First Financial Bank, NA v. Forsythe et al

UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
In re: 	TIMOTHY C HARLES FORSYTHE
KRISTIN K. FORSYTHE,
Debtors
Case No. 	04-39980
Adv. No. 	05-3092
FIRST N ATIONAL BANK, NA,
SUCCESSOR IN I NTEREST TO FIRST
NATIONAL B ANK OF SOUTHWEST O HIO ,
Plaintiff
v.
TIMOTHY C HARLES FORSYTHE
KRISTIN K. FORSYTHE,
Defendants
Judge Waldron
Chapter 7
DECISION ON ORDER DENYING
MOTION TO DISMISS
ADVERSARY COMPLAINT
DATED AT DAYTON, OHIO this 24th Day of May, 2005:
Background
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: May 24, 2005
____________________________________________________________
Case 3:05-ap-03092 Doc 9 Filed 05/24/05 Entered 05/24/05 13:56:05 Desc Main
Document Page 1 of 9

2
On November 11, 2004, the Debtors filed for chapter 7. (Doc. 1) 	The
meeting of creditors (11 U.S.C. § 341) was set for January 12, 2005. This date is
significant because a creditor has only 60 days from the first date set for the
meeting of creditors to file a complaint objecting to the dischargeability of a debt
under 11 U.S.C. § 523(a)(2), (4), (6) and (15). 	See Bankruptcy Rule 4007(c)
and 11 U.S.C. § 523(c). 	In this case, the deadline for such complaints was
March 14, 2005 (See Doc. 7 – FORM B9A – Notice of Chapter 7 Bankruptcy
Case, Meeting of Creditors, & Deadlines).
On March 14, 2005, First National Bank, NA, Successor in Interest to First
National Bank of Southwest Ohio (the “Plaintiff”) electronically filed a document
captioned 	“Complaint 	to 	Determine 	Dischargeability 	of 	Debts” 	(the 	initial
complaint). (Doc. 13) 1 The initial complaint raised two immediate concerns: (1) it
was filed in the estate case and not as a separate adversary proceeding (this
error was noticed to counsel and is also on the docket) and (2) the complaint was
docketed by counsel as a “Submission of Summons for Court Issuance.” 	The
following day, March 15, 2005 – one day past the deadline – the complaint was
re-filed as a new adversary proceeding (the complaint). (Adv. Doc. 1) 	The
Plaintiff also filed a “Report to the Court” on March 15, 2005, which simply
reiterates what the court record shows – the Plaintiff electronically filed the initial
complaint 	incorrectly 	on 	March 	14, 	2005 	and 	re-filed 	the 	complaint 	as 	an
adversary proceeding on March 15, 2005. 	On March 15, 2005, the Plaintiff also
1 The court notes the complaint does not specify subsections of 523; however, Count I quotes the
language from 11 U.S.C. § 523(a)(2)(A) and Count II quotes the language from 11 U.S.C. §
523(a)(2)(B).
Case 3:05-ap-03092 Doc 9 Filed 05/24/05 Entered 05/24/05 13:56:05 Desc Main
Document Page 2 of 9

