In re Eaton, Bankruptcy No. 04-14519-JMD.

• Decision Date: 07 July 2005
• Docket Number: Bankruptcy No. 04-14519-JMD.,Adversary No. 05-01052-JMD.
• Citation: 327 B.R. 79
• Parties: In re Hollis EATON, Debtor. Sandra Francis a/p/n/f of Anthony Venturi, Jr., Plaintiff, v. Hollis Eaton, Defendant.
• Court: U.S. Bankruptcy Court — District of New Hampshire

Page 79

327 B.R. 79

In re Hollis EATON, Debtor.

Sandra Francis a/p/n/f of Anthony Venturi, Jr., Plaintiff, v. Hollis Eaton, Defendant.

Bankruptcy No. 04-14519-JMD.

Adversary No. 05-01052-JMD.

United States Bankruptcy Court, D. New Hampshire.

July 7, 2005.

Paul K. Baker, Esq., Baker & Abraham, PC, Boston, Massachusetts, for Plaintiff.

Peter A. Riley, Esq., Riley & Fay PLLC, Seabrook, New Hampshire, for Debtor.

MEMORANDUM OPINION

J. MICHAEL DEASY, Bankruptcy Judge.

I. INTRODUCTION

The question before the Court is whether the Court can use its equitable discretion to extend the deadline to object to the dischargeability of certain debts when the complaint is filed after the deadline has passed and no motion to extend time to file a complaint has been filed. On April 8, 2005, the Plaintiff filed a complaint objecting to the dischargeability of the Debtor's obligations to the Plaintiff pursuant to 11 U.S.C. § 523(a)(6) (the "Complaint"). The Complaint was filed ten days after the deadline to object to the dischargeability of a debt.

This Court has jurisdiction of the subject matter and the parties pursuant to 28 U.S.C. §§ 1334 and 157(a) and the "Standing Order of Referral of Title 11 Proceedings to the United States Bankruptcy Court for the District of New Hampshire," dated January 18, 1994 (DiClerico, C.J.). This is a core proceeding in accordance with 28 U.S.C. § 157(b).

II. FACTS

Hollis Eaton (the "Debtor") filed for protection under chapter 7 of the Bankruptcy Code on December 23, 2004. The deadline to file a complaint objecting to discharge of the Debtor or to determine dischargeability of certain debts was set for March 29, 2005. The Debtor listed Sandra Francis a/p/n/f of Antony Venturi, Jr. (the "Plaintiff") in his bankruptcy schedules together with the name and address of Plaintiff's counsel¹. However, the address of Plaintiff's counsel was not included in the mailing matrix filed by the Debtor. The docket reflects that the first meeting of creditors originally schedule for January 28, 2005, was rescheduled to February 18, 2005. On February 8, 2005, Debtor's counsel provided a written notice of the rescheduled meeting to a number of parties, including Plaintiff's counsel (the "Letter Notice").

On April 8, 2005, the "Plaintiff" filed the Complaint objecting to the dischargeability of the Debtor's obligations to the Plaintiff pursuant to 11 U.S.C. § 523(a)(6). The Debtor answered the Complaint and moved for summary judgment based, inter alia, upon a claim that the Complaint was not timely filed (the "SJ Motion"). The Plaintiff filed an objection to the SJ Motion (Doc. No. 9) (the "Objection") alleging that the Debtor should have listed Plaintiff's counsel in the creditor mailing matrix filed with the Court, did not include the proper address for the Plaintiff in the mailing matrix, and that the Complaint was filed 48 days after the Plaintiff first learned of the filing of the Debtor's chapter 7 bankruptcy petition. Plaintiff's counsel acknowledged receipt of the Letter Notice in the Objection as well as actual knowledge of the bankruptcy case pursuant to a telephone conversation with Debtor's counsel prior to receipt of the Letter Notice. The Court held a hearing on the SJ Motion on June 8, 2005 in connection with the pre-trial conference.

The Plaintiff acknowledges the complaint was filed after the deadline established by Federal Rule of Bankruptcy Procedure (hereinafter "Rule"). However, she argues: (1) the defects in the mailing matrix filed by the Debtor excuses her untimely filing because it was filed within sixty days of her learning of the commencement of the bankruptcy case; (2) Plaintiff's counsel erroneously thought that February 18, 2005, was the original date set for the first meeting of creditors and through excusable neglect he computed the deadline as being sixty days after that date; and (3) due to the Debtor's failure to provide proper and timely notice to the Plaintiff, this court may equitably toll the deadline under Rule 4007(c).

