Weil v. Elliott

Ninth Circuit is hesitant to make bankruptcy time deadlines jurisdictional.

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Case Type:
Case Status:
Reversed and Remanded
16-55359 (9th Circuit, Jun 14,2017) Published
Reversing the BAP, the 9th Circuit, with a concurrence, ruled that 11 U.S.C. § 727(e)(1) is a statute of limitations, not a statute of repose, The debtor's failure to plead the statute of limitations as an affirmative defense requires that the bankruptcy court reimpose the portion of its judgment revoking the debtor's discharge. Section 727(e)(1) limits the right of trustees, creditors et al. to bring actions to revoke discharge. Statutes of repose (e.g., 15 U.S.C. § 78t–1(c)(4)) limit the general right to litigate, not a party's right to litigate. Thus, § 727(e)(1) is not jurisdictional.
Procedural context:
The bankruptcy court granted the Chapter 7 trustee summary judgment on the trustee's complaint to revoke the debtor's discharge under 11 U.S.C. § 727(d). The trustee filed the adversary proceeding, after the debtor's discharge, upon discovering that the debtor failed to list his house as an asset. The debtor appealed to the 9th Circuit BAP. The BAP vacated the judgment because the trustee filed the adversary proceeding after the expiration of the one-year period specified in 11 U.S.C. § 727(e)(1), even though the debtor had not asserted timeliness as a defense. The BAP held that § 727(e)(1) was a jurisdictional bar — a statute of repose rather than a statute of limitations — on bringing an action to revoke a debtor's discharge. The result, according to the BAP, was that the bankruptcy court did not have jurisdiction over the trustee's adversary proceeding to revoke the debtor's discharge. The BAP sent the case back to the bankruptcy court with instructions to revise its judgment. The bankruptcy court complied, and the trustee appealed to the BAP and then requested to take the appeal directly to the Court of Appeals. The BAP and the 9th Circuit approved the trustee's request. Circuit Judge Christen wrote a separate concurrence, agreeing that § 727(e)(1) is a waivable and non-jurisdictional time bar, and rejected the debtor's "fresh start" argument.
The debtor filed a Chapter 7 petition and failed to schedule his house. He also lied about (or, in the court's words, "knowingly and fraudulently misrepresented") where he lived. The trustee did not discover the debtor's lies and omissions until after the debtor had received his discharge. The trustee filed an adversary proceeding in the bankruptcy court seeking to revoke the debtor's discharge. The debtor answered, but did not assert a timeliness defense.

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