               ELECTRONIC CITATION: 2005 FED App. 0002P (6th Cir.)
                            File Name: 05b0002p.06

            BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT

In re: JOSEPHINE COHARA,                        )
                                                )
                  Debtor.                       )
_____________________________________           )
                                                )
MARVIN A. SICHERMAN,                            )
CHAPTER 7 TRUSTEE,                              )
                                                )
                   Plaintiff-Appellant,         )
                                                )
       v.                                       )      No. 04-8051
                                                )
JOSEPHINE COHARA,                               )
                                                )
                  Defendant-Appellee.           )
_____________________________________           )

                    Appeal from the United States Bankruptcy Court
                     for the Northern District of Ohio, at Cleveland.
                                    No. 04-10371-rb.

                                Argued: February 2, 2005

                            Decided and Filed: April 5, 2005

        Before: AUG, LATTA, and PARSONS, Bankruptcy Appellate Panel Judges.

                                 ____________________

                                          COUNSEL

ARGUED: Marvin A. Sicherman, DETTELBACH, SICHERMAN & BAUMGART, Cleveland,
Ohio, for Appellant. ON BRIEF: Marvin A. Sicherman, DETTELBACH, SICHERMAN &
BAUMGART, Cleveland, Ohio, for Appellant.
                                      ____________________

                                            OPINION
                                      ____________________

        J. VINCENT AUG, JR., Chief Bankruptcy Appellate Panel Judge. Marvin A. Sicherman,
Chapter 7 Trustee, appeals the bankruptcy court’s order granting the Debtor, Josephine Cohara’s,
motion to voluntarily dismiss her chapter 7 case pursuant to 11 U.S.C. § 707(a).

                                     I.   ISSUES ON APPEAL

        Whether the bankruptcy court abused its discretion in finding that the Debtor met her burden
to establish that cause existed under § 707(a) to grant the Debtor’s motion to dismiss her chapter 7
petition.

                    II.   JURISDICTION AND STANDARD OF REVIEW

        The Bankruptcy Appellate Panel (“BAP”) of the Sixth Circuit has jurisdiction to decide this
appeal. The United States District Court for the Northern District of Ohio has authorized appeals
to the BAP. A “final order” of a bankruptcy court may be appealed by right under 28 U.S.C.
§ 158(a)(1). For purposes of appeal, an order is final if it “ends the litigation on the merits and
leaves nothing for the court to do but execute the judgment.” Midland Asphalt Corp. v. United
States, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989) (citations omitted).

        We review the decision of the bankruptcy court to grant the motion to dismiss pursuant to
§ 707(a) for an abuse of discretion. See Industrial Ins. Servs., Inc. v. Zick (In re Zick), 931 F.2d
1124, 1126 (6th Cir. 1991); Turpen v. Eide (In re Turpen), 244 B.R. 431, 433 (B.A.P. 8th Cir. 2000).
A court abuses its discretion when it “relies upon clearly erroneous findings of fact or when it
improperly applies the law or uses an erroneous legal standard.” Fleischut v. Nixon Detroit Diesel,
Inc., 859 F.2d 26, 30 (6th Cir. 1988). “Under this standard, we cannot reverse unless we have a
definite and firm conviction that the trial court committed a clear error of judgment in its conclusion
it reached upon weighing the relevant factors.” Bartee v. Ainsworth (In re Bartee), 317 B.R. 362,
365 (B.A.P. 9th Cir. 2004).




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                                            III.   FACTS

       The Debtor filed her chapter 7 petition on January 13, 2004. Her schedules reflect a
“Passcorp Inc. annuity for structured settlement of personal injury sustained 1987.” Even though
she anticipated receiving future payments, $10,000 of which would be received within six weeks
of filing her bankruptcy, the Debtor’s schedules indicated that the value of the annuity was $0.00.
The annuity represented a settlement for the Debtor’s injuries incurred in an automobile accident.
Under the annuity, in addition to payments she had previously received, the Debtor was scheduled
to receive the following future payments:
               Payment Date                    Amount
               February 26, 2004               $10,000
               February 26, 2006               $12,000
               February 26, 2008               $15,000
               February 26, 2011               $21,950
                       Total                   $58,950
       The Debtor did not claim the annuity as exempt, and on March 16, 2004, the Trustee filed
a motion requesting that the bankruptcy court direct Prudential Annuity Services to turn over the
annuity payments due on the contract. The Trustee asserts that the Debtor’s schedules reflect $475
in assets and $41,928 in unsecured claims. The Trustee also asserts that pursuant to schedules I and
J, the Debtor’s monthly net income is $1,157 and her monthly expenses are $1,267. The Debtor did
not dispute this information.

