Eckel Industries, Inc. v. Collins (In re Collins)

173 B.R. 251, 1994 Bankr. LEXIS 1659
CourtUnited States Bankruptcy Court, D. New Hampshire
DecidedSeptember 9, 1994
DocketBankruptcy No. 94-10902-MWV; Adv. No. 94-1098-JEY
StatusPublished
Cited by2 cases

This text of 173 B.R. 251 (Eckel Industries, Inc. v. Collins (In re Collins)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eckel Industries, Inc. v. Collins (In re Collins), 173 B.R. 251, 1994 Bankr. LEXIS 1659 (N.H. 1994).

Opinion

MEMORANDUM OPINION

JAMES E. YACOS, Bankruptcy Judge.

This adversary proceeding is before the Court on the debtor’s motion to dismiss for failure to timely file a complaint seeking a nondisehargeability determination pursuant to 11 U.S.G. § 523(c) within the deadline specified by Bankruptcy Rule 4007(c). The deadline for filing complaints was set for July 25, 1994. Eckel Industries, Inc. filed their complaint on July 26, 1994 1 There is no [252]*252question that the complaint was actually filed one day beyond the deadline date.

Plaintiffs first argument is that the complaint should be deemed timely filed where evidence of proper mailing would presume delivery within the usual time. Specifically, since the complaint was properly executed, addressed, stamped and mailed three days prior to the deadline and the usual time for delivery from the originating town to the town where the Bankruptcy Court is located is one day, the complaint should be deemed timely filed notwithstanding the fact that it actually arrived at the Court one day after the filing deadline. E.g. Matter of Kero-Sun, Inc., 63 B.R. 50 (Bankr.D.Conn.1986) (proof of claim properly executed and mailed to bankruptcy court ten months before the claims bar date is presumed to have been timely filed); In re Smith, 42 B.R. 927 (Bankr.D.Mass.1984) (complaint which was intended to be filed with the bankruptcy court but misdelivered to the district court is deemed to have been filed on the date of its original delivery pursuant to Bankruptcy Rule 5005(b)). While recognizing some courts have sustained this proposition under certain factual scenarios, this Court expressly rejects this contention.

The efficient administration of the bankruptcy estate depends on the imposition of deadlines. Both the debtor and the creditors benefit from the prompt resolution of the creditor’s claims and determination of the debtor’s proposed repayment terms.

The purpose of the bankruptcy laws is quickly and effectively to settle bankrupt estates. Katchen v. Landy, 382 U.S. 323, 328, 86 S.Ct. 467, 471-72, 15 L.Ed.2d 391 (1966). Under the Bankruptcy Code and [r]ules, creditors play a zero-sum game in which the failure to navigate effectively through various intricate procedures can mean total defeat. Moreover, because such procedures are thought to be necessary to protect the bankrupt and the creditors, exceptions cannot be made every time a creditor claims hardship.

In re Robintech, Inc., 863 F.2d 393, 397-98 (5th Cir.), cert. denied by 493 U.S. 811, 110 S.Ct. 55, 107 L.Ed.2d 24 (1989). Although as a general matter, complaints to bar discharge or to determine dischargeability may be filed any time before or after the conclusion of the bankruptcy case, complaints to bar discharge or to determine dischargeability under § 523(a)(2) (fraud or false financial statement); § 523(a)(4) (fraud or defalcation acting as a fiduciary, embezzlement or larceny); or § 523(a)(6) (willful and malicious injury) are subject to a 60 day deadline for the filing of a complaint2. Bankruptcy Rule 4007(c). As previously stated, the policy behind the Rule is to promote the prompt administration of the bankruptcy estate and to facilitate the debtor’s “fresh start.”

“The result [of the 60 day deadline] is automatic and sometimes leads to harsh results. However, Congress intended to establish a system whereby certain types of nondischargeability claims would be automatically cut off after a relatively short period of limitations in order to prevent debtors from being harassed by creditors after their claims had been discharged in bankruptcy. Congress meant to cure the abuse whereby debtors were routinely sued by creditors long after bankruptcy creditors claiming that their claims were [253]*253not discharged because of fraud or a false financial statement.”

In re Kirsch, 65 B.R. 297, 299-300 (Bankr. N.D.Ill.1986); See also Neeley v. Murchison, 815 F.2d 345, 346 (5th Cir.1987); In re Hill, 811 F.2d 484, 486-87 (9th Cir.1987); Byrd v. Alton, 837 F.2d 457 (11th Cir.1988). In light of the language of the Rule and the policy behind the words, this Court will not “deem” a complaint which was actually received beyond the deadline date to be timely filed.

Plaintiffs second argument centers around the creditors’ ability to file a motion to extend time to file a complaint as allowed by the rule3. The bankruptcy court cannot sua sponte extend the deadline to file dis-chargeability complaints under Rule 4007(c). The only way to extend the fixed date is upon motion filed before the deadline expires. In re Kennerley, 995 F.2d 145, 147 (9th Cir.1993). Although Eckel Industries did not file a motion to extend before the deadline lapsed, they did file a Motion to Modify Stay requesting the Court to lift the automatic stay in order to proceed with a lawsuit pending in District Court. Citing the ease of In re Lambert, 76 B.R. 131 (E.D.Wis.1985), Eckel Industries argues that the motion put the parties and the Court on notice of an intent to file a nondischargeability complaint and therefore the Court should construe the Motion to Modify Stay as a motion for extension of time for fifing the dischargeability complaint.

In Lambert, on November 2, 1984, two days before the deadline for filing discharge-ability determinations, the creditors filed a motion for termination of stay and attached a copy of the complaint they intended to file in the state court alleging misrepresentation and fraud in a home sale that involved the debtor. A hearing was held on December 21, at which time the Bankruptcy Court granted the motion stating that if the creditor prevailed in the state court litigation, a hearing on dischargeability would be required prior to the enforcement of the state court judgment. On January 15, the debtor filed a motion for leave to appeal and an appeal of the December 21 Order. The District Court denied the motion for leave to appeal finding that the Bankruptcy Court acted within its discretion by construing the motion for termination of stay as a motion for extension of time to determine dischargeability in that this action did not prejudice the debtor’s right to a “fresh start” but merely maintained the status quo.

The effect of the ruling in Lambert is clearly to allow a nondischargeabifity determination based on fraud grounds to be pursued in state court litigation post-bankruptcy even though no complaint to determine non-dischargeabifity had been filed with the Bankruptcy Court within the deadline. That decision does support the creditors’ argument to some extent but Lambert must be distinguished from the present situation because in Lambert

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Cite This Page — Counsel Stack

Bluebook (online)
173 B.R. 251, 1994 Bankr. LEXIS 1659, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eckel-industries-inc-v-collins-in-re-collins-nhb-1994.