In re: EDWIN M. MAUGHAN, SR. v. Edwin M. Maughan, Sr.

*The Honorable A drian G. Duplantier, United States D istrict Judge
for the Eastern District of Louisiana, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2003 FED App. 0286P (6th Cir.)
File Name: 03a0286p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
In re: EDWIN M. MAUGHAN,
SR.,
Debtor.
JOHN P. NARDEI,
Plaintiff-Appellant,
v.
EDWIN M. MAUGHAN, SR.,
Defendant-Appellee.
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No. 01-4151
Appeal from the Bankruptcy Appellate
Panel of the Sixth Circuit.
No. 98-41905—William T. Bodoh, Bankruptcy Judge.
Submitted: March 28, 2003
Decided and Filed: August 14, 2003
Before: MERRITT and BATCHELDER, Circuit Judges;
DUPLANTIER, District Judge.*
2 In re Maughan No. 01-4151
_________________
COUNSEL
ON BRIEF: Mark D. Shepard, BABST, CALLAND,
CLEMENTS & ZOMNIR, Pittsburgh, Pennsylvania, for
Appellant. Andrew W. Suhar, Youngstown, Ohio, for
Appellee.
_________________
OPINION
_________________
ALICE M. BATCHELDER, Circuit Judge. Plaintiff-
appellant John Nardei appeals an order from the Bankruptcy
Appellate Panel (“BAP”) of the Sixth Circuit reversing and
remanding a judgment of the United States Bankruptcy Court
for the Northern District of Ohio. Nardei, a partially secured
creditor of defendant-appellee Edwin Maughan, argues that
the BAP erred in reversing the bankruptcy court’s order
granting Nardei an extension to file a complaint objecting to
discharge. Although Nardei acknowledges that he failed to
file timely either his complaint or his request for an extension
of time for filing that complaint, he argues that the
bankruptcy court correctly held that Bankruptcy Rules
4004(a) and 4007(c)—the rules governing the filing of
complaints objecting to discharge under 11 U.S.C. §§ 523 and
727—are not jurisdictional in nature, but instead establish
only filing deadlines that are subject to equitable tolling. The
BAP’s opinion finding that those rules are jurisdictional and
reversing the bankruptcy court, Nardei argues, must be
reversed. Because we find that the precedent of this circuit
compels us to conclude that these rules are not jurisdictional,
we will reverse the order of the BAP and affirm the decision
of the bankruptcy court.

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No. 01-4151 In re Maughan 3
I. BACKGROUND
The relationship between these parties began when John
Nardei, a resident of Youngstown, Ohio, purchased U.S. Gold
Eagle coins from Edwin Maughan, who operated a coin and
jewelry business in Pittsburgh, Pennsylvania. Over time,
Maughan convinced Nardei that he could increase the return
on Nardei’s investment by trading the coins according to the
fluctuations in the price of gold. Based on this advice, Nardei
gave his existing investment of gold coins and additional
payments for the purchase of more coins to Maughan; in
return, Maughan gave Nardei receipts detailing the number of
gold coins purchased in each transaction. Maughan asked
Nardei to get more individuals involved in the investment
plan, which Nardei did. Eventually, Maughan began issuing
promissory notes to Nardei and the other investors covering
the total amount invested over the years.
After Maughan issued several more notes, it became clear
to Nardei that his investment was not being used to purchase
gold coins, but was being used to purchase jewelry to be
resold in Maughan’s retail location. Nardei sued Maughan in
the Common Pleas Court of Allegheny County and obtained
a judgment on the notes in the amount of $1,051,503.72, plus
interest and costs. The parties then entered into a settlement
whereby Maughan agreed to pay Nardei $1,200,000.00,
without interest, over a specified number of years. Maughan
failed to comply with the terms of the agreement and
eventually filed a voluntary petition for bankruptcy under
Chapter 7.
In the proceedings that followed, the bankruptcy court set
October 19, 1998, as the deadline to file a Complaint
Objecting to the Discharge of the Debtor or to Determine
Dischargeability of Certain Debts, pursuant to Bankruptcy
4 In re Maughan No. 01-4151
1Rule 40 04(a) p rovides:
In a chapter 7 liquidation case a complaint objecting to the
de btor's discharge under § 727(a) of the Code shall be filed no
later than 60 days after the first date set for the meeting of
creditors under § 341(a). In a chapter 11 reorganization case, the
complaint shall be filed no later than the first date set for the
hearing on confirmation. At least 25 days' notice of the time so
fixed shall be given to the United States trustee and all creditors
as provided in Rule 2002 (f) and (k), and to the trustee and the
trustee's attorney.
