Opinion
6:22-bk-508-TPG
10-13-2022
In re Garry Thomas Coleman, Debtor.
Chapter 13
ORDER DENYING MOTION TO EXTEND THE AUTOMATIC STAY AND DISMISSING CASE WITH TWO-YEAR PROHIBITION AGAINST REFILING
Tiffany P. Geyer United States Bankruptcy Judge
This case came on for hearing on September 20, 2022, at 10:00 a.m. (Doc. No. 77) upon (1) the Debtor's Motion to Extend the Automatic Stay Pursuant to 11 U.S.C. § 362(c)(3) (Doc. No. 14); (2) S.C.O. Condominium Association, Inc.'s Motion for Prospective Relief (Doc. No. 62); (3) the Debtor's Objection to Claim No. 1 of Cavalry SPV I, LLC as Assignee of Citibank, N.A. (the "Objection") (Doc. No. 23); and (4) the Trustee's Motion to Dismiss for Failure to Maintain Timely Plan Payments (Doc. No. 72). The hearing was attended by Erik J. Washington as counsel for the Debtor; Ana De Villiers as counsel for the Chapter 13 Trustee; Marc G. Granger as counsel for Wells Fargo Bank, National Association, as Trustee for Structured Asset Mortgage Investments II Inc., GreenPoint Mortgage Funding Trust 2006-AR3, Mortgage Pass-Through Certificates, Series 2006-AR3; Jennifer Laufgas as counsel for PNC Bank, N.A.; and William C. Matthews as counsel for S.C.O. Condominium Association, Inc. (the "Association"). (Doc. No. 77.) Upon consideration of the arguments of counsel, the law, the case docket, and taking judicial notice of the record in this case and the Debtor's previous bankruptcy filings in this Court, and being otherwise fully advised in the premises, the Court denies the Debtor's motion to extend the automatic stay, dismisses the case, and imposes a two-year prohibition on the Debtor refiling any bankruptcy case. The Debtor has not come to this Court with an honest intention to reorganize and has instead sought only to delay his creditors.
A court may take judicial notice of its own records. ITT Rayonier Inc. v. United States, 651 F.2d 343, 345 n.2 (5th Cir. Unit B July 20, 1981). The decisions of the United States Court of Appeals for the Fifth Circuit issued on or before September 30, 1981, are binding precedent in the Eleventh Circuit. Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th Cir. 1981).
THIS IS THE DEBTOR'S THIRD CHAPTER 13 CASE IN UNDER THREE YEARS
The Debtor has filed three Chapter 13 bankruptcy cases. He filed his first Chapter 13 case on September 11, 2019, but the case was dismissed on October 16, 2019, because the Debtor failed to file numerous required documents, including a Chapter 13 plan and the required schedules and statement of financial affairs (the "2019 Case"). (Case No. 6:19-bk-5940-KSJ, Doc. No. 10.) The impetus for the Debtor's 2019 Case stemmed from a default being entered against him in a lawsuit filed by the Association in the Ninth Judicial Circuit Court for Orange County, Florida (the "State Court") based upon his continuing failure to pay homeowner's association assessments on his condominium in the Sanctuary Downtown (the "Condo") since January 2019. (Doc. No. 62 at 2, 4.) The State Court entered a final judgment against the Debtor on October 11, 2021, which the Association attached to its proof of claim in the amount of $42,889.40. (Claim 7-2 Part 2 at 5.) The final judgment set a November 18, 2021 sale date for the Condo (id.), but the sale did not occur. The sale was rescheduled for December 16, 2021. (Doc. No. 62 at 2.)
The Condo's address is 100 South Eola Dr., Unit # 1108, Orlando, Florida 32801.
To thwart the rescheduled sale, the Debtor filed a second Chapter 13 case on November 12, 2021 (the "2021 Case") (6:21-bk-05163-GER). On December 8, 2021, the Court entered an order dismissing the 2021 Case (6:21-bk-05163-GER, Doc. No. 10) based upon the Debtor's failure (for the second time now) to file multiple required documents and informing the Debtor he had fourteen days to request reconsideration of the dismissal. He did not, so the Court dismissed the 2021 Case for the same reasons the 2019 Case was dismissed. (Id.) Notably, notwithstanding the December 8 dismissal order, on December 15, 2021, the Debtor noticed the State Court of his 2021 Case, asserting the protection of the automatic stay, which resulted in the cancellation of the December 16 foreclosure sale. (Doc. No. 62 at 3.)