       The Debtor filed an objection to the Trustee’s motion for turnover and also filed a motion
to dismiss her chapter 7 petition. In her objection and motion to dismiss, the Debtor asserts that her
medical condition has progressively declined causing increased pain and the need for one or more
operations. The Debtor states that the annuity payments are needed to pay her ongoing medical
expenses. The Debtor further asserts that the dismissal of her case will be more fair to creditors
because she proposes a payment of her debts to her creditors that will ultimately pay more to the
creditors than they would receive by virtue of the Trustee’s motion for turnover, particularly in light
of the administrative fees that would be paid to the Trustee. Finally, the Debtor asserts that the
annuity was proposed with an anti-alienation provision which, outside of bankruptcy, will prevent




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attachment of the funds by the creditors. The annuity contract, however, was not introduced into
evidence at the bankruptcy court.

       The Trustee objected to the Debtor’s motion to dismiss on the basis that a debtor in chapter
7 does not have an absolute right to dismiss her bankruptcy case. The Debtor must show cause for
dismissal and a lack of prejudice to the creditors. The Trustee pointed out that the Debtor has not
provided any details of any payment plan for the creditors such as the percentage creditors will
receive, when they will be paid, or how the plan will be funded. Further, if the annuity contract does
include an anti-alienation clause, then outside of bankruptcy the Debtor’s creditors will be unable
to reach the proceeds of the annuity.

       Hearings were held on May 11, 2004 and May 18, 2004. No testimony was taken at either
hearing. The bankruptcy court found that the test of whether cause exists for the Debtor to dismiss
her chapter 7 petition is whether dismissal is in the best interests of the Debtor and her creditors.
The court found that the Debtor’s best interest obviously was in having the case dismissed and
permitting her to reduce the administrative expenses incurred in the chapter 7, leaving her with
resources to work out her debts. The court further found that the Trustee had failed to demonstrate
that the creditors would be prejudiced because they would be adequately protected if the Debtor’s
case was dismissed by virtue of their state law remedies. Therefore, the bankruptcy court granted
the Debtor’s motion to dismiss and the Trustee filed his timely notice of appeal.

                                        IV.   DISCUSSION

       11 U.S.C. § 707(a) provides that “[t]he court may dismiss a case under this chapter only after
notice and a hearing and only for cause.” The Debtor does not have an absolute right to dismiss a
chapter 7 petition. Bartee v. Ainsworth (In re Bartee), 317 B.R. 362, 366 (B.A.P. 9th Cir. 2004).
As the movant, the Debtor has the burden of showing cause for dismissal. In re Horan, 304 B.R.
42 (Bankr. D. Conn. 2004). “[A] debtor’s ability to repay her debts will not, on its own, constitute
‘cause’ for dismissal.” In re Hopkins, 261 B.R. 822, 823 (Bankr. E.D. Pa. 2001); see also Turpen
v. Eide (In re Turpen), 244 B.R. 431, 434 (B.A.P. 8th Cir. 2000); In re Foster, 316 B.R. 718, 721
(Bankr. W.D. Mo. 2004). “If dismissal would prejudice the creditors, then it will ordinarily be
denied.” Peterson v. Atlas Supply Corp. (In re Atlas Supply Corp.), 857 F.2d 1061, 1063 (5th Cir.
1988). See also In re Harker, 181 B.R. 326, 328 (Bankr. E.D. Tenn. 1995) (“[I]f creditors are


                                                 -4-
prejudiced in any respect by the dismissal or if the trustee has acquired funds for distribution, a
request by the debtor for dismissal will be denied.”). “Prejudice exists where assets which would
be available for distribution are lost as a result of the dismissal.” In re Byam, No. 02-80538, 2002
WL 32123991, at *1 (Bankr. C.D. Ill. Aug. 14, 2002) (citing In re McCullough, 229 B.R. 374, 376
(Bankr. E.D. Va. 1999)).

Burden To Establish That Dismissal Will Not Prejudice Creditors.

        The case law clearly places on the Debtor the burden of proving cause for voluntarily
dismissing her chapter 7 petition. A core issue in determining whether the Debtor has established
cause is whether the dismissal will prejudice the creditors. In re Stephenson, 262 B.R. 871, 874
(Bankr. W.D. Okla. 2001); see also Bartee, 317 B.R. at 366 (debtor bears the burden of proving that
dismissal will not prejudice her creditors). In requiring the Trustee to prove prejudice to the
creditors, the bankruptcy court in the case before the Panel abused its discretion and inappropriately
shifted the burden of establishing cause for dismissal from the Debtor to the Trustee.

Debtor Failed to Establish Cause.

