DeVito v. Pees (In re DeVito)

Summarized by James Bailey , Butler Snow LLP
15 years 4 months ago

Citation:

Sixth Circuit Bankruptcy Appellate Panel, Case No. 09-8072, Opinion, Oct. 14, 2010

Tag(s):

6th Circuit

Ruling:

Bankruptcy Court abused its discretion in dismissing case for "lack of prosecution" as sole "cause" for dismissal under 11 U.S.C. § 1307(c) when it failed to make any findings that delays presented in case, while perhaps unreasonable, were prejudicial to creditors. The Sixth Circuit Bankruptcy Appellate Panel reversed dismissal and remanded case to Bankruptcy Court. By order of the Bankruptcy Appellate Panel, the precedential effect of this decision is limited to the case and parties pursuant to 6th Cir. BAP LBR 8013-1(b). See also 6th Cir. BAP LBR 8010-1(c).

Procedural context:

Appeal from dismissal of chapter 13 case under § 1307(c) for "lack of prosecution."

Facts:

Debtors filed joint chapter 13 case. After four (4) attempts at confirmation, payment of $20,000 to the chapter 13 trustee prior to confirmation, objections to claims and pursuit of an avoidance action, the Court denied confirmation of plan and dismissed case for "lack of prosecution" which the court found to be "cause" for dismissal of case under § 1307(c). Debtors argued that bankruptcy court abused its discretion when it denied confirmation of their proposed chapter 13 plan and dismissed their case, and that Local Bankruptcy Rule 3015-2, as applied in this case, violated 11 U.S.C. § 1323 and abrogated Fed. R. Bankr. P. 3015. Sixth Circuit Bankruptcy Appellate Panel held that it would defer to Bankruptcy Court's decision that delay was unreasonable but found that the lower court failed to address second prong of Section 1307(c) concerning prejudice to creditors. The Sixth Circuit Bankruptcy Appellate Panel reversed dismissal and remanded case to Bankruptcy Court with direction to reinstate case. As the decision was reversed, there was no need to address second issue on appeal related to Loc. Bankr. R. 3015-2 and Fed. R. Bankr. P. 3015.

Judge(s):

Marci B. McIvor, G. Harvey Boswell, Marilyn Shea-Stonum

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