VS. ADV. NO. 03-5128




This matter is before the court on a motion for judgment on the pleadings and to dismiss adversary proceeding filed by defendant Brenda F. Gentry on April 16, 2003 and the plaintiff's response. The plaintiff had filed its complaint to determine dischargeability on April 6, 2003. The basis for the defendant's motion is that the dischargeability proceeding under 11 U.S.C.  523(a)(4) was brought outside the time limit for filing such a proceeding. This court has jurisdiction of this matter pursuant to 28 U.S.C.  1334(b); it is a core proceeding pursuant to 28 U.S.C.  157)b)(2)(I).

The record in this case shows that the defendants filed their Chapter 7 case in this court on August 2, 2002. The first meeting of creditors was set for and held on September 5, 2002. The sixty day period within which a complaint to determine the dischargeability of debt pursuant to 11 U.S.C.  523(a)(2),(4),(6) or (15) expired on November 4, 2002. 11 U.S.C.  523(c). The plaintiff's complaint was not filed until April 6, 2003.

Bankruptcy Rule 4007(c) provides that, "[o]n motion of a party in interest, after hearing on notice, the court may for cause extend the time fixed under this subdivision. The motion shall be filed before the time has expired." Rule 9006(b)(3) then goes on to provide that "[t]he court may enlarge the time for taking action under Rules 1006(b)(2), 1017(e), 3002(c), 4003(b), 4004(a), 4007(c), 8002, and 9033, only to the extent and under the conditions stated in those rules." A court may therefore enlarge the time for filing a complaint falling within the scope of Rule 4007(c) "only to the extent and under the conditions stated in [that] rule[]." Nicholson v. Isaacman (In re Isaacman), 26 F.3d 629, 631 (6th Cir. 1994). Rule 4007(c) permits an extension of time, but only if a motion seeking the extension is filed before the original deadline has expired.

The plaintiff here did not seek an enlargement of time within the prescribed period. It maintains that it was an unscheduled creditor that only learned of the filing of the debtors' Chapter 7 case in early April 2003. The plaintiff argues that filing requirements are not applicable to unscheduled creditors. It cites in support of its position Erie Ins. Co. v. Romano (In re Romano), 262 B.R. 429 (Bankr. N.D. Ohio 2001), in which the plaintiff, a scheduled creditor, was aware of the deadline for filing a non-dischargeability complaint under  523(c), but was prevented by the debtor's fraud from discovering that it had such a cause of action in time to file a  523(a)(2) complaint within the deadline.

The Romano court held that in that situation, the Rule 4007(c) deadline is not a jurisdictional requirement, but a statute of limitations subject to the possibility of equitable tolling. In re Romano, 262 B.R. at 432. The court then ruled that the Rule 4007(c) deadline was equitably tolled, and that the plaintiff's complaint was timely filed. Id., at 434. The plaintiff's assertions aside, the Romano decision does not deal with unscheduled debts which are addressed in  523(a)(3)(B). The court pointed out the difference in the treatment of such debts:

Although not addressed by either party, the potential application of  523(a)(3)(B) . . . also bears mention. That provision of the Bankruptcy Code sets forth that a discharge under Chapter 7 will not discharge an individual debtor from any debt

(3) neither listed nor scheduled under section 521(1) of this title, with the name, if known to the debtor, of the creditor to whom such debt is owed, 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 dischargeability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request.

. . . Since an unscheduled tort debt is treated under  523(a)(3)(B), a complaint to determine nondischargeability may be brought at any time.

Section 523(c), by its own terms, does not apply to Section 523(a)(3)(B) claims. Therefore, the exclusive jurisdiction provisions of Section 523(c) are not applicable to the issue of dischargeability under Section 523(a)(3)(B). The time limitation of Bankruptcy Rule 4007(c) is also inapplicable, since that Rule applies only to complaints under Section 523(c), not to complaints under Section 523(a)(3)(B). In effect, a debtor who failed to list a creditor loses the jurisdictional and time limit protections of Section 523(c) and Rule 4007(b) [sic, should be 4007(c)] with respect to that creditor.

In re Strano, 248 B.R. 493, 499-500 (Bankr. D. N.J. 2000) (alteration in original)(citing In re Mendiola, 99 B.R. 864, 868 n. 6 (Bankr. N.D. Ill. 1989)).

Id., at 434, fn. 5.

This court does not agree with the Romano court's characterization of the Rule 4007(c) deadline as a "statute of limitations." See Rogers v. Laurain (In re Laurain), 113 F.3d 595 (6th Cir. 1997), for the proposition that the issue of timeliness may not be waived. The opinion is instructive, however, in its explanation of the treatment of unscheduled debts under  523. The complaint of the plaintiff here was more properly filed under 11 U.S.C.  523(a)(3)(B). Its 523(a)(4) complaint was untimely, and the untimeliness of that complaint may not be waived.

In consideration of all of the foregoing it is therefore the opinion of this court that the defendant's motion for judgment on the pleadings and to dismiss adversary proceeding is well taken, and unless the complaint is amended, it should be dismissed. The plaintiff will be allowed 10 days to amend its complaint to bring its action under 11 U.S.C.  523(a)(3)(B), failing which, the complaint will be dismissed. An order in conformity with this opinion will be entered separately.

Copies to:

Robert F. Ristaneo, Esq.

Ronald E. Butler, Esq.