Fort Meade Community Credit Union v. Brown et al

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Baltimore
In re: *
Harry Deible Brown and Case No. 04-26528
Sharon Kay Brown, *
Debtors. Chapter 7
*
* * * * * * * * * * * * *
Fort Meade Community Credit Union
Plaintiff, *
*
v.
* Plaintiff Adversary No. 04-2143
Harry Deible Brown and *
Sharon Kay Brown,
Defendants. *
* * * * * * * * * * * * *
MEMORANDUM OPINION AND ORDER
DISMISSING THE COMPLAINT
Facts
Debtors filed a voluntary petition for relief under Chapter 7 of Title 11 of the United States
Signed: January 06, 2005
SO ORDERED
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Code on July 9, 2004. Notice of the First Meeting of Creditors and deadlines to file objections to
discharge and motions to determine dischargeability went out to all scheduled creditors that same day.
In their petition for relief, Debtors scheduled a debt owing to Plaintiff, Fort Meade Community Credit
Union, in the amount of $5,160.00. A representative of Fort Meade attended the Debtors’ First
Meeting of Creditors on August 12, 2004. The deadline to file objections to discharge and motions to
determine dischargeability was October 12, 2004. An Order granting Debtors’ discharge was entered
on October 20, 2004.
On October 22, 2004, Fort Meade Community Credit Union filed its Complaint to Determine
Dischargeability of Debt, alleging the debt owed was not dischargeable pursuant to 11 U.S.C. §
523(a)(2) and objecting to Debtors’ discharge under § 727(a)(4). Fort Meade sought judgment
entered in its favor in the amount of $4,102.38, plus attorney’s fees of $615.35. Fort Meade alleges
that at Debtors’ 341 Meeting of Creditors it discovered that Debtors had falsely misrepresented the
value of their automobile and boat in their loan documentation, on which Fort Meade had reasonably
relied in granting an automobile loan on April 22, 2004, and that it would not have granted the loan had
it known the true value of those vehicles. On October 26, 2004, Debtors filed an opposition to the
complaint, and they moved to dismiss the complaint as untimely filed. Fort Meade responded to the
opposition motion.
Analysis
Federal Rules of Bankruptcy Procedure prescribe the time required to file complaints objecting
to discharge and to determine dischargeability. See Fed. R. Bankr. P. 4004 and 4007. Rules 4004(a)
and 4007(a) state that in a chapter 7 case, a complaint objecting to discharge under §727 or to
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1 11 U.S.C. § 523(c) provides that, subject to certain exceptions not relevant in this case, “a
debtor shall be discharged from a debt of a kind specified in paragraph (2), (4),(6), and (15), 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.”
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determine dischargeability under § 523(c) “shall be filed no later than 60 days after the first date set for
the meeting of creditors under § 341(a).”1 Id. This time limitation may be extended, but a motion
requesting an extension of the bar date “shall be filed before the time has expired”, i.e. before the 60
day period expires. Id. at 4004(c) and 4007(c); see also Fed. R. Bankr. P. 9006(b)(3).
Recently, the United States Supreme Court has stated that these particular rules are not
jurisdictional, but procedural in nature, and they may be waived if not asserted before the court
determines the merits of the case. In re Kontrick, 124 S.Ct. 906 (2004). The Court did not expressly
hold that the failure to file before the deadline acts as an absolute bar to recovery, but it opined that, in
the case before it, the debtor would have prevailed if he had raised the issue of timeliness sooner. See
id. at 917. Further, the Court opined that claim-processing rules serve, in part, to “afford the debtor an
affirmative defense to a complaint filed outside the Rules 4004(a) and (b) limits.” Id. at 916. Other
courts have held that absent exceptional circumstances these complaints will not be considered after the
bar date. See In re McKoy, 211 B.R. 843,846 (E.D.Va..1997) (citing Farouki v. Emirates Bank Int'l,
Ltd., 14 F.3d 244, 248 (4th Cir.1994)). See also In re Asbury, 250 B.R. 59, 65 (Bankr. D. Md.
2000) (holding that a creditor seeking to determine dischargeability under § 523(c) must do so before
the 60 day deadline or seek an extension before the limitation period expires). Furthermore, filing a
complaint objecting to discharge under § 727 after the discharge order has been entered is improper
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without first seeking to have the discharge order stricken from the record. Id. at 66. An order granting
a discharge may only be stricken if the Code permits. Id.
Fort Meade Community Bank did not file its Complaint until October 22, ten days after the
filing deadline. Fort Meade knew of its cause of action at least since the meeting of creditors held on
August 12, 2004. Further, Fort Meade does not allege any reason whatsoever as to why it filed the
complaint after the bar date. Fort Meade states only that Debtors were aware of its intention to file the
complaint and that it would be inequitable to argue that a 10-day delay should act as a bar. Given that
Fort Meade offers no reason for why it could not file this complaint prior to the bar date, even though it
had actual notice of the bankruptcy and participated in the bankruptcy case, the complaint must be
dismissed. See In re McKoy, 211 B.R. at 846 (“the Rule 4007(c) time limit for objecting to discharge
is not easily avoided.”). In addition, there is no reason alleged that is cognizable under the Bankruptcy
Code why the order granting Debtors’ discharge should be stricken.
It is, therefore, by the United States Bankruptcy Court for the District of Maryland,
ORDERED, that Debtors’ Motion to Dismiss is GRANTED; and it is further
ORDERED, that the Complaint against Harry Dieble Brown and Sharon Kay Brown is
DISMISSED.
End of Order
cc: Glenn N. Klavans, Esquire
7310 Ritchie Highway
Empire Towers – Suite 202
Glen Burnie, MD 21061-3068
Attorney for Debtor
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Harry Dieble Brown, Jr.
123 Lincoln Avenue
Glen Burnie, MD 21061
Debtor
Sharon Kay Brown
123 Lincoln Avenue
Glen Burnie, MD 21061
Debtor
Sean C. Logan, Trustee
Logan Russack, LLC
2530 Riva Road
Suite 308
Annapolis, MD 21401
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