## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 08

- 3358 I N RE : B RUCE S. S MITH, M .D ., D e b t or . T R I NA T IDWELL an d S ANDRA S T ERLI NG -A HLLA, P la intif fs-A pp ellees , v.

B RUCE S. S MITH, M .D ., D e f e ndan t

-Appe l l ant
.
A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 08 CV 46

—Harry D. L eine nwebe r, Judge .
A RG UE D M AY 14, 2009

— D ECI DE D S EP TE MBE R 23, 20092 N o. 08

- 3358

The H onorab le J oseph S. V an Bo kkelen, of t he N orther n  Dis t ri c tofI ndi ana , s i t t i ng by des i gna t i on. Befo re R O VNERa nd E VANS, C ircu it Judges , a nd V AN B OKKELEN, D i s t r i ctJudg e .  R OV NER, Cir cu i tJudg e . W he n de fen dan t- ap pel l an t Dr. Bruce S. S m i th fi l ed a Cha p te r 7 ba nkruptcy peti ti on i n S ept embe r 2 00 5, he f ai l ed to i nc l ude a ppel l ee s T ri na Ti dwe l l a nd S a nd r a S t e r l i ng - Ahl l a o n hi s s c he du l e o f c re d ito rs h old in g u n se c u r ed , no n p rior ity cla im s. T id w ell and S ter l i ng- A hl l a had s ued S m i th i n sta te cour t for se xua l a ss au l t. Be ca us e S m i tho m i tt ed Ti dwel l an d St er l i ng- A hl l a fro m hi s l i st ofcr edi tor s, nei therof them w as se n t n ot ice of h is b an kr u p tc y p et itio n . Th eir c ou n se l lear n ed of Sm ith ’s p en d in g b an kr u p tc y on ly w eek s be f or e hi s disc harg e and t oo k no acti on a t that t i m e. Ro ug hly o ne y ea r a fte rthe di sc ha r g e, Ti dwel l a nd S te r l i ng - Ahl l a ( whom w e sh al l a l so r efert o a s th e “pl aint i ff s ” ) fi l e d mot i o ns a s k i ng the b a nk r up t c y c o ur tf or l ea ve t o pr o ce ed wi ththe i r l aws ui ts a g ains t S m ith, al o ng w ith ad versary com p lai nt s asking th e cou rt to de clare th ei r clai m s ag ains t S m i thno ndi sc ha r g eabl e pur su an t to 11 U .S.C . § 52 3(a )(3) (B ) an d (a) ( 6 )
. F o llow in g a n ev id en ti a r y h ea rin g, th e c ou rtgra n te d th eir req u es t in par t. The c o ur t f o und tha t S m i thha d de l ibe r at ely a nd f r au dul en tly f ai l ed to s ch edu l e th e pl ainti ff s’ c l ai m s an d that thei r counsel had no t been pu t on noti ce of the b an kruptcy i n ti m e e nough to per m i t them to se ek a decl ar ati on o fnondi schar geabi l i ty pri orto S m i th’ s di schar ge.N o. 08

- 3358 3 Ti d we l l v . S mi t h (In reSmit h) , 379 B
. R
. 315 (Ba nk r. N
. D. I l l

. 2 0 0 7 )
. T h e c o u r tth e r e f o r e g r a n t e d T i d we l l a nd St er l i ng- A hl l a le av e t o proce ed w i th the i r sui ts aga i nst Sm i th i n sta te cour t a nd r ese rv ed j ud gm ent as to w hether their cl ai m s were i n f act nondisc harg eabl e pursuant to se cti on 5 23 ( a) ( 6) unt i l s ucht i m e as the y pr ev ai l ed i n the sta te- cour t l i ti gat i on. Sm i th appeal ed to the di str i ct c ourt, w hi ch affi rm ed the bankr up tcy cour t’ s deci si on. Sm i t h v
. Tidwe l l (In reSmit h) , N o. 08 C 4 6, 2008 W L 40 67 306 (N
. D
. I ll

. A ug . 27, 2008 ). Sm i th ag ai n appeal s, contending that the e vi dence does no t su ppo r t th e ba nk rupt cyc o ur t’ s fi ndi ng s th athe d elib er at ely om itt ed T id w ell an d Ste rlin g-A h lla fro m h is schedule o funsecur ed cr edi tor s a nd thattheydi d not beco m e a w ar e o f h is bankr up tcy i n ti m e t o see k a decl ar ati on o fnondischar geabi l i ty bef or e the bank ruptcy proce edi ng was cl ose d. W e agr ee w i th the l ower co urts that the e l eve nth-ho ur no ti ce o fthe bankr up tcy that Tidw el l and St er l i ng- A hl l a r ecei ved di d no t aff or d them su ffici e n t t im e in w hich to protec t the ir rights before Sm i th was d i schar ged. Thei r post- discharg e co m pla i nts w er e th er efo r e ti m ely, a nd we affi r m o n tha t ba si s wi th

out re achi ng the questi on o f w hetherS m i th o m i tte d Tidw el l and St er l i ng- A hl l a fro m hi s l i st ofunsecur ed cre dit or s with fra ud ule nt i ntent.

I. Tidw el l and St er l i ng- A hl l a sep ar ate l y fi l ed sui t a gainst Sm i th i n th e C ircuitCourto fCookCounty, I l l i noi s o n Decem ber18 , 20 03
. Each al l ege d that S m i th, a physi ci an4 N o. 08

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A ltho u g h th e statu te an d b an k ru p tcy ru les req u ire a d eb tor to 1 id en tify his c r e d i t o rs b y their o w n n am es, rath er th an b y their rep rese n tativ es, the b an k ru p tcy cou rt fou nd tha t no tice to R obinson cons ti tute d no ti ce to hi s cl ie nts
. 379 B. R
. at 324 n. 2. sp ec ializ in g in ob st et ric s a n d gy n ec olo gy , ha d u n law fu lly en g ag ed i n se xua l i nt er co ur se wi th he r dur i ng a rout i ne pr en at ale xa m i na ti o n. S m ith fi rs t so ug htthe pr o te ct i o n o fCha pte r 7i n a pe t i t i o n fi l e d o n J un e 2 4 , 2 0 0 4
. Bythe te r ms o f1 1 U. S
. C. § 5 21( 1) and Fe d. R. Bankr. P. 10 07( a) ( 1) , he was r eq u i re d to i denti fy a l l cr ed ito rs hol ding unsecured, nonpri or i ty cl ai m s o n S ch edu l e F o fhi s pet i ti o n. The c l er ko fthe ban krup tcy cou rt i n tu rns sen d s notice of the fi ling of a ba nk r upt cy pet i ti o n to al l i den ti fi ed cr edi to rs, i nc l udi ng th os e o n Sc h ed u le F. See Fe d. R. Bankr. P. 20 02. S m i th did notl i st Tid w ell and Ste rl i ng- A hl l a bynam e o n that sc he dul e, b uthe di d l i sttheir a ttor ne y, Da r r y lRo bi ns o n, i ndi ca ting( i nc o r r ec tly ) tha t Ro bi ns o n r epr es en te d the u n id en tifie d p lain tiffs in a “m ed ica l m alp ra c tic e c laim .” B a n k r . N o . 0 4

- 2 3 8 4 5 , D o c . N o . 1 a t6
. R o b i n s o n, p r e s u mab l y, r ec ei ve d no ti ce o fthe pe ti ti o n a s a r es ul t: the ser vi ce l i st f orthe noti ce ofbank ruptcy m ai l ed on J une 25, 20 04 indi ca te s th athe was a m o ngtho se c r edi to r s who w er e s er ve d w ith n ot ice
. Id. , Do c. N o. 5 a t 3. H ow ever, 1 th e ba nk r upt cyc o ur t di smi ss ed th e 20 04 pe ti ti o n o n the m oti on o fthe U ni ted S tat es Tru st ee , wh o ar gued that i n vi ew o fS m i th’ s o n go in g e m plo ym ent, subst anti al i ncom e, and unreas onabl y hi gh m onthl y e xpenses, di sc h ar gi ng hi s debt s pursuant to Ch apter7 ra therthanN o. 08

- 3358 5 fund i n g a r epaym ent pl an pursuant to Ch apter13 w ou l d amoun t to a “s ubs ta nt i al ab us e” o f Cha pte r 7’s p ro vis ion s. See 11 U
. S. C. § 7 07(b)

