The Cadle Co. v. Andersen (In re Andersen)

Citation:
The Cadle Company v. Andersen, BAP No. MB 11-092 (B.A.P. 1st Cir. Aug. 17, 2012)
Tag(s):
Ruling:
The Bankruptcy Appellate Panel of First Circuit affirmed the decision of the bankruptcy court which dismissed the complaint filed by the plaintiff, The Cadle Company, as General Partner of D.A.N. Joint Venture, L.P. (“Cadle”), seeking to revoke the discharge of the debtor, Rolf Andersen (the “Debtor”). The B.A.P., in reviewing Section 727(e) of the Bankruptcy Code, concluded that this section establishes a limitation on the time when discharge revocations may be sought. The B.A.P. further found that Bankruptcy Rule 9024, which makes Federal Rule of Civil Procedure 60 (Relief from Judgment or Order) applicable to bankruptcy proceedings, specifically prohibits the application of such rule to revocation of discharge claims under Section 727(e). The B.A.P. stated that “nonjurisdictional federal statutory” deadlines could generally be tolled. However, both Section 727(e)(1) (setting a deadline of one-year after such discharge is granted for claims under 727(d)(1)) and Section 727(e)(2) (setting a deadline or one year after the granting of discharge and the date the case is closed for claims under 727(d)(2) or (d)(3)) are jurisdictional statutes whose deadlines are firm and are essential prerequisites to a discharge revocation proceeding. The B.A.P., finding that the complaint was time-barred, rejected Cadle’s argument claiming that it amounted to “equitable tolling in masquerade” and concluded that Congress recognized strong policy reasons in favor of providing finality to a debtor, and that while these statutes may lead to unwelcome results, it prompts parties to act and produces finality for a debtor.
Procedural context:
The Debtor was granted his discharge in his Chapter 7 case on September 15, 2009, and the case was closed on September 30, 2009. Following the First Circuits reversal of the bankruptcy court’s refusal to reopen the Chapter 7 case, Cadle commenced the action that is the subject of this appeal seeking a revocation of the Debtor’s discharge under Section 727(d)(1) and Section 727(d)(3). The Debtor moved to dismiss the complaint, which was granted by the bankruptcy court. The bankruptcy court held that the action was time-barred and also held that even if it was timely, Cadle’s claim was not viable and did not support a discharge revocation as pleaded under Section 727(d)(3). Cadle appealed to the Bankruptcy Appellate Panel of the First Circuit, who affirmed the decision of the Bankruptcy Court dismissing the complaint.
Facts:
The Debtor, who filed a Chapter 7 petition in May 2009, scheduled Cadle as holding an unsecured creditor. The deadline for filing complaints objecting to the Debtor’s discharge was set for August 7, 2009, with an extension granted on Cadle’s motion to September 12, 2009. Cadle made no further requests for extensions and the Debtor was granted his discharge on on September 15, 2009, and the case was thereafter closed. The bankruptcy court subsequently denied Cadle’s belated motion seeking a further extension of the deadline for filing a complaint objecting to the Debtor’s discharge. Cadle and the Chapter 7 Trustee then filed a motion to reopen the Debtor’s case to permit them to investigate their concerns over the veracity of information reported in the Debtor’s Statement of Financial Affairs, which was also denied by the Court. Cadle appealed to the First Circuit, which reversed the refusal to reopen the case. Cadle then commenced the action that is the subject of this appeal seeking revocation of the discharge.
Judge(s):
Haines

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