In re: Ronald Calderon and Janessa Lee Price

FILED 1 OCT 28 2013 2 SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT [5] 6 In re: ) BAP No. EC-13-1010-JuKiPa ) 7 RONALD CALDERON and ) Bk. No. EC-12-25992-MSM JANESSA LEE PRICE, ) 8 ) Debtors. ) 9 ______________________________) FRANCIS DAVIN, ) 10 ) Appellant, ) 11 ) v. ) M E M O R A N D U M* 12 ) JAN P. JOHNSON, Chapter 13 ) 13 Trustee; RONALD CALDERON; ) JANESSA LEE PRICE, ) 14 ) Appellees. ) 15 ______________________________) 16 Argued and Submitted on October 18, 2013 at Sacramento, California [17] Filed - October 28, 2013 [18] Appeal from the United States Bankruptcy Court 19 for the Eastern District of California 20 Honorable Michael S. McManus, Bankruptcy Judge, Presiding _______________________ [21] Appearances: Timothy A. Charshaf, Esq. argued for appellant 22 Francis Davin; Ulric N. Duverney, Esq. argued for appellees Ronald Calderon and Janessa Lee Price. 23 _________________________ [24] Before: JURY, KIRSCHER, and PAPPAS, Bankruptcy Judges. [25] 26 * This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. 28 See 9th Cir. BAP Rule 8013-1. -1- 1 Appellant-creditor Francis Davin appeals from the 2 bankruptcy court’s order denying his motion for leave to file a 3 late proof of claim (POC) and a complaint for § 523 4 nondischargeability or, alternatively, to deny chapter 131 5 debtor, Janessa Lee Price, her discharge under § 727. We 6 AFFIRM. 7 I. FACTS 8 On April 30, 2007, Price and Davin entered into a written 9 agreement for Davin to purchase Interpretative Consulting 10 Services (ICS), a California corporation wholly owned by Price. 11 The parties agreed on a purchase price of $1.5 million (reduced 12 to $1 million if paid in full within one year of the April 30, 13 2007 contract date), including a $150,000 non-refundable deposit 14 paid by Davin to Price. Thereafter, Davin assumed the 15 management and day-to-day operation of ICS. Later, a dispute 16 arose between the parties. 17 On May 17, 2010, Davin filed a complaint against Price in 18 the state court alleging causes of action for breach of 19 contract, fraud, negligent misrepresentation and breach of oral 20 contract. 21 On July 13, 2010, Price filed her answer and cross22 complaint against Davin, alleging causes of action for breach of 23 written contract, fraud, negligent misrepresentation, and breach 24 of oral contract. [25] 26 1 Unless otherwise indicated, all chapter and section 27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532 , and “Rule” references are to the Federal Rules of Bankruptcy 28 Procedure. -2- 1 A. Debtors’ First Bankruptcy 2 On June 30, 2011, debtors filed a chapter 13 petition 3 (Bankr. Case No. 11-36278). Debtors listed Davin as a creditor 4 and sent a notice of stay of proceedings and notice of the 5 meeting of creditors and other deadlines to Davin at his home 6 address on Molina Street, Napa, California. Davin turned over 7 these documents to his attorney, Timothy Charshaf (Charshaf), 8 who was representing Davin in the state court action against 9 Price. 10 On July 8, 2011, Price’s state court attorney, Norbert 11 Frost (Frost), served Charshaf by mail with a Notice of Stay of 12 Proceedings which was mailed to 4359 Town Center Blvd., Ste. 13 210, El Dorado Hills, CA 95762 (Town Center Blvd. Address). 14 On August 31, 2011, the bankruptcy court dismissed debtors’ 15 case. 16 On September 7, 2011, Charshaf filed a Request for Special 17 Notice in the bankruptcy case. 18 On September 9, 2011, Charshaf notified the state court of 19 the dismissal of debtors’ case. 20 B. Debtors’ Second Bankruptcy 21 On March 27, 2012, debtors filed the instant case, also a 22 chapter 13. They again listed Davin as a creditor. Debtors and 23 their bankruptcy attorney, John Tosney (Tosney) signed the 24 Verification of Master Address List which listed Davin’s address 25 as “c/o The Heritage Law Group, APC, 1101 Investment Blvd., Ste. 26 160, El Dorado Hills, CA 95762” (Investment Blvd. Address). The 27 Investment Blvd. Address was Charshaf’s old address. 