Chapter 13 conversion to Chapter 7 under 11 USC § 1307(c): Motion under FedRCivP 60(b)(1); Jurisdiction; 28 USC §§ 158(a) & (d)(1); Scope of the notice of appeal to the district court; Whether the conversion order & the “MTD order” were “inextricably intertwined”; The merits of the motion to dismiss; Failure to move for dismissal before the case was converted; Whether “excusable neglect” was shown
[This appeal was from the WD-MI.] Holding that it (and the district court) had jurisdiction over one of the bankruptcy court orders at issue, the court affirmed the bankruptcy court’s denial of debtor-O’Hara’s Rule 60(b) motion. Once the case had been converted from a Chapter 13 to a Chapter 7, § 1307 did not apply, and he did not show that his failure to move for dismissal before the case was converted was due to excusable neglect. At a hearing on the Trustee’s motion to dismiss, the bankruptcy court indicated that it wanted to convert the Chapter 13 case to a Chapter 7. O’Hara moved to dismiss instead but not until after the bankruptcy court entered its conversion order (the May 8 Conversion Order). The bankruptcy court subsequently denied his motion in its May 9 MTD Order and his later Rule 60(b) motion in its August 7 Order. The district court affirmed. On appeal, the court first concluded that O’Hara appealed all three orders to the district court. But it held that the appeals of the May 8 and 9 Orders were untimely, so it only considered the August 7 Order. It determined that this order, denying the 60(b) motion, encompassed “both the May 8 Conversion Order and May 9 MTD Order.” It noted that it has “held that orders converting a bankruptcy case to Chapter 7 are final, appealable orders” and because the May 8 Order was an underlying order, the August 7 Order was also a final, appealable order. Turning to the merits of the Rule 60(b) motion, the court explained that § “‘1307 does not grant a debtor an absolute right to dismiss a case after the case has been converted.’” Thus, the bankruptcy court did not make “‘a substantive mistake of law’” because once the case was converted to Chapter 7, “O’Hara no longer had the right to” voluntarily dismiss under the section. And his excusable neglect argument failed where he “was on notice for months ahead of the May 8 hearing that the U.S. Trustee’s motion to dismiss could result in conversion, and O’Hara could have moved to dismiss voluntarily at any time.” He also could have done so “at the May 8 hearing, but chose not to.” The court held that the bankruptcy court did not abuse its discretion by denying his Rule 60(b) motion.
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