III. DISCUSSION

Rule 4007(c) sets the deadline for filing a complaint objecting to the dischargeability of a debt under section 523 of the Bankruptcy Code as "60 days after the date first set for the meeting of creditors under § 341(a)." Fed. R. Bankr.P. 4007(c) (emphasis added).² In this case, the deadline was set for March 29, 2005. Rule 9006(b)(3) provides that the Court may not enlarge the time to file a complaint under Rule 4007(c) for any reason outside of the provisions of Rule 4007(c).³ Rule 4007(c) provides that "the court may for cause extend the time fixed under this subdivision. The motion shall be filed before the time has expired." Fed. R. Bankr.P. 4007(c) (emphasis added). The Plaintiff failed to timely file her Complaint or to timely seek an extension of the deadline under Rule 4007(c). Accordingly, the Court shall grant the SJ Motion.

A. Improper Notice

Plaintiff's improper notice argument can be broken down into two components: due process and excusable neglect. First, the Plaintiff argues emphatically that she did not receive notice of the "original, court-scheduled date of the § 341 Meeting" because the mailing matrix: (1) did not list Plaintiff's attorney and (2) listed the Plaintiff at an address where she had not lived for over two years. The Debtor counters the address on the mailing matrix is the Plaintiff's last address of record in her prepetition lawsuit against the Debtor in the pending state court action. Therefore, any defect in the address is Plaintiff's fault because she failed to notify the state court and the parties to that proceeding of her change in address as required by state court rules. This is the due process argument.

Second, the Plaintiff argues that the Letter Notice was misleading because her counsel thought the date of the rescheduled section 341 meeting contained in the Letter Notice was the original date for the section 341 meeting. Although not specifically stated, it appears that the Plaintiff is arguing that her counsel's mistake was a result of excusable neglect.

1. Excusable Neglect

In order to determine excusable neglect, the Court looks to the relevant circumstances surrounding the Plaintiff's failure to act to determine whether the failure constitutes excusable neglect. The excusable neglect argument fails for two reasons. In this case, the Plaintiff had actual notice of the bankruptcy filing and the date of the rescheduled 341 meeting. Any confusion regarding the appropriate deadline for filing a non-dischargeability complaint was a function of her counsel's failure to take reasonable actions to ascertain the date. The mistake by Plaintiff's counsel in calculating the deadline and his failure to take any measures to ascertain the correct deadline do not constitute excusable neglect. Even if the Plaintiff's failure to act was found to be based upon excusable neglect, the provisions of Rule 9006(b)(3) preclude the Court from extending the deadline under Rule 4007(c) based upon excusable neglect. Neeley v. Murchison, 815 F.2d 345, 346 (5th Cir.1987) (holding that Rule 9006(b)(3) explicitly excepts Rule 4007(c) from the "excusable neglect" standard); Byrd v. Alton (In re Alton), 837 F.2d 457, 459 (11th Cir.1988) (holding that Rule 4007(c) does not allow the Court any discretion to grant a late filed motion to extend time to file a dischargeability complaint); But see In re Rychalsky, 318 B.R. 61, 64 (Bankr.D.Del.2004) (holding that applied equitable principles to extend 4007(c) deadline to allow amendment adding fraud counts to timely filed complaint). Therefore, to the extent that the Plaintiff's notice argument is based upon excusable neglect, it is unavailing.⁴

2. Due Process

The Plaintiff's due process argument is equally unavailing. Due process requires notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950). Notice need not be perfect but reasonable based on the circumstances of the case. In re San Miguel Sandoval, ___ B.R. ___, 2005 WL 1405828 (1st Cir. BAP 2005); In re DCA Dev. Corp., 489 F.2d 43, 47 (1st Cir.1973); In re Intaco Puerto Rico, Inc., 494 F.2d 94, 98 (1st Cir.1974); Zidell, Inc. v. Forsch (In re Coastal Alaska Lines, Inc.), 920 F.2d 1428, 1430 (9th Cir.1990); In re Anderson, 159 B.R. 830, 838 (Bankr.N.D.Ill.1993). Creditors in bankruptcy cases are entitled to the due process rights granted by the Fifth Amendment. Aboody v. U.S. (In re Aboody), 223 B.R. 36, 40 (1st Cir. BAP 1998). Notwithstanding any deficiencies in the mailing matrix, Plaintiff's counsel has acknowledged, and the docket reflects, that Plaintiff's counsel had actual knowledge of the bankruptcy case and the date of the rescheduled section 341 meeting no later than early February, 2005. Counsel obtained written verification of the same upon receipt of the Letter Notice dated February 8, 2005. Counsel makes much of the fact that the Plaintiff did not receive notice of the case until after the original date for the section 341 meeting. The Court finds more significant that the notice was received over a week before the re-scheduled 341 meeting and over a month before the deadline to object to dischargeability. The Court further finds that any confusion regarding the appropriate deadline for filing a non-dischargeability complaint was a function of the failure of the Plaintiff to take reasonable action to ascertain the date of the deadline.

There is no dispute that Plaintiff's counsel was actively representing the Plaintiff in the state court proceeding at the time of the bankruptcy filing. In light of this fact, the Plaintiff is bound by her counsel's actions or inactions. Link v. Wabash R. Co., 370 U.S. 626, 633, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962); In re Griggs, 306 B.R. 660, 665 ...