Alton, In re

• Decision Date: 12 February 1988
• Docket Number: No. 87-3366,87-3366
• Citation: 18 C.B.C.2d 326,837 F.2d 457
• Parties: 18 Collier Bankr.Cas.2d 326, Bankr. L. Rep. P 72,200 In re William M. ALTON, Debtor. Bronson F. BYRD, Plaintiff-Appellant, v. William A. ALTON, Defendant-Appellee. Non-Argument Calendar.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 457

837 F.2d 457

18 Collier Bankr.Cas.2d 326, Bankr. L. Rep. P 72,200

In re William M. ALTON, Debtor.

Bronson F. BYRD, Plaintiff-Appellant, v. William A. ALTON, Defendant-Appellee.

No. 87-3366

Non-Argument Calendar.

United States Court of Appeals, Eleventh Circuit.

Feb. 12, 1988.

Francis P. Dicello, Hazel, Buckhorn & Hanes, Washington, D.C., for plaintiff-appellant.

C. Kathryn Preston, Stitcher & Reidel, P.A., Tampa, Fla., for defendant-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before VANCE, CLARK and EDMONDSON, Circuit Judges.

PER CURIAM:

This appeal turns on the question of when one may move for an extension of time under Fed.R.Bankr.P. 4007(c) regarding the dischargeability of debts. Because we find that the District Court correctly upheld the Bankruptcy Court's ruling that such request for extension must be filed before the time period for filing a dischargeability complaint has run, we affirm the District Court's decision.

In August 1985, Bronson Byrd, appellant in this case, filed suit against William Alton, debtor in the bankruptcy proceeding from which this appeal stems, in federal court in Virginia to recover monies that Alton had allegedly taken or withheld fraudulently. At that time Alton had not filed a bankruptcy petition. Several months later, on November 7, 1985, Alton filed a Chapter 11 petition in Florida. On November 26, 1985, debtor Alton's counsel filed notices of Chapter 11 reorganization and of automatic stay. On the same day a copy of such notice was sent to Byrd's counsel, although the notice was not dated and did not indicate the date of the Chapter 11 filing or the date set for the creditors' meeting. Appellant acknowledges that this notice was received.

Because Alton never listed Byrd as a creditor on Alton's bankruptcy petition, neither Byrd nor his counsel received notice from the court of either the creditors' meeting or of the last day to file complaints regarding dischargeability of debts. Only several weeks after the bar date had passed did Byrd learn of the deadline; he thereafter filed an application for an extension of time to file a complaint with the Bankruptcy Court.

Under the Bankruptcy Code, upon confirmation of a Chapter 11 debtor's plan of reorganization, unsecured debts included in the debtor's plan are discharged. 11 U.S.C. sec. 1141. Excepted from such discharge, however, are debts arising from fraudulent or malicious conduct, if the creditor files a complaint in a timely manner, that is, "not later than 60 days following the first date set for the meeting of creditors," and prevails on that complaint. Fed.R.Bankr.P. 4007(c) and 11 U.S.C. sec. 523(a)(2), (a)(4), (a)(6).

In this case, because Byrd filed no complaint against discharge within the applicable time period and because he had filed no motion for extension before the applicable time period expired, the Bankruptcy Court denied his application, 64 B.R. 221. That court stated that Byrd had been on timely notice of the Chapter 11 proceeding and therefore had a duty to inform himself about hearing dates and bar dates. The District Court affirmed the Bankruptcy Court decision.

Creditor Byrd brings the present appeal on three grounds. He contends first, that because he received no notice from the court as required by Rule 4007(c), his request for an extension of time to file a dischargeability complaint is not barred under that same rule. He next contends that the denial of his request to file a dischargeability complaint when he never received the required notice of the bar date is a violation of his fifth amendment right of due process. Finally Byrd contends that principles of equity demand that he be allowed to file his dischargeability complaint, because it was debtor's own conduct that caused Byrd to miss the filing deadline.

