Viola E. Trusty

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
VIOLA E. TRUSTY F/tED WOO82008
V. C.A. NO. 05-6782
WACHOVIA BANK OF
DELAWARE; N.A., et al.
MEMORANDUM OPINION AND ORDER
RUFE, J. AUGUST 8, 2O06
Appellant/Debtor Viola E. Trusty (the "Debtor")
appeals from the Order dated November 22, 2OO5 of the
United States Bankruptcy Court for the Eastern District of
Pennsylvania, wherein the Honorable Kevin JJ. Carey dis-
missed the Debtor's Chapter 13 bankruptcy case (the "2005
case") based on a finding that: (1) the 2O05 cjase was filed. ' i
within eight days of the dismissal of another Chapter 1 3 case
E N T E R E D
filed on November 1 2, 2003 ("the 2QQ3 case") and dismissed
AUG i>
on August 23, 2005, and (2) the^Dfibtoj- failed to demonstrate
v/LcHK OF COURT
a change in circumstances which justified the filing of the
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2005 case.1 For the reasons that follow, this Court affirms the
* Order of November 22, 2005.
Appellee Americap Financial, Inc. ("Americap") held
a first mortgage on property titled in the name of the Debtor,
located at 331 South Plum Street, Media, Pennsylvania (the
"Property"). The first mortgage is currently held by Appellee
Wachovia Bank of Delaware, N.A. ("Wachovia"). Appellee
First Horizon Home Loan Corporation ("First Horizon") he|d a
second mortgage on the Property. The second mortgage is
currently held by Appellee Equity One, Inc. ("Equity One").
On March 22, 20O4, the Debtor initiated an adver-
sary proceeding (the "Adversary Action") by filing a complaint
seeking to avoid the mortgages against the Property. On April
8, 2004, Equity One filed a motion for relief from the auto-
matic stay based upon the Debtor's failure to make adequate
protection payments (the "Motion for Reliefh).
1. The actual written Order dismissed the 2003 case for the
reasons stated in the record on November 22, 2005.
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On April 13, 2004, the Standing Chapter 13 trustee filed a
i
motion to dismiss the 2003 case (the "Motiori to Dismiss").
Hearings on both motions were continued numerous times
at the request of the Debtor.
On November 9, 2004, the Debtor and Equity One
entered into a stipulation ("Stipulation of Settlement"), which
required the Debtor to make adequate protection payments,
thereby conditionally resolving the Motion for Relief. On
January 1O, 2OO5, the Bankruptcy Court entered an order
approving the Stipulation of Settlement, which resolved the
Motion for Relief.
On April 29, 2005, in response to a notice of default
under the terms of the Stipulation of Settlement by Equity
One, but before the filing of a Certification of Default, the
Debtor filed an "Objection to Prospective Certification of
Stipulation by Equity One, Inc." On May 23, 2005, Equity
One filed a Certification of Default of Stipulation. On June 28,
2005, the Bankruptcy Court sua sponte vacated the Order
granting Equity One relief from the automatic stay and
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I
scheduled a hearing to consider the Certification of Default
i
and Objection for July 19, 2O05 (the scheduled hearing date
on the Motion to Dismiss). Once again, hearings on the
Certification of Default and outstanding Motion to Dismiss
were continued several times at the request of the Debtor.
On August 23, 2005, the Debtor asserted that she
had no defense to the Motion to Dismiss and the Bankruptcy
Court entered an Order dismissing the 2003 case. Prior to
representing to the Bankruptcy Court that Debtor could not
defend against the Motion to Dismiss, the Debtor, through
counsel, also represented to Equity One that she had no
defense to the Certification of Default.
On September 1, 2005, just eight clays after the
Bankruptcy Court dismissed the 2003 case, the Debtor filed
the 2OO5 case. Americap, Wachovia, First Horizon, and
Equity One responded by filing a Joint Motion to Dismiss the
2005 case, claiming, inter alia, that the 2005 case was filed
in bad faith in violation of 11 U.S.C. section 1307 and in
violation of the 180-day bar provision contained in 11 U.S.C.
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section 109(g). The Bankruptcy Court held an evidentiary
hearing on the Joint Motion to Dismiss on llMovember 22,
2O05, at which the Debtor testified.
On November 22, 2005, the Bankruptcy Court
entered an Order dismissing the 2005 case based upon a
factual finding that the Debtor's financial circumstances had
not materially changed since the dismissal of ihe 20O3 case,
and, therefore, the Debtor had not shown that she could
successfully reorganize under Chapter 13. On December 1,
2005, the Debtor filed a Notice of Appeal with this Court.
In reviewing a bankruptcy court's decision, the
district court sits as an appellate court.2 The district court
may not set aside the bankruptcy court's factual findings
unless they are clearly erroneous.3 Moreover, the district
court shall give due regard Jo the bankruptcy court's opportu-
nity to judge the credibility of witnesses.4
2. 28 U.S.C.§ 158(a).
