In re Jones

• Decision Date: 05 February 2020
• Docket Number: Case No. 18-42354
• Citation: 611 B.R. 279
• Parties: IN RE: Tierra JONES, Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of Michigan

611 B.R. 279

IN RE: Tierra JONES, Debtor.

Case No. 18-42354

United States Bankruptcy Court, E.D. Michigan, Southern Division.

Signed February 5, 2020

Avraham Adler, Advanta Law, PLC, Southfield, Michigan, Attorney for the Debtor.

OPINION AND ORDER DENYING THE DEBTOR'S EX PARTE MOTION TO REOPEN CASE AND TO WAIVE MOTION FILING FEE

Thomas J. Tucker, United States Bankruptcy Judge

This case is before the Court on the Debtor's motion filed February 3, 2020, entitled "Motion To Reopen Case and Waive Reopen Fee" (Docket # 22, the "Motion"). The Motion seeks to reopen this case, to enable the Debtor to file a Financial Management Course Certificate ("Certificate") and receive a discharge. The Motion was filed more than 19 months after this case was closed. The case was closed on June 13, 2018, without a discharge, due to the Debtor's failure to timely file the Certificate. The Motion also seeks a waiver of the filing fee for the Motion. For the following reasons, the Court will deny the Motion in its entirety.

A. Background

With the assistance of her attorney, the Debtor filed a voluntary petition for relief under Chapter 7 on February 23, 2018, commencing this case. That same day, the Clerk issued a notice that the first meeting of creditors would be held on March 28, 2018 at 1:30 p.m. (Docket # 7, the "Notice"). On February 23, 2018, the Notice was served by the Bankruptcy Noticing Center by email on some of the creditors, the Chapter 7 Trustee, and the Debtor's attorney, and on February 25, 2018, the Notice was served by the Bankruptcy Noticing Center by mail on the Debtor and the remainder of creditors (Docket # 8).

Under Fed. R. Bankr. P. 1007(b)(7)(A),¹ 1007(c),² and 4004(c)(1)(H),³ and 11 U.S.C. § 727(a)(11),⁴ to obtain a discharge under 11 U.S.C. § 727, the Debtor was required to file a Certificate "within 60 days after the first date set for the meeting of creditors," which meant that the deadline was May 29, 2018.⁵

Although not required to do so, the Clerk of this Court reminded the Debtor and her attorney of the need to file the Certificate, and of the deadline for doing so, by a notice issued on April 13, 2018 (Docket # 16). The same day, that notice was served on the Debtor's attorney electronically, through the Court's ECF system. And the notice was mailed to the Debtor by the Bankruptcy Noticing Center on April 15, 2018. (Docket # 17). The notice stated the following:

Notice is hereby given that, subject to limited exceptions, a debtor must complete an instructional course in personal financial management in order to receive a discharge. Pursuant to Rule 1007(b)(7) of the Federal Rules of Bankruptcy Procedure, the debtor(s) must complete and file a Certification About a Financial Management Course (Official Form 423) as described in 11 U.S.C. § 111.

Debtor(s) and/or debtor(s)' attorney is/are hereby notified that Official Form 423 must be filed before a discharge can be entered. Debtor(s) and/or debtor(s)' attorney is/are hereby notified that in a chapter 7 case the debtor(s) must file Official Form 423 within 60 days after the first date set for the meeting of creditors under § 341 of the Code.

Failure to file the certification will result in the case being closed without an entry of discharge. If the debtor(s) subsequently file(s) a Motion to Reopen the Case to allow for the filing of the Official Form 423 , the debtor(s) must pay the full reopening fee due for filing the motion.

(Docket # 16) (emphasis in original) (footnote omitted).

The Debtor failed to file the Certificate by the May 29, 2018 deadline, or at anytime thereafter while the case remained open. The Debtor also failed to file a motion to extend the deadline to file the Certificate.

On June 13, 2018, after the case had been fully administered, the case was closed without a discharge, due to the Debtor's failure to file the Certificate. (Docket # 20). Notice of the Final Decree entered that day (Docket # 21) was served on Debtor's counsel by e-mail on June 13, 2018, through the Court's ECF system. And a notice that the Debtor's bankruptcy case had been closed without a discharge was served by the Bankruptcy Noticing Center by mail on June 15, 2018 on all creditors, and on the Debtor. (Docket # 21). Such notice stated: "All creditors and parties in interest are notified that the above-captioned case has been closed without entry of discharge as Debtor(s) did not file Official Form 423, Certification About a Financial Management Course.." (Id. )

More than 19 months later, on February 3, 2020, the Debtor filed the Motion (Docket # 22). The Motion states, in relevant part: "I didn't do my certi[fi]cate of debtor education. [I] thought [I] completed this it totally slipped my mind [I] never know my case wasn't discharged until recently. My lawyer explained what [I] needed to do." (Mot. at ¶¶ 1-2.) Also on February 3, 2020, the Debtor filed a Certificate indicating that she took the financial management course on January 27, 2020 (Docket # 23.)

