In re Anwiler
| Decision Date | 12 July 1990 |
| Docket Number | Bankruptcy No. 88-21120-B7,BAP No. SC-89-1504-VAsJ,Adv. No. C88-0321-B7. |
| Citation | 115 BR 661 |
| Parties | In re John Frederick ANWILER, Debtor. Gregory PATCHETT and Kathleen Griffin, Appellants, v. John Frederick ANWILER and Timothy Cohelan, Chapter 7 Trustee, Appellees. |
| Court | U.S. Bankruptcy Appellate Panel, Ninth Circuit |
Charles S. Bargiel, Santa Barbara, Cal., for appellants Gregory Patchett and Kathleen Griffin.
David L. Buchbinder, San Diego, Cal., for appellees John Frederick Anwiler and Timothy Cohelan, Chapter 7 Trustee.
Before VOLINN, ASHLAND and JONES, Bankruptcy Judges.
OVERVIEW
The debtors filed their chapter 7 petition in the U.S. Bankruptcy Court for the Central District of California, which issued a "§ 341 notice" setting the date for the first meeting of creditors, and specifying the deadline for filing complaints objecting to discharge. Before the first meeting date or the complaint deadline, the case was transferred to the Southern District of California, which issued a new § 341 notice specifying a new and later date for the first meeting, and a new and later date for the filing of complaints objecting to discharge.
The appellants filed a complaint objecting to discharge after the deadline specified in the first notice, but before the one specified in the second notice. The bankruptcy court granted the debtor's motion to dismiss and the appellants appeal. We reverse.
The appellants, Gregory Patchett and Kathleen Griffin, hold a state court judgment for $447,641.02 against the debtor. The appellants contend that the judgment debt is excepted from discharge under 11 U.S.C. § 523.1
On January 21, 1988, the debtor filed a voluntary chapter 7 petition in the Bankruptcy Court for the Central District of California. The clerk of that court sent out a standard § 341 notice ("the First Notice") setting March 22, 1988, as the date for the first meeting of creditors, and May 23, 1988, as the last day for filing complaints under §§ 523 or 727.
The case was transferred to the Bankruptcy Court for the Southern District of California on Mr. Patchett's motion, in which Ms. Griffin joined. The transfer occurred on March 8, 1988, which was prior to the date set for the first meeting of creditors in the Central District.
On March 29, 1988, the clerk for the transferee court sent out its standard § 341 notice ("the Second Notice") which set April 20, 1988, as the date for the first meeting of creditors, and June 20, 1988, as the last day for filing complaints objecting to discharge.
On June 17, 1988, the appellants filed a complaint objecting to discharge under §§ 727(a) and 523(c). The appellants contend that they filed the complaint in good faith reliance on the Second Notice and the deadline specified in it.
On April 13, 1989, the court below granted the debtor's motion to dismiss the complaint on the grounds that it was filed after the applicable deadline, instructing the debtor to present an order of dismissal. Patchett v. Anwiler (In re Anwiler), 99 B.R. 41 (Bankr.S.D.Cal.1989). The debtor's order was entered on May 19, 1989. The appellants filed a notice of appeal on May 27, 1989.
Should the complaint objecting to discharge have been allowed to stand when it was filed after the deadline established in the First Notice, but before the later deadline specified in a Second Notice, which was issued before the first deadline?
Rule 4007(c) sets the same deadline for complaints under § 523(c). The creditors are generally notified of the first meeting date and the complaint deadline via a "§ 341 notice" which the court clerk generates mechanically whenever a case is opened, transferred, or converted. It is this practice that gave rise to the controversy in this appeal; the effect of a second § 341 notice, specifying a later meeting date and complaint deadline, is not clear in light of Rules 4004(a) and 4007(c).
In this case, the First Notice set the first date for the meeting of creditors, thereby determining the complaint deadline. Although creditors' meetings may be continued, the complaint deadline is calculated from the first date set, regardless of when the meeting is actually held. In re Rhodes, 61 B.R. 626, 629 (9th Cir. BAP 1986). In particular, the transfer of a case from one district to another, and the issuance of a second § 341 notice, does not invalidate or displace a complaint deadline triggered by an act of the first court. See Urtabek Systems, Inc. v. Lochrie (In re Lochrie), 78 B.R. 257, 260 (9th Cir. BAP 1987); In re Lewis, 71 B.R. 633, 635 (Bankr.N.D.Ill.1987); In re Riso, 48 B.R. 244, 246 (Bankr.D.N.H.1985), aff'd 57 B.R. 789 (D.N.H.1986); cf. In re Miller, 485 F.2d 74, 76 (5th Cir.1973).
