Court Opinion

ID: 4406126
Source: CourtListenerOpinion
Date Created: 2019-06-12 20:00:50.982836+00
Date Added: 2024-06-11T08:46:19.911515
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                           JUN 12 2019
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In re: CARL CLIFFORD SISON                       No.   18-16162
TAKANO; LEILANI LEACH TAKANO,
______________________________                   D.C. No. 15-00108

VANESSA L. WILLIAMS,
                                                 MEMORANDUM*
              Appellant,

 v.

CARL CLIFFORD SISON TAKANO;
LEILANI LEACH TAKANO,

              Appellees.

                  Appeal from the United States District Court
                            for the District of Guam
              Frances Tydingco-Gatewood, District Judge, Presiding

                             Submitted June 10, 2019**
                                Honolulu, Hawaii

Before: THOMAS, Chief Judge, and CALLAHAN and CHRISTEN, Circuit
Judges.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      Creditor Vanessa Williams appeals the district court’s denial of her motions

in the bankruptcy proceedings of Carl and Leilani Takano. Because the parties are

familiar with the facts, we do not recount them here. We have jurisdiction

pursuant to 28 U.S.C. § 1291, and we affirm.

      We review a district court’s denial of a motion to dismiss for cause under 11

U.S.C. § 707(a) for an abuse of discretion. Sherman v. SEC (In re Sherman), 491

F.3d 948, 969 (9th Cir. 2007). Decisions committed to the bankruptcy court's

discretion, such as a decision on whether to convert a case from one Chapter to

another, will be reversed only if “based on an erroneous conclusion of law or when

the record contains no evidence on which [the bankruptcy court] rationally could

have based that decision.” Benedor Corp. v. Conejo Enters., Inc. (In re Conejo

Enters., Inc.), 96 F.3d 346, 351 (9th Cir. 1996) (alteration in original) (quoting

Vanderpark Props., Inc. v. Buchbinder (In re Windmill Farms, Inc.), 841 F.2d

1467, 1472 (9th Cir. 1988) (quotations omitted)).

                                           I

      The district court did not abuse its discretion in denying Williams’s motion

to dismiss for cause. Under 11 U.S.C. § 707(a), a court may dismiss a bankruptcy

case for cause, including, but not limited to, unreasonable delay resulting in

prejudice to the creditors. Neary v. Padilla (In re Padilla), 222 F.3d 1184, 1191

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(9th Cir. 2000) (noting the list under § 707(a) is “illustrative and not exhaustive”).

The district court found that Williams had not attempted to show prejudice and that

the delay was partially self-created and thus not unreasonable. Further the court

considered that any delay attributable to the Takanos did not have a substantial

affect on the administration of the estate.

      Contrary to Williams’s assertion, the district court’s focus on whether

Williams had established prejudice was not erroneous. The district court was

simply assessing whether Williams had established cause based on the enumerated

circumstance found in § 707(a)(1): “unreasonable delay by the debtor that is

prejudicial to creditors.” Similarly, the district court did not preclude Williams’s

claim because she was not a trustee. After concluding that Williams had not

established cause by demonstrating unreasonable delay prejudicial to creditors, the

district court correctly noted that simply not being “timely” is not a ground for

Williams to have the case dismissed because that motion may only be made by a

trustee under § 707(a)(3). The court did not abuse its discretion in determining that

Williams had failed to establish circumstances constituting cause to dismiss the

case under § 707(a).

                                              II

                                              3
      The district court did not abuse its discretion in denying Williams’s motion

to convert the case to a Chapter 11 case. Under 11 U.S.C. § 706(b), a court has

broad discretion to convert to a Chapter 11 case based on what “will most inure to

the benefit of all parties in interest.” H.R. Rep. No. 95-595, at 380 (1977), as

reprinted in 1978 U.S.C.C.A.N. 5963; S. Rep. No. 95-989, at 94 (1978), as

reprinted in 1978 U.S.C.C.A.N. 5787. Although the district court did not

explicitly address the Takanos’ ability to pay, it weighed the interests of the parties

and concluded that Williams had not provided any evidence tending to show that

an involuntary conversion would benefit the parties. Neither had Williams

identified how a conversion would benefit the Takanos. Finally, in addition to

noting that an involuntary conversion could leave the Takanos “trapped in a

chapter 11 proceeding they do not need, do not want, and cannot manage,” the

district court found that an involuntary conversion ran contrary to the Takanos’

interest in a quick discharge of their debts and a fresh start. The district court did

not abuse its discretion in denying Williams’s motion for a conversion under §

706(b).

      AFFIRMED.

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