In re Peralta

599 B.R. 759
CourtUnited States Bankruptcy Court, D. New Jersey
DecidedApril 16, 2019
DocketCase No. 16-21251 (RG)
StatusPublished
Cited by4 cases

This text of 599 B.R. 759 (In re Peralta) is published on Counsel Stack Legal Research, covering United States Bankruptcy 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
In re Peralta, 599 B.R. 759 (N.J. 2019).

Opinion

MEMORANDUM DECISION

Honorable Michael B. Kaplan, United States Bankruptcy Judge *761This matter comes before the Court1 on a motion filed by Creditors Yanira Colon, Miguel Verdugo, and Rosa Lidia Lopez ("Movants") seeking an extension of time to file an adversary proceeding (ECF No. 30 ). Kley F. Peralta, Sr. and Carmen Peralta ("Debtors") filed an Objection (ECF No. 34 ) and a Supplemental Certification in Support of the Objection (ECF No. 36 ), and Movants filed a Reply (ECF No. 38 ). At the hearing on May 4, 2018, Judge Gambardella reserved her decision. On August 30, 2018, Judge Gambardella held a telephonic hearing on the motion and, at the Court's request, the parties thereafter submitted supplemental briefing (ECF Nos. 89 & 90). For the reasons set forth below, the Movants' motion is DENIED. The following constitutes the Court's findings of fact and conclusions of law as required by FED. R. BANKR. P. 7052.2

I. Background

The factual background and procedural history of this matter are well known to the parties and will not be repeated in detail here. In relevant part, Movants allege that they were the victims of a fraudulent real estate scheme conceived and carried out by Debtor, Kley F. Peralta. In September 2015, Movants initiated a civil action against Mr. Peralta in New Jersey state court with attorney Mario Blanch as their counsel. That matter was pending in the state court when Debtors filed a chapter 7 petition on June 9, 2016.

On June 10, 2016, the Court distributed a Notice of Bankruptcy Filing which set September 6, 2016, as the deadline to object to discharge or to challenge whether certain debts were dischargeable (ECF No. 4 ). It is undisputed that each Movant received notice of the bankruptcy filing via first class mail at his or her respective address.3 In fact, Movants concede that multiple documents pertaining to the Debtors' bankruptcy were sent to each movant at his or her respective address.4

*762Nevertheless, the September 6, 2016 deadline for filing an adversary proceeding passed and Movants did not file an adversary proceeding challenging dischargeability. Several months later, on April 10, 2017, Movants filed a motion seeking an extension of time to file an adversary proceeding to challenge the dischargeability of the debt owing to them by Debtors.

The crux of the Movants' motion is that the deadline should be tolled for equitable reasons. Specifically, Movants argue that the notice they received-in the form of notices mailed directly to Movants-was designed and calculated to deprive Movants of their due process rights and, as such, did not constitute actual notice as required by the Federal Rules of Bankruptcy Procedure. Movants point to the fact that they are not proficient in English, that they are unsophisticated as to the bankruptcy process, and that the notice of bankruptcy was served upon them directly and not upon the attorney, Mr. Blanch, who represented Movants in the state court action. Finally, Movants note that on September 9, 2016, the Court docketed a Consent Order (ECF No. 13 ) between Debtors and the chapter 7 trustee ("Trustee") which extended the Trustee's deadline to file a nondischargeability complaint until December 6, 2016. Movants assert that the Trustee and the Debtors were obligated to give notice of the Consent Order and provide a copy to all creditors and their attorneys, but intentionally failed to do so.

Debtors contend that the instant motion should be denied. In sum, Debtors assert that they properly listed the Movants in the chapter 7 petition, that Movants were properly served and received actual notice of the bankruptcy in accordance with the rules, and that Debtors were under no obligation or duty to serve Mr. Blanch directly. Debtors also contend that the Consent Order did not apply to Movants and, as such, Movants were not entitled to receive a copy.

II. Discussion

Section 523(c)(1) of Title 11 of the United States Code states that a debtor shall be discharged from a debt unless, after notice and hearing, the Court determines the debt to be nondischargeable. Federal Rule of Bankruptcy Procedure 4007(c) provides that "a complaint to determine the dischargeability of a 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)." That 60-day time period may be extended upon motion of a party in interest and after a hearing; however, the motion must be filed before the time period has expired. FED. R. BANKR. P. 4007(c) ("The motion shall be filed before the time has expired."). Here, the Movants neither filed a complaint before the deadline, nor did they file a motion to extend the deadline within the prescribed time frame. Instead, after the deadline passed the Movants filed the instant motion requesting that the Court extend their deadline to file an adversary proceeding.

Prior to engaging in a legal analysis, the Court takes this opportunity to clarify the appropriate legal basis for the Movants' arguments. Although Movants frame their motion as a request for equitable tolling of a deadline, the substance of their argument is more appropriately characterized as a challenge to the adequacy of the notice they received. These are two distinct and separate concepts. See, e.g. , Jones v. Chemetron Corp. , 212 F.3d 199, 205 n.6 (3d Cir. 2000) (distinguishing the issues of equitable tolling and adequacy of notice); In re Trans World Airlines, Inc. , 96 F.3d 687, 690 (3d Cir. 1996) (same). In the context of late-filed proofs of claims, several courts have expressly noted that *763the application of equitable tolling due to excusable neglect "presupposes 'that the creditor received timely and adequate notice of the proceedings.' " In re R.H. Macy & Co., Inc. , 161 B.R. 355, 357 (Bankr. S.D.N.Y. 1993) (quoting National Union Fire Ins. Co. of Pittsburgh v. Main (In re Main) , 157 B.R. 786, 791 (W.D. Pa. 1992) ); see also, e.g. , In re Grand Union Co. , 204 B.R. 864, 870 (Bankr. D. Del. 1997). Nothing in the Federal Rules of Bankruptcy Procedure or relevant case law suggests that the application of the equitable tolling doctrine would differ in the context of a late-filed adversary proceeding.

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Bluebook (online)
599 B.R. 759, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-peralta-njb-2019.