2Rule 40 07(c) p rovides:
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. O n motion of a pa rty 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 has expired.
3Rule 200 4 provides, in relevant part:
(a) Examination on motion
On motion of any party in interest, the court may order the
exam ination o f any entity.
(b) Scope of examination
The examination of an entity under this rule or of the debtor
under §§ 343 o f the Co de may relate only to the acts, co nduc t,
or property or to the liabilities and financial condition of the
debtor, or to any matter which may affect the administration of
the debtor's estate, or to the debtor's right to a discharge. In a
family farmer's debt adjustment case under chapter 12, an
individual's debt adjustment case under chapter 13, or a
reorganization case under chapter 11 of the Code, other than for
the reorganization of a railroad, the examination may also relate
Rules 4004(a)1 and 4007(c).2 In August of 1998, Nardei filed
a motion under Bankruptcy Rule 20043 to examine Maughan

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No. 01-4151 In re Maughan 5
to the operation of any business and the desirability of its
continuance, the source of any money or prope rty acquired or to
be acquired by the debtor for purposes of consummating a plan
and the consideration given or offered therefor, and any other
matter relevant to the case or to the formulation of a plan.
(c) Comp elling attendance and production o f documents
The attendance of an entity for examination and for the
production of documents, whether the examination is to be
conducted within or without the district in which the case is
pending, may be compelled as provided in Rule 9016 for the
attendance of a witness at a hearing or trial. As an officer of the
court, an attorney may issue and sign a subpoena on behalf of
the court for the district in which the exam ination is to be held
if the attorney is admitted to practice in that court or in the court
in which the case is pending.
under oath and determine the appropriateness of filing
objections to the discharge of the settlement debt. The
bankruptcy court granted the motion and ordered Maughan to
appear for an examination on August 21, 1998, and to provide
specific documents sought by Nardei. Although Maughan
appeared for the Rule 2004 examination, he failed to comply
fully with the order to produce the documents. He did,
however, promise to provide the missing documents
promptly.
When the October 19, 1998, deadline for filing a complaint
arrived, Maughan had still not produced all the documents
requested for the Rule 2004 examination. Three days later,
on October 22, 1998, citing Maughan’s failure to produce the
documents and, in the alternative, excusable neglect, Nardei
filed a Motion for Extension of Time to Object to Discharge.
After initially granting Nardei’s motion, the bankruptcy court
allowed Maughan to file a Motion in Opposition to Nardei’s
extension request. The bankruptcy court considered the
parties’ motions and ordered that the time to file a complaint
be extended to a date twenty days following the actual day
Maughan complied with the court’s prior order directing him
6 In re Maughan No. 01-4151
4The only bankruptcy rule properly before the bankruptcy court and
before the BAP and this court on appeal is Rule 4007(c), because, as
Nardei’s brief says, “[a]t trial, for strategic reasons, counsel for Nardei
choose [sic] to pursue o nly Nardei’s claim that Debtor’s debt to him is
excepted from d ischarge [Rule 4007(c)] because it was obtained by fraud
and false pretenses p ursuant to 11 U .S.C. § 523(a)(2)(A).” Although each
party briefed and argued the impact of both rules in this case, the
bankruptcy court discussed only Rule 4007(c), and our holding is
therefore limited to Rule 4007(c). Ho wever, because the reasoning and
rationa le of both rules are co nsistent, we look to cases app lying both rules
for guidance on the question before us.
to produce specified documents for the Rule 2004
examination. Within the time allowed by the extension,
Nardei filed complaint under 11 U.S.C. § 523(c), alleging that
Maughan had obtained the money from Nardei by false
pretenses or false representations. The bankruptcy court held
a hearing in this adversary proceeding on August 22, 2000,
and issued an opinion on January 9, 2001, finding that
Maughan’s debt to Nardei was obtained through false
pretenses, a false representation or actual fraud, and was
therefore excepted from discharge under 11 U.S.C.
§ 523(a)(2)(A).
Maughan appealed the bankruptcy court’s decision to the
Bankruptcy Appellate Panel of the Sixth Circuit, arguing that
the bankruptcy court erred by granting Nardei’s request for an
extension to file his complaint. The BAP agreed, and,
holding that the time limits set forth in Bankruptcy Rule
4007(c)4 are jurisdictional in nature and not akin to statutes of
limitation, reversed the bankruptcy court’s decision. Nardei’s
timely appeal to this court followed.
