In re Yashaya

• Decision Date: 31 March 2009
• Docket Number: Bankruptcy No. 08-40314-CEC.,Adversary No. 08-1100-CEC.
• Citation: 403 B.R. 278
• Parties: In re Wise K. YASHAYA, Debtor. Yesh Diamonds, Inc., Plaintiff v. Wise K. Yashaya, Defendant.
• Court: U.S. Bankruptcy Court — Eastern District of New York

Page 278

403 B.R. 278

In re Wise K. YASHAYA, Debtor.

Yesh Diamonds, Inc., Plaintiff v. Wise K. Yashaya, Defendant.

Bankruptcy No. 08-40314-CEC.

Adversary No. 08-1100-CEC.

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

March 31, 2009.

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Matin Emouna, Esq., Rashel Mikhail, Esq., Emouna & Mikhail, PC, Mineola, NY, Attorneys for Plaintiff.

Stuart P. Gelberg, Esq., Garden City, NY, Attorney for Debtor-Defendant.

DECISION

CARLA E. CRAIG, Chief Judge.

This matter comes before the Court on the motion of Wise K. Yashaya (the "Debtor") to dismiss this adversary proceeding commenced against him by Yesh Diamonds, Inc. (the "Plaintiff"). A hearing on the Debtor's motion was held on November 13, 2008.¹ Because this proceeding was not timely commenced, the motion is granted.

Jurisdiction

This Court has jurisdiction over this core proceeding under 28 U.S.C. §§ 1334(b) and 157(b)(2)(I), and the Eastern District of New York standing order of reference dated August 28, 1986. This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.

Background

The following facts are undisputed.

On January 21, 2008, the Debtor filed a voluntary petition under chapter 7 of the Bankruptcy Code. On January 22, 2008, Robert L. Geltzer (the "Trustee") was appointed chapter 7 trustee of the Debtor's bankruptcy estate.

The first meeting of creditors pursuant to § 341(a)² was scheduled for February 14, 2008. Pursuant to Federal Rules of Bankruptcy Procedure 4004 and 4007, April 14, 2008 was set as the date by which a complaint pursuant to § 727(a) objecting to the Debtor's discharge, or a complaint pursuant to § 523(c) objecting to the dischargeability of a debt, must be filed.

On March 6, 2008, the Plaintiff filed a proof of claim against the Debtor's estate in the amount of $190,000.

On April 11, 2008, the Plaintiff filed a stipulation between itself and the Debtor extending the Plaintiff's time to file a complaint objecting to the Debtor's discharge to April 21, 2008. This stipulation was never so-ordered by the Court.

On April 18, 2008, the Plaintiff filed another stipulation between itself and the Debtor extending the Plaintiff's time to file a complaint objecting to the dischargeability of a debt pursuant to § 523 to May 5, 2008. This stipulation was also never so-ordered by the Court.

The current dispute revolves principally around a stipulation between the parties dated May 5, 2008, and filed by the Plaintiff on that same date, extending the Plaintiff's time to file a complaint objecting to the dischargeability of a debt pursuant to § 523 to May 12, 2008. This stipulation, too, was never so-ordered by the Court.

On May 13, 2008, the Plaintiff commenced this adversary proceeding against the Debtor seeking to except its debt from discharge pursuant to § 523(a)(2)(A), (6), and (c).

On June 13, 2008, the Debtor filed an answer to the Plaintiff's complaint and asserted two affirmative defenses: (1) the complaint is untimely; and (2) the court lacks jurisdiction over the Debtor.

On October 24, 2008, the Debtor filed this motion to dismiss the adversary proceeding with prejudice, arguing that the Court lacks jurisdiction over the action because the complaint was filed untimely. The Debtor further argued that the Court lacks jurisdiction over the Debtor because he was not properly served with the summons and complaint. The Plaintiff opposed the Debtor's motion.

Discussion

A. Insufficient Service

The Debtor argues that this action must be dismissed because the Plaintiff did not serve him with the complaint or summons in accordance with Federal Rule of Bankruptcy Procedure ("Bankruptcy Rule") 7004 and Federal Rule of Civil Procedure ("Rule") 4. The Debtor further argues that his counsel was not served with the summons as required by Bankruptcy Rule 7004(g). The Plaintiff contends that the summons and complaint were properly served.

Personal jurisdiction over a defendant is established if the summons is served in accordance with Bankruptcy Rule 7004 and Rule 4. Fed. R. Bankr.P. 7004(f). According to those rules, a plaintiff must serve the defendant with the summons and a copy of the complaint. Fed.R.Civ.P. 4(c)(1); Fed. Bankr.R. 7004(a)(1). During the pendency of the bankruptcy case, a debtor may be served by mailing a copy of the summons and complaint to the address listed on the petition. Fed. R. Bankr.P. 7004(b)(9). If the debtor is represented by an attorney, the attorney shall also be served. Fed. R. Bankr.P. 7004(g).

