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In re Carol Engen

Summarizing by Bradley Pearce

Moushigian v. Marderosian

Moushigian v. Marderosian, No. 13-2295 (1st Cir)
The First Circuit affirmed the bankruptcy court's determination that the Marderosians' discharge barred Moushigian from further prosecution of his state court action. The First Circuit determined that the Bankruptcy Court's interpretation of the Bankruptcy Court's own order was not improper, the Bankruptcy Court had not been required to make findings of fact on an uncontested motion, and that the Bankruptcy Court had not been required to use its equitable authority to relieve Moushigian from the impact of his counsel's mistake of not timely filing an adversary proceeding under section 523(a) or moving to further extend the deadline to file an action under section 523(a).
Procedural context:
An appeal of the District Court's affirmation of the Bankruptcy Court's denial of Moushigian's motion to affirm that the Marderosians' discharge did not bar Moushigian's efforts to continue prosecuting his state court action.
Prior to the Marderosians filing their Chapter 7 bankruptcy petition, Moushigian sued the Marderosians in state court for fraud and embezzlement. After the Marderosians filed their bankruptcy petition, Moushigian moved for relief from the automatic stay and to deem the pending state action sufficient to satisfy the deadline for filing a proceeding to except his potential debt from discharge. The Bankruptcy Court issued an order stating "relief from stay granted." In a separate prior order, the Bankruptcy Court extended the deadline to file an action under section 523(a) and required that Moushigian apply for further extensions. Moushigian made no further effort to extend the time to file a complaint to except his debt from discharge. The Bankruptcy Court granted Marderosians a discharge. Moushigian later moved for an order stating that the discharge did not affect his efforts to prosecute his state court action and except the debt from discharge. The Bankruptcy Court denied the motion in pertinent part and the subsequent motion to reconsider. The Bankruptcy Court determined that the order on Moushigian's motion for relief from stay had not relieved Moushigian of the deadline to file an action under section 523 or seek an extension of the deadline.
Howard, Kayatta, McCafferty (sitting by designation).

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