Court Opinion

ID: 856784
Source: CourtListenerOpinion
Date Created: 2013-03-29 23:26:47.275232+00
Date Added: 2024-06-11T13:12:35.485086
License: Public Domain

FILED
                                                           MAR 29 2013
 1                                                    SUSAN M SPRAUL, CLERK
                                                          U.S. BKCY. APP. PANEL
                                                          OF THE NINTH CIRCUIT
 2
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                             ) BAP No. CC-12-1086-PaKiTa
                                        )
 6   ROBERT GELB,                       ) Bankr. No. SA 11-24761-TA
                                        )
 7                  Debtor.             )
     ___________________________________)
 8                                      )
     JULIA GELB,                        )
 9                                      )
                    Appellant,          )
10                                      )
     v.                                 ) M E M O R A N D U M1
11                                      )
     UNITED STATES TRUSTEE;2            )
12   ROBERT GELB,                       )
                                        )
13                  Appellees.          )
     ___________________________________)
14
                        Submitted Without Oral Argument
15                             on March 22, 20133
16                           Filed - March 29, 2013
17               Appeal from the United States Bankruptcy Court
                     for the Central District of California
18
          Honorable Theodor C. Albert, Bankruptcy Judge, Presiding
19
     Appearances:     Appellant Julia Gelb pro se on brief; Appellee
20                    Robert Gelb pro se on brief.
21
     Before: PAPPAS, KIRSCHER and TAYLOR, Bankruptcy Judges.
22
23        1
             This disposition is not appropriate for publication.
24   Although it may be cited for whatever persuasive value it may have
     (see Fed. R. App. P. 32.1), it has no precedential value. See 9th
25   Cir. BAP Rule 8013-1.
          2
26             The United States Trustee did not participate in this
     appeal.
27        3
             After examination of the briefs and record, and after
28   notice to the parties, the Panel unanimously determined that oral
     argument was not needed in an order entered October 16, 2012.
     Fed. R. Bankr. P. 8012.

                                      -1-
 1        Appellant Julia Gelb (“Appellant”) appeals the decision of
 2   the bankruptcy court to dismiss the involuntary chapter 74
 3   petition she filed against her ex-husband and alleged debtor,
 4   Robert Gelb (“Appellee”).     She also appeals the bankruptcy court’s
 5   order denying Appellant’s motion to vacate the prior order
 6   dismissing the involuntary case.     We AFFIRM.
 7                                    FACTS
 8        Appellant and Appellee were married.     They have two minor
 9   children.    Appellant commenced an action for a divorce sometime in
10   2008 in the Superior Court of California for the County of
11   Orange.5    An order entered by that court in July 2009, labeled
12   “Stipulation and Order: For Judgment (Partial)” (“Divorce Order”),
13   adopts the parties’ agreement as to spousal support, child support
14   and visitation, and their agreements as to the division of marital
15   property.    The Divorce Order, which is handwritten and somewhat
16
17
          4
             Unless otherwise indicated, all chapter, section and rule
18   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
19   Civil Rule references are to the Federal Rules of Civil
     Procedure 1-86.
20
          5
             It is clear from the record that the divorce has been less
21   than amicable. Appellant was chastised in a lengthy order by the
     state court for her litigation tactics. The court observed,
22
              [u]nfortunately, [Appellant] has demonstrated
23            that she will continue her use of the
              litigation process until she achieves her
24            goal. Her misuse of the legal process, her
              inaccurate accusations of being mistreated by
25            judicial decisions, and most significantly her
              refusal to stop the litigation battle and
26            allow the children to enjoy a season of
              stability and peace between their parents must
27            end.
28   Order, Marriage of Gelb, Case No. 08D011558, May 22, 2012 at 5-6.

