Bricker v. Scalera (In re Scalera), Bankruptcy No. 11-27241-CMB
| Decision Date | 08 November 2013 |
| Docket Number | Adversary No. 13-02103-CMB,Bankruptcy No. 11-27241-CMB |
| Parties | IN RE: William F. Scalera, Debtor, Kenneth G. Bricker, Ellen Bricker, Pamela J. Meier, Richard F. Monning and Linda B. Monning, Plaintiffs, v. William F. Scalera, Defendant. |
| Court | United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Western District of Pennsylvania |
Appearances: Peter V. Marcoline, Jr., Esq., for the Plaintiffs
Francis E. Corbett, Esq., for Defendant/Debtor.
The matter before the Court is the Defendant's Motion for Summary Judgment ("Motion for Summary Judgment") filed by Defendant/Debtor, William F. Scalera, in the above-captioned adversary proceeding. Plaintiffs commenced the within adversary proceeding by filing their Complaint to Determine Dischargeability of Debt followed by an Amended Complaint to Determine Dischargeability of Debt (hereinafter the "Complaint") seeking exceptions fromdischarge for certain judgments pursuant to 11 U.S.C. §1328(a)(2)1 and §523(a)(19)(A)(i).2 Debtor avers that Plaintiffs' Complaint is time-barred and as such, Debtor is entitled to summary judgment as a matter of law.
The standard for evaluating motions for summary judgment set forth in Fed.R.Civ.P. 56, made applicable to the within adversary proceeding by Fed.R.Bankr.P. 7056, provides that "the court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The moving party has the initial burden of identifying evidence which demonstrates the absence of material fact. Rosen v. Bezner, 996 F.2d 1527, 1530 (3d Cir.1993). Said burden may be satisfied by citing to materials in the record, including depositions, documents, affidavits, stipulations, admissions, and interrogatory answers. See Fed.R.Civ.P. 56(c). When deciding a motion for summary judgment, the court shall draw all inferences from the underlying facts in the light most favorable to the non-moving party. Bezner, 996 F.2d at 1530.
The underlying facts of the matter are not in dispute. Following a bifurcated non-jury trial, on May 2, 2011, the Honorable R. Stanton Wettick, Jr. of the Court of Common Pleas of Allegheny County, Pennsylvania entered a Decision and Order of Court3 finding that Plaintiffswere entitled to a verdict against Debtor on claims brought under §1-503(a) of the Pennsylvania Securities Act. A non-jury trial to establish damages was scheduled for December 1, 2011, however Debtor filed a Voluntary Petition under Chapter 7 of the Bankruptcy Code on November 30, 2011, effectively staying said trial. On December 7, 2011, Plaintiffs filed their Motion for Relief from Automatic Stay Pursuant to 11 USC §362(d)(1) ("Motion for Relief") seeking relief to pursue a money judgment against Debtor. Debtor did not oppose the Motion for Relief and an Order granting Plaintiffs relief from stay was entered by the Court on January 24, 2012. Debtor's first §341(a) Meeting of Creditors was held on January 23, 2012. In advance of this Meeting of Creditors, on December 27, 2011 the Court issued a Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines ("Notice").
On March 22, 2012, the non-jury trial was held to determine damages in the state court action and verdicts were entered on December 18, 2012. In the interim, Debtor was granted a discharge on November 12, 2012. Plaintiffs commenced the within adversary proceeding by filing their Complaint to Determine Dischargeability seeking exceptions from discharge for certain judgments pursuant to 11 U.S.C. §1328(a)(2) and §523(a)(19)(A)(i) on March 20, 2013; 423 days after the first set §341(a) Meeting of Creditors. The following day, Plaintiffs filed their Amended Complaint to Determine Dischargeability seeking relief on the same grounds as the Complaint to Determine Dischargeability. On April 22, 2013, Debtor filed his answer to the Complaint averring that the Complaint was untimely and a pretrial conference was held June 25, 2013. At the pretrial conference, the parties represented to the Court that no hearing was required to resolve the issue of timeliness and that such determination would be made on motion for summary judgment and briefs. A scheduling order was issued on June 26, 2013, and thewithin Motion for Summary Judgment seeking dismissal of the Complaint for untimeliness was filed on August 26, 2013. Plaintiffs' Response in Opposition to Defendant William F. Scalera's Motion for Summary Judgment ("Response to Motion for Summary Judgment") was filed September 5, 2013, and the parties' briefs were both filed on October 22, 2013.
