In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 04-3621

IN RE:

MARK A. SIDEBOTTOM,

Debtor-Appellant.

____________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:03-cv-1639-LJM-WTL—Larry J. McKinney, Chief Judge.

____________

ARGUED APRIL 13, 2005—DECIDED DECEMBER 9, 2005

____________

Before BAUER, WOOD, and WILLIAMS, Circuit Judges.

WOOD, Circuit Judge. This case involves a tangle of

bankruptcy issues under the Code as it existed prior to

the effective date of the Bankruptcy Abuse Prevention

and Consumer Protection Act of 2005 (BAPCP Act), Pub. L.

109-8, 119 Stat. 23 (2005). The debtor, Mark A. Sidebottom,

owned an eponymous construction company, Sidebottom

Builders, Inc. (SBI). David and Jamie Broyles are two of

Sidebottom’s creditors, who had contracted with SBI to

build their dream home, but were left high and dry when

SBI ceased performance. Eventually, Sidebottom personally

and SBI as a company both filed for protection under

Chapter 7 of the Bankruptcy Code; a little while later,

before the Chapter 7 proceeding was fully resolved,

Sidebottom filed a petition for relief under Chapter 13. The

bankruptcy court and district court focused on the question whether the Broyleses’ claims for fraud and conversion
2 No. 04-3621

could be considered a liquidated, noncontingent debt for

purposes of the Chapter 13 proceeding—if not, then

the Chapter 13 proceeding was barred under 11 U.S.C.

§ 109(e), because the debt exceeded $290,525. The district court concluded the bar of § 109 indeed applied and

that Sidebottom was thus not eligible for Chapter 13 relief. We agree that it was correct to dismiss Sidebottom’s

case, for the more fundamental reason that he was not

entitled in these circumstances simultaneously to pursue

Chapter 7 and Chapter 13 relief.

I

On April 6, 2000, David and Jamie Broyles hired SBI to

construct a new residence on their property in Indianapolis,

Indiana. The cost of the project was estimated at $968,862,

which was to be paid in stages according to a schedule set

out in the parties’ written contract. In order to receive the

scheduled payments, SBI had to submit to the Broyleses an

application for payment certifying that the stipulated work

had been completed. The contract permitted the Broyleses

to withhold payment for a variety of reasons: defective

work; the filing or threatened filing of a mechanic’s lien; the

failure of SBI to make payments properly to subcontractors

or for labor, materials, or equipment; SBI’s failure to follow

the plans or requirements of the contract; or nonperformance of the work for that stage.

During the course of construction, the Broyleses made

four payments to SBI totaling $678,205, or 70% of the full

contract price. Their last payment was made on October 20,

2000. Shortly after that date, Sidebottom notified them that

SBI could not perform the contract and that it planned to

file for bankruptcy relief. Around December 29, 2000, the

Broyleses began receiving notices from various subcontractors stating that the Broyleses were personally liable for

payments that SBI owed to the subcontractors. The
No. 04-3621 3

Broyleses paid $21,285.62 to one subcontractor, Frank

Proctor. On January 10, 2001, the Broyleses and SBI

executed a “Contract Termination Agreement” in which SBI

acknowledged its breach. The Broyleses then hired another

construction company, Hamilton Homes, to complete the

project at an additional cost of $700,919, well in excess of

the remaining $290,658 due under the contract. On April 9,

2001, the Broyleses filed a complaint against SBI and

Sidebottom in the Superior Court of Marion County,

Indiana, seeking damages for breach of contract, fraud,

conversion, and unjust enrichment.

On April 23, 2001, hard on the heels of the Broyleses’

suit, SBI filed a voluntary petition for bankruptcy under

Chapter 7 of the Code. About nine months later, on January

23, 2002, Sidebottom followed with a personal Chapter 7

filing, which is the case of immediate relevance to this

appeal. Sidebottom’s petition naturally triggered an

automatic stay of the state court proceedings against him,

see 11 U.S.C. § 362(a). The Broyleses filed an adversary

complaint in the personal bankruptcy, claiming that their

fraud and conversion claims against Sidebottom were

nondischargeable under 11 U.S.C. § 523(a)(2)(A). The

bankruptcy court scheduled an adversary proceeding on the

matter for April 9, 2003, while it granted a general discharge to Sidebottom with respect to his other debts on May

31, 2002.

