Mallory v. Heitkamp (In re Mallory)

Citation:
No. 11-20192 (5th Cir. April 16, 2012) [Not for Publication]
Tag(s):
Ruling:
Affirming the District Court affirmance of the dismissal of Joel Donald Mallory, Jr.’s (“Mr. Mallory”) chapter 13 bankruptcy petition, the Fifth Circuit found that the Bankruptcy Court did not abuse its discretion under section 1307 of the Bankruptcy Code. Specifically, the Fifth Circuit opined that Mr. Mallory’s failure to make the payments required by section 1326 of the Bankruptcy Code was sufficient cause to dismiss Mr. Mallory’s case under section 1307(c) of the Bankruptcy Code. In reaching its decision, the Fifth Circuit rejected Mr. Mallory’s arguments that Bankruptcy Court erred by failing to address his good faith attempts to comply with his chapter 13 plan. Further, the Fifth Circuit concluded that it was unnecessary to address the other issues Mr. Mallory raised in his appeal, including the Bankruptcy Court’s failure to address issues with various filed proofs of claim. The Fifth Circuit emphasized that these equitable arguments did not change the fact that Mr. Mallory failed to make the required payments, and it was “within [the Bankruptcy Court’s] discretion under Section 1307 in dismissing his case on that basis alone.”
Procedural context:
On April 20, 2010, the Bankruptcy Court dismissed Mr. Mallory’s chapter 13 bankruptcy case with prejudice pursuant to section 1307(c)(4) on the sole basis that Mr. Mallory failed to make plan payments required by section 1326 of the Bankruptcy Code. The Bankruptcy Court subsequently denied Mr. Mallory’s motion for reconsideration. The District Court affirmed the Bankruptcy Court order, concluding that the Bankruptcy Court acted within its discretion when dismissing Mr. Mallory’s case on the basis of his failure to make plan payments. The District Court also rejected the numerous equitable arguments Mr. Mallory raised in his appeal.
Facts:
On January 17, 2007, Mr. Mallory filed a chapter 13 petition. Three years later, the chapter 13 trustee moved to dismiss Mr. Mallory’s case on the basis that Mr. Mallory (1) failed to make payments under section 1326 of the Bankruptcy Code, (2) did not implement an automated clearing house (“ACH”) authorization pursuant to the local bankruptcy rules, (3) failed to provide for payment of secured and priority claims, (4) failed to provide the proper information to allow the trustee to comply with his duties under section 1302(d) of the Bankruptcy Code, and (5) caused an unreasonable delay prejudicial to the creditors of the estate. Mr. Mallory did not dispute that (1) he failed to make the required payments or (2) that the dismissal was “in the best interests of creditors and the estate” under section 1307(c) of the Bankruptcy Code. Instead, Mr. Mallory argued “that under equity and the totality of the circumstances his case should not have been dismissed.” Specifically, Mr. Mallory pointed to five facts to support his equitable arguments: (1) he could not afford the increased payments under his chapter 13 plan, (2) he attempted in good faith to reorganize, (3) he paid over $60,000 to the chapter 13 trustee under the plan, (4) various claimants had standing issues, and (5) the chapter 13 trustee failed to comply with his statutory duties.
Judge(s):
Garza, Southwick, and Haynes, Circuit Judges.

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