At the outset, we reject Byrd's equities argument. It is true that there are some disturbing aspects to this case. We are particularly troubled that debtor Alton did not include appellant Byrd on the list of creditors made out pursuant to 11 U.S.C. sec. 521 and filed with his bankruptcy petition; and yet, some three weeks later, debtor Alton, through his attorneys, sent Byrd notice of the petition for a Chapter 11 reorganization and notice of the automatic stay. Thus, debtor Alton, by his own actions, first deprived creditor Byrd of official notice at various stages of the proceedings pursuant to the Bankruptcy Code by omitting Byrd from the creditor list; and Alton then put Byrd on actual notice that a proceeding was pending by mailing the notice of the proceeding and of the stay. ¹

The actual notice deprived Byrd of making any later claim of nondischargeability of his claim on the ground of lack of knowledge. See 11 U.S.C. sec. 523(a)(3)(B). At the same time, the actual notice from the debtor might well have led creditor Byrd to believe that debtor Alton recognized Byrd as a creditor and had probably named Byrd on the creditor list in the bankruptcy proceeding as required by the Bankruptcy Code. Debtor Alton's actual notice to Byrd thus could have induced creditor Byrd to believe that Byrd would receive the normal notices from the court of the dates for the creditors' meeting and the bar date for filing a complaint regarding the dischargeability of debts.

Appellant emphasizes these harsh facts. "We agree that this is a hard case, but we cannot agree that it should be allowed to make bad law." FCC v. Woko, Inc., 329 U.S. 223, 229, 67 S.Ct. 213, 216, 91 L.Ed. 204 (1946) (Jackson, J.). Despite the misleading actions, inadvertent or intentional, of debtor Alton, the time specifications set out in the Bankruptcy Code are sufficiently clear to have placed an obligation on creditor Byrd to follow the case and to take the timely action necessary to pursue his claim. We leave it to the Bankruptcy Court to decide whether debtor Alton's actions, if in bad faith, can and should affect confirmation of his reorganization plan. Appellant's equities argument is thus rejected.

Appellant's interpretation of the Bankruptcy Code and Rules is also unavailing. The dictates of the Code and Rules are clear. It is not our place to change them. Under Rule 4007(c), ² any motion to extend the time period for filing a dischargeability complaint must be made before the running of that period. There is "almost universal agreement that the provisions of F.R.B.P. 4007(c) are mandatory and do not allow the Court any discretion to grant a late filed motion to extend time to file a dischargeability complaint." See In re Maher, 51 B.R. 848, 852 (Bankr.N.D.Iowa 1985) (and cases cited therein).

If a motion were to be effective, appellant Byrd would have had to have moved for extension no later than February 11, 1986; he first filed his motion on February 27, 1986. Byrd argues, however, that his dischargeability complaint needs to be filed within sixty days after the first date set for the creditors' meeting only if the other provisions of Rule 4007(c) have been met--that is, if the court sent him notice of the creditors' meeting. Because Byrd received actual notice of a bankruptcy proceeding with sufficient time to allow him to file a timely dischargeability complaint, his argument on this point fails. The motion was correctly dismissed as untimely. See Neeley v. Murchison, 815 F.2d 345 (5th Cir.1987) (bankruptcy clerk's failure to provide notice of dischargeability date and oral assertions of clerk's office employees that no date had been set did not suspend running of sixty-day period; creditor had actual notice of proceeding so that purposes of notice were met); In re Rhodes, 61 B.R. 626 (9th Cir.BAP 1986) (although neither creditor nor attorney received notice from court of dischargeability bar date, if they had reviewed bankruptcy file upon learning of the proceeding, they would have had ample time to file complaint before bar date; their complaint was properly denied as untimely).

Section 523(a)(3)(B) specifically provides that when a debtor fails to list those debts incurred fraudulently or incurred because of malicious injury to another or lists them too late to allow a creditor to file a proof of claim and a dischargeability complaint in timely manner, then those debts will be undischarged "unless such creditor had notice or actual knowledge of the case in time for such timely filing and request" (emphasis added). ³ The statutory language clearly contemplates that mere knowledge of a pending bankruptcy proceeding is sufficient to bar the claim of a creditor who took no action, whether or not that creditor received official notice from the court of various pertinent dates. This furthers the bankruptcy...