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Butala v. Logan

United States District Court, E.D. North Carolina, Western Division

February 21, 2019

MATTHEW DOUGLAS BUTALA, Appellant,
v.
JOHN F. LOGAN, TRUSTEE, Appellee.

          MEMORANDUM OPINION

          LOUISE W. FLANAGAN UNITED STATES DISTRICT JUDGE

         This matter is before the court on appeal by Matthew Douglas Butala (“Debtor”) from an order of the United States Bankruptcy Court dated July 10, 2018. Notice of appeal was filed on July 23, 2018 pursuant to 28 U.S.C. § 158(a), within the time period allotted by Federal Rule of Bankruptcy Procedure 8002. The appeal has been fully briefed, and the matter is now ripe for decision. For the reasons that follow, the decision below is affirmed.

         BACKGROUND

         Debtor petitioned for relief under Chapter 7 of the Bankruptcy Code on May 11, 2015. The petition was converted to one under Chapter 13 on January 13, 2016. Upon conversion, appellee John F. Logan (“Trustee”) ant was appointed trustee.

         On October 27, 2016, the bankruptcy court confirmed the Chapter 13 plan presented by the parties. Among other things, the plan called for debtor to make payments of $187.00 per month over a period of 60 months.

         On November 21, 2017, debtor filed a motion to incur debt, wherein debtor indicated that he and his wife desired to finance the purchase of a residence costing no more than $425, 000.00, where the monthly mortgage payment would not exceed $2, 500.00. On January 17, 2018, debtor withdrew the motion to incur debt.

         In its place, debtor filed a motion to abrogate Local Bankruptcy Rule 4002-1(g)(5), which requires debtor to seek approval of the bankruptcy court to incur additional debt of $7, 500.00 or more. Debtor argues that the local rule should be abrogated because a local bankruptcy court rule cannot abridge, enlarge or modify any substantive right, and debtor has a right to obtain credit and make purchases. In support of debtor's motion, debtor pointed to various alleged inconsistencies between the Bankruptcy Code and Local Bankruptcy Rule 4002-1(g)(5).

         On July 10, 2018, the bankruptcy court denied debtor's motion to abrogate. The court noted that “the only matter before the court is the debtor's request that he not be required to comply with the Local Rule; there is no substantive request before the court.” (Bankr. Order (DE 7-14) at 3). The bankruptcy court then denied debtor's motion, reasoning that Local Bankruptcy Rule 4002-1(g)(5) is consistent with the purpose of the Bankruptcy Code, does not abridge debtor's substantive right to incur debt, and does not usurp a legislative function.

         On July 27, 2018, debtor timely filed notice of appeal of the bankruptcy court's order. The record on appeal was docketed in this court on August 22, 2018. The parties thereafter filed their briefs for the court's consideration.

         DISCUSSION

         A. Standard of Review

         This court has appellate jurisdiction pursuant to 28 U.S.C. § 158(a) to review the bankruptcy court's order. “An appeal under subsections (a) and (b) of this section shall be taken in the same manner as appeals in civil proceedings generally are taken to the courts of appeals from the district courts . . . .” 28 U.S.C. § 158(c)(2).

         “On an appeal the district court or bankruptcy appellate panel may affirm, modify, or reverse a bankruptcy court's judgment, order, or decree or remand with instructions for further proceedings.” Harman v. Levin, 772 F.2d 1150, 1153 n.3 (4th Cir. 1985) (internal quotations omitted). “[The court] review[s] the bankruptcy court's factual findings for clear error, while [the court] review[s] questions of law de novo.” Devan v. Phoenix Am. Life Ins. Co. (In re Merry-Go-Round Enterprises, Inc.), 400 F.3d 219, 224 ...


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