In re Malandra

• Decision Date: 31 March 1997
• Docket Number: Bankruptcy No. 095-72750-511,Adv. No. 096-7014-511.
• Citation: 206 BR 667
• Parties: In re Louis MALANDRA, Debtor. CABLEVISION SYSTEMS CORPORATION, Plaintiff, v. Louis MALANDRA, Defendant.
• Court: U.S. Bankruptcy Court — Eastern District of New York

206 B.R. 667 (1997)

In re Louis MALANDRA, Debtor CABLEVISION SYSTEMS CORPORATION, Plaintiff, v. Louis MALANDRA, Defendant.

Bankruptcy No. 095-72750-511, Adv. No. 096-7014-511.

United States Bankruptcy Court, E.D. New York.

March 31, 1997.

Daniel J. Lefkowitz by Daniel J. Lefkowitz, Jericho, NY, for Plaintiff.

Macco Hackeling & Stern by C. Stephen Hackeling, Huntington, NY, for defendant.

OPINION

(Motion for Extension of Time to File Complaint)

MELANIE L. CYGANOWSKI, Bankruptcy Judge:

Louis Malandra ("Malandra" or the "Debtor") filed a voluntary petition for relief under Chapter 7 on October 2, 1995. The meeting of creditors pursuant to 11 U.S.C. § 341 (the "§ 341 meeting") was scheduled for November 2, 1995. On October 6, 1995, the Court mailed a notice to creditors advising them of the § 341 meeting and informing them that the deadline to file a complaint objecting to discharge of the Debtor or to determine dischargeability of certain types of debts was fixed at January 2, 1996 (the "Notice").¹ A certificate of service was filed with the Court on October 10, 1995, indicating that the Notice was mailed on October 6th to the plaintiff, Cablevision Systems Corporation ("Cablevision"), at "Cablevision, c/o Daniel J. Lefkowitz, Esq., 350 Jericho Tpk, Suite 100, Jericho, NY 11753." The Court file does not contain any notices which were returned to the Court by the United States Postal Service.²

The Chapter 7 Trustee conducted the § 341 meeting on November 2, 1995 and, on November 15, 1995, filed a "no-asset" report with the Court.

As of January 2, 1996, no creditor had filed a complaint objecting to the Debtor's discharge. Accordingly, pursuant to Federal Rule of Bankruptcy Procedure ("FRBP") 4007(c) and 11 U.S.C. § 727, the Court entered an Order on January 17, 1996 discharging the Debtor from all dischargeable debts (the "Discharge Order"). On January 19, 1996, the Clerk mailed a copy of the Discharge Order to all creditors, including Cablevision, at "Cablevision, c/o Daniel J. Lefkowitz, Esq., 350 Jericho Tpk, Suite 100, Jericho, NY 11753" (i.e., the same address to which the Notice was mailed). Cablevision's counsel concedes receipt of the Discharge Order.

On January 31, 1996, Cablevision filed the above-captioned adversary proceeding complaint, seeking a determination of dischargeability of the debt owed to it pursuant to 11 U.S.C. § 523(a)(6).³ The complaint was filed on Cablevision's behalf by Daniel J. Lefkowitz, Esq. The complaint alleges, inter alia, that Cablevision holds a claim against the Debtor in excess of $800,000 as a result of a judgment entered against him in the United States District Court for the Eastern District of New York following a decision by Hon. David F. Jordan, U.S. Magistrate Judge, on April 10, 1992 (the "District Court Decision"). The complaint further alleges that Cablevision was listed on Schedule D of the Debtor's petition as a secured creditor holding a judgment lien against the Debtor's residence. The complaint avers that the District Court Decision found that the Debtor was liable for modifying and selling at least 350 television decoding devices designed and intended to enable their purchasers to receive unauthorized cable television. It further alleges that (i) the Debtor had modified and sold the "pirate" cable descramblers intentionally and deliberately, (ii) the Debtor knew or should have known that his actions would harm Cablevision, (iii) the Debtor intended to harm Cablevision, and (iv) Cablevision was in fact harmed. It therefore seeks a determination that the debt owed to it is nondischargeable. A review of the docket in the adversary proceeding shows that Cablevision has not yet filed a certificate of service of the summons and complaint; nor has the Debtor answered or moved with respect to the complaint.

On February 5, 1996 — well after the January 2nd date by which creditors were required to object to discharge or dischargeability and after the January 31st date on which it commenced the within action, Cablevision filed a motion for an Order "pursuant to 11 U.S.C. 105 and 523(a)(6) and (c) and Rules 4007 and 9006 granting plaintiff an extension of time in which to file its complaint objecting to the discharge of the obligation of Louis Malandra . . . to it."

The motion alleges that on January 22, 1996, the Discharge Order was received at the offices of plaintiff's counsel, Daniel J. Lefkowitz, Esq., P.C. (the "Lefkowitz Firm"). Cablevision contends that the

Discharge notice was the first notice of any kind regarding the debtor\'s Chapter 7 case received by the Lefkowitz Firm. Prior to that time, neither Cablevision nor the Lefkowitz Firm had any notice or knowledge, either actual, constructive or otherwise, of the debtor\'s Chapter 7 case.

