Bruce A. Ruth & Dawn Conversions, Inc. v. Swigert (In re Swigert)

601 B.R. 913
CourtUnited States Bankruptcy Court, M.D. Pennsylvania
DecidedApril 1, 2019
DocketCase No. 1:18-bk-04351-HWV
StatusPublished
Cited by5 cases

This text of 601 B.R. 913 (Bruce A. Ruth & Dawn Conversions, Inc. v. Swigert (In re Swigert)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bruce A. Ruth & Dawn Conversions, Inc. v. Swigert (In re Swigert), 601 B.R. 913 (Pa. 2019).

Opinion

Henry W. Van Eck, Bankruptcy Judge

This matter comes before the Court on the Motion of Bruce A. Ruth and Dawn Conversions, Inc. to Dismiss Chapter 13 Case for Bad Faith Filing filed on October 31, 2018 (the "Motion to Dismiss"). The debtors, Robert E. Swigert and Mary Ellen Swigert, filed the above-captioned chapter 13 proceeding on October 13, 2018. At the time the current case was filed, Mr. and Mrs. Swigert were already before the Court in another chapter 13 proceeding filed on April 4, 2017 to case number 17-bk-01380-RNO.

I. Jurisdiction

This court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1334(b). This is a core proceeding pursuant to 28 U.S.C. §§ 151, 157(b)(2). Venue is proper pursuant to 28 U.S.C. § 1409(a).

II. Factual Background and Procedural History

The facts of this case are not complicated and come directly from the Movants' Motion to Dismiss and the exhibits thereto unless otherwise noted. On July 20, 2012, Dawn Conversions, Inc. ("DCI") as seller entered an agreement with Baye Auto Sales, LLC ("Baye Auto") as buyer for the sale and purchase of an automobile sales *915and service business (the "Sales Agreement"). Bruce A. Ruth ("Ruth") is a principal owner of DCI. The Debtors collectively own, or Robert E. Swigert individually owns, Baye Auto.1 The obligations of Baye Auto under the Sales Agreement were personally guaranteed by the Debtors and were secured by liens on the Debtors' 1930 Ford Model A 2 Door Sedan, a 1933 Ford 2 Door Sedan, and a 1953 Ford Anglia Coupe2 (collectively, the "Pledged Vehicles"). Over the course of the next four years, Baye Auto failed to timely make all payments due to DCI under the Sales Agreement and arrears accrued in the amount of $40,264.00. To pay these arrears, the Debtors signed a new promissory note in favor of Ruth in the principle amount of $40,264.00 plus interest over a period of 42 months (the "Note"). The Debtors' payment obligations under the Note were secured by the Pledged Vehicles, which served as collateral for same.

On April 4, 2017 the Debtors filed a voluntary chapter 13 bankruptcy petition in the United States Bankruptcy Court for the Middle District of Pennsylvania (the "Bankruptcy Court") with case number 1:17-bk-01380-RNO.3 The Debtors listed two of the Pledged Vehicles (the 1930 Ford Model A 2 Door Sedan and the 1933 Ford 2 Door Sedan, hereinafter collectively referred to as the "Debtors' Pledged Vehicles") on their Official Form 106A/B (Schedule A/B: Property) as jointly owned assets with estimated values of $15,000.00 and $5,000.00, respectively. Schedules and Statements, In re Swigert , 1:17-bk-01380-RNO ECF No. 20. The Debtors' Pledged Vehicles were also listed on their Official Form 106C (Schedule C: The Property You Claim as Exempt) as fully exempt. Id. The Debtors did not list a claim secured by the Debtors' Pledged Vehicles in favor of Ruth, DCI, or any other individual or entity on their Official Form 106D (Schedule D: Creditors Who Have Claims Secured by Property). Id. Nor did they list Ruth or DCI as an unsecured creditor on their Official Form 106E/F (Schedule E/F: Creditors Who Have Unsecured Claims). Id.

On January 12, 2018, DCI and Ruth (collectively, the "Movants") filed a Motion for Relief from Automatic Stay (the "DCI/Ruth Motion for Relief") seeking an order modifying the stay imposed by section 362(a) to permit them "to exercise their rights and remedies in accordance with the terms of the Note and under state law with respect the [Pledged] Vehicles including, specifically, the right to repossess [them], the right to commence or continue with legal proceedings relating to [them], the right to effect the disposition of [them] in a commercially reasonably manner, and the right to apply the proceeds of said disposition of the [Pledged] Vehicles to the Debtors' outstanding indebtedness." Mot. for Relief, In re Swigert , 1:17-bk-01380-RNO ECF No. 83. The Debtors defended the DCI/Ruth Motion for Relief by filing an answer on January 26, 2018 (the "Debtors' Response") wherein they specifically *916denied owing any money to the Movants.

A hearing on the DCI/Ruth Motion for Relief and the Debtors' Response was originally scheduled to occur on February 22, 2018 but was continued three times at the joint request of the parties to engage in discussions, discovery, and preparation for an evidentiary hearing. In re Swigert , 1:17-bk-01380-RNO ECF Nos. 90, 92, 96, 98. An evidentiary hearing on the Ruth/DCI Motion for Relief and the Debtor's Response thereto finally took place on June 21, 2018, during which both parties presented testimony and evidence on the matter. Following that hearing, the Bankruptcy Court made the following findings of fact and conclusions of law: 1) Debtors had not provided adequate protection; 2) there was no equity in the Pledged Vehicles; 3) the Pledged Vehicles were not necessary for an effective reorganization; and 4) Ruth had shown a plausible claim secured by the Pledged Vehicles in the amount of $30,000. Ans. to Mot. to Dismiss ¶ 14. An order granting the DCI/Ruth Motion for Relief was entered the following day on June 22, 2018 (the "Order for Relief").

Following entry of the Order for Relief, Ruth pursued his state court remedies regarding the Pledged Vehicles in the Cumberland County Court of Common Pleas (the "State Court"). As a result of those efforts, the State Court issued a writ of seizure to the Cumberland County Sheriff (the "Sheriff") on October 4, 2018, directing him to seize the Pledged Vehicles. Upon receiving the writ of seizure, the Sheriff contacted the Debtors and directed them to make the Pledged Vehicles available.4 According to Movant, the Debtors refused to cooperate with the Sheriff and kept the Debtors' Pledged Vehicles in locked garages throughout the process.

On October 13, 2018, just 9 days after the State Court issued the writ of seizure, the Debtors filed the instant chapter 13 petition even though their prior case remained pending at that time. Upon filing the current case, the Debtors promptly notified the Sheriff of the new filing and advised him that the Pledged Vehicles were now subject to the protections of a new automatic stay.5 Two days later, on October 15, 2018, the Debtors filed a motion to voluntarily dismiss their prior case.

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Cite This Page — Counsel Stack

Bluebook (online)
601 B.R. 913, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bruce-a-ruth-dawn-conversions-inc-v-swigert-in-re-swigert-pamb-2019.