United Cmty. Bank v. Harper (In re Harper)

• Decision Date: 29 January 2013
• Docket Number: Adversary No. 12–1080.,Bankruptcy No. 11–14105–WHD.
• Citation: 489 B.R. 251
• Parties: In the Matter of Timothy P. HARPER, Debtor. United Community Bank, Plaintiff, v. Timothy P. Harper, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Georgia

489 B.R. 251

In the Matter of Timothy P. HARPER, Debtor.

United Community Bank, Plaintiff,

v.Timothy P. Harper, Defendant.

Bankruptcy No. 11–14105–WHD.

Adversary No. 12–1080.

United States Bankruptcy Court,

N.D. Georgia,

Newnan Division.

Jan. 29, 2013.

Paul G. Durdaller, Stites & Harbison PLLC, Atlanta, GA, for Plaintiff.

H. Matthew Horne, Rosenzweig, Jones, Horne & Griffis, P.C., Newnan, GA, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS COMPLAINT OF UNITED COMMUNITY BANK TO DETERMINE DISCHARGEABILITY OF DEBT

W. HOMER DRAKE, Bankruptcy Judge.

INTRODUCTION

The above-styled Chapter 7 case comes before the Court on Timothy P. Harper's (hereinafter the “Debtor” or “Defendant”) Motion to Dismiss Complaint, submitted on December 20, 2012 in response to United Community Bank's (hereinafter the “Creditor” or “Plaintiff”) Complaint to Determine Dischargeability of Debt filed on November 20, 2012. This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(b)(2)(A), (I) & (J); § 1334.

Because there are no material issues of factual dispute in this case, an evidentiary hearing would be unnecessary. See McMillen v. Syndicated Office Sys., Inc. (In re McMillen), 440 B.R. 907, 910 (Bankr.N.D.Ga.2010) (Bihary, B.J.) (“[A] judgment on the pleadings is appropriate when there are no issues of material facts in dispute, and judgment may be rendered by considering the substance of the pleadings and any judicially noticed facts.” (citing Hawthorne v. Mac Adjustment,Inc., 140 F.3d 1367, 1370 (11th Cir.1998))); see also In re Faillace, Case No. A04–93282–PWB, slip op. at 1 (Bankr.N.D.Ga. Sept. 17, 2004) (Bonapfel, B.J.) (“Because there is no factual dispute in this case, an evidentiary hearing is not required.”). In reviewing the motion, the Court accepts the facts as stated in the pleadings and views them in the “light most favorable to the nonmoving party.” McMillen, 440 B.R. at 910 (citing Rivell v. Private Health Care Sys., Inc., 520 F.3d 1308, 1309 (11th Cir.2008)).

STATEMENT OF FACTS

On December 13, 2011 (hereinafter the “Petition Date”), the Debtor filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq. (hereinafter the “Code”), in the Northern District of Georgia, Newnan Division. The meeting of creditors was scheduled for January 19, 2012, in accordance with 11 U.S.C. § 341(a)¹, and the time set for objections to discharge was established as March 19, 2012. The Plaintiff acknowledges receiving notice of this deadline.

By consent order, dated March 7, 2012, the period for the Plaintiff's filing of a complaint objecting to discharge was extended to September 19, 2012, and by another motion filed before the expiration of this new deadline, a second consent order, dated September 20, 2012, extended the Plaintiff's period for filing a complaint objecting to discharge to November 18, 2012. Because November 18, 2012 was a Sunday, the time to file a complaint objecting to discharge was further lengthened to November 19, 2012, pursuant to Federal Rule of Bankruptcy Procedure (hereinafter “Rule(s)”) 9006(a)(1)(C) ².

During this interval, the Plaintiff used this time to depose the Debtor and his wife and to pursue settlement negotiations. On October 25, 2012, the settlement discussions terminated without an agreement. At this juncture, the Debtor was aware that the Creditor intended to file a complaint to determine the dischargeability of its debt. On the Friday before the deadline, counsel for the Plaintiff sought consentfrom the Debtor for a third enlargement of the period, through and including November 30, 2012. The Debtor denied the Plaintiff's request ³, and no motion was filed with the Court for a further extension, resulting in the deadline remaining November 19, 2012.

On the night of the deadline, the Plaintiff did not initiate the process of electronically filing its Complaint and Exhibits onto the Court's CM/ECF system until 11:45 P.M. The task was left in the hands of a trained and, apparently, very capable paralegal ⁴. Upon commencing the uploading of the complaint, the Plaintiff began to have difficulties. The Plaintiff's computers failed to attach the complaint and proceed to the next step, and continuously became unresponsive ⁵, or in other words, it “froze.” This required the Plaintiff to reinitiate the process. After successfully uploading the complaint, the Plaintiff began to upload the two exhibits, but again the computer froze, prompting the Creditor to once again restart the entire process, including refiling the complaint. On this third attempt, the paralegal was instructed to only submit the complaint. After another temporary delay, the complaint uploaded to the system. The time stamp for the filing was 12:02:44 on November 20, 2012 ⁶.

