FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In the Matter of: JON G. ROSSON, 

Debtor,

JON G. ROSSON,

Appellant,

No. 06-35724

v.

D.C. No.

K MICHAEL FITZGERALD, Chapter  CV-05-01842-JLR

13 Trustee; JAMES RIGBY; UNITED

OPINION STATES INTERNAL REVENUE SERVICE;

THOMAS STONE, Jr.; 925 PIKE

STREET BUILDING CORP; NEW

CENTURY MORTGAGE CORPORATION;

MUNDT MACGREGOR LLP,

Appellees. 

Appeal from the United States District Court

for the Western District of Washington

James L. Robart, District Judge, Presiding

Argued and Submitted

March 13, 2008—Seattle, Washington

Filed September 24, 2008

Before: Betty B. Fletcher and Richard A. Paez,

Circuit Judges, and William W Schwarzer,* District Judge.

Opinion by Judge Paez

*The Honorable William W Schwarzer, Senior United States District

Judge for the Northern District of California, sitting by designation. 

13543
COUNSEL

Rod McCarvel, Seattle, Washington, for the debtor-appellant.

David A. Gebben (argued), McCarty & Gebben, Bellevue,

Washington; Bruce P. Kriegman, Bruce Kriegman Law

Office, Seattle, Washington, for the appellees. 

OPINION

PAEZ, Circuit Judge: 

Unable to pay his debts, appellant Jon G. Rosson filed a

voluntary petition for protection under Chapter 13 of the

Bankruptcy Code. For almost a year, Rosson assured the court

and his creditors that he would soon be receiving several hundred thousand dollars in an arbitration award, and that he

13546 IN THE MATTER OF ROSSON
would use that money to fund his proposed Chapter 13 plan.

When the money finally came in, however, Rosson failed to

deliver it to the Chapter 13 Trustee as the bankruptcy court

had ordered him to do. Upon discovering that the arbitration

proceeds had not been delivered to the Trustee, the bankruptcy court found that Rosson was “rebelliously” “horsing

around” with estate assets and, on its own motion, converted

the Chapter 13 case to one under Chapter 7. Before the court

filed the formal conversion order, Rosson invoked his right to

voluntarily dismiss his Chapter 13 petition under 11 U.S.C.

§ 1307(b). The bankruptcy court denied the request for dismissal and converted the case. 

Relying on a holding from the Bankruptcy Appellate Panel,

see Beatty v. Traub (In re Beatty), 162 B.R. 853 (B.A.P. 9th

Cir. 1994), Rosson brought this appeal asserting that

§ 1307(b) afforded him an “absolute” right to voluntarily dismiss his Chapter 13 case at any time prior to the filing of a

conversion order, and that the bankruptcy court therefore

abused its discretion by denying his request for dismissal. We

write to clarify that, after Marrama v. Citizens Bank of Massachusetts, 127 S. Ct. 1105 (2007), a debtor’s right to voluntarily dismiss a Chapter 13 case under § 1307(b) is not

absolute, but is qualified by an implied exception for bad-faith

conduct or abuse of the bankruptcy process. The bankruptcy

court did not clearly err in finding bad-faith conduct here.

Moreover, although the bankruptcy court failed to provide

Rosson with adequate notice and hearing before converting

the case to Chapter 7, as required by 11 U.S.C. §§ 102(1) and

1307(c), Rosson cannot show prejudice from the bankruptcy

court’s deficient procedures. Therefore, we affirm. 

BACKGROUND

Rosson filed his voluntary petition for bankruptcy protection under Chapter 13 on August 13, 2004. At that time, Rosson was involved in an arbitration concerning the breakup of

an entity called Bleu, LLC. Over the next nine months, while

IN THE MATTER OF ROSSON 13547
attempting to confirm a Chapter 13 plan over objections from

creditors and the United States Trustee, Rosson repeatedly

assured the bankruptcy court that he would soon be receiving

several hundred thousand dollars as the result of the arbitration proceeding, and that the funds would be used to pay his

debts under the plan.1

On July 1, 2005, Rosson reported to the court that the arbitrator had awarded him approximately $185,000. On July 6,

2005, the court ordered Rosson to deposit the arbitration

funds with the Chapter 13 Trustee. Rosson admits that he did

not deposit the funds with the Trustee until early September,

at which time he deposited only $104,000.2

Meanwhile, on August 11, 2005, Rosson’s attorney, Harris,

moved to withdraw as attorney of record, stating that there

was a breakdown in communication with his client. A hearing

on the motion to withdraw was set for August 17, 2005. 

At the August 17, 2005 hearing on Harris’s motion to withdraw, the court was informed that Rosson had not yet complied with the order to deliver the $185,000 to the Trustee.

