The Court found “cause” to dismiss or convert a pro se Debtor’s subchapter V bankruptcy case under § 1112(b) based on 1) Debtor’s failure to comply with an order of the Court requiring her to mail complete plan packages by a certain date; and 2) Debtor’s inability to propose a confirmable plan. Debtor continued to file multiple amendments and corrections to the plan after the Court-imposed deadline to mail plan packages that included the entire plan in one document, preventing creditors and parties in interest from having sufficient time to evaluate the proposed plan before the objection and voting deadline. Debtor’s plan and amendments did not comply with the requirements of the Bankruptcy Code regarding classification and treatment of secured claims and in other respects. Debtor’s filings demonstrated her inability to propose a confirmable plan absent assistance of counsel. Debtor’s pro se status did not establish unusual circumstances that would prevent the Court from dismissing or converting Debtor’s case. Dismissal, rather than conversion, was in the best interests of creditors and the estate where the UST expressed a preference for dismissal; Debtor’s properties had insufficient equity from which a chapter 7 trustee could make a meaningful distribution; and Debtor intended to maintain regular payments on various claims. Finally, because Debtor’s violation of the Court’s order was not willful, the Court did not impose refiling restrictions under § 109(g).

On remand, the court made extensive findings of fact and referred to the record for each finding. Based on the findings, the court ruled that a portion of creditors’ state court judgment was nondischargeable under 523(a)(2)(A).

The Court entered partial final summary judgment in favor of plaintiffs based on the preclusive effect of a prior state court’s findings and conclusions and judgment entered after a trial on damages. The state court’s findings and conclusions established that defendant committed actual fraud and caused willful and malicious injury to plaintiffs by secretly selling property a second time that he originally agreed to sell to plaintiffs when he knew he had received the full purchase price from plaintiffs, was obligated to convey the property to plaintiffs, and obtained a higher sales price in the second sale due to plaintiffs’ renovations of the property. All but $15,000 of the debt (the purchase price for the property) awarded in the state court’s final judgment, including attorneys’ fees and punitive damages, was traceable to defendant’s non-dischargeable conduct and, therefore, non-dischargeable. Transcripts from the state court proceedings established that defendant had a full and fair opportunity to litigate both liability and damages at the damages trial held by the state court. Plaintiffs were not entitled to attorneys’ fees and costs in pursuing the non-dischargeability action.

The Court remanded this removed adversary proceeding to state court under the permissive abstention and equitable remand statutes:  28 U.S.C. § 1334(c)(1) and 28 U.S.C. § 1452(b). Plaintiff asserted state law claims against the debtor and his limited liability company (“LLC”) based on the LLC’s alleged breach of a business loan agreement and based on the debtor’s alleged breach of his personal guaranty of the LLC’s indebtedness to Plaintiff. Although mandatory abstention under 28 U.S.C. § 1334(c)(2) may apply to Plaintiff’s non-core claim against the LLC, the Court determined that equitable factors used to determine permissive abstention and equitable remand weighed in favor of remand. The Court noted that upon remand the automatic stay will continue to apply to the claim against the debtor unless and until the stay is modified with respect to the claim.