3
withdrew 	the 	incorrectly 	filed 	initial 	complaint. 	(See 	Doc. 	16 	– 	Notice 	of
Withdrawal)
The court notes that the Bankruptcy Court for the Southern District of Ohio
operates through a mandatory case management/electronic case filing [cm/ecf]
system. 	Filing, which previously routinely required a physical presence at the
courthouse, is now a cyberspace occurrence accomplished with a few computer
keystrokes. 	Pursuant to Local Bankruptcy Rule 5005-4 and the applicable
Southern District of Ohio Administrative Procedures for Electronic Case Filing, all
attorneys 	(with 	few 	exceptions 	not 	relevant 	here) 	are 	required 	to 	file 	all
documents 	through 	the 	electronic 	case 	filing 	system. 	In 	addition, 	the
Administrative Procedures require the attorney, and not the Clerk, to select the
title under which such filings will appear on the docket. When the docket must be
corrected, the Clerk’s office sends a “deficiency notice” to the attorney, which,
depending on the deficiency, the attorney may be required to correct. See ECF
Procedure 3(e).
On April 6, 2005, the Debtors filed a Motion to Dismiss (Adv. Doc. 7),
noting the adversary proceeding was filed one day late and requesting dismissal.
[The Debtor also filed an answer (Adv. Doc. 6), which raised the same issue as
an affirmative defense.] 	On April 26, 2005, the Plaintiff filed a Memorandum in
Opposition. (Adv. Doc. 8). 	The Plaintiff’s memorandum and accompanying
affidavit simply recite the above history, which appears as part of the court’s
record in this case and related adversary.
Case 3:05-ap-03092 Doc 9 Filed 05/24/05 Entered 05/24/05 13:56:05 Desc Main
Document Page 3 of 9

4
ISSUE FOR DETERMINATION
The issue presented is whether the Plaintiff’s complaint was timely filed;
untimely filed, but pursuant to equitable principles of tolling, should be considered
timely filed; or should be dismissed for failure to comply with the requirements of
Bankruptcy Rule 4007(c).
DETERMINATION OF ISSUE
The 	Court 	determines 	that, 	in 	the 	facts 	and 	circumstances 	of 	this
proceeding, without regard to the electronic filing deficiencies in connection with
the initial complaint, the initial complaint was timely filed and the subsequent
complaint, which is presently before the court, although not filed timely, is, as a
result of the application of the principles of equitable tolling, considered timely
filed, and will remain before the court for determination pursuant to applicable
law.
Analysis
The Initial Complaint was Timely Filed
The initial complaint was part of the Court’s docket in this case on March
14, 2005. Concededly, the filing of the complaint was not consistent with the
requirements of the Court’s Administrative Procedures; however, the complaint
had successfully made it through the Court’s (electronic) door. 	Before electronic
filing, if a paper complaint was filed with the Clerk and stamped “March 14, 2005”
Case 3:05-ap-03092 Doc 9 Filed 05/24/05 Entered 05/24/05 13:56:05 Desc Main
Document Page 4 of 9

5
and then either incorrectly docketed or physically placed in an estate file, rather
than an adversary file, it was, nevertheless, determined to be filed as of March
14, 2005. 	As noted by Judge William A. Clark of this Court in Stipancich v.
Colston (In re Colston), 244 B.R. 770, 771 (Bankr. S.D. Ohio 2000), filing, for
purposes of a complaint, “means that the pleadings ‘are placed in the possession
of the Clerk of the Court.’” (quoting Wright and Miller, § 1052 and 1153; other
citation 	omitted) 	Although 	the 	Clerk 	does 	not 	take 	possession 	of 	paper
documents under the current Administrative Procedures, the initial complaint was
in the Clerk’s possession on March 14, 2005.
ECF Procedure 3 – Consequences of Electronic Filing – states that:
(a) Filing and Entry on the Docket. Once electronic transmission of a document
to ECF, consistent with these rules, has been received by the Court, the
document has been filed for all purposes required by the Federal Rules of
Bankruptcy Procedure and the Local Rules of this Court and is entered upon the
docket kept by the clerk under Rule 5003.
(b) Official Record. When a document has been filed through ECF, the official
record is the electronic recording of the document as stored by the Court, and the
filing party is bound by the document as filed. Except in the case of documents
first filed conventionally, a document filed through ECF is deemed filed at the
date and time stated on the Notice of Electronic Filing from the Court.
(c) Filing Date and Time. Filing a document electronically does not alter the
filing deadline for that document. Unless otherwise ordered, filing must be
completed before midnight local time where the Court is located in order to be
considered timely filed that day.
(d) Appropriate Title of ECF Documents. A Filer or User electronically filing a
pleading or other document shall be responsible for designating the appropriate
title for that pleading or other document by selecting among the categories
provided through ECF.
(e) Corrections. In the event that a docket entry must be corrected, the clerk’s
office will notify the Filer or User of the deficiency. (underlining added)
ECF Procedure 3 is consistent with the applicable substantive law. 	The
Notice of Electronic Filing of the initial complaint (Doc. 13) was March 14, 2005.
Although it is clear counsel is now responsible for correcting filing and docketing
Case 3:05-ap-03092 Doc 9 Filed 05/24/05 Entered 05/24/05 13:56:05 Desc Main
Document Page 5 of 9