II. DISCUSSION
We independently review the decision of the bankruptcy
court that comes to us by way of appeal from a Bankruptcy
Appellate Panel. See In re Isaacman, 26 F.3d 629, 631 (6th
Cir. 1994); In re Cassell, No. 00-4523, 2001 U.S. LEXIS
13969, **3-**4 (6th Cir. June 15, 2001) (unpublished). The

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No. 01-4151 In re Maughan 7
first question for this court to decide is whether the deadline
provided in Bankruptcy Rule 4007(c) is jurisdictional, such
that the bankruptcy court has no authority to alter it, or is
more comparable to statutes of limitation and subject to the
court’s equitable authority. We review de novo this question
of law. In re Downs, 103 F.3d 472, 476-77 (6th Cir. 1996).
The Federal Rules of Bankruptcy Procedure state that “a
complaint to determine the dischargeability of a debt pursuant
to § 523(c) of the Code shall be filed not later than 60 days
following the first date set for the meeting of creditors held
pursuant to § 341(a).” FED. R. BANK. P. 4007(c).
Additionally, any motion to extend the time for filing such a
complaint “shall be made before the time [to file the
complaint] has expired.” Id. Under Bankruptcy Rule 9006,
courts may enlarge the time for taking action under Rule 4007
“only to the extent and under the conditions stated” in Rule
4007. FED. R. BANK. P. 9006(b)(3). These rules, however,
must be read together with the general powers given to the
courts in bankruptcy under 11 U.S.C. § 105, which provides:
The court may issue any order, process, or judgment that
is necessary or appropriate to carry out the provisions of
this title. No provision of this title providing for the
raising of an issue by a party in interest shall be
construed to preclude the court from, sua sponte, taking
any action or making any determination necessary or
appropriate to enforce or implement court orders or rules,
or to prevent an abuse of process.
11 U.S.C. § 105(a).
There is no question that Nardei failed to file his motion for
an extension prior to the expiration of Rule 4007(c)’s sixty-
day deadline. Nardei, however, argues that Maughan’s failure
to comply with a prior order from the court led to the late
filing, and Section 105(a) authorizes the court to use its
equitable power to toll the filing deadline and prevent an
abuse of process.
8 In re Maughan No. 01-4151
5Rule 4003(b) is included in the series of rules along with R ule
4007(c) who se extension is limited by Rule 9006 (b)(3).
The Supreme Court had an opportunity to address a similar
rule in Taylor v. Freeland & Kronz, 503 U.S. 638 (1992)
(examining Bankruptcy Rule 4003, which governs the
debtor’s list of property claimed as exempt under 11 U.S.C.
§ 522 on the schedule of assets required to be filed by Rule
1007). Under the rule at issue in Taylor, a trustee or creditor
“may file objections to the list of property claimed as exempt
within 30 days after the conclusion of the meeting of creditors
held pursuant to Rule 2003(a) . . . unless, within such period,
further time is granted by the court.” FED. R. BANKR. P.
4003(b).5 The trustee in Taylor neither timely moved for an
extension of time to object nor timely objected to the debtor’s
including on the list of exemptions proceeds from a pending
lawsuit, believing that the lawsuit had no value. Taylor, 503
U.S. at 641. After the debtor received a significant payment
in settlement of the lawsuit, the trustee attempted to object to
the inclusion of the proceeds on the list of exemptions. Id.
The Supreme Court affirmed the appellate court’s holding
that the trustee had failed to raise a timely objection to the
exemption, and that the debtor therefore could not be required
to turn over the proceeds. Id. at 642.
Looking at the specific allowance under Rule 4003(b) for
trustees and creditors to file objections within thirty days of
the initial creditors’ meeting, the Court found by “negative
implication” that the rule “indicates that creditors may not
object after 30 days ‘unless, within such period, further time
is granted by the court.’” Id. at 643. The Court held that even
if the trustee was correct, and the debtor improperly included
the lawsuit proceeds on the exemption list, the trustee could
not contest the exemption. “Deadlines may lead to
unwelcome results, but they prompt parties to act and they
produce finality.” Id. at 644. The Court explicitly declined
to address the question of whether the bankruptcy court could
have extended the time for filing the objection by invoking its

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No. 01-4151 In re Maughan 9
6W e did, however, specifically distinguish Taylor in deciding
whether the bankruptcy court had erred in refusing to use its equitable
power to accept the late filing, noting that there the Supreme Court had
not addressed the issue of the bankruptcy court’s equitable p owers.
Isaacman, 26 F.3d at 635.
equitable power under Section 105(a), noting that the trustee
had raised this issue for the first time in his opening brief on
the merits in the Supreme Court.