. T he case w as dism i sse d on N ove m b er 23 , 20 04, and the proce edi ng was cl ose d and the t rust ee w as disc harg ed on J anuary31 , 20 05. A fterS m i th’ s fi nanci alsi tuati on dete ri or ate d fur ther w i th th e los s ofhi s j ob, he fi l ed a s eco nd Chapter 7 ba nkr u p t c y p e t i t i o n o n S e p t e mb e r 2 6 , 2 0 0 5
. T h e a t t o r ne y who pr e p a r e d S mi th ’ s s e c o n d p e t i t i o n wa s n o t th e s ame o ne w ho pre pared hi s first peti ti on. H owever, S m i th’ s new counselworke d fo r a fi rm thatspeci al i zes in ba nkr upt cy, he was ex p erie nc ed wi thCha pte r 7c as es , a nd he h ad a c o p y of t h e 2 00 4 p et itio n w h ich h e re fer en c ed in p re p ar in g t h e n ew p et itio n . Th e la w su its filed by T id w ell and S ter l i ng- A hl l a w er e i denti fi ed i n the St atem en t of Fi nanci alA ff ai rs at tached to the 2005 peti ti on, but nei ther th eyno r the i r a tt orney was l i st ed o n S ch edu l e F
. The bankr up tcy cl er k m ai l ed noti ces to the schedul ed cre dit or s o n Se ptem ber2 7, 20 05, i nd i cating tha t S m i th h ad filed a b an kr u p tc y p et itio n, no t i n g t h e a u to m at ic stay of coll ection and other ac tion s a g a in st th e d ebtor, an d s e t t i n gf o r th a n u mb e r o fi mpo r t a n td a t e s , i n c l udi ng th a to fth e c r e d i t o r s ’ me e t i n g( No v e mb e r 8 , 2 0 0 5 ) , a nd the deadl i ne f orfi l i ng a com pla i nt o bj ect in g to the di scharg e o fthe deb t o r o r t o de t e r mi ne the di s c ha r g e a b i l i ty ofany debt (J anuary9, 2006)
. A s a r esul t o fthei r om i ssi on fro m Sc h ed u le F , n eit h er T id w ell n or Ste rlin g-A h lla ( n o r th e i r a t t o r n e y ) r e c e i v e d th a t n o t i c e . P r i o r t o De c e mber23 , 2 00 5, Sm i th m ade no att em pt to i nvoke the autom at i c st ayi n the s tate-cou r t su i ts fi l ed byTi dwel l a nd S te r l i ng - Ahl l a, a nd h e d i d no t o th er wi se no ti fy the sta te cour t, Ti dw el l, o r St er l i ng- A hl l a o fthe sta y.6 N o. 08

- 3358 Se cti on 5 23( a) ( 6) o fthe Bankruptcy Code e xem pts from disch arge an y d ebt “for w il lful or m ali cious injury by the debt orto a n ot h erenti ty orto the proper ty of an ot h er en tit y,” an d be c au se th e la w su its filed by T id w ell and Ste rl i ng- A hl l a a l l ege thatS m i th se xuall y a ssault ed th em , th eir cla i m s a g a i n s t S m ith are p ot en tia lly n on d isc h ar ge ab le u n d e r th at p ro vis ion
. Seegene rally Ka w a a uh a u v . Geig er, 52 3 U
. S. 57, 61

- 62, 11 8 S
. Ct. 974, 97 7 (1998); In re Thirty a cre, 36 F .3d 69 7, 70 0 (7 th C ir. 19 94 ); see a lso , e . g. , In re Fo rs , 259 B
. R
. 131, 137 ( 8th C ir. B
. A
. P. 2001); P ettey v . B ela ng er ex rel. B ela n ger, 23 2 B. R. 54 3, 54 6- 47 (D . M as s. 19 99 ). A cr ed ito r w h o h old s s u c h a d eb t is obl i ged to fi l e a pro ofo fcl ai m and a t i m ely r equest that the b ankr up tc y c ourtdeter m i ne the debt to be n on d isc h ar ge ab le. 11 U .S.C . § 52 3(c )( 1) ; see also § 5 23( a) ( 3) ( B); Fe d. R. Bank er . P
. 40 07( a)
. The f ai l ure to t a k e th a tst e p w i l l r e s u l ti n th e d i s c h a r g e o fth e c l a i m. § 5 23 (c )(1) ; In re M endiola , 9 9 B. R. 8 6 4 , 8 6 6 ( Ba nk r . N. D. I l l

. 19 89)
. Bankruptcy Rule 4007 ( c) al l ow s a cr edi torsi xty day s f r o m the fi r st d ate s etf o r the c r edi to r s’ meet i ng i n whi cht o fi l e a co m pl aintt o de te r m i ne the disc harg eabi l ity o fa debt. I n thi s ca se, the cre dit or s’ m ee tingwas s et f o r Nov embe r 8 , 2 00 5; the r efo r e, the presum pti ve deadli ne f orse eking a d et erm i nati on that a debt w as nondisc harg eabl e was J anuary8, 20 06 ( si xtyone days a fterthe cre dit or s’ m eet i ng, as the s i xti eth day fell on a Su n d ay ), see3 79 B. R. a t 32 1 ¶ 11 , a l th ou g h the noti ce to c redito rs i denti fi ed the deadli ne as J anuary9, 2006
. Because they w er e om i tte d f ro m Sm i th’ s S chedule F, ne i th erTi dwel l no r S te r l i ng - Ahl l a r ecei ved no ti ce o fthe cre dit or s’ m eet i ng, and as ofJ anuary9, 20 06, theyhadN o. 08

- 3358 7 tak en no ste ps to have thei r cl ai m s a gainst S m i th decl ar ed nondisc harg eabl e. The cre dit or s’ m eet i n g on N o ve m be r 8 , 2005, resul te d i n a no - as se t r epo r t bythe tr ustee
. On J anuary17, 20 06, the bankr up tcy cour t i ssued a d ischa rge orde r, and on Janu ary 23, 2006 , th e C ha p ter 7 proce edi ng was cl ose d. Pursuant to 11 U
. S. C. § 7 27(b) , that o r de r di s c ha r g e d S mi th f ro m al l p r e pe t i t i o n de b t s e xc e pt as pr o vi ded i n s ec ti o n 5 23 , whi chs et s f o rth th e va r i o us cate gor i es ofd eb ts w hi ch ar e e xem pt fro m di schar ge. The di sc ha r g e al so ope rated as a n inj unc ti o n a g ains t th e com m encem ent o r continuati on o fany acti on to c ol l ect f ro m S m i th a n y d eb t fr om wh i ch he was di schar ged as a re su lt of t h e b an kr u p tc y p ro c e e d i n g. See1 1 U. S
. C. § 524(a)(2). Tidw el l and S ter l i ng- A hl l a w er e fi rs t pla ced on n oti ce o f S m i th ’ s ba nk r upt cy i n l at e Dec embe r 20 05 , when the att or neys defe nd i ng Sm i th i n thei r l aw sui ts fi l ed m oti ons ask i ng the s ta te cour t t o tr ansferthe sui ts to that cour t’s bankr up tcy cal endar. Copie s o fthes e m oti ons w er e s er ved by f ax on R ob in son, the att or ney re prese nti ng T i dw el l and Ster l i ng- A hl l a, on Decem ber23 , 20 05 , the da y a fte r the y were fi l ed. Ro bi ns o n was o ut ofto w n on Decem ber 2 3, and he r em ai ned unaw ar e o f th e m o ti o ns unt i l he r eturne d t o hi s o ffi ce o n o r abo ut J anuary4, 20 06. Beyo nd st ati ng g ener al l y that Sm i th had fi l ed a b an kr up tcy peti ti on a nd thatnot i ce o fthe bankr up t c y h a d b e eni s s ue d, the mo t i o ns di d n o tp r o v i de any info rm ati on about the s tatus ofthe ban kr up tcy

— e.g ., w hen orwh etherth er e had be en a cre dit or s’ m eet i ng o r by w hat date o bj ec tio n s t o the di schar geabi l i ty ofa debt w er e due. The st ate court gr anted S m i th’ s m oti on o n8 N o. 08

