Document: 549 U.S. ___ (2007) ROBERT LOUIS MARRAMA, Petitioner v. CITIZENS BANK OF MASSACHUSETTS ET AL. No. 05-996. Supreme Court of United States. Argued November 6, 2006. Decided February 21, 2007. ON WRIT CERTIORARI TO THE UNITED STATES COURT APPEALS FOR FIRST CIRCUIT. STEVENS, J., delivered the opinion Court, in which KENNEDY, SOUTER, GINSBURG, and BREYER, JJ., joined. ALITO, filed a dissenting opinion, ROBERTS, C. SCALIA THOMAS, JUSTICE STEVENS Court. The principal purpose Bankruptcy Code is to grant "`fresh start'" "`honest but unfortunate debtor.'" Grogan Garner, 498 279, 286, 287 (1991). Both Chapter 7 13 permit an insolvent individual discharge certain unpaid debts toward that end. authorizes prepetition following liquidation debtor's assets by bankruptcy trustee, who then distributes proceeds creditors. with regular income obtain after successful completion payment plan approved court. Under nonexempt are controlled trustee; under debtor retains possession his property. A proceeding commenced may be converted vice versa. 11 §§706(a), 1307(a) (c). An issue has arisen disturbing frequency whether acts bad faith prior to, or course of, filing petition by, for example, fraudulently concealing significant assets, thereby forfeits right relief. arise at outset case response motion creditors States trustee either dismiss convert it 7, see §1307(c). It also when files §706(a) 13. In former context, despite absence any statutory provision specifically addressing issue, federal courts virtually unanimous bad-faith conduct cause forfeiture proceed case.[1] latter however, some have suggested even absolute least one into though will thereafter dismissed immediately returned 7.[2] We granted certiorari decide mandates procedural anomaly. 547 U. S. ____ (2006). I On March 11, 2003, petitioner, Robert Marrama, voluntary creating estate consisting all property "wherever located whomever held." §541(a). Respondent Mark DeGiacomo estate. Citizens Bank Massachusetts (hereinafter Bank) creditor. verified schedules attached petition, Marrama made number statements about asset, house Maine, were misleading inaccurate. For instance, while he disclosed was sole beneficiary trust owned property, listed its value as zero. He denied had transferred other than ordinary business during year preceding petition. Neither statement true. fact, Maine substantial value, newly created no consideration seven months later admitted transfer protect from After Marrama's examination meeting creditors, §341, advised counsel intended recover asset Thereafter, "Verified Notice Conversion 13." Pursuant Federal Rule Procedure 1017(c)(2), notice conversion treated convert, both objections. Relying primarily on attempt conceal creditors,[3] contended request would constitute abuse process. opposed similar grounds. At hearing explained through misstatements attributable "scrivener's error," originally rather because unemployed, recently become employed therefore eligible 13.[4] Judge rejected these arguments, ruling there "Oops" defense concealment facts established "bad faith" case. App. 34a-35a. judge conversion. argument appeal Appellate Panel First Circuit[5] plain language Code. panel affirmed decision construed §706(a), read connection provisions Rules, "is only extreme circumstances." re 313 B.R. 525, 531 (2004). concluding record such circumstances, relied failure describe residence revocable trust, homestead exemption rental Massachusetts, nondisclosure anticipated tax refund. panel, Appeals Circuit gives addition emphasizing statute uses word "may" "shall," court added: "In construing subsection 706(a), important bear mind unquestioned authority chapter petitionas distinguished converting 13based upon showing `bad faith' part debtor. can discern neither theoretical nor practical reason Congress chosen treat first-time 706(a) differently first instance." 430 F.3d 474, 479 (2005) (citations omitted). While Courts appellate panels refused recognize exception n. 2, supra, we conclude this correctly held forfeited II two most relevant our resolution subsections (a) (d) §706, provide: "(a) 12, title time, if not been section 1112, 1208, 1307 title. Any waiver unenforceable. "(d) Notwithstanding section, another unless chapter." contends creates unqualified seeks support House Senate Committee Reports provision. Report stated: "Subsection one-time reorganization repayment If already once does right. policy should always given opportunity repay debts, unenforceable." Rep. 95-989, p. 94 (1978); H. R. 95-595, 380 (1977) (using nearly identical language). Reports' reference "absolute right" more equivocal petitioner suggests. Assuming described "opportunity debts" short-hand 13, "always" inconsistent earlier recognition survive previous under, More importantly, broad description "absolute" fails give full effect express limitation (d). words "unless chapter" expressly conditioned ability qualify "debtor" There possible reasons why debtor, arising §109(e) Code, turning construction "cause" imposes limit amount indebtedness order relief.