Christopher Alan Mullins and Brittany Renee Mullins

MEMORANDUM OF DECISION - 1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF IDAHO
______________________________________________________
In Re:
Bankruptcy Case
CHRISTOPHER MULLINS and 	No. 05-40734
BRITTANY MULLINS,
Debtors.
______________________________________________________
MEMORANDUM OF DECISION
______________________________________________________
Appearances:
Jay A. Kohler, Idaho Falls, Idaho, Attorney for Debtors.
Gary L. McClendon, Office of the U.S. Trustee, Boise, Idaho.
L. D. Fitzgerald, Pocatello, Idaho, Chapter 13 Trustee.
The United States Trustee filed a motion to transfer or dismiss this
Chapter 13 bankruptcy case on the basis of improper venue. Christopher and
Brittany Mullins, the Chapter 13 debtors, concede venue is improper in the
District of Idaho, but argue the Court has discretion to retain an improperly
venued case. The Court heard oral argument from the parties on July 26, 2005.
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MEMORANDUM OF DECISION - 2
They were given until July 29, 2005, to file any additional briefs. The United
States Trustee filed a brief, Docket No. 27; Debtors did not.
The Court concludes it has no discretion to administer an improperly
venued case. The following constitutes the Court’s findings of fact, conclusion of
law and disposition of the issue. Fed. R. Bankr. P. 7052; 9014.
Factual Background
Prior to moving to Idaho, the Debtors, husband and wife, lived in
Utah. They filed a Chapter 13 bankruptcy case in that district in April 2004.
Apparently, on the advice of Utah counsel, the Debtors dismissed their Utah
bankruptcy case with the intent to immediately file for bankruptcy once they
moved to Idaho.
Debtors moved to Idaho in April, 2005 for employment purposes.
On April 15, 2005, just a few days after moving in to Idaho, Debtors filed for
bankruptcy under Chapter 13 of the Code. Nothing in the record suggests that
Debtors’ move to Idaho and immediate bankruptcy filing here were done with
improper motives or in an attempt to avoid their creditors. On their petition,
Debtors marked the following statement pertaining to venue:
Debtor has been domiciled or has had a residence,
principal place of business, or principal assets in this
District for 180 days immediately preceding the date
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MEMORANDUM OF DECISION - 3
of this petition or for a longer part of such 180 days
than in any other District.
Docket No. 1.
The U.S. Trustee argues that pursuant to 28 U.S.C. § 1408, venue is
improper in Idaho because Debtors have not lived here for the majority of the past
180 days. And according to the U.S. Trustee, if venue is improper, the Court lacks
discretion to take any action other than to transfer or dismiss the case. Debtors
concede they have not lived in Idaho for the majority of the 180 days preceding
the filing, but argue the Court has discretion to retain the case.
Disposition
Venue for a bankruptcy case is set forth in 28 U.S.C. § 1408. Venue
is proper in the district,
(1) in which the domicile, residence, principal
place of business in the United States, or principal
assets in the Untied States, of the person or entity that
is the subject of such case have been located for the
one hundred and eighty days immediately preceding
such commencement, or for a longer portion of such
one-hundred-and-eighty day period than the domicile,
residence, or principal place of business, in the United
States, or principal assets in the United States, of such
person were located in any other district; or
(2) in which there is pending a case under title
11 concerning such person’s affiliate, general partner,
or partnership.
28 U.S.C. § 1408.
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MEMORANDUM OF DECISION - 4
The law in this District is settled that the Court lacks discretion
under 28 U.S.C. § 1408 to retain cases filed in the improper venue. “Under the
provisions of Bankruptcy Rule 1014(a)(2) upon such a finding [of improper
venue] this court has only the option of dismissing the case or transferring the case
to another district.” In re Thornberry, 90 I.B.C.R. 129, 129 (Bankr. D. Idaho
1990).
In support of their argument to the contrary Debtors cite to In re
Hall, 128 B.R. 168 (Bankr. S.D. Tex. 1990). In Hall, the debtors lived in Las
Cruces, New Mexico but filed bankruptcy in El Paso, Texas. The Court denied
the motion to dismiss or transfer venue, reasoning that while venue in the
Southern District of Texas was improper, pursuant to Fed. R. Bankr. P.
1014(a)(2), in the interest of justice and for the convenience of the parties, the case
would remain in Texas. Id. at 170. The Texas Court applied Rule 1014(a)(2) to
transfer venue to itself.
The result in Hall is inconsistent with this Court’s decisions
interpreting Rule 1014(a)(2). That Rule provides:
Cases Filed in Improper District. If a petition is filed
in an improper district, on timely motion of a party in
interest and after hearing on notice to the petitioners,
the United States trustee, and other entities as directed
by the court, the case may be dismissed or transferred
to any other district if the court determines that transfer
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MEMORANDUM OF DECISION - 5
is in the interest of justice or for the convenience of the
parties.
Fed. R. Bankr. P. 1014(a)(2). As this Court has previously explained:
Rule 1014 leaves a bankruptcy court with but two
options when faced with a case filed in the wrong
venue: to dismiss the case; or to transfer the case to
another district. In re Thornberry, 90 I.B.C.R. 129
(Bankr. D. Idaho 1990). See also In re Petrie, 142
B.R. 404, 405-06 (Bankr. D. Nev. 1992) (although
there is a split of authority, the majority of courts hold
that a court cannot retain an improperly venued case
over an objection of a party in interest).
In Petrie, the court recognized “that, on occasion,
quirks of geography . . . make it necessary for a case to
be heard in the closest court, even if that court is in
another state.” In re Petrie, 142 B.R. at 407.
However, the Petrie court went on to hold that it is the
role of the “home court” or district in which venue is
proper, to determine whether a change of venue is
appropriate under 28 U.S.C. § 1412.
In re Sauer, 00.3 I.B.C.R. 127, 129 (Bankr. D. Idaho 2000) (quoting In re Corona,
Bankr. Case No. 00-00200, Summ. Order at 2–3 (Bankr. D. Idaho April 21,
2000)).
Conclusion
Debtors concede they filed their bankruptcy case in the improper
venue. This Court lacks discretion to retain a case filed improperly in this District.
Debtors have not indicated to the Court whether they would prefer a transfer or
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MEMORANDUM OF DECISION - 6
dismissal of the case. Pursuant to Rule 1014, the Court concludes the U.S.
Trustee’s motion should be granted and this case should be transferred to the
District of Utah. If Debtors choose to do so, they may ask the Utah court, as the
“home court,” to change venue to Idaho. In the alternative, Debtors will be
allowed a brief time to voluntarily dismiss this case, 11 U.S.C. § 1307(b), so that
they may refile it in Idaho, assuming venue would now be proper. A separate
order will be entered.
Dated: August 22, 2005
Honorable Jim D. Pappas
United States Bankruptcy Judge
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