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Cody v. Micale

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

November 13, 2019

CHRISTOPHER MICALE, Chapter 13 Trustee, Appellee



         This is an appeal of an order by the United States Bankruptcy Court for the Western District of Virginia pursuant to 28 U.S.C. § 158(a)(1) and Rule 8001(a) of the Federal Rules of Bankruptcy Procedure. On February 5, 2019, die bankruptcy court dismissed appellant Linda Rene Cody's ("Cody") fourdi bankruptcy petition in four years due to her failure to complete the pre-petition credit counseling required by the Bankruptcy Code, her violation of the court's prior order barring her from filing another petition within 180 days, and die filing of her fourth petition in bad faith. For the reasons that follow, this court AFFIRMS die bankruptcy court's February 5, 2019 dismissal of Cody's bankruptcy petition because she fails to show that the bankruptcy court abused its discretion.


         Cody has filed four voluntary Chapter 13 petitions in the United States Bankruptcy Court for the Western District of Virginia since November 2016 in an attempt to prevent the sale of a parcel of real property ("Property"). ECF No. 1-2, at 1. All four petitions have been dismissed, with the fourth and most recent dismissal resulting in this appeal. ECF No. 6 at 5. Each of Cody's first three petitions was filed one day before appellee the City of Roanoke ("the City") was set to sell the property and each was dismissed for her failure to submit the required documentation. Id. at 6. On July 17, 2018, the court dismissed her third petition and also ordered her not to file another petition for a period of 180 days, which expired on January 14, 2019.[1] Id. at 7.

         Cody violated this order by filing her fourth bankruptcy petition on January 11, 2019, which was three days before the court's 180-day bar expired and four days before another scheduled sale of the Property. Id. Additionally, Cody failed to file the required documentation or take the required credit counseling courses before filing her petition. ECF No. 7 at 9. Despite Cody's fourth petition, the City sold the Property at public auction on January 15, 2019 as planned. Id. The bankruptcy court ordered Cody to show cause why her fourth petition should not be dismissed, and oral arguments were heard on February 4, 2019. Id. at 10. The court issued an order dismissing the case the next day, concluding the following:

[T]he Debtor's repeat bankruptcy filings [were] a continued effort to thwart the City of Roanoke from exercising its rights in connection with unpaid real estate taxes on the Debtor's condemned and unoccupied Property. The serial filings combined with her disregard of the duties and obligations imposed upon her by the United States Bankruptcy Court and this Court's prior dismissal Order, indicate that her case was filed in bad faith, and is an abuse of the provisions of the Bankruptcy Code.

ECF No. 1-2 at 5.

         Cody filed a Motion for Leave to Appeal on February 14, 2019, which this court treated as a Notice of Appeal. ECF No. 7 at 4. Therefore, Cody's appeal is timely pursuant to Rule 8002 of the Federal Rules of Bankruptcy Procedure because it was filed within fourteen days of the bankruptcy court's order. Id. However, Cody's appeal did not request a stay, nor was one ordered by any court. Id. at 11. As such, the Roanoke City Circuit Court entered a decree on March 26, 2019, confirming the January 15, 2019 sale and tide was conveyed to the purchaser three days later. Id. The Special Commissioner's report of receipts and proposed disbursements subsequendy was confirmed by the circuit court in an order entered on July 10, 2019. Id. Notably, the report shows that after satisfaction of the taxes, costs, and expenses of the sale, Cody is entitled to die surplus proceeds totaling $30, 469.99 as the former owner of the Property. Id., at 12. However, the Special Commissioner has deferred any disbursements until this appeal is resolved. Id.


         It is not entirely clear from Cody's brief which issues she is appealing. ECF No. 4. However, based on the briefs filed by appellee-trustee Christopher Micale ("Micale") and the City, the court considers the sole issue to be whether the bankruptcy court erred in dismissing Cody's fourth bankruptcy petition filed on January 11, 2019. ECF Nos. 6 at 4 and 7 at 5.

         In her brief, Cody argues that she filed her petition two days before the 180-day court-ordered bar expired because she was concerned that anticipated inclement weather would prevent her from doing so before the public auction on January 15, 2019. ECF No. 4 at 2. At the February 4, 2019 hearing, Cody also asserted that she was concerned the bankruptcy court would be closed on the Rev. Dr. Martin Luther King, Jr. holiday. ECF No. 7 at 10. In addition, she cites the onset of numerous health issues as the reason for her untimely delay in taking the required consumer credt counseling course. ECF No. 4 at 1-2.

         Micale and the City largely make the same arguments in their respective briefs. First, they argue that Cody is not a debtor under 11 U.S.C. § 109(h) because she failed to take die required credit counseling course. ECF Nos. 6 at 8-11 and 7 at 14-15. Second, they argue that Cody was barred by the bankruptcy court from filing another Chapter 13 petition prior to January 14, 2019. ECF Nos. 6 at 11-13 and 7 at 16. Third, they argue that Cody's serial filing of Chapter 13 petitions on the eve of the City's planned public auctions constitutes bad faith, with the City adding that Cody did not have sufficient wages to fund a Chapter 13 plan even if the case had been allowed to proceed. ECF Nos. 6 at 13-16 and 7 at 16-18. These arguments mirror the reasons given by the bankruptcy court for its dismissal of the petition. ECF No. 1-2 at 4-5.

         Finally, the City alone argues that Cody's appeal is constitutionally and equitably moot because no stay was requested after the February 5, 2019 dismissal and because the Property in question has been sold and title conveyed. ECF No. 7 at 18-21. Because the court finds that the bankruptcy court ...

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