United States District Court, C.D. California
In re MICHAEL A. TURCHIN, Debtor.
MICHAEL A. TURCHIN, Appellee. STEVEN BERKOWITZ, Appellant, Adversary No. 2:16-ap-02181-BR Bankr. Case No. 2:16-bk-13147-BR
from the United States Bankruptcy Court for the Central
District of California. Hon. Barry Russell, Bankruptcy Judge,
HONORABLE ANDRÉ BIROTTE JR. UNITED STATES DISTRICT
bankruptcy appeal, Appellant-Creditor Steven Berkowitz
(“Appellant” or “Berkowitz”) contends
the Bankruptcy Court erred in denying his Motion to Allow
Inadvertent Late Filing of Objection To Discharge and
Complaint to Determine Non-Dischargeability of Debt, entered
on August 4, 2016. Dkt. No. 1. Berkowitz's
non-dischargeability complaint was filed one day late due to
a delay caused by Federal Express. In the underlying
proceeding, the Bankruptcy Court held that the time
limitations for filing a non-dischargeability complaint
appeared to be jurisdictional, but to the extent equitable
powers could extend the deadline, they are limited to
situations where a court misleads a party.
October 25, 2016, Berkowitz filed his opening brief. Dkt. No.
10. On November 23, 2016, Appellee-Debtor Michael A. Turchin
(“Appellee” or “Turchin”) timely
filed his opposition. Dkt. No. 11. On December 7, 2016,
Berkowitz timely filed his reply. Dkt. No. 14. This Court has
jurisdiction to hear the appeal under 28 U.S.C. section
158(a). After considering the papers filed in connection with
the appeal, the Court finds this matter appropriate for
resolution without oral argument. Fed. R. Bank. P.
8019(b)(3). For the reasons discussed below, the Court
REVERSES the Bankruptcy Court's order.
March 11, 2016, Turchin filed a voluntary petition for
Chapter 7 bankruptcy in the Central District of California.
130-177.) That same date, the Bankruptcy Court scheduled the
meeting of creditors for April 11, 2016. (Id. at
183-185.) Thus, the deadline for filing a complaint to
determine the dischargeability of a claim under 11 U.S.C.
§ 523(c) was June 10, 2016. See Fed. R. Bankr.
to the bankruptcy proceedings, on November 5, 2015, Berkowitz
obtained a judgment from the District Court for Pitkin
County, Colorado in his favor and against Turchin in the
amount of $624, 822.53 (“State Court Judgment”).
(Id. at 39-48.) Berkowitz sought to challenge the
dischargeability of the State Court Judgment based on 11
U.S.C § 523(a), which excepts from discharge debts
obtained by fraud. (Id. at 35-54.) On June 9, 2016,
Berkowitz transmitted an Objection to Discharge and Complaint
to Determine Non-Dischargeability of Debt to Federal Express
in Colorado for guaranteed overnight delivery by June 10,
2016 to the Bankruptcy Court in Los Angeles. (Id. at
64, ¶¶ 3-7.) Due to a handling error by Federal
Express, the non-dischargeability complaint was delivered to
the Bankruptcy Court on June 13, 2016, one business day late.
(Id. at 107.)
17, 2016, Berkowitz filed a Motion to Allow Inadvertent Late
Filing of Objection To Discharge and Complaint to Determine
Non-Dischargeability of Debt. (Id. at 56-67.) On
July 12, 2016, Turchin filed an opposition. (Id. at
73-89.) On July 18, 2016, Berkowitz filed a reply.
(Id. at 92-107.) On July 26, 2016, a hearing was
held on Berkowitz's motion, at which time the Bankruptcy
Court denied the motion. (Id. at 109-124.) The
Bankruptcy Court held that to the extent Rule 4007(c) was not
jurisdictional, it was bound by Ninth Circuit authority,
In re Marino, 37 F.3d 1354, 1358 (9th Cir. 1994),
which limited extensions under Rule 4007(c) “to
situations where a court explicitly misleads the
party.” (Id. at 112, 117-118.) On August 4,
2016, the Bankruptcy Court issued its order denying
Berkowitz's motion to allow the late filing of the
non-dischargeability complaint. (Id. at 8-9.) On
August 17, 2016, Berkowitz filed a notice of appeal. Dkt. No.
courts have jurisdiction to hear appeals from, inter
alia, “final judgments, order, and decrees”
of the bankruptcy courts. 28 U.S.C. § 158(a)(1); see
also Fed. R. Bankr. P. 8005. “When reviewing a
decision of a bankruptcy court, a district court functions as
an appellate court and applies the standards of review
generally applied in federal courts of appeal.” In
re Guadarrama, 284 B.R. 463, 468 (C.D.Cal. 2002).
“The bankruptcy court's findings of fact are
reviewed for clear error, while its conclusions of law are
reviewed de novo.” In re Strand, 375 F.3d 854,
857 (9th Cir. 2004). The scope of the exercise of equitable
power is reviewed de novo, and the exercise of equitable
power is reviewed for an abuse of discretion. In re
Sasson, 424 F.3d 864, 867 (9th Cir. 2005). “A
bankruptcy court necessarily abuses its discretion if it
bases its ruling ‘on an erroneous view of the law or on
a clearly erroneous assessment of the evidence.'”
In re Staffer, 262 B.R. 80, 82 (B.A.P. 9th Cir.
2001) (citation omitted).
issue on appeal is whether the Bankruptcy Court erred in
refusing to permit the non-dischargeability complaint to
proceed in spite of its untimely filing when the delay
occurred due to a failure of Federal Express.
Fed.R.Civ.P. 4007(c), “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).”
Fed.R.Bankr.P. 4007(c). The court may enlarge the deadline
under Rule 4007(c) if a request is made before the 60-day
expiration period. Id.; see also Fed. R.
Bankr. P. 9006(b)(3). Although the Ninth Circuit has
construed the requirements of Rule 4007(c) strictly, Rule
4007(c) is not jurisdictional. Kontrick v. Ryan, 540
U.S. 443, 454 (2004) (“[T]he filing deadlines
prescribed in Bankruptcy Rules . . . are claim-processing
rules that do not delineate what cases bankruptcy courts are
competent to adjudicate.”); see also In re
Santos,112 B.R. 1001, 1006 ...