fed,Appx. 45.) On June 30, 2014, Judge Gerber held a hearing on the motion to dismiss. Although Murray had not raised the possibility of a § 707(a) dismissal in his moving papers, Judge Gerber raised it during the hearing. (Id. at 403-06.)
On January 4, 2016, the Bankruptcy Court issued its Decision and Order dismissing the case for cause under section 707(a). (Id. at 418-37.) Specifically, the Bankruptcy Court found that the Law Firm was attempting to use the bankruptcy court as a judgment-enforcement mechanism in a two-party dispute, that the involuntary petition was filed solely to achieve a result not available outside of bankruptcy (i.e., the sale of the jointly held property), no other creditors existed, and there was no legitimate bankruptcy purpose for the case. It held that the involuntary petition was “an inappropriate invocation — and exploitation — of the bankruptcy system,” and dismissed the case for cause. (Id. at 420.)
III. Standard of Review
This court has jurisdiction pursuant to 28 U.S.C. § 158(a)(1) to hear appeals from final judgments, orders, and decrees of a bankruptcy court. On such an appeal, a district court reviews the bankruptcy court’s findings of fact for clear error, and any conclusions of law de novo. In re Momentum Mfg. Corp.,
IV. Discussion
Appellant makes three arguments seeking reversal: (1) the Bankruptcy Court
A. Dismissal Under § 707(a) Was Not Premature
Appellant argues that the Bankruptcy Court’s decision was procedurally improper in that it “bypassed” dismissal under § 303, which governs the filing of involuntary petitions.
First, the Bankruptcy Court in no way “bypassed” Section 303; it explicitly accepted the concession that the § 303 requirements had been met, which would result in the case moving forward as a chapter 7 case:
Mr. Murray does not dispute that the Law Firm’s petition complies with section 303 of the Code, which authorizes the filing of involuntary petitions, in certain instances, by only a single creditor. An involuntary petition (filed under section 303 of the Code), like the much more common voluntary petition (filed under section 301 of the Code), can result in an ‘order for relief which would cause a case under the Code (as applicable here, under chapter 7) then to be pending.
Accordingly, the Court assumes, for the purposes. of this analysis, that if there were not cause for dismissal, the involuntary case commenced by the Law Firm[ ] could continue.
(Fed.Appx. 424.) There is no support for the argument that the Bankruptcy Court was required to formally enter an order of relief, or appoint an interim trustee (which only occurs after an order for relief is entered), before dismissing the case under § 707. Having assumed that all the requirements under § 303 had been met and the chapter 7 case would proceed, the Bankruptcy Court was within its discretion to dismiss the case under § 707(a). See 11 U.S.C. § 707(a) (“The court may dismiss a case under this chapter ... for cause ....”). Indeed, it was Appellant that brought the case pursuant to chapter 7 in the first instance. It is not unprecedented for a bankruptcy court to simultaneously dismiss a case under § 303 and § 707(a), without first entering an order for relief. See, e.g., In re VII Holdings Co.,
Second, contrary to Appellant’s argument, § 707 can be used to dismiss cases brought by involuntary petitions. See In re Dinova,
Appellant attempts to distinguish eases where courts have granted § 707(a) dismissals of involuntary petitions as involving petitions by non-petitioning creditors, as opposed to debtors. Again, § 707(a) is not so limited and there is no reason to prevent debtors facing involuntary chapter 7 petitions filed by abusive creditors from seeking relief under § 707(a). See In re Dickinson,
B. Appellant Did Not Raise The Issue of Additional Creditors Below
Next, Appellant argues that the Bankruptcy Court’s finding that it was the sole creditor was both clearly erroneous and an insufficient basis upon which to dismiss the case under § 707(a). Appellant contends that Murray’s wife is also a creditor, as is Bank of America, the mortgage holder on the apartment.