The court gave Rosson less than one hour to deliver the

money before the court, on its own motion, would convert

Rosson’s case to Chapter 7. Rosson did not deliver the

money, and the bankruptcy court docket reflects that the case

was converted to Chapter 7 on August 17, although a formal

order was not filed or entered until later. As the district court

1The bankruptcy court granted limited relief from the automatic stay to

allow the arbitration proceeding to go forward. 

2Rosson spent the balance of the funds to remodel his home, although

this was not disclosed to the bankruptcy court until after the court’s rulings

that are challenged in this appeal. It appears that Rosson’s home was later

sold in foreclosure proceedings, with the proceeds distributed to secured

creditors. Thus, although at least part of the $81,000 spent on the home

was ultimately recovered by Rosson’s creditors, Rosson’s unauthorized

use of the funds resulted in a redirection of estate assets from the general

pool of creditors to those creditors holding a security interest in the home.

13548 IN THE MATTER OF ROSSON
later concluded, the bankruptcy court converted the case with

“essentially no notice.” The bankruptcy court explained that

there was too much money involved to be “horsing around

with” and “the Court[ was] left with . . . only one course of

action, . . . to convert the case so there’s a [Chapter 7] trustee

to go after the money.” The same day (August 17) Rosson

filed a “Notice of Dismissal” notifying the court that he was

voluntarily dismissing his Chapter 13 case under 11 U.S.C.

§ 1307(b) and asked the court to enter an order dismissing the

petition.3 On September 7, 2005, the court entered an order

converting the case to a Chapter 7 proceeding and denying the

request for dismissal.4 On September 8, 2005, Rosson

appeared through new counsel and moved for reconsideration

on the basis that his right to voluntary dismissal was “absolute.” In an order entered September 16, 2005, the court

denied the motion, stating that it would be a “gross miscarriage of justice to allow [Rosson] to dismiss this case and

abscond with [estate] proceeds.” In denying the motion for

reconsideration, the court applied a local rule stating that such

motions are “disfavored” and will be granted only upon a

showing of “manifest error” or “new facts or legal authority

which could not have been [raised] earlier with reasonable

diligence.” W.D. Wash. Local Civ. R. 7(h)(1); see also W.D.

Wash. Local Bankr. R. 9013(h) (applying Local Civil Rule

7(h)(1) to bankruptcy cases). 

3The parties disagree as to whether Rosson’s Notice of Dismissal,

which the bankruptcy court characterized as a motion to dismiss, was

properly filed. We need not decide that question because it does not affect

our resolution of the case. We assume for purposes of this appeal that Rosson’s notice, or motion, was properly filed. 

4That order inaccurately stated that: “This matter came before the . . .

Court on August 17, 2005 on the Debtor’s motion to dismiss his Chapter

13 case. That motion was heard on August 17, 2005 and was denied by

this Court at the hearing.” In fact, as noted above, the August 17, 2005

hearing related to Harris’s motion to withdraw as counsel of record. The

motion to dismiss was not discussed or ruled on at the August 17 hearing.

Indeed, it appears that the motion to dismiss (or “Notice of Dismissal”)

was not even filed until after that hearing. 

IN THE MATTER OF ROSSON 13549
Rosson appealed to the district court, which affirmed. He

then timely appealed to this court, raising essentially the same

arguments that he raised before the district court: (1) the right

to dismiss a Chapter 13 case under 11 U.S.C. § 1307(b) is

absolute; and (2) when the bankruptcy court converted his

case to Chapter 7, it violated his right to notice and a meaningful hearing under 11 U.S.C. §§ 102(1) and 1307(c). 

JURISDICTION

[1] The district court had jurisdiction to review final bankruptcy court orders under 28 U.S.C. § 158(a), and we have

jurisdiction, under 28 U.S.C. § 158(d), to review bankruptcy

court orders originally reviewed under 28 U.S.C. § 158(a).

We have not previously considered whether an order converting a bankruptcy case to Chapter 7 is final and appealable.5

But cf. Pioneer Liquidating Corp. v. United States Trustee (In

re Consol. Pioneer Mortgage Entities), 264 F.3d 803, 804

(9th Cir. 2001) (reviewing order converting case from Chapter 11 to Chapter 7 without addressing finality). We have no

trouble, however, concluding that such an order is sufficiently

final to permit review under 28 U.S.C. § 158(a) and (d). 

