Appeal from the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division Bankr. No. 010 B 16195 Bankruptcy Judge Jack B. Schmetterer
The opinion of the court was delivered by: District Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER ON APPEAL
Appellant Sherron L. Lewis, Jr. filed this appeal from a final order of the bankruptcy court. This Court has jurisdiction pursuant to 28 U.S.C. § 158(a). In considering a bankruptcy appeal, the Court reviews factual findings for clear error, while conclusions of law are reviewed de novo. See In re Midway Airlines, 383 F.3d 663, 668 (7th Cir. 2003); In re Frain, 230 F.3d 1014, 1017 (7th Cir. 2000). As explained below, finding no error of fact or law in the decisions of the bankruptcy court, the Court affirms the bankruptcy court's order and judgment entered on December 23, 2010, and also dismisses Debtor-Appellant's appeal of the bankruptcy court's September 30, 2010 order. The Court grants JP Morgan Chase Bank's motion to dismiss appeal .
On April 13, 2010, Debtor Sherron L. Lewis, Jr. filed a petition under Chapter 13 of the Bankruptcy Code and also filed his original Schedules A, B, C, D, E, F, G, H, I and J. On June 29, 2010, Debtor filed amended Schedules A, B, C, D, F, G, H, I and J. On August 19, 2010, Debtor filed his amended Chapter 13 plan, using the form approved by the Court, to replace his original Chapter 13 plan filed on April 26, 2010.
At the time of his bankruptcy petition, the State of Colorado, through its attorney general, was investigating Debtor for unlawful foreclosure rescue services. On July 26, 2010, the State of Colorado commenced a civil law enforcement action under the Colorado Consumer Protection Act against Debtor in Jefferson County District Court, Colorado. The law enforcement action sought to enjoin Debtor, who is not a licensed attorney, from engaging in unlawful foreclosure rescue services. Those services involved, among other things, Debtor taking upfront fees from, and an interest in the property of, homeowners in foreclosure to purportedly assist with challenging the foreclosure in court. After entering a preliminary injunction on August 16, 2010, which enjoined Debtor from engaging in foreclosure services, the state court, on January 3, 2011, entered a judgment against Debtor in favor of the State of Colorado for $181,266.42 for civil penalties, disgorgement, restitution, costs, and attorney fees and permanently enjoined Debtor from foreclosure services.
On June 28, 2010, the State of Colorado filed a motion with the Bankruptcy Court objecting to confirmation of the plan and challenging venue. On July 30, 2010, the Bankruptcy Court issued a final pretrial order for an evidentiary trial on the State's objection, and set the evidentiary trial for September 28, 2010. The final pretrial order required the parties to exchange all exhibits that they intended to introduce in evidence. It also stated that "[s]ince the Debtor has the burden of proof to establish Plan feasibility. * * * Debtor is to include in his list of exhibits and supply copies to Colorado counsel and Judge's law clerk all documents relating or referring to all his sources of income reported by him in his Schedules," including the following: (1) his "income for operation of business/profession" shown as $1,740 on line 7 of his Bankruptcy Schedule I; (2) "a supplement to his Schedule I consisting of the 'Statement' to be attached as required at Line 7 thereof, and include same as one of his exhibits"; (3) his income from real property scheduled as $1,950 on line 8 of Schedule I; and (4) his income from "self employment" shown as $9,468 in response to paragraph 1 of his Statement of Affairs. The final pretrial order also required Debtor to "produce at the trial all originals of the following of accounts, records of all income from any business and for real estate, and business expenses for his business and real estate interests for the period January 1, 2009 through July 30, 2010." The pretrial order also authorized the parties to serve written discovery requests.
Debtor failed to comply with the pretrial order or respond to the State of Colorado's discovery requests. Instead, Debtor offered for trial six exhibits, A through F, which were admitted into evidence without objection. The only exhibits relating to financial records, Exhibits C through E, were Debtor's bank statements for the time period December 18, 2009 through April 19, 2010 ("bank statements"). Exhibits A and B were water shut-off orders from the City of Park Ridge addressed to Eldon O. Williams and Norma Williams, and Exhibit F is a copy of the state court preliminary injunction order in the law enforcement action. While the bank statements show certain deposits from December 18, 2009 through April 19, 2010, the bank statements do not constitute "all documents relating or referring to all his sources of income reported by him in his Schedules," as required by the final pretrial order. Nor do the bank statements reveal the source or nature of the deposits to establish any regular income.
On September 1, 2010, the Chapter 13 Trustee filed a motion to dismiss Debtor's petition, claiming that it was filed in bad faith, that Debtor lacks regular income, and that venue was improper. The bankruptcy court consolidated for the hearing the motion to dismiss with the State of Colorado's objection. On September 28, 2010, the bankruptcy court conducted a half-day evidentiary hearing on two issues: (1) whether venue was proper in this district and (2) whether the Debtor's Chapter 13 plan is feasible. At the hearing, Debtor appeared pro se and took the witness stand, invoking the Fifth Amendment privilege against self-incrimination in response to almost every question on the issue of whether he had regular income, whether he could establish a feasible plan, and whether he satisfied the venue statute. At trial, Debtor relied only on Exhibits A through F (described above), the petition, and his schedules.
On December 23, 2010, the bankruptcy court issued its findings of fact and conclusions of law relating to the propriety of venue, the feasibility of the plan, and bad faith. For the reasons set forth in the memorandum opinion, the bankruptcy court issued separate orders dated December 23, 2010 that (1) granted the State of Colorado's objection to confirmation of Debtor's plan; (2) granted the Chapter 13 Trustee's motion to dismiss, with a prohibition against Debtor re-filing in the district without court approval and notice to all creditors; and (3) denied Debtor's motion to remove the Chapter 13 Trustee.
On the issue of venue, the bankruptcy court concluded "from the overwhelming weight of proof" that Debtor's domicile, residence, principal place of business in the United States, and principal assets were located in Colorado and that venue was not proper in this district, making the following findings of fact:
1. Sherron L. Lewis Jr. (the "Debtor") has had at all times, since and at the time this bankruptcy case was filed on April 13, 2010, a Colorado driver license, not an Illinois driver license.
2. The Debtor is registered to vote in Colorado, not Illinois.
3. The Debtor first opened a bank account in Illinois on April 9, 2010, using an Illinois address. The Debtor's prior bank accounts were opened in Colorado and used a Colorado address.
4. The Debtor's main vehicle, Colorado license plate no. 479WGK, 2000 Ford Expedition, is registered in Colorado and the registration was renewed in Colorado on or about June 25, 2010. The Debtor has no vehicles registered in Illinois.
5. The Debtor has not filed any Illinois state tax returns.
6. The Debtor's Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income lists the Debtor's state of residence as ...