Opinion
6:23-bk-03847-TPG
05-06-2024
In re: Christopher Lee Crutcher, Debtor.
ORDER DETERMINING DEBTOR IS INELIGIBLE FOR CHAPTER 13 PURSUANT TO 11 U.S.C. § 109(E)
TIFFANY P. GEYER UNITED STATES BANKRUPTCY JUDGE.
THIS CASE is before the Court upon the argument raised by two creditors, Joseph Colyer and Loreilyn Rowe (collectively, the “Creditors”), that the Debtor is ineligible for a Chapter 13 case because he exceeds the debt limit set forth in 11 U.S.C. § 109(e). (Doc. No. 78 at 7; Doc. No. 101 ¶¶ 1, 8-9.) For the reasons below, the Court agrees with the Creditors.
On September 18, 2023, the Debtor filed a Chapter 13 petition. (Doc. No. 1.) Chapter 13 cases are limited to individual debtors owing less than the amount specified in 11 U.S.C. § 109(e), which states that “[o]nly an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated debts of less than $2,750,000 . . . may be a debtor under Chapter 13 of this title.” In this case, the Debtor's noncontingent, liquidated debts exceed this amount.
On his original schedules, the Debtor listed $2,535,792.89 in total liabilities. (Doc. No. 1 at 8, Part 2.) The Debtor subsequently amended schedule E/F to add an unsecured claim of $40,555, increasing his total debts to $2,576,347.89. (Doc. No. 41 at 1.) Among the liabilities scheduled by the Debtor is a debt to Colyer in the amount of $2,133,327.89, which the Debtor categorized as contingent, disputed, and unliquidated. (Doc. No. 1 at 25.) However, this amount is $344,787.96 less than the $2,478,115.85 asserted by Colyer in his proof of claim. (Claim 5-1 at 2.) The Debtor objected to Colyer's claim but failed to overcome the claim's prima facie validity in the amount of $2,478,115.85, so the Court overruled the objection and allowed the claim in the amount filed. (Doc. No. 115.) See Fed. R. Bankr. P. 3001(f) (“A proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim.”); In re Walston, 606 Fed.Appx. 543, 546 (11th Cir. 2015) (proof of claim containing all information required by Rule 3001 is prima facie evidence of the validity and amount of the claim).
The Debtor did not attribute the additional $40,555 to any particular creditor, though he noted that the purpose of the amendment was to add the unsecured claim of the City of Orlando Code Enforcement Division, which he listed in an "unknown" amount. (Doc. No. 41 at 1, Part 2.)
In the Eleventh Circuit, "Unpublished opinions are not considered binding precedent, but they may be cited as persuasive authority." 11th Cir. R. 36-2.
Furthermore, Colyer's claim is not contingent and unliquidated because the claim arises from a state court judgment. In re Letterese, 397 B.R. 507, 514 (Bankr. S.D. Fla. 2008) ("A judgment which establishes monetary liability in favor of a party is noncontingent and liquidated as to the sum owed. The pendency of an appeal does not affect the outcome . . . ."); In re Cluett, 90 B.R. 505, 507 (Bankr. M.D. Fla. 1988) ("[T]he judgment . . . clearly represents a liability which is fixed and which is noncontingent and remains a final and enforceable judgment until it is reversed, if ever, upon appeal."). As such, Colyer's noncontingent liquidated $2,478,115.85 claim is appropriately included in calculating the Debtor's Chapter 13 eligibility under § 109(e).
The Debtor also scheduled a debt of $28,628 to First Florida Credit Union as contingent and disputed (Doc. No. 1 at 24), and a $1 debt to Rowe as unliquidated and disputed (id. at 25). Giving the Debtor the benefit of the doubt and subtracting these amounts from the § 109(e) calculation reduces the Debtor's scheduled liabilities from $2,576,347.89 to $2,547,718.89 ($2,576,347.89 - $28,628 - $1 = $2,547,718.89). Once $344,787.96 is added to $2,547,718.89 to account for the amount set forth in Colyer's proof of claim, the total debt is $2,892,506.85 ($2,547,719.89 + $344,787.96 = $2,892,506.85), well over the $2,750,000 § 109(e) limitation. Notably, this figure does not include a $90,562.70 judgment debt to RRI that was assigned to Rowe, which the Debtor did not include on his schedules (Claim 6-1). Thus, on the petition date, and calculating the debts in the Debtor's favor, the Debtor owed more than $2,750,000 in noncontingent, liquidated debts, rendering him ineligible to be a debtor under Chapter 13.
As an aside, the Claims Register reflects $3,138,991.84 in liabilities, clearly exceeding the debt limit in § 109(e), and the Creditors note that their claims plus the IRS's claims alone reflect combined liquidated and noncontingent debts of $2,797,744.85. (Doc. No. 101 ¶ 9.) There is a split of authority regarding whether the Court may look beyond the schedules to determine eligibility without a showing of the debtor's bad faith. Compare In re Sullivan, 245 B.R. 416, 418 (N.D. Fla. 1999) ("Section 109(e) limits eligibility based upon what an individual [actually] owes on the date of the filing of the petition, not on what an individual . . . thinks he owes on the date of filing; and there is nothing in the statute to suggest that, when a creditor makes an objection to the debtor's eligibility, the court may not look past the debtor's schedules to other evidence of correct figures as of the petition date." (emphasis added)) with In re De La Hoz, 451 B.R. 192, 197, 201 (Bankr. M.D. Fla. 2011) (recognizing majority view "that a Bankruptcy Court should not look beyond a debtor's schedules in determining the debtor's eligibility for Chapter 13 relief unless the court determines that the debtor did not file its schedules in good faith."). Lack of good faith can be shown by "an intent to abuse the judicial process and the purposes of the reorganization process[]" or "when it appears to a legal certainty that the claim is not what the debtor reported." In re De La Hoz, 451 B.R. at 202. Here, it is clear the amount scheduled by the Debtor for Colyer's claim is inaccurate, and possibly intentionally so. There is no dispute that Colyer's claim was timely filed, or that he failed to provide all documentation supplying fair notice of the basis of the claim. Moreover, the Debtor produced nothing in his objection (Doc. No. 91) to Colyer's claim sufficient to rebut the claim's validity. See In re MacFarland, 462 B.R. 857, 880 (Bankr. S.D. Fla. 2011) ("The burden of proof is on the objecting party to provide evidence surpassing the evidence set forth in the claim."). Furthermore, the Debtor failed to schedule a liquidated, noncontingent $90,562.70 judgment debt to RRI that was assigned to Rowe, and instead scheduled Rowe as having an unliquidated and disputed $1 claim, raising the specter of an intent to abuse the reorganization process.
Accordingly, it is ORDERED that the case will be DISMISSED unless the Debtor moves for conversion to another chapter of the Bankruptcy Code within fourteen days of the date of this Order.
The Clerk is directed to serve a copy of this Order on interested parties who do not receive service by CM/ECF and file a proof of service within three days of entry of this Order.