                                       -2-
 1   difficult to decipher, requires Appellee to pay child support,6
 2   provides that the “Cypress Equipment fund” shall be “split
 3   equally” between the parties, and that Appellee “shall assume
 4   responsibility for credit card debt of approx. 80k to Novadebt
 5   . . . .”7
 6        Based upon Appellee’s alleged obligation to assume and pay
 7   the credit card debt, and his ongoing obligation to pay child
 8   support for his two minor children,8 Appellant, as a petitioning
 9   creditor, filed an involuntary chapter 7 petition on October 24,
10   2011, naming Appellee as the alleged debtor, and listing the
11   parties’ two minor children as co-petitioners.   The involuntary
12   petition is not signed and, in the space provided for the co-
13   petitioning creditors, Appellant listed the children’s names “by
14
15
          6
             The Divorce Order states Appellee’s child support
16   obligation as $2,177 per month, but the petition says $4,000 a
     month per child is owed. Nevertheless, there is no indication
17   that Appellee is behind on his support payments to Appellant or
     their children. Appellant only argues that Appellee owes the
18   amount on a continuing basis.
19        7
             Appellant assists in determining the content of this
     handwritten provision in the cover page to Exhibit A to the
20   involuntary petition. There, she alleges the order provides that
     “Robert Gelb ‘shall assume $80,000.00 to Novadebt’ which non-
21   contingent, liquidated amount remains unpaid to date.”
22        8
             We express no opinion regarding whether Appellee’s
     obligations under the Divorce Order relied upon by Appellant as
23   the basis for the involuntary petition would, indeed, constitute
     “claims” for purposes of § 303(b)(1) (requiring that petitioning
24   creditors hold claims against alleged debtor that are not
     contingent as to liability or the subject of bona fide dispute as
25   to liability or amount). Even if that were so, in order to obtain
     relief on the involuntary petition over Appellee’s objection,
26   Appellant would also have to prove that Appellee was “generally
     not paying [his] debts as such debts become due . . . .”
27   § 303(h)(I). Appellee argued vehemently to the bankruptcy court
     at the hearings that he was in compliance on all his obligations
28   under the Divorce Order.

                                    -3-
 1   Julia Gelb.”
 2        On November 8, 2011, acting sua sponte, the bankruptcy court
 3   entered an order to show cause directed to Appellant requiring her
 4   to appear and show cause why the involuntary petition should not
 5   be dismissed.   The hearing on the show cause order was held on
 6   December 6, 2011, at which time both Appellant and Appellee
 7   appeared pro se.    At the hearing, the bankruptcy court began by
 8   identifying what it perceived to be two issues with the
 9   involuntary petition: (1) whether the minor children could act as
10   co-petitioners without the appearance on their behalf of a
11   guardian ad litem; and (2) whether the involuntary petition was,
12   in reality, Appellant’s attempt to relitigate issues from the
13   divorce proceedings.   In response to the court’s comments,
14   Appellant stated,
15         What I was really hoping to achieve with [the
           involuntary bankruptcy petition] is to declare
16         the action of Judge Clay Smith null and void,
           specifically in the action that he took on
17         October 25th, where clearly – and November 2nd
           where he clearly went ahead and started to
18         divide the largest community asset, namely
           . . . Cypress Equipment fund. He went ahead
19         and – without completely taking a look at the
           entire financial picture, he went ahead and
20         touched that, even though I have - based on
           bankruptcy, I have [the] automatic stay in
21         place. So, because of that I have a problem.
22   Hr'g Tr. 2:13-3:19, Dec. 6, 2011
23        Appellee then pointed out to the bankruptcy court the
24   division of the “Cypress Equipment fund” was agreed to in the
25   Divorce Order entered in July 2009.
26        The bankruptcy court repeated its concerns about the legal
27   status of the children as petitioning creditors, and its belief
28   that the bankruptcy case was initiated for an improper purpose,

