Colonial Auto Center v. Tomlin ( 1997 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
In Re: SHIRLEY MAE TOMLIN,
Debtor.
COLONIAL AUTO CENTER,
No. 95-2509
Plaintiff-Appellee,
v.
SHIRLEY MAE TOMLIN,
Defendant-Appellant.
Appeal from the United States District Court
for the Western District of Virginia, at Charlottesville.
James H. Michael, Jr., Senior District Judge.
(CA-95-20-3, BK-94-1213-WA3-7)
Argued: December 4, 1996
Decided: February 3, 1997
Before ERVIN, WILKINS, and MOTZ, Circuit Judges.
_________________________________________________________________
Reversed and remanded by published opinion. Judge Motz wrote the
opinion, in which Judge Ervin and Judge Wilkins joined.
_________________________________________________________________
COUNSEL
ARGUED: Mark Bennett Peterson, OGLE & PETERSON, Char-
lottesville, Virginia, for Appellant. Steven Shareff, Palmyra, Virginia,
for Appellee. ON BRIEF: Gail S. Ogle, OGLE & PETERSON, Char-
lottesville, Virginia, for Appellant.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
In this case a creditor asserts that an order dismissing "with preju-
dice" a bankrupt debtor's Chapter 7 petition precluded the debtor
from subsequently seeking to discharge debts existing at the time of
that order. Although a bankruptcy court certainly has the power to bar
a debtor from further litigating the dischargeability of pending debts,
the order at issue here is ambiguous. For this reason, we defer to the
bankruptcy court's interpretation of its own order as one limiting sub-
sequent filings, not forever prohibiting the right to seek a discharge
of existing debt, and reverse the district court's contrary holding.
I.
On December 27, 1991, Shirley Mae Tomlin and her husband
signed a retail installment contract with Colonial Auto Center, Inc.
("Colonial") to purchase a pickup truck. Eight months later, Colonial
repossessed the truck, then sold it at public auction. The sale left a
deficiency of $5,284.63. On May 28, 1993, Colonial obtained a state
court judgment against Tomlin for the amount of the deficiency plus
interest and court costs. Subsequently, Colonial obtained another
judgment against Tomlin for $1,500.00 plus interest, arising from her
failure to pay a deposit owing to Colonial. The balance remaining on
these two judgments constitute the debt at issue in this case.
This is the sixth bankruptcy petition Tomlin has filed in the past
seven years. On May 25, 1990, Tomlin and her husband filed a peti-
tion pursuant to Chapter 13 of the Bankruptcy Code, 11 U.S.C.
§§ 1301-1330 (1994). On August 20, 1990, the bankruptcy court con-
firmed the Tomlins' Chapter 13 plan (an amended plan was con-
firmed on November 14, 1990). On January 17, 1991, Union Planters
National Bank ("Union Planters") moved for relief from the stay
imposed pursuant to Chapter 13. On May 3, 1991, the bankruptcy
court ordered the stay lifted. On July 15, 1991, the bankruptcy court
granted the Tomlins' voluntary motion to dismiss.
On July 25, 1991, Tomlin individually filed a second Chapter 13
petition. She did not submit a confirmable plan and on September 12,
2
1991, Union Planters moved for relief from the stay. On December
6, 1991, the bankruptcy court granted Tomlin's motion to dismiss the
petition.
On April 24, 1992, Tomlin, again with her husband, filed still
another Chapter 13 petition. During the pendency of this petition, the
Tomlins neither attended creditors' meetings nor timely filed bank-
ruptcy schedules. On June 22, 1992, the bankruptcy court heard the
trustee's motion to dismiss and ordered the Tomlins to cure all
defaults by June 26, 1992. The Tomlins failed to abide by that order.
On July 6, 1992, the bankruptcy court ordered the petition dismissed.
On September 18, 1992, Tomlin filed a pro se Chapter 7 petition
to stop the foreclosure sale of her residence. 11 U.S.C. §§ 701-728
(1994). During the pendency of this petition, Tomlin did not pay the
filing fee, did not attend the creditors' meeting, and did not file sched-
ules. On November 13, 1992, the bankruptcy court dismissed the peti-
tion.
