In re Mi Jung Hong
| Decision Date | 05 February 2014 |
| Docket Number | Case No. 2:11-bk-39687-RK |
| Court | U.S. Bankruptcy Court — Central District of California |
| Parties | In re: MI JUNG HONG, Debtor. |
DEBTOR'S SECOND AMENDED
MOTION TO DISMISS BANKRUPTCY
On May 31, 2013, debtor Mi Jung Hong filed her original motion to revoke her bankruptcy discharge and to dismiss this Chapter 7 bankruptcy case "on the equitable grounds that a discharge remaining on her credit report will continue to have a negative effect on her personal and professional life as a real estate escrow agent." Debtor's Motion to Dismiss Chapter 7 Bankruptcy Case and to Revoke Discharge (Docket No. 22)("Original Motion"), filed on May 31, 2013, at 4. In support of her Original Motion to revoke her discharge, she cited Fed. R. Bankr. P. 9024 and Cisneros v. United States (In re Cisneros), 994 F.2d 1462 (9th Cir. 1993) for the proposition that "[a]s courts of equity, the court has power to 'reconsider, modify or vacate their previous orders so long as no intervening rights have become vested in reliance on orders." Original Motion at 5. The Original Motion was noticed for hearing on June 25, 2013.
At the hearing on June 25, 2013, the court cited the opinion of the Ninth Circuit Bankruptcy Appellate Panel (BAP) in In re Markovich, 207 B.R. 909 (9th Cir. BAP 1997), which was directly contrary to debtor's position, holding that a Chapter 7 bankruptcy debtor lacks standing to seek revocation of a discharge under Section 727(d) of the Bankruptcy Code, 11 U.S.C., and that a bankruptcy court does "not have the inherent equitable power to revoke a discharge outside the framework of § 727(d)." 207 B.R. at 911-913. The court in its tentative ruling for the hearing on June 25, 2013 indicated that it intended to follow Markovich and deny the motion to revoke discharge, but because debtor did not discuss Markovich in her moving papers, the court gave debtor at the hearing on June 25, 2013 the opportunity to respond to the tentative ruling in a supplemental brief and set a further hearing on the motion for July 23, 2013.1
On June 26, 2013, debtor filed her amended motion to revoke discharge and to dismiss, which was noticed for hearing on July 16, 2013. Debtor's Motion to Dismiss Chapter 7 Bankruptcy Case and to Revoke Discharge (Docket No. 25)("Amended Motion"), filed on June 26, 2013. Debtor in the amended motion argued that a BAP decision, such as in Markovich, is not binding on this court and that in the alternative, debtor is permitted to seek revocation of discharge based on her right to waive her discharge under 11 U.S.C. § 727(a)(10), that the plain meaning of § 727(d) that does not specifically refer to a debtor as a party to revoke a discharge does not preclude a debtor's standing to revoke in light of the right to waive a discharge under § 727(a)(10) and that "Rule 9024(b)(5)" [i.e., Fed. R. Bankr. P. 9024, incorporating by reference, Fed. R. Civ. P. 60(b)(5)] allows relief from judgment where applying it prospectively is no longer equitable. Id. at 4-6.
The further hearing on the motion to revoke discharge and to dismiss as amended was held on July 16, 2013. For the hearing on July 16, 2013, the court issued a further tentative ruling that a debtor may not waive a discharge after it has been entered, citing In re Bailey, 220 B.R. 706 (Bankr. M.D. Ga. 1998) and that debtor had not shown any change in facts to warrant prospective equitable relief under Fed. R. Civ. P. 60(b)(5).2 At the hearing, counsel for debtor argued that the court should not follow In re Bailey, citing several cases not discussed in the second amended motion, and the court requested that the debtor file a further supplemental brief, listing and discussing the cases not previously cited or discussed. At the request of counsel for debtor, the court set a deadline for filing further briefing of August 31, 2013 and set a further hearing on the matter for September 24, 2013.
On July 24, 2013, debtor filed a second amended motion to revoke discharge and to dismiss with her supplemental brief, arguing that Bailey should not be followed because other cases have upheld a debtor revoking a discharge after a discharge has been entered. Debtor's Motion to Dismiss Chapter 7 Bankruptcy Case and to Revoke Discharge [Second Amended] (Docket No. 27)("Second Amended Motion"), at 4-7, citing inter alia, In re Jones, 111 B.R. 674, 680 (Bankr. E.D. Tenn. 1990); In re Mosby, 244 B.R. 79 (Bankr. E.D. Va. 2000); In re Starling, 359 B.R. 901 (Bankr. N.D. Ill. 2007); and In re Magundayao, 313 B.R. 175, 179 n. 6 (Bankr. S.D.N.Y. 2004). The Second Amended Motion was noticed for hearing on September 24, 2013. After the hearing on September 24, 2013, the court took the motions under submission. Although debtor apparently filed three motions, they seek the same relief, i.e., revocation of her bankruptcy discharge and dismissal of her bankruptcy case.
