Ryan et al v. Fox

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UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
CLIFFORD DALE FOX,
Debtor. 	No. 7-06-10690-SL
KIERAN F. RYAN, Trustee
Plaintiff,
v. 	Adv. No. 06-01189-S
CLIFFORD DALE FOX,
Defendant.
Consolidated with:
UNITED STATES TRUSTEE,
Plaintiff,
v. 	Adv. No. 06-01190-S
CLIFFORD DALE FOX,
Defendant
MEMORANDUM OPINION AND ORDER
DENYING DEFENDANT’S MOTION TO DISMISS
This matter is before the Court on the Motion to
Dismiss (doc 13) filed by Clifford Dale Fox (“Debtor”), and
the objections thereto by the United States Trustee (doc 19
and 21) and by Kieran Ryan (“Trustee”) (doc 20)
(“Plaintiffs”), and Debtor’s reply (doc 22). 	The motion
will be denied.
FACTS
Debtor filed for Chapter 7 bankruptcy relief on May 1,
2006. 	June 20 was the first date set for the meeting of
creditors under Section 341(a). 	The deadline for filing a
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complaint objecting to Debtor’s discharge therefore was
Monday, August 21, 2006. 	Rules 4004(a) and 9006(a)
F.R.B.P.
On August 21 (or earlier) Debtor’s then counsel
Kenneth G. Egan and Trustee agreed to the entry of a
stipulated order extending, for the Trustee and the United
States Trustee, the deadline for objections to the debtor’s
discharge until October 23. 	The order was e-mailed to the
Court and the Court reviewed and approved the order on
August 21. 	However, it was not docketed until the
following day, August 22. 	(Main case, doc 12.) 	On October
18 Trustee filed his complaint objecting to Debtor’s
discharge, and the United States Trustee filed her
complaint on October 23. 	Debtor asserted as an affirmative
defense to Trustee’s complaint that it was untimely filed.
Afterward the two adversary proceedings were consolidated,
and Debtor’s defense applies to both complaints.
CONCLUSIONS OF LAW
In relevant part, Rule 4004 states as follows:
Grant or Denial of Discharge
(a) Time for Filing Complaint Objecting to
Discharge; Notice of Time Fixed.
In a chapter 7 liquidation case a complaint
objecting to the debtor’s discharge under §
727(a) of the Code shall be filed no later than
60 days after the first date set for the meeting
of creditors under § 341(a)….
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(b) Extension of Time.
On motion of any party in interest, after hearing
on notice, the court may for cause extend the
time to file a complaint objecting to discharge.
The motion shall be filed before the time has
expired.
Rule 9006(b)(3), dealing with enlargement of time, states
in relevant part:
The court may enlarge the time for taking action
under Rules…4004(a)…, only to the extent and
under the conditions stated in those rules.
Debtor argues that the failure to get the extension
order timely entered 1 means that there has been no
compliance with Rule 4004(a) or (b), and therefore the
consolidated complaints have been untimely filed. 	In
response Plaintiffs argue that the stipulation would have
been filed timely if not for unavoidable events, namely, a
CM/ECF software update that occurred that weekend which
Plaintiffs assert caused the Court to enter the order on
Tuesday rather than Monday. 	They also argue that the Court
has the equitable power to correct mistakes pursuant to
§105(a). 	And they contend that the time provisions in Rule
4004 are not jurisdictional and therefore can be modified
or extended by the use of equitable defenses such as waiver
or estoppel.
1 Rules 9021 and 5023, F.R.B.P. provide that orders are “entered” when
they are docketed.
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Plaintiffs incorrectly assert that a court error
resulted in the untimely filing, blaming the upgrade of the
Court’s CM/ECF system that weekend. 	Plaintiffs
misunderstand how orders are processed. 	Orders are
submitted by e-mail (as required by Notice to Practitioners
No. 2004-06 section 4, December 14, 2004), reviewed by the
Court, and if approved, forwarded to the Clerk’s office for
docketing. 	Thus, whereas CM/ECF immediately dockets a
party’s filing, submission to the Court of a proposed order
by e-mail has no such automatic result. 	The fact that the
order must first be reviewed by the judge (who may not even
see the order on the day it is sent) to approve its entry,
makes it clear that no party can reasonably expect that in
all instances an order will always be entered on the day it
is submitted. 	(This is without consideration of the
remainder of the process, which counsel likely were not
aware of.) 	So this case does not raise an issue of parties
being misled or harmed by the Court. 	Cf. Themy v. Yu (In
re Themy), 6 F.3d 688, 690 (10th Cir.1993) (court may allow
untimely filings using its equitable powers when one party
relied on an incorrect notice from the court) but compare
Bowles v. Russell, ___ U.S. ___, 127 S.Ct. 2360 (2007)
(untimely appeal from denial of habeas corpus petition
deprived court of appeals of jurisdiction to hear the
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appeal even though counsel relied on an incorrect statement
from the trial court giving defendant extra time to file
the appeal). 	Thus the cases cited by Plaintiffs -- Moss v.
