In re Isaacman
| Decision Date | 22 January 1993 |
| Docket Number | Bankruptcy No. 92-26078-B,Adv. No. 92-0961. |
| Citation | 149 BR 502 |
| Parties | In re Kenneth L. ISAACMAN, Debtor. J.E. NICHOLSON, Jr., Plaintiff, v. Kenneth L. ISAACMAN, Defendant. |
| Court | U.S. Bankruptcy Court — Western District of Tennessee |
Randall J. Fishman, Memphis, TN, for Kenneth L. Isaacman.
J. Kevin Smith, Margaret B. White, Smith & Diment, Carrollton, GA, for J.E. Nicholson, Jr.
Preston Wilson, Chapter 7 Trustee, Memphis, TN.
Jimmy Croom, Memphis, TN, for United States Trustee.
This adversary proceeding was initiated by a complaint filed on September 21, 1992, and the filing fee of $120.00 was paid at that time. Service has been made pursuant to applicable Federal Rules of Bankruptcy Procedure ("F.R.B.P.") upon the debtor as defendant and the debtor's attorney. The defendant moved to dismiss the adversary proceeding for failure to file a timely complaint, and this motion was heard upon the motion, written response, memoranda, and statements of counsel for the parties. No sworn proof was introduced at the hearing. This proceeding is core pursuant to 28 U.S.C. § 157(b)(2)(I), and this opinion contains findings of fact and conclusions of law pursuant to F.R.B.P. 7052.
The debtor filed a Chapter 7 case in the Northern District of Georgia on March 19, 1992. A § 341(a) meeting of creditors was set by that court clerk for April 28, 1992, and the notice of commencement of the case, of the meeting of creditors and of fixing of dates was mailed by that bankruptcy court clerk to creditors stating that the "deadline to file a complaint objecting to discharge of the debtor or to determine dischargeability of certain types of debts" was June 29, 1992. This notice appears in this court's case file and has attached to it a list of creditors to whom the notice was mailed by that clerk. That notice includes J.E. Nicholson, the plaintiff in this adversary proceeding. Counsel for both parties have represented to the court that Mr. Nicholson appeared at the § 341(a) meeting in the Northern District of Georgia,1 making it obvious that Mr. Nicholson had notice of the filing of the Chapter 7 petition there. Further, an attorney for Mr. Nicholson in this adversary proceeding was also in attendance at the § 341(a) meeting, although that attorney did not represent Mr. Nicholson at that time.
On May 6, 1992, the United States Trustee for the Northern District of Georgia filed a motion to transfer venue to the Western District of Tennessee and a hearing was requested. Apparently, no hearing was conducted; rather, an order styled "Consent Order On United States Trustee's Motion To Transfer Venue" was entered on June 1, 1992, in the Northern District of Georgia. This court's case file contains the original order transferring venue and a letter dated June 4, 1992, of transmittal from the clerk of the Bankruptcy Court in the Northern District of Georgia to the clerk of this court transferring the entire case file. The file was received in this court clerk's office on June 8, 1992, and the case was assigned a new bankruptcy number in this district, 92-26078-B. Under this court's computerized system of handling new cases, and upon this case being assigned a new case number for this district, a routine notice of commencement of the case under Chapter 7, meeting of creditors and fixing of dates was generated, setting a new § 341(a) meeting in the Western District of Tennessee for July 22, 1992, and setting a new deadline date to file complaints objecting to discharge or to determine dischargeability of certain types of debts for September 21, 1992. See, e.g., In re Lewis, 71 B.R. 633, 635 (Bankr.N.D.Ill.1987). The court clerk's stamp indicates that the notice generated by this court clerk's office was entered on the court's docket on June 25, 1992, and mailed on that same date to the debtor and all creditors. It therefore appears that the notice generated by the clerk's office in the Western District of Tennessee was mailed prior to the expiration of the original bar date of June 29, 1992, but the court has no knowledge of when Mr. Nicholson or his attorneys received that new notice. One of the attorneys for Mr. Nicholson, who appeared at the oral hearing on this motion, stated that she called the clerk's office of this court in Memphis, Tennessee and inquired whether a new bar date for filing complaints had been set and that she was advised that a new bar date of September 21, 1992, had been set. That attorney also stated that she and co-counsel relied upon the new bar date set by the clerk's office for this court. It is obvious that the complaint was filed after the expiration of the original bar date set in the Northern District of Georgia but on the expiration date set by the clerk's office in the Western District of Tennessee.