28 In a letter dated March 29, 2012, Tosney notified Frost -3- 1 regarding debtors’ bankruptcy filing and imposition of the stay. 2 The letter requested Frost to notify the state court of the 3 automatic stay. Attached to the letter was the face sheet of 4 debtors’ petition. 5 On April 2, 2012, Frost served Charshaf with a Notice of 6 Stay of Proceedings, the March 29, 2012 letter, and the face 7 sheet of debtors’ petition at the Town Center Blvd. Address. 8 On April 4, 2012, the bankruptcy court filed and mailed the 9 Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors & 10 Deadlines (Notice) to the addresses on the master address list. 11 The Notice set the first meeting of creditors for May 10, 2012, 12 the last day for filing nondischargeability complaints for 13 July 9, 2012, and the last day to file a POC for August 8, 2012. 14 Charshaf did not receive the Notice or debtors’ chapter 13 plan 15 because debtors used the Investment Blvd. Address. Charshaf’s 16 Notice was returned to the bankruptcy court as undeliverable and 17 the clerk notified Tosney that it was returned. 18 On July 9, 2012, the time for filing a nondischargeability 19 complaint in debtors’ case expired. 20 On July 25, 2012, Charshaf filed a Request for Special 21 Notice with the bankruptcy court listing his address as 5176 22 Hillsdale Circle, Ste. 100, El Dorado Hills, CA 95762. 23 On August 8, 2012, the time for filing a POC in debtors’ 24 case expired. 25 On October 31, 2012, Frost filed a status report in the 26 state court action stating that Davin had not filed a POC in 27 debtors’ chapter 13 case and that debtors’ plan had been 28 approved by the bankruptcy court on June 12, 2012. Frost -4- 1 served Charshaf at the Town Center Blvd. Address. 2 On November 2, 2012, Charshaf filed a motion in the 3 bankruptcy court for leave to file a late POC on behalf of Davin 4 and a complaint for § 523 nondischargeability or, in the 5 alternative, to deny Price her discharge under § 727. Charshaf 6 filed a declaration in support, stating, among other things, 7 that he was the attorney for Davin and that Frost served him 8 with the Notice of Stay of Proceedings on April 2, 2012. 9 Price opposed the motion, contending that Davin had actual 10 and constructive notice of her bankruptcy case because Frost had 11 served Charshaf with a Notice of Stay of Proceedings. Price 12 filed a declaration in support stating that she was never aware 13 of Charshaf’s new addresses and that the address she used was on 14 the original state court pleading. She also declared that The 15 Heritage Law Group’s website still listed Charshaf as one of 16 their attorneys and listed a Sacramento area address as 17 2901 Douglas Blvd., Ste. 290, Roseville, CA 95661. 18 On December 17, 2012, the bankruptcy court denied Davin’s 19 motion.2 On December 20, 2012, the bankruptcy court entered the 20 order. On January 3, 2013, Davin filed a timely notice of 21 appeal. 22 II. JURISDICTION 23 The bankruptcy court had jurisdiction over this proceeding 24 under 28 U.S.C. §§ 1334 and 157(b)(2)(B) and (I). We have [25] 26 2 There is no transcript of the hearing in the record. 27 Appellant’s failure to include a transcript of this hearing, while not fatal to their case since our review is de novo, is a 28 violation of Rule 8009(b) and 9th Cir. BAP R. 8006–1. -5- 1 jurisdiction under 28 U.S.C. § 158 . 2 III. ISSUE 3 Did the bankruptcy court err, as a matter of law, when it 4 concluded that Davin’s complaint for § 523 nondischargeability 5 and POC were time barred? 6 IV. STANDARD OF REVIEW 7 Whether the bankruptcy court was correct in its 8 interpretation of § 523(a)(3)(B), its interpretation of 9 Rule 4007(c), and its disallowance of an untimely filed POC 10 under Rule 3002(c) is reviewed de novo. Towers v. United States 11 (In re Pac.