In re Anderson, Bankruptcy No. 4-82-2171
| Citation | 72 BR 783 |
| Decision Date | 17 April 1987 |
| Docket Number | Bankruptcy No. 4-82-2171,Adv. No. 4-86-181. |
| Parties | In re Allan A. ANDERSON and Hellen Anderson, Debtors. ROBERT S.C. PETERSON, INC., Plaintiff, v. Allan A. ANDERSON, Defendant. |
| Court | United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — District of Minnesota |
Lea M. De Souza, Lang, Pauly & Gregerson, Ltd., Minneapolis, for plaintiff.
Rockford R. Chrastil, Chrastil & Steinberg, Minneapolis, for defendant.
ORDER GRANTING SUMMARY JUDGMENT
This proceeding came on for hearing on the defendant's motion for summary judgment. Rockford R. Chrastil appeared for the defendant and Leah M. De Souza appeared for the plaintiff. This court has jurisdiction pursuant to 28 U.S.C. §§ 157 and 1334, and Local Rule 103(b). This is a core proceeding under 28 U.S.C. § 157(b)(2)(I). Based on the evidence, memoranda of counsel, and the file of this proceeding, I make the following:
Robert S.C. Peterson, Inc. brought this proceeding on September 12, 1986, to determine the dischargeability of the defendant's debt under 11 U.S.C. § 523. The defendant, Allan A. Anderson, moves for summary judgment pursuant to Bankruptcy Rule 7056 and Fed.R.Civ.P. 56. The relevant facts are not disputed.
Anderson is a former employee of Peterson. During the course of his employment, Anderson borrowed money from Peterson on several occasions including $15,904.75 to cover trading losses, $5,177.64 to purchase a new car, and $3,417.73 in general loans for a total of $24,500.12. The $5,177.64 car loan is evidenced by a promissory note dated August 17, 1980. The note purports to give Peterson a security interest in the 1979 Trans Am purchased by Anderson with the loan proceeds. The terms of the note provided that it was to be paid in full by November 17, 1981. However, in November of 1981 Anderson was involved in an accident that substantially damaged the automobile. Because the car was not repairable, Anderson sold it to an auto body shop for $2,000.00. He used the money to pay personal expenses and purchase another car.
On December 1, 1982, Anderson together with his wife Hellen Anderson, filed a joint chapter 7 petition.1 Peterson is listed in the debtor's A-3 Schedule as follows:
Robert Peterson, Inc 5050 Excelsior Blvd Citizens Bank Bldg Minneapolis, MN 55416
The mailing matrix2 lists Peterson's address as:
Robert Peterson, Inc 5050 Excelsior Bldg. Minneapolis, MN 554163
In fact, neither the address in the A-3 Schedule nor the address in the matrix was Peterson's correct address at the time of filing the petition. The address in the A-3 Schedule was Peterson's correct address prior to September 1981. In September, however, Robert S.C. Peterson, Inc. moved to: 21 Water Street, Excelsior, MN 55431. Allan Anderson knew that Peterson had moved when he filed his bankruptcy petition because he was employed at the company through January 4, 1983.
Notice of the bankruptcy filing was sent by the Clerk to Peterson at the address listed on the mailing matrix. Shortly thereafter, the post office returned the notice to the Clerk for want of a good or sufficient address. On January 3, 1983, the Clerk informed Allan Anderson's attorney that the notice had been returned, but no steps were taken to send Peterson another notice.
Anderson continued to work for Peterson until January 4, 1983. On that date and at Peterson's request, Anderson signed a promissory note for $1,600.00 which represented a portion of Peterson's $3,417.13 claim for general loans. The note provided: The note was dated January 4, 1983, and signed by Anderson.
On May 24, 1984, Peterson filed a claim with the National Association of Securities Dealers (NASD) to collect the $24,500.12 debt.4 NASD assigned the case to an arbitration panel. A hearing was held on January 29, 1985, at which time Anderson told the panel and Peterson about his bankruptcy.
