- Case Type:
- Case Status:
- BAP No. SC-18-1121-SFL (9th Circuit, Sep 03,2019) Published
- BAP for 9th Cir. affirmed ruling of bankruptcy court (SD Cal.) overruling debtors' claim objection. Statute of limitations was continuously tolled by applicable state law during pendency of bankruptcy and entry of discharge did not re-start limitations period. Discharge injunction further tolled California 4-year limitations period.
- Procedural context:
- Bankruptcy court (SD Cal.) overruled debtors objection to mortgagee's unsecured proof of claim. Debtors appealed to BAP for 9th Cir.
- In August 2012, debtors commenced chapter 7 case. Because of lack of assets, the bankruptcy court did not set a deadline to file proofs of claim, and its notice of the bankruptcy filing instructed creditors not to file proofs of claim. Chapter 7 trustee promptly issued final report stating that there were no assets to distribute. Within months, debtors received discharge, and the case was closed. In August 2017, roughly four and a half years after the case was closed, debtors moved to reopen their case, alleging they recently discovered a potential prepetition personal injury or product liability cause of action. The bankruptcy court reopened the case, and a new chapter 7 trustee was appointed. The bankruptcy court issued notice of potential distribution with bar date. Creditor (Quantum) filed proof of claim on behalf of MOMA for $832.30. Debtors objected that claim was barred by statute of limitations.
- Spraker, Faris, Lafferty
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