6
[See ECF Procedures 3(d) and (e)], correcting a filing error does not change the
date a pleading was filed because it was, as required, electronically filed.2
The instant case is distinguished from cases where there is a complete
failure to comply with a local rule or other governing law. See LeGrand v.
Harbaugh 	(In 	re 	Harbaugh), 	301 	B.R. 	317, 	319-20 	(B.A.P. 	8th 	Cir. 	2003)
(Pursuant to Bankruptcy Rule 5005(a)(2), facsimile filing not permitted where not
authorized in a local rule. 	Since the local rule allowed such filing only when
expressly authorized by the judge, and because such authorization was not
obtained, the facsimile filing sent to the Clerk was “dead on arrival.” (citation
omitted))
The court also finds this case distinguishable from Household Fin. Co. v.
Beam (In re Beam), 73 B.R. 434 (Bankr. S.D. Ohio 1987). 	In that case, this
court did not allow a late filed motion for an extension of the dischargeability
date, since, although counsel had timely filed the motion, he had filed it a
completely 	unrelated 	case 	where 	it 	would 	have 	been 	impossible 	for 	any
interested party to have knowledge the filing had occurred. 	The case sub judice
is different in several respects. First, the initial complaint in this case was filed in
the estate case, where all interested parties had either actual or constructive
knowledge – not in a completely unrelated case. 	Second, the caption was
correct. 	Therefore, unlike Beam, counsel’s mistake in this case is akin to the
Clerk’ office in the previous paper system placing the timely filed paper document
in the wrong case jacket and/or docketing the document in the wrong case.
2 It may be noted how failure to correctly complete electronic filings complicates court
proceedings, adversely impacts counsel and their clients and potentially raises the issue of
sanctions. See Local Bankruptcy Rules 5005-4(b) and 9011-3.
Case 3:05-ap-03092 Doc 9 Filed 05/24/05 Entered 05/24/05 13:56:05 Desc Main
Document Page 6 of 9

7
Third, the underpinning of the Beam decision was a body of case law that
prohibited equitable consideration of late filings under Bankruptcy Rule 4007(c).
As discussed in the balance of this decision, subsequent decisions of the U.S.
Supreme Court and Sixth Circuit Court of Appeals have determined that this
court should analyze equitable considerations in such circumstances. 	These
decisions follow the general mandate of the Sixth Circuit to decide cases on the
merits. This decision is the court’s expression of the current state of the law.
The initial complaint was filed on March 14, 2005 and, accordingly, was
timely filed. It could have been subject to subsequent correction by counsel. The
Court, also, recognizes that this initial complaint has been withdrawn and,
accordingly, is not longer before the court for determination. The timely filing,
however, is part of the consideration in the following section, which discusses the
complaint presently before the Court.
Equitable Tolling
Since the initial complaint was timely filed on March 14, 2005, the deadline
date, and could have been amended to correct any docketing deficiencies, but
was subsequently withdrawn, and the complaint pending before the court was
filed on March 15, 2005, one day after the deadline date, an appropriate analysis
requires this Court to consider the application of principles of equitable tolling,
which, in appropriate circumstances, would “toll” the date for a required filing.
In a recent decision, the Sixth Circuit affirmed the bankruptcy court,
reversed the Bankruptcy Appellate Panel, and concluded the bankruptcy court
was within its equitable power under 11 U.S.C. § 105 to allow a creditor to file a
Case 3:05-ap-03092 Doc 9 Filed 05/24/05 Entered 05/24/05 13:56:05 Desc Main
Document Page 7 of 9