“We have adopted a ‘pragmatic approach’ to finality in

bankruptcy . . . [that] emphasizes the need for immediate

review, rather than whether the order is technically interlocutory.” Bonham v. Compton (In re Bonham), 229 F.3d 750, 761

(9th Cir. 2000) (internal quotation marks omitted). “[A] bankruptcy court order is considered to be final and thus appealable where it 1) resolves and seriously affects substantive

rights and 2) finally determines the discrete issue to which it

5Neither party contends otherwise. Nevertheless, we have an independent obligation to assure ourselves of our own jurisdiction, as well as the

jurisdiction of the district court, even if the parties are prepared to concede

it. See, e.g., Solidus Networks, Inc. v. Excel Innovations, Inc. (In re Excel

Innovations, Inc.), 502 F.3d 1086, 1092 (9th Cir. 2007), cert. denied, ___

U.S. ___, 128 S. Ct. 2080 (2008). 

13550 IN THE MATTER OF ROSSON
is addressed.” Id. (internal quotation marks omitted); see also

Allen v. Old Nat’l Bank of Wash. (In re Allen), 896 F.2d 416,

418 (9th Cir. 1990) (per curiam) (“Bankruptcy orders that

determine and seriously affect substantial rights can cause

irreparable harm if the losing party must wait until bankruptcy

court proceedings terminate before appealing.”). 

[2] An order converting a case under another chapter to one

under Chapter 7 determines finally the discrete issue to which

it is addressed, i.e., whether or not the case will be converted.

See Vista Foods U.S.A., Inc. v. Unsecured Creditors’ Comm.

(In re Vista Foods U.S.A., Inc.), 202 B.R. 499, 500 (B.A.P.

10th Cir. 1996) (per curiam) (“Conversion ends the litigation

regarding the discrete controversy of whether the case should

proceed under chapter 11 or chapter 7.”). Moreover, because

a conversion to Chapter 7 takes control of the estate out of the

hands of the debtor, it seriously affects substantive rights and

may lead to irreparable harm to the debtor if immediate

review is denied. See Mason v. Young (In re Young), 237 F.3d

1168, 1173 (10th Cir. 2001) (explaining that “under Chapter

7, once the debtor’s assets have been liquidated, it is virtually

impossible to reassemble them, and therefore an order converting to Chapter 7 is necessarily more final in nature than

an order converting to Chapter 13”)6; see also In re Firstcent

Shopping Ctr., Inc., 141 B.R. 546, 550 (S.D.N.Y. 1992)

(holding that “[c]onversion of a bankruptcy case [to Chapter

7] is final and . . . appealable” and quoting In re Rebeor, 89

B.R. 314, 320-21 (Bankr. N.D.N.Y. 1988) (“[I]mmediate

review [i]s necessary to protect Debtor’s substantive rights to

reorganize in Chapter 13 and to prevent irreparable harm

6

In Young, the Tenth Circuit held that, in contrast to an order converting

a case to Chapter 7, an order converting a case from Chapter 7 to Chapter

13 did not become final and appealable until after confirmation of a Chapter 13 plan. See id. at 1173. But see, e.g., Bannish v. Tighe (In re Bannish),

311 B.R. 547, 548-49 (C.D. Cal. 2004) (holding order “effectively convert[ing] . . . case from Chapter 7 to Chapter 13” final and appealable).

Our holding today is limited to the finality of those conversion orders that

convert a case to Chapter 7. 

IN THE MATTER OF ROSSON 13551
through the potential loss of his property sold to good faith

purchasers.”)). We therefore hold, in accordance with all

other courts of which we are aware that have considered the

issue,7 that a bankruptcy court order converting a case from

one under another chapter of the Bankruptcy Code to one

under Chapter 7 is a final and appealable order.

STANDARD OF REVIEW

“On appeal from a district court’s affirmance of a bankruptcy court decision, we independently review the bankruptcy court’s decision, without giving deference to the

district court.” Hebbring v. U.S. Trustee, 463 F.3d 902, 905

(9th Cir. 2006). We review for abuse of discretion the bankruptcy court’s ultimate decisions to deny a request for dismissal of a Chapter 13 case under § 1307(b) and to convert a

case from Chapter 13 to Chapter 7. See Leavitt v. Soto (In re

Leavitt), 171 F.3d 1219, 1222-23 (9th Cir. 1999); Croston v.

Davis (In re Croston), 313 B.R. 447, 450 (B.A.P. 9th Cir.

2004), abrogated on other grounds by Marrama, 127 S. Ct.

7

See, e.g., Cabral v. Shamban (In re Cabral), 285 B.R. 563, 571 (B.A.P.

