Court Opinion

ID: 9901374
Source: CourtListenerOpinion
Date Created: 2023-11-21 18:01:41.065427+00
Date Added: 2024-06-11T09:21:31.700727
License: Public Domain

NOT FOR PUBLICATION                         FILED
                    UNITED STATES COURT OF APPEALS                       NOV 21 2023
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                             FOR THE NINTH CIRCUIT

In re: JEREMY DANIEL KINTNER,                   No.    22-56022

             Debtor,                            D.C. No. 2:21-cv-03280-FWS
______________________________

JEREMY DANIEL KINTNER,                          MEMORANDUM*

                Appellant,

 v.

CALIFORNIA DEPARTMENT OF TAX
AND FEE ADMINISTRATION,

                Appellee.

                   Appeal from the United States District Court
                       for the Central District of California
                   Fred W. Slaughter, District Judge, Presiding

                     Argued and Submitted November 7, 2023
                              Pasadena, California

Before: WALLACE, W. FLETCHER, and R. NELSON, Circuit Judges.

      On appeal from the bankruptcy court, the district court affirmed the

bankruptcy court’s dismissal of Jeremy Kintner’s Chapter 13 petition for cause

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
under 11 U.S.C. § 1307(c) based on a finding that he filed the petition in bad faith.

Kintner appealed from the district court’s order. We have jurisdiction pursuant to

28 U.S.C. § 158(d). We affirm.

      “When reviewing an appeal from a bankruptcy court, we independently

review the bankruptcy court’s decision and do not give deference to the district

court’s determinations.” In re Bunyan, 354 F.3d 1149, 1150 (9th Cir. 2004)

(internal quotation marks omitted). “We also review the bankruptcy court’s

finding of bad faith for clear error and the bankruptcy court’s decision to dismiss a

case for abuse of discretion.” In re Leavitt, 171 F.3d 1219, 1222–23 (9th Cir.

1999) (internal citations omitted).

      As the parties are familiar with the factual and procedural history of this

case, we need not recount it here.1

      Kintner argues that the bankruptcy court’s finding of bad faith should be

      1
         Also pending before us is California Department of Tax and Fee
Administration’s (“CDTFA”) Request for Judicial Notice of nine documents
stemming from related proceedings before an administrative body and the Los
Angeles County Superior Court. Dkt. 14. “Under Fed. R. Evid. 201, a court may
take judicial notice of ‘matters of public record.’” Lee v. City of Los Angeles, 250
F.3d 668, 689 (9th Cir. 2001); see also Reyn’s Pasta Bella, LLC v. Visa USA, Inc.,
442 F.3d 741, 746 (9th Cir. 2006) (“We may take judicial notice of court filings
and other matters of public record”). We take judicial notice of Exhibits 2 through
9 as to the existence of these records, where the documents constitute court filings.
We decline to take judicial notice of Exhibit 1, which is a personal Billing and
Refund Notice and not a matter of public record.

                                          2
reviewed de novo rather than for clear error because the finding was based on an

erroneous conclusion that California’s “Pay First Rule,” Cal. Const. art. XIII, § 32,

limits a bankruptcy court’s authority to assess challenged debt under 11 U.S.C.

§ 505. In In re Fagerdala USA-Lompoc, Inc., 891 F.3d 848, 854 (9th Cir. 2018),

we reasoned that de novo review was proper where the bankruptcy court

misunderstood the good faith inquiry and only relied on two facts, neither of

which—“alone or together”—were sufficient to support a finding of bad faith.

Here, irrespective of whether the bankruptcy court erred in concluding that section

505 requires Kintner to comply with the Pay First Rule before challenging the state

tax assessment, the bankruptcy court properly inquired whether Kintner filed his

Chapter 13 petition in bad faith to avoid the Pay First Rule and state litigation. We

review the bankruptcy court’s factual findings for clear error.

      To determine whether a debtor filed a Chapter 13 petition in bad faith, a

bankruptcy court must apply the “totality of the circumstances” test, considering

the following factors:

      (1) whether the debtor misrepresented facts in his petition or plan,
      unfairly manipulated the Bankruptcy Code, or otherwise filed his
      Chapter 13 petition or plan in an inequitable manner; (2) the debtor’s
      history of filings and dismissals; (3) whether the debtor only intended
      to defeat state court litigation; and (4) whether egregious behavior is
      present.

