Sullivan v. Costa (In re Costa)

11-10672-FJB (unpublished)
The Bankruptcy Appellate Panel for the 1st Circuit affirmed a Massachusetts Bankruptcy Court's ruling, which held that a creditor's untimely filing of a motion objecting to discharge had lapsed. The Appellate Panel's ruling relied on the language and case law surrounding rules 4004, 4007, and 9006 of Bankruptcy procedure, which set firm procedural time limits for bankruptcy filings. F. R. Bank. P. 4004(b), 4007(c), 9006(c); Kontrick V. Ryan, 540 U.S. 443 (2004).
Procedural context:
Debtor filed a Chapter 7 bankruptcy that sought to discharge, inter alia, a $400,000 debt owed to Creditor. Creditor filed an untimely motion with the bankruptcy court to: (1) amend his 11 USC 523(c) complaint objecting to discharge to include a 727(a) objection to discharge; and (2) file for an extension, nunc pro tunc, to include a 523(c) and 727(a) objections to discharge in his adversary complaint. The bankruptcy court ruled that the Creditor's attempts to both amend his complaint and file for an extension had lapsed. The Creditor appealed the ruling to the Bankruptcy Appellate Panel for the 1st Circuit.
Andrew J. Costa, the debtor-appellee ("Costa"), filed a Chapter 7 petition with the United States Bankruptcy Court for the District of Massachusetts ("Court"). On schedule D Costa listed Gilbert C. Sullivan ("Sullivan") as a creditor holding a $400,000 unsecured claim. Originally, the Court set an April 25, 2011 deadline for filing objections to discharge, but first Costa and later Sullivan motion for extensions, which were granted. At this point, the deadline to object to discharge was September 15, 2011, which passed without Sullivan filing a complaint or motion. On October 4, 2011, Sullivan filed a motion to extend, which was granted. The new deadline was November 22, 2011. Sullivan filed a 523(c) complaint on November 21, 2011. Costa objected to Sullivan's complaint, claiming that it was time-barred. On January 6, 2012, Sullivan motioned the Court to amend his complaint, which Costa claimed was time-barred. The Court held in favor of Costa. The Bankruptcy Appellate Panel ("Panel") affirmed the Court's ruling. First, the Panel held that Sullivan's complaint filed on November 21st was time-barred because it was past the September 15th deadline, which, based on rule 4007 and case law, precludes a bankruptcy court from extending a deadline without a motion for an extension filed prior to the deadline. Second, the Panel denied Sullivan's motion to amend his complaint because, similar to the ruling concerning the Sullivan's November 21st filing, Sullivan did not motion the Court to extend the deadline prior to September 15, 2011. Third, section 105 of the bankruptcy code that vests a bankruptcy court power to set dates and times must be consistent with other provisions of the bankruptcy code and rules, which under rule 4007 allows a creditor 60 days to file an objection. Fourth, a bankruptcy court should not equitably toll a deadline when a party has not petitioned for an extension prior to that deadline. Thus, the Panel affirmed the Court's ruling.
Judge Haines, Judge Deasy, and Judge Tester

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