1st Cir. 2002) (“Orders converting a Chapter 13 case to a case under

Chapter 7 are final orders.”); In re Vista Foods U.S.A., Inc., 202 B.R. at

500 (B.A.P. 10th Cir.) (holding that order converting case from Chapter

11 to Chapter 7 is final and appealable); Halvajian v. Bank of N.Y. (In re

Halvajian), 216 B.R. 502, 510 (D.N.J.) (same), aff’d, 168 F.3d 478 (table)

(3d Cir. 1998) (unpublished order); Firstcent Shopping Ctr., Inc., 141 B.R.

at 550-51 (S.D.N.Y.) (same); Rebeor, 89 B.R. at 321 (Bankr. N.D.N.Y.)

(Chapter 13 to Chapter 7). 

We note that one district court ruled that a bankruptcy court order converting a case to Chapter 7 was non-final and non-appealable, but that ruling was abrogated on appeal. See Fraidin v. Weitzman (In re Fraidin),188

B.R. 529, 532 & n.1 (D. Md. 1995) (holding that order converting case

from Chapter 11 to Chapter 7 was not final or appealable, but providing,

in the alternative, analysis of appeal on the merits), aff’d on other grounds,

110 F.3d 59 (table), 1997 WL 153826, at *1 (4th Cir. 1997) (unpublished

per curiam opinion) (holding that bankruptcy court’s conversion order was

appealable, either on grounds of finality or as a collateral order, but

affirming district court’s alternate decision on the merits). 

13552 IN THE MATTER OF ROSSON
1105. We review the bankruptcy court’s legal conclusions de

novo and its factual findings for clear error. Hebbring, 463

F.3d at 905. 

DISCUSSION

As noted, Rosson argues that: (1) he was improperly denied

his right to voluntarily dismiss his Chapter 13 case; and (2)

he was denied statutorily-guaranteed procedures when the

bankruptcy court converted his case without notice and a

meaningful hearing. We address these arguments in turn. 

I. Denial of right to voluntarily dismiss a Chapter 13

case

[3] Sections 1307(b) and 1307(c) of the Bankruptcy Code

provide as follows: 

(b) On request of the debtor at any time, if the case

has not been converted under section 706, 1112, or

1208 of this title, the court shall dismiss a case under

this chapter. Any waiver of the right to dismiss under

this subsection is unenforceable. 

(c) . . . [O]n request of a party in interest or the

United States trustee and after notice and a hearing,

the court may convert a case under [chapter 13] to a

case under chapter 7 of this title, or may dismiss a

case under this chapter, whichever is in the best

interests of creditors and the estate, for cause . . . . 

11 U.S.C. § 1307(b)-(c). These two provisions—i.e., that the

court “shall” dismiss a case on request of the Chapter 13

debtor, but that the court also “may” convert a Chapter 13

case to Chapter 7 “for cause”—can conflict where, on the one

hand, a debtor requests voluntary dismissal, while, on the

other hand, a party in interest or the trustee moves to convert

IN THE MATTER OF ROSSON 13553
—or the court, acting on its own, converts—the case to Chapter 7.8

[4] The conflict between § 1307(b) and (c) has divided

courts, including two of our sister circuits, with some courts

holding that a debtor has an absolute right to dismiss under

§ 1307(b), notwithstanding pending motions to convert under

§ 1307(c), while other courts hold that a bankruptcy court

retains the power to convert a case under § 1307(c), even in

the face of a debtor’s request for dismissal under § 1307(b).

Compare, e.g., Barbieri v. RAJ Acquisition Corp. (In re Barbieri), 199 F.3d 616, 619 (2d Cir. 1999) (holding that, at any

time prior to an actual order of conversion, “a debtor has an

absolute right to dismiss a Chapter 13 petition under

§ 1307(b), subject only to the limitation explicitly stated in

that provision”), with, e.g., Molitor v. Eidson (In re Molitor),

76 F.3d 218, 220 (8th Cir. 1996) (rejecting “absolute” right of

dismissal under § 1307(b) in cases involving bad faith or

abuse of process, because “the purpose of the bankruptcy

code is to afford the honest but unfortunate debtor a fresh

start, not to shield those who abuse the bankruptcy process in

order to avoid paying their debts”). See generally In re Jacobsen, 378 B.R. 805, 809 (Bankr. E.D. Tex. 2007) (collecting

cases on both sides of the split).

[5] Although we have not weighed in on this question,9 our

8Although the statute provides for conversion “on request of a party . . .

or the . . . trustee,” 11 U.S.C. § 1307(c), there is no doubt that the bankruptcy court may also convert on its own motion. See id. § 105(a) (“No

provision of this title providing for the raising of an issue by a party in

interest shall be construed to preclude the court from, sua sponte, taking

any action or making any determination necessary or appropriate to

enforce or implement court orders or rules, or to prevent an abuse of process.”). 