With the Debtor's 2021 case dismissed, the Association rescheduled the foreclosure sale for February 14, 2022. (Id.) In response, two days before the sale (id.), the Debtor filed the third, instant Chapter 13 case on February 12, 2022 (Doc. No. 1), again noticing the State Court, which again cancelled the foreclosure sale due to the automatic stay. (Doc. No. 62 at 3.)
THE DEBTOR OMITTED REAL PROPERTY FROM HIS SCHEDULES
The only property the Debtor included on his initial Schedule A/B was the Condo. (Doc. No. 1 at 10.) At the 341 meeting conducted on March 10, 2022, the Debtor and his counsel were made aware that Schedule A/B would need to be amended based upon the Debtor's ownership of another real property located at 740 Wessex Place, Orlando, Florida 32803 ("Wessex Place"), which the Debtor omitted from his initial Schedule A/B. (Doc. No. 61 at ¶¶ 4, 5.) By June 2, 2022, the Debtor had still not cured this omission, nor was the Debtor timely making payments to the Chapter 13 Trustee. (Id. at ¶¶ 3, 5.) It took the Debtor five months to finally disclose Wessex Place (Doc. No. 66-1 at 4). Due to the Debtor's serial filings and his failure to disclose a substantial asset, the Chapter 13 Trustee questioned the Debtor's good faith. (Doc. No. 61 at ¶ 6.)
THE DEBTOR REQUESTED AN EXTENSION OF THE AUTOMATIC STAY
When an individual debtor files a Chapter 13 case after having another case dismissed in the preceding year, the protection of the automatic stay expires on the thirtieth day after the new case is filed. 11 U.S.C. § 362(c)(3)(A). To prevent this from happening, on March 9, 2022, Debtor's counsel filed a motion to extend the automatic stay pursuant to 11 U.S.C. § 362(c)(3)(B) (the "Motion"). (Doc. No. 14.) Bankruptcy courts can extend the stay if a debtor demonstrates that the new case is filed in good faith as to the creditors to be stayed. 11 U.S.C. § 362(c)(3)(B). A case is presumed to be filed in bad faith if the prior case was dismissed "after the debtor failed to file or amend the petition or other documents as required by this title or the court without substantial excuse . . . ." 11 U.S.C. § 362(c)(3)(C)(i)(II)(aa). Because the Debtor's 2021 Case was dismissed due to his failure to file documents Title 11 requires (e.g., 11 U.S.C. § 521(a)), the instant case is presumed to have been filed in bad faith, but the Debtor could overcome the bad faith presumption with clear and convincing evidence that the new case was filed in good faith. 11 U.S.C. § 362(c)(3)(C). Omitting Wessex Place from his initial schedules tends to undermine the appearance of good faith.
As his showing of good faith, the Debtor asserted only that he filed his two prior cases pro se (Doc. No. 14 at ¶¶ 2, 3, 5) and that he has sufficient disposable income- $1,113.00 a month- to make timely plan payments and fully perform under a confirmed plan (id. at ¶¶ 5, 6). This is probably insufficient to rebut the bad faith presumption, but since the Debtor did obtain counsel, the Court gave the Debtor the benefit of the doubt and on March 11, 2022, entered its order extending the stay through the preliminary hearing on April 20, 2022 (Doc. No. 16), following which it extended the stay through May 24, 2022 (Doc. No. 44). After the May 24th hearing, the Court further extended the stay through July 26, 2022 (Doc. No. 59), the date scheduled to consider confirmation of the Debtor's amended Chapter 13 plan (Doc. Nos. 53, 60). Multiple objections to the amended plan were filed (Doc. No. 46, 55, 61), however, and the Debtor was not able to overcome them by the time of the confirmation hearing on July 26, 2022. So, the amended plan was not confirmed. In addition, the Association had filed a motion for prospective relief from the stay (Doc. No. 62) which the Court continued over to another hearing to give the Debtor another chance (Doc. No. 67).
On October 4, 2022, the Court granted the Association's motion for prospective relief from the stay. (Doc. No. 79.)
