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In re Francis

United States Bankruptcy Appellate Panel of the First Circuit

September 10, 2019


          Appeal from the United States Bankruptcy Court for the District of Massachusetts (Hon. Frank J. Bailey, U.S. Bankruptcy Judge)

          Carmenelisa Perez-Kudzma, Esq., on brief for Appellant.

          Before Tester, Cabán, and Fagone, U.S. Bankruptcy Appellate Panel Judges.

          Fagone, U.S. Bankruptcy Appellate Panel Judge.

         Paul Francis (the "Debtor") refused to comply with several orders issued by the bankruptcy court. On its own initiative, the court denied the Debtor a chapter 7 discharge. The Debtor has appealed the order denying his discharge (the "Order"), contending that the bankruptcy court should have dismissed the case and that the court lacked the authority to deny him a discharge sua sponte. We AFFIRM.


         In May 2017, the Debtor's chapter 13 case was dismissed due to his failure to file required documents. About two and a half months later, the Debtor filed another case, the one in which this appeal arises. This case began under chapter 13 but was later converted to chapter 11. The chapter 11 case was not successful. Due to the Debtor's accumulated omissions, including his failure to file a plan and disclosure statement, the bankruptcy court granted a motion by the United States trustee and issued an order converting the case to one under chapter 7. In so doing, the bankruptcy court considered whether dismissal or conversion would be in the best interests of the creditors and the estate. Based, in part, on the likely existence of equity for unsecured creditors in a chapter 7 case, the court decided that conversion was the right option. The Debtor appealed that decision and the Panel affirmed. See Francis v. Harrington (In re Francis), BAP No. MB 18-012, 2019 WL 1265316 (B.A.P. 1st Cir. Mar. 14, 2019).

         The failures that contributed to the conversion of the case were not the Debtor's only failures to comply with the Bankruptcy Code and court orders.[1] When it converted the case, the bankruptcy court also issued an order (the "Order to Update") requiring the Debtor to file: (1) an Official Form 108-a Statement of Intention for Individuals Filing Under Chapter 7 (the "Statement of Intention") "[w]ithin 30 days of the filing of [his] bankruptcy petition or the scheduled date of the § 341 Meeting of Creditors, whichever is earlier"; and (2) a schedule listing post-petition creditors by April 3, 2018 or a statement that he had none. The Order to Update warned:

Failure to file the required documents with the Clerk's Office may result in the dismissal of your case. . . .
Please note that if not dismissed earlier, the case MUST be automatically dismissed under 11 U.S.C. § 521(i) if certain documents are not filed within 45 days of the date of the filing of the petition. If you file another bankruptcy petition within 12 months of the dismissal, the automatic stay may be limited or may not take effect depending upon your circumstances.

         The Debtor did not comply with the Order to Update. He also failed to appear at the § 341 meeting of creditors as scheduled.

         In an apparent effort to secure the Debtor's compliance, the bankruptcy court entered another order (the "Second Order"), this time requiring the Debtor to file the missing documents by July 19, 2018. The Second Order also warned "that refusal to obey a lawful order of the court is grounds for denial of discharge in chapter 7" under § 727(a)(6)(A).

         After the Debtor failed to comply with the Second Order, the bankruptcy court issued yet another order, this one on August 13, 2018 (the "Order to Show Cause"). The Order to Show Cause required the Debtor "to show cause in writing, with supporting affidavit(s), why he should not be denied a discharge for refusal to obey a lawful order of the court."

         Shortly after the Order to Show Cause was issued, the Debtor's counsel filed a statement indicating: (1) the Debtor had not provided her with the list of post-petition creditors or Statement of Intention; (2) she hoped to obtain the Debtor's court-ordered affidavit the following day; and (3) she would file all required documents on or about August 30, 2018.

         The bankruptcy court then scheduled a hearing on the Order to Show Cause for September 18, 2018 and directed the Debtor to appear at the hearing. The court rescheduled the hearing for September 25, 2018 at the Debtor's request. On September 21, 2018-more than five months after the expiration of the deadline prescribed in the Order to Update-the Debtor finally filed a "Notice of No Post[-]Petition Creditors," representing he had no post-petition creditors. Additionally, on September 23, 2018, the Debtor filed a Statement of Intention, indicating that he intended to retain and redeem three properties.

         Two days later, at the hearing on the Order to Show Cause, the Debtor's attorney explained that the Debtor had been confused about what was required of him in his bankruptcy case and that it was difficult for him to comply with court orders because his wife managed the family's financial matters. The bankruptcy court then examined the Debtor to ascertain whether he received court notices:

THE COURT: Mr. Francis, we sent you a number of notices concerning things that you needed to do in connection with your case. We sent them to your counsel . . . but we also sent them to you, right? Did you get those notices? . . . .
THE COURT: All right. You opened them up and you read them. Is that right?
MR. FRANCIS: Well, yes. My wife did it. . . . I don't collect the mail. My wife ...

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