- 3358

Althoughthe c om p l ai nt s al s o c i t ed s ec t i on 72 6 o fthe Bank

2 ru pt c y Code, i twas obvi ous , as the ban kr upt c y c our tr ec og- (co n tin u ed ...) J anuary6, 20 06, and the tw o l aw sui ts w er e pl aced o n d orm an t statu s on th e cou rt’s bank rup tcy ca lend ar. Ju st sh y o fa y ea r lat er , onD ec em b er 20 , 200 6, T id w ell and Ste rl i ng- A hl l a fi l ed m oti ons w i th the ban kr up tcy cour t s eek i ng a decl ar ati on that S m i th’ s di schar ge had no e ffect on thei r law sui ts and that they were fre e t o pr o ce ed ag ains t S m i thi n s ta te c o ur t. The mot i o ns no te d tha t be ca us e S m i thha d o m i tt ed T idw el l a nd Sterli ng -A hlla from his l ist ofun secu red cred itors des pi te kno wi ngo fthe i r s ui ts, the y r emai ne d i gn or an t of his ban krup t c y pe titi on u nt ilhe aske d the sta te cou rt to t r an sfertheir s ui ts t o the b an k r upt cyc al en dar

. The ba nk r upt cyc o ur t co nt i nue d the h earingo n the mot i o ns in orde r to al low Tid w elland Sterl ing-A hlla to pre p a re advers ar y c om pla i nts a gainst S m i th, wh i ch theyfi l ed on J anuary8, 2 007. A s a m ended, the c om pla i nts a l l ege d th at bec au se Sm ith h a d com m itted the inten tional tort of sexualas saul t a nd was subj ect to pu ni ti ve dam age s, th ei r cl ai m s were exem pt fro m di schar ge pu rs uant to sect i on 5 23( a) ( 6) and that th ey w er e enti tl ed to a decl ar at i o n t o th a t e ffe c t
. Al t e r n a t i v e l y, th e c o mpl a i n t s s o ug ht re l i efunder s ecti on 7 27, wh i ch i n re l evantpartp er m i ts a c re dit orwithi n one yea r ofthe disc harg e t o askthat the di schar ge be rev ok ed o n the gr ound that i t was o bta in ed th ro u gh th e d eb to r’s frau d

. See § 7 27 ( d) ( 1) a nd ( e) ( 1)
. T he bank ruptcy cour t deni ed Sm i th’ s m oti on t o

2N o. 08

- 3358 9

(
. . . c on t i nu e d) 2 nized, thatthe plai nti ff s m eant to r el y on section 727, w hich deals w ith the disc harge ofthe deb tor. 379 B. R
. at 323. dism i ss the c om pla i nts as unti m el y and set the c om pla i nts a n d t h e m otions for l eave to proce ed w ith th e state-cou rt l aw sui ts dow n f ora hear i ng o n the m er i ts. The co ur t su bs eque nt l y r ec ei ve d t es ti m o ny r eg ar di ng both the om i ssi on of Tidw el l and St er l i ng- A hl l a fro m the l i st ofS m i th’ s unsec ured cr edi tor s a nd the noti ce t h a t t h e i r a t t o r n e y, R o b i n s o n, h a d r e c e i v e d i n D e c e mbe r 2 00 5 r eg ar di ng th e r eque st to tr an sferthe i r s ui ts t o the sta te cour t’s bankr up tcy cal endar. On the l att erpoi nt, C h y k o l a J o n e s , th e o ffi c e c l e r ka tR o b i n s o n ’ s l a w fi r m, tes ti fi ed that i t was herprac ti ce t o pla ce incom i ng co rr espondence, i nc lu d i ng f axes, o n the re ci pie nt’ s desk

. J ones al so tes ti fi ed that she i s no t a n att or ney a nd has not wo r k e d f o r a t t o r n e y s wh o p r a c t i c e d b a n k r u p t c y l a w, and thus w oul d n ot h ave appreci ate d the s i gni fi cance of th e m o ti o ns t o t r an sfertha t were f ax ed to Ro bi ns o n. Sm i th’ s bankr up tcy att or ney, N athani el Si n n , then te st i fi ed r eg ar di ngthe pr epa r at i o n o fSm i th ’ s se co nd bankr up tcy peti ti on. A t the ti m e he prepar ed that peti ti on i n 200 5, S i nn w or ked f orthe C hi cago o ffi ce o fLegal H el pers, a fi rm that specia l i zes i n consum erbank ruptci es. Altho ug h S i nn ha d b ee n pr ac ti cingl aw f o r l es s th ana yea r, and had been work i ng o n bankr up tcy m att er s f or only seven or eight m ont hs , he h ad help ed to prep are seve ra l hund re d Ch apter7 peti ti ons i n that ti m e. Typi cal l y, a law clerk or l egal as s is t an t in the offi ce w ou ld p rep are10 N o. 08

- 3358

a fi r st d raft ofthe pe ti ti o n, the dr aft woul d the n b e se nt to the cl i ent f or cor re cti ons, and then Si nn w ou ld m eet wi ththe c l i en t t o r ev i ew the r ev i se d dr aft be f o r e th e petition w as si gned and fi l ed. S i nn und er sto od that Tidw el l an d S ter l i ng- A hl l a, as unsecur ed cr edi tor s o f S mi th, s h o u l d h a v e b e e n i nc l ud e d i n S c h e d u l e F
. He fur th ert es ti fi ed th at when a deb to r ha s fi l ed a pr ev i o us bankr up tcy peti ti on, he wil l co m pare that peti ti on w ith the o ne he i s wo rk in g o n; and Sinn re cal l ed that he had a co py ofS m i th’ s 2 004 peti ti on a nd schedu l es, wh i ch of cour se l i ste d Robi nson as the pl ai nti ff s’ r epres entat i ve. H e a l so re vi ew ed the com ple ted peti ti on with Sm i th b e f o r e S mi th s i g n e d i t
. I n th e c o ur se o fth a tr e v i e w, Si nn w ent thro ugh the l i ste d c re d ito rs and ask ed Sm i th whe the r the r e we r e an y o the r s tha th a d n o tb e e n l i s t e d; had Sm i th i den tifi ed anyo ne el se, he woul d have add ed them to the l i st ofcr edi tor s. S i nn tes ti fi ed that Sm i th neve r ask ed hi m to withhold anycr edi tor s fro m the pet i ti on, an d h e would nothave done s o had Sm i th as k ed. S i nn co ul d no t ex pl ai n w hy, i n pr epa r i ngthe 20 05 p et itio n, t h e su its file d b y T id w ell an d Ste rlin g-A h lla wer e i nc l ude d i n the S ta te m en t o fF i na nc i al A ff ai r s but ne i the r T i dwe l l n o r S t e r l i ng - Ahl l a we r e i de nt i fi e d a s uns ec ur ed cr edi to r s i n S ch edu l e F
. H e te st i fi ed th atthe om i ssi on was “j ust a n er ro r” o n his p art, R. 5 Ex
. A at31 , and not a del iber ate acto ffra u d o r decepti on. H e a ttr ibu te d th e m ist ak e t o t h e h ea vy w o r k l o a d th at h e a n d h is fi rm were experi enci ng as debto rs r ushed to fi l e forbank

ruptcy bef or e the less co nsum er - f ri endlypro vi si ons of the Bankr up tcy A buse P re venti on a nd Consum erPro tecti on Act of20 05 too k effect i n October2005. Final l y, S m i thN o. 08

- 3358 11 hi m se l ft es ti fi ed. S m i th ackno wl edg ed th athe ha d the opportunity t o and did re vi ew hi s s eco nd bank ruptcy peti ti on be f or e it w as fi l ed. Li ke Si nn, S m i th deni ed that the o m i ssi on o fTi dw el l and St er l i ng- A hl la fro m Schedul e F r efl ecte d an eff or t t o hi de thei r claim s. S m i th sa i d tha t he did n o t appr ec i at e th e si g ni fi ca nc e o fthe f ac t that Tidw el l and St er l i ng- A hl l a had be en o m i tte d f r o m S ch edu l e F
. He r el i ed o n S i nn to pr epa r e th e p eti ti on and m ake the appropri ate disc l osur es; an d it w as hi s unders tandi ng tha t e ver ythi ng tha t had be en disc l ose d on hi s fi rs t pet i ti on was inc l ud ed i n the second. I n re sponse to questi ons posed by the c ourt, S m i th disc l ose d t h at hi s f or m erem plo yerhad f ai l ed to pu rchas e a n i nsurance “tai l r i de r” e x tendi ng hi s cl ai m sm ade co ver age f orm edi calm al pract i ce. A l though Sm i th’ s insurerwas pro vidi ng hi m with a defense to th e sui ts fi l ed by Tidw el l and St er l i ng- A hl l a, i t was his understan d in gtha t he a l o ne woul d b e l i ab l e to pa y a ny j ud gm ent e nter ed aga i nst hi m i n thos e s uit s. Aft erhe ar i ngthe e vi den ce , the ban krupt cyc o ur t co nc lu d ed th at th e p lain tiffs w er e e n tit led to p ro c ee d in sta te cour t a gainst S m i th, and i t e nter ed an o rderto that effec t. Two k eyfi ndi ng s l ed th e co ur t to tha t co nc l us i o n. Fir st, th e c ou rt f o u n d th at Sm ith ’s o m iss ion of T id w ell and Ste rl i ng- A hl l a fro m the Schedul e F he fi l ed w as del iber ate r atherthan i nadvert ent. W hen Sm i th si gned the 2 005 peti ti on, h e su b scr ibed to an o ath that he had re ad the s chedules i ncl ud ed w i th the peti ti on and that they we r e t r ue a nd c o r r e c tt o the b e s to fh i s kno wl edge. 379 B.R. at32 0 ¶ 6. I n f act, S chedule F was i ncom ple te,12 N o. 08

