In Re Stanton

136 B.R. 562, 1992 U.S. Dist. LEXIS 2885, 1992 WL 21816
CourtDistrict Court, D. Kansas
DecidedFebruary 5, 1992
Docket91-4050-S, 91-4074-S, Bankruptcy Nos. 90-41702-7, 90-41865-13
StatusPublished
Cited by3 cases

This text of 136 B.R. 562 (In Re Stanton) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Stanton, 136 B.R. 562, 1992 U.S. Dist. LEXIS 2885, 1992 WL 21816 (D. Kan. 1992).

Opinion

MEMORANDUM AND ORDER

SAFFELS, Senior District Judge.

This matter is before the court on two appeals by debtors, John Curtis Stanton (“Stanton”) and John Christopher (“Christopher”) from orders of dismissal of the bankruptcy court. 1 In the bankruptcy orders below, the court found that the debtors’ petitions were barred under the United States Bankruptcy Code because the only debts listed by petitioners were non-dis-chargeable debts of criminal restitution. In re Stanton, Bankr. Case No. 90-41702-7; In re Christopher, Bankr. Case No. 90-41865-13. The bankruptcy court further found that appellants’ motions to convert their petitions to petitions under Chapter 13 were filed in bad faith. Id. Both debtors appear pro se.

As an initial matter, this court finds that it has jurisdiction over these appeals under 28 U.S.C. § 158. The standards of review which this court is to apply in reviewing decisions of the bankruptcy court are well settled. The district court functions as an appellate court and may affirm, reverse or modify the bankruptcy court’s ruling or remand for further proceedings. Fed.R.Bankr.P. 8013. The district court may examine the bankruptcy court’s conclusions of law de novo. In re Mullet, 817 F.2d 677, 679 (10th Cir.1987). However, the bankruptcy court’s findings of fact must be upheld unless they are clearly erroneous. Id. at 678. The “clearly erroneous” standard contemplates reversal where “although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been committed.” Anderson v. Bessemer City, 470 U.S. 564, 573-74, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (citations omitted). Thus, where there are two permissible views of the evidence, the factfinder’s choice between them cannot be clearly erroneous. Id.

A brief procedural summary of each case below is in order.

I.

In re Christopher

Debtor Christopher filed his voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code on October 3, 1990. The only debt listed was an order of criminal restitution of an amount owed to the Nevada First Bank of Reno, Nevada. On December 17, 1990, debtor Christopher moved to convert his Chapter 7 bankruptcy to a Chapter 13 proceeding pursuant to the Bankruptcy Code. On January 30, 1991, the bankruptcy court entered an order granting the debtor’s motion to convert his petition to a Chapter 13 proceeding. Subsequently, on February 21, 1991, the United States filed a motion to dismiss this action on grounds that Christopher’s motion to convert his petition to a Chapter 13 petition was filed in bad faith. The bank *564 ruptcy court conducted a hearing and on April 2, 1991, granted the government’s motion to dismiss finding that Christopher’s motion to convert his action to one brought under Chapter 13 was filed in bad faith. The bankruptcy court reasoned the motion to convert was filed in bad faith because the only debt listed was one of criminal restitution which was a non-dis-chargeable debt under both the original Chapter 7 petition and the under recent amendments to Chapter 13, namely 11 U.S.C. § 1328(a)(3) (effective Nov. 29, 1990).

In re Stanton

Debtor Stanton’s voluntary petition for relief also was filed under Chapter 7 of the Bankruptcy Code. Like debtor Christopher, Stanton’s only listed debt was that of an order of criminal restitution owed to the First Bank of Hampton/Yosemite of Denver, Colorado. On November 7, 1990, the bankruptcy court issued an order denying Stanton’s request for injunctive relief. The court expressly ruled that criminal restitution was not dischargeable in Chapter 7 proceedings. On November 14, 1990, the government filed a motion to dismiss on the same grounds. On December 3, 1990, Stanton objected and moved to convert his petition to one under Chapter 13. On December 6, 1990, a hearing was held during which the bankruptcy court granted the government’s motion to dismiss. Subsequently, on December 13, 1990, the bankruptcy court issued an order memorializing its ruling, finding that Stanton’s petition for relief was barred as originally filed under Chapter 7 pursuant to Kelly v. Robinson, 479 U.S. 36, 107 S.Ct. 353, 93 L.Ed.2d 216 (1986). Stanton moved for reconsideration. Following a hearing conducted on January 31,1991, the bankruptcy court denied Stanton’s motion. Once again, on February 12, 1991, the bankruptcy court issued a written order memorializing its ruling finding that Stanton’s alternative motion to convert his petition to one under Chapter 13 was filed in bad faith because Stanton’s only listed debt was a non-dischargeable debt under Chapter 7. The court further found that Stanton’s petition under Chapter 13 would be barred at this time, in any event, because petitioner had not moved to convert his petition to one under Chapter 13 until after Congress had amended Chapter 13 to include criminal restitution as a non-dischargeable debt.

II.

The issue presented in these appeals is whether the bankruptcy court erred in dismissing bankruptcy petitions originally filed as Chapter 7 petitions which listed criminal restitution as the only debts, and which were converted or sought to be converted to Chapter 13 petitions after 11 U.S.C. § 1328 was amended to expressly include criminal restitution as an exception to discharge in a Chapter 13 proceeding.

This court holds that the exceptions to dischargeability in effect at the time of a motion to convert control. Accordingly, the bankruptcy court’s orders of dismissal will be affirmed.

At the time debtors filed their original Chapter 7 petitions, criminal restitution was a non-dischargeable debt under Chapter 7. See Kelly, 479 U.S. at 50, 107 S.Ct. at 361. However, at that time, criminal restitution orders were dischargeable in some cases under Chapter 13. See Pennsylvania Dept. of Public Welfare v. Davenport, 495 U.S. 552, 110 S.Ct. 2126, 2134, 109 L.Ed.2d 588 (1990). Following the Supreme Court’s ruling in Davenport, Congress amended 11 U.S.C. § 1328(a) to specifically include criminal restitution as a non-dischargeable debt under Chapter 13. See 11 U.S.C. § 1328(a) (as amended November 15, 1990).

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Bluebook (online)
136 B.R. 562, 1992 U.S. Dist. LEXIS 2885, 1992 WL 21816, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-stanton-ksd-1992.