Lompa v. Price (In Re Price)

79 B.R. 888, 17 Collier Bankr. Cas. 2d 999, 1987 Bankr. LEXIS 906, 16 Bankr. Ct. Dec. (CRR) 967
CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedOctober 8, 1987
DocketBAP No. CC 86-2032 MoVJ, Bankruptcy No. LA 86-05753-RM
StatusPublished
Cited by56 cases

This text of 79 B.R. 888 (Lompa v. Price (In Re Price)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lompa v. Price (In Re Price), 79 B.R. 888, 17 Collier Bankr. Cas. 2d 999, 1987 Bankr. LEXIS 906, 16 Bankr. Ct. Dec. (CRR) 967 (bap9 1987).

Opinions

MOOREMAN, Bankruptcy Judge:

This appeal arises from an order by the bankruptcy court allowing the ap-pellee/Lompa to file a nondischargeability complaint under section 523(c), after the bar date had passed.

FACTS

As a basis for his nondischargeability complaint, the appellee alleges that he advanced $93,000 to the debtor based on certain misrepresentations. The underlying agreement between the parties was that the debtor would assist the appellee in obtaining certain “certificate of deposit financing” through a reputable company in order to purchase land in Australia. The appellee alleges that the debtor failed to obtain the financing and he lost the opportunity to purchase the land. The debtor failed to return the advanced funds.

In February, 1983, the appellee filed a complaint in state court alleging fraud and breach of contract. Three years later, on April 3, 1986, the debtor filed a Chapter 7 petition, but failed to schedule the appellee. [889]*889as a creditor. The bar date for filing complaints to determine dischargeability was set for July 22, 1986. Although the appel-lee was not listed as a creditor, his attorney (“Mr. Ring”) received a “Notice of Injunction” from the debtor’s counsel on May 21, 1986, which notified Mr. Ring that the debt- or had filed bankruptcy. There is no evidence of when the appellee was personally notified of the bankruptcy proceeding. However, Mr. Ring was representing the appellee in the underlying state court action and there is no dispute that he had authority to act for the appellee.

After receiving notice of the debtor’s bankruptcy, Mr. Ring assumed his client had been properly scheduled and awaited notice of the deadline for filing a section 523(c) complaint. Because of the debtor’s failure to list the appellee as a creditor, the notice under BR 4007(c) and BR 2002(f) was never sent to the appellee or to Mr. Ring.

On August 4,1986, (13 days after the bar date had run), Mr. Ring called the debtor’s counsel and learned that the filing date had passed. On August 25, 1986, the appellee filed his Motion for Leave to File a Late Complaint to Determine Dischargeability of Debt. At the hearing on the motion, the bankruptcy court found that the appellee did not receive notice of the bar date, that it was reasonable to assume that notice would be received and that the matter was “pursued in a reasonably timely matter.” Based on these findings, the trial court granted the appellee’s motion and the debt- or appeals.

DISCUSSION

The debtor argues that because Mr. Ring received actual notice of the bankruptcy petition in time to file a complaint, the trial court erred in granting the extension. The appellee initially argues the Panel lacks jurisdiction to hear this appeal from a “non-final order” and that the debtor failed to obtain “leave of the Court” to allow review of the order as interlocutory. The appellee alternatively argues that although notice of the bankruptcy was received in the form of a Notice of Injunction, it was reasonable to assume that notice of the bar date would be sent to the appellee and, therefore, the trial court did not err. The appellee further argues that his failure to file a timely complaint was “directly caused” by the debtor’s failure to schedule him as a creditor and the debtor should not be “allowed to profit from his own negligence.”

I. Interlocutory Order

With regard to the appellee’s initial argument that the Panel lacks jurisdiction to hear this appeal, Bankruptcy Rule 8003(c) provides for consideration of the notice of appeal as a motion for leave to appeal. Further, this Panel hereby grants review of this appeal based on the standards set forth in 28 U.S.C. § 1292(b), in that it involves a controlling question of law as to which there is a substantial ground for difference of opinion and an immediate appeal may materially advance the ultimate termination of the litigation. Although section 1292(b) deals with appeals of interlocutory orders from district courts to courts of appeals, it is appropriate for this Panel to adopt such standards for appeals from the bankruptcy court. See e.g. Matter of Bertoli, 58 B.R. 992, 995 (D.N.J.1986); In re Johns-Manville Corp., 45 B.R. 833, 835 (S.D.N.Y.1984).

II. Notice to Appellee’s Attorney.

Assuming the creditor did not receive personal notice of the debtor’s bankruptcy petition, the initial issue before this Panel is whether notice to a creditor’s attorney of the bankruptcy proceeding is sufficient to constitute notice to the creditor. In addressing this issue, it is helpful to look to section 523(a)(3)(B) of the Bankruptcy Code which provides for an exception to discharge when the creditor does not receive notice of the bankruptcy proceedings. Section 523(a)(3)(B) excepts from discharge any debt not listed or scheduled in time to permit—

(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim and timely request for a determination of dis-chargeability of such debt under one of such paragraphs, unless such creditor [890]*890had notice or actual knowledge of the case in time for such filing and request.

11 U.S.C. § 523(a)(3)(B) (emphasis added).

The generally recognized rule was stated in Maldonado v. Ramirez, 37 B.R. 219 (D.V.I.1984). There the court stated:

[njotice or actual knowledge will be imputed to a creditor or claimant when it ‘comes to someone who has clear authority to act for the creditor and which provides ample opportunity [for the creditor] to participate in the bankruptcy proceeding ... ’ Matter of Robertson, 13 B.R. 726, 733 (Bankr.E.D.Va.1981) quoting Katz v. Kowalsky, 296 Mich. 164, 295 N.W. 600, 604 (Mich.1941). Notice to a creditor’s attorney of a bankruptcy filing is usually sufficient if the attorney received knowledge of it while representing his client in enforcing a claim against the bankrupt. [3 Collier on Bankruptcy, 15th Ed., § 523.15(5)(c) (1983)]. See In re Saltzman, 25 B.R. 125 (Bankr.E.D.Wis.1982); Matter of Robertson, supra.

Id. at 221 (emphasis added).

In the instant case, Mr. Ring was representing the appellee in the underlying state court action on the claim that the appellee now seeks to be declared nondischargeable. Mr. Ring has represented the appellee in these bankruptcy proceedings and does not dispute his authority to receive notice on behalf of the appellee. Based on these facts, notice to the appellee’s attorney of the bankruptcy proceeding was sufficient for purposes of section 523(a)(3)(B) and for purposes of due process.

III. Actual Notice Under Section 523(c).

We now turn to the next issue of whether a debtor’s failure to schedule a creditor with actual notice of the bankruptcy will allow the unscheduled creditor to file a nondischargeability complaint under section 523(c) after the sixty-day time limitation pursuant to B.R. 4007(c) has passed.

It is now well recognized that a trial court has no discretion to grant untimely extensions to file section 523(c) complaints. E.g. In re Hill,

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Cite This Page — Counsel Stack

Bluebook (online)
79 B.R. 888, 17 Collier Bankr. Cas. 2d 999, 1987 Bankr. LEXIS 906, 16 Bankr. Ct. Dec. (CRR) 967, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lompa-v-price-in-re-price-bap9-1987.