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In re Timurshin

United States District Court, W.D. Washington, Seattle

January 23, 2018

In re MARAT TIMURSHIN Debtor.
v.
NATALIA SMAGINA, Appellee MARAT TIMURSHIN, Appellant,

          ORDER ON APPEAL

          John C. Coughenour UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on Appellant's opening brief (Dkt. No. 7), Appellee's response brief (Dkt. No. 9), and Appellant's reply brief (Dkt. No. 12). After review of the briefs, and the designated record on appeal (Dkt. No. 10)[1], the Court finds oral argument unnecessary and hereby AFFIRMS the Bankruptcy Court's order denying Appellant's motion for extension of the automatic stay and order denying Appellant's motion for reconsideration.

         I. BACKGROUND

         Appellant Marat Timurshin appeals Bankruptcy Judge Christopher Alston's orders denying his motion to extend the automatic stay and denying his motion for reconsideration on the same issue. (Dkt. No. 7 at 3.) Appellant filed his first Chapter 13 bankruptcy case (“Case I”) in August 2016. (Id. at 4.) On May 4, 2017, Bankruptcy Judge Timothy Dore dismissed Appellant's case. (Dkt. No. 16 at 10-12.) Appellant filed this Chapter 13 case (“Case II”) 49 days later. (Dkt. No. 7 at 5.) Appellant simultaneously filed a motion to extend the automatic stay, which would otherwise lapse 30 days from the filing date of Case II. (Id.) Appellee, Natalia Smagina, objected to Appellant's motion to extend the automatic stay. (Dkt. No. 10-6.)

         After a hearing, Judge Alston denied Appellant's motion to extend the automatic stay. (Dkt. No. 10-8.) Judge Alston applied a statutory presumption that Case II was not filed in good faith, and concluded Appellant failed to meet his burden to overcome the presumption. (Id.) Appellant subsequently filed a motion for reconsideration, which Judge Alston denied. (Dkt. No. 10-10.) Appellant timely appealed both of Judge Alston's orders to this Court.

         II. DISCUSSION

         A. Standard of Review

         This Court may review the Bankruptcy Court's decision. 28 U.S.C. § 158(a)(1). The Bankruptcy Court's findings of fact are reviewed for clear error and its conclusions of law are reviewed de novo. In re EPD Inv. Co., LLC, 821 F.3d 1146, 1150 (9th Cir. 2016). The Bankruptcy Court's denial of a motion for reconsideration is reviewed for abuse of discretion. In re Weiner, 161 F.3d 1216, 1217 (9th Cir. 1998) (citation omitted).

         Appellant presents five issues on appeal (Dkt. No. 7 at 3); however, the Court perceives two overarching questions. First, whether Judge Alston erred by concluding Appellant failed to demonstrate Case II was filed in good faith. Second, whether Judge Alston erred by denying Appellant's motion for reconsideration. The Court addresses these issues in turn.

         B. Order Denying Motion to Extend Automatic Stay

         In general, when a debtor files a bankruptcy petition it “operates as a stay, applicable to all entities” for the enforcement, collection, or other disposition of the debtor's assets during the pendency of the bankruptcy case. See 11 U.S.C. § 362(a)-(c). But when a debtor commences a second bankruptcy case within a year of a prior case being dismissed, the automatic stay “shall terminate with respect to the debtor on the 30th day after the filing of the later case . . . .” § 362(c)(3)(A). The Bankruptcy Court can extend the stay “after notice and a hearing completed before the expiration of the 30-day period [and] only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed.” § 362(c)(3)(B). A debtor ordinarily has the burden to prove by a preponderance of the evidence that the second case was filed in good faith. In re Montoya, 342 B.R. 312, 316 (Bankr. S.D.Cal. 2006).

         That said, the statute establishes three situations in which a bankruptcy case is presumptively filed not in good faith. § 362(c)(3)(C)(i)(I)-(III). At issue in this case is the third situation, which dictates that a case is presumptively filed not in good faith as to all creditors if:

(III) there has not been a substantial change in the financial or personal affairs of the debtor since the dismissal of the next most previous case under chapter 7, 11, or 13 or any other reason to ...

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