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In re Ross

United States Court of Appeals, Third Circuit

June 8, 2017

IN RE: RAYMOND ROSS, Appellant

          Argued October 25, 2016

         On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civ. No. 2:15-cv-00197) District Judge: Honorable Gerald J. Pappert

          Raymond Ross Pro Se

          Charles J. Hartwell, Esq. Dethlefs Pykosh and Murphy Law Counsel for Appellee AmeriChoice Federal Credit Union

          William H. Burgess, Esq. [ARGUED] Kirkland & Ellis Court-Appointed Amicus Curiae in Support of Appellant Raymond Ross

          Before: VANASKIE, KRAUSE, and NYGAARD, Circuit Judges

          OPINION

          VANASKIE, Circuit Judge.

         Raymond Ross appeals from a broad filing injunction issued against him by the Bankruptcy Court after he and his wife used the bankruptcy process to stave off the sheriff's sale of their home. Ross argues that, as a matter of law, a bankruptcy court may never issue a filing injunction against a Chapter 13 debtor who requests voluntary dismissal under 11 U.S.C. § 1307(b) because doing so would undermine the debtor's statutory rights. We disagree, and hold that a bankruptcy court does indeed have the authority to issue a filing injunction even in the context of approving a debtor's § 1307(b) voluntary dismissal because nothing in the Bankruptcy Code's express terms says otherwise.

         However, we also find that the Bankruptcy Court's filing injunction against Ross cannot survive this appeal due to this case's particular circumstances. The Bankruptcy Court provided no reasoning for the broad nature of its filing injunction, which went well beyond what had been requested and what the Bankruptcy Court found appropriate in the case of Ross's similarly-situated wife. Accordingly, we will vacate the injunction and remand this matter for further proceedings.

         I.

         Appellant Raymond Ross and his wife Sandra have lived in their home in Ambler, Pennsylvania, since 1993. In 2003, the Rosses took on a mortgage from Appellee AmeriChoice Federal Credit Union. The Rosses fell behind on their payments, and in 2012 AmeriChoice filed a foreclosure action in Pennsylvania state court. The state court entered default judgment against the Rosses, and AmeriChoice scheduled a sheriff's sale to be held on October 30, 2013. Ross v. AmeriChoice Fed. Credit Union, 530 B.R. 277, 280 (Bankr. E.D. Pa. 2015).

         The day before the sheriff's sale, Raymond[1]-acting alone, without Sandra-filed the first of the Rosses' three relevant Chapter 13 bankruptcy petitions. Raymond's first petition triggered Chapter 13's automatic stay and put a halt to the sheriff's sale, but was dismissed about six months later after Raymond failed to make required payments. AmeriChoice rescheduled the sheriff's sale for August 27, 2014.

         On the day of the rescheduled sale, Raymond filed a second Chapter 13 petition-the one that led to this appeal- stalling the sale for a second time. The Bankruptcy Court quickly granted AmeriChoice relief from the automatic stay, and the sheriff's sale was rescheduled yet again, this time for October 29, 2014. On that day, however, Sandra filed her own Chapter 13 petition, delaying the sale of the Rosses' property a third time. In re Sandra Dixon-Ross, No. 15-CV-581, 2016 WL 1056776, at *1 (E.D. Pa. Mar. 17, 2016). Sandra's case was assigned to the same Bankruptcy Judge overseeing Raymond's case, and a week later the court dismissed Sandra's petition for failure to obtain required pre-petition credit counseling. Id.

         In Raymond's second case, AmeriChoice filed a motion under 11 U.S.C. § 1307(c) to either convert Raymond's case to Chapter 7 or dismiss it altogether due to what AmeriChoice saw as Raymond's bad faith use of the bankruptcy process. The Bankruptcy Court scheduled a hearing on the motion. About two weeks prior to the hearing, Raymond filed a motion to postpone the hearing due to a scheduling conflict and his anticipated absence from the state. The Bankruptcy Court denied the motion to postpone a week later. Raymond then requested, the day before his hearing, that his case be dismissed pursuant to § 1307(b).

         Raymond did not appear at the hearing on AmeriChoice's motion. AmeriChoice did appear, and indicated that its preference would be for the Bankruptcy Court to convert Raymond's case to Chapter 7; dismissal was its second choice. If the Bankruptcy Court decided to dismiss, AmeriChoice requested that the court also issue one of two proposed filing injunctions: a filing injunction "barring future filings [of both Raymond and Sandra Ross] for 180 days, " or a filing injunction "barring the use of the automatic stay in any future filings by either one of them." (Addendum to Amicus Br. at 24 (transcript of hearing).) The Bankruptcy Judge expressed due process concerns with the prospect of issuing an order that extended to Sandra because the hearing was held only in Raymond's case and Sandra had not been given notice. The Judge instead suggested that if AmeriChoice wanted a filing injunction entered against Sandra, it should return to Sandra's case and request one there. Neither the Bankruptcy Judge nor AmeriChoice mentioned or discussed Raymond's request for dismissal at the hearing. ...


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