Opinion
Case No. 04-60272-7, Adv No. 05-00005.
June 17, 2005
MEMORANDUM OF DECISION
At Butte in said District this 17th day of June, 2005.
In this adversary proceeding the Defendant/Debtor Ryan James Retz filed a motion on April 11, 2005, for judgment on the pleadings pursuant to F.R.B.P. 7012(b) (applying Fed.R.Civ.P. 12(c) in adversary proceeding) seeking judgment against Plaintiff Timberland Construction, L.L.C. ("TCLLC") dismissing Count I of the amended complaint due to the expiration of the bar date under F.R.B.P. 4007(c) for filing a complaint to determine dischargeability of a debt, before TCLLC filed its complaint. Plaintiffs filed an objection, and the matter was heard at Missoula on June 2, 2005. Attorneys Harold V. Dye appeared for the Defendant, and Edward A. Murphy appeared for the Plaintiffs Donald G. Abbey ("Abbey") and TCLLC. No testimony or exhibits were admitted, and the Court took the matter under advisement at the conclusion of the hearing. After review of the record and applicable law, for the reasons set forth below Defendant's motion will be granted and a separate Judgment shall be entered dismissing TCLLC's Count I as barred by Rule 4007(c).
This Court has jurisdiction of this adversary proceeding under 28 U.S.C. § 1334(b). Plaintiffs' claims seeking denial of Debtor's discharge and exception from discharge are core proceedings under 28 U.S.C. § 157(b)(2)(I) and (J).
BACKGROUND FACTS
Defendant Ryan James Retz filed a voluntary Chapter 7 bankruptcy petition on February 10, 2004, and filed his Schedules and Statements on February 25, 2004. Notice of Commencement of his case was sent was sent out on February 12, 2004, which set the deadline for filing a complaint objecting to discharge and for exceptions from discharge on May 11, 2004. Abbey's and TCLLC's attorney of record Edward A. Murphy received actual knowledge and notice of the pendency of Ryan's Chapter 7 case, as demonstrated when Murphy filed a motion to modify stay on March 10, 2004, representing Abbey. In that motion Murphy stated at paragraph 2 that a third party claim was filed in a state court action on behalf of Abbey individually and TCLLC, of which Abbey is a 50% member.
On May 7, 2004, within the time period set by the Notice of Commencement of case and before the time set under Rule 4007(c) expired, Murphy, representing Abbey but not TCLLC, filed a motion for enlargement of time to file objections to discharge and complaints to determine dischargeability of his claims. As per usual practice in this Court, the motion was granted routinely and Abbey was allowed until September 8, 2004, to file his complaints objecting to discharge or to determine dischargeability. TCLLC's name was not included in Abbey's motion, and TCLLC did not file its own motion for extension of time or dischargeability complaint by the May 11, 2004, bar date.
On September 8, 2004, Abbey filed another motion to extend time which was also granted, and the deadline was extended to November 7, 2004. Abbey filed a third motion for extension on November 8, 2004, which was granted and Abbey allowed until March 8, 2005, to file a dischargeability complaint. The Debtor objected and requested reconsideration of the third extension, but the Court overruled the Debtor's objection after hearing held on January 13, 2005.
In Adversary Proceeding No. 04/00049, Abbey and the Chapter 7 Trustee Richard J. Samson filed on November 30, 2004, a motion for reinstatement (Docket # 144) of TCLLC, stating that TCLLC had been terminated by the Receiver James H. Cossitt ("Cossitt") in November of 2003 by filing articles of termination, and that TCLLC's charter had been revoked on October 31, 2003. After the Receiver resigned the Trustee and Abbey assumed control of the companies. Their motion for reinstatement requested the Court enter an Order nunc pro tunc reinstating TCLLC. No objection was filed, and the Court entered an Order (Docket #156) reinstating TCLLC nunc pro tunc on December 14, 2004.
Abbey and TCLLC filed their complaint initiating the instant adversary proceeding on January 6, 2005. They filed an amended complaint on January 11, 2005, which includes an averment at paragraph 3 that TCLLC is a Montana limited liability company in good standing, and Count I averring the Defendant is liable to Abbey and TCLLC for damages which are nondischargeable under 11 U.S.C. §§ 523(a)(2), (a)(4), and (a)(6). Defendant filed an answer on April 11, 2005, admitting that TCLLC is a Montana limited liability company but denying all allegations of Count I. On the same date he filed his answer, Defendant filed the pending motion for judgment on the pleadings, seeking judgment against TCLLC dismissing TCLLC's Count I since TCLLC is a separate legal entity which failed to file its dischargeability complaint within the time provided under Rule 4007(c), and failed to request an extension before the time expired. Abbey and TCLLC objected on the grounds the Receiver had terminated TCLLC and did not exist until Abbey obtained reinstatement by this Court, and Abbey was preserving TCLLC's rights during its termination by filing a notice of claim and by seeking extensions of time which TCLLC could not do since it was terminated. Plaintiffs contend these unique circumstances justify considering TCLLC's complaint timely and should relate back.