On December 17, 1992, Tomlin filed another pro se Chapter 7 peti-
tion again to stop the foreclosure sale of her residence. The next day,
after Union Planters filed an emergency motion for relief from the
stay, the bankruptcy court lifted the stay in an order in which it noted
that it appeared that Tomlin had filed the petition in violation of 11
U.S.C. § 109(g) (1994). A month later, on January 21, 1993, the
trustee filed a motion to dismiss Tomlin's petition"with prejudice"
because she had caused unreasonable delay that was prejudicial to her
creditors by failing to: appear at an initial creditors' meeting, timely
file her schedules, or prosecute the bankruptcy case she had filed two
months before. Tomlin did not respond in any way to the trustee's
motion. After a hearing, which Tomlin did not attend, on February 11,
1993, the bankruptcy court issued a dismissal order, stating only that
"[f]or the reasons set forth" in the trustee's motion, Tomlin's petition
would be dismissed "with prejudice."
Twenty months later, on October 14, 1994, Tomlin filed another
Chapter 7 petition; this time she was represented by counsel. On
November 15, 1994, the bankruptcy court entered an order discharg-
ing Tomlin's debts.
3
Prior to that discharge order, Colonial filed the instant action to
determine the dischargeability of debts pending as of the February 11,
1993 order dismissing "with prejudice" Tomlin's December 17, 1992
Chapter 7 petition. Colonial moved for summary judgment, asserting
that the February 11 order barred Tomlin from subsequently seeking
to discharge debts existing at that time.
After a hearing, the bankruptcy court issued an order and a memo-
randum opinion denying Colonial's motion for summary judgment.
The bankruptcy court reasoned:
[T]he [February 11, 1993] dismissal order, although ambig-
uously designated simply "with prejudice," was intended
only to invoke the sanction set forth in the first paragraph
of § 109(g) -- that the debtor be barred from filing another
petition for 180 days. The matters addressed in the trustee's
motion do not warrant imposition of the far more serious
sanction of making all pending debts nondischargeable. The
trustee did not request such a severe sanction in either the
motion or at the hearing. And because the debtor did not
appear at the hearing, the order dismissing the case was in
effect by default.
(footnotes omitted).
Colonial appealed to the district court, which reversed. Colonial
Auto Center, Inc. v. Tomlin, 184 B.R. 720 (W.D. Va. 1995). The dis-
trict court recognized that, if there were "any ambiguity or obscurity"
in an order, reference could properly be made to the"findings and
entire record for determining what was decided." Id. at 727 (quoting
Security Mut. Cas. Co. v. Century Cas. Co., 621 F.2d 1062, 1066
(10th Cir. 1980)). However, the district court found no "ambiguity or
obscurity" in the bankruptcy court's order and so held the order had
the "res judicata effect of precluding the discharge of debts in subse-
quent bankruptcy petitions." Id. Tomlin appeals.
II.
The first question presented here is a deceptively simple one: is the
bankruptcy court's February 11, 1993 order ambiguous. Our review
of this legal question is de novo.
4
Colonial asserts that "dismissed with prejudice" can have "only one
reasonable interpretation," namely, the final dismissal of all claims
that were, or could have been, brought in the action. Brief for Appel-
lee at 8. Thus, Colonial claims that the February 11, 1993 order "dis-
missing Tomlin's prior Chapter 7 case `with prejudice' had the res
judicata effect of precluding the subsequent discharge of her debts
existing at the filing of the dismissed case." Id. at 6.
As Colonial points out, generally "[d]ismissal of an action with
prejudice is a complete adjudication of the issues presented by the
pleadings and is a bar to a further action between the parties."
Harrison v. Edison Bros. Apparel Stores, Inc., 924 F.2d 530, 534 (4th
Cir. 1991) (quoting Schwarz v. Felloder, 767 F.2d 125, 129 (5th Cir.
1985)). Moreover, principles of res judicata certainly apply to deci-
sions of bankruptcy courts. See Katchen v. Landy , 382 U.S. 323, 334
(1966). Indeed, although the Bankruptcy Code establishes a general
rule that dismissal of a case is without prejudice, it also expressly
grants a bankruptcy court the authority to "bar the discharge, in a later
case . . . of debts that were dischargeable in the case dismissed . . . ."
11 U.S.C. § 349(a) (1994); 3 Collier on Bankruptcy § 349.02[2] (15th
ed. rev. 1994).
However, a bankruptcy court rarely uses its authority to bar the dis-
charge of debts in a later case. See In re Robinson, 198 B.R. 1017,
1023 n.7 (Bankr. N.D. Ga. 1996). In any court, a dismissal order that
bars subsequent litigation is a severe sanction warranted only by egre-
gious misconduct. See Durham v. Florida E. Coast Ry. Co., 385 F.2d
366, 368 (5th Cir. 1967) (citing Link v. Wabash R.R. Co., 370 U.S.
