Fitzhugh v. Birdsell

The deadline for objecting to discharge can be extended under Rule 4004(d) after the deadline has passed.

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Case Type:
Consumer
Case Status:
Reversed and Remanded
Citation:
AZ-17-1141-BLKu (9th Circuit, Apr 13,2018) Not Published
Tag(s):
Ruling:
BAP for 9th Circuit reversed and remanded judgment of bankruptcy court (D. Az.) revoking debtor's discharge under 11 USC 727. Bankruptcy court applied incorrect standard of law. Trustee was required to prove that he was unaware of alleged fraud at time discharge entered; Trustee's knowledge had to arise after entry of discharge. Bankruptcy court factual finding that Trustee knew of alleged fraud on the bar date, which preceded the entry of discharge date, established that Trustee failed to satisfy necessary elements of 727(d)(1) or 727(d)(2).
Procedural context:
Bankruptcy court (D. Az.) entered judgment revoking debtor's discharge under 11 USC 727(d)(1) and (d)(2). Debtor defendant appealed to BAP for 9th Circuit.
Facts:
Personal injury lawyer practiced as a sole proprietor, was suspended from practice of law, then filed chapter 7. Debtor utilized a petition preparer. Debtor failed to disclose in SOFA or schedules that he was owed any money by his clients or that he had any pending cases in which he might receive or be entitled to receive a contingency fee. Debtor also failed to disclose any ownership interest in any entities or that he was the plaintiff in any lawsuits. In fact, debtor held several contingency fee claims to pending cases. One case settled shortly after his chapter 7 filing. Debtor asserted he was entitled to fee, and it was not property of bankruptcy estate, because it was owed to his former P.C. Debtor formed LLC months after his chapter 7 filing. Chapter 7 trustee pursued fee claim; debtor asserted it was owed to his LLC. Debtor sought to dismiss bankruptcy, then sought to exempt fee as wages. The trustee settled another contingency fee claim. Debtor also pursued claim postpetition as plaintiff against former clients. Trustee was aware of nondisclosed claims prior to entry of debtor's discharge. After entry of discharge, Trustee sued to revoke discharge.
Judge(s):
Brand, Lafferty, Kurtz

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