Opinion
Case No. 06-30803 TC.
October 24, 2008
MEMORANDUM RE MOTION FOR TURNOVER AND APPLICATION TO DISMISS
On October 24, 2008, the court held a hearing re creditor Allan Cadgene's Motion for Turnover of Artwork in Compliance with Debtor's Plan (the Turnover Motion). Julia M. Wei appeared for Cadgene. Debtor failed to appear.
Creditor Alan Cadgene obtained a pre-petition judgment lien against artwork created by Debtor. Debtor filed a chapter 13 case to prevent the forced sale of that art. Debtor and Cadgene agreed upon the terms of a chapter 13 plan (Plan) under which Debtor would be required to sell art over time. If Debtor failed to pay off the debt on the schedule provided in the Plan, Cadgene could designate certain works of art and seize them as payment in kind at prices previously agreed upon by the parties (the Designated Artworks). When Debtor failed to make a scheduled debt payment, Cadgene made the necessary designation of artworks. When Debtor failed to transfer the Designated Artworks as required by the Plan, Cadgene filed the Turnover Motion. Debtor failed to respond to the Turnover Motion, and on the eve of the hearing on that Motion filed an application to dismiss the chapter 13 case (Application to Dismiss).
Upon due consideration, and for the reasons set forth below, the Application to Dismiss is denied, and the Turnover Motion is granted.
The Debtor's right to dismiss a chapter 13 case is not absolute, and an application to dismiss may be denied when the debtor acts in bad faith. Rosson v. Fitzgerald (In re Rosson), 2008 WL 4330558 (9th Cir. 2008). This case is much like Rosson, in that Debtor obtained a delay in the enforcement of Cadgene's claim through an agreed-upon Plan, then attempted to avoid the consequences of that Plan after having obtained its benefits. Debtor's Application to Dismiss is not supported by any statement of reasons or declaration, and is not set for hearing. On the basis of the record currently before the court, the Application to Dismiss is denied at this time.
Debtor having filed no opposition to the Turnover Motion, and the Turnover Motion appearing to be in conformity with the confirmed Plan, the Turnover Motion is granted.
It appearing that Debtor is not acting in good faith and is attempting to frustrate Cadgene's rights under the confirmed Plan, Debtor should be restrained from moving or attempting to move any of the artwork subject to Cadgene's lien and the Plan. Cadgene is authorized to remove the Designated Artworks from the storage facility in which they are located without consent of Debtor. The storage facility is authorized and ordered to permit and take all steps necessary to effect such removal. Cadgene shall afford Debtor 48 hours notice of such removal. Debtor and/or Debtor's counsel may be present and observe, but are ordered not to interfere with removal of the Designated Artworks.
Cadgene's counsel is directed to prepare a form of order consistent with this decision.