626 (1962)). Given that the Bankruptcy Code's "central purpose" is
remedial, i.e., to afford insolvent debtors an opportunity to "enjoy `a
new opportunity in life with a clear field for future effort, unhampered
by the pressure and discouragement of preexisting debt,'" Grogan v.
Garner, 498 U.S. 279, 286 (1991) (quoting Local Loan Co. v. Hunt,
292 U.S. 234, 244 (1934)), such an order is particularly devastating
in a bankruptcy case. For this reason, a permanent bar to discharge
is at times referred to as the "capital punishment of bankruptcy," for
it "removes much of the benefit" of the bankruptcy system. In re
Merrill, 192 B.R. 245, 253 (Bankr. D. Colo. 1995).
This "drastic sanction which may affect substantial rights of the lit-
igant" is usually limited to "extreme situations." In re Martin-
5
Trigona, 35 B.R. 596, 601 (Bankr. S.D.N.Y. 1983) (citing Flaska v.
Little River Martin Constr. Co., 389 F.2d 885, 887 (5th Cir. 1968)).
Generally, only if a debtor engages in egregious behavior that demon-
strates bad faith and prejudices creditors -- for example, concealing
information from the court, violating injunctions, or filing unautho-
rized petitions -- will a bankruptcy court forever bar the debtor from
seeking to discharge then existing debts. See, e.g., In re Moses, 171
B.R. 789, 793-94 (Bankr. E.D. Mich. 1994); Martin-Trigona, 35 B.R.
at 601-02; In re Jerry's Blue Room, 19 B.R. 963, 964 (Bankr. E.D.
Pa. 1982).
Far more frequently, if a bankruptcy court disciplines a debtor, it
will do so with a different sanction, one that is less drastic, but which
is nonetheless often referred to as a dismissal with prejudice. This is
a dismissal triggering 11 U.S.C. § 109(g) (1994), which temporarily
bans the debtor from filing further petitions.1 Section 109(g) provides:
Notwithstanding any other provision of this section, no indi-
vidual or family farmer may be a debtor under this title who
has been a debtor in a case pending under this title at any
time in the preceding 180 days if--
(1) the case was dismissed by the court for will-
ful failure of the debtor to abide by orders of the
court, or to appear before the court in proper pros-
ecution of the case; or
(2) the debtor requested and obtained the volun-
tary dismissal of the case following the filing of a
request for relief from the automatic stay provided
by section 362 of this title.
_________________________________________________________________
1 The Bankruptcy Amendments and Federal Judgeship Act of 1984,
Pub. L. 98-353, 98 Stat. 352, 269 (1984), added new subsection (f) to
§ 109 to provide a 180-day bar to filing. This was redesignated as sub-
section (g) by § 253 of the Bankruptcy Judges, United States Trustees,
and Family Farmer Bankruptcy Act of 1986, Pub. L. 99-554, 100 Stat.
3105 (1986). Throughout this opinion, it will be referred to as § 109(g).
6
This statute was added to the Bankruptcy Code in 1984 to address
the precise abuse of the bankruptcy system at issue here -- the filing
of meritless petitions in rapid succession to improperly obtain the
benefit of the Bankruptcy Code's automatic stay provisions as a
means of avoiding foreclosure under a mortgage or other security
interest. See, e.g., 1 William L. Norton, Jr., Norton Bankruptcy Law
and Practice § 18:14 at 18-55-56 (2nd ed. 1994); Jeffrey W. Morris,
"Substantive Consumer Bankruptcy Reform in the Bankruptcy
Amendments Act of 1984," 27 Wm. & Mary L. Rev. 91, 101 (1985);
In re Faulkner, 187 B.R. 1019, 1022 (Bankr. S.D. Ga. 1995).
Thus, the Bankruptcy Code provides a bankruptcy court with
authority both to bar subsequent discharge of existing debt and to bar
successive petitions under § 109(g). Although the two sanctions differ
dramatically in purpose and effect, bankruptcy courts often refer to
both sanctions as dismissals "with prejudice."
Even prior to the addition of § 109(g) to the Bankruptcy Code in
1984, bankruptcy courts would order a debtor to cease filing succes-
sive petitions and refer to such an order as a "dismissal with preju-
dice." See, e.g., In re Damien, 35 B.R. 685, 687 (Bankr. S.D. Fla.