If service is by mail, the summons and complaint must be deposited in the mail within 10 days after the summons is issued. Fed. R. Bankr.P. 7004(e). If the summons is not timely mailed, another summons may be issued. Id. If service is not completed within 120 days after the complaint is filed, the court may dismiss the action or order that service be made within a specified period of time. Fed. R.Civ.P. 4(m); Fed. R. Bankr.P. 7004(a)(1).

Plaintiff's counsel filed a certificate of service dated May 22, 2008, wherein he declared under penalty of perjury that, on that date, he served the summons and complaint on the Debtor by mail to 41-08 Little Neck Parkway, Little Neck, New York 11363, which is the address listed in the Debtor's bankruptcy petition.³

It is well settled that "mail which is properly addressed, stamped and deposited in the mail system creates a rebuttable presumption of receipt by the party to whom it has been addressed." Cablevision Sys. Corp. v. Malandra (In re Malandra), 206 B.R. 667, 673 (Bankr. E.D.N.Y.1997) (citing In re R.H. Macy & Co., 161 B.R. 355, 359 (Bankr.S.D.N.Y. 1993) and In re Heyward, 15 B.R. 629 (Bankr.E.D.N.Y.1981)). See also Meckel v. Cont'l Res. Co., 758 F.2d 811, 817 (2d Cir.1985) ("New York law holds that when, as here, there is proof of the office procedure followed in a regular course of business, and these procedures establish that the required notice has been properly addressed and mailed, a presumption arises that notice was received."). The Debtor's argument that he was never served, or that he never received the summons or complaint, without more, is insufficient to rebut the presumption that he received the properly addressed mail containing the summons and complaint. See Id.; In re Wintrade, Inc., No. 01-13007(AJG), 2007 WL 3104029 at *1 (Bankr.S.D.N.Y. Oct.22, 2007) ("Federal courts in New York `uniformly' take the strict view that an affidavit of non-receipt is not sufficient to rebut the presumption of receipt."); Malandra, 206 B.R. at 673-674.

However, it appears that the Debtor's counsel was never served with the summons. An affidavit of served indicates that the complaint was served on the Debtor's attorney on May 12, 2008. (Pl.'s Aff. in Opp'n Ex. C.) It is evident that the summons was not served with the complaint at that time because the summons was not issued until May 15, 2008, two days later. The Plaintiff has not submitted any evidence indicating that Debtor's counsel was served with the summons in compliance with Bankruptcy Rule 7004(g). In fact, the Plaintiff has never addressed the issue.

The Bankruptcy Rules provide that service of process on a Debtor is insufficient unless both the debtor and his attorney are served with the summons and complaint. Moll v. Parker (In re Parker), Adv. No. 07-3037, Case No. 07-30697, 2007 WL 2815561 at *1 (Bankr.E.D.Tenn. Sept.25, 2007); Dreier v. Love (In re Love), 232 B.R. 373, 377 (Bankr.E.D.Tenn. 1999); Ingala v. Sciarretto (In re Sciarretto), 170 B.R. 33, 35 (Bankr.D.Conn.1994); U.S. Escrow v. Bloomingdale (In re Bloomingdale), 137 B.R. 351, 354 (Bankr. C.D.Cal.1991). Therefore, because the Plaintiff has not established that Debtor's counsel was served with the summons, and based upon the affidavit of service on file, this Court concludes that the Plaintiff did not comply with Bankruptcy Rule 7004(g). See Fed.R.Civ.P. 4(l) (proof of service must be made to the Court by way of the server's affidavit); Fed. R. Bankr.P. 7004(a)(1). This leads to the conclusion that the Plaintiff also did not comply with Rule 4(m), made applicable to this action pursuant to Bankruptcy Rule 7004(a)(1), because service was not completed within 120 days of filing the complaint. Fed. R.Civ.P. 4(m); Fed. R. Bankr.P. 7004(a)(1).

However, the Plaintiff's failure to properly serve the Debtor's counsel or to complete service within 120 days of the filing of the complaint is not fatal to this action. Although the Court may dismiss this action based on these failures, the Court may instead "order that service be made within a specified time." Fed.R.Civ.P. 4(m); Fed. R. Bankr.P. 7004(a)(1). Notwithstanding the availability of this relief, the adversary proceeding must be dismissed because, as discussed below, the complaint was untimely filed.

B. Complaint is Untimely

The Debtor argues that the Court lacks jurisdiction over this action because the complaint was not timely filed. The Plaintiff argues that the complaint was timely filed pursuant to an agreement with the Debtor's counsel extending the time to file the complaint to May 19, 2008. The Plaintiff further argues that the failure to comply with the statute of limitations does not divest the Court of jurisdiction over this action.

Bankruptcy Rule 4007(c) provides, in pertinent part:

[A] complaint to determine the dischargeability of a debt under § 523(c) shall be filed no later than 60 days after the first date set for the meeting of creditors under § 341(a).... On motion of a party in interest, after hearing on notice, the court may for cause extend the time fixed under this subdivision. The motion shall be filed before the time has expired.

Fed. R. Bankr.P. 4007(c).

Based upon the first date set for the meeting of creditors under § 341(a) in this case, the deadline to file a complaint objecting to the dischargeability of a debt pursuant to...