Several lower courts applying Taylor have determined that
the deadlines within the Bankruptcy Rules create
jurisdictional bars and not statutes of limitation. See, e.g.,
First Deposit Nat'l Bank v. Glover (In re Glover), 212 B.R.
860, 862 (Bankr. S.D. Ohio 1997); Goodwin v. United States
Fid. & Guar. Ins. Co. (In re Goodwin), 215 B.R. 710, 714
(Bankr. W.D. Tenn. 1997). This circuit, however, has issued
only one opinion addressing the apparent conflict between the
filing deadlines of the Bankruptcy Rules and the bankruptcy
court’s extensive equitable power. In In re Isaacman, 26 F.3d
629 (6th Cir. 1994), we held—without mentioning Taylor in
our discussion of this issue6—that Rule 9006(b)(3) prohibits
a court from sua sponte extending the time in which to file a
dischargeability complaint, but the rule “does not prevent a
bankruptcy court from exercising its equitable powers under
11 U.S.C. § 105(a) in accepting an untimely filed complaint.”
Id. at 632. At issue in Isaacman was an error created by the
bankruptcy court itself establishing two separate deadlines for
filing complaints; the creditor relied upon the second date and
filed an untimely complaint after the first deadline expired.
We limited our holding to a situation in which a bankruptcy
court erroneously set a second bar date and a creditor
reasonably relied upon that second date when filing an
untimely complaint. Id. (joining the Ninth Circuit, In re
Anwiler, 958 F.2d 925 (9th Cir. 1992), and the Tenth Circuit,
In re Themy, 6 F.3d 688 (10th Cir. 1993), in this specific
holding); see also In re Moss, 289 F.3d 540, 541-42 (8th Cir.
2002) (adopting the reasoning of Isaacman in a factually
10 In re Maughan No. 01-4151
7Specifically, the court said, “The rules we have just described do
not, as a matter of textua l interpre tation, ad dress the issue. Although R ule
9006(b)(3) restricts the grounds upon which the bankruptcy court may
enlarge the time for actions required by Rules 4004(a) and 4007(c), these
restrictions still vest a great deal of discretion in the bankruptcy co urt.”
Kontrick, at 730. W e find that statement somewhat puzzling, inasmuch
as Rule 9006(c)(3) pro vides that the court may enlarge the time for taking
action under these rules “only to the extent and under the conditions stated
in those rules.” (italics added.) Rules 4004 and 4007 both permit the
court to extend the time on motion of a party in interest, but such motion
“shall be made before such time has expired.” That language in the text
of those rules sounds like a condition to us, and rather than vesting
discretion in the court, it appears to us to limit that discretion.
similar case). But the Isaacman decision cracked open the
door of equity through which the bankruptcy court might
accept an untimely complaint.
Other circuits have gone beyond the limited facts of
Isaacman and have found that, in general, the deadlines are
not jurisdictional in nature. For example, the Fourth Circuit,
in Farouki v. Emirates Bank Int’l, Ltd., 14 F.3d 244, 248 (4th
Cir. 1994), held that the Rule 4004(a) deadline is not
jurisdictional and that the rules “do not preclude the
bankruptcy court from exercising its equitable powers in
extraordinary cases.” The Seventh Circuit compared the
filing deadlines to statutes of limitations, first finding that the
text of the rules and statutes failed to resolved the issue7 and
then examining the structure, legislative history and
underlying policy of the rules and the related statutory
scheme. In re Kontrick, 295 F.3d 724, 730-33 (7th Cir.
2002). The Seventh Circuit concluded that the Supreme
Court’s decision in Taylor was not dispositive and held that
the timeliness provisions are not jurisdictional. Id. at 733.
The Second Circuit has also concluded that the deadlines
imposed by these Bankruptcy Rules are not jurisdictional.
European Am. Bank v. Benedict (In re Benedict), 90 F.3d 50,
54 (2d Cir. 1996). The court divided the cases on this issue
into three groups: (1) cases finding that the time periods
imposed by the rules are jurisdictional (citing several district

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No. 01-4151 In re Maughan 11
and bankruptcy courts); (2) cases that fail to reach the
jurisdictional question, but permit late filings when the
bankruptcy court has erred (essentially the
Isaacman situation); and (3) cases explicitly rejecting the
view that the time limits are jurisdictional and allowing the
exercise of the court’s equitable power to extend the time for
filing complaints. Id. After specifically adopting the
reasoning from the third group of cases, the court provided an
additional reason for rejecting the characterization of these
time requirements as jurisdictional:
Our conclusion is also consistent with the line of cases
that has allowed an extension of the time period when the
creditor was affirmatively misled by the bankruptcy court
as to the filing deadline. See e.g., In re Themy, 6 F.3d at
688. Since equitable considerations cannot excuse a
jurisdictional defect, there is implicit in those cases the
concept that [Rule 4004(a) and] 4007(c) merely
establish[es] a filing deadline.