At the July 26 hearing, the Court gave the Debtor a deadline of August 23, 2022 in which to complete mortgage modification mediation ("MMM") and a deadline of September 6, 2022, to file an amended plan and expressly cautioned the Debtor (actually, Debtor's counsel, since the Debtor did not attend) that if an amended plan was not confirmed on September 20, 2022, the Court would dismiss the case with a two-year injunction. (Doc. No. 67.) Unfortunately, MMM resulted in an impasse. (Doc. No. 75.) The Debtor filed an amended plan on September 15, 2022. (Doc. No. 76.) As discussed below, the Debtor's amended plan was merely a last-ditch effort to further delay his creditors because the plan had no chance of being confirmed.
Despite the need to overcome a statutory presumption of bad faith by clear and convincing evidence, the Debtor has not personally attended any hearings before Judge Geyer.
The Court will ignore the fact that the deadlines to mediate and to file an amended Chapter 13 plan were not met and accepts Mr. Washington's representation that an effort was made to timely comply but that the parties had difficulty coordinating their schedules.
THE AMENDED PLAN IS PATENTLY UNCONFIRMABLE AND FILED FOR THE SOLE PURPOSE OF OBTAINING FURTHER DELAY
Per below, the amended plan proposes to pay $1,700 during the first 7 months, and monthly payments of $11,115.45 from month 8 through month 60. (Doc. No. 76 at 2.)
The amended plan reflects payments of $1,700 per month that would be made in months 7 through 60 in addition to payments of $11,115.45. The Court presumes this is a scrivener's error and that the amended plan intended to reflect an intention to pay $11,115.45 in months 8 through 60. Either way, the proposed plan is not feasible based upon the Debtor's schedules.
R, MONTHLY PLAN PAYMENTS. Plan payments {"Plan Payments") include the Trustee's fee of 10% and shall begin 30 days from petition filing/conversion date. Debtor shall make Plan Payments to the Trustee for the period of 60 months. If the Trustee does not retain the full 10%, any portion not retained will be disbursed to allowed claims receiving payments under the Plan and may cause an increased distribution to the unsecured class of creditors.
$1.700.00 from month I (March 14. 2022) through 7 (September 14.20281
$ll.115-45 from month 8 October 14. 2022) through 60 (February 14.2028)
The Debtor's Schedule I reveals that he is self-employed. (Doc. No. 1 at 26.) His income consists of $1,500 per month from those efforts, and $1,671 in Social Security payments for a total monthly income of $3,171. (Id. at 27.) In 2021 he received $18,600 in Social Security payments and earned $18,000 for a total income of $36,600. (Id. at 32.) In 2020 his total income was slightly less, $35,200. (Id. at 32.)
"[T]he essence of confirming a Chapter 13 case is feasibility." In re Nygaard, 213 B.R. 877, 879 (Bankr. M.D. Fla. 1997). Under 11 U.S.C. § 1325(a)(6), "the court shall confirm a plan if . . . the debtor will be able to make all payments under the plan and to comply with the plan . . . ." Section "1325(a)(6) requires the Court to be realistic about how this case is likely to unfold." In re Brown, 319 B.R. 898, 902 (Bankr. M.D. Ga. 2004). "Whether a debtor's plan is feasible is a factual question." In re Todd, 181 B.R. 997, 1004 (Bankr. N.D. Ala. 1995). Feasibility is satisfied when the plan has a reasonable likelihood of success, which means that it is probable that the debtor will have the resources to make all the plan payments. In re McFashion, No. 13- 74255-MGD, 2014 WL 3015659, at *2 (Bankr. N.D.Ga. May 23, 2014). "The debtor carries the burden of satisfying the feasibility requirement and the other section 1325 requirements." In re McFashion, No. 13-74255-MGD, 2014 WL 3015659, at *2 (Bankr. N.D.Ga. May 23, 2014).
Here, the math just doesn't work. Although the Debtor had caught up on plan payments by the time of this hearing, he has not been able to pay them in a timely fashion. Given that he struggled to make $1,700 monthly payments during months 1 through 7, there is no way he can make far greater payments in months 8 through 60 because the proposed payments far exceed his monthly income. (Doc. No. 14 at ¶¶ 5, 6; Doc. No. 76 at 2.) Critically, the Debtor has not amended Schedule I to reflect an influx of additional income demonstrating he can afford the payments he proposed, nor has he offered any other basis for the Court to conclude he will have sufficient resources to make the substantial monthly payments he has proposed for months 8 through 60 in the plan. The Debtor fails to meet his burden of demonstrating that the amended plan is feasible. This case is due to be dismissed.
