Opinion
No. SA-03-CA-060
July 17, 2003
ORDER REGARDING STATUS OF DEBTOR'S BANKRUPTCY APPEAL
Before the Court is Debtor Annette S. Muecke's Bankruptcy Appeal, filed on January 28, 2003, as well as the Motion of the Internal Revenue Service to Dismiss Appeal ("Motion to Dismiss"), filed on May 29, 2003. For reasons explained below, the Court is of the opinion that the Motion to Dismiss should be DENIED at this time. However, Plaintiff is ORDERED TO SHOW CAUSE that her appeal should be preserved by complying with Rules 8006 and 8009 of the Federal Rules of Bankruptcy Procedure. Failure to comply with this Order as discussed herein will subject Plaintiff's appeal to dismissal.
BACKGROUND
This case comes before the Court with a rather unusual procedural posture. Debtor filed her Chapter 13 bankruptcy petition in the United States Bankruptcy Court for the Western District of Texas, San Antonio Division on July 10, 2002. The Bankruptcy Court was intimately familiar with Debtor's status, since she had filed four previous bankruptcy petitions, all of which were unsuccessful. On October 10, 2002, Bankruptcy Judge Leif M. Clark sua sponte issued an Order to Appear and Show Cause Why Annette
Muecke Should Be Allowed To Continue In This Case. The Bankruptcy Court held a hearing on this matter on December 10, 2002. At the conclusion of that hearing, the Bankruptcy Court orally dismissed Debtor's Chapter 13 case with prejudice to refiling. However, a written order was not entered at that time.
On December 20, 2002, Debtor filed a Motion to Reinstate her Chapter 13 case. This Motion was denied on January 7, 2003. On January 21, 2003, Debtor filed a Notice of Appeal in the Bankruptcy Court of the dismissal of her Chapter 13 case. Since the written Order dismissing her case had not yet been entered, however, the docket of the Bankruptcy Court contains a notation beside this filing, which reads: "No Order Dismissing Case on File." The written Order Granting Dismissal of Chapter 13 Case With Prejudice to Refiling for 180 Days was eventually filed on January 28, 2003. Debtor filed a Motion for Rehearing of this Order on February 13, 2003. An Amended Order Granting Dismissal of Chapter 13 Case With Prejudice to Refiling for 180 Days was signed on February 16, 2003, and the Order Denying Motion for Rehearing was filed on February 27, 2003.
Debtor commenced her appeal to this Court on January 28, 2003, in which she sought to appeal the dismissal of her case by the Bankruptcy Court. On March 11, 2003, Debtor filed a Motion for Stay Pending Appeal in this Court. This Motion sought to stay enforcement of: (a) the Bankruptcy Court's January 7, 2003 Order Denying Debtor's Motion to Reinstate Chapter 13 Case; and (b) the Bankruptcy Court's February 16, 2003
Amended Order Granting Dismissal of Chapter 13 Case With Prejudice to Refiling for 180 Days. This Court denied that Motion on March 21, 2003, and again on rehearing on March 28, 2003, on the grounds that Debtor had not first filed the request in the Bankruptcy Court, as required under Rule 8005 of the Federal Rules of Bankruptcy Procedure.
Following this Court's denial, Debtor filed the Motion for Stay Pending Appeal in the Bankruptcy Court. The Bankruptcy Court denied that Motion on May 22, 2003. In its Order, the Bankruptcy Court stated that Debtor did not specify which order she sought to stay. It found that Debtor essentially sought "a broad injunction against all collection activity against her," which was a form of relief not available to her. Additionally, the Bankruptcy Court's Order stated that "the docket shows that no appeal has ever been filed with respect to either of the dismissal orders. There can be no stay pending appeal if there is no appeal." It further added that the time for filing such an appeal expired on March 10, 2003, ten days after the entry of the Order Denying Motion for Rehearing. Plaintiff has not appealed the Bankruptcy Court's Order Denying Motion for Stay
See IRS Mot. to Dismiss Appeal, Ex. G-1 ("Order Denying Motion for Stay Pending Appeal").
Id., Ex.G-1 at 1.
Id., Ex. G-1 at 2.
Id., Ex. G-l at 2.
Id., Ex. G-1 at 2.
Pending Appeal, and the time for doing so has now expired.
See F.R.Bankr.P. 8002(a).
On May 29, 2003, the Internal Revenue Service ("IRS"), one of the creditors in the bankruptcy case, filed a Motion to Dismiss Appeal. As authority for its Motion, the IRS cites the Bankruptcy Court's Order Denying Motion for Stay Pending Appeal. Debtor filed her Opposition to the Motion to Dismiss on June 23, 2003.
See IRS Mot. to Dismiss Appeal, p. 3-4 ¶ 20.