                                      -4-
 1   and concluded that the petition should be dismissed.    The
 2   bankruptcy court memorialized this conclusion in an order entered
 3   December 28, 2011, that stated “[i]t is appearing that this case
 4   is not the proper forum.   The dissolution is a state court issue.
 5   Minors cannot be parties without guardian ad litems.”
 6        On January 11, 2012, Appellant filed a motion to vacate the
 7   bankruptcy court’s dismissal order.     A hearing was conducted by
 8   the court concerning the motion on February 7, 2012, at which time
 9   the parties again appeared.9    The bankruptcy court again explained
10   its concerns as noted at the hearing on the show cause order, and
11   provided Appellant an opportunity to argue her motion.    After
12   considering Appellant’s arguments, the bankruptcy court denied
13   Appellant’s motion to vacate because, in the court’s judgment, it
14   was improper for the parties’ minor children to appear as co-
15   petitioning creditors without an appointed guardian ad litem to
16   represent their interests, and because the bankruptcy proceeding
17   was not the proper forum to resolve Appellant’s issues with the
18   orders of the state court.     In the process of announcing its
19   decision, the court stated, “I’m going to abstain . . . I have the
20   power to abstain sua sponte.”     Hr’g Tr. 10:14-15, Feb. 7, 2012.
21        Appellant filed a timely notice of appeal on February 13,
22   2012, challenging both the order dismissing the involuntary
23   bankruptcy petition and the order denying her motion to vacate the
24
          9
             At the hearing on Appellant’s motion to vacate the
25   bankruptcy court’s order dismissing the involuntary case an
     attorney appeared and addressed the court concerning the interests
26   of the parties’ children. The attorney did not formally appear on
     behalf of children, nor was there any indication that she had been
27   appointed to serve as their guardian ad litem. The attorney
     stated that she appeared at the behest of the children’s rabbi,
28   but she did not file an appearance on behalf of the children.

                                       -5-
 1   dismissal.
 2                                JURISDICTION
 3        The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
 4   and 157(b)(2)(A).    We have jurisdiction under 28 U.S.C. § 158.
 5                                   ISSUES
 6        Whether the bankruptcy court erred in dismissing the
 7   involuntary chapter 7 petition.
 8        Whether the bankruptcy court erred in denying the motion to
 9   vacate that order.
10                             STANDARD OF REVIEW
11        The bankruptcy court’s determination that the unrepresented
12   minors lack standing to be co-petitioners in an involuntary
13   bankruptcy case is a question of law, reviewed de novo.     Johns v.
14   Cnty. of San Diego, 114 F.3d 874, 876 (9th Cir. 1997); United
15   States v. Rodriguez-Sanchez, 23 F.3d 1488, 1494 (9th Cir. 1994);
16   Franklin v. Four Media Co. (In re Mike Hammer Prod., Inc.),
17   294 B.R. 752, 753 (9th Cir. BAP 2003).
18        Whether the bankruptcy court should abstain and dismiss a
19   bankruptcy petition under § 305(a) presents a mixed question of
20   law and fact, reviewed de novo.    Wechsler v. Macke Int’l Trade,
21   Inc. (In re Macke Int’l Trade, Inc), 370 B.R. 236, 245 (9th Cir.
22   BAP 2007); Barnett v. Edwards (In re Edwards), 214 B.R. 613, 618
23   (9th Cir. BAP 1997); Eastman v. Eastman (In re Eastman), 188 B.R.
24   621, 624 (9th Cir. BAP 1995).
25        Finally, the bankruptcy court’s denial of the motion to
26   vacate its prior order is reviewed for abuse of discretion.
27   United States v. Estate of Stonehill, 660 F.3d 415, 443 (9th Cir.
28   2011) (citing Am. Games, Inc. v. Trade Prods., Inc., 142 F.3d

                                       -6-
 1   1164, 1166 (9th Cir. 1998); Nat. Union Fire Ins. Co. v. Seafirst
 2   Corp., 891 F.2d 762, 765 (9th Cir. 1989)).
 3                                 DISCUSSION
 4         Appellant argues the bankruptcy court erred by dismissing the
 5   involuntary bankruptcy petition, and denying Appellant’s motion to
 6   vacate the order of dismissal, because: (1) as explained in
 7   In re Hopkins, 177 B.R. 1 (Bankr. D. Me. 1995), minor children
 8   have standing to be co-petitioners in an involuntary petition;
 9   (2) the bankruptcy court did not appoint a guardian ad litem for
10   the children; (3) Appellee did not file any response to the
11   involuntary bankruptcy petition, and thus relief should have been
12   granted by the bankruptcy court; and (4) the bankruptcy court
13   should have recognized that “the purpose of [the involuntary
14   petition was] to take the estate out of the hands of the debtor
15   [and] an extremely biased California State Judge.”   Appellant’s
16   Br. at 17.10   For the reasons that follow, we conclude that all of
17   these arguments lack merit.
18   I.   Applicable Law
19         A.   Standing of Minors in the Ninth Circuit
20         It is settled in the Ninth Circuit that a non-lawyer “has no
21   authority to appear as an attorney for others than [herself].”
22   C.E. Pope Equity Trust v. United States, 818 F.2d 696, 697 (9th
23   Cir. 1987).    Further, neither a guardian ad litem nor a parent may
24   “bring an action on behalf of a minor child without retaining a
25
26         10
             Appellant does not stop with these issues in her brief.
     For example, she argues at great length that the state court judge
27   violated the automatic stay in dividing the marital estate.
     However, the bankruptcy court made no findings on this issue and
28   it is not before us on appeal.