- 3358 and because S m i th was awa re o f the sta te- cour t l i ti gati on, had m enti oned thatl i ti gat i on i n hi s S tat em ent o f F i na nc i alAffai r s, ha d l i st ed th e at to r ne y r epr es en ting Tidw el l and St er l i ng- A hl l a in the Sched u l e F he fi l ed i n s up po rto fh i s 2 0 0 4 b a nk r up t c y p e t i t i o n, a nd h a d a fi n a n c i al m ot ive for om itt in g t h e litig at ion from Sc h ed u le F ( as i t was unl i k ely tha t hi s i ns ur erwoul d c o ve r a ny j ud gm en t ent ered a gainst h im ), th e c ou rt d eem ed Sm ith’s o ath t o b e “int en ti o na l l y f al se . ” 37 9 B. R
. at3 20 ¶ 7
. The co ur t r ej ec te d a tt o rney S i nn’ s te st i m o ny tha t th e o mi s s i o n o fT i d we l l an d S t e r l i n g - Ah l l a r e s u l t e d fr o m a si m pl e er r o r o n h i s par t. The c o ur t p oin te d o uttha t S i nn w as knowle dgeabl e a nd exper i enced i n the prepar ati on of C h ap te r 7 b an kr u p tc y p et itio n s, t h at h e t yp ica lly con s ul t e d the S c he du l e F fi l e d wi th a p r i o r b a nk ruptcy peti ti on i n prepar i ng a seco nd o ne, thathe a l w ays r eview ed the Stat em en t of Finan cial A ff airs be fore fi nal i zi ng the p eti ti on, and that he had i ncl ud ed the sui ts Tidw ell and Ste rl i ng- A hl l a had fi l ed i n the St ate m ent o f Fin an c ial A ffair s. Inv iew o f t h os e fac ts , t h e c ou rtfo u n d it im p l ausibl e that the f ai l ure to al so i ncl ud e the sui ts on Sc h ed u le F w as a m er e o ve rs igh t. Id. at32 0- 21 ¶ 8. Se c on d , alth ou gh th e p lain tiffs ’ co u n se l, R ob in so n, d id r ec ei ve no ti ce o fthe 2 00 5 ba nk r upt cyb efo r e th e dea dl i ne f or o bj e c t i ngt o the di s c ha r g e a b i l i t y o fa nydeb te xp i r ed an d before Sm ith w as gran ted a disch ar g e , t he cou rt dee m ed th e no ti ce t o o l at e an d i ns uffi ci en tly e nl i g ht en i ng to ob liga te R ob i n so n to ac t a t t h at tim e. Id. a t 32 7- 30
. The cou rt ackn ow ledge d that, pu rsu an t to section 52 3(a)( 3)(B), an unschedule d, nondisc h argeabl e debtwil l be disc h ar ge d so lon g as th e cre d ito r h ad n ot ice or a c tu al k n ow l-N o. 08

- 3358 13

The cour tw as as s um i ng thatthe dea dl i ne f or obj ec t i ng t o the 3 di s c har ge abi l i t y ofa d ebt was J anu ar y 8 , 20 06 , al thoughthe not i c e s en tt o c re di t or s ha d s pec i fi ed J anu ar y 9 , 20 06 , as the dead li ne. e dg e o fthe b a nk r up t c y i n t i me t o o b j e c tt o the di s c harg eab ility of th e d eb t. Id. at32 6. The co urt sum m ar ily r ej ec te d a s “abs ur d” S m i th ’ s as se r ti o n tha t be ca us e th e pla i nti ff s’ cl ai m s were scheduled i n hi s 2 004 bankr up tcy p et itio n, Tid w ell an d Ste rlin g-A h l l a so m eh ow sh ou ld ha ve kno wn o fhi s 20 05 pe ti ti o n, no twi th st an di ngthe f ac t th atthe y wer e ne ve rs er ve d wi th n otice o fthe seco nd peti ti on a s a r esul t o fthei r om i ssi on fro m hi s l i st of c re d ito rs . Id. at32 4. O n th e o th er h an d , t h e c ou rtd id agre e th at w hen Robi nson’ s o ffi ce was s er ved by f ax on Decem ber23 , 20 05, with a co py ofS m i th’ s m ot ion to tr ansfer the tw o sui ts to the sta te cour t’ s ba n kruptcy c a l e nd e r, h e wa s p r o v i de d wi th a c t ua l n o t i c e o fthe p e nd

i ng ba nkruptcy, and thr ough hi m Ti dw el land St er l i ngA h lla w er e a lso giv en n ot ice
. Id. at 327
. But due proce ss en tit led th e p lain tiffs to rea so n ab le n ot i c e . Id. at32 6- 27. I n the cour t’ s v iew , that m eant noti ce which a l er ted the pl ai nti ff s t o keydeadl i ne s in t i m e e nough f orthem to ta ke ac tio n in c om p lian c e w ith th os e d e a d lin es . Id. at 32 7 -3 0. B y the tim e Rob inson received the fax , Sm ith’s bankr up tcy peti ti on had b ee n pend i ng f ornear l y ni nety day s, the c r edi to r s’ meet i ngha d b ee n h el d m ore tha n a m onth e ar l i er, and the dead lin e forfi l i ng obj ecti ons to th e d i sc ha r g eabi l i tyo fa de btwas j us t si xt ee n da y s o ff. See 37 9 B. R . at 3 28. M or eov er, the m oti on s er ved on 3 R ob in so n ga ve n o w ar n in g of t h e im m in en t b ar d at es . Id.14 N o. 08

- 3358 Undertho se c i r cumst an ce s, the c o ur t co nc l ude d tha t th e bel ate d noti ce Ti dw el l and St er l i ng- A hl l a were gi ven o f S m i th ’ s ba nk r upt cydi d no t su ppl y the m wi ths uffi ci en t tim e a n d info rm at ion to ta ke ap p ro p ria t e a c tio n w h ile th e b an kr u p tc y p ro c ee d in g w as st ill op en . Id. at32 7- 30. The bankruptcy co urt conse quentl y deem ed Count Io f th e p lain tiffs ’ ad ve r sa ry co m p lain ts to h av e b ee n tim ely fi l ed and al l owed thei r com pla i nts t o s ta n d as a n obj ection to d ischa rgeabili ty p ur s ua nt to sections 52 3(a)( 3)(B), 52 3(a )(6) , an d 52 3 ( c ) (1), i d. at 330, 331; and the cou rt i nd i cate d that the di schar ge i nj uncti on would be am ended to allow the pl ai nti ff s’ st ate
- cour t ca ses to p ro c ee d to fina l j u d gm en t, i d. at 331
. The co urt dism i sse d Counts I Iand I I Io fthei r adv er sar y c om pla i nts, wh i ch had sought re voca ti on o fthe disc harg e pu rs u an t t o sect i on 7 27( d)( 1). Id. at 325 , 32 7. Rel i efunder that pr ovi si on i s a pp ro pri ate wh en the debto r procur ed hi s di scharg e thro ugh fra ud , and the partyr eq u es ting re vocati on di d not l ear n ofthe fr au d u nti l afterthe disc harg e w a s gra n te d

. Id. at32 5; see, e . g. , Ci t i b an k, N. A. v . Eme ry (In r eEm e ry) , 132 F.3d 89 2, 89 5 (2 d C ir. 19 98 ); U nited Sta tes v. Willey, 57F. 3d 1374, 1 392 n. 33 ( 5th Ci r. 19 95)
. Those r equi r ement s no rm all y a r e r ea d s tr i ct l y i n f av o r o fthe deb to r, a s r ev o k i nga di sc ha r g e r eins ta te s a ll de bt s an d thus wh o l l y de pr i v e s the deb t o r o fthe fr e s h s t a r ttha t C h ap te r 7 is int en d e d to giv e h im . 379 B .R . at 3 25 ; see Wood v. Coch ar d (In reCoch ar d) , 177 B
. R
. 639, 642 (B a n kr. E
. D
. M o . 1 9 9 5 )
. H e r e , T i d we l l a n d S t e r l i n g - Ah l l a b e c a me aw ar e o fS m i th’ s ban kr uptcy i n advance o fhi s di schar ge, obvi ousl y knew thattheyhad not been proper l y no ti fi ed o fthe b an k r upt cy, a nd wi thqui cki nv esti gati o n mi g htN o. 08

