Piazza v. Nueterra Healthcare Physical Therapy, LLC (In re Piazza)

Summarized by Stephen Starks , Phelan Hallinan Diamond & Jones PLLC
12 years 8 months ago

Citation:

Piazza v. Nueterra Healthcare Physical Therapy LLC. Case No. 12-12899 (11th Cir. June 26, 2013)(published)

Tag(s):

Ruling:

Under § 707(a) of the bankruptcy code, the bankruptcy court may involuntarily dismiss a Chapter 7 petition for cause due to Debtor’s prepetition bad faith conduct.

Procedural context:

Appeal from the Southern District of Florida’s order affirming the bankruptcy court’s involuntarily dismissal of a Chapter 7 petition under §707(a).

Facts:

Piazza filed a Chapter 7 bankruptcy to discharge primarily business debts, of which the debt to Nueterra was more than half of the total unsecured debts scheduled. Nueterra argued for dismissal under §707(a) and §707(b) because Piazza had engaged in bad faith prior to the petition filing by avoiding paying Nueterra’s state court judgment for two years, paying insiders, and transferring assets. The bankruptcy court held that based on the totality of the circumstances Piazza’s prepetition conduct constituted bad faith and under §707(a) his bankruptcy could be dismissed “for cause.” Piazza appealed arguing that §707(a) permits only dismissal “for cause” and prepetition bad faith does not constitute “cause” for dismissal. The district court affirmed the bankruptcy decision and Piazza appealed to the Eleventh Circuit. This issue was one of first impression for the Eleventh Circuit and it affirmed the lower courts’ rulings that bad faith does provide cause for a petition to be dismissed under §707(a) and that Piazza’s involuntarily dismissal was appropriate.

Judge(s):

Marcus, Black, Siler, Circuit Judges.

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