In Re Bistrian

184 B.R. 678, 1995 U.S. Dist. LEXIS 9979, 1995 WL 422804
CourtDistrict Court, E.D. Pennsylvania
DecidedJuly 18, 1995
DocketCiv. A. No. 95-1843. Bankruptcy No. 94-15355DWS
StatusPublished
Cited by7 cases

This text of 184 B.R. 678 (In Re Bistrian) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Bistrian, 184 B.R. 678, 1995 U.S. Dist. LEXIS 9979, 1995 WL 422804 (E.D. Pa. 1995).

Opinion

MEMORANDUM

DALZELL, District Judge.

I. Introduction

Callye Bistrian appeals a decision of the United States Bankruptcy Court for the Eastern District of Pennsylvania to convert her Chapter 13 petition to a Chapter 7 liquidation. She presents three questions for our review. First, may a debtor orally request a voluntary dismissal of her Chapter 13 petition at a hearing on another party’s motion, or must she instead file a written motion? Second, did the court err when it refused to qualify an expert witness? Third, did the court err in converting Bistrian’s Chapter 13 petition?

*680 We have jurisdiction of this timely appeal pursuant to 28 U.S.C. § 158(a). 1 We affirm.

II. Background Facts

On August 16, 1994, Callye Bistrian filed for bankruptcy again. Her 1994 Chapter 13 petition was at least the second — and probably the third — attempt to stop a sheriffs sale of her house. 2 2/23/95 Hrg.Tr. at 16. Unfortunately, Bistrian’s petition exceeded the $350,000 secured debt limit for a Chapter 13 petition, and she had no regular income with which to make payments (other than a monthly gift of $2,000 from her husband’s parents). Id. at 11-12; see 11 U.S.C. § 109(e) (“Only an individual with regular income ... may be a debtor under Chapter 13.”). Perhaps unsurprisingly, then, Bistrian failed to make scheduled payments. 2/23/95 Hrg.Tr. at 14-15; see 11 U.S.C. § 1326.

On December 5, 1994, the Trustee filed a motion to dismiss Bistrian’s petition because it exceeded the Chapter 13 secured debt limit. R. at doc. 6; see also 11 U.S.C. § 109(e) (1988), as amended by Bankruptcy Reform Act of 1994, Pub.L. No. 103-394, § 108(a)(2), 1994 U.S.S.C.A.N. (108 Stat.) 4106, 4111-12 (effective October 22, 1994) (raising the Chapter 13 secured debt limit from $350,000 to $750,000). 3 Three days later, two of Bistrian’s secured creditors, Richard and Carol Gorlewski, filed a motion to convert the case to Chapter 7 on the grounds that Bistrian had filed her petition in bad faith. Supp.R. at doc. 5; see 11 U.S.C. § 1307(c).

The bankruptcy court held a hearing on the motions on January 12, 1995. At the hearing, Bistrian (through counsel) freely admitted that her petition exceeded the Chapter 13 debt limit. 1/12/95 Hrg.Tr. at 3, 6. Counsel then announced her intention to dismiss the petition voluntarily and file another Chapter 13 petition to take advantage of the higher secured debt limit under the 1994 amendments to the Bankruptcy Code. Id. at 4, 6. The bankruptcy court could not decide the Trustee’s motion or the Gorlewskis’s motion because Bistrian did not attend the hearing. Id. at 7. Judge Sigmund did conclude, however, that Bistrian’s oral motion was not properly before her. Id. at 5 (“([B]oth of these [motions] are before me today and I guess as far as your voluntary dismissal, that isn’t.”). 4

The court held a second hearing on February 23, 1995. At that hearing, the Gorlewsk-is advanced three grounds for conversion. First, they reviewed Bistrian’s Chapter 13 petition with her and showed that the petition — on its face — exceeded the secured debt limit of 11 U.S.C. § 109(e). In a review of *681 her secured creditors, Bistrian recognized that she owed $300,000 to Fleet Finance, $17,500 to the Internal Revenue Service, $70,000 to the Gorlewskis, $18,000 to Thomas Deaver, and $7,276 to Wilmington Trust. 2/23/95 Hrg.Tr. at 8-10, 35-36. All told, Bistrian owed secured creditors $411,876, a figure to which her counsel later stipulated. Id. at 36. 5

Second, the Gorlewskis showed that Bistri-an had no steady income from which to make payments on her debt. When she filed the petition, she had no job and no job prospects. Id. at 11. She only received a $2,000 gift each month for living expenses from her husband’s parents. Id. at 11-14.

Finally, as we have noted, Bistrian freely admitted that she filed successive bankruptcy petitions to prevent sheriffs sales of her house. Id. at 16-17.

Bistrian responded to the Gorlewskis’s motion with two arguments. First, she focused on the practical advantages of dismissal and refiling. Congress had raised the Chapter 13 debt limits, and a new petition would fall within those limits. Moreover, Bistrian’s husband had just been released from prison, and the two could now file a joint petition. Id. at 21.

Second, Bistrian tried to show that a conversion of her petition to Chapter 7 would not lead to the sale of her house and therefore would be futile. Bistrian called Arthur Liebersohn, who apparently has significant experience with Chapter 7 liquidations, and posed several hypothetical questions that mirrored Bistrian’s financial position. If the house was worth $400,000 and Bistrian’s debts totalled $411,876, Liebersohn testified, then the administrative costs of conversion would preclude the sale of the house. Id. at 33-38.

At the conclusion of the hearing, the bankruptcy court granted the Gorlewskis’s motion to convert the action to Chapter 7. R. at doc. 2; see 11 U.S.C. § 1307(c) (giving bank-ruptey courts the power to convert or dismiss a Chapter 13 petition “for cause” 6 ). It concluded that Bistrian had filed her Chapter 13 petition in bad faith, for four reasons. 2/23/95 Hrg.Tr. at 52 (“[T]he standard that I would probably use for deciding this motion is really one of bad faith.... ”). First, Bist-rian filed a petition well over the Chapter 13 debt limit on its face. Id. at 50-51. Second, she had no prospect of regular income when she filed the petition. Id. at 52. Third, she allowed her action to proceed for three months before recognizing that Chapter 13 was not an option for her. Id. Finally, the court credited the long history of Bistrian’s prior bankruptcy filings as evidence of her illegitimate attempts to evade creditors. Id. at 53-54. Bistrian has not asked us to review this ruling.

III. Legal Analysis

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Cite This Page — Counsel Stack

Bluebook (online)
184 B.R. 678, 1995 U.S. Dist. LEXIS 9979, 1995 WL 422804, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-bistrian-paed-1995.