Mahakian v. William Maxwell Investments, LLC (In re Mahakian)

Summarized by Thomas Phinney , Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP
10 years 10 months ago

Citation:

BAP No. NV-14-1115-JuKuD (April 13, 2015)

Tag(s):

Ruling:

The BAP held that the Debtor's failure to schedule a creditor in an asset chapter 7 case, such that the creditor did not have notice and thus did not timely file a proof of claim, meant that pursuant to the strict terms of Section 523(a)(3) the creditor's claim was not discharged. The BAP also held Debtor could not remedy the problem by filing a late proof of claim on behalf of the creditor and asking that it be considered timely under an excusable neglect standard.

Procedural context:

Debtor filed an adversary proceeding seeking a determination that Creditor's claim was discharged. On cross-motions for summary judgment, the bankruptcy court entered judgment that the debt was not discharged. Debtor appealed to the BAP.

Facts:

Debtor failed to schedule a mortgage guarantee claim in his bankruptcy. Scheduled creditors were served with a notice to file proofs of claim. The Bank had no notice of the bankruptcy, foreclosed, and then sued the debtor in state court on the guarantee to recover the deficiency. Debtor then filed a late proof of claim on behalf of the bank. The Debtor filed an adversary proceeding seeking a declaration that the debt was discharged, and that the late-filing of the proof of claim was allowable based upon excusable neglect.

Judge(s):

JURY, KURTZ, and DUNN, Bankruptcy Judges.

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