In the Matter of Ralph W. Brandstaetter and Mary L. Brandstaetter, Debtors. Appeal of Douglas F. Mann, Trustee

767 F.2d 324, 1985 U.S. App. LEXIS 20208, 13 Bankr. Ct. Dec. (CRR) 599
CourtCourt of Appeals for the Seventh Circuit
DecidedJuly 2, 1985
Docket84-2990
StatusPublished
Cited by15 cases

This text of 767 F.2d 324 (In the Matter of Ralph W. Brandstaetter and Mary L. Brandstaetter, Debtors. Appeal of Douglas F. Mann, Trustee) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In the Matter of Ralph W. Brandstaetter and Mary L. Brandstaetter, Debtors. Appeal of Douglas F. Mann, Trustee, 767 F.2d 324, 1985 U.S. App. LEXIS 20208, 13 Bankr. Ct. Dec. (CRR) 599 (7th Cir. 1985).

Opinion

CUDAHY, Circuit Judge.

These proceedings arise in a bankruptcy proceeding under Chapter 7 of Title 11 of the United States Code. The trustee in bankruptcy appeals from an order of the district court disallowing the trustee’s objection to the debtors’ claim of exemption of certain personal injury claims. We affirm.

I.

On September 16, 1982, Ralph and Mary Brandstaetter, the debtors-appellees, filed a voluntary petition for relief under Chapter 7, Title 11, of the United States Code., In their Schedule B-2, both debtors listed unasserted claims for personal injuries as assets. In Schedule B-4, the debtors elected exemptions allegedly pursuant to Wisconsin law and listed these personal injury claims as exempt property. On October 4, 1982, the bankruptcy court issued an order setting a meeting of creditors and fixing times for filing objections to discharge and for other purposes. This order scheduled a meeting of creditors for October 20, 1982. In the order, the court also required that any objection to the debtors’ claim of exempt property had to be filed within 15 days after the date set for the meeting of creditors — that is, by November 4, 1982.

On October 20, 1982, a creditors’ hearing was held as scheduled. No objections were filed within the time limit, and the debtors were discharged on January 10, 1983.

On or about March 9, 1983, the trustee filed an objection to the debtors’ claimed exemption of the personal injury claims. The debtors filed their initial brief and four supporting affidavits on April 22, 1983. On April 29, 1983, after filing his objection, the trustee filed a motion, with supporting affidavit and brief, requesting an order extending time to file an objection to the debtors’ claim of exemption of the personal injury claims. The bankruptcy court did not rule on the motion, but did not dismiss the objection, either. The trustee then filed a brief in support of his objection to the exemptions, and the debtors filed a reply brief and three additional supporting affidavits. The debtors argued that the trustee’s objection was untimely and further on the merits that the personal injury cause of action, although part of the debtors’ estate pursuant to section 541 of the Bankruptcy Code, was exempt property under the law of Wisconsin. The bankruptcy judge declined to rule on the untimeliness objection but held that the personal injury claim constituted exempt property and therefore disallowed the trustee’s objection to the exemptions, 36 B.R. 369 (Bkrtcy.D.Wis.1984). 1

*326 II.

Although the bankruptcy court did not rule on the timeliness of the objection, it specifically noted on the first page of its decision that timeliness was an issue before that court.

An appeal was taken to the district court, which affirmed the determination of the bankruptcy court, again declining to rule on the untimeliness argument but agreeing that the personal injury claim constituted exempt property and therefore that the trustee’s objection to the exemption should be disallowed. Both the bankruptcy judge and the district court found that since the personal injury claim had been excluded from the bankruptcy estate in Matter of Buda, 323 F.2d 748 (7th Cir.1963), and was therefore not available to meet creditors’ claims under the former bankruptcy law, this property was also exempt under Wisconsin law under the test provided by the new Bankruptcy Code. We decline to address this issue on the merits, but we find that the trustee’s objection to the exemption was untimely and that the decision of the bankruptcy court affirmed by the district court may be affirmed on this alternative ground. Under the peculiar circumstances of this case we believe that we are authorized to address this issue and decide it. There are no outstanding questions of fact which appear to be material to a determination of timeliness and this seems to be an issue which can be decided based upon the documents which are before us.

III.

Because of a historical gap, no statutory time limit for filing objections applies to this case. The case was filed on September 16, 1982. On October 4, 1982, the bankruptcy court issued an order setting October 20, 1982 as the date for the creditors’ meeting and requiring that any objection to the debtors’ claim of exempt property be filed within 15 days after that date, namely, by November 4, 1982. The trustee’s objection was filed on March 9, 1983.

Bankruptcy rules in effect at the time of the enactment of the Bankruptcy Reform Act of 1978, Pub.Law No. 95-598, 92 Stat. 2549 (codified as amended in 11 U.S.C. and scattered sections of 28 U.S.C.), were to continue to apply to the extent they were not inconsistent with the new Code. In re Bartley, 33 B.R. 768 (Bankr.E.D.N.Y.1983); In re Vigil, 23 B.R. 172 (Bankr.D.Colo.1982). Since the Code does not establish a time limit for the filing of objections to exemptions, any time limit set by the older rules would apply if not inconsistent with the provisions of the Code. Old Rule 403 set fifteen days from the filing of a required report as the limit for filing objections. Since the Code does not require the filing of such a report, most courts that have considered the matter- have decided that the old rule is in fact inconsistent with the provisions of the Code. See Matter of Dembs, 757 F.2d 777, 780 (6th Cir.1985); In re Bartley, 33 B.R. at 770; In re Vigil, 23 B.R. at 174. But see Redmond v. Tuttle, 698 F.2d 414, 416-17 (10th Cir.1983).

A new Bankruptcy Rule 4003 has been promulgated under the Bankruptcy Code which requires that objections to claimed exemptions must be made within thirty days after the creditors’ meeting or any amendment, or they are waived. Rule *327 4003, however, took effect on August 1, 1983 and was applicable only to proceedings pending on that date, except to the extent that in the opinion of the court the application would not be feasible or would work injustice. The case before us was still pending on August 1, 1983 but we do not believe that the rule should be applied retroactively to actions already taken by the parties, for they were without notice that a restrictive rule might be applied. See In re Penland, 34 B.R. 536 (Bankr.E.D.Tenn.1983).

Had either of' these time limits applied, of course, the filing in this case would be untimely. Under the old Rule 906 and new Rule 9006, the bankruptcy judge could extend the time allowed on a showing of excusable neglect. Although there is sufficient evidence in the record to show that it would have been an abuse of discretion for the bankruptcy judge to find excusable neglect, we need not reach that issue. For the objection was not filed until almost two months after discharge of the debtors. 2

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767 F.2d 324, 1985 U.S. App. LEXIS 20208, 13 Bankr. Ct. Dec. (CRR) 599, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-the-matter-of-ralph-w-brandstaetter-and-mary-l-brandstaetter-debtors-ca7-1985.