9

In the district court, Rosson argued that we had addressed this question

in Nash v. Kester (In re Nash), 765 F.2d 1410 (9th Cir. 1985), where we

stated: “Under § 1307(b), a debtor has an absolute right to dismiss a Chapter 13 petition.” Id. at 1413. Our holding in Nash, however, was concerned

13554 IN THE MATTER OF ROSSON
circuit’s Bankruptcy Appellate Panel (BAP) adopted the “absolute right” approach in Beatty. See Beatty, 162 B.R. at 857

(“The better reasoned view is that a court must dismiss the

case upon the debtor’s request for dismissal under section

1307(b) if that request is made prior to the . . . [formal] order

converting the case to Chapter 7.”); see also Croston, 313

B.R. at 451 (reaffirming and following Beatty). In his opening

brief, Rosson argues that we should follow and adopt Beatty

and hold that the bankruptcy court abused its discretion by

refusing to grant his request for dismissal, which was filed

prior to the court’s formal order converting the case to Chapter 7.10

[6] After Rosson filed his opening brief, however, the

Supreme Court issued Marrama v. Citizens Bank of Massachusetts, 127 S. Ct. 1105 (2007). In Marrama, the Court

firmly rejected the analysis that the BAP applied in Croston—

the case that followed and reaffirmed Beatty—and implicitly

abrogated Beatty as well. Indeed, in his reply brief, Rosson

acknowledges that the “absolute” right to dismissal under

§ 1307(b), as recognized in Beatty, is no longer viable after

Marrama because that right must be qualified by the court’s

power to convert a case based on the debtor’s bad-faith conwith the res judicata effect of a prior voluntary dismissal under § 1307(b),

not the potential conflict between § 1307(b) and § 1307(c). The quoted

sentence is thus likely dicta as applied to this case. More importantly, as

explained in the text infra, even if the statement in Nash is a holding, it

has been abrogated by subsequent Supreme Court precedent. See Miller v.

Gammie, 335 F.3d 889, 900 (9th Cir. 2003) (en banc) (holding that a

three-judge panel is not bound by a prior three-judge panel’s published

decision where subsequent Supreme Court case law is “clearly irreconcilable” with original panel’s holding). 

10BAP opinions are not binding on this court, Bank of Maui v. Estate

Analysis, Inc., 904 F.2d 470, 472 (9th Cir. 1990), but we have noted the

importance of the BAP in providing “guidance on frontier bankruptcy

issues,” id. (O’Scannlain, J., concurring specially), and we have adopted

BAP opinions where persuasive. See, e.g., Onink v. Cardelucci (In re Cardelucci), 285 F.3d 1231, 1234 (9th Cir. 2002). 

IN THE MATTER OF ROSSON 13555
duct or abuse of the bankruptcy process. Nevertheless, Rosson

argues that he did not engage in any bad-faith conduct, and

that he therefore had a right to dismiss his case. Below, we

first briefly clarify the effect of Marrama on the rule

announced in Beatty and then address Rosson’s argument that

he should prevail, even under the new rule. 

A. Status of Beatty’s “absolute right” rule after Marrama

As noted, courts have split on the question of the “absolute” nature of the right to dismissal of a Chapter 13 case

under § 1307(b). After Marrama, however, the “absolute

right” position is no longer viable. 

In Marrama, the Court took up the same question

addressed by the BAP in Croston—the right of a debtor,

under 11 U.S.C. § 706(a), to convert his Chapter 7 case to

Chapter 13. See Marrama, 127 S. Ct. at 1108 (identifying the

issue as whether “even a bad-faith debtor has an absolute right

to convert at least one Chapter 7 proceeding into a Chapter 13

case”). As the BAP recognized in Croston, this question is

analytically indistinguishable from the question in Beatty (i.e.,

the absolute right of a debtor to voluntarily dismiss his Chapter 13 case). As Croston held, the text of § 706(a)11 “is indistinguishable from the parallel language of § 1307(b) . . . [and]

it follows that [Beatty’s] analysis of the absolute nature of

§ 1307(b) applies to the same question under § 706(a).” Croston, 313 B.R. at 451. Thus, in Croston, the BAP followed

Beatty and held that a debtor had an “absolute,” one-time

right to convert his case from Chapter 7 to Chapter 13, and

11Section 706(a) provides: 

The debtor may convert a case under this chapter to a case

under chapter 11, 12, or 13 of this title at any time, if the case has

not been converted under section 1112, 1208, or 1307 of this title.

Any waiver of the right to convert a case under this subsection

is unenforceable. 

11 U.S.C. § 706(a). 

13556 IN THE MATTER OF ROSSON
that this was true notwithstanding a bankruptcy court’s concern with “perceived dysfunction” or “bad faith manipulation” of the bankruptcy process. Id. at 451-52. 

