Frank v. Ward (In re Ward), CASE NO. 14-32939-BJH
| Decision Date | 26 January 2017 |
| Docket Number | ADV. PROC. NO. 15-3050-BJH,CASE NO. 14-32939-BJH |
| Parties | IN RE: LLOYD EUGENE WARD, DEBTOR. MICHAEL FRANK, DANA BLOCK, GREG BURKE, JESSICA CASEY, VICTORIA CASTILLO, JEREMY COZARD, JOHNNY KEEL, VALLERY MANN, JO MINAYA, BRIAN PARKER, CHRISTOPER PITRE, TIM CARR, CODDI DEAN and JOHN NELSON and ROBERT YAQUINTO, TRUSTEE, PLAINTIFFS, v. LLOYD WARD, DEFENDANT. |
| Court | U.S. Bankruptcy Court — Northern District of Texas |
The following constitutes the ruling of the court and has the force and effect therein described.
The Court tried this adversary proceeding (the "Adversary Proceeding") on December 12-14, 2016. Following trial, the Court directed the parties to file amended proposed findings of fact and conclusions of law with citations to the trial record. The last of those pleadings was filed on January 3, 2017, following which the Court took the matter under advisement. This Memorandum Opinion contains the Court's findings of fact and conclusions of law pursuant to Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") 7052 and 9014.
The U.S. District Court for the Northern District of Texas has subject matter jurisdiction over this proceeding under 28 U.S.C. § 1334. Although bankruptcy courts do not have independent subject matter jurisdiction over bankruptcy cases and proceedings, 28 U.S.C. § 151 grants bankruptcy courts the power to exercise certain "authority conferred" upon the district courts by title 28. Under 28 U.S.C. § 157, the district courts may refer bankruptcy cases and proceedings to the bankruptcy courts for entry of either a final judgment (core proceedings) or proposed findings and conclusions (noncore, related-to proceedings). So, as relevant here, this Court exercises authority over the Chapter 7 bankruptcy case of Lloyd Ward ("Ward") and this Adversary Proceeding pursuant to the Order of Reference of Bankruptcy Cases and Proceedings Nunc Pro Tunc adopted in this district on August 3, 1984. Venue is proper with this Court under 28 U.S.C. § 1409.
Chapter 7 trustee Robert Yaquinto (the "Trustee") and the Judgment Creditors1 (collectively, the "Plaintiffs") request that this Court deny Ward's receipt of a discharge under various subsections of 11 U.S.C. §§ 727(a), while the Judgment Creditors also request that thisCourt find a final, prepetition judgment they hold against Ward (the "Judgment")2 to be nondischargeable in accordance with 11 U.S.C. § 523(a)(6). A complaint seeking a determination of whether (i) the debtor is entitled to a discharge, and/or (ii) a debt is nondischargeable is a core proceeding under 28 U.S.C. § 157(b)(2)(I) and (O). Accordingly, this Court has statutory authority to hear and finally determine this Adversary Proceeding. Moreover, this Court has constitutional authority to enter a final judgment in this Adversary Proceeding, which arises solely under 11 U.S.C. §§ 727 and 523 and raises no ancillary issues that may implicate the holding in Stern v. Marshall, 564 U.S. 462 (2011).
Ward is a lawyer licensed to practice in the state of Texas. Joint Pretrial Order [AP3 ECF No. 131] at 12 (Stipulated Fact No. 56). On May 1, 2014 (the "Petition Date"), Ward filed a voluntary petition (the "Petition") for relief under Chapter 7 of title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Texas, Sherman Division (the "EDTex Court"), initiating the above-referenced bankruptcy case denoted in the EDTex Court as Case No. 14-40933 (the "Case"). Id. at 5 (Stipulated Fact No. 1); DX4 3 at 1 of 56.5
Along with the Petition, Ward filed his bankruptcy schedules (DX 3 at 6 of 56, the "Schedules") and Statement of Financial Affairs (DX 3 at 29 of 56, the "SOFA"). Joint Pretrial Order at 5 (Stipulated Fact No. 5). On January 23, 2015, Ward filed amended Schedules B, C, F, H, I, and J (DX 16, the "Amended Schedules") and an amended SOFA (DX 18, the "Amended SOFA"). Id.
On May 13, 2014, the Judgment Creditors, with the Defendant's consent, filed their unopposed motion in the EDTex Court (the "Venue Motion") seeking to transfer the Case to the Bankruptcy Court for the Northern District of Texas, Dallas Division (the "Court"). Id. at 6 (Stipulated Fact No. 7). Ward's principal place of business and domicile are within the Northern District of Texas. Id. at 5 (Stipulated Fact No. 4).