Block (In re Moss), 289 F.3d 540 (8th Cir. 2002) (objection
filed 17 months after the deadline deemed timely filed due
to reliance on court order indefinitely extending deadline)
and In re Anwiler, 958 F.2d 925 (9th Cir. B.A.P. 1992)
(court set two different deadlines for complaints to a
discharge; late filed complaint allowed on equitable
grounds) -- to the extent they have not been abrogated by
Bowles v. Russell, are inapposite.
On the other hand, Plaintiffs are correct that the
docketing of the extension order on August 22 is not a
jurisdictional defect precluding the action from going
forward. 	Kontrick v. Ryan, 540 U.S. 443, 452-57 (2004)
(“jurisdictional” is a term that should be limited to
subject matter and personal jurisdiction; debtor waived
defense of untimely filing by waiting until after the
adjudication of the merits to raise the issue). 	Compare,
for example, Taylor v. Freeland & Kronz, 503 U.S. 638, 642-
46 (1992) (untimely filing of objection precluded trustee
from contesting debtor’s claim of exemption but was not
characterized as “jurisdictional”). 	Thus, unlike a genuine
challenge to the Court’s subject matter jurisdiction, which
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if well taken would require this Court to dismiss the
action regardless of when it was raised, Kontrick v. Ryan,
540 U.S. at 455, there are circumstances in which a late-
filed objection may proceed. 	Id. 	The question is whether
such circumstances exist in this adversary proceeding. 	The
Court finds that such circumstances do exist.
The elements of an estoppel defense are a
representation, act or omission; justifiable reliance on
that act or omission; and a change of position to one’s
detriment based on that reliance. Lone Mountain Production
Co. v. Natural Gas Pipeline Co. of America, 984 F.2d 1551,
1557 (10th Cir. 1992) (action on a gas purchase contract;
“[E]stoppel bars a party when by acts, or silence, one
induces another party to act to his detriment in reliance
on that silence or act.”).
The order itself makes clear that Defendant entered
into a stipulation with the Plaintiff Kieran Ryan to extend
the deadline for objection; that stipulation constituted
the requisite representation. 	It is equally apparent that
had Defendant not stipulated to the entry of an order
extending the deadline, on August 21 Plaintiffs would have
filed their complaints, or at least Trustee on behalf of
Plaintiffs would have filed a motion requesting the
extension. 	As explained above, that motion would have been
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docketed immediately – i.e., timely – and thereby would
have preserved Plaintiffs’ rights. 	Rule 4004(b). 2
Debtor argues that stipulated extensions must be
“ordered by the court”, citing In re Synder, 102 B.R. 874,
875 (Bankr. S.D.Fla. 1989), and Dent v. Associates
Financial Services of America, Inc. (In re Dent), 137 B.R.
78, 80 (Bankr. S.D.Ga. 1992). The parties in Snyder agreed
to an extension, but the court refused to approve that
agreement on the basis that the Code and Rules “display a
clear mandate for prompt disposition of these
controversies”. 	Id. at 875. 	The court provided no other
explanation for its ruling. 	With respect, this Court does
not regard the wording and policy of the Code and Rules so
inflexibly. 3
Dent is even less applicable. 	In that case the
attorneys agreed between themselves (although even this
fact was subject to dispute) to extend a deadline imposed
by a court order to file a proof of claim. 	The court
2 It is true that the Court might not have granted the motion if it were
contested, which would have meant that the time had expired. 	However,
that possibility is vanishingly slight. 	At worst, consistent with the
Court’s practice, the Court almost certainly would merely have required
Plaintiffs to file their complaints sooner than October 23.
3 At the time of the Snyder ruling, Rule 4004(b) required that an order
extending the deadline have been entered by the court prior to the
expiration of the deadline. 	Since 1996 Rule 4004(b) requires only that
the motion be pending as of the deadline. 	It appears that the Snyder
court relied on this limitation for its ruling. 	Reliance on a like
provision of Rule 4003(b) (objections to exemptions) was the basis of
the ruling in Clark v. Brayshaw (In re Brayshaw), 912 F.2d 1255, 1256-
57 (10th Cir. 1990), making that case equally inapposite.
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refused to give effect to the parties’ unilateral change of
its order. 	In this adversary, the parties were not seeking
to modify an order of this Court, and in any event they
sought prompt approval of the extension.
Conclusion and Order:
Plaintiffs, in reliance on Defendant’s agreement in
the stipulated order, now find themselves facing a motion
to dismiss. 	Defendant is estopped from urging dismissal
based on an untimely filing.
It is therefore ordered that Defendant’s motion to
dismiss the complaints is denied.
JAMES S. STARZYNSKI
UNITED STATES BANKRUPTCY JUDGE
Copy to:
Kieran F Ryan
Ryan Law Office
PO Box 26
Las Cruces, NM 88004-0026
Leonard Martinez-Metzgar
PO Box 608
Albuquerque, NM 87103-0608
Trey Arvizu, III
PO Box 1479
Las Cruces, NM 88004-1479
505-527-8600
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