Charles Michael Collins

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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
CHARLES MICHAEL COLLINS,
Debtor.
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Case No. 05-33530 TEC
Chapter 7
SECOND MEMORANDUM RE PAUL A. VANDER WAERDT’S MOTION TO REOPEN
Creditor Paul Vander Waerdt (Movant) seeks to reopen this
chapter 7 case: 	(1) to “prosecute postpetition fraud claims
against [Debtor] in the Superior Court”, (2) for a determination
that Debtor’s conduct over a four-year period beginning prepetition
is nondischargeable under 11 U.S.C. §§ 523 (a)(2), (4), and (6) ,
and (3) for revocation of Debtor’s bankruptcy discharge for fraud.
For the reasons stated below, the motion is denied. 	This
memorandum constitutes the court’s findings of facts and
conclusions of law.
FACTS
In 2003, Movant engaged Debtor to represent him in several
lawsuits. 	Movant alleges that, at the time of the engagement,
Signed and Filed: December 10, 2008
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
December 11, 2008
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 05-33530 Doc# 42 Filed: 12/10/08 Entered: 12/11/08 08:35:55 Page 1 of 6

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28 1 The deadline to file such an action was January 9, 2006.
Movant did not file the action until November 20, 2008.
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Debtor falsely stated that his malpractice insurance covered the
legal work subject to the engagement.
On October 20, 2004, Movant filed a complaint against Debtor
for professional negligence (San Francisco Sup. Court Case No. CGC
04-435626). 	On September 26, 2005, Debtor served discovery
responses in that action regarding his malpractice insurance.
Debtor agreed to produce relevant policy information, but allegedly
refused to produce any insurance policy.
On September 30, 2005, Debtor filed a no-asset chapter 7
petition. 	On October 5, 2005, notice of Debtor’s bankruptcy case
and the deadline for filing nondischargeability actions (January 9,
2006) was served on Movant. 	On October 14, 2005, Debtor filed his
schedules of assets and liabilities. 	Debtor’s Schedule F lists
Movant as a creditor with a contingent, unliquidated, disputed
claim for negligence and a contingent, disputed claim to vacate an
arbitration award entered prepetition in Debtor’s favor. 	Movant
did not timely file an action seeking either to block entry of
Debtor’s discharge under section 727 or to determine Movant’s
claims excepted from discharge under section 523(a)(2), (4), or
(6). 1 	Debtor’s discharge was entered on January 12, 2006.
On November 20, 2008, Movant filed an adversary proceeding
against Debtor (Adv. Proc. No. 08-3146). 	The complaint seeks to
except Movant’s claims from discharge pursuant to 11 U.S.C.
§§ 523(a)(3)(B), (a)(2), (a)(4), and (a)(6), based on Debtor’s
alleged failure to disclose prior to January 2008 that Debtor was
not insured for legal malpractice regarding the matters in which
Case: 05-33530 Doc# 42 Filed: 12/10/08 Entered: 12/11/08 08:35:55 Page 2 of 6

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Debtor represented Movant, and Debtor’s alleged false statements to
Movant regarding the malpractice insurance policy. 	The complaint
alleges that it is timely filed under Federal Rule of Bankruptcy
Procedure 4007(b).
DISCUSSION
A bankruptcy case may be reopened “to administer assets, to
accord relief to the debtor, or for other cause.” 	11 U.S.C. § 350.
Because Movant’s claims are time-barred, the motion to reopen is
denied.
Movant’s claims under section 523 are time-barred because they
arose prepetition and because Movant was scheduled as a creditor in
this bankruptcy case and received timely notice of the deadline to
file a nondischargeability action. 	The claims arose prepetition,
because Movant could fairly contemplate such claims as of the date
Debtor filed his chapter 7 petition. 	Corman v. Morgan (In re
Morgan), 197 B.R. 892, 896-99 (N.D. Cal. 1996). 	Movant should have
contemplated that Debtor’s insurance policy may not have covered
Movant’s claims, because Debtor refused, prepretition, to produce
such policy in response to discovery.
Prepetition claims are subject to the bar date for filing an
action under section 523 (action to render claim nondischargeable)
or section 727 (action to deny Debtor’s discharge). 	In this case,
such bar date was January 9, 2006. 	Movant received actual, timely
notice of that bar date and did not timely file an action under
section 523 or section 727. 	Accordingly, his claims under sections
523(a)(2), (a)(4), and (a)(6), and any claim to deny Debtor’s
discharge based on his alleged failure to schedule his insurance
policy, are time barred. 	Fed. R. Bankr. Proc. 4004(a), 4007 (c).
Case: 05-33530 Doc# 42 Filed: 12/10/08 Entered: 12/11/08 08:35:55 Page 3 of 6

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Movant seeks to escape the deadline for filing an action to
determine nondischargeability by invoking section 523(a)(3)(B).
That section provides that an action to determine certain claims
for nondischargeability may be brought at any time by a creditor
who did not receive notice of the bankruptcy case. 	This avenue is
not available to Movant, because he was listed on Debtor’s
schedules and served with notice of the bankruptcy case.
Likewise, Movant is time barred from filing an action to
revoke Debtor’s discharge, even if it were obtained through fraud
not discovered until after entry of that discharge. 	11 U.S.C.
§§ 727(d)(1), (e). 	The time for filing such an action is one year
from entry of the discharge and cannot be tolled. 	11 U.S.C.
§ 727(e); Fed. R. Bankr. Proc. 9024 (“a complaint to revoke
discharge in a chapter 7 liquidation case may be filed only within
the time allowed by 	§ 727(e)); accord Towers v. Boyd (In re Boyd),
243 B.R. 756 (N.D. Cal. 2000) (Breyer, J.). 	This deadline passed
on January 9, 2007, well before Movant filed the current action.
Nor is it necessary to reopen the case to grant relief from
the automatic stay, because the stay is no longer in effect and has
been replaced by the discharge injunction. 	11 U.S.C. §§ 362(c);
524.
Debtor has received a discharge of any personal liability with
respect to the claims asserted by Movant in the new adversary
proceeding and in the currently pending state-court action (Case
No. CGC 04-435626). 	11 U.S.C. § 727(a). 	Movant may not bring
these claims in state court or in this court. 	Any continuation of
the state-court action to impose personal liability on Debtor on
account of these claims constitutes contempt of court for violating
Case: 05-33530 Doc# 42 Filed: 12/10/08 Entered: 12/11/08 08:35:55 Page 4 of 6

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the discharge injunction. 	E.g., Walls v. Wells Fargo Bank, N.A.,
276 F.3d 502, 507 (9th Cir. 2002).
The court will enter an order directing the Clerk to close the
bankruptcy case and dismiss the adversary proceeding with
prejudice.
**END OF MEMORANDUM**
Case: 05-33530 Doc# 42 Filed: 12/10/08 Entered: 12/11/08 08:35:55 Page 5 of 6

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Court Service List
Charles Michael Collins, Esq.
P.O. Box 14792
San Francisco, CA 94114
Paul A. Vander Waerdt
15932 Rock Crystal Drive
Parker, CO 80134
Case: 05-33530 Doc# 42 Filed: 12/10/08 Entered: 12/11/08 08:35:55 Page 6 of 6