Opinion
Case No. 96-11198-SSM
November 6, 1997
Douglas E. Bywater, Esquire, Tate Bywater, Ltd., Vienna, VA, of Counsel for the debtor
MEMORANDUM OPINION AND ORDER
A hearing was held in open court on November 4, 1997, on (a) the motion filed by Joseph B. and Mary M. Valder on September 15, 1997, for a further extension of the time to file a complaint objecting to the debtor's discharge and (b) the motion filed by the Valders on October 8, 1997, for a continuance of the hearing on the motion to extend time. The debtor was present by counsel. Movant Mary M. Valder was present in person.
As a threshold matter, the court, having reviewed the pleadings, does not find that continuance of the hearing is warranted since the issues raised by the motion do not require the taking of evidence, and the legal positions of the parties are fully set forth in the pleadings. Accordingly, the motion for continuance will be denied.
Background
The debtor, Irene A. Mendez, filed a voluntary petition under chapter 7 of the Bankruptcy Code in this court on March 11, 1996. The first date set for the meeting of creditors was April 11, 1996. On May 9, 1997, Joseph B. and Mary M. Valder, who are listed on the debtor's schedules as holding a disputed claim in the amount of $10,000.00, filed a motion to extend the time for filing a complaint to object to the debtor's discharge. By order dated June 12, 1996, the motion was granted and the time for filing a complaint objecting to discharge was extended through August 5, 1996. By separate order, the time for the United States Trustee to file such a complaint was also extended to August 5, 1996.
The claim apparently grows out of a contract under which the debtor was to have performed landscaping services for the Valders.
On July 9, 1996, the Valders filed a motion for a further extension of the time for filing a complaint objecting to the debtor's discharge. The United States Trustee similarly moved for an extension of the deadline. By order dated September 18, 1996, the time for the Valders to object to the debtor's discharge was extended through November 4, 1996. By separate order, the time for the United States Trustee to file such an objection was extended to November 7, 1996. On October 7, 1996. the Valders filed a third motion for extension of time. On October 30, 1996, the dispute between the Valders and the debtor was assigned to non-binding mediation. By order dated November 20, 1996, the time for the Valders to object to discharge was extended through March 3, 1997. The United States Trustee was granted the same extension. On March 3, 1997, both the Valders and United States Trustee filed a motion for a further extension of the time to object to the debtor's discharge. By order dated April 29, 1997, the deadline for the Valders to file such objection was extended through June 2, 1997. On June 9, 1997, the Valders filed a motion for leave to file (out of time) a fifth motion for extension of the time to object to the debtor's discharge. Prior to the hearing on that motion, an order had been entered, on the timely motion of the United States Trustee, extending to September 12, 1997, the time for " any party in interest" to object to the debtor's discharge (emphasis added). By order dated July 21, 1997, the court denied the Valders' motion to the extent it sought to extend the time within which to file a complaint to determine dischargeability under § 523(c), Bankruptcy Code, but, in view of the extension previously granted to "any party in interest" at the U.S. Trustee's request, extended the time for the Valders to file a complaint objecting to the debtor's discharge to September 12, 1997. On September 15, 1997, the Valders filed the motion presently before the court seeking a further extension through December 12, 1997. No further motion for extension has been filed by the United States Trustee.
In the interim, an order granting the debtor a discharge had been prematurely granted on July 3. 1996, as a result of an administrative error. That order was vacated on July 17, 1996.
Although the title to their motion papers characterize this as the "first" motion for extension of time to file a complaint objecting to the debtor's discharge, in actuality, this is the sixth such motion. There are two conceptually quite distinct challenges a creditor may raise to a debtor's discharge. The first, referred to in the Bankruptcy Rules as an "objection to discharge," seeks to deny the debtor any discharge whatsoever, based, for example, on concealment or transfer of property, false schedules, destruction or concealment of records, failure to explain satisfactorily a loss of assets, or a prior discharge in a case filed within six years of the present case. § 727(a), Bankruptcy Code; F.R.Bankr.P. 4004. The second type of challenge, referred to in the Bankruptcy Rules as a "complaint to determine dischargeability of [a] debt," seeks, based on the character of the debt itself, to have a particular debt excluded from any discharge granted to the debtor. § 523(a), Bankruptcy Code; F.R.Bankr.P. 4007. Such nondischargeable debts, for example, include those arising from fraud, theft, willful and malicious injury, and drunk driving, as well as debts for alimony and child support, certain taxes, and certain student loans. Whether or not the Valders fully understood or appreciated the distinction between complaints objecting to a debtor's discharge under § 727 and complaints under § 523 to determine the dischargeability of a particular debt, the fact is that their motions from the outset referenced the former rather than the latter. Later motions did reference their belief that they had a potential nondischargeability claim under § 523, but the plain language of the extension orders which they drafted — and despite the fact that they are appearing pro se, the court notes that Mr. Valder is an attorney — extended only the time for objecting to discharge, not the time for filing a complaint to determine the dischargeability of a particular debt. Hence, the fact that the court's prior extension order specifically limited the extension to § 727 complaints does not transform the Valder's present motion into a "first" motion for extension of that deadline, since that is the deadline that has been extended by all the prior orders.