The following morning, the Plaintiff communicated with Irene Wiggins, the CM/ECF Administrator for the Bankruptcy Court, and explained its difficulties from the night before. In response to an inquiry regarding whether to file a “Notice of Technical Difficulties,” Ms. Wiggins responded that there was “nothing wrong with CM/ECF” system during the time period that the Plaintiff sought to upload the complaint ⁷. In response to Ms. Wiggins statements, the Plaintiff consciously took no steps under the Northern District of Georgia Bankruptcy Court CM/ECF Administrative Procedures, by motion and affidavit or by facsimile transmission, for rectifying an untimely filing due to technicalfailure ⁸. On December 20, 2012, the Debtor file the instant motion to dismiss based on Plaintiff's failure to timely file its complaint to determine dischargeability of a debt.

CONCLUSIONS OF LAW

A.

Generally, a Chapter 7 debtor is entitled to a discharge from all pre-petition debts. See11 U.S.C. § 727(a). This discharge is intended to promote the Bankruptcy Code's objective toward providing a “fresh start” for the “honest but unfortunate debtor,” but not necessarily the dishonest one. In re Moseley, 470 B.R. 223, 225 (Bankr.M.D.Fla.2012) (citing United States v. Fretz (In re Fretz), 244 F.3d 1323, 1326 (11th Cir.2001)). To that purpose, Congress created various exceptions to the dischargeability of certain debts. See generally11 U.S.C. § 523(a)(1)–(19).

The Plaintiff's complaint asserts that under Section 523(a)(2), the debt should not be discharged because of the Debtor's false representations and because of the Debtor's presentation of false documents, both made to the Plaintiff and advanced by the Debtor for the purpose of guaranteeing a loan conferred by the Plaintiff. Debts that meet the provisions of 11 U.S.C. 523(a)(2) are not automatically excepted from discharge. In fact, the Code provides that such debts will actually be discharged, except as provided in 11 U.S.C. § 523(a)(3)(B) (which does not apply in this case), or “unless on request of the creditor to whom such debt is owed, and after notice and a hearing, the court determines” otherwise. 11 U.S.C. § 523(c).

The proper process for objecting to the discharge of a certain debt is to initiate an adversary proceeding by filing a complaint, seeFed. R. Bankr.P. 7001(4) & (6); see alsoFed. R. Bankr.P. 7003, and the Code sets the deadline for the filing of such a complaint, objecting to discharge under Section 523(c) of the Code, at sixty (60) days after the first date set for the meeting of creditors under 11 U.S.C. § 341. SeeFed. R. Bankr.P. 4007(c). Additionally, Rule 4007(c) does not permit extensions, if sought after the expiration of this time frame, id., and the Court is only authorized to extend it as prescribed within the Rule. SeeFed. R. Bankr.P. 9006(b)(3). However, the Plaintiff believes that this Court may stretch the deadline, notwithstanding the plain language in the Rules, by “equitably tolling” the sixty day deadline period under the equitable powers granted in Section 105 of the Code.

B.

Although other Circuits have recognized equitable tolling in the context of Rule 4007(c)⁹, the Eleventh Circuit has held that the Rule 4007 time restriction is not subject to such an equitable remedy. See Byrd v. Alton (In re Alton), 837 F.2d 457 (11th Cir.1988). In Byrd, the debtor neglected to list the creditor in the schedules, but had generally noticed the creditor of the pending bankruptcy, although such notice failed to indicate the date the debtor actually filed for Chapter 11 relief or the date set for the creditors meeting. Id. at 458. Additionally, because Byrd was never listed as a creditor, neither he nor his attorney was notified by the court of the creditors meeting or the deadline for filing complaints concerning the dischargeability of debts. Id. As a consequence, Byrd failed to file his dischargeability action in a timely manner, and the bankruptcy court denied Byrd's post-deadline motion to enlarge the period. Id.

On appeal, Byrd argued numerous grounds for relief, including that the principles of equity demanded that he be allowed to file his complaint, as it was the debtor's own conduct, by not scheduling him as a creditor, which caused him to miss the deadline. Id. Although the Eleventh Circuit gave some attention to the actual substance of Byrd's equitable argument ¹⁰, the appellate court found that the time period in Rule 4007(c) is absolute:

The dictates of the Code and Rules are clear. It is not our place to change them. Under Rule 4007(c), any motion to extend the time period for filing a dischargeability complaint must be made before the running of that period. There is almost universal agreement that the provisions of F.R.B.P. 4007(c) are mandatory and do not allow the Court any discretion to grant a late filed motion to extend time to file a dischargeability complaint.”

Id. at 459 (internal quotations omitted) (emphasis in the original). Therefore, under Byrd, this Court is without discretion to extend the deadline outside of the methods prescribed in Rule 4007(c).

The Plaintiff argues that Byrd was...