[6] pertinently,[7] provision, §1307(c), provides "for cause" includes nonexclusive list 10 causes justifying relief.[8] None specified mentions (although subparagraph identify form errorwhich necessarily conductthat justify dismissal case).[9] nevertheless routinely implicitly authorized cause." See 1, supra. effect, individual's conduct, including fraudulent committed proceeding, tantamount That individual, words, member class debtor[s]'" laws enacted protect. S., 287. text §706(d) adequate denial convert. honest debtors do possess their cases vast majority hundreds thousands individuals file petitions each year.[10] sought chance they acquire means so. Moreover, observed, unenforceability functions "as consumer protection against adhesion contracts, whereby might precluded attempting prescribe non-negotiable condition contractual agreements." F. 3d, 479. protecting borrower shield forfeiture. Nothing §706 §1307(c) (or legislative history provision) limits take appropriate action atypical litigant demonstrated entitled relief available typical debtor.[11] contrary, judges necessary "to prevent process" §105(a) Code,[12] surely authorize immediate lieu merely postpones allowance equivalent provide prejudicial creditors.[13] Indeed, Solicitor General argued brief amicus curiae, enacted, inherent power every sanction "abusive litigation practices," Roadway Express, Inc. Piper, 447 752, 765 (1980), well justification prompt, delayed, unmeritorious Accordingly, judgment affirmed. so ordered. whom CHIEF JUSTICE, SCALIA, THOMAS join, dissenting. clear terms initially proceed. holds judge's finding "good faith." Because imposition respectfully dissent. unambiguously chapter. Title states: "[A] title." restricts twoand twoways. First, makes once: long "the [to 7] Second, wishing must meet conditions needed "be suggests discretion override exercise ground set out Thus, straightforward reading chapter) provided contained satisfied. This buttressed contrast between deny requests. As noted, says "may convert" Chapters contain stating those chapters chapters. §§1112(a), 1208(a), (2000 ed. Supp IV). separate governing requests parties interest. applicable provides: "On party interest hearing, time." §706(b) (emphasis added). §§1112(b), 1208(b), (d), 1307(c). sections, Rather, And left court, general standard found met. meant wishes used knew how way, did §706(a). directly address consequences sort complained §727(a)(3), concealed . records, papers, financial transactions ascertained." further "made false oath account" "presented claim." §727(a)(4). blocking discharge, could easily deemed sufficient bar chapter, Instead taking approach, included scheme several redress faith. finds "cause," reconvert restructuring liquidation. propose satisfy creditorsa subject approval proposed good §§1325(a)(3), (4); accord, §1328(b)(2). Third, penalty perjury. 28 §1746; Fed. Bkrtcy. Proc. 1008. Fourth, overseen empowered investigate affairs, furnish information regarding interest, oppose necessary. §§704(4), (6) (9). §1302(b) (defining powers trustee). These measures, requirement crafted represent Code's strategy dealing engage type abusive tactics Court's targets.[1] sum, satisfies requirements destination By contrast, pointedly based disregarding scheme. reaching conclusion faith," follows. §706(d), One recognized Therefore, proceeded her debtor" reconversion pursuant cannot agree strained met forth A. §109 (main Supp. 2006), appropriately titled "Who debtor." specific appear (e). restricted individuals, without spouses, income. debt exceeded.[2] below understood, §706(d)'s obviously refers chapter-specific §109. 479, 3 (CA1 2005). Rather §§109(e) 706(d) together, puts aside treats repository additional (namely, grounds §1307(c)) before But plainly Instead, sets ("cause") apply deciding whether, discretion, 7. holding appears influenced belief literal pointless. Id., 479-481. Specifically, observed exhibited back served requiring go process prompt reconversion. 481. clear, followed empty exercise. compliance 1017(f), applies 9014 1017(e)(1). (a), turn, requires "reasonable afforded sought." circumvents forecloses otherwise plan, §1321, demonstrate receive less liquidation, §§1325(a)(3) 15 days conversion, time i.e., hearing. 