                                      -7-
 1   lawyer.”    Johns, 114 F.3d at 876.    In so holding, the Ninth
 2   Circuit joined the Second, Third, and Tenth Circuits in adopting
 3   this rule as articulated by the Third Circuit:
 4         A litigant in federal court has a right to act
           as his or her own counsel. See 28 U.S.C.
 5         § 1654 (1982) . . . . However, we agree with
           Meeker v. Kercher, 782 F.2d 153, 154 (10th
 6         Cir. 1986) (per curiam), that a non-attorney
           parent must be represented by counsel in
 7         bringing an action on behalf of his or her
           child. The choice to appear pro se is not a
 8         true choice for minors who under state law,
           see Fed. R. Civ. P. 1(b), cannot determine
 9         their own legal actions. There is thus no
           individual choice to proceed pro se for courts
10         to respect, and the sole policy at stake
           concerns the exclusion of non-licensed persons
11         to appear as attorneys on behalf of others.
           It goes without saying that it is not in the
12         interest of minors or incompetents that they
           be represented by non-attorneys. Where they
13         have claims that require adjudication, they
           are entitled to trained legal assistance so
14         their rights may be fully protected.
15   Id. at 876-77 (quoting Osei-Afriyie v. Med. Coll., 937 F.2d 876,
16   882-83 (3d Cir. 1991) (quoting Cheung v. Youth Orchestra Found. of
17   Buffalo, Inc., 906 F.2d 59, 61-62 (2d Cir. 1990)); see also Jie
18   Lin v. Ashcroft, 377 F.3d 1014, 1025 (9th Cir. 2004) (restating
19   this standard).
20        Even if Johns did not prohibit the children from appearing in
21   this federal bankruptcy case without a lawyer, in California, “a
22   minor who is a party in a lawsuit must appear by guardian ad litem
23   appointed by the court in which the action or proceeding is
24   pending.”   Williams v. Superior Court, 147 Cal. App. 4th 36, 47,
25   54 Cal. Rptr. 3d 13, 20-21 (2007) (citing Cal. Code Civ. Proc.,
26   § 372(a)) (internal quotes omitted).     Therefore, absent both a
27   lawyer and a guardian ad litem, the children could not join the
28

                                      -8-
 1   involuntary petition.11
 2        B.      Involuntary Petitions Under § 303(b)
 3        Section 303(b)12 sets forth the requirements for an
 4   involuntary bankruptcy petition.       “We have previously held that,
 5   ‘[a]n involuntary petition that is sufficient on its face and
 6   which contains the essential allegations invokes the subject
 7   matter jurisdiction of the bankruptcy court.’”      Marciano v. Fahs
 8   (In re Marciano), 459 B.R. 27, 39 (9th Cir. BAP 2011) aff’d
 9   708 F.3d 1123 (9th Cir. 2013) (quoting Wechsler, 370 B.R. at 246).
10   The corollary to this rule is that an involuntary petition,
11   insufficient on its face and missing essential allegations,
12
13
          11
             The need for an independent guardian for the children is
14   highlighted in this context where, according to the Divorce Order,
     custody of the children is jointly shared by Appellant and
15   Appellee.
16        12
                 Section 303(b) provides:
17             (b) An involuntary case against a person is
               commenced by the filing with the bankruptcy
18             court of a petition under chapter 7 or 11 of
               this title--
19
               (1) by three or more entities, each of which
20             is either a holder of a claim against such
               person that is not contingent as to liability
21             or the subject of a bona fide dispute as to
               liability or amount, or an indenture trustee
22             representing   such    a   holder,   if   such
               noncontingent, undisputed claims aggregate at
23             least $14,425 more than the value of any lien
               on property of the debtor securing such claims
24             held by the holders of such claims;
25             (2) if there are fewer than 12 such holders,
               excluding any employee or insider of such
26             person and any transferee of a transfer that
               is voidable under section 544, 545, 547, 548,
27             549, or 724(a) of this title, by one or more
               of such holders that hold in the aggregate at
28             least $14,425 of such claims[.]