1983) (concluding that "every court that has considered the question
has concluded that the Bankruptcy Court has discretion to dismiss
with prejudice to refiling") (citing In re Sando, 30 B.R. 474, 476-77
(E.D. Pa. 1983)); In re Petro, 18 B.R. 566, 567 (Bankr. E.D. Pa.
1982) (finding debtors in contempt for filing an action within a year
of the issuance of an order dismissing "with prejudice" their previous
action).
The language of the 1984 amendments to the Bankruptcy Code
apparently has increased the prevalence of this practice. In addition
to the adoption of § 109(g), codifying the court's power to temporar-
ily bar refiling, the 1984 amendments also revised the language of
§ 349, adding the emphasized language:
Unless the court, for cause, orders otherwise, the dismissal
of a case under this title does not bar the discharge, in a later
case under this title, of debts that were dischargeable in the
case dismissed; nor does the dismissal of a case under this
title prejudice the debtor with regard to the filing of a subse-
7
quent petition under this title, except as provided in section
109(g) of this title.
11 U.S.C. § 349(a) (emphasis added).
Indeed, this new language has prompted some speculation that
Congress intended to eliminate a bankruptcy court's power to bar per-
manently the discharge of existing debt. See, e.g., Dennis Montali,
"Important Bankruptcy Code Changes in the Bankruptcy Amend-
ments and Federal Judgeship Act of 1984," 332 PLI/Comm 61, 68
(1984) ("New § 349(a) states that disqualification under § 109[g] con-
stitutes a dismissal of the case with prejudice. Unfortunately, the
amendment to § 349(a) can be read to exclude from the "dismissal
with prejudice" label any other dismissal of a bankruptcy case since
it now reads: `*** nor does the dismissal of a case *** prejudice the
debtor with regard to the filing of a subsequent petition, except as
provided in section 109[g] ***.'"); Michael T. Andrew, "Real Prop-
erty Transactions and the 1984 Bankruptcy Code Amendments," 20
Real Prop. Prob. & Tr. J. 47, 72 n.107 (1985) ("It might be thought
that the [language of § 349(a)] limits the prejudicial impact of a dis-
missal to that provided in new § 109[g] . . . .").
Our analysis of the plain language and "statutory scheme" of the
statute, Maurice Sporting Goods, Inc. v. Maxway Corp. (In re Max-
way Corp.), 27 F.3d 980, 982-83 (4th Cir. 1994) (quoting United
States v. Ron Pair Enters., Inc., 489 U.S. 235, 240-41 (1989)), leads
us to conclude that § 349 was never intended to limit the bankruptcy
court's ability to impose a permanent bar to discharge that would
have res judicata effect. Rather, the language of§ 349, as amended,
"seems to make clear that the court has the power to order" such a
sanction "in circumstances other than those dealt with by new
§ 109[g]." Andrew at 72 n.107.
But what is equally clear is that it has become common bankruptcy
practice to employ the phrase "dismissed with prejudice" to refer to
a temporary bar to filing another petition. As the court observed in In
re Robinson, 198 B.R. 1017 (N.D. Ga. 1996):
The usual remedy for a bad faith filing is a dismissal pursu-
ant to § 109(g), which works to prohibit the filing by a
8
debtor of any case under Title 11 for a period of 180 days.
11 U.S.C. § 109(g). Such a dismissal is frequently and im-
precisely referred to (only by bankruptcy practitioners) as
a "dismissal with prejudice."
Id. at 1022 (emphasis added); see also 2 Norton § 33:19 at 33-23
("Although under Code § 349(a), a case may be dismissed without
prejudice, where the court finds cause, the case may be dismissed
with prejudice to refiling further petitions.").
Representative of the many cases in which a § 109(g) bar to refil-
ing has been characterized as a dismissal "with prejudice" are several
cases from courts in this circuit. See, e.g., Jolly v. Great W. Bank (In
re Jolly), 143 B.R. 383, 385 (E.D. Va. 1992) ("Debtors argue that the
bankruptcy court misapplied [Code provisions] in dismissing Debt-
ors' case with prejudice for 180 days."), aff'd, 45 F.3d 426 (4th Cir.
1994); In re Hollis, 150 B.R. 145, 147 (D. Md. 1993) ("According to
11 U.S.C. § 349, dismissal of a bankruptcy petition is without preju-
dice, except as provided in section 109(g).") (footnote omitted);
Owings v. Doniff (In re Doniff), 133 B.R. 351, 354 (Bankr. E.D. Va.