At this point, matters became more complicated. Less

than two weeks before the adversary hearing, on March 24,

2003, Sidebottom filed an overlapping petition for relief under Chapter 13, which insofar as the Broyleses’

claims were concerned covered exactly the same debts as

the ongoing Chapter 7 proceeding. Along with his application, Sidebottom submitted a proposed plan and schedule of

assets and liabilities. He listed the Broyleses’ claim

as a nonpriority, unsecured, disputed, unliquidated, and

contingent claim of an “unknown” amount along with
4 No. 04-3621

$350.14 in unsecured priority claims and $8,658.33 in other

unsecured nonpriority claims in the schedule. His proposed

plan represented that he would make 36 monthly payments

to his creditors in the amount of $100.00, totaling $3,600.

The bankruptcy court assumed that the new Chapter 13

filing required a stay of the scheduled adversary hearing in

the Chapter 7 case. On July 13, 2003, it ordered the

proceedings in the Chapter 7 nondischargeability action

stayed “until completion by the Debtor of all payments

required under a confirmed chapter 13 plan, or dismissal or

conversion of the chapter 13 case.” The Broyleses moved to

dismiss Sidebottom’s Chapter 13 petition on two grounds:

first, that it was not filed in good faith, and second, that

Sidebottom’s debts exceeded the $290,525 limit imposed by

11 U.S.C. § 109(e). The Broyleses alleged that Sidebottom

had filed the case for the sole purpose of avoiding the trial

of the pending § 523(a)(2)(A) claim in the Chapter 7 proceeding. In addition, the Broyleses alleged that their fraud

and conversion claims represented a noncontingent,

liquidated, unsecured debt and thus were covered by the

$290,525 cap in § 109(e). At the same time, the Broyleses

filed an objection to the confirmation of the Chapter 13

plan, arguing that it was not filed in good faith and that it

unfairly discriminated against them.

After an evidentiary hearing, the bankruptcy court

dismissed Sidebottom’s Chapter 13 petition on the ground

that the Broyleses’ claims constituted a liquidated,

noncontingent debt greater than the statutory cap for

eligibility under Chapter 13. The district court summarily affirmed the dismissal.

II

Before this court, Sidebottom argues that the district and

bankruptcy courts were mistaken to conclude that
No. 04-3621 5

the Broyleses’ claim was liquidated. His argument is

somewhat hard to follow, but essentially he appears to be

asserting that the only party that owes money to the

Broyleses is his company, SBI, and that there was no

reason for holding him personally liable for SBI’s debts. He

goes on to assert that any contractual liability he himself may have had to the Broyleses was covered by the

May 31, 2002, general discharge in the Chapter 7 proceeding. The fraud and conversion claims, which he seems to

concede survived that discharge, are not readily ascertainable (indeed, he goes so far as to assert that the amount

due under the contract with SBI was not readily determinable either). Last, he argues that the Broyleses’ claims

against him are contingent, again because they depend on

piercing the corporate veil. The Broyleses, as one would

expect, defend the bankruptcy court’s ruling.

A. Simultaneous “Chapter 20” Filings

Although the parties have focused on § 109(e), a more

fundamental question is apparent on the face of these

proceedings, namely, whether Sidebottom was entitled to

maintain a Chapter 13 proceeding while a Chapter 7

proceeding involving the same debts was pending. A

Chapter 13 case that follows a Chapter 7 case is a special

form of serial or repetitive filing under the Bankruptcy

Code; it has been nicknamed a “Chapter 20” filing. See

Lex A. Coleman, Individual Consumer “Chapter 20” Cases

After Johnson: An Introduction to Nonbusiness Serial

Filings under Chapter 7 and Chapter 13 of the Bankruptcy

Code, 9 BANKR. DEV. J. 357 (1992). In Johnson v. Home

State Bank, 501 U.S. 78 (1991), the Supreme Court held

that the Code did not expressly prohibit such filings where

the Chapter 13 case was initiated after the Chapter 7

case had closed. Looking at other Code provisions governing

serial filings, the Court wrote that “[t]he absence of a like
6 No. 04-3621

1 Among the other important changes affected by the BAPCP

Act is one in this area. The BAPCP Act amended the Code to bar a

debtor from relief under Chapter 13 within four years of receiving

a discharge under Chapters 7, 11, or 12, or within two years of

receiving a discharge in a previous Chapter 13 proceeding. See

BAPCP Act § 312, amending 11 U.S.C. § 1328. Because these

changes apply only prospectively, however, see BAPCP Act § 1501,

this statutory bar does not apply to Sidebottom’s Chapter 13 case.

prohibition on serial filings of Chapter 7 and Chapter 13

petitions, combined with the evident care with which

Congress fashioned these express prohibitions, convinces us

that Congress did not intend categorically to foreclose the

benefit of Chapter 13 reorganization to a debtor who

previously has filed for Chapter 7 relief.” Id. at 87.1

The facts in Johnson involved a Chapter 13 case that was

begun after the conclusion of the Chapter 7 proceeding.

