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IN RE: Michele MARINARI (2021)

United States Court of Appeals, Third Circuit.2021-01-19No. No. 19-3642

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Opinion

OPINION *

Appellant Robert Murphy, who held an outstanding judgment against Michele Marinari and filed an adversary complaint in her Chapter 13 bankruptcy proceeding, challenges the Bankruptcy Courts dismissal of Marinaris case pursuant to 11 U.S.C. § 1307(b). The District Court affirmed. Because we perceive no error in the Bankruptcy Courts rulings, we too will affirm.

I. Discussion 1

On appeal, Murphy argues that the Bankruptcy Court improperly dismissed Marinaris case, that the Bankruptcy Court should have imposed additional conditions on the dismissal, and that the Bankruptcy Court erred by denying his motion for reconsideration. None of these arguments are persuasive. We address each in turn.

A. The propriety of dismissal

Murphy offers three reasons the Bankruptcy Court should not have dismissed Marinaris case. His first and primary argument is that § 1307(b) does not permit dismissal where a debtor acts in bad faith.

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But even assuming arguendo that § 1307(b) does have a bad faith exception, we agree with the District Court that Murphy failed to plead any facts that would suggest Marinari acted in bad faith, much less in the “extraordinary” or “atypical” fashion that other courts have found sufficient to satisfy a bad faith exception in the bankruptcy context. See Marrama v. Citizens Bank of Mass., 549 U.S. 365, 375 n.11, 127 S.Ct. 1105, 166 L.Ed.2d 956 (2007) (in the context of 11 U.S.C. § 706); In re Rosson, 545 F.3d 764, 773–74 (9th Cir. 2008) (in the context of § 1307(b)).

Second, Murphy faults the Bankruptcy Court for granting dismissal in the absence of a formal motion to dismiss, which is required by the bankruptcy rules. Fed. R. Bankr. P. 1017(f)(2), 9013. But Murphy had sufficient notice that the Bankruptcy Court intended to treat Marinaris self-styled “application” as a motion to dismiss, he did not object to that approach, and he had the opportunity to brief and be heard on the dismissal issue. App. 62–63. Murphy therefore had “notice ‘reasonably calculated ․ to apprise [him] of the pendency of the [motion] and afford [him] an opportunity to present [his] objections,’ ” which “more than satisfied [his] due process rights.” United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 272, 130 S.Ct. 1367, 176 L.Ed.2d 158 (2010) (quoting Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950)).

Murphys third argument is that the Bankruptcy Court should not have granted the dismissal while his motions for sanctions and conversion to Chapter 7 were still pending and without holding an evidentiary hearing. This objection, too, is unavailing, as Murphy had the opportunity—and failed—to request an evidentiary hearing at the hearing that was held on the motion to dismiss; the Bankruptcy Court had already resolved his motions for sanctions when it dismissed Marinaris case; and § 1307(b) allows for dismissal “at any time” prior to conversion. 11 U.S.C. § 1307(b).

In short, the Bankruptcy Court did not err when it dismissed Marinaris case.

B. The conditions of dismissal

Murphy next argues that the Bankruptcy Court placed “meaningless” and “unconstitutional[ ]” conditions on the dismissal of Marinaris case. Appellants Br. 5. We review dismissal conditions for abuse of discretion. See In re Ross, 858 F.3d 779, 786 (3d Cir. 2017).

Here, the Bankruptcy Court provided that Murphys adversary action would resume if Marinari filed for bankruptcy again within two years. That ensured the adversary proceeding would continue from where it left off if Marinari refiled within that timeframe, and, unless and until that occurred, Murphy could seek collection on his judgment in the ordinary course. True, Murphy did request “additional appropriate conditions” after the hearing on dismissal, App. 107, but that belated request was too vague to preserve the issue, cf. In re Teleglobe Commcns Corp., 493 F.3d 345, 376–77 (3d Cir. 2007), and regardless, given the dearth of support Murphy offered to show bad faith by Marinari, the Bankruptcy Court did not abuse its discretion, much less violate due process, by declining to impose any additional conditions, cf. In re Ross, 858 F.3d at 782, 786–87 (requiring a basis in the record and a “legitimate rationale” for dismissal conditions predicated on alleged bad faith conduct).

C. Murphys motion for reconsideration

Finally, Murphy argues that the Bankruptcy Court improperly denied his motion for reconsideration. “[W]e review a lower courts determination regarding a motion to reconsider for an abuse of discretion,” and “such a motion should be granted only where the moving party shows ․ ‘(1) an intervening change in the controlling law; (2) the availability of new evidence ․; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice.’ ” In re Energy Future Holdings Corp., 904 F.3d 298, 311–12 (3d Cir. 2018) (quoting United States ex rel. Schumann v. Astrazeneca Pharms. L.P., 769 F.3d 837, 848–49 (3d Cir. 2014)). Murphy presented no change in law or new evidence in his motion for reconsideration, and in any event, as we have explained, there was no error in the Bankruptcy Courts rulings.

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II. Conclusion

For the foregoing reasons, we will affirm the District Courts order.

FOOTNOTES

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.   Section 1307(b) provides that “[o]n request of the debtor at any time, if the case has not been converted ․, the court shall dismiss [the] case,” 11 U.S.C. § 1307(b), and we have not resolved the question whether § 1307(b) grants a debtor the absolute right to dismiss or has an exception for bad faith, see In re Ross, 858 F.3d 779, 784 (3d Cir. 2017).

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.   We typically “view[ ] a motion characterized as a motion for reconsideration as the ‘functional equivalent’ of a Rule 59(e) motion,” Jones v. Pittsburgh Natl Corp., 899 F.2d 1350, 1352 (3d Cir. 1990) (citation omitted), and we therefore apply the standard for Rule 59(e) to Murphys motion here, see In re Energy Future Holdings Corp., 904 F.3d at 311; Fed. R. Civ. P. 59(e); Fed. R. Bankr. P. 9023. But insofar as Murphy also grounds his motion for reconsideration on Rule 60(b), we see no basis for relief under that provision either. See Fed. R. Civ. P. 60; Fed. R. Bankr. P. 9024. Murphy has not demonstrated “excusable neglect,” identified “newly discovered evidence,” pleaded any facts suggesting Marinari engaged in “fraud” or “misconduct,” or established that “the judgment is void,” Fed. R. Civ. P. 60(b)(1)–(4), (d)(3), and he has failed to show “extraordinary circumstances where, without ․ relief, an extreme and unexpected hardship would occur,” Cox v. Horn, 757 F.3d 113, 115 (3d Cir. 2014) (articulating standard for Rule 60(b)(6) relief). Likewise, to the extent Murphy bases his argument on Rule 52, it is also without merit, as we see no “errors ․ that require correction.” U.S. Gypsum Co. v. Schiavo Bros., Inc., 668 F.2d 172, 180 (3d Cir. 1981); see Fed. R. Civ. P. 52; Fed. R. Bankr. P. 7052, 9014(c).

KRAUSE, Circuit Judge.