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In re Bowman

United States District Court, Fourth Circuit

November 26, 2013

IN RE GARY BOWMAN, Appellant.

MEMORANDUM OPINION AND ORDER

GERALD BRUCE LEE, District Judge.

THIS MATTER is before the Court on Appellant Gary Bowman's appeal of (i) an order of the Bankruptcy Court for the Eastern District of Virginia ("Bankruptcy Court") denying Mr. Bowman's Motion for Reconsideration [of the Order Denying Motion to Defer Payment of Fee) and Amended Motion to Defer Reopening Fee, and Mr. Bowman's appeal of (ii) the Court's Order denying the reopening of the bankruptcy case in which Mr. Bowman was sanctioned, for failure to pay the reopening fee.

There are three issues before the Court. The first issue is whether the Bankruptcy Court abused its discretion by requiring Mr. Bowman to pay the wrong amount in filing fees and refusing to reopen his case based on the non-payment of the wrong amount of fees. The second issue is whether the Bankruptcy Court abused its discretion by not extending the time to pay the correct fee after it denied Mr. Bowman's motion for reconsideration of payment or deferral of the filing fee. The third issue is whether the Bankruptcy Court abused its discretion by not waiving the filing fee even though Mr. Bowman claimed that appropriate circumstances justified waiver of fee.

The Court AFFIRMS the Bankruptcy Court's two orders. First, the Court holds that the Bankruptcy Court did not abuse its discretion because it corrected the erroneous notice to cure filing defect a week before the reopening fee was due, and as such, the refusal to reopen the case was based on Mr. Bowman's nonpayment of the correct filing fee. Second, the Court holds that the Bankruptcy Court did not abuse its discretion by choosing not to give Mr. Bowman a second extension of time to pay the filing fee where he only filed his Motion for Reconsideration the day before the first extension expired and has cited to no law requiring a court to extend the period to pay a fee during a motion For reconsideration. Third, the Court holds that the Bankruptcy Court did not abuse its discretion by not waiving the filing fee because it determined that where Mr. Bowman had not made any showing that he was financially unable to pay the fee, his explanation for his delay in filing was insufficient to warrant a waiver of the fee.

I. BACKGROUND

The appeal currently before the Court stems from Mr. Bowman's motion to reopen a bankruptcy case to appeal a sanctions order against him.

A. Sanctions Order

On June 5, 2012, the Bankruptcy Court issued an Order imposing sanctions upon Mr. Bowman (the "Sanctions Order") pursuant to Federal Rule of Bankruptcy Procedure 9011(c)(1)(B) regarding cases 11-18617-BFK and 11-11656-BFK. (Doc. 1, p. 44.) Prior to promulgating its Memorandum Opinion and Order, Mr. Bowman was served with an Order to appear and show cause why sanctions should not be imposed. (Id.) An evidentiary hearing was held on April 17, 2012, at which Mr. Bowman was present. After the evidentiary hearing, the Bankruptcy Court allowed, and Mr. Bowman filed, a post-hearing brief. ( Id. )

In its Memorandum Opinion, the Bankruptcy Court found that Mr. Bowman had various irreconcilable conflicts of interest, had violated his duty of loyalty to a client, and made unauthorized filings. ( Id. at 44-61) The Bankruptcy Court imposed a number of sanctions on Mr. Bowman including a prohibition on the filing of any petition on behalf of a debtor, creditor, or any other party in interest in a Chapter 11 case in the Eastern District of Virginia for a period of one year. ( Id. at 62.) Mr. Bowman did not move the Bankruptcy Court to reconsider its Sanctions Order. Mr. Bowman stated he did not appeal the Sanctions Order because he had no intention of filing any Chapter 11 cases in this District for the year to come. ( Id. at 42.) Approximately five months later, the parties moved to dismiss the underlying cases. ( Id. at 40.) Mr. Bowman was provided notice that the parties were dismissing the case. ( Id. at 113.) The case was officially closed on December 27, 2012. ( Id. at 41.)

