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Young v. United States Department of Veterans Affairs

United States District Court, W.D. Virginia, Danville Division

September 29, 2016

RICKEY GENE YOUNG, Appellant,
v.
UNITED STATES DEPARTMENT OF VETERANS AFFAIRS, et al., Appellees.

          MEMORANDUM OPINION

          Jackson L. Kiser SENIOR UNITED STATES DISTRICT JUDGE.

         This matter is before the court on Appellant Rickey Gene Young's appeal of the Bankruptcy Court's dismissal of his Chapter 7 voluntary petition for bankruptcy and 180-day prohibition on refiling in the bankruptcy court. The matter was fully briefed by the parties, and I heard oral arguments on September 20, 2016. For the reasons stated herein, the decision of the Bankruptcy Court will be reversed and this matter will be remanded to the bankruptcy court for further proceedings.

         I. STATEMENT OF FACTS AND PROCEDURAL BACKGROUND

         Appellant Rickey Gene Young (“Young”) filed a Chapter 7 voluntary petition for bankruptcy in the United States Bankruptcy Court for the Western District of Virginia on February 29, 2016.[1] [See ECF No. 1-4.] On the same date, Young filed an Application for Individuals to Pay the Filing Fee in Installments, which requested leave to pay the $335.00 filing fee in three separate installments between March 22, 2016, and May 23, 2016. [See ECF No. 4, pg. 20.] On February 29, Judge Paul M. Black entered an Order informing Young:

The administrative notice fee has not been paid in the amount of Seventy-five Dollars ($75.00). Cases filed electronically are to be paid by debit or credit card. Cases filed pro se must be paid by cash, cashier's check or money order only, payable to Clerk, U.S. Bankruptcy Court.

[ECF No. 4, pg. 60.] Young was informed “that failure to cure said deficiency(ies) within fourteen (14) days . . . may result in dismissal of the case without further notice or hearing.” (Id.)

         On the same day, Judge Black entered an Order granting Young's application to defer paying the filing fee. [See ECF No. 4, pg. 61.] Although Young requested to pay the fee in installments, Judge Black ordered that Young pay the filing fee in full “within thirty (30) days after the first meeting of creditors.” (Id.)

         Young's administrative notice fee was due on March 14, 2016, but was not paid. On March 15, Judge Black dismissed Young's petition sua sponte. [See ECF No. 4, pg. 159-60.] He additionally barred Young from “refiling in this Court for a period of 180 days, ” given Young's history of abandoning, dismissing, or failing to comply with the bankruptcy court rules and orders in both the Western District of Virginia and the Western District of Tennessee. Judge Black recounted five prior Virginia cases that were either dismissed voluntarily by Young or dismissed on the Trustee's motion, all within six months of being filled. Judge Black also recounted three Tennessee cases that were dismissed on the trustee's motions, the last of which resulted in a 180-day bar to filing in that court imposed against Young.

         On March 30, 2016, Young filed a Bankruptcy Notice of Appeal in this Court. [ECF No. 1.] He amended his Notice of Appeal on April 8, 2016. [ECF No. 2.] Both parties filed briefs [ECF Nos. 9, 11], and I heard arguments on September 20, 2016. The matter is now ripe for disposition.

         II. STANDARD OF REVIEW

         On appeal, a district court reviews the bankruptcy court's legal conclusions de novo and its factual findings for clear error. See United States Dep't of Health & Human Servs. v. Smitley, 347 F.3d 109, 115-16 (4th Cir. 2003); Three Sisters Partners, LLC v. Harden, 167 F.3d 843, 847 (4th Cir. 1999). A bankruptcy court's finding of fact is “‘clearly erroneous' when ‘it is not supported by substantial evidence, ' is ‘contrary to the clear preponderance of the evidence' or, in a somewhat different vein, is ‘based upon an erroneous view of the law.'” In re Jolly, 143 B.R. 383, 385 (E.D. Va. 1992).

         III. DISCUSSION

         The threshold issues are: (a) did the Bankruptcy Court have the authority, pursuant to 11 U.S.C. § 105(a), to dismiss Young's case without notice or a hearing for nonpayment of fees; and, if it did, (b) did the Bankruptcy Court reasonably exercise that power on the facts presented? The first question is one of law that is reviewed de novo; the second, which concerns application of law to facts, is reviewed for clear error.

         A bankruptcy court has the “inherent power . . . to sanction ‘abusive litigation practices, '” Marrama v. Citizens Bank of Mass., 549 U.S. 365, 375-76 (2007), but, “in exercising those statutory and inherent powers, a bankruptcy court may not contravene specific statutory provisions.” Law v. Siegel, 134 S.Ct. 1188, 1194 (2014). Section 105(a) of the Bankruptcy Code authorizes a bankruptcy court to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of” the Bankruptcy Code. 11 U.S.C. § 105(a). “Section 105 ‘provides a bankruptcy court with statutory contempt powers . . . .'” In re Eldorado Canyon Properties, LLC, 505 B.R. 601, 604 (B.A.P. 1st Cir. 2014) (quoting Bessette v. Avco Fin. Servs., Inc., 230 F.3d 439, 445 (1st Cir. 1990)). “[These] powers include ‘discretionary sua sponte dismissals.'” Id. (quoting In re Gonic Realty Trust, 909 F.2d 624, 626 n.1 (1st Cir. 1990)). This provision has been held to authorize a bankruptcy court to dismiss a case without notice or hearing for, inter ...


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