-Atl. Trading Co.), 64 F.3d 1292 , 1297 (9th Cir. 12 1995) (interpretation of statute); Herndon v. De La Cruz 13 (In re De La Cruz), 176 B.R. 19, 22 (9th Cir. BAP 1994) 14 (interpretation of Rule 4007(c)); IRS v. Osborne 15 (In re Osborne), 76 F.3d 306 , 310 (9th Cir. 1996)(untimely POC). 16 V. DISCUSSION 17 The record shows that it is undisputed that Charshaf 18 represented Davin with respect to the same debt in the state 19 court and debtors’ bankruptcy proceedings. It is also 20 undisputed that the bankruptcy court sent the Notice of the bar 21 dates to Charshaf at an outdated address and thus he never 22 received it. Finally, it is undisputed that Charshaf received 23 the Notice of Stay of Proceedings from Frost approximately six 24 days after debtors’ bankruptcy filing. This notice, which 25 attached the face sheet of debtors’ petition, gave the name of 26 the bankruptcy case, the bankruptcy court, and the bankruptcy 27 case number. [28] -6- 1 A. Notice: Complaints for § 523 Nondischargeability 2 Debtors listed Davin as a creditor on their schedules. 3 Rule 4007(c) requires a creditor to file a complaint for 4 nondischargeability under § 523(a)(2), (4), and (6) no later 5 than 60 days after the first date set for the meeting of 6 creditors under § 341(a). A listed creditor who has adequate 7 notice of the meeting of creditors but fails to make a timely 8 complaint, has certain claims automatically discharged pursuant 9 to § 523(c)(1). However, the fact a creditor is listed has no 10 effect on the discharge of its claim in the absence of effective 11 due process notice. 12 Although there is no per se rule, generally when a debtor 13 lists an incorrect address so as to cause the creditor not to 14 receive notice, the creditor’s debt has not been duly scheduled. 15 See Lubeck v. Littlefield’s Rest. Corp. (In re Fauchier), [16] 71 B.R. 212, 215 (9th Cir. BAP 1987). An unlisted creditor’s 17 claim ordinarily is not discharged and that creditor may file a 18 complaint for nondischargeability under § 523(a)(2), (4) and (6) 19 at any time pursuant to § 523(a)(3)(B) unless the “creditor has 20 notice or actual knowledge of the case” in time to comply with 21 the 60-day deadline set forth in Rule 4007(c). 22 Section 523(a)(3) provides that “[a] discharge under 23 section . . . 1328(b) of this title does not discharge an 24 individual debtor from any debt--” 25 (3) neither listed nor scheduled under section 521(a)(1) of this title, with the name, if known to 26 the debtor, of the creditor to whom such debt is owed, in time to permit-- [27] . . . [28] -7- 1 (B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of 2 a proof of claim and timely request for a determination of dischargeability of such debt under 3 one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for 4 such timely filing and request. . . . 5 By its plain terms, § 523(a)(3)(B) specifically qualifies any 6 right to assume receipt of formal notice. See Lompa v. Price 7 (In re Price), 871 F.2d 97, 99 (9th Cir. 1989) (reasoning that 8 “[t]he statutory language [of § 523(a)(3)(B)] clearly 9 contemplates that mere knowledge of a pending bankruptcy 10 proceeding is sufficient to bar the claim of a creditor who took 11 no action, whether or not that creditor received official notice 12 from the court of various pertinent dates.”) (internal citations 13 omitted). 14 Regardless of whether we consider Davin as a listed or 15 unlisted creditor, at bottom the inquiry is one of effective due 16 process notice. Due process requires that the creditor receive 17 the type of notice that was reasonably calculated under all the 18 circumstances to apprise it of the pendency of the action and 19 afford it an opportunity to present its claims. Mullane v. 20 Cent. Hanover Bank & Trust Co., 339 U.S. 306 (1950); Fireman’s 21 Fund Mort’g Corp. v. Hobdy (In re Hobdy), 130 B.R. 318, 320 (9th 22 Cir. BAP 1991). In circumstances similar to those here, the 23 Ninth Circuit has held that actual timely notice to the 24 creditor’s attorney of the pendency of the bankruptcy meets the 25 due process requirement. In re Price, 871 F.2d at 99 . Further, 26 it is well established that a creditor who learns of a 27 bankruptcy filing has a duty to inquire into the relevant 28 deadlines. Id. Simply put, in cases of actual notice, it is up -8- 1 to the creditor to see that the complaint for § 523 2 nondischargeability is timely filed. 