Winebrenner v. Morris (In re Morris)

570 B.R. 708, 2017 Bankr. LEXIS 1245
CourtUnited States Bankruptcy Court, M.D. Pennsylvania
DecidedApril 28, 2017
DocketCASE NO. 1-14-bk-03161 RNO
StatusPublished
Cited by2 cases

This text of 570 B.R. 708 (Winebrenner v. Morris (In re Morris)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Winebrenner v. Morris (In re Morris), 570 B.R. 708, 2017 Bankr. LEXIS 1245 (Pa. 2017).

Opinion

OPINION1

Robert N. Opel, II, Chief Bankruptcy Judge

The Chapter 7 Debtor received a bankruptcy discharge in October 2014. The case was reopened in February 2017 to consider a motion filed by a personal injury claimant who commenced a pre-bankruptcy state court action against the Debtor. The Claimant has moved for a declaration that her state court action, which she wishes to pursue only to the extent of available liability insurance coverage, is not stayed by the discharge injunction imposed by § 524 of the Bankruptcy Code. For the reasons stated in this Opinion, I conclude that the state court personal injury action is not prohibited and can proceed.

I. Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (0).

II. Facts and Procedural History

Betty Morris (“Debtor/Defendant”) filed a Voluntary Petition under Chapter 7 of the Bankruptcy Code on July 7, 2014. On August 25, 2014, the Chapter 7 Trustee filed a Report of No Distribution, ECF No. 12, and the Debtor/Defendant received a Chapter 7 Discharge on October 27, 2014, ECF No. 14.

On February 13, 2017, Carol Winebren-ner (“PlaintiffiClaimant”) filed a Motion to Reopen the Chapter 7 case, ECF No. 18, and the bankruptcy case was reopened on February 22, 2017, ECF No. 23. The PlaintiflyCl^imant is the plaintiff in a personal injury action against the Debtor/Defendant, which was pending on the petition date in the Pennsylvania Court of Common Pleas of Franklin County (“Personal Injury Action”). On February 23, 2017, the Plaintiff/Claimant filed a Motion for Relief from the Injunction of 11 U.S. Code § 524 of the Bankruptcy Code and to the Bankruptcy Discharge in Order that the Mov-ant Be Permitted to Pursue a- Liability Insurance Policy in Effect Prior to the Debtor’s Discharge (“Motion”). ECF No. 24. On March 9, 2017, the Debtor/Defendant filed an Answer with New Matter in opposition to the Motion. ECF No. 30.

Federal Rule of Evidence 201 allows a Federal Court to take judicial notice of facts that are not subject to reasonable dispute. A bankruptcy court may take judicial notice of the docket events in a case and the contents of the bankruptcy schedules to determine the timing and status of case events, as well as other facts not reasonably in dispute. In re Harmony Holdings, LLC, 393 B.R. 409, 413 (Bankr. D.S.C. 2008); In re Paolino, 1991 WL [711]*711284107, at *12 n.19 (Bankr. E.D.Pa., Jan. 11,1991).

I take judicial notice of the docket entries in the Debtor/Defendant’s Chapter 7 case. I also take judicial notice of the contents of the bankruptcy schedules and statements, which are not subject to reasonable dispute. I also take judicial notice of docket entry 13, filed on September 18, 2014, Amended Schedule F-Creditors Holding Unsecured Non Priority Claims, The amendment added the Plaintiff/Claimant as a creditor describing the claim as “possible claim .from auto accident” and the amount of the claim as “unknown.” ECF No. 13.

The parties filed a Stipulation of Undisputed Facts on April 17, 2017 (“Stipulated Facts”). ECF No. 38.

One of the exhibits attached to the Motion is a copy of the prepetition state court complaint filed in the Personal Injury Action. The'complaint avers that on May 31, 2014, the Plaintiff/Claimant was injured in a motor vehicle accident in Waynesboro, Pennsylvania. It is alleged that the motor vehicle accident was due to the negligence of the Debtor/Defendant. The state court complaint also alleges that, as a result of the accident, the Plaintiff/Claimant suffered serious injuries, including cervical herniations and cervical disc bulging.

The core of the Plaintiff/Claimant’s position is that the discharge injunction does not prohibit her from proceeding with the Personal Injury Action, with any recovery limited to available liability insurance coverage. That is, with no personal liability being assessed, or collected, from the Debtor/Defendant or her assets.

The Debtor/Defendant advances three principal positions. First, the Motion is characterized as seeking a revocation of discharge, which the Debtor/Defendant maintains is untimely under § 727(e). Second, she argues that the state court in Franklin County is the best forum to address the issues raised by the Motion. Third, that the discharge injunction prohibits continuation of the Personal Injury Action, even though recovery would be limited to applicable insurance coverage.

III. Discussion

A. Does the Discharge Revocation Deadline Apply?

A revocation of discharge is exceptional relief and is allowed only in limited circumstances. In a Chapter 7 case, revocation of discharge is provided for in § 727(d), which states:

(d) On request of the trustee, a creditor, or the United States trustee, and after notice and a hearing, the court shall revoke a discharge granted under subsection (a) of this section if—
(1) such discharge was obtained through the fraud of the debtor, and the requesting party did not know of such fraud until after the granting of such discharge;
(2) the debtor acquired property that is property of the estate, or became entitled to acquire property that would be property of the estate, and knowingly and fraudulently failed to report the acquisition of or entitlement to such property, or to deliver or surrender such property to the trustee;
(3) the debtor committed an act specified in subsection (a)(6) of this section; or
(4) the debtor has failed to explain satisfactorily—
(A) a material misstatement in an audit referred to in section 586(f) of title 28; or
(B) a failure to make available for inspection all necessary accounts, [712]*712papers, documents, financial records, files, and all other papers, things, or property belonging to the debtor that are requested for an audit referred to in section 586(f) of title 28.

A revocation of discharge is contrary to the fresh start purposes of a bankruptcy discharge. Therefore, the requirements of §. 727(d) are strictly construed against the party seeking revocation. In re Shiloh., 2011 WL 8204916, at *1 (Bankr. M.D.Pa. July 26, 2011); In re Rockwell, 280 B.R. 100, 101 (Bankr. D.N.J. 2002).

Section 727(e) establishes deadlines for discharge revocation actions providing:

(d) The trustee, a creditor, or the United States trustee may request a revocation of a discharge—
(1) under subsection (d)(1) of this section within one year after such discharge is granted; or
(2) under subsection (d)(2) or (d)(3) of this section before the later of—
(A) one year after the granting of such discharge; and

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570 B.R. 708, 2017 Bankr. LEXIS 1245, Counsel Stack Legal Research, https://law.counselstack.com/opinion/winebrenner-v-morris-in-re-morris-pamb-2017.