        In this case, the Debtor asserts that she needs the stream of payments that will be provided
by the annuity for her continuing medical needs. However, she presented no evidence of the truth
of these assertions either in the form of statements of her doctors reflecting the details or cost of any
further medical needs or in the form of testifying herself to provide this information. “Assertions
by counsel do not constitute probative evidence.” McClure v. Dome (In re McClure), 234 B.R. 889,
890 (Bankr. N.D. Tex. 1999). See also Nielsen v. DLC Invest., Inc. (In re Nielsen), 211 B.R. 19, 22
n.3 (B.A.P. 8th Cir. 1997) (statements of counsel are not evidence unless expressly stipulated as
admissible evidence); Smith v. GTE North Inc. (In re Smith), 170 B.R. 111, 117 (Bankr. N.D. Ohio
1994) (statements of counsel are not probative evidence); In re Haymaker, 166 B.R. 601, 607
(Bankr. W.D. Pa. 1994) (statements of counsel are not evidence).

        However, even if the Debtor had presented evidence as to her medical needs, she still would
have failed to establish cause for dismissal because she failed to establish that her creditors would
not be prejudiced if she were permitted to dismiss her bankruptcy case. The Debtor argues that her
creditors will not be prejudiced because, at the time of the hearings, she was in the process of
negotiating a payment plan with the creditors.

                                                   -5-
       In Bartee, the debtors wanted to dismiss their chapter 7 petition and proposed and filed a
“Planned Course of Action” by which they would repay their creditors from money obtained by
selling Mr. Bartee’s business interest to one of his partners. Although the details of the proposed
plan were articulated to the bankruptcy court, Mr. Bartee’s plan was not supported by documentary
evidence or affidavits. In denying the debtors’ motion to dismiss, the bankruptcy court found that
the “proposed course of action to be followed if the case is dismissed is too speculative to give this
court confidence that the interests of all pertinent parties would be served with dismissal.” Bartee,
317 B.R. at 365 (quoting In re Bartee, No. 03-23700-C-7, slip op. at 1 (Bankr. E.D. Calif. July 17,
2003)). The Bankruptcy Appellate Panel for the Ninth Circuit affirmed the decision of the
bankruptcy court, stating:
       Dismissal of debtors’ case would have prejudiced their creditors, because there is no
       guarantee that debtors will pay their debts outside of bankruptcy.
               We agree with the bankruptcy court that debtors’ plan for liquidating assets
       was too speculative to establish the lack of prejudice that is a prerequisite to
       dismissal. While debtors insist that they had arranged to sell Mr. Bartee’s interest
       in his business, the record is devoid of any evidence of this arrangement. Moreover,
       debtors did not offer any evidence that they would be bound to use the sale proceeds
       to pay their creditors if such a sale came to pass.
Bartee, 317 B.R. at 366. See also In re Williams, 305 B.R. 618, 621 (Bankr. D. Conn. 2004)
(debtor’s motion to dismiss denied where his asserted plan to pay all creditors outside of bankruptcy
in full from inheritance proceeds is made without a practical, assured method of compliance); In re
Foster, 316 B.R. at 721 (court found a lack of evidence or assurance that debtors could or would
follow through on assertions that creditors would be paid outside of bankruptcy); In re Byam, 2002
WL 32123991, at *1 (debtor’s motion to dismiss denied where debtor’s vow to pay unsecured
creditors outside of the bankruptcy case is not sufficient cause to dismiss the bankruptcy nor is it
sufficient to dispel the prejudice to creditors) (citing Turpen, 244 B.R. 431); In re Hopkins, 261 B.R.
at 823 (debtor’s own testimony and schedules cast doubt on her ability to pay creditors).

       Here, the Debtor provided even less evidence of her proposed plan to pay her creditors
outside of bankruptcy than did the debtors in Bartee. She failed to provide any details of her
proposed plan. The Debtor’s schedules reflect that she has no excess income and that she proposed
to use some or all of the income from the annuity for herself. Therefore, the Debtor failed to show
how she would be able to follow through with making any proposed payments to her creditors.



                                                  -6-
       The Debtor failed to establish an evidentiary basis for her assertion that dismissal is
necessary due to her continuing medical needs, and she failed to carry her burden of proving that
dismissal of her bankruptcy petition will not prejudice her creditors. Accordingly, the Debtor failed
to establish the “cause” needed to dismiss her bankruptcy petition pursuant to 11 U.S.C. § 707(a).



                                       V.   CONCLUSION

       The decision of the bankruptcy court is REVERSED. The bankruptcy court order
dismissing the case is vacated and the court is ordered to reinstate the case on its docket.




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