3 Charshaf admits he had actual notice of debtors’ bankruptcy 4 within six days of its filing. Moreover, Charshaf could have 5 identified Price as the debtor based on the notice he received 6 which included the face sheet of debtors’ petition with their 7 names and the case number. At minimum, Charshaf should have 8 reviewed the bankruptcy court file, which is a public record. 9 Had he done so, he would have had ample time to file the 10 complaint for § 523 nondischargeability. See Mfgs. Hanover v. 11 Dewalt (In re Dewalt), 961 F.2d 848 (9th Cir. 1992) (thirty-day 12 notice provision of Rule 4007(c) provides a guide to the minimum 13 time within which it is reasonable to expect a creditor to act). 14 Indeed, Charshaf does not explain why he failed to investigate 15 after receiving actual notice of debtors’ second bankruptcy 16 filing in light of debtors’ prior filing. In short, actual 17 notice of debtors’ filing is imputed to Davin for purposes of 18 due process. 19 Davin also asserts his constitutional right to formal 20 notice of the bar date on the basis of the bankruptcy court’s 21 decision in In re Rogowski, 115 B.R. 409 (Bankr. D. Conn. 1990). 22 Rogowski is not binding on this Panel. Under Price, Davin did 23 not act reasonably in waiting for formal notice of the bar dates 24 after his attorney received actual notice of debtors’ bankruptcy 25 case. 26 In sum, the due process requirements for notice have been 27 met in this case. Charshaf had actual notice of Price’s 28 bankruptcy, he could have identified Price as the debtor since -9- 1 he had obtained the face sheet of debtors’ petition, and he had 2 plenty of time to file a § 523 nondischargeability complaint or 3 move for an extension of time. Accordingly, the bankruptcy 4 court properly found Davin’s complaint for § 523 5 nondischargeability was time-barred. 6 B. Notice: POC Bar Date in Chapter 13 Cases 7 The last date to file a timely POC in this case was 8 August 8, 2012. Davin failed to file a POC by that date. Under 9 Rule 3002(c), a POC must be disallowed if it is untimely. 10 Zidell, Inc. v. Forsch (In re Coastal Alaska Lines, Inc.), [11] 920 F.2d 1428, 1432-33 (9th Cir. 1990). Again, Davin relies on 12 his lack of formal notice of the claims bar date as grounds for 13 filing a late POC. 14 In this context, the rules regarding due process are 15 essentially the same as those for complaints for § 523 16 nondischargeability. A creditor who has knowledge of the 17 debtor’s bankruptcy case in time to file a timely POC is not 18 entitled to participate in the distribution of assets. Id. at 19 1430-31. Once Charshaf received actual notice of debtors’ 20 bankruptcy case, he was on inquiry notice with respect to the 21 claims bar date. Indeed, Charshaf filed a Request for Special 22 Notice in the case on July 25, 2012. As noted by the bankruptcy 23 court, had Charshaf checked the docket when he filed his 24 request, he would have discovered that there was still time to 25 file a POC by the August 8, 2012 claims bar date. 26 The bankruptcy court lacks any equitable power to enlarge 27 the time for filing a POC unless one of the six situations in 28 Rule 3002(c) exists. Id. at 1432–33. None apply to this case. -10- 1 Further, the excusable neglect standard set forth in 2 Rule 9006(b)(3) does not apply to permit the court to extend the 3 time for filing a POC under Rule 3002(c). Id. Because Charshaf 4 had actual notice of debtors’ bankruptcy case in time to file a 5 POC by the claims bar date, the bankruptcy court properly found 6 that Davin’s POC was time-barred. 7 VI. CONCLUSION 8 For all these reasons, we AFFIRM. [28] -11-