In Marrama, however, a majority of the Court unequivocally rejected the Croston position, holding that the right to

convert to Chapter 13 was impliedly limited by the bankruptcy court’s power to take any action necessary to prevent

bad-faith conduct or abuse of the bankruptcy process. See id.

at 1111-12 (noting that the Bankruptcy Code specifically

grants bankruptcy judges “broad authority . . . to take any

action necessary or appropriate ‘to prevent an abuse of process’ ”) (quoting 11 U.S.C. § 105(a)). Thus, the Court held

that bankruptcy judges had the power to differentiate between

“the vast majority” “of honest but unfortunate debtors who do

possess an absolute right to convert their cases from Chapter

7 to Chapter 13” and “the atypical litigant who has demonstrated that he is not entitled to the relief available to the typical debtor.” Id. at 1111. 

Although the Court declined to decide “with precision what

conduct qualifies as ‘bad faith’,” the Court “emphasize[d] that

the debtor’s conduct must, in fact, be atypical.” Id. at 1112

n.11. Applying the rule to the facts before it, the Court concluded that Marrama had “made a number of statements about

his principal asset [a house] . . . that were misleading or inaccurate,” id. at 1108, and that he had therefore “forfeited his

[purportedly absolute] right to proceed under Chapter 13.” Id.

at 1109. 

[7] There is no doubt that after Marrama, Croston is no

longer good law. Marrama expressly cited Croston as one of

the cases recognizing a debtor’s absolute right to convert a

Chapter 7 case to Chapter 13—an approach that the Court

then rejected. See id. at 1108 n.2, 1111-12. Moreover,

although Marrama did not address the exact issue decided in

Beatty, it is clear that, after Marrama, Beatty too is no longer

good law, insofar as it holds that a Chapter 13 debtor has an

IN THE MATTER OF ROSSON 13557
absolute right to dismiss under § 1307(b). As noted above,

Croston was at pains to explain that there was no analytical

distinction between the legal issue in that case and the issue

in Beatty. See Croston, 313 B.R. at 451-52. We agree, and

accordingly we conclude that the Court’s rejection of the “absolute right” theory as to § 706(a) applies equally to § 1307(b).12

Therefore, in light of Marrama, we hold that the debtor’s

right of voluntary dismissal under § 1307(b) is not absolute,

but is qualified by the authority of a bankruptcy court to deny

dismissal on grounds of bad-faith conduct or “to prevent an

abuse of process.” 11 U.S.C. § 105(a). See Jacobsen, 378

B.R. at 811 (reaching same conclusion). But see In re Polly,

___ B.R. ___, 2008 WL 3330636 (Bankr. N.D. Tex. Aug. 8,

2008) (holding that right to voluntarily dismiss Chapter 13

case is “absolute” (distinguishing Marrama). 

B. Application of Marrama to Rosson’s case

Rosson acknowledges in his reply brief that, after Marrama, bad-faith conduct can “justify the bankruptcy court’s

denial of . . . the right to voluntarily dismiss a [Chapter 13]

petition,” but he attempts to distinguish his case from Marrama on the facts, insisting that his “conduct is nothing like

that of the dishonest [debtor] described in Marrama.” Rosson

states that “Marrama involved a debtor who consciously lied

to the court, attempted to remove assets from the court’s jurisdiction, and took efforts to conceal what he had done.” Rosson argues that, by contrast, he merely pledged the arbitration

proceeds “for use in [his] Chapter 13 case,” and that “it is not

at all obvious that [he] must have known that investing a portion of the arbitration award in repairs to the residence—a

12This is true even though, as Rosson points out, § 706(a) states that a

debtor “may” convert a case, whereas § 1307(b) states that the court

“shall” dismiss a case at the debtor’s request. Here, the different formulations are not dispositive; the important point established by Marrama is

that even otherwise unqualified rights in the debtor are subject to limitation by the bankruptcy court’s power under § 105(a) to police bad faith

and abuse of process. 

13558 IN THE MATTER OF ROSSON
valuable asset of the estate—was inconsistent with ‘using’ the

funds in his Chapter 13 case.” 

