Willms v. Sanderson

Summarized by Thomas Phinney , Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP
12 years 7 months ago

Citation:

9th Cir. July 25, 2013; No. 12-35135 (published)

Tag(s):

Ruling:

The Ninth Circuit held that the 60-day time limit provided in Bankruptcy Rule 4007(c) for filing a nondischargeability complaint under 11 U.S.C. section 523 was improperly extended "sua sponte" by the bankruptcy court where (1) the creditor's motion for extension referenced sections 727 and 707, and did not reference section 523; and (2) no cause for the extension was shown. The Ninth Circuit ordered the nondischargeability complaint dismissed with prejudice as having been untimely filed.

Procedural context:

Bankruptcy court granted extension of time for creditor to file section 523 complaint, and subsequently entered judgment in favor of creditor. The bankruptcy court then reversed the nondischargeability judgment based upon new evidence provided by the debtor on motion for reconsideration. On appeal, the district court ordered that the debtor should not have been allowed to introduce new evidence post-trial, and ordered the bankruptcy court to re-instate the judgment. On further appeal, the Ninth Circuit ruled that the nondischargeability complaint was untimely to begin with and should be dismissed.

Facts:

60 days after the 341 meeting, Creditor filed a motion pursuant to Bankruptcy Rules 4004(b) and 1017(e)(1) which explained it was the last day to file such a motion and creditor "require[d] additional time to complete an investigation and evaluate whether or not a complaint objecting to discharge or a motion to dismiss is warranted." The Motion did not reference Bankruptcy Rule 4007 or nondischargeability under section 523. The bankruptcy court held a hearing on the motion ten days later. The bankruptcy court opined that creditor may have "a fairly straightforward [11 U.S.C.] § 523(a)(2)(A) claim" objecting to dischargeability." The bankruptcy court then sua sponte extended the time for the creditor to file such a complaint. Creditor then filed a nondischargeability complaint within the extended time period set by the court. The Ninth Circuit ruled that the creditor's motion was not made under Bankruptcy Rule 4007(c) and thus there was no timely motion to extend the deadline for filing a nondischargeability complaint, and further (assuming the motion did property request relief), no cause was shown for the extension. The Ninth Circuit noted that "unique or extraordinary circumstances," such as where the court issues a notice stating the wrong deadline, might justify a late motion but no such circumstances were present here.

Judge(s):

Arthur L. Alarcon, M. Margaret McKeown, and Jacqueline H. Nguyen

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!