- 3358 15 ha ve d eterm ined before the d ischa rge i ssu ed that Sm ith’s fai lure to includ e the m on his li st of uns ecu red cred itors w as int en tio n a l

. S till, giv en th at th ey h ad on ly d ay s in whi cht o make tha t det er m i na ti on, the c o ur t was wi l l i ng to a ss um e th atthe pl aint i ff s wer e no t o n n o ti ce o fthe fraud un tilafter the d is c ha rge and that they w ere enti tl ed to se ek revocati on o fthe disc harg e. 37 9 B. R. at 32 5. But, i n v i ew o fthe r el i efa va i l ab l e to T i dwel l a nd S te r l i ng - Ahl l a un d ers ec ti o n 5 23 ( a) ( 3) ( B) , whi chthe co ur t v i e we d a s a mo r e a p p r o p r i a t e v e h i c l e f o r r e l i e f, t he cour t fou n d it unnecess ar y t o enter tai n the possibi l i ty of re vok i ng S m i th’ s di scharge

. Id. Giv en thatthe pla i nti ff s’ cl ai m s ag ains t S m i thha d no t y etb een li qui dat ed, the cour t ele cted t o postpone deci si on a s t o the di schar geabili ty of th e claim s u n t il such tim e as j ud gm en ts w ere en te re d in t h e s ta te
- c o u r t a c tio n s. Id. at33 0. If Tid w ell an d Ste rling -A hlla w ere su cce ssful i n th eir state -court pr o ce eding s ag ains t S m i th, the y co ul d r etur n t o the bankru p tcy cour t t o see k j ud gm ents ofnondi schar geab ility

. Id. at33 0- 31. S m i tha ppea l ed to the di st r i ctc o ur t, whi ch affi r m ed th e ban krup tcy cou rt’s dec isi on. 2008 W L 40673 06
. Th e cou rt f ound no f aul t w i th the bankr up tcy cour t’ s dete rm i nati on th at Sm ith h ad co m m it t e d fr au d by int en tio n ally om itting Ti dw el l and St er l i ng- A hl l a fro m S chedule F. Sm i th’ s debtto the pla i nti ff s was pote nti al l y no nd i scharg eabl e, and gi ven that hi s m al pract i ce insurer m i g htno t co ve r a ny j udg m en t ent er ed i n f av o r o fthe p lain tiffs , th e c ou rt a gr ee d th at it w as a p er m iss ible in fer en c e t h at Sm ith h a d int en tio n ally failed to sc h ed u le th eir cla im s. Id. , at* 2. “S i nce the ev i dence d isc l ose d that16 N o. 08

- 3358 S m i thha d l o sthi s j o b, un d ou btedl y a s a r es ul t o fthe all ege d i ntenti onalto rt, the re aso n f orfi l i ng the bank

ru p tc y p et itio n m u st h a v e be en , at le as t in p ar t, to av oid perso nal l i abi l i ty to [ Tidw el l an d S ter l i ng- A hl l a]
. ” Id. Alte r na ti ve l y, e ve n a ss um i ngtha t th e fi ndi ngo ffr au d m i ght b e cl ear l y err oneo us, the cour t fo und “co m pel l i ng” th e ba nk r upt cyc o ur t’ s addi ti o na l fi ndi ngtha t th e pl ainti ff s, al though they di d l ear n ofthe b ankr up tcy pri orto th e d ischa r g e, di d no t r ec ei ve the t i m ely a nd s uffi ci en t n ot ice to w h ich d u e p ro c es s e n tit led th em . Id. , at* 3. N ot onl y di d Tidw el l and Ster ling- A hl l a no t r ecei ve noti ce o fS m i th ’ s pet i ti o n un ti l a l m o stthr ee months a ft erhe fi l ed i t, but the m oti on i nfo rm i ng the m o fS m i th’ s peti ti on did noti n c lu d e any i nfo rm ati on r ega rdi ng the date an d res ulto fthe cre dit or s’ m eet i ng. There f or e, Ti dw ell and Ste rl i ng- A hl l a co uld notcal cul ate the bar date f or ob j ec tin g t o d isc h ar ge or d isc h ar ge ab ility

. Id. , a t * 3. The co ur t no ted th ata c en tr alc o ns i der at i o n in e va l ua ting th e r ea so nabl en es s o fthe no ti ce gi ven to a c r edi to r i n a ba nk r upt cypr o ce edingi s whethe r the not i ce l eft th e cr edi to r w itho ut“ su ffi ci en t ti m e to t ak e m ea ni ng ful ac tio n,” su c h th at th e cre d ito r w as ac tu ally p rej u d ice d

. Id. ( ci ti ng Ha rtiga n v . P eters , 871 F.2d 133 6 , 1 3 4 0 ( 7th Cir. 19 89 ) )
. Her e, the t i m i ngo fthe n otice pr ej udi ce d the cred itors becau se it w a s given only tw o da ys before C h ris tm as , a n or m ally qu ietp er iod for a tt or n ey s. Id. A l so, gi ven that Rob i nson i s no t a bank ru p tcy att or ney, an d thus w as not knowle dgeabl e about the pr oce du re s and prac ti ces ofbank ruptcy proce edi ngs, the bel ate d n ot ice h e re c eiv ed of th e b an kr u p tc y d id n otgiv e h im su fficie n t t i m e t o t ak e m ea n in gfu l ac tio n . Id. TheN o. 08

- 3358 17 di st r i ctc o ur t no te d fi na l l y th at S m i thwas no t wi th o ut re cour se, bec ause he st i l l would have the o pp or tuni ty to defe nd the tw o sta te- cour t ca ses , and eve n i fhe l ost ei thero r both, he woul d al so h av e the r i ght t o obj ect to m aking the debts nondi schar geab le in the bankr up tcy c ou rt
. Id.

II. W e hav e j urisd iction to review the d istri ct cou rt’s affi r m an ce of t he b an k r upt cyc o ur t, pr o vi ded th atthe bankr up tcy cour t’ s or der i s appropri ate l y c hara cter i zed as a “ f in al” d ec isio n . 28 U .S.C . § 15 8(d )(1) ; see Zed an v. Ha ba sh , 52 9 F
. 3d 398, 40 2 ( 7t h C ir. 20 08) ( ci ti ng In re Sa lem , 4 65 F
. 3d 76 7, 7 71 ( 7th Ci r. 2 006))
. F i na l i tyi n the c on te x t o f ba n kr u p tc y jur isp ru d en c e is “ ‘c on s i d er ab ly m or e fl exibl e than i n an o rdi narycivi l appealta ken und er28 U
. S. C. § 1 291. ’ ” Id. at40 2 ( quoti ng In re G ould, 977 F. 2d 1038 , 10 40- 41 & n. 2 (7t h C ir. 19 92) )
. A n or der o f th e ba nk r upt cyc o ur t m ay be c o ns i der ed fi na l, a nd thus im m edi ate l y a pp eal abl e, wh en i t defi ni ti vel y r eso l ves a d isc re te d isp u te w ith in t h e la rg er ca se . In re C om disc o, Inc. , 538 F. 3d 647, 65 1 ( 7th Ci r. 20 08) ( quoti ng In re Sa co Lo ca l D e v. Corp. , 711 F.2d 44 1, 44 4 (1 st C ir. 19 83 ) (B re ye r, J.)); see al s o Chip l e as e, Inc . v. St e i nb e rg (In r e Res our ce Tec h. C o rp.) , 52 8 F.3d 46 7, 47 4 (7 th C ir.), cert. denied , 1 29 S. C t. 636 (2008 ). The or der a t issu e h ere a ro se f ro m a sta nd

- al one, post
disc harg e pr oce edi ng co m m enced byT i dw el l and St er l i ngA hl l a w hi ch sought, am ong othe r re l i ef, m odi fi cati on of the disc h arge i nj uncti on t o perm i t thei r l aw sui ts aga i nst Sm i th i n sta te cour t t o p ro c ee d