On August 16, 2022, the Trustee filed a motion to dismiss for the Debtor's failure to timely make plan payments for July and August 2022. (Doc. No. 72.) At the hearing, the Trustee stated that the Debtor became current in his plan payments and withdrew the motion. (Doc. No. 77.) This was the fourth motion to dismiss due to the Debtor's failure to either maintain timely plan payments, provide proof of his social security number, or provide his tax return. (Doc. Nos. 20, 21, 22.) Although the Debtor eventually cured the deficiencies (Doc. Nos. 35, 43, 46), the Debtor failed to timely meet his obligations and the Trustee was required to file multiple motions to dismiss to goad his compliance.
A TWO-YEAR INJUNCTION IS APPROPRIATE
In addition to dismissal, the Court considers these factors in determining whether an injunction against future filings is necessary: (1) the debtor's litigation history, specifically "whether it entailed vexatious, harassing, or duplicative lawsuits;" (2) the debtor's motive in pursuing the litigation; (3) whether the debtor is proceeding pro se; "(4) whether the [debtor] has caused needless expense to other parties or has posed an unnecessary burden on the court and its personnel; and (5) whether other sanctions would be adequate to protect the courts and other parties." In re Diaz, No. 8:14-BK01237-CPM, 2014 WL 12936894, at *2 (Bankr. M.D. Fla. July 25, 2014) (citing Martin-Trigona v. Shaw, 986 F.2d 1384, 1386-87 (11th Cir. 1993)).
All five factors weigh in favor of an injunction. The Debtor filed serial bankruptcy cases and failed to timely file the required documents. The timing of the three cases indicates that they were filed to delay and hinder the Association. The Debtor supplied the State Court with paperwork from his 2021 Case to obtain the cancellation of the sale of the Condo after the 2021 Case had been dismissed. So, he wielded the automatic stay as a sword in a dismissed case knowing he needed to cure basic filing deficiencies in the 2021 Case to maintain that protection and obtain reinstatement, but did not.
Further, the Debtor was given a substantial benefit of the doubt on the applicable legal standard in extending the automatic stay because he obtained counsel in this case after filing the 2019 Case and the 2021 Case pro se, but he failed to meet the burden of demonstrating that this case was filed in good faith. He waited five months before disclosing Wessex Place. He has caused needless expense to his creditors and posed an unnecessary burden on this Court and the Chapter 13 Trustee by filing bankruptcy cases for the sole purpose of obtaining multiple cancellations of the Association's sale of the Condo. Finally, other sanctions would be inadequate to protect the Court and other parties from the Debtor's gamesmanship. He filed a Chapter 13 plan that had no hope of being confirmed due to its wholesale lack of feasibility solely for the purposes of obtaining further delay. For these reasons, the case is dismissed with a two-year injunction against refiling.
Accordingly, it is ORDERED as follows:
1. The Motion (Doc. No. 14) is DENIED;
2. The Objection (Doc. No. 23) is moot based upon the dismissal of this case;
3. This case is DISMISSED WITH PREJUDICE;
4. In accordance with 11 U.S.C. §§ 105(a) and 1307(c)(5), the Debtor is ENJOINED, BARRED, and PROHIBITED from commencing any bankruptcy case petition in this Court for a period of TWO YEARS FROM THE DATE OF THIS ORDER. No stay shall go into effect under 11 U.S.C. §§ 362(a), 1201, or 1301 in any bankruptcy case filed by the Debtor during the above stated prohibited time period. No stay shall go into effect under 11 U.S.C. §§ 362(a), 1201, or 1301, in any bankruptcy case filed by any transferee of the Debtor during the above stated prohibited time period as to any action upon or against property transferred by the Debtor;
5. For any bankruptcy case filed in violation of the injunction imposed in paragraph three of this Order, the automatic stay shall be annulled immediately, and no automatic stay shall arise or apply to any property involved in such improperly filed case;
6. The Clerk of the Bankruptcy Court is directed not to accept any future filings from the Debtor prior to the expiration of the two-year period commencing on the date of the entry of this Order; and
7. The Court retains jurisdiction to enforce the terms of this Order, including, without limitation, by granting immediate stay relief in the event the Debtor files a bankruptcy petition before the expiration of two years after the entry of this Order.
The Clerk is directed to serve a copy of this order on all interested parties.