[8] Rosson’s argument is not persuasive. Even conceding

the doubtful proposition that Rosson decided in good faith

that using the arbitration proceeds to remodel his home was

consistent with his repeated pledges to apply that money to

his Chapter 13 plan, his use of the money was still in defiance

of the bankruptcy court’s specific order to deposit the money

with the Chapter 13 Trustee. Moreover, Rosson never—not

even in his motion for reconsideration—provided the bankruptcy court with an explanation of what happened to the

missing funds. He simply failed to deliver the funds as

ordered and then, when taken to task for failing to do so,

invoked his supposedly absolute right to withdraw from the

bankruptcy process by requesting that his Chapter 13 petition

be dismissed. Under these circumstances, it was hardly unreasonable for the bankruptcy court to conclude that Rosson

sought to voluntarily dismiss his case in order to “abscond

with [estate] proceeds.” Moreover, bad faith is a finding of

fact reviewed for clear error. Leavitt, 171 F.3d at 1222-23;

Eisen v. Curry (In re Eisen), 14 F.3d 469, 470 (9th Cir. 1994)

(per curiam). Even if Rosson’s conduct was arguably less

egregious than Marrama’s, the bankruptcy court did not

clearly err in finding that Rosson’s failure to deliver to the

Trustee $185,000 in estate assets (or, when given the chance,

to explain the status of the money) amounted to atypical, badfaith debtor conduct.13

[9] In sum, it is clear from the record that the bankruptcy

court acted “to prevent” what it reasonably perceived to be

13The bankruptcy court never used the words “bad faith” or “abuse of

process.” Nevertheless, the court’s comments at the August 17 hearing and

in its order denying the motion for reconsideration make clear that this

was the basis for its decision. See Leavitt, 171 F.3d at 1222-23, 1226

(affirming dismissal of Chapter 13 case, notwithstanding lack of “express

findings” of bad faith, where record “provide[d] a clear and complete

understanding of the basis for [the bankruptcy court’s] ruling”). 

IN THE MATTER OF ROSSON 13559
“an abuse of process.” 11 U.S.C. § 105(a). As this type of

action was specifically approved by Marrama, we hold that

the bankruptcy court did not abuse its discretion when it converted the case on its own motion and denied voluntary dismissal. 

II. Denial of notice and a meaningful hearing

[10] We next turn to Rosson’s claim that “the bankruptcy

court erred by converting his case from Chapter 13 to Chapter

7 without notice and a hearing, as required by 11 U.S.C.

§ 102(1)(A).” 

Section 102(1) of the Bankruptcy Code states that: 

“[A]fter notice and a hearing”, or a similar phrase—

(A) means after such notice as is appropriate in the

particular circumstances, and such opportunity for a

hearing as is appropriate in the particular circumstances; but (B) authorizes an act without an actual

hearing if such notice is given properly and if— (i)

such a hearing is not requested timely by a party in

interest; or (ii) there is insufficient time for a hearing

to be commenced before such act must be done, and

the court authorizes such act. 

11 U.S.C. § 102(1); see also id. § 1307(c) (requiring “notice

and a hearing” as prerequisite to conversion of a case from

Chapter 13 to Chapter 7); cf. Tennant v. Rojas (In re Tennant), 318 B.R. 860, 870 (B.A.P. 9th Cir. 2004) (holding that

“notice and a hearing” are required even where the bankruptcy court acts pursuant to “its general powers under Section 105(a)”). We have “emphasize[d] that the notice-andhearing definition in § 102(1) is flexible and sensitive to context.” Law Offices of David A. Boone v. Derham-Burk (In re

Eliapo), 468 F.3d 592, 603 (9th Cir. 2006). “The essential

point is that the court should give counsel a meaningful

13560 IN THE MATTER OF ROSSON
opportunity to be heard.” Id. (internal quotation marks omitted). 

Here, Rosson correctly points out that the bankruptcy

court’s initial August 17, 2005 “hearing” on conversion provided him essentially no notice, and no “opportunity to present legal argument and/or evidence.” Id. (internal quotation

marks omitted). Although various motions to convert the case

had been pending for months, those motions were scheduled

to be addressed at a September hearing, and Rosson had no

notice that conversion to Chapter 7 would be addressed at the

August 17 hearing on Harris’s motion to withdraw. Nevertheless, the bankruptcy court was within its discretion to enter,

with minimal or no notice, what it perceived as an emergency

ruling to prevent dissipation of assets. As the district court

noted, the bankruptcy court was “[f]aced with circumstances

strongly suggesting that Mr. Rosson sought to defraud his

creditors and the court.” Thus, at the August 17 hearing, having learned of the status of the arbitration funds, the court provided the minimal notice due under the circumstances. See 11

U.S.C. § 102(1) (authorizing notice “appropriate in the particular circumstances” and “an act without an actual hearing if

. . . there is insufficient time . . . before such act must be

done”). 

