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CFCU Community Credit Union v. Pierce

July 17, 2009

CFCU COMMUNITY CREDIT UNION, APPELLANT,
v.
KEITH T. PIERCE, KRISTI A. PIERCE, AND DOUGLAS J. LUSTIG, TRUSTEE, APPELLEES.



The opinion of the court was delivered by: Siragusa, J.

DECISION and ORDER

INTRODUCTION

CFCU Community Credit Union ("CFCU") appeals an Order of the Honorable John C. Ninfo II, U.S. Bankruptcy Judge, entered on September 19, 2006, denying CFCU's motion to dismiss Keith and Kristi Pierce's ("the Pierces") Chapter 7 bankruptcy case pursuant to § 521(i)(2). 11 U.S.C. § 521(i)(2) (2005). For reasons discussed below, Judge Ninfo's Order is affirmed.

STANDARD OF REVIEW

Pursuant to 28 U.S.C. § 158, "the district courts of the United States ... have jurisdiction to hear appeals from final judgments, orders and decrees" of a bankruptcy court. 28 U.S.C. § 158(a)(1) (2005). "On an appeal the district court may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceeds ...." Fed. R. Bankr. P. 8013. "Findings of fact ... shall not be set aside unless clearly erroneous ...." Id.

Under this standard, the district court is not authorized to engage in independent fact findings and reviews the bankruptcy court's findings only for clear error. The findings of fact can only be set aside by the district court when, after reviewing the evidence, the court is left with the firm and definite conviction that a mistake has been committed.

Bagel Bros. Maple, Inc. v. Ohio Farmers, Inc., 279 B.R. 55, 61 (Bankr. W.D.N.Y. 2002) (citations and internal quotations omitted). However, when a district court is reviewing conclusions of law, a de novo standard is used. Id.; see also, In re Enron North Am. Corp., 312 B.R. 27, 28 (Bankr. S.D.N.Y. 2004).

BACKGROUND

On March 7, 2006, the Pierces filed for chapter 7 bankruptcy, but on March 21, 2006, CFCU's lawyer wrote the Pierces a letter pointing out that they had not filled in parts of Schedules I and J. On May 5, 2006, CFCU's lawyer filed this letter with the bankruptcy court, which he followed up with a motion to dismiss on May 31, 2006. Three hearings were held on the issue of whether the Pierces' bankruptcy case should be dismissed: the first was held on June 1, the second June 30, and the third on July 21. The Pierces filed amended versions of Schedules I and J on June 20, 2006.*fn1 Section 521(a)(1)(B)(vi) requires a debtor disclose any reasonably anticipated increase in income or expenses for the twelve-months subsequent to discharge. Judge Ninfo found that, since the Pierces had no reasonably anticipated increases in either their income or expenses, that their leaving blank Question 17 of Schedule I and Question 19 of Schedule J was an accurate representation. (App. at 2.) However, when the Pierces amended Schedule J they stated, in regards to expenditures, "[e]xcept the Husband's ex-wife is petitioning for increased child support for an 11 year old daughter the husband has with his ex-wife." (App. at 27.) Although the Pierces had no reasonably expected increases in income for the twelve months after filing for bankruptcy, CFCU insisted that the Pierces not leave Question 17 blank, so the Pierces entered "[n]one." (App. at 26.)

The Pierces received their discharge on July 28, 2006, and Judge Ninfo issued an Order denying CFCU's motion to dismiss on September 19, 2006. An Order denying CFCU's motion for certification of direct appeal to the Second Circuit was issued on November 13, 2006. A notice of appeal from the bankruptcy court was issued on November 29, 2006.

ANALYSIS

Statutory Language

Section 521(i)(1) states in pertinent part:

[I]f an individual debtor in a voluntary case under chapter 7 or 13 fails to file all of the information required under subsection (a)(1) within 45 days after the filing of the petition, the case shall be automatically ...


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