Diahann Grasty v. Marilyn Marshall

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604

Submitted April 2, 2020*
Decided April 2, 2020

Before

DIANE P. WOOD, Chief Judge

JOEL M. FLAUM, Circuit Judge

AMY C. BARRETT, Circuit Judge

No. 19-3199

IN RE: DIAHANN GRASTY, Appeal from the United States District
Debtor-Appellant. Court for the Northern District of Illinois,
Eastern Division.

No. 19-cv-3044

Sharon Johnson Coleman,
Judge.

ORDER

After Diahann Grasty repeatedly failed to make payments required by her
bankruptcy plan, the bankruptcy court dismissed her petition for material default. The
district court affirmed the dismissal. On appeal, Grasty contends that the bankruptcy

* The appellee (the bankruptcy trustee) notified the court that she is not
participating in the appeal. We have agreed to decide this case without oral argument
because the brief and record adequately present the facts and legal arguments, and oral
argument would not significantly aid the court. FED. R. APP. P. 34(a)(2)(C).
No. 19-3199 Page 2

court and district court were biased against her and that the bankruptcy court
erroneously dismissed her case. Grasty’s arguments are meritless, so we affirm.

Grasty filed a Chapter 13 bankruptcy petition in January 2018. (A Chapter 13
bankruptcy allows a debtor to voluntarily propose a plan to reorganize her debts for
repayment. 11 U.S.C. § 1322; Matter of Lisse, 921 F.3d 629, 638 (7th Cir. 2019).) Grasty
initially proposed paying $30 per month for 60 months, but after amending her plan
twice, she ultimately agreed to pay $84.26 per month for 60 months. The bankruptcy
court confirmed this plan in June 2018.

The trustee moved to dismiss the bankruptcy case five months later, contending
that Grasty had not been making full payments under the plan, was in default, and
owed over $400. In response, Grasty filed a motion for a hardship discharge, arguing
that her financial situation had changed and requesting that her monthly payments be
reduced to a more manageable amount.

The bankruptcy court held a hearing to address these motions. Grasty admitted
that she had not submitted a full payment every month as required by the plan. She
also expressed confusion about the plan, including whether her payment obligations
began when she first submitted the plan or when it was confirmed, and when her
monthly payment had increased from $30 to $84.26. She also disputed (without
evidence) the amount the trustee claimed she owed.

The bankruptcy court first explained that Grasty had not demonstrated that she
qualified for a hardship discharge under 11 U.S.C. § 1328(b), as she had not shown an
inability to make payments. The court did, however, acknowledge Grasty’s confusion
about her responsibilities under the plan and delayed ruling on the motion to dismiss.
The court implored Grasty to work with the trustee to resolve her confusion and find a
solution to her default.

The court then conducted two more hearings, but Grasty continued to express
confusion and request a hardship discharge. The court reiterated that Grasty had not
proved that she qualified for the discharge. Recognizing Grasty’s lasting confusion,
however, the court again delayed ruling on the trustee’s motion to dismiss and found a
volunteer lawyer to assist Grasty.

The bankruptcy court conducted three more hearings, with counsel for Grasty
appearing at each one. At the sixth hearing, however, counsel moved to withdraw from
No. 19-3199 Page 3

representing Grasty because of irreconcilable differences and an inability to
communicate with her about her options to cure the default. At that point, the
bankruptcy court explained that it could no longer delay ruling on the motion to
dismiss. Grasty had not proposed a viable alternative to the dismissal of her petition,
and throughout the six months that the motion to dismiss had been pending, Grasty
continued to miss payments and now owed approximately $700. The court therefore
dismissed Grasty’s bankruptcy petition based on her default. See 11 U.S.C. § 1307(c)(6).

Grasty appealed the dismissal of her case to the district court. She argued that
the bankruptcy court erred by not granting her a hardship discharge, that the
bankruptcy judge should have recused himself from the case, and that both the
bankruptcy court and the district court lacked subject-matter jurisdiction over her case.
The district court rejected Grasty’s contentions and concluded that the bankruptcy court
did not abuse its discretion by dismissing her petition for material default.

Now on appeal to this court, Grasty devotes most of her brief to arguing that
both the district judge and the bankruptcy judge were biased and should have recused
themselves from the case. But Grasty offers only allegations so unfounded and, at times,
extreme, that we do not repeat them. She says nothing to suggest that either judge
revealed favoritism or antagonism that made a fair judgment impossible. See Liteky v.
United States, 510 U.S. 540, 555 (1994). Nor does the record reveal such bias. Grasty
disagrees with the rulings against her, but “[a]dverse rulings do not constitute evidence
of judicial bias.” Thomas v. Reese, 787 F.3d 845, 849 (7th Cir. 2015).

Grasty also contends that the bankruptcy court wrongly dismissed her
bankruptcy petition for material default. We review findings of fact for clear error and
the dismissal of a bankruptcy petition for material default for abuse of discretion.
See 11 U.S.C. § 1307(c)(6); In re Wiese, 552 F.3d 584, 588 (7th Cir. 2009). The bankruptcy
court dismissed Grasty’s petition after finding that, at the time of the ruling, she had
defaulted on her payment plan and was behind approximately $700 in plan payments.
Grasty attempts to cast doubt on that conclusion by asserting, with no support, that she
had been in default for less than one month and that the trustee lied about how much
she owed. But she did not raise these arguments in the bankruptcy court and, what’s
more, she acknowledged there that she was in default and had not adhered to her
payment plan for several months. Grasty presents no basis on which we could conclude
that the bankruptcy court’s finding of default was clearly erroneous or that it abused its
discretion when dismissing her case. See In re Wiese, 552 F.3d at 588 (bankruptcy court
No. 19-3199 Page 4

abuses discretion when decision premised on incorrect legal principle or clearly
erroneous factual finding).

We have considered Grasty’s remaining arguments, and none has merit.

AFFIRMED