United States District Court, W.D. Louisiana, Shreveport Division
WEBSTER BOOKER, ET AL.
TODD S. JOHNS
HORNSBY MAGISTRATE JUDGE.
MAURICE HICKS, JR. CHIEF JUDGE
the Court is an appeal by Appellants, Webster Booker and
Lillie Booker (“the Bookers”) of the bankruptcy
court's finding of the absence of good faith on the part
of the Bookers in submitting their Chapter 13 plan.
See Record Document 2-2 at 11; see Record
Document 3 at 26. For the reasons contained in the instant
Memorandum Ruling, the bankruptcy court's ruling is
facts of this case are not in dispute. On June 2, 2016,
Debtors, the Bookers, jointly filed for bankruptcy relief
under Chapter 13 of the United States Bankruptcy Code.
See Record Document 2-1 at 1-65 (Chapter 13
Voluntary Petition). At the time of filing, the Bookers
earned a below median income. Further, at the time of filing
the Bookers owned two vehicles, a 2012 Ford F-150 Truck and a
2014 Dodge Charger. See id. at 19. Both vehicle
payments were in default and the Bookers were indebted on
three other secured obligations. First Heritage Credit
(“First Heritage”) was secured by a Yardman
riding lawnmower, a 52" Zenith flat screen TV, a
36" Sharp flat screen TV, a 28" Sharp TV, a 1998
Procraft Boat (“the boat”), a 1998 Force 90
Motor, 1998 Motorguide Trolling motor and a trailer. See
id. at 18. First Heritage filed a proof of claim as
secured for $3, 100.00 with the remaining balance of $839.89
as unsecured. Ivan Smith Furniture was secured by living room
furniture with a remaining balance of $2, 290.12 which was to
be paid in full in the Chapter 13 plan. Preferred Credit Inc.
was secured by a Kirby vacuum cleaner which debtors
surrendered in the confirmed plan.
Bookers' initial Chapter 13 plan provided for 58 monthly
plan payments of $1, 200.00 with a proposed $600.00, or 4%,
distribution to unsecured creditors. See id. at
68-71 (Initial Chapter 13 Plan). This plan called for
repayment of several secured claims. See id. at 69.
The Bookers proposed to pay First Heritage for the boat, the
TVs, and a firearm. See id. The plan also proposed
to pay Ivan Smith Furniture for living room furniture.
See id. at 70. The last secured claims listed in the
plan were two debts with State Farm Bank that secured the
vehicles. See id. Finally, the plan proposed to pay
for attorney fees of $2, 800.00. See id. at 71.
22, 2016, First Heritage filed an objection to this proposed
plan, which asserted it was owed $3, 939.89 and that the
collateral securing the loan was worth more than the debt.
See id. at 108 (Objection to Initial Confirmation
Plan). In response to this objection, the Bookers filed an
amended plan on August 12, 2016, which increased the term to
59 months and increased the value of the collateral of First
Heritage as per an agreement to $3, 100.00. See id.
at 119 (Amended Chapter 13 Plan). This sum was to be paid
with interest through Trustee distributions. See id.
This second plan continued to propose a dividend of $600.00
to the unsecured creditors but was also over-funded and as
reflected by the plan Summary $1, 284.54 was available to pay
unsecured creditors. See id. at 122. No objections
were filed to this plan, and the Trustee submitted to the
bankruptcy court an order of confirmation, to which no
interested party filed an objection. On August 31, 2016, the
bankruptcy court denied confirmation and set the matter for
hearing on September 28, 2016 “regarding retention of
the 1988 Procraft boat, in a 4% plan.” See id.
at 130 (Order Denying Amended Plan); see Record
Document 3 at 2 (Hearing Transcript).
hearing on September 28, 2016, the bankruptcy court indicated
that the retention of the boat in this case raised an issue
of good faith. See Record Document 3 at 3. After the
bankruptcy court's announcement, the Bookers testified.
At the conclusion of the hearing, the representative for the
Trustee, Daven Hill, advised the bankruptcy court that she
did not oppose the confirmation of the plan and did not have
an issue with good faith based upon the facts elicited
through testimony, as well as the age and condition of the
boat. See id. at 24. The bankruptcy court issued
findings of fact and conclusions of law holding that the plan
was not proposed in good faith and denied the confirmation of
the Bookers' amended Chapter 13 plan. See id. at
October 12, 2016, the Bookers filed another amended plan
proposing to surrender all collateral to First Heritage,
including the boat. See Record Document 2-2 at 35
(Second Amended Chapter 13 Plan). The Trustee objected to the
plan on a ground unrelated to good faith. See id. at
58 (Objection to Second Amended Chapter 13 Plan). Following
the Trustee's objection, on November 3, 2016, the Bookers
proposed a third amended plan, which also proposed to
surrender all collateral to First Heritage. See Id.
at 59 (Third Amended Chapter 13 Plan). On November 10, 2016,
the bankruptcy court entered an order confirming the
Bookers' third amended Chapter 13 plan. See id.
at 69 (Order Confirming Chapter 13 Plan). The Bookers then
filed the instant appeal of the bankruptcy court's order
denying confirmation of the first amended Chapter 13 Plan and
the order confirming Chapter 13 Plan. See Record
Document 2-2 at 11; see Record Document 2-2 at 69.
LAW AND ANALYSIS
Jurisdiction and Standard of Review.
Court has jurisdiction over the Bookers' appeal from the
bankruptcy court's order pursuant to 28 U.S.C. §
158(a). In reviewing a decision of the bankruptcy court, this
Court functions as an appellate court and applies the
standards of review generally applied in a federal court of
appeals. See Matter of Webb, 954 F.2d 1102, 1103-04
(5th Cir. 1992). Conclusions of law are reviewed de
novo. See Matter of Herby's Foods, Inc., 2
F.3d 128, 131 (5th Cir. 1993). Findings of fact are not to be
set aside unless clearly erroneous. See id. at
130-31. “A finding is clearly erroneous when although
there is evidence to support it, the reviewing court on the
entire evidence is left with a firm and definite conviction
that a mistake has been committed.” Matter of
Missionary Baptist Foundation of America, 712 F.2d 206,
209 (5th Cir. 1983). Thus, appellate courts will sustain a
bankruptcy court's factual findings “absent a firm
and definite conviction that the bankruptcy court made a
mistake.” In re Ragos, 700 F.3d 220, 222 (5th
Cir. 2012) (citation omitted).
applied to the instant matter, “a factual finding that
a [bankruptcy] petition was not filed [or a plan was not
proposed] in good faith is subject to the clearly erroneous
standard of review. If this finding is based on an incorrect
statement of law, however, [the] review [is] de
novo.” Matter of Elmwood Dev. Co. v. Gen.
Elec. Pension Trust, 964 F.2d 508, 510 (5th Cir. 1992);
see also In re Ragos, 700 F.3d at 222 (stating that
“[a] bankruptcy court's determination that a debtor
has [or has not] acted in bad faith is a finding of fact
reviewed for clear error.”).
Bookers argue that the de novo standard of review
applies because the bankruptcy court used an incorrect legal
standard, did not correctly apply the totality of
circumstances test enumerated by the Fifth Circuit, and used
an incorrect per se approach to deny their plan.
See Record Document 7 at 8 ...