Garry R Means and Margery Means

UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re 	: 	Chapter 7
GARRY R. MEANS 	:
MARGERY MEANS
Debtors 	: 	Bankruptcy No. 05-31424bif
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ORDER
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AND NOW, this 24th day of May 2007, upon motion of Mr. Garry R.
Means and Mrs. Margery Means to reopen their closed chapter 7 case pursuant to 11
U.S.C. § 350(b),
And upon consideration of the opposition thereto filed by Mr. Bjorn
Lowenhielm,
And after a hearing at which both parties requested that all factual
averments made in their respective pleadings be taken as true,
And Mr. and Mrs. Means filed a voluntary petition in bankruptcy under
chapter 7 on August 25, 2005,
And the chapter 7 debtors did not disclose that Mr. Lowenhielm was a
creditor,
And the chapter 7 case was administered by the chapter 7 trustee as a no-
asset case, meaning that there was no property of the debtors administered for distribution
to creditors and creditors were informed, pursuant to Fed. R. Bankr. P. 2002(e), that they
need not file any proofs of claim,
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And a deadline of December 13, 2005 was set for creditors to file non-
dischargeability complaints, or objections to discharge, pursuant to Fed. R. Bank. P. 4004
and 4007,
And Mr. Lowenhielm was never informed of this deadline,
And on March 14, 2006, a chapter 7 discharge was entered in favor of Mr.
and Mrs. Means,
And on March 14, 2006, this chapter 7 case was closed pursuant to 11
U.S.C. § 350(a),
And in June 2006, Mr. Lowenhielm commenced an arbitration proceeding
against Mr. Means, with a hearing scheduled for December 1, 2006,
And Mr. Means’ counsel sought a postponement of the arbitration hearing,
which request was denied,
And in connection with the request for postponement of the arbitration
hearing, Mr. Means did not assert that he had received a chapter 7 discharge or that the
arbitration claim had been discharged,
And on January 25, 2007, the arbitrator entered an award in favor of Mr.
Lowenhielm and against Mr. Means. (Mr. Means declined to participate in the arbitration
hearing),
And on January 30, 2007 Mr. Lowenhielm commenced a civil action in the
United States District Court for the Southern District of New York against Mr. Means
seeking to enforce the arbitration award and have judgment entered against Mr. Means,
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And after this civil action commenced, Mr. Lowenhielm first learned of the
chapter 7 bankruptcy filing of Mr. and Mrs. Means and the entry of a bankruptcy
discharge,
And even though Mr. Lowenhielm never received notice of the bankruptcy
filing while it was pending, his claim against Mr. Means would be discharged unless he
could demonstrate that the provisions of 11 U.S.C. § 523(a)(3)(B) were applicable. See,
e.g., Judd v. Wolfe, 78 F.3d 110, 115 (3d Cir. 1996):
Thus, in a no-asset Chapter 7 case where no bar date has been
set, we conclude that there would be no purpose served by
reopening a case to add an omitted creditor to the bankrupt's
schedules. If the debt at issue is not a debt described under
section 523(a)(2), (4) or (6), the debt has been discharged by
virtue of section 727(b), whether or not it was listed. If,
however, the debt is a debt that falls under sections 523(a)(2),
(4) or (6), the debt is not discharged by virtue of section
523(a)(3)(B).
And Mr. and Mrs. Means seek to reopen this closed chapter 7 case in order
to litigate in this bankruptcy court whether Mr. Lowenhielm’s claim is non-dischargeable
under section 523(a)(2)(B),
And a bankruptcy court does not have exclusive jurisdiction over non-
dischargeability disputes under section 523(a)(3). As one court has observed:
Jurisdiction over section 523(a)(3) actions, however, is
concurrent state and federal jurisdiction pursuant to section
1334(b), rather than the exclusive federal jurisdiction
prescribed by section 523(c). Not only may dischargeability
of the fraud claim be litigated in state court, the action, like all
the concurrent jurisdiction nondischargeability actions, may
be filed “at any time” after the bankruptcy case is first filed. . .
In short, the penalty to the debtor for failing to schedule a
fraud debt or otherwise to inform the creditor of the
bankruptcy is forfeiture of the right to enjoy exclusive federal
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jurisdiction and loss of the sixty-day limitations period
applicable in the exclusive jurisdiction actions.
In re Franklin, 179 B.R. 913, 924 (Bankr. E.D. Cal. 1995) (citations and footnote
omitted); accord, In re Jenkins, 330 B.R. 625, 630-31 (Bankr. E.D. Tenn. 2005),
Accordingly, Mr. Lowenhielm asserts that any issue of non-
dischargeability under section 523(a)(3)(B) can and should in this instance be determined
by the District Court for the Southern District of New York,
And pursuant to section 350(b), “a [closed bankruptcy] case may be
reopened in the court in which such case was closed to administer assets, to accord relief
to the debtor or for other cause.” Whether to reopen a closed bankruptcy case is
committed to the discretion of the bankruptcy court. See, e.g., Donaldson v. Bernstein,
104 F.3d 547, 551 (3d Cir. 1997); Judd v. Wolfe, 78 F.3d at 116; Matter of Case,
937 F.2d 1014, 1018 (5th Cir. 1991) (“This discretion depends upon the circumstances of
the individual case and accords with the equitable nature of all bankruptcy court
proceedings.”); Hawkins v. Landmark Finance Co., 727 F.2d 324 (4th Cir. 1984); Matter
of Becker’s Motor Transp., Inc., 632 F.2d 242, 245 (3d Cir. 1980), cert. denied, 450 U.S.
916 (1981); Urbanco Inc. v. Urban Systems Streetscape, Inc., 111 B.R. 134 (W.D. Mich.
1990),
And the burden of demonstrating circumstances sufficient to justify the
reopening is on the moving party. See, e.g., In re Cloninger, 209 B.R. 125, 126 (Bankr.
E.D. Ark. 1997); In re Nelson, 100 B.R. 905 (Bankr. N.D. Ohio 1989),
And for the reasons stated in open court—given the debtors’ failure to
schedule Mr. Lowenhielm’s substantial claim; given the failure of the debtor to raise the
discharge issue within the arbitration matter; given that Mr. Lowenhielm expended funds
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to prosecute that arbitration claim; given that this case was closed more than one year
ago; and given that the debtors waited until April 16, 2007 to file the instant motion to
reopen, although they knew on or before December 1, 2006 that Mr. Lowenhielm was
pressing his claim against Mr. Means—the better exercise of discretion is to deny the
motion to reopen and permit the district court to adjudicate the non-dischargeability issue,
as requested by Mr. Lowenhielm,
Accordingly, it is hereby ordered that the motion to reopen this case is
denied. It so doing, this court expresses no position regarding the merits of Mr.
Lowenhielm’s claim nor the dischargeability of that claim.
BRUCE FOX
United States Bankruptcy Judge
copies to:
Mr. Garry R Means
Mrs. Margery Means
20 Beth Drive
Lower Gwynedd, PA 19002
Barton Knochenmus, Esq.
Knochenmus Law Firm
125 North 8th Street
Allentown, PA 18101
Adam Finkel, Esq.
Sabharwal & Associates
350 Fifth Ave, Suite 4606
New York, NY 10118
Michael L. Maddren, Esq.
McNichol Byrne Matlawski
606 E. Baltimore Pike
Media, PA 19063
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