Grant v. Granader (In re Granader)

Summarized by Thomas DeCarlo , John Steinberger & Associates, PC
9 years 4 months ago

Citation:

2016 WL 5936797 (6th Cir. 2016)

Tag(s):

Ruling:

Bankruptcy Court did not abuse its discretion in denying creditor's Motion to Reopen Chapter 7 case where motion was filed 3 years after entry of discharge and reopening case would have on effect.

Procedural context:

Debtor filed for relief under Chapter 7 and received a discharge. Three years later, Creditor, debtor's ex-wife, sought to reopen the case to bring a proceeding to except debt from discharge. Bankruptcy Court denied the Motion. On appeal, the Sixth Court affirmed. On further appeal, the Sixth Circuit affirmed the Bankruptcy Court's denial of the Motion.

Facts:

Prior to debtor filing for Chapter 7 relief, debtor borrowed $350,000 from a trust settled by debtor's father. Three years later, debtor and creditor divorced. Approximately 2 year later, the Trust assigned the note to creditor. At the time of the assignment, debtor was not a beneficiary of the trust and had no role in the assignment of the note to creditor. Approximately one year later, debtor filed for relief under Chapter 7. During the course of debtor's Chapter 7 proceeding, debtor and creditor agreed that debtor's obligations under the divorce judgment totaling $47,000, were non-dischargeable Domestic Support Obligations, and debtor subsequently paid that obligation in full. Debtor received a Chapter 7 discharge and the court closed the case. Three years later, creditor filed a motion to reopen the case to have the assigned note declared a domestic support obligation excepted from discharge. The Bankruptcy Court denied the Motion holding that while there is no time limit for filing a motion to reopen, the Court can deny the Motion where it appears that reopening the case would not produce any relief for creditors. Based on the uncontested facts, the assigned promissory note was not incurred in the course of a divorce decree and was not in lieu of alimony or support. As such, there was no basis to except the debt from discharge under either Section 523(a)(5) (a)(15), and there was on need to reopen the case to declare the debt discharged. Court did not address debtor's assertion that creditor's belated motion was barred by laches. Laches requires both a lack of diligence by party against who laches is asserted and prejudice to the party asserting the defense. While debtor demonstrated that creditor waited a long time to assert Motion to Reopen, passing of time alone is not prejudice and debtor did not allege any other basis for a finding of prejudice.

Judge(s):

Boggs, Suhreinrich, McKeague

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