See Notice of Motion, dated Feb. 1, 1996, ¶ 9. The motion is supported by the affidavits of two attorneys at the Lefkowitz Firm, who recount the manner in which their office processes mail, aver that had a bankruptcy notice been received, they would have seen it, and deny receipt of any notice of the Malandra bankruptcy case.

Arguments of the Parties

The Debtor urges that a motion to extend the time to file a complaint to determine dischargeability must, pursuant to FRBP 4007(c),⁴ be made before the time has expired, and that the Court has no discretion to grant a motion which is untimely made. The Debtor asserts that notice to Cablevision's counsel constitutes "notice sufficient to apply the actual 4007 Statute of Limitations," Def.'s Aff. in Opp. ¶ 8, and that there is a presumption of the validity and regularity of service of the Clerk's notice. Lastly, the Debtor contends that the Court should not grant an extension, even if it finds that Cablevision did not receive any notice prior to the Discharge Order, because "Congress' intent to promote the expeditious and efficient administration of the Bankruptcy process is revealed in its acceptance of the rules limiting the Bankruptcy Court's discretion to extend § 523(c) bar dates, notwithstanding that notices for unknown reasons may not have been received, so long as the process of noticing is constitutionally sound." Id. at ¶ 9, quoting In re Pratt, 165 B.R. 759 (Bankr.D.Conn. 1994).

Cablevision urges that the Court may extend the time where the creditor had no actual notice of the deadline. It argues that its factual affidavits rebut the presumption of receipt which is raised by the Court's certificate of service, and that a judicially-created exception to the rule that a motion must be filed before the bar date expires is therefore warranted. It further contends that to strictly apply Rules 4007 and 9006 when it had no notice of the bar date would deny it due process. Lastly, Cablevision contends that this Court has the power under 11 U.S.C. § 105 to grant an extension of time, particularly since it received no notice, its complaint was filed promptly upon learning of the bankruptcy, it holds a claim which, under controlling precedent, would be nondischargeable and its claim is large, representing approximately 97% of all claims scheduled by the Debtor. In its arguments, Cablevision does not, however, address or respond to the Debtor's assertion that notice to the attorney (i.e., the Lefkowitz Firm) constitutes sufficient notice to the creditor.

DISCUSSION

This case arises in a somewhat peculiar context, as Cablevision has filed an adversary proceeding (as to which no certificate of service of the summons and complaint or answer has been filed) and, subsequently thereto, moved for an extension of time to do so. Despite the odd procedural posture, however, it is clear that what the parties are asking the Court to decide is whether Cablevision's complaint is timely.⁵ In addressing this issue, the Court must look at the statutory context within which it arises.

Section 523 and FRBP 4007, 9006

Rule 4007(c) requires that a complaint, such as Cablevision's, that seeks to except a debt from discharge on the ground that it is of the kind specified in paragraphs (2), (4) or (6) of Section 523(a)⁶ must be filed within 60 days following the first date set for the § 341 meeting. Alternatively, Rule 4007(c) permits that time to be extended on motion, after a hearing on notice, so long as "the motion is made before the time has expired." Rule 4007(c) does not stand alone, however. Rather, Rule 9006(b)(3) bears on the subject and states, in pertinent part, that:

The court may enlarge the time for taking action under Rule . . . 4007(c) . . . only to the extent and under the conditions stated in those rules.

Courts have been divided on the issue of whether a bankruptcy court has the power to extend the time period afforded under Rule 4007(c) after it has expired. Some have held that the time limitation imposed by Rule 4007(c) is jurisdictional and that there is no discretion under Rule 9006(b)(3) to grant an extension after expiration of the time allowed. See, e.g., In re Klein, 64 B.R. 372 (Bankr.E.D.N.Y.1986); In re Booth, 103 B.R. 800, 802 (Bankr.S.D.Miss.1989) ("Because Rules 4007(c) and 9006(b) provide a jurisdictional basis for complaints objecting to dischargeability under Section 523(c), there can be no waiver for objecting to the timeliness of the complaint"); In re Kirsch, 65 B.R. 297, 299 (Bankr.N.D.Ill.1986) ("Once the Rule 4007(c) time has elapsed, a properly scheduled creditor can never raise the question of the nondischargeability of a claim . . . in the Bankruptcy Court or in any other forum").

A second line of cases has permitted late filings of complaints to determine dischargeability in certain limited circumstances, such as where a bankruptcy court may have inadvertently, but nonetheless affirmatively, misled a creditor by setting an incorrect deadline. See, e.g., In re Kennerley, 995 F.2d 145, 148 (9th Cir.1993) (dictum); In re Themy, 6 F.3d 688, 690 (10th Cir.1993).

A third line of cases, and that which has been adopted by the Court of...