[11] The problem, if any, is what happened next. Although

the court was entitled to act summarily to prevent dissipation

of the estate, Rosson was nevertheless entitled to a subsequent, meaningful opportunity to present any arguments that

he had against conversion. Having issued an order to preserve

assets of the estate, the bankruptcy court should then have

promptly scheduled a hearing to allow Rosson to present

argument and supporting declarations explaining why the

order should be vacated. Instead, the court left it to Rosson to

request a hearing, which he did by filing a motion for reconsideration. Although Rosson had an opportunity to present

arguments against conversion in that motion, as a motion for

reconsideration, it was decided with considerable deference to

IN THE MATTER OF ROSSON 13561
the original ruling. See W.D. Wash. Local Civ. R. 7(h)(1)

(quoted above). Thus, Rosson never received a meaningful

hearing of his arguments against conversion. 

[12] Of course, as the record shows, Rosson knew that he

was required to turn over the arbitration funds to the Trustee,

and that delivery of the $185,000 was a major factor in fending off the pending motions to convert. Nonetheless, Rosson

was still entitled to an opportunity to be heard as to why the

funds had not been delivered, and why the case should not

have been converted. For instance, there could have been an

unavoidable delay in transferring the funds from escrow. Or

Rosson may have been confused about the deadline for turning over the funds (the bankruptcy court’s prior, oral order to

turn the funds over to the Trustee did not specify such a deadline). Rosson might have had any number of explanations of

why his actions did not amount to bad-faith conduct, did not

constitute abuse of the bankruptcy process, and did not justify

conversion. Thus, even though the initial conversion order

was justified, we agree with Rosson that the overall process

provided by the bankruptcy court failed to afford him a meaningful opportunity to be heard, as required by § 1307(c) and

§ 102(1). 

The difficulty for Rosson, however, is that, even when

given an opportunity, he has never actually provided a satisfactory explanation of why the funds were not delivered. Rosson’s motion for reconsideration provided no argument of the

facts and offered no excuse for his failure to produce the

$185,000 as ordered by the court. He did not make any of the

kinds of arguments alluded to above. Instead, Rosson rested

on the (now) manifestly inadequate legal claim that he had an

“absolute” right to voluntarily dismiss his case.14 For this rea14At oral argument, Rosson’s counsel speculated that he may have made

a “strategic error” by relying on the overly “legalistic” argument of the

absolute right to dismiss under Beatty. Even if that statement is accurate,

however, it is too late for this court to remedy that mistake. 

13562 IN THE MATTER OF ROSSON
son, Rosson can show no prejudice arising from the defective

process afforded him. See Fed. R. Bankr. P. 9005 (“Harmless

Error”) (incorporating into bankruptcy rules Federal Rule of

Civil Procedure 61, which provides: “At every stage of the

proceeding, the court must disregard all errors and defects that

do not affect any party’s substantial rights.”); cf. City Equities

Anaheim, Ltd. v. Lincoln Plaza Dev. Co. (In re City Equities

Anaheim, Ltd.), 22 F.3d 954, 959 (9th Cir. 1994) (rejecting

due process claim for lack of prejudice where debtor could

not show that any different or additional arguments would

have been presented if bankruptcy court had timely approved

petition for new counsel).15

[13] In short, even after receiving notice of the conversion

and having the opportunity to be heard in opposition, Rosson

offered nothing to counter the court’s finding of bad faith.

Under these circumstances, even though the bankruptcy court

improperly applied the demanding standard of a motion to

reconsider, it is nevertheless clear that the bankruptcy court

properly denied the request for voluntary dismissal.16 Because

there is no reason to think that, given appropriate notice and

a hearing, Rosson would have said anything that could have

made a difference, Rosson was not prejudiced by any procedural deficiency. We hold that the bankruptcy court did not

abuse its discretion in denying the motion to dismiss and con15See also, e.g., Union Planters Bank Nat’l Ass’n v. Martin (In re Martin), 306 B.R. 591, 610-11 (C.D. Ill. 2004) (affirming ruling despite failure

to provide adequate notice and hearing where debtor “was not prejudiced

by the Bankruptcy Court’s procedures”); Fraidin, 188 B.R. at 532 n.1

(cited supra n.7) (holding, in alternative, that any violation of notice and

hearing requirement before converting case from Chapter 11 to Chapter 7

was harmless under Bankruptcy Rule 9005). 

16We note that, although the bankruptcy court recited the deferential

standard for a motion for reconsideration, its order—which states that “[i]t

would be a gross miscarriage of justice to allow the Debtor to dismiss this

case and abscond with proceeds that should be distributed to creditors of

this estate”—makes clear that the court would have rejected Rosson’s

claim even if it had entertained Rosson’s motion anew. 

IN THE MATTER OF ROSSON 13563
verting the case to Chapter 7. See Leavitt, 171 F.3d at 1223

(“[An] appellate court may affirm the lower court on any

ground fairly supported by the record.”). 

AFFIRMED.

13564 IN THE MATTER OF ROSSON