B. Bankruptcy Court's Denial of Motion to Reopen

After the case was closed, someone filed a Bar Complaint against Mr. Bowman, using as grounds for the Bar Complaint, at least in part, the Sanctions Order. ( Id. at 113.) Now that a Bar Complaint had been filed, Mr. Bowman decided that he wanted to try to fight and vacate the Sanctions Order. On June 4, 2013, Mr. Bowman filed a Motion to Reopen Case, Motion to Reconsider [the Sanctions Order], and a Motion to Extend the Time to Pay the Reopening Fee of $1, 167 and noticed those motions for hearings on July 30, 2013. ( Id. at 41.) Mr. Bowman did not pay any reopening fee at the time that he filed these motions or at any later point in time. On June 5, 2013, the Bankruptcy Court issued a Notice to Cure Filing Fee Deficiency, erroneously stating that the reopening fee was $1, 000.00, and required Mr. Bowman to pay the filing fee by the next day. ( Id. at 84.)

On June 6, 2013, the Bankruptcy Court denied the motion to waive or defer the payment of the reopening fee. ( Id. at 87.) The Bankruptcy Court listed four grounds for the denial of the waiver or deferment of the fee. First, Mr. Bowman had not supported his Motion with any sort application or affidavit indicating that he was in forma pauperis. Second, the payment of the fee is not dependent on the outcome of the Motion to Reopen, it is due and payable when a Motion is filed. Third, although a court has the discretion to waive a reopening fee, the Bankruptcy Court did not know of any policy permitting waiver in these particular circumstances. [emphasis added.] Fourth, the Bankruptcy Court believed that the problem was entirely of Mr. Bowman's own making as he could have acted promptly to vacate the Sanctions Order during the six months before the case was closed and he would not have had to pay a reopening fee. Mr. Bowman contends that the Bankruptcy Court erroneously determined that it did not have the authority to provide a reopening fee waiver.

In the June 6, 2013 Order, the Bankruptcy Court granted Mr. Bowman a two week extension of time to pay the reopening fee until June 20, 2013 and cautioned Mr. Bowman that if the fee was not timely paid, the Motion to Reopen would be denied. ( Id. at 88.) On June 14, 2014, six days before the extended payment deadline, the Bankruptcy Court issued an Amended Notice to Cure Filing Fee Deficiency, correcting the previous Notice by stating that the amount due was $1, 167. ( Id. at 90.) On the day that the extension to pay the filing fee was set to expire, June 20, 2013, Mr. Bowman filed a motion to reconsider the Bankruptcy Court's June 6, 2013 Order denying the motion to defer or waive the filing fee, On June 21, 2013, the day after the deadline to pay the filing fee, Mr. Bowman filed his memorandum in support of his Motion to Reconsider, In neither his Motion to Reconsider nor his Memorandum in Support, did Mr. Bowman request the Bankruptcy Court grant him an additional extension of time to pay the filing fee during the pendency of the Motion.

On June 25, 2013, the Bankruptcy Court entered an Order denying the Motion for Reconsideration [of the Order denying the motion to defer or waive the filing fee] and denying the Amended Motion to Defer Reopening Fee. ( Id. at 112.) In the Order, the Bankruptcy Court reemphasized that although the Judicial Conference policy gives the Court the discretion to waive a filing fee in appropriate circumstances, it did not believe Mr. Bowman's circumstances were such that he was entitled to such a waiver because the situation he was in was entirely of his own making because he chose not to appeal the Sanctions Order in the six months that the case remained open. The Bankruptcy Court did not find persuasive Mr. Bowman's argument that because he did not intend to practice in this District's Bankruptcy Court in the coming year, he did not have sufficient incentive to appeal the Sanctions Order at the time it was imposed, and as such he only had incentive to appeal after the Bar Complaint was filed such that he should be entitled to a waiver of the ...


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