Dollinger v. Poskanzer (In Re Poskanzer)

146 B.R. 125, 1992 U.S. Dist. LEXIS 16611, 1992 WL 289931
CourtDistrict Court, D. New Jersey
DecidedOctober 13, 1992
DocketCiv. A. No. 92-3262 (AMW), Bankruptcy No. 90-24943 (WFT), Adv. No. 91-2255
StatusPublished
Cited by17 cases

This text of 146 B.R. 125 (Dollinger v. Poskanzer (In Re Poskanzer)) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dollinger v. Poskanzer (In Re Poskanzer), 146 B.R. 125, 1992 U.S. Dist. LEXIS 16611, 1992 WL 289931 (D.N.J. 1992).

Opinion

OPINION

WOLIN, District Judge.

Before this Court is an appeal of a bankruptcy court decision brought by creditor-appellant, Martin Dollinger (“Dollinger”). The bankruptcy court had ruled that Dol-linger’s claim of nondischargeability was barred for failure to file his complaint or an extension before the lapse of the bar date. For the reasons set forth below, the bankruptcy court’s decision is affirmed.

BACKGROUND

The debtor-appellee, David Poskanzer (“Poskanzer”), filed a pro se individual voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code (the “Code”) on November 7, 1990. The bankruptcy court subsequently converted this petition to a Chapter 11 proceeding. Before filing for bankruptcy, Poskanzer was engaged in the business of commercial real estate development under various business names. Dollinger had served as an attorney in some of Poskanzer’s business ventures and as a partner in others.

Because Poskanzer failed to name Dol-linger as a creditor in his bankruptcy petition or schedules, the bankruptcy court clerk’s “Notice to Creditors” (“creditors’ notice”) failed to include Dollinger. The creditors’ notice scheduled the first creditors’ meeting pursuant to Code section 341 on December 21, 1990, and provided that the bar date for objections to discharge would be on February 19, 1991, as mandated by Bankruptcy Rule 4007(c). 1 The initial creditors’ meeting was adjourned until January 3, 1991. Accordingly, under Bankr.R. 4007(c), the bar date was set for March 4, 1991.

Dollinger stipulated that he learned of the meeting from other sources and, therefore, was represented at the creditors’ meeting. The bankruptcy court observed that Dollinger’s law firm received its initial notice by a court-ordered newspaper publication. Trial Tr. at p. 19, lines 12-16. 2

Dollinger filed his nondischargeability complaint with the bankruptcy court on April 29, 1991, after the bar date established by Bankr.R. 4007(c). In his complaint, Dollinger averred damages in the amount of $2,427,060.02. Pl.Compl. p. 3. This figure was based on legal services rendered by Dollinger and promissory notes in the amount of $1,387,842 signed by Poskanzer in Dollinger’s favor. Pl.Compl. p. 2.

Poskanzer filed his answer on June 19, 1991 without including an objection that the nondischargeability complaint was time barred under Bankr.R. 4007(c). After the bankruptcy court trial began, Poskanzer moved to dismiss the complaint based upon Dollinger’s failure to file his nondischarge-ability complaint within the sixty-day limit imposed by Bankr.R. 4007(c). The bankruptcy court initially denied the motion, but, later reconsidered, and requested full-briefing of the issue raised. After a review of the parties’ submissions, the bankruptcy court, in an opinion written by the *127 Honorable William F. Tuohey, granted Pos-kanzer’s motion. Judge Tuohey held that Dollinger’s actual knowledge of the creditors’ meeting was sufficient notice of the bar date, and that Poskanzer had not waived this defense by his failure to affirmatively plead it in his answer.

DISCUSSION

Dollinger appealed from the bankruptcy court’s opinion and order, posing two arguments: first, that dismissal of his complaint denied him due process and equal protection of the law; and, second, that Poskanzer’s failure to plead Bankr.R. 4007(c) as a defense in his answer constituted a waiver.

A. Standards of Review

When sitting as an appellate tribunal in bankruptcy proceedings, this Court may only disturb fact-findings that are clearly erroneous. Bankr.R. 8013. As to legal issues, the scope of review is plenary. Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 103 (3d Cir.1981). The bankruptcy court’s decision to bar Dolling-er’s nondischargeability complaint was a resolution of a legal question and is now properly subject to review. Three issues are implicit in this review: (1) whether the Code requires extension of the bar date where Dollinger did not receive notice of the bar date but had actual knowledge of the creditors’ meeting; (2) whether Poskan-zer waived the bar date by failing to plead it in his answer; and (3) whether dismissal of Dollinger’s complaint based on failure to file his complaint of nondischargeability within the bar date denies Dollinger due process and equal protection where Dol-linger, possessed actual knowledge of the creditors’ meeting, but failed to receive the requisite creditors’ notice.

B. Dollinger’s Failure to Meet the Bar Date

Bankr.R. 4007(c) provides the general notice requirements and time frame that a debtor must satisfy to discharge a debt under Code section 523(c). More specifically, Bankr.R. 4007(c) provides that a complaint to determine the dischargeability of any debt pursuant to section 523(c) cannot be filed later than sixty-days after the “first date set for the meeting of creditors.” Bankr.R. 4007(c). 3 This creditors’ meeting is commonly known as a “341 meeting.” 4 The Bankruptcy Rules anticipate that creditors should receive thirty-days notice of this meeting in a manner prescribed by Bankr.R. 2002. Bankr.R. 4007(c).

A bankruptcy court possesses limited discretion, however, to permit filing beyond the bar date. Bankr.R. 9006(b)(3). 5 A creditor’s receipt of inadequate notice represents one instance where courts have traditionally extended the time to file the complaint. But this discretion is limited. More specifically, section 523(a)(3)(B) of the Code tempers the discretion permitted under the Bankruptcy Rules by limiting late filing only to those creditors who lack notice or actual knowledge of the case to permit *128 timely filing. 6 A plain-reading of the Code and the Bankruptcy Rules suggests that a creditor’s possession of actual knowledge of the case vitiates an inadequately noticed creditor’s ability to file out of time.

Although the Third Circuit has not ruled on the issue before this Court, persuasive authority exists from other circuits. Most notably, the Fifth, Ninth, Tenth, Eleventh and Twelfth Circuits have had factually similar cases involving the identical issue presented here. A survey of their rulings is instructive.

The Fifth Circuit has ruled that notice of bankruptcy proceedings — without formal notice of the bar date — received in time to act prior to the bar date constitutes sufficient notice under the Code. In re Compton, 891 F.2d 1180 (5th Cir.1990); Neeley v. Murchison, 815 F.2d 345 (5th Cir.1987). In Compton, the debtors listed the creditor with an incorrect address on their schedules. 891 F.2d at 1184. As a result, the creditor’s debt was not duly scheduled within the meaning of the Code. Id.

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Bluebook (online)
146 B.R. 125, 1992 U.S. Dist. LEXIS 16611, 1992 WL 289931, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dollinger-v-poskanzer-in-re-poskanzer-njd-1992.