UNITED STATES BANKRUPTCY COURT




NORTHERN DISTRICT OF CALIFORNIA







In re Case No. 06-41515

DON OBERLE,

Debtor. /






DECISION RE: MOTION TO DISMISS



Involuntary Debtor Don Oberle ( A Oberle @ ) filed a motion to dismiss this involuntary Chapter 7 case pursuant to Bankruptcy Code ' ' 109(h) and 303, and Fed.R.Bankr.P. 1003.¹ On December 12, 2006, this court entered its Order Granting Motion to Dismiss Involuntary Petition, which order was grounded on several subsections of ' 303 and Rule 1003 (but not on ' 109(h)). This memorandum sets forth the court = s reasons for doing so.

/////

A. Facts

On August 31, 2006, Jean Whitley ( A Jean @ ), William Whitley ( A William @ ), and John Brosnan ( A Brosnan @ ) filed an involuntary Chapter 7 petition against Oberle. Jean asserted a claim of $54,000.00, William asserted a claim of $6,000.00, and Brosnan asserted a claim of $2.00. Oberle filed an answer on September 19, 2006, seeking dismissal of the case. On October 19, 2006, he filed a motion to dismiss the case, which came on for hearing on November 30, 2006.

B. Discussion

' 109(h)

Oberle argues that the mandatory credit counseling provisions of ' 109(h) apply to him, and that since he did not take the required credit counseling prior to the petition being filed, he does not qualify as a debtor and the case should be dismissed. The court rejects Oberle = s argument that ' 109(h) applies to involuntary debtors. To hold otherwise would totally obliterate the provisions of the Bankruptcy Code providing for involuntary bankruptcy relief against individual debtors. The court declines to do this: following the doctrine of ut res magis valeat quam pereat, the court must construe ' 109(h) so that ' 303 is preserved rather than destroyed. See Kelly v. Calhoun, 95 U.S. 710 (1878).

Rule 1003(a)

Oberle also argues that Jean transferred and William acquired claims solely to commence this case, which disqualifies them both as petitioning creditors under Rule 1003(a). ² Therefore, argues Oberle, the case must be dismissed, because the required number of petitioning creditors did not join in the petition. ³ The court agrees.

Rule 1003(a) disqualifies creditors who have A transferred or acquired a claim for the purpose of commencing a case. @

In William Whitley = s response in the related adversary proceeding, 06-4223, he states A [the] $6,000 debt was assignment/purchase by me from Jean Whitley. @ Because, by his own admission, William = s claim is the one Jean assigned to him, and because he did not file the statement required under Rule 1003(a) that he did not acquire that claim for the purpose of commencing this case, he is not a qualified petitioner. Rule 1003(a). ⁴

As to Jean Whitley, Oberle has not challenged the validity of Jean = s claim. Oberle contends, however, that she transferred part of her claim to William solely for the purpose of creating another petitioner to file this case. Jean does not deny this allegation, and has provided no explanation for the assignment other than to create an additional petitioning creditor. The court therefore holds that she is not a qualified petitioner under Rule 1003(a).

' 303(b)

Section 303(b) requires as a condition to the validity of an involuntary petition that the requisite number of petitioners ⁵ hold claims that are not A contingent as to liability or the subject of a bona fide dispute as to liability or amount. @ Here, both William and Jean Whitley are disqualified.

In addition, the court finds that John Brosnan = s $2.00 claim is de minimis to the point that he is not a valid petitioner. Moreover, Oberle alleges, without opposition of substance, that Brosnan = s $2 claim is subject to bona fide dispute as to liability. For the foregoing reasons, Brosnan is not a qualified petitioner. ⁶

Based on the foregoing, the court holds that not a single qualified petitioning creditor has joined in the involuntary petition at issue.

' 303(h)(1)

As previously mentioned, Oberle concedes that he is required to pay support to Jean Whitley. However, Oberle has submitted a declaration stating that he is paying this support debt, and his other debts, as they become due. Petitioners have submitted no evidence to the contrary. Consequently, Oberle has a valid defense to the involuntary petition under ' 303(h)(1).⁷

C. Conclusion

For the foregoing reasons, the court dismissed this involuntary petition.






** END OF DOCUMENT **





¹ All further section references are to the Bankruptcy Code, 11 U.S.C. ' 101 et. seq., unless otherwise stated. All further rule references are to the Federal Rules of Bankruptcy Procedure, unless otherwise stated.

² Rule 1003(a) states: A A transferor or transferee of a claim shall annex to the original and each copy of the petition a copy of all documents evidencing the transfer, whether transferred unconditionally, for security, or otherwise, and a signed statement that the claim was not transferred for the purpose of commencing the case and setting forth the consideration for and terms of the transfer. An entity that has transferred or acquired a claim for the purpose of commencing a case or liquidation under chapter 7 or for reorganization under chapter 11 shall not be a qualified petitioner. @

³ ' 303(b)

⁴ Rule 1003 also prevents the improper splitting of one claim into two, which is likely what happened here. See In re Focus Media, Inc., 378 F.3d 916, 928 (9th Cir. 2004).

⁵Pursuant to ' 303(b)(1) and (2), 3 qualified petitioners must join in the petition unless the alleged debtor has fewer than 12 creditors. Here, the record does not show how many creditors Oberle has. However, this is irrelevant, because the court has concluded that none of the petitioners in this case are qualified.

⁶ Oberle also raised the additional point that John Brosnan has been found by the California Superior Court to be a vexatious litigant who under the terms of an October 2000 order cannot file a case in any court situated in the state of California. Although this court believes it doubtful that a state court has jurisdiction to bar a litigant access to federal courts, the court need not decide this issue because Brosnan is nevertheless not a qualified petitioning creditor.

⁷ Section 303(h)(1) provides, in relevant part, that A after trial, the court shall order relief against the debtor in an involuntary case . . . only if - (1) the debtor is generally not paying such debtor = s debts as such debts become due unless such debts are the subject of a bona fide dispute as to liability or amount; . . . @

Decision re: Motion to Dismiss

Click on icon to view the signed order:











CANB DocumentsNorthern District of California