Opinion ID: 795803
Heading Depth: 2
Heading Rank: 3

Heading: The Standard Applied to Harris

Text: 38 Applying the above considerations to the instant case, we note that the district court did not give Harris notice of its plan to dismiss the appeal and did not consider any sanction short of dismissal. To be sure, Harris's failure to designate the transcript made it difficult, if not impossible, for the district court to determine whether the bankruptcy court had acted in error. Although Harris is an attorney who practices bankruptcy law, he was proceeding pro se before the district court. Moreover, as is clear from Harris's argument in this Court, he did not believe the transcript was necessary because it contained only argument, not testimony. In these circumstances, dismissing the appeal without determining whether a lesser sanction would have been appropriate or giving Harris notice or an opportunity to respond was an abuse of discretion. 7 39 Several other considerations support our holding here. First, we note that the district court did not give Harris any opportunity to rectify the situation by obtaining the June 23 transcript and placing it in the record before the court. In his motion for reconsideration, Harris indicated his willingness to do so. Furthermore, in the very case upon which the district court relied for its authority to dismiss the appeal, that court did not do so. In Frostbaum, the debtor failed to include the record of the hearing that served as the basis of the ruling, but the district court obtained the transcripts pursuant its powers under Bankruptcy Rule 8019, which permits a district court to suspend the requirements of certain bankruptcy rules in the interest of expediting a case. See Frostbaum 277 B.R. at 473 n. 1; Fed. R. Bankr.P. 8019. We, of course, do not mean this observation to require a district court to allow every errant litigant an opportunity to rectify the situation or to force a court to remedy a problem sua sponte, but we think the ability of a party or the court to cure a defective record is a consideration that the district court should assess on remand on the particular facts of this case. 40 Second, we are concerned with the dismissal here because serious questions on the merits remain unresolved, particularly the § 548 determination that the bankruptcy court never ultimately reached. The County here appears to have reaped a rather large windfall — in excess of $300,000 — at the expense of other, unsecured creditors. Thus, in weighing the prejudice of dismissing this appeal, the court below should be mindful that there is a strong presumption of not allowing a secured creditor to take more than its interest. Cf. In re French, 440 F.3d 145, 152 (4th Cir.2006) (noting that the Bankruptcy Code's avoidance provisions, including 11 U.S.C. § 548, protect a debtor's estate from depletion to the prejudice of the unsecured creditor). From the County's foreclosure and auction of the Properties, it appears that the County has received excess moneys that could have satisfied other creditors. 41 Third, Harris argues that much of the delay below is attributable to the County, not him. Our examination of the record reveals that the case has suffered unquestionably long delays, but this Court notes, for instance, that the County appears not to have responded to the bankruptcy court's order regarding the Properties' valuation for the resolution of the § 548 claim. Thus, while we take no views on the matter, the district court should assess, if it reaches the merits of the appeal on remand, the relative fault of both parties with respect to delay when determining whether the bankruptcy court properly dismissed the case. 42 Finally, Harris explains that his failure to pay his taxes is inextricably intertwined with the disputed title to the Properties. He has always maintained that the resolution of the § 548 fraudulent transfer issue would enable him to pay down the taxes he owes as well as other incurred debts. We do not express an opinion whether the transfer issue should control, but we nevertheless note that the bankruptcy court never explained why resolution of the transfer issue could not be done expeditiously — which would likely have ended the alleged delay on Harris's part in adopting or rejecting a reorganization plan, as well as put to rest any of Harris's arguments that his plan was only feasible upon resolution of that issue. Thus, on the specific facts of this case, these considerations, we believe, should be weighed by the district court in its review of the bankruptcy court's determination (and reexamined by the bankruptcy court if the matter is remanded to it).