Alabama Dept. of Economic & Community Affairs v. Lett

368 F. App'x 975
CourtCourt of Appeals for the Eleventh Circuit
DecidedMarch 18, 2010
Docket09-11871
StatusUnpublished
Cited by13 cases

This text of 368 F. App'x 975 (Alabama Dept. of Economic & Community Affairs v. Lett) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Alabama Dept. of Economic & Community Affairs v. Lett, 368 F. App'x 975 (11th Cir. 2010).

Opinion

PER CURIAM:

Plaintiff-Appellant, the Alabama Department of Economic and Community Affairs (“ADECA”), appeals from a decision of the district court that affirmed a bankruptcy court decision dismissing proceedings initiated by ADECA against ADE-CA’s debtor, Defendant-Appellee Charles L. Lett, Sr., a physician. No reversible error has been shown; we affirm.

ADECA obtained a state court consent judgment against Dr. Lett after Dr. Lett defaulted on a HUD Section 108 loan issued to Dr. Lett and his corporation. Before ADECA could enforce this judgment, Dr. Lett filed a Chapter 11 bankruptcy proceeding for himself and his corporation. In the bankruptcy proceedings, ADECA filed an adversary complaint seeking a determination that Dr. Lett’s debt to ADE-CA was nondischargeable under 11 U.S.C. § 523. The bankruptcy court entered a judgment dismissing ADECA’s adversary proceeding as untimely filed. ADECA’s motion to alter or amend that dismissal was denied; ADECA appealed the order denying that motion to the district court. The district court affirmed the bankruptcy court.

The relevant underlying facts may be briefly summarized. On 19 December 2001, ADECA obtained a state court judgment in the amount of $3,012 million against Dr. Lett due to his default on a HUD Section 108 loan. On 26 March 2004, Dr. Lett filed an individual Chapter 11 bankruptcy petition; and on 29 March 2004, the bankruptcy court issued to Dr. Lett’s creditors, including ADECA, a “Notice of Chapter 11 Bankruptcy Case, Meeting of Creditors, & Deadlines” (the “Notice”). Among the deadlines listed on the form Notice was the date for the first meeting of the creditors: 13 May 2004.

The Notice contained a section entitled “Deadline to File a Complaint to Determine Dischai'geability of Certain Debts;” inexplicably, the space for the date was left blank. ADECA’s counsel stated that he understood the absence of a specific date meant that no deadline had been set. Later, ADECA’s counsel called the clerk’s office and was told by clerk’s office personnel that no deadline had been set by the court.

*977 Dr. Lett was deposed as part of the bankruptcy proceedings; the deposition concluded on 23 February 2005. On 24 March 2005, ADECA filed it adversary complaint alleging that Dr. Lett had committed fraud in obtaining the loan.

Under Bankruptcy Rule 4007(c), a creditor — such as ADECA — who seeks a determination of the dischargeability of a debt on the grounds alleged by ADECA, must file a dischargeability complaint in the bankruptcy court no later than 60 days after the first date set for the debtor’s section 341 meeting of creditors, unless the creditor files a motion for extension of time before the 60 days have expired and that motion is granted by the bankruptcy court. Because the date first set for Dr. Lett’s section 341 meeting of creditors was 13 May 2004, under Rule 4007(c), ADECA had 60 days — until 12 July 2004 — to file an adversary complaint or to seek an extension to file. ADECA sought no extension; its complaint, filed on 24 March 2005, was filed outside of Rule 4007(c)’s 60-day time period.

In answer to ADECA’s complaint, Dr. Lett pleaded the “statute of limitations” generally as an affirmative defense. Neither side filed pretrial dispositive motions addressing that defense. In due course, the bankruptcy court scheduled trial on the merits of ADECA’s complaint. Before trial, Dr. Lett filed a “position statement” that asserted, among other things, that the two-year limitations period had expired and that the claim “was filed beyond sixty days of this case being filed.” 1 Again Dr. Lett made unclear references to the statute of limitations at the close of ADECA’s case. Rule 4007(c) never was cited as the source of the asserted defense.

The trial was completed on 2 February 2006. During the course of the trial, Dr. Lett’s counsel made no mention of Rule 4007(c) or the 60-day deadline. Lett’s counsel also made no mention of Rule 4007(c) or the 60-day deadline in his closing argument presented in the form of a post-trial brief. ADECA, in its post-trial rebuttal brief, argued that Dr. Lett was not relying on Rule 4007(c)’s 60-day deadline. Dr. Lett disputed ADECA’s characterization of his argument in a “surrebuttal brief.”

After receiving the post-trial briefing, the bankruptcy court dismissed ADECA’s complaint: it was not filed within the 60-day time period required by Rule 4007(c). ADECA filed a motion to alter or amend the judgment; it contended that the late filing of its complaint in the adversary proceeding should be excused because (1) Dr. Lett forfeited the Rule 4007(c) defense when he failed to present it before trial, or (2) the bankruptcy court should have extended the Rule 4007(c) time period under the doctrine of equitable tolling. ADE-CA’s motion was denied; and the district court affirmed that denial.

We have jurisdiction pursuant to 28 U.S.C. § 158(d). Determinations of law— from the bankruptcy court or the district court — are reviewed de novo. In re International Administrative Services, Inc., 408 F.3d 689, 698 (11th Cir.2005); findings of fact made by the bankruptcy court are reviewed for clear error. In re JLJ Inc., 988 F.2d 1112, 1116 (11th Cir.1993).

ADECA argues first that Dr. Lett waived the Rule 4007(c) defense by failing to present it to the bankruptcy court until its post-trial “surrebuttal brief.” Defenses afforded by the bankruptcy rules can be forfeited if the party seeking the benefit of the rule waits too long to raise the point. *978 See Kontrick v. Ryan, 540 U.S. 443, 124 S.Ct. 906, 916, 157 L.Ed.2d 867 (2004) (considering limitations period in Bankruptcy Rule 4004). 2 So, if Dr. Lett failed to raise the Rule 4007(c) defense before litigation on the merits, the benefits of the defense would have be forfeited. But the district court determined that Dr. Lett’s answer — which raised a statute of limitations defense — raised the Rule 4007(c) limitations period as a defense. We agree that Dr. Lett preserved the Rule 4007(c) defense when he pleaded the statute of limitations in his answer even though the answer contained no specific reference to Rule 4007(c).

In discussing the time period for filing claims set out in Bankruptcy Rule 4004, the Supreme Court made clear that such rules constitute a time bar to the filing of a complaint; the Court further opined that “[t]ime bars ... generally must be raised in an answer or responsive pleading.” Kontnck, 124 S.Ct. at 917, citing Fed. R.Civ.P. 8(c), made applicable to adversary bankruptcy proceedings by Bankruptcy Rule 7008(a).

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Cite This Page — Counsel Stack

Bluebook (online)
368 F. App'x 975, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alabama-dept-of-economic-community-affairs-v-lett-ca11-2010.