. See H end rix v . P age (In re18 N o. 08

- 3358 He ndr ix) , 98 6 F
. 2d 195, 19 7 ( 7th Ci r. 19 93)
. The bank ruptcy co ur t’ s de ci si o n to gr an t tha t r eque ste nds thi s st an d- al o ne pr o ce edingf o r no w. The c o ur t d i d no t r ea chthe disc harg eabi l i ty ofthe cl ai m s th at T idw el l and St er l i ngA hl l a h a v e fi l e d a g a i ns tS mi th; r e s o l ut i o n o fthat i ss ue ha s b ee n po st po ne d pe ndi ngthe o ut co m e o fthe litig at ion in st at e cou rt
. T h at m ay ta ke ye ar s ; a n d if nei thero fthe pla i nti ff s pre vai l s in h er l aw sui t a gainst Sm i th, the n the r e wi l l b e no fur the r a c t i o n f o r the bank

ruptcy cour t t o tak e. In the m eanti m e, S m i th m ust defe nd hi m sel fin t he l aw sui ts ( al though hi s insurer apparentl y wil l supply that defe nse) wit h t h e pr ospecto f be i nghe l d l i ab l e to Ti dwel l a nd S te r l i ng - Ahl l a ( an d p os sib ly w ith n o in su ra n c e c ov er ag e) h an gin g ov er h is head. To that e xtent, the dist ri ct c ourt ’ s deci si on to a l l o w th e s t a t e - c o u r ts u i t s t o g o f o r wa r d h a s a l r e a dy depri ved hi m o fthe f re sh st ar t that the di scharge or der otherw i se gave hi m . The bank ruptcy cour t’ s o rder was the r efo r e fi na l f o r pur po ses of s ec ti o n 1 58 ( d) ( 1) a nd w e hav e j urisd iction to review t he district cou rt’s d ec isio n to affirm th at ord er . S e e S t a ffer v. P redo vic h (In re Sta ffer) , 30 6 F
. 3d 967, 970- 71 ( 9th Ci r. 20 02) ( deem i ng fi nal and app eal abl e deni alo fm oti on t o re open bank ruptcy f o r p u r p o s e o ffi l i n go fa d v e r s a r y c o mpl a i n tt o d e t er m i ne d is c h ar ge ab ility of u n sc h ed u led d eb t); Hendrix , 98 6 F
. 2d at 197 ( bankr up tcy cour t’ s o rder granting cr edi tor s’ m oti on t o m odi fy di schar ge to perm i t them to r eopen s tat ec o ur tp e r s o na l

- i nj ur y l a ws ui tf o r p ur po s e o fp ro c ee d in g a ga in st d eb to r’s ins u ra n c e c ar r i er w as fina l, ap p ea lab le or d er ); In re B a rnes , 96 9 F.2d 526, 52 7- 28 ( 7th Cir. 19 92) ( or der g ra nti ng debto r’ s m oti on t o re openN o. 08

- 3358 19 bankr up tcy and decla re unsched ule d debt di schar ged w as fi na l an d ap p ealable). Because o ur r evi ew i n a b ankr up tcy appeal i s pl enar y, w e a p p ly th e s am e s ta n d ar d s t h a t th e d ist ric t c ou rtd id i n r ev iew in g t h e b an kr u p tc y c ou rt ’s d ec isio n . Wi e s ev. C m ty. B a nkof C ent. Wis. (In re Wiese) , 55 2 F
. 3d 584, 588 ( 7th Ci r . 2 0 0 9 ) ( c i t i ng C o rp. As s e t s , Inc . v. Pal oi an , 36 8 F
. 3d 761, 76 7 (7 th C ir. 20 04 )); see also F e d

. R
. B a n k r . P
. 8 0 1 3
. We exam i ne the bank ruptcy c ou rt ’ s dete rm i nati ons ofl aw d e n ov o a n d its find in gs of fac t fo r c lea r er ro r. Wiese, 552 F. 3d at 588 ( ci ti ng In reAB C -Naco, Inc. , 48 3 F
. 3d 47 0, 47 2 (7 th C ir. 20 07 )); Ru le 8 01 3. “A find in g is ‘c lea rly errone ou s’ w he n alth ou gh there is eviden ce t o sup p ort it, the review ing cou rt on th e ent ire e vide nc e is left w i th the de fi ni t e a nd fi r m co nv i c t i o n tha ta mi s t a k e h as been com m i tte d.” U ni t e d S ta tes v. U
. S. Gyps um Co. , 33 3 U
. S. 364, 395, 68 S. Ct
. 525, 542 (1948 ). Sm ith’s i n itial ch all en ge is to the ban krup tcy cou rt’s fac tu al d et er m in at ion th at h is fa ilu re to sc h ed u le T i d w ell a n d S t e r l i n g - Ah l l a ’ s l a ws u i t s wa s fr a u d u l e n t, b u twe n ee d n otd ec id e w h et h er or n o t t h a t find in g w as cle ar ly er r o ne o us . F r au d i s a pr er equi si te t o r ev o ca ti on o fthe d eb to r’s d isc h a r ge p u rs u an t t o s ec tio n 72 7(d )(1)
. E.g
. , C itiba nk, N .A . v. E m ery, sup ra , 13 2 F
. 3d at 895. Revo cati on of Sm ith’ s di schar ge w as one ofthe f or m s o fr el i efthat T idw elland Sterl ing-A hlla sough t in their adv ersary com pla i nts. But the ba nkruptcy cour t deem ed that ha r s h r e med y

— w hi ch as w e hav e noted would have r e i ns t a t e d all of Sm ith ’s d eb ts , n ot j u st h is de b ts to T id w ell an d Ste rlin g-A h lla, see Wo o d v . Co ch a rd, sup ra , 17 7 B. R. at20 N o. 08

- 3358 642

— i napp ro pri ate i n view o fthe re l i efava i l abl e t o the pl ain tiffs under s ecti on 5 23; the cour t there f or e di sm i ss ed th e p ort i o ns o fthe a dve r sa r y c o m pl aint s se ek i ng re voca ti on. T hat a spect ofthe bankrup tcy cour t’ s deci si on has no t be en chall enged i n thi s a pp eal

. A l l thatneed be s how n to es tabl i sh a ri ght t o re l i efunder s ecti on 5 2 3 ( a ) ( 3 ) ( B) i s tha tthe deb ti n qu e s t i o n w as un s c he du led an d th e c re d ito r d id n oth av e n ot ice or a c tu al k n ow le dg e o fthe b a nkruptcy i n t i me t o fi l e a c l a i m a nd a re quest fora deter m in at i on that the debt w as nondisc h ar ge ab le. See Judd v. Wolfe( In re Wolfe ) , 78 F. 3d 110, 11 5- 16 (3d C ir. 19 96 ); B eezley v . C a lif. La nd Title C o . (In re Beezl ey) , 994 F.2d 14 33 , 14 37(9t h C ir. 19 93 ) (O ’Sc an n lain , J. , concurr i n g); B yr d v
. Al t on (In reAl t on) , 83 7 F
. 2d 457, 46 0 (1 1t h C ir. 19 88 ) (p er cu ria m ); Ne e l eyv . Mur c h i s on , 81 5 F
. 2d 34 5, 3 47( 5th Ci r . 1 98 7). W h eth er or not the de btor’s f ai l ure to schedule the debt was del iber at e is i rr el evant
. Alt on , 837F.2d at45 9 (c re d i t o r h old in g n on d isc h ar ge ab le cl ai m w ho re cei ved actual noti ce of pen d in g bankr up tcy i n ti m e t o see k d ecl ar ati on ofnondi schar geabi l i ty pri orto bar d ate w as p r e c lud ed from seeking reli ef after d ebtor’s disc harg e, not w i thsta nd i ng poss ibi l i ty that debt orm ay ha ve de l ibe r at ely f ai led to l i stc r edi to r : “ Des pi te the m i sle ad i ng ac ti ons, i nadvert ent o r i ntenti onal, o fdebto r A l ton, the t im e speci fi cati ons seto ut i n the Bankruptcy Code ar e s uffi ci entl y c l ear to have pla ced an o bl i gat i on o n c r edi to r By r d t o f o l l o w th e ca se a nd t o t ak e th e tim e l y ac tio n n ec es sa ry to p u rs u e h is c laim . W e le av e it to the Bankr up tcy Cou rt to deci de w hetherdebto r A l ton’ s a cti ons, i fi n bad f ai th, can and sh ou ld affect c on firm at ion of h is re o r g a n iza tio n p lan .”); St uc ke rv.N o. 08