B. Discussion

The Motion does not allege or demonstrate any valid excuse, (1) why the Debtor failed to timely complete the financial management course and file the required Certificate, more than 19 months ago; (2) why the Debtor waited more than 20 months after the deadline to complete the financial management course; or (3) why the Debtor waited more than 19 months after this case was closed before she moved to reopen it.

Section 350(b) of the Bankruptcy Code, Bankruptcy Rule 5010,⁶ and Local Bankruptcy Rule 5010-1⁷ govern motions to reopen a case for the purpose of filing a Certificate. Bankruptcy Code Section 350(b) states that "a case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause." 11 U.S.C. § 350(b). Here, in essence, the Debtor seeks to reopen the case to move for an order granting Debtor an extension of time to file the Certificate, so the Debtor can obtain a discharge.

"It is well settled that decisions as to whether to reopen bankruptcy cases ... are committed to the sound discretion of the bankruptcy judge ...." Rosinski v. Rosinski (In re Rosinski ), 759 F.2d 539, 540-41 (6th Cir. 1985) (citations omitted). "To make the decision, courts may consider ‘the equities of each case with an eye toward the principles which underlie the Bankruptcy Code." In re Chrisman , No. 09-30662, 2016 WL 4447251, at *1 (Bankr. N.D. Ohio August 22, 2016) (citation omitted). Debtor has the burden of establishing that "cause" exists to reopen this case. See id. (citing Rosinski , 759 F.2d 539 (6th Cir. 1985) ).

Bankruptcy Rule 9006(b)(3) states, in relevant part, that "the court may enlarge the time to file the statement required under Rule 1007(b)(7) [ (the Certificate) ] ... only to the extent and under the conditions state in Rule 1007(c). Fed. R. Bankr. P. 9006(b)(3). Bankruptcy Rule 1007(c), in turn, permits a bankruptcy court "at any time and in its discretion, [to] enlarge the time to file the statement required by subdivision (b)(7) [of Bankruptcy Rule 1007(c) [ (namely, a Certificate) ]." Fed. R. Bankr. P. 1007(c). However, with an exception not applicable here, any such extension "may be granted only on motion for cause shown and on notice to the United States trustee, any committee elected under § 705 or appointed under § 1102 of the Code, trustee, examiner, or other party as the court may direct." Fed. R. Bankr. P. 1007(c) (emphasis added).

Several reported bankruptcy cases, including cases decided by the undersigned judge, have considered whether "cause" exists to grant a debtor's motion to reopen a case to file a Certificate after the debtor's case was closed without a discharge. Such cases apply a four-part test, and have denied the motion where the Debtor had not completed a post-petition financial management course and filed the motion to reopen and a Certificate within a relatively short time after the case was closed. The four factors that these cases have considered are: "(1) whether there is a reasonable explanation for the failure to comply; (2) whether the request was timely; (3) whether fault lies with counsel; and (4) whether creditors are prejudiced." See , e.g. , In re Barrett, 569 B.R. 687, 690-92 (Bankr. E.D. Mich. 2017) (apply the 4-part test and denying a Debtor's motion to reopen to file a Certificate where the debtor had not completed the post-petition financial management course and did not file the motion to reopen and Certificate until more than 8 years after the case was closed); In re Chrisman , No. 09-30662, 2016 WL 4447251, at *2-3 (Bankr. N.D. Ohio Aug. 22, 2016) (denying a Debtor's motion to reopen to file a Certificate where the debtor had not completed the post-petition financial management course and did not file the motion to reopen and Certificate until more than 7 years after the case was closed); In re McGuiness , No. 08-10746, 2015 WL 6395655, at *2, 4 (Bankr. D.R.I. Oct. 22, 2015) (more than 7 year delay); In re Johnson , 500 B.R. 594, 597 (Bankr. D. Minn. 2013) (more than 4 year delay); cf. In re Heinbuch , No. 06-60670, 2016 WL 1417913, *3-4 (Bankr. N.D. Ohio April 7, 2016) (approximately 7 year delay).

This Court has denied motions to reopen in several cases, where the delay ranged from 10 months to more than 8 years. See In re Lockhart , 582 B.R. 1, 6 (2018) (delay of more than 1 year); Barrett , 569 B.R. at 688 (delay of more than 8 years) ; In re Szczepanski , 596 B.R. 859 (Bankr. E.D. Mich. 2019) (delay of more than 15 months); In re Kessler , 588 B.R. 191 (Bankr. E.D. Mich. 2018) (delay of 5 years); In re Moore , 591 B.R. 680 (Bankr. E.D. Mich. 2018) (delay of 10 months); In re Garnett , 579 B.R. 818, 823 (Bankr. E.D. Mich. 2018) (delay of more than 5 and one half years); In re Rondeau , 574 B.R. 824 (Bankr. E.D. Mich. 2017) (delay of more than 3 years); In re Wilson , 575 B.R. 783 (Bankr. E.D. Mich. 2017) (delay of almost 15 months); In re Whitaker , 574 B.R. 819 (Bankr. E.D. Mich 2...