Cyrnek v. Oliva (In re Oliva)

591 B.R. 328
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedOctober 23, 2018
DocketBankruptcy No. 17 B 36365; Adversary No. 18 A 00189
StatusPublished
Cited by1 cases

This text of 591 B.R. 328 (Cyrnek v. Oliva (In re Oliva)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cyrnek v. Oliva (In re Oliva), 591 B.R. 328 (Ill. 2018).

Opinion

Donald R. Cassling, United States Bankruptcy Judge

A Chapter 7 trustee lacks standing to prosecute a complaint under 11 U.S.C. § 523 objecting to the discharge of debts owed to creditors. Does that trustee nevertheless have the authority to bring a motion to extend the time for those creditors to file their own § 523 complaints? The Fourth Circuit says no, the Sixth Circuit says yes, and the Seventh Circuit has yet to opine on the issue. This Court is persuaded that the Sixth Circuit's view is the better reasoned of the two because it acknowledges the plain language of the applicable Bankruptcy Rules and because it is supported by important policy considerations.

This issue arose in a motion filed by Debtor-Defendant Adam C. Oliva ("Defendant"), seeking to dismiss a § 523 complaint filed by Justin M. Cyrnek ("Plaintiff") as untimely filed. Defendant argues that the complaint should be dismissed because it was filed after the original bar date, even though it was filed prior to an order extending that bar date upon the motion of Chapter 7 Trustee Catherine Steege ("Trustee"). Defendant argues that that extension order was invalidly sought by Trustee. For the reasons that follow, the Court rejects this argument.

In addition, the Court will address an argument raised by Defendant for the first time in his supplemental reply brief: Trustee in this instance never served Defendant personally with a copy of her extension motion, even though his counsel was served electronically. Defendant contends that personal service of this type of motion on a debtor is required, and that *331the failure of Trustee to personally serve Defendant invalidates the extension order. While the Court could find that Defendant waived this argument by raising it for the first time in his supplemental reply brief, the Court rejects the argument on its merits, holding that Trustee's routine extension motion was not a contested proceeding requiring personal service upon Defendant.

I. BACKGROUND

Defendant filed a voluntary Chapter 7 petition on December 7, 2017. On the following day, the Clerk's Office sent out a notice of the bankruptcy case. That notice specified March 12, 2018 as the deadline to object to Defendant's discharge under 11 U.S.C. § 727(a)(2)-(7) or challenge the dischargeability of his debts under 11 U.S.C. § 523(a)(2), (4), or (6). (Bankr. Dkt. No. 9.)

On March 12, 2018, Trustee filed a routine motion seeking to extend the deadlines to object both to Defendant's discharge under § 727 and to challenge the dischargeability of his debts under § 523.1 (Id. at No. 25.) Her service list shows that she served it on all creditors and on the U.S. Trustee, but failed to serve it on Defendant who is the debtor in this case. However, the docket shows that the motion was served on Defendant's counsel electronically. Defendant did not object to this extension request.

In her extension motion, Trustee stated that the "extension [was] necessary due to the fact that the continued [first] meeting [of creditors would] not take place until after the 60-day time periods set forth in Rules 4004 and 4007 have passed." (Id. at ¶ 5.) The Court granted Trustee's unopposed motion on March 20, 2018 and entered an order extending the deadline to May 31, 2018 (the "Extension Order"). (Id. at No. 27.) No party, including Defendant, appealed or filed a motion to alter or amend the Extension Order.

On May 30, 2018, Plaintiff filed a complaint seeking to except from discharge Defendant's debt owed to him under § 523(a)(2) (the "Complaint"). (Adv. Dkt. No. 1.) This filing occurred after the original filing deadline of March 12, 2018 but prior to expiration of the extended filing deadline of May 31, 2018.

On July 19, 2018, Defendant filed a motion to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6). In the motion, Defendant argues that the Court did not have the legal authority to extend the deadline to file a complaint under § 523 and that that portion of the Court's order extending the § 523 deadline was therefore a nullity. (Id. at No. 7.) Specifically, Defendant contends that because the extension was requested by Trustee-as opposed to a creditor-the Court lacked the authority to enter the Extension Order and Plaintiff's complaint was therefore untimely. (Adv. Dkt. No. 7, ¶ 5.) Plaintiff filed a response on August 7, 2018, and Defendant filed a reply on August 13, 2018. Both parties submitted supplemental briefs to address the circuit split regarding a trustee's authority to extend the deadline to file complaints under § 523.

II. DISCUSSION

In reaching its decision, the Court addresses two issues: (1) whether Trustee had standing to extend the time to file a *332complaint to except a debt from discharge under § 523, and (2) whether the motion to dismiss must be granted because the original extension motion was never personally served upon Defendant.2

A. Trustee's Authority to Extend the Bar Date

Federal Rule of Bankruptcy Procedure 4007(a) governs who may file a § 523 complaint. It answers that question by stating that only "[a] debtor or any creditor may file a complaint to obtain a determination of the dischargeability of any debt." Fed. R. Bankr. P. 4007(a) (emphasis added). This Rule is consistent with § 523(c) of the Bankruptcy Code, which also only allows creditors to request determinations regarding the dischargeability of certain debts. 11 U.S.C. § 523(c).

By contrast, Bankruptcy Rule 4007(c) controls when such a complaint may be brought by a debtor or one of his creditors. Significantly, that Rule provides a broader answer than the one provided by subdivision (a) of the Rule:

[A] complaint to determine the dischargeability of any 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).... On motion of a party 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.

Fed. R. Bankr. P.

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Cite This Page — Counsel Stack

Bluebook (online)
591 B.R. 328, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cyrnek-v-oliva-in-re-oliva-ilnb-2018.