In re Kearney
| Citation | 105 BR 260 |
| Decision Date | 19 September 1989 |
| Docket Number | Bankruptcy No. 88-13527F,Adv. No. 89-0248F. |
| Parties | In re Marlene E. KEARNEY, Debtor. P.S.T.C. EMPLOYEES FEDERAL CREDIT UNION, Plaintiff, v. Marlene E. KEARNEY, Defendant. |
| Court | United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania |
James Winfred Pearson, Jr., Rudolph Seidner, Philadelphia, Pa., for plaintiff, P.S.T.C. Employees Federal Credit Union.
Allan K. Marshall, Philadelphia, Pa., for debtor, Marlene E. Kearney.
Leslie Baskin, Philadelphia, Pa., trustee.
Before me is defendant debtor's motion to dismiss an adversary proceeding commenced by a creditor, P.S.T.C. Employees Federal Credit Union. The basis of debtor's motion is that the plaintiff's "Complaint Objecting to Discharge of a Particular Debt" was filed untimely.1 The plaintiff asserts that, under the circumstances, its complaint was filed in accordance with applicable bankruptcy rules. The relevant underlying facts are not disputed, and are as follows.
The defendant, Marlene Kearney, filed her chapter 7 bankruptcy petition on October 11, 1988. Pursuant to 11 U.S.C. § 341(a) the Clerk of the Bankruptcy Court on October 27, 1988 sent notice of the meeting of creditors, which was scheduled for November 17, 1988. The notice stated the date, time and place set for this meeting, identified the interim chapter 7 trustee (as well as the debtor and her attorney), and further stated that "the deadline for complaints is 01/16/89." Ex. A. This notice was sent to and received by the credit union.
The plaintiff and plaintiff's attorney appeared at the scheduled meeting of creditors; the interim trustee then informed those present that due to a potential conflict of interest he was being replaced by another interim trustee. The plaintiff was then told that the bankruptcy court would issue a notice naming the replacement interim trustee and scheduling another 341(a) meeting. Indeed, on January 4, 1989 the Clerk's office issued a notice setting January 26, 1989 as the new 341(a) meeting date. This notice, typed onto the same form as the notice issued in October, 1988, stated that the deadline for filing complaints was March 27, 1989. Ex. 1.
Plaintiff, accompanied by counsel, attended the January meeting of creditors and examined the debtor. The plaintiff thereafter filed an adversary proceeding on March 24, 1989, asserting that the debtor violated § 727(a)(4) by knowingly and fraudulently receiving money from the plaintiff credit union. This filing occurred well beyond the period established by Rule 4004(a), thus triggering the instant motion by the debtor.
The plaintiff urges that its complaint was filed timely in that it relied in good faith on the fact that "the Court, on its own motion, may and did extend the time to March 27, 1989," Plaintiff's Memorandum of Law at 1, and contends that this court should exercise its equitable power and allow the dischargeability complaint. The credit union further argues that the debtor is not prejudiced by having to answer to the complaint. For the reasons set forth below, however, I am constrained to grant debtor's motion to dismiss the complaint which, I conclude, was filed untimely.
Resolution of this controversy depends upon an interpretation of various provisions of the Bankruptcy Rules and their counterparts under the former Bankruptcy Act. Of primary interest is Rule 4004, which states in pertinent part:
Thus, the time within which a party may object to discharge is set automatically by the bankruptcy rule as no later than 60 days after the first date set for the § 341(a) meeting of creditors. (Here, the filing deadline was January 16, 1989.) This provision is widely understood to require a literal reading and require that complaints be so filed even if the meeting is continued to a later date. E.g., In re Hill, 811 F.2d 484 (9th Cir.1987); In re Rhodes, 71 B.R. 206 (9th Cir.BAP 1987); In re Bartlett, 87 B.R. 445 (Bankr.W.D.Ky.1988); In re Tieman, 73 B.R. 22 (Bankr.S.D.Ohio 1987); In re McDowell, 57 B.R. 310 (Bankr.M.D.Pa. 1986), aff'd, 85 B.R. 717 (M.D.Pa.1986).2 Certainly, this is the result in this district. In re Reppert, 84 B.R. 37 (Bankr.E.D.Pa. 1988); In re Betinsky, 58 B.R. 814 (Bankr. E.D.Pa.1986); In re Yancey, 46 B.R. 621, 623 (Bankr.E.D.Pa.1985). Compare F & M Marquette Nat'l Bank v. Richards, 780 F.2d 24 (8th Cir.1985) (). But see In re Keefe, 48 B.R. 717, 719 (Bankr.D.S.D.1985) ().