Discussion
Under § 727, Bankruptcy Code, the court is required to ("shall") grant an individual debtor a discharge unless the court makes a finding that the debtor has engaged in certain disqualifying conduct. Federal Rule of Bankruptcy Procedure 4004(a) requires that a complaint objecting to the debtor's discharge be filed not later than 60 days following the first date set for the meeting of creditors. Although the time may be extended "for cause," the motion requesting such extension must be made "before the time has expired," and the Bankruptcy Rules expressly prohibit an extension based on excuseable neglect when the request is made after the time has expired. F.R.Bankr.P. 4004(b) and 9006(b)(3). The Fourth Circuit, in dicta, has sided with those courts that have held that the time limit is not jurisdictional. Farouki v. Emirates Bank Int'l Ltd., 14 F.3d 244, 248 (4th Cir. 1994) (adopting the reasoning of Schunk v. Santos (In re Santos), 112 B.R. 1001 (Bankr. 9th Cir. 1990)). At the same time it is clear that the deadline is strictly enforced and is not subject to enlargement based on excusable neglect. Farouki, 14 F.3d at 249 n. 15; Santos, 112 B.R. at 1008; see also Mann v. CCR Financial Planning, Ltd. (In re McKoy), 211 B.R. 843, 846 (E.D. Va. 1997) (Ellis, J.) ("[the rule] establishes a strict time limit," which "while not a jurisdictional prerequisite, is analogous to a statute of limitations" and "is not easily avoided."). Under Santos, as adopted by Farouki, the Bankruptcy Rules "[do] not prevent the bankruptcy court from exercising its equitable powers in extraordinary cases." Farouki, 14 F.3d at 248. Such extraordinary circumstances, for example, include those where a notice from the court misleads creditors as to the bar date. Themy v. Yu (In re Themy), 6 F.3d 688 (10th Cir. 1993). However, relief from the bar date cannot be granted on the basis of equitable tolling. Santos, 112 B.R. at 1006-07. In appropriate circumstances, an out-of-time request for extension may be granted, however, on the basis of equitable estoppel or waiver. Id. at 1007-08.
McKoy involved a dischargeability complaint under § 523, Bankruptcy Code rather than an objection to discharge under § 727, but the relevant language of Federal Rules of Bankruptcy Procedure 4007(c) and 4004(b) is identical. In McKoy, the court held that a dischargeability complaint erroneously filed in the case of the debtor's corporation rather than in the debtor's individual bankruptcy case could not be amended, after the dischargeability deadline had passed, to show the complaint as being filed in the individual case.
As explained in Santos, "The essence of the doctrine of equitable tolling is that a limitations period does not run against a plaintiff who is unaware of his cause of action [such as] when the defendant conceals or makes it impossible for the plaintiff to discover the facts underlying his cause of action." 112 B.R. at 1006.
"Equitable estoppel requires reasonable reliance on a defendant's words or conduct in forebearing suit within the applicable limitations period. . . . [T]he application of estoppel . . . takes its life from the principle that no person will be permitted to profit from his or her wrongdoing in a court of justice." Santos, 112 B.R. at 1007. The court held in Santos, however, that equitable estoppel did not apply where a plaintiff relied on a defendant's informal agreement to extend the bar date; the court ruled that such reliance was not reasonable, as only the court had the power to extend the deadline.
"[T]he timeliness of a dischargeability complaint presents an affirmative defense that must be raised in an answer or responsive pleading. If the defense is not raised in the answer or responsive pleading, it is generally waived." Santos, 112 B.R. at 1008 (internal citations omitted).
In the present case, no "extraordinary circumstances" have been alleged that would permit the court, in the exercise of its equitable powers, to entertain the tardily-filed motion for another extension of the deadline for objecting to the debtor's discharge. Under the plain language of Rule 4004(b), the court may grant an extension only if the request is made before the time has expired. The time in this case, as previously extended, expired on September 12, 1997. The motion for a further extension was filed on September 15, 1997. There is no suggestion in the record that either equitable estoppel or waiver is present. Accordingly, the motion for extension will be denied as untimely.
Even if Rule 4004(b) did not prevent the court from granting a further extension, the circumstances set forth in the motion would not justify a sixth extension of the time for objecting to the debtor's discharge. Taking into account the 60 days allowed under Rule 4004, as well as the five extensions previously granted, the Valders have had over 17 months from the date of the meeting of creditors in which to investigate the debtor's conduct and to file a complaint objecting to the debtor's discharge. While reasonable extensions of time to object to a debtor's discharge are liberally granted, extensions cannot be granted indefinitely. By all normal case processing standards, this case has whiskers. The court can appreciate that movant Joseph Valder, although proceeding pro se in this case, is a busy Federal prosecutor involved in serious cases that apparently require him to travel out of the area for extended periods of time, and that a substantial amount of time was lost as a result of unsuccessful efforts to achieve a mediated settlement. Yet, at some point, if the movants were truly too busy to attend to their own legal matters, they should have hired an attorney to assist them. The court would not grant even an attorney endless extensions simply because the attorney was too busy with other matters. By the same token, a litigant representing himself or herself cannot have extension after extension based on the need to attend to other business. Based on the circumstances that existed in this case, reasonable, indeed generous, extensions were granted to the movants. At some point, however, further extensions simply cease to be reasonable. That point has been reached in this case. Accordingly, even if the extension motion were not time-barred, the court would deny the motion.
ORDER
For the foregoing reasons, it is
ORDERED:
1. The motion for continuance is DENIED.
2. The motion for further extension of the time to object to the debtor's discharge is DENIED.
3. The clerk will mail a copy of this order to counsel for the debtor, to Joseph B. and Mary M. Valder, and to the United States Trustee.