Sidebottom’s case, in contrast, involves a debtor’s effort to

institute a Chapter 13 proceeding during the pendency of

the Chapter 7 proceeding—a move dubbed a “simultaneous

Chapter 20” by the bankruptcy bar, to distinguish it from

the Johnson-style “sequential Chapter 20.” See In re

Hodurski, 156 B.R. 353, 355 (Bankr. D. Mass. 1993) (finding

no per se prohibition against simultaneous filings but

dismissing on the basis of bad faith).

The courts are divided on the question whether a simultaneous “Chapter 20” filing is ever permissible. Unlike the

bankruptcy court in Hodurski, the majority has endorsed a

per se rule prohibiting a debtor from having more than one

bankruptcy case open at any time. See, e.g., In re Turner,

207 B.R. 373, 378 (2d Cir. B.A.P. 1997) (at the preliminary

injunction stage, holding that a Chapter 13 case filed before

the debtor receives his Chapter 7 discharge is a nullity); In

re Scruggs, 320 B.R. 94 (Bankr. D. S.C. 2004) (citing cases);

In re Lord, 295 B.R. 16 (Bankr. E.D. N.Y. 2003) (barring a

debtor from filing a Chapter 13 proceeding before the
No. 04-3621 7

Chapter 7 case is closed even if the debtor has already

received a discharge in the Chapter 7 case); In re Jackson,

108 B.R. 251, 252 (Bankr. E.D. Cal. 1989) (“[o]nce a bankruptcy case is filed, a second case which affects the same

debt cannot be maintained”). The majority has relied on the

Supreme Court’s decision in Freshman v. Atkins, 269 U.S.

121 (1925), which involved a debtor who had been denied a

discharge in one bankruptcy proceeding, and while that

case was pending, had filed a second petition seeking to

discharge both the debts listed in the first petition and

some new debts. The Court allowed the petition only with

respect to the new debts, writing that the “pendency of the

first application precluded a consideration of the second in

respect of the same debts.” Id. at 122. It analogized this

situation to the common law plea of “prior suit pending,”

which reflected “the general rule that the law will not

tolerate two suits at the same time for the same cause.” Id.

at 123.

A minority of courts has refrained from adopting an

absolute ban on simultaneous filings, but their rationale

is not helpful to Sidebottom. They have noted that Freshman stands only for the limited proposition that a debtor may not maintain simultaneous applications relating

to the same debts and thus is not wholly barred from

maintaining two cases under different chapters of the Code

in other situations. See, e.g., In re Kosenka, 104 B.R. 40

(Bankr. N.D. Ind. 1989). Some courts have permitted a

debtor to file a Chapter 13 petition to reorganize the debts

that have survived the Chapter 7 discharge, provided that

the debtor has already received the Chapter 7 discharge,

even if the Chapter 7 case has not been closed. See, e.g., In

re Young, 237 F.3d 1168 (10th Cir. 2001); In re Saylors, 869

F.2d 1434 (11th Cir. 1989); In re Ragsdale, 315 B.R. 691

(Bankr. E.D. Mich. 2004); In re Hodurksi, 156 B.R. 353.

These decisions focus on the lack of an express prohibition

on this practice (in the pre-October 2005 Code, of course),
8 No. 04-3621

and on the rehabilitative purpose of Chapter 13. Rather

than banning all Chapter 13 filings during the pendency of

a Chapter 7 case, these courts assess the propriety of the

Chapter 13 case in light of the good faith standard applicable to confirmations of Chapter 13 plans.

Although the courts have differed with respect to the

permissibility of these “simultaneous Chapter 20” cases,

there is general agreement that a debtor may not maintain two or more concurrent actions with respect to the

same debts. Only the Tenth Circuit may have held otherwise, in In re Young, 237 F.3d 1168. The facts of Young

are similar to those before us: the debtor received a general

discharge in his Chapter 7 case, but one of his creditors had

filed an adversary complaint alleging that the debt owed to

it was nondischargeable. Before the bankruptcy court had

a chance to resolve that dispute, the debtor “converted” his

case to a Chapter 13 proceeding. Thus, as the Tenth Circuit

saw it, nothing was left of the Chapter 7 proceeding. It

described this course of events as a “Chapter 20” procedure

and permitted the conversion. Id. at 1173. Any potential

abuse on the debtor’s part could be addressed, in the court’s

view, through the bankruptcy court’s general power to

ensure good faith in the creation and confirmation of the

Chapter 13 plan.

