In RE McCLELLAN

459 B.R. 371
CourtUnited States Bankruptcy Court, E.D. Wisconsin
DecidedOctober 21, 2011
Docket19-20274
StatusPublished
Cited by2 cases

This text of 459 B.R. 371 (In RE McCLELLAN) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In RE McCLELLAN, 459 B.R. 371 (Wis. 2011).

Opinion

459 B.R. 371 (2011)

In re Patricia A. McCLELLAN, Debtor.
William T. Neary, United States Trustee, Plaintiff,
v.
Patricia A. McClellan, Defendant.

Bankruptcy No. 05-44803. Adversary No. 07-2141.

United States Bankruptcy Court, E.D. Wisconsin.

October 21, 2011.

*372 Michelle S.Y. Cramer, U.S. Trustee, Milwaukee, WI, for Plaintiff.

Michael J. Burr, Burr Law Office LLC, Elm Grove, WI, Ryan J. Harrington, Waukesha, WI, for Defendant.

MEMORANDUM DECISION ON UNITED STATES TRUSTEE'S MOTION FOR CORRECTION OF CLERICAL ERROR UNDER RULE 9024 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE

MARGARET DEE McGARITY, Bankruptcy Judge.

The United States Trustee filed a motion for correction of a clerical error in the order denying the debtor's discharge in the above-titled adversary proceeding. The debtor opposed the motion on the ground the error was not correctable under Fed.R.Civ.P. 60(a). Both parties submitted briefs in support of their respective positions.

This is a core proceeding under 28 U.S.C. § 157(b)(2), and the Court has jurisdiction under 28 U.S.C. § 1334. This decision constitutes the Court's findings of facts and conclusions of law pursuant to Fed. R. Bankr.P. 7052. For the reasons stated below, the motion for correction is granted.

BACKGROUND

The relevant facts are not in dispute. Patricia McClellan filed a chapter 13 petition on October 16, 2005, and her plan was confirmed on March 6, 2006. Unbeknownst to the trustee and unsecured creditors (presumably the mortgage holder signed off), the debtor had sold her homestead in July 2006, while her chapter 13 case was pending. She and her husband received approximately $81,000 from the sale. Those proceeds were never turned over to the chapter 13 trustee, and within three months the debtor and her nonfiling spouse, Patrick McClellan, had spent the entire amount. The debtor subsequently converted to chapter 7 on November 2, 2006. The trustee reported no assets for distribution on March 23, 2007.

The United States Trustee filed an adversary proceeding, seeking a denial of the debtor's discharge under 11 U.S.C. § 727(a)(2), due to her postpetition dissipation of estate assets. The debtor requested and was granted an extension of time to file an answer to the complaint. After the debtor failed to answer the complaint, the United States Trustee moved for a default judgment. The Court held a preliminary pretrial and entered the order denying the debtor's discharge on August 13, 2007.

The McClellans then filed a joint chapter 7 petition on April 27, 2011, Case No. 11-26543-pp. Some of the debts listed on the 2011 schedules had also been listed in the 2005 case. When the issue was raised with debtor's counsel, he informed the United States Trustee that the judgment order in the adversary proceeding denied the debtor's discharge pursuant to 11 *373 U.S.C. § 727(a)(8)[1], not 11 U.S.C. § 727(a)(2), as alleged in the complaint. This adversary proceeding was reopened on July 5, 2011, to address the motion for correction.

ARGUMENTS

The United States Trustee argues the order denying the debtor's discharge under section 727(a)(8) is correctable as a clerical error. Federal Rule of Civil Procedure 60(a), made applicable by Federal Rule of Bankruptcy Procedure 9024, provides that "[t]he court may correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order or other part of the record. The court may do so on motion or on its own, with or without notice." Fed. R.Civ.P. 60(a). The bankruptcy court is entitled to modify an order under Rule 60(a) if the error was mechanical in nature rather than the result of a deliberate choice and the modification reflects the intent of the bankruptcy court at the time of the hearing. 11 C. Wright & Miller, Federal Practice and Procedure § 2854 at 441 (2d ed. 1995, Supp. 2011).

The movant is not asking the Court to revisit its legal analysis, nor is it asking that the Court correct an error of substantive judgment. The error in this instance is mechanical or typographical. The Court clearly intended to deny the debtor's discharge pursuant to section 727(a)(2): The complaint stated the basis for denial of discharge was under section 727(a)(2), the adversary proceeding cover sheet listed the cause of action as denial of discharge under section 727(a)(2), and the notice of the basis for denial pursuant to section 727(a)(2) was provided to all interested parties. Additionally, at the time she filed her 2005 case, the debtor was eligible for a chapter 7 discharge[2], so section 727(a)(8) did not apply to her.

The debtor argues Fed.R.Civ.P. 60(a) cannot be used to change the judgment because the United States Trustee committed a legal error, not a clerical error, when drafting the order denying discharge. See Blue Cross & Blue Shield Ass'n v. American Express Co., 467 F.3d 634, 637 (7th Cir.2006) (Rule 60(a) allows court to correct records to show what was done, rather than change them to reflect what should have been done). Nearly four years elapsed between the entry of the order and the United States Trustee's motion for correction. Presumably the Court signed the order as submitted because that was the relief the United States Trustee sought at that time. After the order and judgment denying discharge were entered all the parties behaved as if it were entered legitimately. Errors that affect the substantive rights of the parties are beyond the scope of Rule 60(a); the debtor's substantive right of obtaining a discharge of certain debts in her current case is affected by the error.

*374 DISCUSSION

Federal Rule of Civil Procedure 60(a) provides the following:

(a) Corrections Based on Clerical Mistakes; Oversights and Omissions. The court may correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record. The court may do so on motion or on its own, with or without notice. But after an appeal has been docketed in the appellate court and while it is pending, such a mistake may be corrected only with the appellate court's leave.

Fed.R.Civ.P. 60(a).

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Cite This Page — Counsel Stack

Bluebook (online)
459 B.R. 371, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-mcclellan-wieb-2011.