Status Conference Order in Riverside
Posted: Thu May 02, 2013 5:55 pm
I think it will be very important for everyone who appears at these
status conferences to try to engage Judge Johnson in a conversation
regarding his views of chapter 13. I think we need to get more on the
record regarding his attitude toward chapter 13. We can then order
transcripts of those hearings. It may be possible to make the case that
based on his policies, orders, rulings and comments he is unable to
preside over chapter 13s because of his stated bias against them.
As I pointed out below, in his 42 page standing order he states that the
dismal rate of discharge in chapter 13 has lead Katy Porter to opine
that chapter 13 is a "failed social program." He has use her words and
not his own to express a conclusion that he seems to share. Based on
this and other comments and practices, it can be argued that he is
unable to make proper judgments based on the letter of the law and the
precedence that has gone before him, and that all of his orders and
rulings are colored by the conclusion that chapter 13 is a failed social
program. Again based on these comments, one may conclude that his goal
may be to persuade congress, attorneys and the public that chapter 13 is
a failed social program and that strict enforcement of this failed
program is required to weed out the viable from the nonviable cases.
Debtors must demonstrate to him that there has been a significant enough
change in circumstances to proceed in chapter 13. Even if they are able
to meet that burden, he may test the viability by continuing
confirmation hearings for months at a time to make sure the debtors are
able to make those payments. Furthermore, he will test viability by
setting up Status Conferences to monitor payments. If debtors make a
misstep such as making a mortgage payment a day late, he may dismiss the
chapter 13 case or order that the debtor must now make their mortgage
payments through the chapter 13 trustee who will be entitled to 5%. So,
it can be argued that based on his comments, rulings, policies and
orders his goal is to set an extremely high standard to confirm and/or
receive a discharge in chapter 13 than currently exists. This has the
effect of discouraging the practice of chapter 13 bankruptcy and it
further reduce the number of discharges for the time being so that,
eventually, practitioners may accept that only certain types of cases
will be viable case resulting in the debtor bar filing fewer chapter 13s
which should increase the number of filed cases that reach discharge. Is
anyone dizzy yet? This is the same kind of logic his former employer,
Judge Naugle, used to require 70-100% plans in Riverside. (The only
problem is that we have a means test to contend with now and chapter 20s
are less likely.)
By sua sponte ordering hearings that no party in interest has requested
and are not required under the Code, and by denying confirmation when no
one is objecting to confirmation, he is inserting himself where there is
no controversy. It appears that the reasoning for this is to "enforce or
implement court orders, or rules, or to prevent abuse of process." II
U.S.C. Sec. 105. In many of the case, there appears to be no reason to
believe that the orders or rules have been violated, or that debtors
have abused the process, yet he is still requiring that debtors prove
that they are complying with the letter of the orders or rules, and that
they have not in some way abused the process. It should be noted that he
does not seem to have these concerns in other chapters of bankruptcy but
that may be just because the discharge rates are much higher. There is
no mention in the Code of Status Conferences to monitor chapter 13
cases. There is nothing in the code that allows the court to order
status conferences so that he then may order modifications to confirmed
plans. It could be argument that those actions taken together may lead
to the argument that he is unable to fairly apply the law.
JUST TO BE CLEAR: These are just my conclusions and not those of
Borowitz & Clark, LLP. I make these comments based on my observations
alone and do not mean any disrespect to anyone.
Thank you,
Nancy B. Clark
100 N. Barranca Ave, Suite 250
West Covina, CA 91791
Tele: (626) 332-8600
Fax: (626) 332-8644
www.blclaw.com
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