Having considered debtor's written and oral arguments, the court now rules and denies the Second Amended Motion, the last filed motion which the court considers as superseding the prior ones.
Bankruptcy Courts Do Not Have Inherent Equitable Power to Revoke Chapter 7 Discharge Outside the Statutory Framework of the Bankruptcy Code
In the Original Motion, debtor argued that as a court of equity, the bankruptcy court has the power to reconsider, modify or vacate its previous orders so long as no intervening rights have become vested in reliance on orders. Original Motion at 5, citing, Fed. R. Bankr. P. 9024; In re Cisneros, 994 F.2d at 1466. As a general statement of legal principle, this is overbroad and incorrect with respect to revocation of discharge under the Bankruptcy Code. In re Markovich, 207 B.R. at 913, citing inter alia, Norwest Bank Washington v. Ahlers, 485 U.S. 197, 206 (1988) and Geothermal Resources International, Inc. v. Lumsden, 93 F.3d 648, 651 (9th Cir. 1996). Debtor's argument was based on language contained in the Ninth Circuit's opinion in Cisneros describing the general power of the bankruptcy court under Fed. R. Bankr. P. 9024, which makes Fed. R. Civ. P. 60 applicable to bankruptcy cases, though not specifically relating to revocation of bankruptcy discharges. In re Cisneros, 994 F.2d at 1466. Fed. R. Civ. P. 60 permits a court to grant relief from judgment or order under certain circumstances based on mistake or other equitable circumstances. Cisneros did not present the issue here of the standing of a debtor in a Chapter 7 bankruptcy case to seek revocation of discharge because the party seeking the revocation of discharge was a creditor in a case under a different chapter of the Bankruptcy Code, Chapter 13. 994 F.2d at 1464-1466.
In Markovich, the BAP upheld the bankruptcy court's ruling that it did not have the inherent equitable power to revoke a Chapter 7 debtor's discharge outside the framework of 11 U.S.C. § 727(d). 207 B.R. at 913; see also, In re Starling, 359 B.R. at 911 (). Moreover, as the BAP held in Markovich, the debtor is not one of the persons or entitiesentitled to request a revocation of the discharge under § 727(d). 207 B.R. at 912; accord, In re Bailey, 220 B.R. at 707-708; In re Gomez, 456 B.R. 574, 577 (Bankr. M.D. Fla. 2011); In re Newton, 490 B.R. 126, 127 (Bankr. D.D.C. 2013). In so holding, in Markovich, the BAP relied upon the plain language of the Bankruptcy Code governing revocation of a discharge in a Chapter 7 bankruptcy case as set out in § 727(d), and the statutory language stated in relevant part:
11 U.S.C. § 727(d)(1994), 3 quoted in In re Markovich, 207 B.R. at 911 n. 4. As noted by the BAP in Markovich, the only parties expressly authorized to seek revocation of a discharge under § 727(d) are a trustee, a creditor and the United States Trustee. 207 B.R. at 911. "Section 727(d) does not authorize a debtor to bring a motion to revoke a discharge." Id., citing, In re Eccleston, 70 B.R. 210, 212 (Bankr. N.D.N.Y. 1986)("The unequivocal language of the section limits its applicability to trustees and creditors; a debtor may not seek revocation of his discharge under Code § 727(d)."). The BAP in Markovich relied upon the plain meaning of the statutory language of § 727(d) to determine the standing of the parties to seek revocation of discharge. 207 B.R. at 912. The BAP then stated: "The language of § 727(d) clearly restricts its use to the personsnamed therein." Id. The BAP in following the command of Supreme Court precedent to interpret the meaning of the statute stated:
As the bankruptcy court held, when resolving a dispute over the meaning of a statute, the analysis begins with the language of the statute. Where the statutory language is plain, the inquiry ends and the sole function of the court is to enforce the statute according to its terms. United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989). In Ron Pair, the Supreme Court stated that "[t]he plain meaning of legislation should be conclusive, except in the 'rare cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters.'" Id. at 242, 109 S.Ct. at 1031 (citing Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571, 102 S.Ct. 3245, 3250, 73 L.Ed.2d 973 (1982)). Our...
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