The Second Circuit’s Bankruptcy Appellate Panel, in

contrast, apparently takes a stricter approach. In Turner,

no general discharge had yet been granted at the time

the Chapter 13 case involving the same debt was filed, but

the BAP’s language suggests to us that simultaneous

proceedings over a debt that was excluded from the scope of

a general discharge would be impermissible in its view.

Quoting from In re Kosenka, 104 B.R. at 46, it observed that

the Code is designed “to resolve a debtor’s financial affairs

by administration of a debtor’s property as a single estate

under a single chapter within the code.” 207 B.R. at 378.
No. 04-3621 9

In our opinion, the Second Circuit’s BAP and the majority

of other courts have the better of this debate. It is possible,

in fact, that the Tenth Circuit would not disagree about

truly simultaneous proceedings, because it appears that the

case before it was fully converted from a Chapter 7 proceeding to a Chapter 13 proceeding. Whether that is so or not,

it seems to us that a debt like the Broyleses’ claim against

Sidebottom that is expressly excluded from a general

discharge under Chapter 7 falls within the rule articulated

by the Turner panel. As Freshman might have put it, the

effort to litigate the same matter simultaneously in the

Chapter 13 proceeding should have been rejected on the

grounds of “same matter pending.” This is not a case in

which the Chapter 7 proceeding was finished except for

some minor technicalities at the end, like the filing of a

trustee’s final report. Allowing Sidebottom to proceed with

the Chapter 13 case significantly affects the Chapter 7

trustee’s ability to administer the estate, because it will

change how much each creditor gets paid if the Broyleses’

claims are resolved through the Chapter 13 process.

B. Good Faith

Although the bankruptcy and district courts relied on

§ 109(e) to support dismissal of Sidebottom’s Chapter 13

case, the Broyleses also argued that it should be dismissed because it was filed in bad faith. Because it ruled on

the other ground, the bankruptcy court did not make

findings of fact on this point. In our view, however, it would

be difficult to conclude otherwise on this record.

When determining whether a Chapter 13 petition was

filed in good faith, courts take into account the following

nonexhaustive list of factors: (a) the nondischargeability

of the debt; (b) the time of the filing of the petition; (c)

how the debt arose; (d) the debtor’s motive for filing the

petition; (e) how the debtor’s actions affected creditors; (f)
10 No. 04-3621

the debtor’s treatment of creditors both before and after the

petition was filed; and (g) whether the debtor has

been forthcoming with the bankruptcy court and the

creditors. See Matter of Love, 957 F.2d 1350, 1357 (7th Cir.

1992). Taken as a whole, they cast serious doubt on

Sidebottom’s petition.

Without an adjudication of nondischargeability under

11 U.S.C. § 523(a), it is impossible to say how the first

factor cuts. It does appear, however, that the Broyleses had

a nonfrivolous claim that they were prepared to pursue and

that Sidebottom went to some lengths to avoid the moment

of truth. Looking at factor two, we note that his Chapter 13

petition was filed a mere two weeks before the scheduled

adversary hearing. According to the Broyleses, at least, the

debt arose as a result of Sidebottom’s fraudulent activities

and the conversion of their money. If the bankruptcy court

had rejected the Broyleses’ position in the adversary

proceeding, their debt would have been discharged along

with all of Sidebottom’s other debts, but if it had ruled in

their favor, Sidebottom would have been faced with a

substantial debt that was nondischargeable. This, we

assume, underlies the Broyleses’ belief that Sidebottom’s

primary motive in filing the Chapter 13 case was to avoid

a negative result in the nondischargeablity action pending

in the Chapter 7 proceeding. He also had a financial

incentive to use Chapter 13, if one assumes a significant

risk of losing in the Chapter 7 adversary proceeding: his

proposed Chapter 13 plan would have forced the Broyleses

to receive a pro rata portion of the proposed $3,600 he was

offering to fund the Chapter 13 plan—a plan that is less

than forthcoming about the nature of the Broyleses’ claim.

Before Sidebottom’s eleventh-hour Chapter 13 petition, the

Broyleses had spent considerable time and resources

preparing for trial.

