In re Reynolds
Decision Date | 15 November 1995 |
Docket Number | Bankruptcy No. 686-67522-aer7. Adv. No. 95-6085-aer. |
Parties | In re David and Jeanette REYNOLDS, Debtors. Eric R.T. ROOST, Trustee, Plaintiff, v. David and Jeanette REYNOLDS, Defendants. |
Court | United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Oregon |
Eric R.T. Roost, Eugene, OR, Plaintiff Pro se.
Alan G. Seligson, Eugene, OR, for Defendants.
THIS MATTER comes before the court upon the defendants' motion for judgment on the pleadings made orally at a pretrial conference held herein on May 23, 1995. As a result of defendants' motion, this court established a briefing schedule. The last brief was filed on July 12, 1995 and this matter is now ripe for decision.
This is an adversary proceeding brought by the trustee, as plaintiff, seeking to revoke the discharge of the debtors-defendants pursuant to 11 USC § 727(d)(1). In substance, plaintiff alleges in his complaint that the defendants filed their petition for relief under Chapter 7 of the Bankruptcy Code on March 20, 1986. In their schedules, the defendants have indicated that they had no interest in any real property. They further testified at their first meeting of creditors that they owned no real property or any interest therein. The testimony and representations of the defendants were knowingly and fraudulently false because they had, on December 20, 1977, entered into a land sale contract to purchase real property located at Route 1 Box 80-C, Oakland, Oregon, from Dewey and Eugenia Gaddis. The defendants knowingly concealed this property interest and obtained their discharge through fraud. Plaintiff did not learn about such fraud until after the granting of the defendants' discharge.
The defendants filed their answer to the plaintiff's complaint. The answer contains an affirmative defense indicating that the plaintiff's action is time barred as the plaintiff has not commenced this action within the time required by 11 USC § 727(e)(1). In their answer to the complaint, the defendants indicate that they were granted their discharge in the Chapter 7 case on or about December 23, 1986. The plaintiff's complaint was filed on April 10, 1995, more than eight years after the defendants received their discharge.
The sole question presented to this court for a decision is whether or not the plaintiff's complaint is time barred for failing to commence the action within the time required by 11 USC § 727(e)(1).
All statutory references are to the Bankruptcy Code, Title 11 United States Code, unless otherwise indicated.
Motions for judgment on the pleadings are governed by FRCP 12(c) made applicable by Federal Rule of Bankruptcy Procedure 7012(b). FRCP 12(c) provides in part as follows:
5A Wright & Miller, Federal Practice and Procedure, pp. 518-519 (1990).
In this adversary proceeding, the plaintiff seeks a judgment revoking the debtors' discharge pursuant to § 727(d)(1), which provides that:
The defendants contend that the plaintiff's action is time barred by § 727(e)(1) which provides that:
Plaintiff concedes that his complaint has not been filed within one year after the granting of the discharge. Plaintiff maintains, however, that the doctrine of "equitable tolling" should be applied to toll the period of time provided in § 727(e)(1) such that the one year period begins after the discovery, by the plaintiff, of the fraudulent concealment, by the defendants, of their interest in real property.
The doctrine of equitable tolling was defined by the Supreme Court in Holmberg v. Armbrecht, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743 (1946) as follows:
In spite of the broad statement set forth above, the Supreme Court has not, however, applied the doctrine in every case. In Lampf, Pleva, Lipkind, et al v. Gilbertson, 501 U.S. 350, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991), an action was brought by investors against a New Jersey law firm alleging violations of § 10(b) of the Securities Exchange Act of 1934 and Rule 10(b)(5). There, the Supreme Court noted that several of the statutory provisions contained in the Securities Exchange Act (Title 15 United States Code) provided that an action must be brought to enforce any liability under the Act within one year after the discovery of the facts constituting the violation and within three years after such a violation. See 15 USC § 78(i)(e) and other similar statutes. In that case, plaintiffs urged that the doctrine of equitable tolling should be applied since they did not learn of the violation in time to comply with the time constraints of the statutes. The Supreme Court held:
A number of courts have considered the question of whether or not the doctrine of equitable tolling can be applied within the context of § 727(e)(1). Most of them held that the doctrine may not be applied. See In re Culton, 161 B.R. 76 (Bankr.M.D.Fla.1993); In re Bulbin, 122 B.R. 161 (Bankr.D.C.1990); and In re Fresquez, 167 B.R. 973 (Bankr. D.N.M.1994); but see In re Succa, 125 B.R. 168 (Bankr.W.D.Tex.1991) where the court reached a contrary result.
In this district the question has been considered by Judge Perris in In re Ford, 159 B.R. 590 (Bankr.D.Or.1993). There, the plaintiff-creditor had a viable objection to the debtor's discharge, but was unable to timely pursue the objection because the debtor had neither scheduled plaintiff's debt nor notified the plaintiff of the bankruptcy until 19 months after the case had been filed. The plaintiff brought suit seeking a judgment declaring her debt to be excepted from discharge pursuant to § 523(a)(3)(a) and denying the debtor's discharge pursuant to § 727(d)(1). Judge Perris noted that:
The plaintiff argues that two cases decided by the Ninth Circuit Court Of Appeals in 1994 require that the Ford decision be revisited. See In re United Insurance Management, Inc., 14 F.3d 1380 (9th Cir.1994) and In re Olsen 36 F.3d 71 (9th Cir.1994).
In United Insurance Management, Inc. the court held that § 546(a)(1) is subject to equitable tolling in proper circumstances.1 In Olsen, the court concluded that equitable tolling may be applied to § 549(d).2
Accordingly, the plaintiff argues that since equitable tolling may be applied in cases dealing with the exercise, by the trustee, of his avoidance powers and in cases involving recovery of unauthorized postpetition transfers of property of the estate, that the doctrine should also apply, in appropriate circumstances, to actions brought under § 727(d)(1). Since the cases cited above were decided after the decision in In re Ford, the plaintiff urges this court to revisit that holding.
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