In re Sammut

486 B.R. 404, 2012 Bankr. LEXIS 4921, 2012 WL 5076285
CourtUnited States Bankruptcy Court, E.D. Michigan
DecidedOctober 18, 2012
DocketNo. 12-41706
StatusPublished
Cited by6 cases

This text of 486 B.R. 404 (In re Sammut) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Sammut, 486 B.R. 404, 2012 Bankr. LEXIS 4921, 2012 WL 5076285 (Mich. 2012).

Opinion

OPINION REGARDING THE DEBTOR’S MOTION TO CONVERT THIS CASE TO CHAPTER 11

THOMAS J. TUCKER, Bankruptcy Judge.

1. Introduction

This case came before the Court for a hearing on October 17, 2012, on the Debt- or’s motion, under 11 U.S.C. § 706(a), to convert this case to Chapter 11 (Docket # 78, the “Motion”). At the conclusion of the hearing, the Court took the Motion under advisement. As discussed in this opinion, the Court will deny the Motion because of the Debtor’s bad faith.

II. Background

Debtor filed his voluntary bankruptcy petition under Chapter 7 on January 26, 2012. More than 7 months later, Debtor filed his motion to convert to Chapter 11, on September 4, 2012. During the 7 months before Debtor filed his motion to convert, there was a good deal of activity in this Chapter 7 case, including much activity by the Chapter 7 Trustee and the United States Trustee (the “UST”), and considerable other litigation activity. As of October 17, 2012, the Chapter 7 Trustee had collected a total of $52,000 in funds that are property of the bankruptcy estate.

In one of several adversary proceedings that were filed, the UST filed a complaint on March 20, 2012, seeking the denial of Debtor’s discharge, based on multiple provisions of 11 U.S.C. § 727(a).1 The Debt- or, who has been represented by counsel at all times, filed an answer to the complaint, and the Court entered a scheduling order on May 21, 2012.2 After the August [406]*4063, 2012 deadline for completion of discovery passed, the UST timely filed two motions for partial summary judgment, one on August 9, 2012 and the other one on August 16, 2012.3 Each motion was supported by a detailed brief and voluminous supporting exhibits.

The Court held a final pretrial conference on August 27, 2012, and entered a final pretrial order the same day.4 During the final pretrial conference, the Court and counsel discussed the UST’s pending summary judgment motions. Confirming action taken during the conference, the Court entered an order on August 27, stating, among other things, that “[t]he deadline for Defendant to file a response to each of the Plaintiff United States Trustee’s motions for partial summary judgment ... is September 4, 2012.”5 The order also adjourned the trial date, from September 11, 2012 to October 3, 2012.

Debtor failed to file any response, by the September 4 deadline, to either of the UST’s summary judgment motions, and the UST filed a certificate of no response with respect to the motions on September 5, 2012. On September 7, 2012, the Court entered an order granting both of the UST’s summary judgment motions, and denying Debtor’s discharge. That order stated, in part, the following:

The Court notes that Defendant did not file a timely response to either of the Motions. Under the Court’s August 27, 2012 Order (Docket #22), Defendant’s response was due to be filed no later than September 4, 2012. Defendant filed a response to the Motions only on September 5, 2012 (and then only after Plaintiff filed a Certificate of No Response with respect to each Motion), and Defendant failed to file a brief with either of his responses, as required by L.B.R. 9014-l(e)(l) (E.D. Mich.). Nor did Defendant timely move for an extension of the September 4, 2012 deadline. And that deadline was set after a specific discussion of it with counsel, during the August 27, 2012 final pretrial conference.
Based on the foregoing, and based on the Court’s review of the Motions,
IT IS ORDERED that Plaintiffs Motions (Docket ## 15 and 17) are granted.
IT IS FURTHER ORDERED that summary judgment is granted in favor of Plaintiff on Counts III and IV of Plaintiffs Complaint (Docket # 1).
IT IS FURTHER ORDERED that the Defendant’s discharge is DENIED under 11 U.S.C. §§ 727(a)(4)(A) and 727(a)(5).
IT IS FURTHER ORDERED that the remaining counts in Plaintiffs Complaint, Counts I and II, are dismissed with prejudice, based on the parties’ stipulation contained in the Final Pretrial Order (Docket # 21 at 1 n.l).
This concludes this adversary proceeding, which will now be closed.6

After Debtor filed his motion to convert this case to Chapter 11, three parties objected: the UST; creditor TCF National Bank; and creditor Carol Savage. The UST and TCF National Bank later withdrew their objections to conversion. Savage did not withdraw her objections, how[407]*407ever, and the Court heard argument at the October 17 hearing.

III. Jurisdiction

This Court has subject matter jurisdiction over this bankruptcy case and this contested matter under 28 U.S.C. §§ 1334(b), 157(a) and 157(b)(1), and Local Rule 83.50(a) (E.D. Mich.). This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (0). This matter also is “core” because it falls within the definition of a proceeding “arising under title 11” and of a proceeding “arising in” a case under title 11, within the meaning of 28 U.S.C. § 1334(b). Matters falling within either of these categories in § 1334(b) are deemed to be core proceedings. See Allard v. Coenen (In re Trans-Industries, Inc.), 419 B.R. 21, 27 (Bankr.E.D.Mich. 2009). This matter is a proceeding “arising under title 11” because it is “created or determined by a statutory provision of title 11,” id., namely, 11 U.S.C. § 706(a). And this matter is a proceeding “arising in” a case under title 11, because it is a proceeding that “by [its] very nature, could arise only in bankruptcy cases.” Id.

IV. Discussion

Savage argues that the Debtor is guilty of bad faith, such that the Court should deny Debtor’s motion to convert based on the United States Supreme Court’s decision in Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365, 127 S.Ct. 1105, 166 L.Ed.2d 956 (2007).

In Marrama, the Supreme Court held that a debtor’s right under 11 U.S.C. § 706(a)7 to convert from Chapter 7 to Chapter 13 is not absolute.

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Cite This Page — Counsel Stack

Bluebook (online)
486 B.R. 404, 2012 Bankr. LEXIS 4921, 2012 WL 5076285, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-sammut-mieb-2012.