Id.
The merits or faults of the reasoning in Isaacman and of
other courts on this issue is of little moment here, since we
are bound by our decision in Isaacman unless it is inapposite
to this case. The first question before us, then, boils down to
whether Isaacman’s narrow holding that the bankruptcy court
could use its equitable power to circumvent the time limits
required by Rule 4007(c) where an error of the court itself had
caused the untimely filing, requires the legal conclusion that
Rule 4007(c)’s time limits are not jurisdictional. We
conclude that it does. By permitting equity to trump the filing
deadline set by Rule 4007(c) in one particular circumstance,
Isaacman, despite its explicitly narrow holding, compels the
conclusion that the deadline is not jurisdictional, for to hold
to the contrary would be to hold that equitable considerations
can excuse jurisdictional defects. Since “a litigant’s failure to
clear a jurisdictional hurdle can never be “harmless” or
waived by a court,” Torres v. Oakland Scavenger Company,
12 In re Maughan No. 01-4151
487 U.S. 312, 317, n. 3 (1988), the filing deadline cannot be
jurisdictional. Rather, the rule is a statute of limitation—or
simply a deadline—that is generally subject to the defenses of
waiver, estoppel, and equitable tolling. See United States v.
Locke, 471 U.S. 84, 94 n. 10 (1985).
Having determined the BAP erred in its legal conclusion,
and that the bankruptcy court correctly concluded that the
time limits in Rule 4007(c) are not jurisdictional, we must
next determine whether the bankruptcy court properly used its
equitable power by allowing Nardei to file his untimely
objection. We review the bankruptcy court’s use of its
equitable power for an abuse of discretion. See Isaacman, 26
F.3d at 633. “We will find an abuse of discretion only upon
a definite and firm conviction that the district court
committed a clear error of judgment.” In re Kissebirth, 273
F.3d 714, 721 (6th Cir. 2001).
There are five factors that should be considered when
deciding to apply the doctrine of equitable tolling: “The
factors are: (1) lack of actual notice of filing requirement;
(2) lack of constructive knowledge of filing requirement;
(3) diligence in pursuing one's rights; (4) absence of prejudice
to the defendant; and (5) a plaintiff's reasonableness in
remaining ignorant of the notice requirement.” Andrews v.
Orr, 851 F.2d 146, 151 (6th Cir. 1988). Since Nardei did not
claim lack of notice or knowledge of the filing deadline, “our
inquiry must focus on the diligence used by the plaintiff in
pursuing its rights and the resulting prejudice, if any, to the
defendant.” First Bank System v. Begue (In re Begue), 176
B.R. 801, 804 (Bankr. N.D. Ohio 1995).
In its opinion granting the extension, the bankruptcy court
found that Maughan’s failure to comply with the court’s order
to turn over documentation justified the extension.
Specifically, the court recognized the “dilemma” faced by
Nardei and his counsel; since Bankruptcy Rule 9011 creates
an affirmative obligation on the creditor to investigate fully
before initiating an adversary complaint, it would have been

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No. 01-4151 In re Maughan 13
improper for Nardei to file his complaint before Maughan
turned over all the relevant documentation. The record
indicates that Nardei continually tried to get the
documentation from Maughan, only to be misled by
Maughan’s promise that the information was forthcoming.
We find no error in the district court’s conclusion that Nardei
was diligent in seeking to enforce his rights and that
Maughan’s delay in producing the documents contributed to
Nardei’s failure to timely file his complaint. And although
Nardei could have filed his motion for an extension within the
time decreed by the rule, he filed that motion only three days
out of rule, and we find no error in the bankruptcy court’s
implicit conclusion that this delay, too, was partly attributable
to Maughan’s conduct or in the court’s express conclusion
that Maughan suffered no prejudice from the extension. The
bankruptcy court did not abuse its discretion by using its
equitable power to ensure that the debtor was not permitted
“to frustrate the ability of a litigant to comply with applicable
law by failing or neglecting to adhere to lawful orders of the
Court.”
III. CONCLUSION
For the foregoing reasons, we REVERSE the order of the
Bankruptcy Appeal Panel and AFFIRM the decision of the
Bankruptcy Court. We REMAND the case for proceedings
consistent with this opinion.

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