                                        -9-
 1   requires further scrutiny from the bankruptcy court.      See, e.g.,
 2   In re Mi La Sul, 380 B.R. 546 (Bankr. C.D. Cal. 2007).
 3         C.      Abstention Under § 305(a)
 4         Section 305(a) provides that: “(a) The [bankruptcy] court,
 5   after notice and hearing, may dismiss a case under this title, or
 6   may suspend all proceedings in a case under this title, at any
 7   time if – (1) the interests of creditors and the debtor would be
 8   better served by such dismissal or suspension . . . .”      Therefore,
 9   even if an involuntary petition satisfies the minimal requirements
10   of   § 303(b), the bankruptcy court may exercise its discretion to
11   nonetheless dismiss the petition, or suspend the bankruptcy
12   proceedings, for the reasons identified in § 305(a).
13   In re Marciano, 459 B.R. at 45; Macke Int’l Trade, 370 B.R. at
14   247; Barnett v. Edwards (In re Edwards), 214 B.R. 613, 620 (9th
15   Cir. BAP 1997).13
16         There are seven factors the bankruptcy court may consider to
17   determine whether dismissal or suspension under § 305(a) is
18   appropriate.      In re Marciano, 459 B.R. at 45.   The bankruptcy
19   court “must make specific and substantiated findings” based upon
20   these factors and conclude that the interests of the creditors and
21   the debtor will be better served by dismissal or suspension.         Id.
22   (quoting Macke Int’l Trade, 370 B.R. at 247)).      Those factors are:
23              (1)   the    economy   and   efficiency   of
                administration; (2) whether another forum is
24
25         13
             A bankruptcy court’s decision to abstain under § 305(a) is
     subject to review by a bankruptcy appellate panel, notwithstanding
26   the limitation of appellate review found under § 305(c). See In
     re Eastman, 188 B.R. at 624 (stating, “[section 305(c) does not
27   prohibit or restrict appeals to the Panel or the district court,
     but only further appeals to the circuit courts of appeal and the
28   United States Supreme Court.”).

                                    -10-
 1             available to protect the interests of both
               parties or there is already a pending
 2             proceeding in state court; (3) whether federal
               proceedings are necessary to reach a just and
 3             equitable solution; (4) whether there is an
               alternative means of achieving an equitable
 4             distribution of assets; (5) whether the debtor
               and the creditors are able to work out a less
 5             expensive   out-of-court   arrangement   which
               better serves all interests in the case;
 6             (6) whether a non-federal insolvency has
               proceeded so far in those proceedings that it
 7             would be costly and time consuming to start
               afresh with the federal bankruptcy process;
 8             and (7) the purpose for which bankruptcy
               jurisdiction has been sought.14
 9
10   In re Marciano, 459 B.R. at 45 (citing In re Monitor Single Lift
11   I, Ltd. 381 B.R. 455, 464-65 (Bankr. S.D.N.Y. 2008)).
12        D.      Motion to Vacate: Civil Rule 60(b)
13        Civil Rule 60(b),15 incorporated in bankruptcy proceedings by
14
          14
15           Notably, § 305 and the case law interpreting this
     provision resembles the doctrine of forum non conveniens. See
16   Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947) (stating even
     if subject matter jurisdiction lies, a court “may resist
17   imposition upon its jurisdiction” under the principle of forum non
     conveniens). “Dismissal may be warranted [under this principle]
18   where a plaintiff chooses a particular forum, not because it is
     convenient, but solely in order to harass the defendant or take
19   advantage of favorable law.” Piper Aircraft Co. v. Reyno,
     454 U.S. 235, 249 (1981).
20
          15
                 Federal Rule of Civil Procedure 60(b) states:
21
               Grounds for Relief from a Final Judgment,
22             Order, or Proceeding. On motion and just
               terms, the court may relieve a party or its
23             legal representative from a final judgment,
               order, or proceeding for the following
24             reasons:
               (1) mistake, inadvertence, surprise, or
25             excusable neglect;
               (2) newly discovered evidence that, with
26             reasonable diligence, could not have been
               discovered in time to move for a new trial
27             under Rule 59(b);
               (3) fraud (whether previously called intrinsic
28                                                              (continued...)