At the outset of this analysis, the Court notes that Debtor's Motion for Summary Judgment fails to cite to any authority supporting its contention that the Complaint is time-barred.4 However, in Defendant's Brief in Support of Motion for Summary Judgment ("Brief in Support") Debtor cites to an excerpt from 421 Chestnut Partners, LP v. Aloia (In re Aloia), 496 B.R. 366, 380 (Bankr.E.D.Pa. 2013) as providing a "good summary of the Rule and standards behind the deadline set forth therein." In doing so, Debtor adopts by reference the statements set forth in the quotation. Specifically, Federal Rule of Bankruptcy Procedure 4004 mandates the filing of objections to discharge within sixty days of the first set meeting of creditors pursuant to §341 and Rule 2003(a). Thus, Debtor premises his argument that the Complaint is untimely, and therefore Debtor is entitled to summary judgment and dismissal of the Complaint, on Plaintiffs' failure to comply with the time constraints for filing an objection to discharge under Rule 4004. The Court rejects this position.
Rule 4004 states that "[i]n a chapter 7 case, a complaint, or a motion under §727(a)(8) or (a)(9) of the Code, objecting to the debtor's discharge shall be filed no later than 60 days after the first date set for the meeting of creditors under §341(a)." Fed.R.Bankr.P. 4004 (emphasis added). A plain reading of Rule 4004 reveals it to be inapplicable to the within matter. In the Complaint, Plaintiffs seek to deny dischargeability of a particular debt and not to deny Debtor's discharge generally, two wholly distinguishable actions the timeliness of which are governed by separate procedural rules.
"Dischargeability" and "objections to discharge" are two (2) distinct proceedings, with different outcomes (nondischargeability of a single debt versus nondischargeability of all debts). They are based on different Bankruptcy Code provisions (§ 523(a) versus § 727(a)). And, most significantly for our purposes, the two (2) types of proceedings are governed by different procedural rules (Rule 4007 versus Rule 4004). Simply put, Rule 4007 has no applicability whatsoever to an objection to discharge; such a proceeding is governed solely by Rule 4004. See In re Saunders, 440 B.R. 336, 349 (Bankr.E.D.Pa.2006) ().
In re Pocius, BR 12-19380 ELF, 2013 WL 5777296, at *2 (Bankr.E.D.Pa. Oct. 24, 2013).
In contrast to objections to discharge, the timelines for filing a complaint to determine dischargeability of a debt pursuant to 11 U.S.C. §523 are set by Fed.R.Bankr.P. 4007, which, in itself, distinguishes between actions which are and are not brought under §523(c). See Fed.R.Bankr.P. 4007(b) and (c). According to Rule 4007, Fed.R.Bankr.P. 4007(b). Conversely, in a chapter 7 liquidation, a complaint brought pursuant to §523(c), " . . . shall be filed no later than 60 days after the first date set for the meeting ofcreditors under § 341(a)." Fed.R.Bankr.P. 4007(c). Thus, the timeliness of Plaintiffs' Complaint turns on whether its underlying cause of action falls within the purview of §523(c).
11 U.S.C. §523(c) provides:
(c)(1) Except as provided in subsection (a)(3)(B) of this section, the debtor shall be discharged from a debt of a kind specified in paragraph (2), (4), or (6) of subsection (a) of this section, unless, on request of the creditor to whom such debt is owed, and after notice and a hearing, the court determines such debt to be excepted from discharge under paragraph (2), (4), or (6), as the case may be, of subsection (a) of this section.
(2) Paragraph (1) shall not apply in the case of a Federal depository institutions regulatory agency seeking, in its capacity as conservator, receiver, or liquidating agent for an insured depository institution, to recover a debt described in subsection (a)(2), (a)(4), (a)(6), or (a)(11) owed to such institution by an institution-affiliated party unless the receiver, conservator, or liquidating agent was appointed in time to reasonably comply, or for a Federal depository institutions regulatory agency acting in its corporate capacity as a successor to such receiver, conservator, or liquidating agent to reasonably comply, with subsection (a)(3)(B) as a creditor of such institution-affiliated party with respect to such debt.
On its face, §523(c) fails to expressly include, and therefore appears to exclude, actions brought pursuant to §523(a)(19). This conclusion is supported by the findings of other courts both within and outside of the Third Circuit which hold that §523(a)(19) does not fall within the bounds of §523(c). See In re Chan, 355 B.R. 494, 503 (Bankr.E.D.Pa.2006)("A second significant aspect of §523(a)(19) is that determination of dischargeability under the provision is not committed exclusively to the bankruptcy court by 11 U.S.C. §523(c)."); Guerriero v. Kilroy (In re Kilroy), 354 B.R. 476, 486 (Bankr.S.D. Texas 2006)("Since §523(a)(19) is not included under §523(c),...
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