3. In re Knapper, 407 F.3d 573, 578 (3d Cir. 20051) .
4. Id. ;
5 ;
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Section 1307(c) of the Bankruptcy Code provides for
the conversion or dismissal of a debtor's case upon request
of a party in interest for cause. The Third Circuit has held that
lack of good faith in filing is sufficient cause for dismissal
under section 1307(c).5 The good faith of Chapter 13 filings
must be assessed on a case-by-case basis in light of the
totality of the circumstances.6 Factors relevant to this
determination include;
the nature of the debt....; the timing of the
petition; how the debt arose; the debtor's
motive in filing the petition; how the debt-
or's actions affected creditors; the debtor's
treatment of creditors both before and
after the petition was filed; and whether
the debtor has been forthcoming with the
bankruptcy court and creditors.7
In addition, in determining whether a debtor has re-
filed in good faith, the Bankruptcy Court for the Eastern
District of Pennsylvania has considered the fqllowing addi-
tional factors: (1) whether there has been a material change
5. In re Lillev. 91 F.3d 491, 496 (3d Cir. 1996).
6. Id.
7. Id.
6
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in a debtor's circumstances since a previous filing (2)
whether a debtor has proposed a "confirmable and feasible
Chapter 13 plan"; and (3) whether the debtor's history of
past filings reflects an intent to abuse the bankruptcy process
i
through a strategy of successive filings Without any real
reorganization effort.8
Here, the Bankruptcy Court founq that there had
been no material change in the Debtor's financial circumsta-
nces in the very brief time from when the 2O03 action was
dismissed and the 2O05 action was commenced. Specifically,
the Bankruptcy Court stated:
THE COURT: Mr. Scholl, as—you know.
Congress hasn't—well, up until recently,
addressed directly how many times a
debtor ought to have to-to obtain bank-
ruptcy relief. There was no bar c}>n the
number of, no limit on the number of
filings, but decisional law has developed,
which If olfow regularly, which says; that
if—if—if one filing follows quickly on the
heels of a dismissal or a prior filing, the
debtor has to demonstrate that there's
been some change of circumstances.
8. In re LeGree. 285 B.R. 615, 619 (Bank. E.D.Pa. 2002) (Carey,
J.) (citing cases) .
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I don't think the debtor here |has
demonstrated this. The debtor has admit-
tedly said she can't pay her second mort-
gage. I mean, ordinarily, in a Chapteif 13
case, that's a-that's a circumstance that
would have to be addressed. NONA/ you're
saying if you're successful in the adver-
sary...she'll have...she'll have no Jien
holders...I just don't think that therefs a
basis for determining that this Chapter 13
should go forward. Whether it's because
she's presently not prepared to address
the payment of the second mortgage,
which is not disputed and that the circum-
stances just have not sufficiently changed
within the few days, literally, that passed
between the prior case and the present
case... 9
The Debtor testified at the evidentiary hearing
that she had defaulted upon her obligation to make "ade-
quate protection plan" payments because she believed that
her daughter was making payments to Equity One.10 More-
over, the Debtor testified that although herfinancial condition
• • • • !
had improved since the filing of the 2003 case, it had only
improved by a "couple of dollars" and her "expenses have
9. Tr. of 11/22/05,at 52-54.
10. Tr. of 11/22/05, at 32.
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gone up an awful lot."11 In addition, the Debtor testified that,
prior to filing the 2005 case, she could no longer rely on her
daughter to help with adequate protection payments and, as
a result, her problems meeting her obligations had actually
increased.12 Nor has the Debtor shown any type of confirm-
able and feasible Chapter 13 plan.
In sum, the Debtor filed the 2005 case only eight
i
days after she consented to the dismissal of the 2OO3 case.
Since this Court's review of the record reveals that the Debtor
has not shown within that eight day period any material
change in her financial circumstances, any confirmable and
feasible Chapter 13 plan real reorganization effort, nor any
real reorganization effort, the Order of the Bankruptcy Court
must be affirmed.
11. Tr. Of 11/22/05, at 28-29.
12. Tr. of 11/22/05, at 32.
9
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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
VIOLA E. TRUSTY
V. C.A. NCJ. 05-6782
WACHOVIA BANK OF
DELAWARE, N.A., et al.
ORDER
AND NOW, this 8th day of August, 2QO6, it is hereby
ORDERED that the Order of the Bankruptcy Court for the
Eastern District of Pennsylvania dated November 22, 2005
dismissing the Debtor's Chapter 1 3 Bankruptcy Case ,No. 05-
31714, is AFFIRMED.
IT IS SO ORDERED.
BY THE COURT: I
CYNTHIA M. RUFE, J,
10
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