3015(b). consider (if filed) and, considered, account faith, honestly discloses demonstrates fact fare better sense "cures" Today's renders questions academic, little guide what consider, disregard, conversion.[3] notes "`"fresh start"'" "`"honest debtor."'" Ante, 9 (quoting (1991)). schemeconversion question reconversion structure identifying whose "`bad faith'" meets consignment "atypical" "extraordinary." 10, 11. III Finally, alternative bases holding. points §105(a), governs court's powers.[4] textual basis, empower Obviously, sources contravene equitable "must exercised within con fines Code." Norwest Worthington Ahlers, 485 197, 206 (1988); SEC Realty & Improvement Co., 310 434, 455 (1940) ("A guided doctrines principles except far Act"). Ultimately, role play this. problem identifies real one. convinced she successfully incentive pursue restructuring. successful, preserves wealth; unsuccessful, land largely where fully instance. craft various remedies range conduct: accountings reporting assets[5]; enjoining alienating property[6]; penalizing counsel[7]; assessing costs fees[8]; contempt[9]. whatever steps powers, rule procedure reverse Appeals. NOTES [1] See, e.g., Alt, 305 413, 418-419 (CA6 2002); Leavitt, 171 1219, 1224 (CA9 1999); Kestell, 99 146, 148 (CA4 1996); Molitor, 76 218, 220 (CA8 Gier, 986 F.2d 1326, 1329-1330 (CA10 1993); Love, 957 1350, 1354 (CA7 1992); Sullivan, 326 204, 211 (Bkrtcy. CA1 [2] Martin, 880 857, 859 (CA5 1989); Croston, CA9 2004); Miller, 303 471 CA10 2003). [3] noted original claimed Gloucester, Mass., exemption, §522(b)(2); Mass. Gen. Laws, ch. 188, §1 (West 2005), testified reside receiving it, 71a-72a. asked anyone owed him money, responded "No," id., 50a, Schedule B requested "tax refunds," indicated "none." 6. amended return July 2002 refund, shortly Internal Revenue Service informed refund $8,745.86, 30a-31a. [4] dispute accuracy representation. trustee's indicates flooring company filed. Brief G. (citing 18, 30). stated oral argument, represented estimate employment yet begun. Tr. Oral Arg. 24. Since sufficiency evidence assume [5] judicial council circuit establish service, comprising judges, hear appeals consent parties. §158(b); Connecticut Nat. Germain, 503 249, 252 (1992). service. [6] Subsection (e) "Only owes, date noncontingent, liquidated, unsecured $250,000 secured $750,000, spouse, stockbroker commodity broker, owe, aggregate $750,000 dollar adjustment inflation three years. §104(b). [7] initiated new day present that, §109(e), ineligible 345 458, 463-464, Ct. 2006). determination us case, made, limit. [8] provides, part: "Except title, whichever best interests estate, cause, including "(1) unreasonable delay creditors; "(2) nonpayment fees charges required 123 28; "(3) timely 1321 title; "(10) paragraph (2) 521." Section 521(2), since redesignated §521(a)(2), 119 Stat. 38, duty period intent respect retention surrender being secure debts. (2004 [9] §521(2) debtors, prominent treatise assumed 8 Collier ¶1307.04[9] (15th rev. [10] Administrative Office 833,148 fiscal Memorandum Steven Schlesinger, Courts, Library (Dec. 2006) (available Clerk file). [11] occasion here articulate precision qualifies suffices emphasize must, atypical. Limiting extraordinary particularly light lack proposing denying confirmation. §1325(a)(3); 2d, 1356 ("Because harsh reluctant reject 1325(a)"). [12] "The order, process, carry No providing raising shall preclude from, sua sponte, making enforce implement orders rules, process." [13] curiae argue briefs interval subsequent granting formerly control create actions impair rights Whether risk significant, understanding misconduct above, §727(a)(4) addresses $307,675 $922,975, $922,975 (Supp. (footnote guidance situation 1017(f)(2), service thereof. §105(a). All Denominational New Church, 268 536 CA8 2001) (affirming comply monthly reporting); Martin's Aquarium, Inc., 225 868, E. D. Pa. 1998) ("[A] may, produce accounting, indeed [this remedy]"). Bartmann, 320 725, 732-733 N. Okla. Newport Creamery, 293 I. 2003); Peklo, 201 331 (Bkrtcy Conn. 1996). Everly, 346 791, 797 (bankruptcy §105 include counsel); Brooks-Hamilton, 329 270 2005) (upholding suspension Washington, 297 662 Fla. Deville, 280 483 Johnson, 336 568, 573 2006); Couch-Russell, 00-02226, 2003 W L 25273863 Idaho Gorshtein, 285 118 Y. 2002). Sekendur, 334 609 Ill. (imposing contempt serial vexatious filing); Tolbert, 258 387 W. Mo. (same); Swanson, 207 J. 1997) civil vacate property).

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