The issues presented to the court are whether the clerk's office for this court had authority to set a new bar date for filing objections to discharge and for complaints to determine dischargeability of § 523(c)(1) debts, and whether the plaintiff, J.E. Nicholson, Jr., and his attorneys were entitled to rely upon the second bar date, or whether the original bar date set in the Northern District of Georgia, of which Mr. Nicholson and his attorneys had constructive and actual knowledge, controls. The critical issue before the court is whether the complaint filed in this court is timely or whether it must be dismissed as being filed late.
It first must be noted that the complaint filed in this adversary proceeding alleges that the debtor obtained an investment of money in an automobile dealership in Carrollton, Georgia, from the plaintiff by materially false representations, which misrepresentations were made with the intent and purpose to deceive the plaintiff, and the complaint further alleges that the plaintiff reasonably relied upon the debtor's false representations. The complaint also alleges that the misrepresentations were made with gross recklessness as to truthfulness. While the complaint does not allege a specific subsection of 11 U.S.C. § 523(a), it appears from the factual allegations that the complaint is relying upon 11 U.S.C. § 523(a)(2)(A), and the complaint prays for a determination that the debt of $629,000.00 is nondischargeable. Section 523(a)(2) is one of the types of debts for which the debtor receives an automatic discharge unless the affected creditor files a timely complaint to determine dischargeability. 11 U.S.C. § 523(c)(1). Federal Rule of Bankruptcy Procedure 4007(c) establishes the time for filing complaints under § 523(c) in Chapter 7, Chapter 11 and Chapter 12 cases, and that rule states that such a complaint "shall be filed not later than 60 days following the first date set for the meeting of creditors held pursuant to Section 341(a)." F.R.B.P. 4007(c). The rule goes on to provide that the court "shall give all creditors not less than 30 days notice of the time so fixed in the manner provided in Rule 2002." F.R.B.P. 4007(c). Rule 2002(a) provides that the clerk, or another person designated by the court, shall mail that notice. Rule 4007(c) further provides that a party in interest may move the court for extension of this time, for cause, but that the motion shall be filed before the bar date has expired. Of course, if the complaint alleges a basis for exception from discharge other than those contained in § 523(c)(1), those complaints may be filed at any time. F.R.B.P. 4007(b).
In the present case, the unfortunate circumstance is that two bar dates were set by two different court clerk's offices. The first bar date, established by the clerk's office where the case was originally filed in the Northern District of Georgia, clearly fixed a bar date of June 29, 1992, and the record contains no motion for an extension of that time. In fact, at the oral hearing on this motion to dismiss, counsel for the plaintiff admitted that they did not file a motion to extend the time to file § 523(c)(1) complaints and that, in retrospect, such a motion should have been filed. The applicable rule of course provides that the bar date is sixty days following the first date set for the § 341(a) meeting of creditors, but in this case the § 341(a) meeting of creditors was actually held on the date scheduled, and the plaintiff, Mr. Nicholson, actually attended that § 341(a) meeting.
The only justification offered by the plaintiff's attorneys for what appears on its face to be an untimely filing of a complaint is that the plaintiff and his counsel were entitled to rely upon the new bar date set by the clerk's office in the Western District of Tennessee, and of course the defendant/debtor disputes that the plaintiff was entitled to rely upon that new bar date without filing a motion for extension of time to file the complaint. In a written response to the motion to dismiss, the plaintiff asserts that he was reasonably and justifiably entitled to rely on the notice issued by the clerk's office for the Western District of Tennessee and that his complaint was timely when viewed in the light of that notice. Further, the plaintiff asserts that the court should use its equitable powers under 11 U.S.C. § 105(a) "to correct any injustices resulting from a plaintiff's reliance on an erroneous bar date issued by the bankruptcy court clerk's office." Objection To Motion To Dismiss . . ., p. 2.
Obviously there are numerous and divergent reported cases discussing whether a complaint is untimely, and those opinions are normally factually driven. This court will not attempt to discuss all of the cases addressing this issue but will focus on the rationale behind the different approaches.
The plaintiff relies upon several cases, including In re Anwiler, 958 F.2d 925 (9th Cir.1992), cert. den., ___ U.S. ___, 113 S.Ct. 236, 121 L.Ed.2d 171 (1992)....
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