In re Leavitt, 171 F.3d at 1224 (cleaned up). Neither malice nor fraudulent intent

is required for a finding of bad faith. Id. at 1224–25.

                                          3
      The bankruptcy court properly applied the Leavitt factors. The bankruptcy

court found that the first Leavitt factor—whether debtor has misrepresented facts in

his bankruptcy papers, manipulated the Bankruptcy Code, or filed his petition in an

inequitable manner—weighed against Kintner for multiple reasons. First, the court

found that Kintner failed to disclose his business’s gross revenue and expenses,

which bear on whether he was financially distressed. Second, the court found that

Kintner was attempting to evade the Pay First Rule without having demonstrated

financial need. Third, the court found that Kintner failed to provide for payment of

the state tax assessment in his Chapter 13 plan.

      Kintner argues that the court erred in finding that he omitted his business’s

financial information in bad faith since disclosure by a third-party corporation is

not required, and, if required, was not material to his petition. However, such

argument is unpersuasive because Kintner determined his own salary or

distribution from the business’s operations. C.f., In re Khan, 846 F.3d 1058, 1066

(9th Cir. 2017) (finding bad faith in part because of petitioners’ “failure and refusal

to provide financial information critical to the determination of the value of their

assets, and their further failure to provide information regarding the movement of

funds among their various business entities”). The bankruptcy court permissibly

inferred from Kintner’s unwillingness to provide his business’s financial

information that he was “simply attempting to evade nonbankruptcy law.”

                                           4
Furthermore, although Kintner justifies listing the amount of the state tax

assessment as zero in the Chapter 13 plan because it was disputed, the bankruptcy

court did not err in finding that Kintner filed his petition in an inequitable manner

on that basis.

       The court found the second Leavitt factor—the debtor’s history of filings

and dismissals—inapplicable as Kintner had no prior bankruptcy filings.

       The court found the third Leavitt factor—whether the debtor intended to use

the bankruptcy filing to defeat state court litigation—satisfied because prior to

filing his Chapter 13 petition, Kintner engaged in extensive but unsuccessful

litigation with CDTFA and was attempting to do an “end run around that

litigation.”

       The court found that the fourth Leavitt factor—whether egregious behavior

is present—also weighed against Kintner.2 The court found that Kintner’s “lip

service” to proving that he could not comply with the Pay First Rule, after two

state court actions, showed an ongoing attempt to increase the cost of litigation for

CDTFA and unnecessary delay. On appeal, Kintner doubles down, arguing the

schedules he submitted to the bankruptcy court sufficiently showed his insolvency.

Such argument is undermined by the bankruptcy court’s admonishment of Kintner

       2
         The bankruptcy court found that, even if the fourth Leavitt factor was not
satisfied, the first and third factors were sufficient grounds for dismissal.

                                          5
for failing to provide “the gross revenues, expenses, and calculation of net income

of his business that he has been required to provide since the inception of this

bankruptcy case” so that the court could accurately determine whether he lacked

financial resources to pay the tax assessment.

      In sum, there is sufficient evidence in the record from which the bankruptcy

court permissibly inferred that Kintner filed his Chapter 13 petition in bad faith.

See Wash. Mut., Inc. v. United States, 856 F.3d 711, 721 (9th Cir. 2017) (“Clear

error review is deferential . . . requiring a definite and firm conviction that a

mistake has been made”).

      Kintner argues that the bankruptcy court abused its discretion by dismissing

his petition without seeking further disclosures or permitting him to amend the

plan. But Kintner was on notice that his financial distress was in question, and that

the bankruptcy court had asked for further information about his financial status.

He “only argued without any support that he has no obligation to provide such

details . . .” Moreover, the bankruptcy court did not bar Kintner from refiling his

petition. Thus, the bankruptcy court did not abuse its discretion in dismissing

Kintner’s bankruptcy petition. See Harman v. Apfel, 211 F.3d 1172, 1175 (9th Cir.

2000).

             AFFIRMED.

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