DISCUSSION
Defendant's motion for judgment on the pleadings is based on F.R.B.P. 7012(b), which incorporates Fed.R.Civ.P. Rule 12(c), which provides:
Motion for Judgment on the Pleadings. After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
The Court set Defendant's motion for hearing and held a hearing at which Defendant and Plaintiffs each were represented by counsel. No evidence was presented at the hearing by the parties, where they were represented by counsel, and the parties did not argue at hearing that there are disputed issues of fact. Therefore, this Court does not deem it appropriate to treat Defendant's motion as a motion for summary judgment.
Defendant's motion is based on TCLLC's failure to file its Count I dischargeability claims before the bar date of May 11, 2004. Rule 4007(c) governs the time for filing a complaint under 11 U.S.C. § 523(c), which encompasses TCLLC's Count I based on §§ 523(a)(2), (a)(4), and (a)(6). Rule 4007(c) states:
Section 523(c)(1) provides: "Except as provided in subsection (a)(3)(B) of this section, the debtor shall be discharged from a debt of a kind specified in paragraph (2), (4), (6), or (15) of subsection (a) of this section, unless, on request of the creditor to whom such debt is owed, and after notice and a hearing, the court determines such debt to be excepted from discharge under paragraph (2), (4), (6), or (15), as the case may be, of subsection (a) of this section.,"
Time for Filing Complaint Under § 523(c) in a Chapter 7 Liquidation . . .; Notice of Time Fixed. A complaint to determine the dischargeability of a debt under § 523(c) shall be filed no later than 60 days after the first date set for the meeting of creditors under § 341(a). The Court shall give all creditors no less than 30 days notice of the time so fixed in the manner provided in Rule 2002. On motion of a party in interest, after hearing on notice, the court may for cause extend the time fixed under this subdivision. The motion shall be filed before the time expired.
The Notice of Commencement of Ryan's Chapter 7 case and date for filing complaints seeking exceptions from discharge were sent out to the parties. Plaintiffs' counsel Murphy learned of the notice and bar date in time to file Abbey's motion for extension of time before the bar date expired. Abbey was granted an extension of time to file complaints, but TCLLC, which is represented by Abbey's attorney Murphy, was not included as a party in Abbey's motions for extension of the bar date and did not file its own motion before the bar date of Rule 4007(c) expired.
Plaintiffs cite In re Dominguez, 51 F.3d 1502 (9th Cir. 1995) as supporting their contention that extraordinary circumstances justify relief from the bar date. However, Dominguez does not support TCLLC's arguments. First, Dominguez is distinguishable because it involved the relation back doctrine for amendments to complaints under Fed.R.Civ.P. 15(c)(2). 51 F.3d at 1509-10. The instant motion for judgment on the pleadings does not involve amendment to the complaint under Rule 15, because the amended complaint does not materially differ from the original complaint with respect to TCLLC's Count I and Defendant's motion for judgment on the pleadings, and Defendant did not object to the filing of the amended complaint.
On the contrary, Dominguez provides support for Defendant's motion for judgment based upon the bar date in the procedural rule, Rule 4007(c), where the court noted that the Ninth Circuit strictly construes bar date rules to support the Code's goal of protecting debtors by allowing them finality, certainty, and relief from distress as quickly as possible to allow them to get on with their lives. Dominguez, 51 F.3d at 1510, citing Schunk v. Santos (In re Santos), 112 B.R. 1001, 1006 (9th Cir. BAP 1990), and Sam Michael Schreiber, M.D., Inc. v. Halstead (In re Halstead), 158 B.R. 485, 487 (9th Cir. BAP 1993). See also Kontrick v. Ryan, 540 U.S. 443, 448, 124 S.Ct. 906, 911, n. 3 (2004) ("Because of the practical identity of the time prescriptions for objections to the discharge of any debts under § 727(a) and for objections to the discharge of particular debts under § 523(c), courts have considered decisions construing Rule 4007(c) in determining whether the time limits delineated in Rules 4004(a) and (b) may be forfeited. See, e.g., In re Kontrick, 295 F.3d 724, 730, n. 3 (7th Cir. 2002) (citing In re Santos, 112 B.R. 1001, 1004, n. 2 (9th Cir. BAP 1990)").