1991) (ordering "dismissal with prejudice pursuant to 11 U.S.C.
§ 349" and enjoining the debtor "from filing a bankruptcy petition for
a period of 180 days after dismissal").
There are also numerous similar cases from other jurisdictions. See,
e.g., In re Jones, 192 B.R. 289, 291 (Bankr. M.D. Ga. 1996) ("It is
clear that the drafters of the Bankruptcy Code and Bankruptcy Regu-
lations knew how to provide for a dismissal with prejudice. See 11
U.S.C.A. §§ 109(g) and . . . ."); In re Armwood, 175 B.R. 779, 787
(Bankr. N.D. Ga. 1994) ("The usual remedy for a bad faith filing is
dismissal `with prejudice,' which works to prohibit the filing by a
debtor of any case under Title 11 for a period of 180 days."); In re
Gross, 173 B.R. 774, 777 (Bankr. M.D. Fla. 1994) (As "the debtor's
multiple bankruptcy filings, coupled with involuntary dismissals
[was] cause to dismiss this case with prejudice," the court barred the
debtor from filing another petition for two years without court permis-
sion.); In re Standfield, 152 B.R. 528, 539-40 (Bankr. N.D. Ill. 1993)
("The totality of the circumstances warrants the imposition of dis-
missal of this case with prejudice . . . and the prohibition of the filing
of another case for a period of 180 days . . . ."); In re Jourdan, 108
9
B.R. 1020, 1021-22 (Bankr. N.D. Iowa 1989) (noting that "there is
nothing to prevent a debtor from immediately refiling another Chapter
13 case . . . so long as the previous dismissal was without prejudice
. . . ."); Lerch v. Federal Land Bank of St. Louis (In re Lerch), 94 B.R.
998, 1001 (N.D. Ill. 1989) ("The clear meaning of[§ 349] is that
unless the court `for cause, orders otherwise,' the court may not dis-
miss a case with prejudice for a period beyond the explicit 180-day
limitation found in Section 109(g).").2
Thus, notwithstanding Colonial's assertions, in the bankruptcy con-
text a "dismissal with prejudice" does not have "only one reasonable
interpretation." Rather, the term "dismissal with prejudice" in bank-
ruptcy cases can either permanently bar discharge of certain debts or
it can trigger the bar to filing successive petitions under § 109(g).
Of course, the actual language of a given order may eliminate any
ambiguity. The bankruptcy court's February 11, 1993 order provided
that, "[f]or the reasons set forth" in the trustee's motion to dismiss,
the case was "dismissed with prejudice."
The order contains no specific reference to the§ 109(g) bar to fil-
ing successive petitions. Cf. In re Dandy Doughboy Donuts, Inc., 66
B.R. 457, 458 (Bankr. S.D. Fla. 1986). Nor does it state the period of
time that it would be in effect, e.g., the 180-day period provided in
§ 109(g) or a longer period. Cf. Gross, 173 B.R. at 776; In re
McKissie, 103 B.R. 189 (Bankr. N.D. Ill. 1989); In re Conley, 105
B.R. 116, 117 (S.D. Fla. 1989). Thus the order does not contain two
of the more usual provisions indicating intent to invoke the bar to suc-
cessive filings under § 109(g).
_________________________________________________________________
2 Of course, as the district court recognized, a bankruptcy court can
impose sanctions under § 109(g) without dismissing a case "with preju-
dice." See Colonial Auto Center, 184 B.R. at 726. What is significant is
that bankruptcy courts so frequently do characterize a dismissal intended
to trigger § 109(g) as a dismissal "with prejudice." Indeed, some courts
have been reluctant to impose § 109(g) sanctions if the underlying order
was without prejudice. See In re Felts, 60 B.R. 736 (Bankr. W.D. Ky.
1986) ("It is the opinion of the court that the present petition is not viola-
tive of 11 U.S.C. Section 109[g] since the[prior] dismissal . . . expressly
denoted that said dismissal was `without prejudice.'"); 1 Norton § 18:14
at 18-57.
10
However, sometimes bankruptcy courts do not include such indicia
in dismissal orders but simply dismiss "with prejudice," when they
nonetheless intend to bar refiling. See e.g., In re Peia, 145 B.R. 749,
750 (Bankr. D. Conn. 1992); In re Hollis, 150 B.R. 145, 146 (D. Md.