The procedure established by Rule 4004(a) is a departure from prior bankruptcy Rule 404(a), under which the court was privileged to enter an order setting the time for filing complaints within a period not less than 30 days nor more than 90 days subsequent to the first date set for the meeting of creditors. Neeley v. Murchison, 815 F.2d 345, 346 (5th Cir.1987); In re Figueroa, 33 B.R. 298 (Bankr.S.D.N.Y. 1983). The current Bankr.Rule 4004(a) removed the prerogative of setting the date from the court, thereby providing uniformity as to the precise date for filing complaints objecting to discharge.
Subsection (b) of Rule 4004 is also a departure from prior practice in that a party in interest must now request an extension of time to file by way of motion and before the 60 day period has elapsed. Under former Rule 404(c), the bankruptcy judge was empowered to extend the time sua sponte. This change was fortified by the adoption of Rule 9006(b)(3), which allows the court to enlarge the time for filing a complaint under 4004(a) or 4007(c) "only to the extent and under the conditions stated in those rules." Its predecessor, Rule 906(b), allowed the court to grant a late-filed request for an extension of time for "excusable neglect." See, e.g., In re Magouirk, 693 F.2d 948 (9th Cir.1982). Current Rule 9006(b)(3), however, forbids enlargement of time for excusable neglect. "It is clear that by prohibiting that which it formerly permitted, Congress intended to no longer subject the preeminent fresh start policy to the uncertainties of excusable neglect in failing to timely object to discharge of a claim." In re Figueroa, 33 B.R. at 300. See also Neeley v. Murchison, 815 F.2d at 346; In re Hill, 811 F.2d at 486; In re Rhodes, 61 B.R. at 629-30; In re Kirsch, 65 B.R. 297, 300 (Bankr.N.D.Ill. 1986). Accord, e.g., In re Lane, 37 B.R. 410, 414 (Bankr.E.D.Va.1984).
Furthermore, for purposes of this analysis Bankruptcy Rule 4007(c) is virtually identical to Rule 4004(a), (b), and provides:
A complaint to determine the dischargeability of any debt pursuant to § 523(c) of the Code shall be filed not later than 60 days following the first date set for the meeting of creditors held pursuant to § 341(a). The court shall give all creditors not less than 30 days notice of the time so fixed in the manner provided in Rule 2002. On motion of any party in interest, after hearing on notice, the court may for cause extend the time fixed under this subdivision. The motion shall be made before the time has expired.
This rule too departs from prior practice; former Rule 409(a)(2) set a limitations period of not less than 30 nor more than 90 days after the first date set for the § 341(a) meeting for filing complaints. While the court set the deadline under the former rule, the deadline is now created automatically for complaints to discharge of a debt, pursuant to § 523(a)(2), (4), and (6). Thus, decisions interpreting Rule 4007(c) are relevant to the instant controversy. In re Anwiler, 99 B.R. 41 (Bankr.S. D.Cal.1989).
The creditor argues that the filing of this adversary proceeding should be allowed as timely because plaintiff justifiably relied on notice sent out by the bankruptcy clerk's office. I conclude, for the reasons stated below, that this position is without merit.
Numerous courts have observed, in a variety of factual settings, that notices sent by the bankruptcy clerk setting erroneous deadlines do not excuse a creditor's failure to comply with the 60 day limit as long as the creditor knew of the bankruptcy filing. As the rules have removed from the bankruptcy court the discretion to set the deadline date, as the court may no longer sua sponte extend that deadline and may no longer extend the expired deadline upon the excusable neglect of a party, and as a motion to extend may now be brought only before the statutory 60 day period has expired, I am persuaded that a literal and strict reading of the rules is required. That is, as the bankruptcy court's discretion in this area has been eroded by carefully considered rules, the court should be cautious in exercising any equitable power. Accord, e.g., In re Lane. See In re Anwiler, 99 B.R. at 45-46; In re Rhodes, 61 B.R. at 630; In re Barr, 47 B.R. 334 (Bankr.E. D.N.Y.1985).
Thus, in Neeley v. Murchison, it was held that where written notice from the clerk's office failed to supply the deadline for filing objections to discharge, and employees of that office erroneously informed the attorney, after inquiry, that no such date had been set,...
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