The court in Halstead noted that the Rule 4007(c) deadline is not a jurisdictional prerequisite and a court may apply equitable doctrines to relieve a party from a failure to strictly comply with the time limits in limited circumstances, such as where inconsistent notices of bar dates were sent out by the court which were reasonably relied on by the creditor. 158 B.R. at 487-88, citing In re Santos, 112 B.R. 1001 (9th Cir. BAP 1990); see In re Anwiler, 958 F.2d 925 (9th Cir. 1992), cert. denied, 506 U.S. 882, 113 S.Ct. 236, 121 L.Ed.2d 171 (1992). The Ninth Circuit affirmed and adopted the BAP's opinion as its own. In re Halstead, 53 F.3d. 253 (9th Cir. 1995).
The instant adversary proceeding does not involve inconsistent bar date notices, or other equitable considerations sufficient to relieve TCLLC from strict compliance with the bar date of Rule 4007(c). Abbey's and TCLLC's counsel were apprised of the bankruptcy case and bar date sufficiently in advance of its expiration that Murphy was able to file motions to extend the bar date, before the time expired, not once but twice on behalf of Abbey.
Murphy argues that TCLLC was terminated by the Receiver as of October 31, 2003, and did not exist at the time of a transfer which gave rise to Plaintiffs' claims or in time to receive notice of Defendant's bankruptcy, and that Abbey was taking action to protect TCLLC's rights pursuant to state law. On the other hand, Murphy contends at Plaintiffs' objection (Docket #15), paragraph 15, that as of the bar date TCLLC had been reinstated as a company in good standing and is a proper party in this action.
No dispute exists in the record that TCLLC is a Montana company in good standing. Defendant's answer (Docket # 12) admits TCLLC is a Montana limited liability company in good standing. That being undisputed, the bar date of Rule 4007(c) applies and is strictly construed against TCLLC when it failed to file its Count I or seek an extension within the time allowed.
Abbey's and TCLLC are represented by the same attorney, who had sufficient notice or actual knowledge of the bar date to file 2 motions for extension of time in Abbey's name. Abbey's motions were filed after his motion to modify stay was filed, in which Murphy related that Abbey had filed a third party claim in his own and TCLLC's behalf in Case No. DV-03-440(B) in state court. In other words Abbey knew how to and in the past had filed pleadings on his own behalf and for TCLLC. Motions for extension of time are listed at Mont. LBR 9013-1(f)(2)(E) as among the matters the Court will routinely grant or deny without notice or hearing, with the right of a party in interest to request a hearing. Abbey's counsel is an experienced practitioner in this Court, and since Abbey contends he was preserving TCLLC's rights he could have included TCLLC in his motions for extension of time filed before the Rule 4007(c) deadline expired, without any objection or request for relief likely having been filed.
The Court notes that Abbey moved for and was granted reinstatement of TCLLC "nunc pro tunc", which is defined by Black's Law Dictionary (4th ed. 1951) as meaning "Now for then" and described as a phrase "applied to acts allowed to be done after the time when they should be done, with a retroactive effect. . . ." (Emphasis added). The retroactive effect of a nunc pro tunc entry is an entry made now of something actually previously done to have effect on the former date. George v. Sullivan, 909 F.2d 857, 859 n. 1 (6th Cir. 1990). The retroactive effect of the nunc pro tunc Order requested by Abbey reinstating TCLLC as of the date of its termination provides further support against granting TCLLC relief based on equitable considerations. Abbey got the nunc pro tunc relief he asked for, and so TCLLC should be bound by the Rule 4007(c) bar date as though it was never terminated.
No question exists that Abbey's and TCLLC's counsel had notice and actual knowledge of the bar date, the Court finds insufficient equitable considerations to override the Ninth Circuit rule of In re Halstead, 53 F.3d. 253, strictly construing Rule 4007(c).
CONCLUSIONS OF LAW
1. This Court has jurisdiction of this adversary proceeding under 28 U.S.C. § 1334(b).
2. Plaintiffs' claims seeking denial of discharge and exception from discharge are core proceedings under 28 U.S.C. § 157(b)(2)(I) and (J).
3. Plaintiff TCLLC failed to file Count I of Plaintiffs' complaint within the bar date for filing a dischargeability complaint under F.R.B.P. 4007(c), and failed to move to extend the time fixed before the time expired.
4. Defendant satisfied his burden under F.R.B.P. 7012(b) and Fed.R.Civ.P. 12(c) for judgment on the pleadings.
5. Plaintiffs failed to show equitable considerations sufficient to override the Ninth Circuit rule of In re Halstead, 53 F.3d. 253 (9th Cir. 1995), strictly construing the F.R.B.P. 4007(c) bar date.
IT IS ORDERED that a separate Order and Judgment will be issued overruling Plaintiffs' objection filed April 25, 2005; granting Defendant's motion for judgment on the pleadings filed April 11, 2005; and a entering a separate Judgment in favor of the Defendant Ryan James Retz dismissing Timberland Construction, L.L.C.'s Count I of Plaintiffs' amended complaint.