In re: PARESH VASANT PATEL, Debtor.
EMIL BENZAKRY and EMIL & SONS LLC, Appellees/Cross-Appellants. PARESH VASANT PATEL, Appellant/Cross-Appellee, In re: KALPITA PARESH PATEL, Debtor. KALPITA PARESH PATEL, Appellant/Cross-Appellee,
EMIL BENZAKRY and EMIL & SONS LLC, Appellees/Cross-Appellants.
MEMORANDUM OPINION AND ORDER
GARRY FEINERMAN, District Judge.
This is an appeal from final decisions of the bankruptcy court in the related and materially identical adversary proceedings captioned above. The cases will be discussed together, and all docket references are to Case No. 13 C 103 unless otherwise noted. Defendants-Appellants/Cross-Appellees Paresh and Kalpita Patel sought discharge of their debts under Chapter 7 of the Bankruptcy Code. Two of their alleged creditors, Plaintiffs-Appellees/Cross-Appellants Emil Benzakry and Emil & Sons LLC, commenced adversary proceedings in which they asserted three alternative grounds to deny the Patels discharge of their debts: (1) that the Patels made false or fraudulent statements to Plaintiffs, see 11 U.S.C. § 523(a); (2) that the Patels failed to retain business records "from which the debtor's financial condition or business transactions might be ascertained, " 11 U.S.C. § 727(a)(3); and (3) that the Patels failed to "explain satisfactorily... any loss of assets or deficiency of assets to meet the debtor's liabilities, " 11 U.S.C. § 727(a)(5). Doc. 1-3 at pp. 9-13. Plaintiffs moved for summary judgment on the §§ 727(a)(3) and 727(a)(5) grounds, and the Patels filed cross-motions for summary judgment on all three grounds. The Patels also moved to strike certain portions of Plaintiffs' Statements of Undisputed Material Facts.
The bankruptcy court granted Plaintiffs' summary judgment motions on both the § 727(a)(3) ground and the § 727(a)(5) ground, and denied the Patels' motions. The court articulated its reasoning in an oral ruling, the transcript of which reads as follows:
THE COURT: We have cross motions for summary judgment in two different adversaries [the adversary proceeding against Paresh Patel and the adversary proceeding against Kalpita Patel], and I will give you my decisions in the order that things are on the court's call.
I'll deny the motion to strike the plaintiff's statement of the undisputed facts. I think it's fine.
I'll deny [the Patels'] motion for summary judgment. It's not well-taken.
I will grant [Plaintiffs'] motion for summary judgment. I think the counts under 727(a)(3) regarding keeping records, and (a)(5) regarding not explaining lost assets, are both overwhelming and not subject to factual dispute. So the motion for summary judgment is granted. The clerk can close the adversary.
Similar rulings in the other matter, and the clerk can close the other adversary also.
The motion to strike is denied. [The Patels'] motion for summary judgment is denied, and [Plaintiffs'] motion for summary judgment is granted.
Doc. 12-1 at 2-3; see also Doc. 24 at 1 (where Paresh states: "The rationale by the bankruptcy judge for the decisions on various matters in this case is contained in the transcript dated December 7, 2012.... There is no other reference in the appellate record or bankruptcy record or elsewhere that contains the rationale for the decisions other than in the transcript as cited."). The Patels appealed to this court, and Plaintiffs cross-appealed the bankruptcy court's denial of their motions for costs under Bankruptcy Rule 7054.
This court has appellate jurisdiction under 28 U.S.C. § 158(a)(1), which grants the district courts jurisdiction to hear appeals from final judgments of bankruptcy courts entered in cases referred under 28 U.S.C. § 157. Here, the bankruptcy court entered final judgments by disposing of Plaintiffs' adversary proceedings against the Patels in their entirety. See Zedan v. Habash, 529 F.3d 398, 402 (7th Cir. 2008) ("[T]he test we have utilized to determine finality under § 158(d) is whether an order resolves a discrete dispute that, but for the continuing bankruptcy, would have been a stand-alone suit by or against the trustee.... [T]he final disposition of any adversary proceeding falls within our jurisdiction."); Fifth Third Bank v. Edgar Cnty. Bank & Trust, 482 F.3d 904, 905 (7th Cir. 2007) ("A final resolution of any adversary proceeding is appealable, as it is equivalent to a stand-alone lawsuit."). Because the bankruptcy court granted summary judgment to Plaintiffs, this court's review is de novo. See Dick v. Conseco, Inc., 458 F.3d 573, 577 (7th Cir. 2006) ("In a second appeal from a bankruptcy court's decision, we apply the same standard of review as did the district court, which in the case of the bankruptcy court's grant of summary judgment, is de novo.") (internal quotation marks omitted).
The Patels' appeals raise five issues: (1) whether the bankruptcy court erred in granting summary judgment to Plaintiffs under § 727(a)(3); (2) whether the bankruptcy court erred in granting summary judgment to Plaintiffs under § 727(a)(5); (3) whether the bankruptcy court erred in denying the Patels' motion to strike; (4) whether the bankruptcy court erred in denying the Patels' motion for summary judgment on the §§ 523 and 727 grounds; and (5) whether the bankruptcy court erred in denying a discharge to the Patels. Plaintiffs' cross-appeals raise one issue: whether the bankruptcy court erred in ruling that the Patels' appeals to this court deprived the bankruptcy court of jurisdiction to hear Plaintiffs' motions for costs under Federal Rule of Bankruptcy Procedure 7054. Those issues are considered in turn.
I. The Patels' Appeals
The bankruptcy court's grant of summary judgment to Plaintiffs rested on two independent grounds-that the Patels failed to retain business records "from which the debtor's financial condition or business transactions might be ascertained, " 11 U.S.C. § 727(a)(3), and that the Patels failed to "explain satisfactorily... any loss of assets or deficiency of assets to meet the debtor's liabilities, " ...