1996); In re Petro, 18 B.R. 566, 569 (Bankr. E.D. Pa. 1982). Colonial
argues that such unqualified "with prejudice" dismissals do not pro-
vide precedent for concluding that the order at issue here was ambigu-
ous. Brief for Appellee at 17-18. It emphasizes that the opinions
accompanying the orders in Peia and Hollis indicated that all that was
intended in those cases was a bar on refiling while in this case there
is no similar clarification in an accompanying opinion or, indeed, any
accompanying opinion at all. Id.
Although we agree that these cases do not provide a direct prece-
dent for Tomlin's position, we nonetheless find them relevant. In dis-
tinguishing them, Colonial implicitly concedes that language in an
accompanying opinion can change the meaning of what Colonial
asserts would otherwise be an unambiguous order barring a debtor
from subsequently seeking to discharge existing debts. This conces-
sion illustrates the slipperiness of a "with prejudice" dismissal in the
bankruptcy context.
Nevertheless, Colonial asserts that the dismissal"with prejudice"
order in this case was totally "unqualified" and thus unambiguous.
Brief for Appellee at 9. Contrary to Colonial's assertions, the order
at issue here is not a totally "unqualified" dismissal "with prejudice."
Rather, the order provides that the case is dismissed "with prejudice"
"for the reasons set forth" in the trustee's motion.
The trustee moved to dismiss Tomlin's Chapter 7 petition "with
prejudice" only after the bankruptcy court had lifted the automatic
stay in an order that specifically noted that Tomlin had apparently
filed her petition "in violation of § 109(g)." Moreover, the trustee
listed the following grounds in support of its motion to dismiss: (1)
Tomlin's failure to appear at the initial creditors' meeting; (2) her
failure to file her schedules on time, and (3) her failure to prosecute
her September 18 bankruptcy case. These reasons hardly constitute
examples of the egregious conduct and bad faith, which has generally
been regarded as the necessary predicate to barring a debtor from for-
ever seeking to discharge debts existing at the time of the dismissal
11
order. Cf. Martin-Trigona, 35 B.R. at 601-02; Moses, 171 B.R. at
793-94. Rather, the usual remedy, even for far more prevalent serial
filing than that presented to the bankruptcy court in this case (in mov-
ing to dismiss, the trustee only mentioned one of Tomlin's earlier fil-
ings) is the § 109(g) temporary bar to filing. See, e.g., In re Penz, 121
B.R. at 602, 604-05 (Bankr. E.D. Okla. 1990); Gross, 172 B.R. at
777; Peia, 145 B.R. at 770.
Although when moving to dismiss "with prejudice" the trustee did
not specifically invoke § 109(g), the bankruptcy court itself had
invoked § 109(g) against Tomlin just two months before when lifting
the automatic stay. Moreover, in moving to dismiss"with prejudice"
the trustee asserted classic § 109(g) reasons for seeking the dismissal.
Accordingly, we believe the bankruptcy court's order granting the
trustee's motion to dismiss "with prejudice,""[f]or the reasons set
forth" in that motion, is ambiguous. This, of course, does not mean
that the order necessarily imposed a § 109(g) sanction. It may have
triggered this bar or it may, as Colonial claims, have banned Tomlin
from subsequently seeking the discharge of existing debt.
III.
Our remaining task is to determine the meaning of the ambiguous
order at issue here. When an order is ambiguous, a court "must con-
strue its meaning, and in so doing may resort to the record upon
which the judgment was based." Spearman v. J & S Farms, Inc., 755
F. Supp. 137, 140 (D.S.C. 1990). See also Sec. Mut. Cas. Co., 621
F.2d at 1066 ("If there is any ambiguity or obscurity" in an order,
"reference may be had to the findings and the entire record for the
purpose of determining what was decided.").
The record here includes the 1995 memorandum opinion of the
bankruptcy court interpreting its 1993 dismissal"with prejudice" to
mean a bar to refiling under § 109(g). We have previously observed
that we will defer to a district court's interpretation of its own order.
See Anderson v. Stephens, 875 F.2d 76, 80 n.8 (4th Cir. 1989);
Simmons v. South Carolina State Ports Auth., 694 F.2d 63, 66 (4th
Cir. 1982). We must now decide whether similar deference should be
accorded to a bankruptcy court's interpretation of its order.
12
Monarch Life Ins. Co. v. Ropes & Gray, 65 F.3d 973 (1st Cir.
1995), is instructive. There, the bankruptcy court had entered a court
order confirming a reorganization plan, and subsequently interpreted
it to protect the former lawyers of an insurance company. On appeal,
the insurance company argued that the order did not afford their for-
mer lawyers this protection. The First Circuit rejected the insurance
company's challenge, explaining:
Even though our interpretation of the confirmation order
essentially presents a question of law, the bankruptcy court
in this case was interpreting its own order of confirmation.
