Bankr. L. Rep. P 75,314 in Re Fred Kennerley, Debtor. Larry Allred v. Fred Kennerley, AKA Frederick L. Kennerley, Jr.

995 F.2d 145, 93 Cal. Daily Op. Serv. 3979, 93 Daily Journal DAR 6835, 1993 U.S. App. LEXIS 12850, 1993 WL 182653
CourtCourt of Appeals for the Ninth Circuit
DecidedJune 2, 1993
Docket91-16599
StatusPublished
Cited by52 cases

This text of 995 F.2d 145 (Bankr. L. Rep. P 75,314 in Re Fred Kennerley, Debtor. Larry Allred v. Fred Kennerley, AKA Frederick L. Kennerley, Jr.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bankr. L. Rep. P 75,314 in Re Fred Kennerley, Debtor. Larry Allred v. Fred Kennerley, AKA Frederick L. Kennerley, Jr., 995 F.2d 145, 93 Cal. Daily Op. Serv. 3979, 93 Daily Journal DAR 6835, 1993 U.S. App. LEXIS 12850, 1993 WL 182653 (9th Cir. 1993).

Opinion

D.W. NELSON, Circuit Judge:

After Fred Kennerley received a discharge under § 727 of the Bankruptcy Code (11 U.S.C. § 727), 1 the bankruptcy court barred further state court proceedings against him. The bankruptcy court determined that the fraud claim at issue in the state court action had been discharged along with Kennerley’s other debts because Larry Allred, the creditor, had failed to file a complaint of nondis-chargeability. The district court reversed, directing the bankruptcy court to allow the state court proceedings to go forward and to determine the dischargeability of any judgment recovered against Kennerley. Kenner-ley timely appealed. We have jurisdiction under 28 U.S.C. § 158(d), and we reverse.

STANDARD OF REVIEW

Because this court is in as good a position as the district court to review the decision of the bankruptcy court, we review the bankruptcy court’s decision independently. In re Probasco, 839 F.2d 1352, 1353 (9th Cir.1988). We review the bankruptcy court’s factual findings for clear error and review its legal determinations de novo. Id.

DISCUSSION

Allred advances three arguments against the bankruptcy court’s determination: (1) the motion to lift the automatic stay was a valid complaint to determine dischargeability under Rule 4007(c); (2) the district court extended Rule 4007(c)’s time limit when it granted Allred’s motion for relief from the automatic stay; and (3) there are extraordinary circumstances in this case requiring the bankruptcy court to exercise its equitable power to permit the untimely complaint.

Debts set forth in § 523(a), including debts for fraud, are excepted from discharge in bankruptcy. However, § 523(c) specifies that some of these nondischargeable debts, including debts for fraud, will be discharged unless the creditor requests the bankruptcy court to determine the dischargeability of the claim. Rule 4007 imposes a strict 60-day time limit for filing complaints to determine dischargeability of debts listed in § 523(c).

We recently dealt with these issues in Anwiler v. Patchett, 958 F.2d 925 (9th Cir.), cert. denied, — U.S.-, 113 S.Ct. 236, 121 L.Ed.2d 171 (1992), where we held that this time limit cannot be extended unless a motion is made before the 60-day limit expires. Although the complaint in Anwiler was untimely, it was allowed to stand under the specific facts of that case. Id. at 929 (court had equitable power to correct a mistake caused by court’s erroneous notice of deadline for filing). We follow the reasoning in Anwiler, but come to a different result in this case.

1. Was Allred’s motion to lift the automatic stay a complaint to determine dischargeability ?

At the outset, we reject Allred’s argument that his Motion For Relief From Automatic Stay was a valid complaint to determine dischargeability under § 523(e). Neither the motion to lift the automatic stay nor the notice of the motion mentioned § 523(c), nor did they indicate that Allred was seeking to have the dischargeability of the debt de *147 cided at that time. Furthermore, the bankruptcy court found that the motion was not intended to be a complaint.

2. Did the bankruptcy court extend the time limit for filing under Rule 4007(c) when it partially lifted the automatic stay?

We also reject Allred’s second argument that the bankruptcy court’s order lifting the automatic stay served also to extend the time limit for filing a complaint under Rule 4007(e). At first blush, it may appear reasonable to conclude that the court implicitly granted such an extension when lifting the stay; however, bankruptcy courts can only grant such extensions upon timely motion) as Rules 4007(c) and 9006(b)(3) make clear. See Anwiler, 958 F.2d at 927 (“[A] court no longer has the discretion to set the deadline [for filing a complaint to determine dischargeability], nor can it sua sponte extend the time to file.... Absent a motion to extend, the date, once set, does not change.” [citations omitted]). The bankruptcy court could not implicitly grant an extension of time when granting Allred’s motion to lift the stay; the court could only extend the time limit on motion to do so.

We disagree with Allred’s suggestion that the motion to lift the automatic stay should also be considered a motion to extend the deadline under Rule 4007(c). As the bankruptcy court noted in its well reasoned decision, “Allred’s motion for relief from the automatic stay did not request an extension of the deadline; it did not mention the deadline. At the time the motion was filed, the deadline was some six weeks in the future, and plenty of time remained for Allred to file a timely dischargeability complaint.” In fact, the motion does not even mention Rule 4007 or § 523(c).

Allred’s reliance on In re Lambert, 76 B.R. 131 (E.D.Wis.1985), where a bankruptcy court construed a motion to lift the automatic stay as a timely motion to extend the time limit, is unpersuasive. First, Lambert conflicts with Ninth Circuit law which strictly construes Rule 4007(c). See, e.g., In re Bucknum, 951 F.2d 204, 207 (9th Cir.1991); In re Hill, 811 F.2d 484, 486-87 (9th Cir. 1987); In re Price, 79 B.R. 888 (9th Cir. BAP 1987); In re Rhodes, 61 B.R. 626, 630 (9th Cir. BAP 1986). Second, in Lambert, the hearing on the motion to lift the automatic stay occurred after the deadline. The same is not true here; Aired still had several weeks in which to file a complaint after the stay was lifted. Because the hearing on the motion to lift the stay in Lambert occurred after the deadline, the debtor was prepared to argue about extending the time limit at the hearing. Kennerley had no reason to prepare for argument on this issue, and the issue was not argued at the hearing.

In sum, bankruptcy courts cannot extend Rule 4007(c)’s time limit implicitly; they may only extend the time upon timely motion to do so. No such motion was made in this case. Accordingly, the bankruptcy court correctly determined that its order granting partial relief from the automatic stay did not extend the time for Aired to file under Rule 4007(c).

3. Are there extraordinary circumstances which would permit an untimely complaint to stand?

Alred’s final argument, and apparently the basis on which the district court reversed the bankruptcy court, is that there are extraordinary circumstances in this case which would permit an untimely complaint to stand.

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995 F.2d 145, 93 Cal. Daily Op. Serv. 3979, 93 Daily Journal DAR 6835, 1993 U.S. App. LEXIS 12850, 1993 WL 182653, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bankr-l-rep-p-75314-in-re-fred-kennerley-debtor-larry-allred-v-fred-ca9-1993.