{"ID":55399,"name":"Marrama v. Citizens Bank of Massachusetts","href":"https:\/\/api.oyez.org\/cases\/2006\/05-996","view_count":0,"docket_number":"05-996","additional_docket_numbers":null,"manner_of_jurisdiction":"Writ of \u003Ci\u003Ecertiorari\u003C\/i\u003E","first_party":"Robert Louis Marrama","second_party":"Citizens Bank of Massachusetts et al.","timeline":[{"event":"Granted","dates":[1150088400],"href":"https:\/\/api.oyez.org\/case_timeline\/case_timeline\/39711"},{"event":"Argued","dates":[1162792800],"href":"https:\/\/api.oyez.org\/case_timeline\/case_timeline\/39712"},{"event":"Decided","dates":[1172037600],"href":"https:\/\/api.oyez.org\/case_timeline\/case_timeline\/39713"}],"lower_court":{"ID":6,"name":"United States Court of Appeals for the First Circuit","href":"https:\/\/api.oyez.org\/taxonomy\/term\/6"},"facts_of_the_case":"\u003Cp\u003ERobert Marrama filed for Chapter 7 bankruptcy and agreed to turn over all of his non-exempt assets to a trustee for payment of his creditors. Trustees later accused Marrama of acting in bad faith by attempting to conceal two assets: a tax refund and some real estate. Marrama then moved to convert his bankruptcy petition from Chapter 7 to Chapter 13, which would allow him to keep more of his assets. Citizens Bank, one of Marrama\u0027s creditors, opposed the conversion. Citizens Bank argued that Marrama should not be able to convert to Chapter 13 due to his initial bad faith Chapter 7 petition. The bankruptcy court agreed and denied the conversion.\u003C\/p\u003E\n\u003Cp\u003EThe bankruptcy appeals panel affirmed the court\u0027s ruling. On appeal to the U.S. Court of Appeals for the First Circuit, Marrama argued that the plain language of Section 706(a) of the Bankruptcy Code supported his right to convert to Chapter 13, regardless of the circumstances. Section 706(a) states, \u0022The debtor may convert a case under [Chapter 7] to a case under Chapter 11, 12 or 13 of this title at any time [...]\u0022 Citizens Bank countered that the word \u0022may\u0022 indicates a privilege rather than a right. It also argued that the bankruptcy system could be abused if debtors were able to convert to Chapter 13 after filing bad faith Chapter 7 petitions. The First Circuit upheld the panel\u0027s ruling, denying Marrama his conversion.\u003C\/p\u003E\n","question":"\u003Cp\u003ECan the right in Section 706(a) of the Bankruptcy Code to convert a Chapter 7 bankruptcy to another chapter be denied because of bad faith?\u003C\/p\u003E\n","conclusion":"\u003Cp\u003EYes. In a 5-4 decision, the Court ruled that there is a \u0022bad faith\u0022 exception to the right of conversion in Section 706(a). The opinion by Justice John Paul Stevens held that although the vast majority of Chapter 7 debtors can convert to Chapter 13, a Chapter 7 debtor who engages in bad faith conduct does not qualify as a \u0022debtor\u0022 under Chapter 13 and thus cannot convert his petition. The majority also wrote that courts have the inherent power to deny the motions of litigants who act in bad faith. The Court concluded that \u0022Nothing in the text of [...] 706 [...] limits the authority of the court to take appropriate action in response to fraudulent conduct by the atypical litigant who has demonstrated that he is not entitled to the relief available to the typical debtor.\u0022\u003C\/p\u003E\n","advocates":[{"advocate":{"ID":20612,"name":"David G. 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