We think customary appellate deference is appropriate in
these circumstances with respect to the bankruptcy court's
determination that the confirmation order was sufficiently
broad to confer "incidental" protection to[the lawyers].
Id. at 983 (emphasis added) (internal citation omitted).
We believe that the bankruptcy court's interpretation of its own
order here similarly warrants "customary appellate deference." The
bankruptcy court was "in the best position to interpret its own orders."
Texas N.W. Ry. Co. v. Atchison, Topeka and Santa Fe Ry. Co. (In re
Chicago, Rock Island & Pac. R.R. Co.), 860 F.2d 267, 272 (7th Cir.
1988). Accord Hastert v. Illinois St. Bd. of Elect. Comm'rs., 28 F.3d
1430, 1438 (7th Cir. 1993). The First Circuit noted in Monarch that
the bankruptcy court "was directly engaged" in the earlier proceedings
and thus had the "better vantage point" to make a determination on
its earlier order. Monarch, 65 F.3d at 983. Similarly, the bankruptcy
court here was "directly engaged" in Tomlin's earlier case, giving it
a "better vantage point" from which to assess the order's meaning.
Since "[t]he court best qualified to determine why it is dismissing a
proceeding is the court doing the dismissing," we will give substantial
deference to the bankruptcy court's analysis on its own order to dis-
miss. In re Bono, 70 B.R. 339, 343 (Bankr. E.D.N.Y. 1987). See also
Ranch House of Orange-Brevard, Inc. v. Gluckstern (In re Ranch
House of Orange-Brevard, Inc.), 773 F.2d 1166, 1168 (11th Cir.
1985) (expressing reluctance to overturn a court's interpretation of its
own order because "[t]he Bankruptcy judge who has presided over a
case from its inception is in the best position to clarify any apparent
inconsistencies in the court's rulings.").
13
Examination of the record demonstrates that the bankruptcy court's
interpretation of its order is reasonable in light of the facts of this
case. The bankruptcy court noted that the trustee's motion did "not
warrant imposition of the far more serious sanction of making all
pending debts nondischargeable. The trustee did not request such a
severe sanction in either the motion or at the hearing." Instead, the
trustee cited Tomlin's failure to attend the initial creditors' meeting
and failure to file her schedules. The trustee's motion stated that Tom-
lin had caused unreasonable delay and had prejudiced her creditors by
this behavior. No doubt Tomlin's behavior constitutes an abuse of the
protection afforded her by the bankruptcy system. Her purpose
seemed clear; by continuously filing petitions, the automatic stay pre-
vented foreclosure action on her home. This is the very behavior for
which Congress formulated § 109(g). 1 Norton § 18:14 at 18-58-59.
The bankruptcy court's order -- as interpreted by that court -- was
the most appropriate sanction for the abuse Tomlin committed. By
prohibiting her from filing another petition immediately after the dis-
missal of the case, the court prevented Tomlin from committing the
very behavior that triggered the sanctions in the first place.3
Nor does the fact that the order at issue here contains no finding
of willfulness undermine the bankruptcy court's conclusion it was
intended to trigger a § 109(g) sanction. Colonial is quite correct that
"the plain language" of § 109(g) bars a subsequent filing sanction
only if the bankruptcy court finds a previous case was dismissed
_________________________________________________________________
3 Of course, similar conduct has also been found to merit the imposition
of a permanent bar to discharge the debts existing at the time of the dis-
missal. Some courts seem to have equated the "willful failure" to obey
a court order necessary to trigger a § 109(g) sanction with the "bad faith"
leading to a permanent bar to the discharge of the debts. See, e.g., In re
McClure, 69 B.R. 282, 284-85 (Bankr. N.D. Ind. 1987). However, the
majority of bankruptcy courts have sought clear evidence of "bad faith"
before proceeding to prohibit a debtor from ever discharging then exist-
ing debts, evidence that goes beyond mere willfulness. Jerry's Blue
Room, 19 B.R. at 964 (bad faith actions merit"serious" and "rarely
invoked" remedy of dismissal with prejudice); Moses, 171 B.R. at 798
(same); Martin-Trigona, 35 B.R. at 601 (same). Cf. Hall v. Vance, 887
F.2d 1041, 1045 (10th Cir. 1989) (filing monthly reports and plan late
does not constitute evidence of bad faith, and thus, no dismissal with
prejudice can be imposed).
