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In re Ricks

United States District Court, D. Idaho

September 29, 2016

In re THOMAS MECHAM RICKS, Debtor.
v.
RANDAL J. FRENCH, P.C.; MCHUGH BROMLEY, PLLC; and JOHN WOOD, Appellees-Respondents. THOMAS MECHAM RICKS, Appellant,

          MEMORANDUM DECISION AND ORDER

          Honorable Edward J. Lodge United States District Judge

         Pending before the Court in the above-entitled matter is Appellant/Debtor Thomas M. Ricks' appeal of Chief Bankruptcy Judge Terry L. Myers' Orders involuntarily converting the case to a Chapter 7 bankruptcy and denying Ricks' Motion for Reconsideration. Having fully reviewed the record, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, this matter shall be decided on the record before this Court without oral argument.

         PROCEDURAL AND FACTUAL BACKGROUND

         Ricks filed a Chapter 11 bankruptcy petition on February 19, 2013. Excerpt of Record (ER), Tab 1, Dkt. 9. On December 17, 2014 the United States Trustee sought to dismiss the petition. ER, Tab 5. A stipulated Order was entered on February 5, 2015, that provided Ricks additional time to seek confirmation of a Chapter 11 plan until September 25, 2015 or the case would be dismissed. ER, Tab 7. The stipulated Order also provided the agreement of the parties and 'this order do not prejudice the parties' rights to raise the issues asserted in the United States Trustee's Motion to Dismiss or Convert in any subsequent motion to dismiss or convert, or any other motion or proceeding." Id.

         Judge Myers denied Ricks plan on August 18, 2015. ER, Tab 39, Dkt. 11. On September 2 and 3, 2015, two administrative creditors, Randal J. French, P.C. and McHugh Bromley PLLC filed motions to convert Ricks' case to a Chapter 7. The Bankruptcy Court held an evidentiary hearing on the motion. Ricks maintained pursuant to 11 U.S.C. § 1112(c) the Court could not involuntarily convert the case as Ricks is a "farmer." Ricks testified at the hearing that his income was inaccurately reflected on his personal and business tax returns, but that he farmed the crops grown on the Grandview, Idaho property and he also operated the cattle operation of Ricks Ranches, Inc. (RRI) and therefore, 80% of his income came from farming operations as defined by 11 U.S.C. § 101 (21) as he is the sole shareholder of RRI, a subchapter S corporation.

         On September 25, 2015, the Bankruptcy Court rejected Ricks' argument based on the tax records and other documents filed in the case and found Ricks had not carried his burden to establish via credible evidence that he met the definition of a "farmer" set out in 11 U.S.C. § 101(20). ER, Tab 18. The Bankruptcy Court also granted the motions for conversion to Chapter 7. Id.

         Ricks filed amended personal and business tax returns for 2012 after the evidentiary hearing and after the Court's ruling on the motion to convert. Ricks then moved for reconsideration of the Court's order converting the case based on amended tax returns claiming they were newly discovered evidence. The Bankruptcy Court denied the motion finding the amended tax returns were not "newly discovered evidence" but "newly manufactured evidence." ER, Tabs 23 (Memorandum of Decision) and 24 (Order). Ricks filed his appeal of the Order converting the case and the Order denying his motion for reconsideration.

         JURISDICTION

         This Court has jurisdiction over "final judgments, orders, and decrees" of bankruptcy judges pursuant to 28 U.S.C. § 158(a)(1).

         ISSUES ON APPEAL

         1. Did the Bankruptcy Court err in failing to dismiss the case pursuant to the stipulated Order of February 5, 2015?

         2. Did the Bankruptcy Court err in finding Debtor did not meet the definition of a "farmer" and involuntarily converting the Chapter 11 petition to a Chapter 7 case?

         3. Did the Bankruptcy Court err in denying the motion for reconsideration?

         STANDARD ...


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