- 3358 21

As a n um ber ofcour t s , inc l udi ng our own, ha ve i ndi c at ed, the 4 de bt or ’ s m e nt a l s t ate i n omi t t i ng a k no wn c r e di t orm a y be r e l e va nt t o the q ue s t i on of whe the r a n un s c he dul e d debt t hat w as oth erw ise d ischa rg eab le un d er 52 3(a)( 3)(A) w as, i n fact, d isc h a rg ed

. SeeSt ark v. S t. M ary’s H os p. (In reSt ark) , 717 F. 2d 322, 324 ( 7th C ir
. 1983) (per curiam ) (al lowing d ebtor i n no-as se t c as e t o r eo penban kr upt c y t o a dd om i t t ed c re di t or ho l di ng otherwise di sc hargeable debt “w here ther e i s no evidence o ff ra u d o r in te n tio n a l d es ig n ” ); s e e a l s o Co l o nia l Su r . Co
. v. Weizman , 56 4 F
. 3d 5 26 , 5 32 ( 1s tCi r. 20 09 ) ( en dors i ng S tark’s a p p ro a ch ); S tone v . C aplan (In re S tone) , 10 F. 3d 285, 291 ( 5th Cir

. 19 94 ) ( c ol l ec t i ng c as es f or pr opos i t i on that“a c our ts houl d not d i sc h a r g e a d e b t u n d e r se c t i o n 5 2 3 (a )(3 )[( A )] i f t h e d e b t o r ’s f ai l ur e t o s c he dul e thatdebtwas d u e to i nt en t i ona l des i gn, fra u d , o r im p ro p er m o t i v e ” ). B u t seeLaur enA. Helbl i ng & C h ri sto p h er M . K le in , TheEmergi ng Har ml ess Inno ce nt O m i s s i o n De

f e ns e t o No nd i s c h a rg e a b i l i ty Un d e rBa nk r up t cy Co de § 5 23 ( a ) (3) (A ) : M a k i ng Se ns e o f theConf

us i o n Ove rRe o pe ni ng C as es an d A m en d ing S ch ed u les to A d d O m it t e d D eb ts , 6 9 A m. B a n k r. L . J. 33 (19 9 5 ) (cr iti ci z in g an a ly sis o f S tarkan d sim il ar c as es whic h have c ons i der ed debt or ’ s m en t al s t ate in om i t t i ng de bta s r e l e va ntt o whe the r ba nk r up t c y c a s e s ho ul d b e r e op e n e d t o p e r mi ta me n d me n to fs c h e d u l e s i n o r d e r t o a dd deb ts t h a t were om it ted i nnocentl y and prop osi ng ins tead reco g nitio n o f equ itab le, ha rm less inn oce nt o m ission d efense to (co n tin u ed ...) C a rdin a l B ldg . M a terial s, Inc . (In re Stu ck er) , 15 3 B. R. 21 9, 22 2 ( Ba n kr . N .D
. I l l

. 19 93) ( “ther e i s no thi ng i n the text of sect ion 523(a) (3 )( A ) or ( B ) w hich references a deb tor’s sta te ofm i nd with r ega rd to the om iss ion i n schedul i ng a c re d i t o r ’ s cla im ”); se e also M endiola , sup ra , 99 B. R. at86 9- 70 )
. Thu s, a s th e di st r i ct cou rtr ec o g ni ze d, the b an k 422 N o. 08

- 3358

(
. . . c on t i nu e d) 4 § 523( a) ( 3 )( A ) nond is chargeabil ity acti ons)
. Bu t, as s tat ed abov e, the deb tor’ s stat e of m ind is not r el evant to w hether an unschedu le d d ebt that was other w is e non d ischa rg eab le u nd er s e c t i on 523 (a)( 2), ( 4), or (6) w as no ne the less disch a rg ed p u rs u a n t to sec tio n 52 3 (a )(3)(B ). ruptcy cour t’ s a dd i ti onalfi nd i ng tha t Ti dw el l and St er l i ngA hl l a l acke d ti m el y no ti ce o fS m i th’ s ba nkruptc y i s by i tse l fsuffi ci ent t o s u st ai n the cour t’ s deci si on t o al l ow thei r sta te- cour t s uit s t o go f or w ar d. 2008 W L 40673 06, at * 3. Sm i th al so ar gues that despit e his fai l ure to i ncl ud e them i n hi s S c he du l e F , T i dwe l l a nd S t e r l i ng - Ahl l a we r e o n not ice ofhis 2005 ba nk rup tcy p etition a n d thu s w ere obliged to s e e k r eli ef from the ba nk rup tcy cou rt before he wa s di s c ha r g e d. He r e l i e s pr i nc i pa l l y o n the m oti on to t r an sferTi dwel l a nd S te r l i ng - Ahl l a’ s l aws ui ts t o the sta te cour t’ s ba nkruptcy cal endar th at was ser ved on thei r att or ney by f ax on Decem ber 23, 2005
. Sm ith as ser ts th atthe mot i o n made the pl aint i ff s awar e o fthe pe ndi ng bankr up tcy proce edi ng i n tim e e nough f orthem to obj ect to the di schar ge of thei r cl ai m s be f or e the bardate. H e s eco nd ar i l y c onte nd s tha tb e c a us e Ti dw el l and St er l i ngA hl l a w er e pr evi ousl y i denti fi ed ( thro ugh thei r att or ney) as uns ec ur ed cr edi to r s o n S ch edu l e F o f hi s 20 04 p etit i o n, th eys ho ul d s o m eh o w hav e be ena war e o f hi s 20 05 pe ti ti o n. T h e adequ acy ofthe noti ce that Ti dw el l and St er l i ngA h lla re cei ved pres ents a m i xed questi on o fl aw and f act, i n tha t i t cal ls for the a ppl i ca ti o n o fl eg als ta nda r ds to theN o. 08

- 3358 23

u n iq u e f a c t s o f th is c as e. Se eThom as v. Ge n. M ot ors Acc eptanc eCorp. , 2 8 8 F
. 3 d 3 0 5 , 3 0 7( 7 th Ci r . 2 0 0 2 )
. A l ower cour t’ s a nsw erto s uch a quest i on i s no rm al l y r evi ew ed f orcl earer ro r, al though de no vo revi ew i s r equi re d as to c ertai n mi xe d fi ndi ng s, us ua l l y tho se ha vinga c o nst i tu ti o na l di m en si o n. Id. The co nsti tuti onalm andate o f du e pr oce ss does com e int o p lay her e. S ti l l, o ur deci si on i n U nited Sta tes v. K irtley, 5 F.3 d 1 110, 1111-12 (7th Cir. 1993 ), w hi ch co nsi dered wh etherthe noti ce g i ven t o a d efe n d an t o f th e v iola tio n s t h at led to rev oc at ion of h is pr o ba ti o n c o m pl i ed wi thdue pro ce ss a s wel l a s th e releva n t rule of crim inal proced ure , point s tow ard r ev i ew f o r c l ea r e r r o r . Howev er, o th erde cision s co nsi deri ng the suffi ci ency ofnot i ce in var i ous c onte xts, em an at in g fro m th is c irc u it a n d o th er s, h av e e n ga ge d in d e n ov o re vie w . E.g
. , B raw d e rs v. C o un ty o f V entu ra (In re B raw ders) , 5 03 F. 3d 856, 86 6 ( 9th Ci r. 20 07) ( adequacy o f noti ce r ega rdi ng pro posed m odi fi cati on o fcred i tor s’ rig h ts in C h ap te r 13 ba n kr u p tc y p lan ); Peralt a- Cabre r a v. G o nz a les , 50 1 F
. 3d 837, 84 3 ( 7th Ci r. 2 00 7) ( adequacy o f n ot ice of d ep or ta tio n h ea rin g); D eJul i us v. N ew Engl and He al t h CareEm pl oye e s Pe ns i on Fun d, 429 F. 3d 935, 942 ( 10th Cir
. 20 05) ( adequacy o fnotice p ro cedures i n sec uri ti es fra u d cla ss ac tio n ); Lo bz un v. U nited Sta tes , 422 F. 3d 503, 507 ( 7th Ci r. 20 05) ( adequ ac y off or fei ture not i ce pr oce d u r e s )
. We n e e d n o t e x p l o r e th e s u b j e c t fu r th er ; o ur deci si on would be th e sa m e r ega rdl ess o fwh at degre e o fa pp e l l a t e s c r ut i nywe a pp l i e d. W e a g r e e wi th b o th the b a nk r up t c y a nd di s t r i c tc o urts th at th e m o ti o n t o t r an sferdi d no t su ppl y Ti dwel l a nd S te r l i ng - Ahl l a wi tha dequa te no ti ce o fS m i th’ s se co nd24 N o. 08