Rule 9006(b)(3) provides that "the court may enlarge the time for taking action under Rules . . . 4004(a) and 4007(c) . . . only to the extent and under the conditions stated in those rules." Rules 4004 and 4007 provide that the court may extend the complaint deadline (1) on motion of a party in interest, (2) after notice and a hearing, and (3) if the motion is made before the expiration of the deadline. See also Leisure Dev. Inc. v. Burke (In re Burke), 95 B.R. 716, 717 (9th Cir. BAP 1989). There was no such motion, notice, or hearing in this case, however, so the complaint deadline was not extended beyond the date specified in the First Notice.3
In certain circumstances, however, pleadings filed after an applicable deadline may be permitted to stand where an otherwise diligent party files late in reliance on a misleading act of the court. Although there are no such cases in the Ninth Circuit involving conflicting § 341 notices, we note that in the case of appeal deadlines, the Ninth Circuit has adopted the doctrine of "unique circumstances" which in certain cases allows an appellant to maintain an appeal that would otherwise be barred as untimely. See United Artists Corp. v. La Cage Aux Folles, Inc., 771 F.2d 1265 (9th Cir.1985); Hernandez-Rivera v. Immigration and Naturalization Service, 630 F.2d 1352 (9th Cir.1980).4 Under that doctrine a court will permit an otherwise untimely appeal to stand if (1) judicial action indicated to the appellant that its assertion of its right to appeal would be timely; (2) such judicial action occurred prior to the expiration of the official time period, such that the appellant could have given timely notice had it not been lulled into inactivity; and (3) the appellant reasonably and in good faith relied upon such judicial action. La Cage Aux Folles, 771 F.2d at 1268.
Courts have applied reasoning analogous to the "unique circumstances" doctrine to allow non-discharge complaints to stand under circumstances similar to those before us. In In re Riso, the underlying bankruptcy case was also filed in one district and transferred to another. 48 B.R. 244 (Bankr.D.N.H.1985), aff'd, 57 B.R. 789 (D.N.H.1986). The case was transferred after the date set for the initial creditors' meeting, but before the complaint deadline specified in the first court's notice. 48 B.R. at 245.
After the transfer but before the first complaint deadline, the second court granted a creditor's motion to extend the first court's complaint deadline. Id. One week later, the transferee court issued a second § 341 notice specifying an even later deadline for complaints. Id. at 246. The creditor filed a complaint after the first deadline as extended by the second court, but before the deadline specified in the second court's § 341 notice. Id.
The court ruled that the deadline from the first court, as extended, was the operative one, and that the subsequent inconsistent § 341 notice was erroneous. Id. The court found, however, that the creditor had reasonably relied on the erroneous notice. Id. The court concluded that it had the power under § 105 to "correct its own mistakes," and it exercised that power to extend the complaint deadline to allow the creditor's complaint to stand. Id. The court noted that the prejudice to the debtor was minimal because the deadline was only extended approximately five weeks, and the debtor could have brought the erroneous notice to the court's attention and requested that it be corrected. Id. On appeal, the district court affirmed the lower court's reasoning in all respects. 57 B.R. at 793-94.
The Riso case strongly supports the appellants' position here. As in Riso, the appellants relied on the court's erroneous notice. The appellants submitted a declaration alleging such reliance, and the record does not reflect any evidence to the contrary.
One court has suggested that a creditor may not reasonably rely on a second § 341 notice that appears to extend the complaint deadline, when the notice is issued over the name of the court clerk rather than a bankruptcy judge, and when there was no previous motion to extend the complaint deadline. See In re Kearney, 105 B.R. 260, 263, 264-65 (Bankr.E.D.Pa. 1989). With all due respect, we are not inclined to view the action of an official of the court, regularly taken, as one which may be considered as detached from the institutional structure of which he is a member. For the purposes of the unique circumstances doctrine, where the clerk of the court issues a notice under the authority of the court and on its behalf, the court may not then disclaim such a notice. Nor should a party be responsible for a possible procedural defect in a notice or order issued by the court where the defect is not apparent from the face of the document, and such pa...
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