The Venue Motion was granted by the EDTex Court by Order entered on June 5, 2014 (the "Transfer Order"). Id. at 6 (Stipulated Fact No. 8). On June 20, 2014, the Transfer Order was docketed in, and the Case was received by, this Court as Case No. 14-32939. Id. (Stipulated Fact No. 9). The Trustee was thereafter appointed. Id.
On June 23, 2014, the Clerk of Court issued a Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines (the "NDTex 341 Notice"). Id. (Stipulated Fact No. 10). The NDTex 341 Notice provided creditors notice of the § 341 meeting of creditors scheduled for July 22, 2014 and further identified September 22, 2014 as the deadline for filing objections to discharge and the dischargeability of individual debt. Id. The § 341 meeting was held and concluded by the Trustee on July 22, 2014. Id. (Stipulated Fact No. 11).
On August 27, 2014, the Judgment Creditors filed a motion seeking an extension of the deadline to object to Ward's receipt of a discharge and the dischargeability of the Judgment to December 22, 2014 [BC ECF No. 32] (the "Extension Motion"). Id. (Stipulated Fact No. 12).The Trustee filed a joinder in the Extension Motion on September 22, 2014 [BC ECF No. 48] ("Joinder"). Id. Ward objected to the Extension Motion and Joinder on the basis that the requests were untimely under Bankruptcy Rules 4004(b)(1) and 4007(c) because the objection deadline had already expired. Id.
On October 31, 2014, after notice and a hearing, the Court entered the Order Extending Deadline to Object to Discharge and/or Dischargeability of Debt [BC ECF No. 76], granting the Extension Motion in part and extending the deadline by which the Plaintiffs may object to Ward's receipt of a discharge and the deadline by which the Judgment Creditors may object to the dischargeability of the Judgment through and including December 22, 2014.6 And, after notice and a hearing, the deadline was subsequently extended to February 3, 2015 [BC ECF No. 115] and then to May 1, 2015 [BC ECF No. 158] because, as explained further below, the Plaintiffs established cause for such further extensions. See infra at pp. 9-10.
On April 30, 2015, the Plaintiffs filed their Original Complaint Objecting to Discharge Under 11 U.S.C. § 727 and 11 U.S.C. § 523 [AP ECF No. 3] (the "Original Complaint"). The Original Complaint was amended multiple times,7 culminating in the Plaintiffs' Third Amended Complaint Objecting to Discharge Under 11 U.S.C. § 727 and 11 U.S.C. § 523 [AP ECF No. 58] (the "Third Amended Complaint"), which is the live complaint before this Court.
In the Third Amended Complaint, the Plaintiffs argue that Ward's receipt of a discharge should be denied under 11 U.S.C. §§ 727(a)(2), (3), (4)(A), 4(D), and (5), and the Judgment Creditors argue that the Judgment should be held nondischargeable under 11 U.S.C. §523(a)(6).Joint Pretrial Order at 2 (¶ 1). Before reaching the merits of these allegations, however, the Court must first address certain preliminary matters, including Ward's renewed argument that the Adversary Proceeding must be dismissed because the Original Complaint was not timely filed, as well as other defenses that Ward raises in his Defendant's Trial Brief [AP ECF No. 107] and the Joint Pretrial Order.
Bankruptcy Rules 4004 and 4007, respectively, govern the deadlines for filing objections to a debtor's discharge and the dischargeability of individual debts. Bankruptcy Rule 4004 provides:
FED. R. BANKR. P. 4004(a), (b)(1). In turn, Bankruptcy Rule 4007(c) provides that:
a complaint to determine the dischargeability of a debt under § 523(c)[9] shall be filed no later than 60 days after the first date set for the meeting of creditors under § 341(a). The court shall give all creditors no less than 30 days' notice of the time so fixed in the manner provided in Rule 2002. On motion of a party in interest, after hearing on notice, the court may for cause extend the time fixed under this subdivision. The motion shall be filed before the time has expired.
Id. 4007(C).
Ward's defense of untimeliness resulted from the voluntary transfer of the Case to this Court. When Ward filed his Petition, the Clerk of the EDTex Court issued a notice informing parties in interest that the § 341 meeting of creditors would be held May 30, 2014 and that the deadline to object to Ward's receipt of a discharge and the dischargeability of individual debts would be July 29, 2014.10 When the Case was transferred to the Northern District of Texas, the Clerk of Court issued the NDTex 341 Notice, informing parties in interest that the § 341 meeting of creditors would be held July 22, 2014 and the deadline to object to Ward's receipt of a discharge and the dischargeability of individual debt would be September 22, 2014.
In reliance on the NDTex 341 Notice, the Judgment Creditors filed the Extension Motion...
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