14
because of a debtor's "willful failure" to abide by a court order. Brief
for Appellee at 15. But that finding need not be made at the time of
the earlier dismissal; it can be made when the bankruptcy court is
later called upon to determine if § 109(g) bars a subsequent filing. See
Montgomery v. Ryan (In re Montgomery), 37 F.3d 413, 415 (8th Cir.
1994); Robinson, 198 B.R. at 1023 n.8; In re Faulkner, 187 B.R.
1019, 1023 (S.D. Ga. 1995); In re Pappalardo, 109 B.R. 622, 626
(Bankr. S.D.N.Y. 1990). For example, in Montgomery, 37 F.2d at
414-15, the bankruptcy court's order stated only that the case was dis-
missed because the debtor failed to attend a creditors' meeting; there
was no finding of willfulness. Within 180 days, the debtor sought to
file another petition. Id. at 414. At that time, the bankruptcy court
found that the prior dismissal was based on the debtor's willful failure
to follow a court order and so § 109(g) barred the subsequent filing.
Id. at 415. The Eighth Circuit affirmed explaining, "[a] finding of
willfulness was necessary only when the bankruptcy court dismissed
the second petition." Id. See also Faulkner , 187 B.R. at 1023 ("Since
the language of section 109(g) is set out as an eligibility requirement,
the determination cannot be made until the filing of the successive
case.").
In the case at hand, the trustee's motion clearly indicated that Tom-
lin's behavior demonstrated a willful failure to prosecute her case.
That the bankruptcy court made no finding of willfulness in the 1993
order is therefore not determinative. If Tomlin had filed a subsequent
action within 180 days of the previously dismissed action, the court
could have made that finding at that time based on a review of Tom-
lin's record in the earlier proceedings.
Finally, Colonial heavily relies on In re Smith , 133 B.R. 467
(Bankr. N.D. Ind. 1991), as compelling the conclusion that the order
at issue here must be one prohibiting Tomlin from seeking the dis-
charge of existing debt. That reliance is misplaced. Although Smith
resolves differently the same issue we have grappled with here, it is
no way inconsistent with our decision. In Smith when the debtors and
trustees in a Chapter 7 case failed to come to an agreement, the trustee
moved the bankruptcy court to dismiss the case or to deny discharge.
Judge Riegle of the bankruptcy court granted the motion, and issued
an order stating "that this case be dismissed with prejudice." Id. at
468. Eighteen months later, the debtors filed another Chapter 7 peti-
15
tion and the trustee again moved to dismiss, asserting the earlier dis-
missal "with prejudice" precluded the debtors"from ever seeking
further relief" under the Bankruptcy Code. Id. A different bankruptcy
judge, Judge Grant, properly rejected that argument and then inter-
preted Judge Riegle's order to mean a permanent bar on discharging
the debts in question at the time of the previous filing: "The dismissal
of a bankruptcy case with prejudice `denies a debtor [the] future dis-
charge of debts dischargeable in that particular case.'" Id. at 470
(quoting Frieouf v. United States (In re Frieouf), 938 F.2d 1099, 1103
(10th Cir. 1991)).
Smith provides no authority for Colonial's position here because
the order in Smith, unlike that here, apparently was an unadorned dis-
missal "with prejudice." Moreover, the Smith order was issued in
response to the trustee's request to "dismiss the case or . . . deny the
discharge." 133 B.R. at 467. In contrast, the trustee in the instant case
never requested that Tomlin be denied the right to seek to discharge
her debts in the future, but instead asked that her case be dismissed
on typical § 109(g) grounds. Thus, the Smith order differs from that
presented here in that it apparently was an unqualified and unambigu-
ous order preventing the debtor from subsequently seeking to dis-
charge existing debt.
Even if the Smith order were identical to that at issue here (and
there is no indication it was), our holding would still not be inconsis-
tent with that of Smith. Our conclusion that the order before us is
ambiguous does not signify that it was definitively a § 109(g) order.
We deferred to the interpretation of the court that fashioned the order
to resolve this ambiguity. In Smith, the court that fashioned the order
never opined as to its meaning. If it had done so, a court subsequently
examining the order might well have deferred to the original court's
interpretation, as we have done here.
IV.
For these reasons, we reverse the order of the district court, which
had reversed the bankruptcy court, and remand the case for further
proceedings consistent with this opinion.
REVERSED AND REMANDED
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