                                        -11-
 1   Rule 9024, provides reasons a court may relieve a party from a
 2   final order or judgment.       Most applicable in this case are Civil
 3   Rule 60(b)(1), which grants relief from a final order or judgment
 4   if there was a “mistake, inadvertence, surprise or excusable
 5   neglect,” and Civil Rule 60(b)(6), which is the catch-all
 6   provision of the rule that grants relief for “any other reason
 7   that justifies relief.”       Civil Rule 60(b)(6) is to be used
 8   sparingly to prevent manifest injustice, and only granted if there
 9   is a showing by the movant of “extraordinary circumstances.”
10   United States v. Alpine Land & Reservoir Co., 984 F.2d 1047, 1049
11   (9th Cir. 1993).
12   II.   Analysis and Disposition
13         Measuring the bankruptcy court’s orders under these
14   standards, it is clear that its decisions to dismiss the
15   involuntary petition, and declining to reconsider the dismissal,
16   should be affirmed.
17         A.      The Bankruptcy Court Did Not Err in Determining that the
                   Minor Children Lacked Standing to be Co-Petitioners
18
19         Examining the bankruptcy court’s decision regarding the
20   standing of the parties’ de novo, we conclude no error was
21   committed.
22
23
           15
                (...continued)
24              or    extrinsic),    misrepresentation,     or
                misconduct by an opposing party;
25              (4) the judgment is void;
                (5) the judgment has been satisfied, released
26              or discharged; it is based on an earlier
                judgment that has been reversed or vacated; or
27              applying it prospectively is no longer
                equitable; or
28              (6) any other reason that justifies relief.

                                         -12-
 1        The Ninth Circuit settled this issue in Johns and in Jie Lin
 2   wherein the court held that neither a guardian ad litem nor a
 3   parent may “bring an action on behalf of a minor child without
 4   retaining a lawyer.”   Johns, 114 F.3d at 876.   In this case,
 5   Appellant, acting pro se, filed the involuntary petition, not only
 6   on her own behalf, but also on behalf of her children.    While
 7   Appellant surely could represent herself in this proceeding, it is
 8   equally clear that she could not represent her minor children.
 9        Further, as noted above, that the bankruptcy court declined
10   to appoint a guardian ad litem for the children is of no moment
11   under these facts.   A guardian would also not have the legal right
12   to join in a petition without counsel under Johns.     Here, the
13   children had no attorney – they were represented “by Julia Gelb.”
14   The bankruptcy court did not err when it dismissed the involuntary
15   petition under these circumstances.
16        Moreover, to the extent that the bankruptcy court in
17   In re Hopkins, 177 B.R. 1 (Bankr. D. Me. 1995) has explained the
18   law in the District of Maine as to standing of minors in
19   involuntary bankruptcy cases, it is inconsistent with the law of
20   the Ninth Circuit as announced in Johns and Jie Lin.
21        B.   The Bankruptcy Court Did Not Err in Declining to Grant
               Relief on the Defective Involuntary Petition
22
23         Contrary to Appellant’s contention, the bankruptcy court did
24   not abuse its discretion by failing to grant relief based upon the
25   facially deficient involuntary petition.   As the Panel has
26   explained, only a sufficient involuntary petition containing all
27   the essential allegations properly invokes the jurisdiction of the
28   bankruptcy court.    In re Marciano, 459 B.R. at 39.   In this case,

