In re DeGour

MEMORANDUM DECISION RE TRUSTEE’S MOTION TO DISMISS BANKRUPTCY CASE

Before the court is the motion (the “Motion,” docket no. 26) filed by Wesley H. Avery, the chapter 12 trustee (the “Trustee”), to dismiss this case because the debtors are not eligible for relief under *2 chapter 12. The Bank of New York Mellon Trust Company, N.A. (“Mellon”), a creditor of the debtors, supports the Motion. Robert DeGour and Lynn Randle (the “Debtors”) oppose the Motion.

There is little guidance from case law regarding the chapter 12 eligibility issues raised in the Motion. At the court’s request, the parties submitted supplemental briefs and evidence on a number of issues and appeared at several hearings on the Motion. When the parties submitted their final briefs and appeared at the final hearing on the Motion, the question presented was clear: whether the gross income of a non-farming California subchapter S corporation wholly owned by the Debtor wife should be included in the Debtors’ gross income when determining whether the Debtors had sufficient farming income to be eligible chapter 12 debtors. To answer this question, the court must also determine the meaning of “gross income,” a term used…