On February 22, 1985, the arbitration panel awarded Peterson $24,500.12. Peterson then moved the Hennepin County District Court to confirm the panel's decision. Both parties stipulated in the district court proceeding that the panel's decision did not address whether Anderson's debt to Peterson had been discharged in bankruptcy.
On June 28, 1985, the Hennepin County District Court denied Peterson's motion to confirm the panel's decision, vacated the panel's February 22, 1985 award, and remanded the claim to the arbitration panel to determine the effect of the bankruptcy discharge. On remand, the panel reinstated its findings as to the amount of the debt, but concluded that the discharge issue is a question for the bankruptcy court to decide.5
On September 12, 1986, Peterson filed a complaint in this court to determine whether Anderson's debt is nondischargeable under 11 U.S.C. § 523(a) (3). Anderson filed his motion for summary judgment on February 12, 1987.6
Anderson moves for summary judgment pursuant to Bankruptcy Rule 7056 and Federal Rule of Civil Procedure 56. Rule 56(c) provides in part:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Fed.R.Civ.P. 56. The party moving for summary judgment, therefore, must show that there are no genuine issues of material fact, and that the moving party is entitled to judgment as a matter of law. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); Foster v. Johns-Manville Sales Corp., 787 F.2d 390, 391 (8th Cir.1986). The court must view the facts, and all reasonable inferences drawn from the facts, in the light most favorable to the opposing party. Adickes, 398 U.S. at 157, 90 S.Ct. at 1608; Foster, 787 F.2d at 392; Stokes v. Lokken, 644 F.2d 779, 782 (8th Cir.1981).
Peterson claims that summary judgment is inappropriate in this case because there exists three genuine issues of material fact: (1) whether Peterson received proper notice of the bankruptcy filing; (2) whether Peterson had actual knowledge of Anderson's bankruptcy filing before the discharge date; and (3) whether Peterson had actual knowledge of Anderson's bankruptcy filing in time to file a proof of claim, or in time to request a determination of nondischargeability under 11 U.S.C. § 523(a)(2), (a)(4), or (a)(6). I find that none of Peterson's claims raise genuine issues of material fact, and that Anderson is entitled to judgment as a matter of law.
Section 523(a)(3) excepts from discharge debts that were:
11 U.S.C. § 523(a)(3). Official Form 6 requires the name of the creditor and the complete mailing address including zip code. For purposes of this motion the parties agree that Peterson's debt was not properly listed or scheduled.7 The central issue, therefore, is whether Peterson had notice or actual knowledge of the case in time to file a proof of claim or request a determination of dischargeability.
Section 523(a)(3) is designed to remedy the harm to creditors that results from not being able to participate in the bankruptcy case. See Stark v. St. Mary's Hospital, 717 F.2d 322, 324 (7th Cir.1983) (); In re Beshensky, 68 B.R. 452, 454 (Bktcy.E.D.Wis.1987) (the key inquiry should be whether the creditor has been harmed by being excluded from the schedules and whether or not the omission was due to fraud or intentional design). The "harm" caused by not receiving notice of the bankruptcy filing may involve several different aspects depending on the particular case. Creditors are denied the opportunity to: (1) participate in the election of a trustee, (2) ask questions of the debtor at the meeting of creditors, (3) object to the debtor's claims of exempt property, (4) timely file a complaint objecting to discharge, (5) timely file a proof of claim and participate in any distribution, and (6) timely file a complaint to determine whether a debt is dischargeable under § 523(a)(2), (4) or (6). It is important to note that the plain language of § 523(a)(3) only incorporates the last two aspects of possible harm as grounds for finding the debt nondischargeable. For whatever reason, Congress chose not to provide a remedy for creditors whose only loss was the opportunity to elect a trustee, question the debtor at the meeting of creditors, object to the debtor's claims of exempt property or object to discharge. In this case, Peterson has no grounds for a finding of nondischargeability under § 523(a)(3)(A) or § 523(a)(3)(B).
Section 523(a)(3)(A) excepts from discharge unscheduled debts unless the creditor had notice or actual knowledge in time to file a proof of claim. Anderson filed his petition on December 1, 1982. He received a discharge of his debts on April 29, 1983. It is undisputed that Peterson had actual knowledge of...
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