In reciting the undisputed facts, the Bankruptcy Court characterized the Law Firm as the “only creditor” in this case. (Fed.Appx. 420-21.) This characterization did not occur in a vacuum. Rather, the Appellant not only conceded this fact, but affirmatively argued for it below. In a declaration submitted to the Bankruptcy Court in support of its Involuntary Petition, Appellant stated that “Petitioner is the only creditor of Alleged Debtor.” (Id. at 11.2 ¶ 5.) In its sur-reply below, Appellant pointed out that “[Murray] admits that Petitioning Creditor is his sole creditor.” (Id. at 445.) At no point did Appellant ai-gue that there were other creditors. Therefore, the argument is waived for failure to raise it before the Bankruptcy Court first. See In re GE-Ray Fabrics, Inc., No. 06 Civ. 13744(DC),
C. The Bankruptcy Court Did Not Abuse Its Discretion in Dismissing For Cause
Section 707(a) of the Bankruptcy Code authorizes a court to dismiss a Chapter 7 case for “cause,” and provides the three examples of “cause”: (1) unreasonable and prejudicial delay by the debtor; (2)nonpayment of fees, and (3) failure to comply with the duties imposed by the debtor in § 521.
Judge Gerber’s decision listed the following factors as bearing on his decision:
[1] This Court is the most recent battlefield in a long-standing two party dispute.
[2] This case has been brought solely as a judgment enforcement mechanism.
[3] There are no creditors competing with each other to be first in line to collect on claims. There are no other creditors to help. Ip fact, there are no other creditors.
[4] There being no other creditors, there is no need for pari passu distribution.
[5] Assuming, arguendo, that there were any fraudulent transfers that could be avoided and then recovered, the Law Firm could do so on its own, without resort to the bankruptcy court.
[6] The Law Firm has adequate remedies under nonbankruptcy law.
[7] The Law Firm is seeking bankruptcy solely to secure a benefit that it does not have under nonbankruptcy law, without a creditor community to protect whose needs might justify the invocation of bankruptcy law.
[8] No assets would be lost of dissipated in the event that the bankruptcy case did not continue. The Law Firm’s interest in the Judgment, and its ability to enforce the Judgment against the Apart: ment, will each remain.
[9] The debtor does not need, or want, a discharge.
(Fed.Appx. 429-30.) Appellant argues that sole-creditor actions are contemplated by § 303(b), and the Bankruptcy Court erred in concluding that inability to get relief elsewhere is not a legitimate bankruptcy objective. However, the fact that there was only one creditor and one debtor was merely one factor the bankruptcy court considered in evaluating whether dismissal was warranted. (See id. at 430 (“[T]he existence of a two-party dispute does not, by itself, warrant dismissal of a case where there are other legitimate bankruptcy objectives to achieve .... ”).)
It was also not an abuse of discretion for the Bankruptcy Court to consider the fact that state law remedies for enforcing the Judgment are available to Appellant outside of bankruptcy. See Dinova,
Y. Conclusion
For the foregoing reasons, and the reasons stated in the Bankruptcy Court’s thorough and well-reasoned decision, the decision is AFFIRMED and the case is DISMISSED. The Clerk of Court is respectfully directed to close the case.
SO ORDERED.
Notes
. Wilk Auslander LLP is acting as both Appellant and its own counsel.
. The Bankruptcy Court relied on the undisputed facts described herein, as do I. (Fed. Appx. 420 n.3.) Except for the sole creditor issue, described more fully below, Appellant does not contest the Bankruptcy Court’s recitation of undisputed facts.
. "Fed.Appx.” refers to Appellant’s Appendix. (Doc. 11.)
. Section 707(a) states:
(a) The court may dismiss a case under this chapter only after notice and a hearing and only for cause, including—
(1) unreasonable delay by the debtor that is prejudicial to creditors;
(2) nonpayment of any fees or charges required under chapter 123 of title 28; and
(3)failure of the debtor in a voluntary case to file, within fifteen days or such additional time as the court may allow after the filing of the petition commencing such case, the information required by paragraph (1) of section 521(a), but only on a motion by the United States trustee.
11 U.S.C. § 707(a). Section 521 lists the debt- or's duties after commencing bankruptcy.