DISCUSSION
As noted above, the IRS cites the Bankruptcy Court's Order Denying Motion for Stay Pending Appeal as the authority for its present Motion to Dismiss. Specifically, the IRS relies on the Bankruptcy Court's statement that "no appeal has ever been filed with respect to either of the dismissal orders . . . [and] there can be no appeal at this late date." While this Court considers the Bankruptcy Court's Order final for purposes of denying a stay pending appeal, it rejects the premise that Debtor has not filed an appeal of the dismissal of her Chapter 13 case in the Bankruptcy Court.
IRS Mot. to Dismiss Appeal, Ex. G-l at 2.
The Bankruptcy Court docket shows that Debtor filed such an appeal on January 21, 2003. The docket notes, however, that no dismissal order was on file at that date. The position of the IRS, therefore, is that Debtor's "appeal in this case was both premature and superceded by subsequent orders of dismissal," which were filed on
January 28, 2003 and amended on February 16, 2003. This theory would suggest that debtor is required to re-file her Notice of Appeal after entry of the written Order in order to preserve her appeal. The Bankruptcy Court seems to share this view, since it held that "no appeal has ever been filed with respect to either of the dismissal orders."
Id., p 4 ¶ 21.
Id., Ex. G-1 at 2 (emphasis added).
This position is directly in contradiction, however, to Rule 8002(a), which states that "[a] notice of appeal filed after the announcement of a decision or order but before entry of the judgment, order, or decree shall be treated as filed after such entry and on the day thereof." There can be no dispute that the decision to dismiss the case was announced at the December 10, 2002 hearing by the Bankruptcy Court. This fact is supported by the language in both the Bankruptcy Court Orders of January 7, 2003 and February 16, 2003. Debtor appealed the dismissal on January 21, 2003, although the initial written Order was not entered until January 28, 2003. The amended Order was entered on February 18, 2003. Presuming the Amended Order superceded the initial Order, therefore, Rule 8002(a) provides that the appeal of that Order is to be treated as though it was filed on February 18, 2003. Thus, while Debtor may no longer appeal the Bankruptcy Court's denial of her Motion for Stay Pending Appeal, she has timely filed an appeal of the Bankruptcy Court's dismissal of her Chapter 13 case.
See Order Denying Debtor's Motion to Reinstate Chapter 13 Case (January 7, 2003); Amended Order Granting Dismissal of Chapter 13 Case With Prejudice to Refiling for 180 Days (February 16, 2003).
Nevertheless, Debtor has not complied with the subsequent filing requirements for her bankruptcy appeal. Specifically, Debtor has not designated with the Bankruptcy Clerk the items to be included in the record on appeal, nor has she filed a statement of the issues to be presented. Moreover, she has not filed a brief on appeal. The Bankruptcy Rules provide that the failure to comply with these rules "does not affect the validity of the appeal, but is ground only for such action as the district court . . . deems appropriate, which may include dismissal of the appeal."
"The severity of the sanction rests in the sound discretion" of the Court. While Debtor's track record in bankruptcy is cause for deep concern, the Court finds dismissal to be an excessive sanction at this point. Having now cleared the record on this issue, however, the Court expects Debtor to comply with these procedural requirements going forward.
10 COLLIER ON BANKRUPTCY ¶ 8001.06[2], at 8001-13 (L. King ed., 15th ed. 2003).
The Court will treat the Notice of Appeal as having been filed on the expected date of Debtor's receipt of this Order confirming the viability of her appeal. Thus, the procedural clock will begin to run on July 21, 2003. Within ten (10) days, or by July 31, 2003, Debtor shall file with the clerk of the Bankruptcy Court and serve on the appellee a designation of the items to be included in the record on appeal and a statement of the issues to be presented, in compliance with Rule 8006 of the Bankruptcy Rules. Within fifteen (15) days, or by August 5, 2003, Debtor shall serve and file a brief in this Court, in compliance with Rule 8009(a) of the Bankruptcy Rules. The rules governing the form and content of the brief are discussed in Rule 8010 of the Bankruptcy Rules.
The Court reminds Debtor, however, that Rule 8001(a) affords this Court the discretion to take such action as it deems appropriate in response to a party's failure to comply with the Bankruptcy Rules, including "dismissal of the appeal." Although the Court is of the belief that leniency is warranted in exercising its discretion at this time, the Court finds that Debtor has now been given adequate notice of the procedural requirements for pursuing her appeal. Future non-compliance with the Bankruptcy Rules will subject her appeal to dismissal.
CONCLUSION
The Court is of the opinion that Debtor's Notice of Appeal, filed after the announcement of the decision to dismiss her Chapter 13 case but prior to entry of the Bankruptcy Court's written order of dismissal, does constitute a timely appeal of the dismissal, based upon the facts presently in the record. Thus, the Internal Revenue
Service's Motion to Dismiss on this basis should be DENIED.
It is therefore ORDERED that the Motion of the United States of America, Internal Revenue Service, to Dismiss Appeal is DENIED,
It is further ORDERED, however, that Debtor is to SHOW CAUSE that her appeal should be preserved, by complying with the procedural requirements of Rules 8006 and 8009 of the Federal Rules of Bankruptcy Procedure.