BB&T Can't Show Cardiologist Entered Bankruptcy in Bad Faith

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By Diane Davis

Aug. 5 — The Chapter 7 bankruptcy case of a cardiologist with primarily business debts won't be dismissed even though his mortgage lender alleged he was trying to dodge a nearly $740,000 default judgment, a bankruptcy court in Florida held July 28 ( In re Uche, 2016 BL 248141, Bankr. M.D. Fla., No. 6:15-bk-03655-CCJ, 7/28/16 ).

Judge Cynthia C. Jackson of the U.S. Bankruptcy Court for the Middle District of Florida denied Branch Banking and Trust Company's (BB&T) motion to dismiss the debtor's bankruptcy case.

The Eleventh Circuit endorses an inquiry where “bad faith” is evidenced by the debtor's “deliberate acts or omissions that constitute a misuse or abuse of the provisions, purpose, or spirit of the Bankruptcy Code,” the court said. The Eleventh Circuit has expressly declined to adopt the mutifactor test in Piazza v. Nueterra Healthcare Physical Therapy, LLC (In re Piazza), 2013 BL 169407, 719 F.3d 1253 (2013), where many of the factors go to a debtor's ability to pay his debts, the court said.

Debtor Eze D. Uche has a medical practice that has a mortgage with BB&T for the medical building where the practice is located. The medical practice paid the mortgage for two years before defaulting on the loan.

The practice brought the mortgage current, but BB&T filed a foreclosure action in state court. After a judicial sale of the property, BB&T sought a final deficiency judgment of $739,062 against the practice.

The debtor then filed for Chapter 7 bankruptcy, in which a debtor's nonexempt assets are liquidated by a trustee, and the proceeds are distributed to creditors. The debtor wanted to discharge more than a $1 million in unsecured debt and claimed nearly $800,000 in exempt property.

BB&T moved to dismiss the bankruptcy for cause under Bankruptcy Code Section 707(a), arguing that the case was filed to delay and frustrate BB&T's pursuit of a deficiency judgment.

The fact that the debtor's bankruptcy filing was “preceded by BB&T's pursuit of a deficiency judgment is not determinative of bad faith,” the court said.

The debtor has insufficient unencumbered assets and income to meet his obligations, the court concluded. The debtor's income is “of little importance where his debts are primarily business debts,” the court said.

By filing this case, the debtor has “effectively tendered all of his non-exempt assets to his creditors,” the court said. Dismissing the case would only favor BB&T over other creditors, according to the court.

Prabodh C. Patel, Straus & Patel, P.A., Altamonte Springs, Fla., represented debtor Eze D. Uche; L. Todd Budgen, Budgen Law Group, Longwood, Fla., represented Trustee Lori Patton.

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To contact the editor responsible for this story: Jay Horowitz at

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