The record suggests that Sidebottom used the Chapter 13

filing simply to save the expense of defending the adversary

action. Addressing the question of good faith before the
No. 04-3621 11

bankruptcy court, he reported that during the course of the

Chapter 7 proceedings, there had been discussions between

counsel with respect to his inability to fund the litigation

and to pay the costs and fees necessary to complete it.

There was also correspondence on January 15, 2003, which

included an offer of settlement and indicated that

Sidebottom was unable to participate in the adversary

proceeding and would file a Chapter 13 petition in the event

that it was necessary to do so prior to going to trial. None

of this sounds like a proper use of the bankruptcy procedures to us, although in the absence of our conclusion above

about the use of simultaneous “Chapter 20” filings we

would probably remand this issue to the bankruptcy court

for a finding of fact on good faith.

C. Eligibility under 11 U.S.C. § 109(e)

Last, we address briefly the ground on which the bankruptcy and district courts relied in their judgments dismissing Sidebottom’s Chapter 13 proceeding. As the bankruptcy judge pointed out, “[u]nlike other chapters of the

Bankruptcy Code, debtors must meet specific debt requirements to be eligible for chapter 13 relief.” The governing

statute is § 109(e), which read as follows at the time

Sidebottom filed:

Only an individual with regular income that owes, on

the date of the filing of the petition, noncontingent,

liquidated, unsecured debts of less than $290,525 . . .

may be a debtor under chapter 13 of this title.

(Under authority granted by 11 U.S.C. § 104, the Judicial

Conference of the United States periodically revises the

dollar amounts in various sections of the Bankruptcy Code,

including § 109(e); the current amount applicable to

§ 109(e) is $307,675. This change does not affect our analysis of Sidebottom’s case.)
12 No. 04-3621

The bankruptcy court began by noting that Sidebottom’s

Chapter 13 petition listed the Broyleses’ claims as an

unsecured nonpriority claim arising out of a lawsuit in an

“unknown” amount. He checked the “contingent,” “unliquidated,” and “disputed” boxes on the form. Looking beyond Sidebottom’s schedules to the complaint the Broyleses

had filed in the state court, the court saw that the alleged

fraud debt was $500,896.79, and the alleged converted

funds were $254,156.91, representing payments made to

SBI and Sidebottom that exceeded the value of the work

performed. This was enough, in the bankruptcy court’s

view, to make the allegation that the amount was “unknown” misleading.

It went on to assess Sidebottom’s eligibility under § 109(e)

on the merits. The judge noted that the mere fact that a

debt is disputed does not exempt it from being included in

the § 109(e) calculation, citing Matter of Knight, 55 F.3d 231

(7th Cir. 1995), and In re Nicholes, 184 B.R. 82, 87 (9th Cir.

B.A.P. 1995). Next, the judge decided that these debts were

liquidated, because they could readily be computed by

looking at the amount paid to SBI under the contract, the

amount of the subcontractors’ claims, the amount paid to

Hamilton Homes to complete the project, and adjusting for

the initial contract price. Even using conservative numbers,

the court came up with a figure of $514,296.41, substantially in excess of the statutory ceiling. Importantly,

Sidebottom did not contest these calculations: he argued

instead that the debt could not readily be determined

because his personal liability for SBI’s debts was at issue.

That point, however, does not address whether the debts

are liquidated in amount; it focuses on who must pay them.

Finally, the bankruptcy judge ruled that the debt was not

contingent, as it did not depend on any future event.

Our only concern with this analysis relates to the question whether the debt was liquidated. The bankruptcy judge

was certainly correct to include the disputed amounts in his
No. 04-3621 13

overall assessment of Sidebottom’s schedule. There was

nothing contingent about these debts, nor did anyone argue

that they were secured. The judge was also entitled to look

at the Broyleses’ complaint, which was a matter of public

record, to see what was at stake in the litigation. Like him,

we find Sidebottom’s indication that the amount of the debt

was “unknown” to be disingenuous; he easily could have

described the amount in controversy and said that it was

disputed. The liquidation requirement, however, is more

problematic. In a sense, the bankruptcy judge avoided it by

noting (sensibly enough) that the disputed amounts took

Sidebottom’s case well over the § 109(e) ceiling. But that is

not the same thing as saying that the amounts were readily

determinable with any precision. Because there are alternate grounds on which the district court’s judgment may be

affirmed, we have no need here to decide exactly how

precise these computations must be in order to satisfy the

statute.

III

We AFFIRM the judgment of the district court, which in

turn affirmed the judgment of the bankruptcy court,

dismissing Sidebottom’s Chapter 13 petition.
14 No. 04-3621

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—12-9-05