8
dischargeability complaint three days late. Nardei v. Maughan, 340 F.3d 337,
343-44 (6th Cir. 2004). 	The court concluded the deadline in Bankruptcy 4007(c)
is not jurisdictional and could be tolled in appropriate circumstances. Id. at 344.
The court noted a five factor test for equitable tolling:
There are five factors that should be considered when deciding to
apply the doctrine of equitable tolling: "The factors are: (1) lack of
actual 	notice 	of 	filing 	requirement; 	(2) 	lack 	of 	constructive
knowledge of filing requirement; (3) diligence in pursuing one's
rights; (4) absence of prejudice to the defendant; and (5) a plaintiff's
reasonableness in remaining ignorant of the notice requirement."
Andrews v. Orr, 851 F.2d 146, 151 (6th Cir.1988). Since Nardei did
not claim lack of notice or knowledge of the filing deadline, "our
inquiry must focus on the diligence used by the plaintiff in pursuing
its rights and the resulting prejudice, if any, to the defendant." First
Bank 	System 	v. 	Begue 	(In 	re 	Begue), 	176 	B.R. 	801, 	804
(Bankr.N.D.Ohio 1995).
Id.
In addition, the United States Supreme Court has recently concluded that
Bankruptcy Rule 4004, which addresses the deadline for objecting to the debtor’s
discharge, is also not jurisdictional. Kontrick v. Ryan, 540 U.S. 443, 124 S.Ct.
906 (2004) In Kontrick, the Court ruled that a party forfeited the right to raise
Bankruptcy Rule 4004 after it lost the case on the merits. 	The Court noted in
Kontrick the “practical identity” of Bankruptcy Rules 4004 and 4007. Id. at 448,
124 S.Ct. at 911, fn. 3. 	Although the holding in Kontrick is narrower than
Maughan, both decisions stand for the principle that Bankruptcy Rules 4007 and
4004 are not jurisdictional and are subject to equitable principles.
In this proceeding, there was no lack of notice or constructive knowledge
of the March 14, 2005 deadline. 	As in Maughan, the inquiry in this proceeding
must “[F]ocus on the diligence used by the plaintiff in pursuing its rights and the
Case 3:05-ap-03092 Doc 9 Filed 05/24/05 Entered 05/24/05 13:56:05 Desc Main
Document Page 8 of 9

9
resulting prejudice, if any, to the defendant.” Id. at 344 (citation omitted). 	In
addition 	to 	timely 	filing 	(although 	not 	in 	compliance 	with 	the 	applicable
Administrative Procedures) the initial complaint, counsel for the plaintiff diligently
and promptly pursued the Plaintiff’s rights and within 24 hours corrected the
electronic filing error. 	As a result, the Court determines, in the facts and
circumstances of this proceeding, there was no meaningful delay prejudicial to
the Debtors, nor any other prejudice to the Debtors.
Accordingly, although the complaint pending before the court was filed a
day after the filing deadline, equitable tolling of the filing deadline is appropriate.
The complaint pending before the court is considered timely filed and will remain
before the court for determination pursuant to applicable law.
Conclusion
The Motion to Dismiss (Adv. Doc. 7) is DENIED. 	An Order in accordance
with this decision is simultaneously entered.
SO ORDERED.
c:
James Papakirk, 301 N. Breiel Boulevard, Middletown, Ohio 45042-3868 (Atty.
for the Plaintiff, First National Bank, NA)
Harold Jarnicki, 576 Mound Court, Suite B, Lebanon, Ohio 45036 (Attorney for
the Debtors/Defendants)
Timothy Charles Forsythe/Kristin K. Forsythe, 204 Highland St., Middletown,
Ohio 45044 (Debtors/Defendants)
###
Case 3:05-ap-03092 Doc 9 Filed 05/24/05 Entered 05/24/05 13:56:05 Desc Main
Document Page 9 of 9