In re Sheppard

Summarized by Dean Langdon , DelCotto Law Group PLLC
10 years 7 months ago

Citation:

15 FED App 0003P (6th Cir.); Docket No. 14-8045

Tag(s):

Ruling:

Reversing a bankruptcy court order refusing to extend the Rule 4007(c) deadline to object to discharge, the Sixth Circuit BAP remanded the case. The BAP relied on the fact that local counsel for the creditor was not listed in the schedules, although there had been regular prepetition communication with counsel. Pursuant to Sixth Circuit precedent favoring decisions on the merits rather than technicalities, the BAP held that a creditor which filed a motion to extend one day after receiving actual notice, and one day prior to the expiration of the deadline, demonstrated sufficient cause to extend the Rule 4007(c) deadline.

Procedural context:

The bankruptcy court for the Middle District of Tennessee denied the creditor's motion to extend the deadline to object to discharge under Rule 4007(c). Creditor appealed that ruling to the Bankruptcy Appellate Panel for the Sixth Circuit Court of Appeals.

Facts:

Republic Franklin Insurance Company hired Mr. Sheppard's law firm to prosecute a subrogation claim. The claim settled for $145,000 in January, 2011, but proceeds were not paid to Republic Franklin. Republic Franklin retained counsel and a settlement agreement was reached in October, 2013 for Sheppard, his partner and their firm to pay Utica National (Republic Franklin's parent) $130,000 by the end of 2013. Sheppard did not make payments, but filed a Chapter 7 bankruptcy on February 28, 2014. The deadline to object to discharge was May 30, 2014. Utica National was listed as a creditor, using its home office address in New Hartford, New York. No notice was sent to Republic Franklin or its local counsel, and in May, 2014, counsel filed suit against Sheppard in Tennessee state court. Republic Franklin's counsel only received actual notice of the bankruptcy on May 28, 2014, and filed a motion to extend the Section 523 deadline pursuant to Rule 4007(c) on May 29, 2014. After a July 8, 2014 hearing, the bankruptcy court denied the motion, finding that cause had not been established to extend the deadline. Republic Franklin timely appealed.

Judge(s):

Delk, Lloyd and Opperman; opinion by Judge Lloyd

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