                                      -13-
 1   the bankruptcy court determined that Appellant’s involuntary
 2   petition had glaring potential defects – it was not signed, and it
 3   was purportedly joined by the parties’ unrepresented minor
 4   children as co-petitioning creditors.    On this record, it was not
 5   an abuse of discretion for the bankruptcy court, even in the
 6   absence of an objection by Appellee, to require Appellant to show
 7   cause why the petition should not be dismissed, or to decline to
 8   grant relief based upon the insufficient involuntary petition.
 9        C.    The Bankruptcy Court Did Not Err in Dismissing the
                Involuntary Petition Under § 305(a)
10
11        A bankruptcy court’s dismissal of an involuntary case on the
12   basis of § 305(a) is reviewed de novo.     Even if the involuntary
13   petition was otherwise adequate under § 303(b), the bankruptcy
14   court had the authority to abstain and dismiss the case pursuant
15   to § 305(a).   Here, the seven factors to be considered before
16   dismissing a case under § 305(a), articulated in In re Marciano,
17   weigh in favor of dismissal of this case.
18        As the bankruptcy court noted at the hearing on the motion to
19   vacate its dismissal order, the state court had already entered an
20   order dividing the marital estate.     The result of this fact is the
21   first four factors discussed in In re Marciano, as well as factor
22   six, all cut in favor of dismissal.    Under these circumstances,
23   the administration of the bankruptcy case would be strained and
24   inefficient because the state court had already divided the
25   assets.   There was also no identifiable need for a federal court’s
26   intervention in this domestic relations dispute.    The distribution
27   of the parties’ assets had already taken place under the terms of
28   an order issued by a court familiar with this case and this type

                                     -14-
 1   of distribution.   Finally, as the bankruptcy court noted at the
 2   hearing on the motion to vacate, Appellant was attempting to use
 3   the involuntary bankruptcy process to circumvent the judgment from
 4   the state court, and that was not an appropriate use of the
 5   bankruptcy process.
 6        Consistent with the factors in In re Marciano, the bankruptcy
 7   court did not err when it determined that it would dismiss the
 8   case in favor of the parties’ participation in the pending state
 9   court case.16
10        D.   The Bankruptcy Court Did Not Err in Denying the Motion
               to Vacate its Prior Order
11
12        Finally, in examining the bankruptcy court’s denial of the
13   motion to vacate its prior judgment for abuse of discretion, we
14   find no error was committed.
15        Appellant raised no new argument at the hearing on the motion
16   to vacate nor did Appellant point out any mistake, inadvertence,
17   surprise, or excusable neglect.    Therefore, the bankruptcy court’s
18   denial of the motion to vacate its prior order was not an abuse of
19   discretion as to Civil Rule 60(b)(1).    Further, pursuant to Civil
20
          16
21           Other courts have reached similar results. For example,
     in one, the alleged debtor’s ex-spouse filed an involuntary
22   petition against him after a “bitter domestic contest between
     feuding spouses.” In re Evans, 8 B.R. 568, 569 (Bankr. M.D. Fla.
23   1981). The bankruptcy court dismissed the involuntary petition
     because the petition lacked a sufficient number of petitioning
24   creditors. Id. However, the bankruptcy court further stated that
     even had the petition been adequate under § 303, it would abstain
25   under § 305(a) because it was “evident that this is not really a
     bona fide insolvency proceeding initiated by bon[a] fide creditors
26   and the rights of the parties can and should be adjudicated by the
     State Court.” Id. The court observed that the petition was an
27   attempt to utilize the favorable law, “to invoke the protection of
     . . . [§] 362 of the Bankruptcy Code under the mistaken assumption
28   that the automatic stay would somehow prevent [the operation of
     the domestic court’s prior order.]” Id.

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 1   Rule 60(b)(6), Appellant raised no “extraordinary circumstances”
 2   that would have justified relief under Civil Rule 60(b)(6).   The
 3   bankruptcy court therefore committed no abuse of discretion in
 4   denying Appellant’s motion to vacate its prior order under this
 5   rule either.
 6                               CONCLUSION
 7        The bankruptcy court did not err when it dismissed the
 8   involuntary bankruptcy petition, or when it denied the motion to
 9   vacate its prior order dismissing the involuntary petition.   We
10   AFFIRM the orders of bankruptcy court.
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