- 3358 ban krup tcy, such that the y w ere requ ired to act be fore S m i thwas d is ch ar g ed an d the b an k r upt cypr o ce eding was c l o se d. Al though i t i s undi spu te d tha t th e pl ainti ff s’ at torney di d becom e a w ar e o fthe p ending bankruptcy as a r esul t o fthat m oti on, and that he acqui re d that k no wl edg e whi l e th er e was s ti l l so m e ti m e l eft i n the b an kr u p tc y p ro c ee d in g for T id w ell an d Ste rlin g-A h lla to fi l e proo fs of cl ai m and to se ek a decl ar ati on that thei r cl ai m s were n on disc harg eabl e, thi s a l one does not est ab l i shtha t th e no ti ce was a dequa te
. “ An el ement ary and funda m en ta l r equi r emento fdue pr o ce ss i n a ny proce edi ng w h ich i s t o be a ccor ded fi nal i ty i s no ti ce re aso na b ly cal cul ate d, und eral l the ci rcum sta nces, to appri se i nter est ed parti es ofthe pend ency ofthe acti on and aff or d them an o pp or tuni ty to prese nt the i r obj ecti ons. ” M ul l anev. Ce nt
. Hanov e rBank & Trus tCo. , 33 9 U
. S. 306, 31 4, 70 S
. Ct. 65 2, 65 7 (1 950). The not i ce m ust no t on ly re as on ab ly c on ve y t h e r eq u ire d info rm at ion , bu t it m ust a lso “ aff or d a r eas onabl e t i m e fortho se i nter est ed to m ake thei r appearance . ” Id. at314, 70 S. Ct. at65 7. A ke y functi on o fthe noti ce pr ovi ded to a cre ditor i n a b ankrup tcy p roceed ing is to give the c r e d itor th e op p ortu n it y t o file a p ro of of c laim an d , w h er e t h e d eb t is potenti al l y no nd i schar geabl e, to r eque st a dete rm i nati on of n on d isc h ar ge ab ility

. Chanut ePr od. Cr e di tAs s ’ n v . Sc hic k e (In r e Sch ick e) , 2 90 B. R. 7 92 , 8 00 ( 10 thCi r . B. A. P. 20 03 ), a ff’d wi t houtpu b l i s he d op
. , 97Fe d. A pp x. 24 9 ( 10th Cir
. 20 04); I n r e O ’Sh a ug hn essy, 252 B
. R
. 722, 732 (B an kr. N
. D. I l l

. 20 00) ( quotin g In reM ar i no , 19 5 B. R. 88 6, 89 4 (B an kr . N .D . I ll. 19 96 )); see g ene r al l y Zur i ch Am
. Ins . Co. v. Tessler (In re J.A . Jo n e s , In c.) , 492 F.3d 242 , 249 (4th C ir.N o. 08

- 3358 25 20 07 ); U nited Sta tes v . H a iro po ulo s (In re Ha iro po ulo s) , 11 8 F.3 d 12 40 , 1 24 4-4 5 (8t h C ir. 19 97 ); C hem etron C o rp. v. Jon es , 72 F.3d 34 1, 348 (3d Cir. 1995). The m oti on t o tr ansferdi d not s er ve thes e inter est s. R ob in son’s offi ce di d not r ecei ve a co py ofthe m oti on to tr ansferu n tilDecem ber23 , 20 05, al m ostni nety days after Sm ith fi led h is ban krup tcy p etition and w ellover a m on th a ft e r the c r e di t o r s ’ me e t i ngo n No v e mbe r 8 , 20 05. The m oti on r eve aled l i ttl e m or e than the pend ency of Sm i th’ s ba nkruptcy; it sai d nothi ng as to wh en the bank

r upt cywas fi l ed, w he th er o r whena c r edi to r s’ meet i ng had take n pla ce, o r w hen obj ecti ons to d isc h ar ge orto the di schar geabi l i ty ofany debt were du e. Thus, Robi nson had no way ofkno w i ng w ithout furtheri nvest i gat i on h ow m u c h tim e re m ain ed for T i d w ell an d Ste rlin g-A h lla to prese rv e thei r ri ghts as cre dit or s. B ec ause the no ti ce w as g i ve n o nl y s i xt ee n o r s ev en te enda y s be f o r e th e de a dl i ne f o r di s c ha r g e a b i l i t y c o mpl a i nt s ( seen .3, sup ra ), ther e w as littl e t i m e l eft a t that point f orRobi nson t o i nv e s t i g a t e the b a nk r up tcy, a s c e r t a i n the r e l e v a ntde a dl i nes, and tak e ap p ro pri ate act i on be f or e the bardate i n J anuary . M or eov er, Robi nson i s no t a bank ruptcy spe ci al i st; he i s a pe r so na l i nj ur y a tt o r ne y . Ev eni fhe had seen the no ti ce o n Decem ber23, 2 00 5 ( ra therthan on Jan u ar y 4 , 200 6 w h en h e re tu rn ed to h is offic e), it is st ill unli kel y he w oul d h av e had suffi ci ent t i m e t o disc uss th e appr o pr i at e co ur se o fa ct i o n wi tha n atto r ne y who speci al i zes i n bankr up tcy l aw , consul t w i th his c lients , an d fi l e th e appr o pr iate doc um en ts b efo r e th e dea dl i ne f o r o bj e c t i n gt o th e d i s c h a r g e a b i l i t y o fh i s c l i e n t s ’ c l a i ms expir ed. T h i s i s par ti cul ar l y s o gi ven that the m oti on26 N o. 08

- 3358

was s er ve d dur i ngthe e nd- o f-year pe r i o d whenmany p eo p le a re oc c u p ied w ith h olid ay s, va c at ion s, an d fa m i ly eve nts a nd l i ttle b u siness i s t ra nsacte d. On these f acts, th e m inim alno ti ce b el at edl y s uppl i ed byway o fthe m oti on t o tr an sferdi d not g i ve the pl ai nti ff s a r easo nable o ppo r tu ni tyt o t ak e appr o pr i at e ac ti o n b efo r e th e deadl i ne f o r o bj ec tingt o di sc ha r g eabi l i typa ss ed an d b efo re Sm ith w as d isc h ar ge d

. SeeM frs. Hano verv. D ewalt (In re D ewalt) , 96 1 F
. 2d 848, 85 1 ( 9th Ci r. 19 92 ) (in m ost case s, at least thirty d ays’ notice to cred it o r is nec essary and suffi ci ent t o sat i sfy § 523( a) ( 3) ( B); not i ce s up pli ed se ve n d a y s p rior to ba r d at e is ins u fficie n t); Soph i rCo. v. He i ney (In reHe i ney) , 19 4 B .R
. 89 8, 90 2- 03 ( D. Col o. 19 96) (notice r e c e iv e d eighteen da ys p riorto bar da te insu ffi ci ent); In re Wa lk er, 149 B .R . 511 , 515 -17(B an kr . N .D . I ll. 1992 ) ( knowle dge o fbank ruptcy acqui re d by unre presen ted cred itor tw en ty d ays p riorto bar da te insu ffici en t); cf. M us ev. M us e(In reM us e) , 289 B
. R
. 619, 623-24 (B an kr. W
. D. Pa. 20 03) ( noti ce pr ovi ded se venty
- seve n days pr i o r to dea dl i ne f o r no ndi sc ha r g eabi l i ty compl aint su fficie n t); He r m an v. Bat e m an (In reBat e m an) , 254 B
. R. 86 6, 87 4

- 7 5 (B an kr . D . M d . 200 0) (n ot ice rec eiv ed tw en ty -six d ays p riorto bar da te su ffici en t); M ar i no , 19 5 B. R. a t 8 95- 97(tw o m on th s’ n ot ice w a s a d eq u at e); but se e also Gross ie v . S a m (In reS a m) , 8 94 F. 2d 778, 78 1- 82 ( 5th Ci r. 19 90) (ei gh teen da ys’ notice su ffici en t). The noti on that S ter l i ng- A hl l a a nd Ti dw el l were on i nquir y n oti ce that S m i th m i ght ha ve fi l ed a b ankr up tcy peti ti on i n 200 5 be cause their atto rneyhad bee n schedule d and noti fi ed ofhi s 2 004 p eti ti on i s untenab l e.N o. 08

- 3358 27 The 2004 peti ti on had be en di sm i sse d fo r “subst anti al a b u s e ” of th e C ha p ter 7 proc ess in li gh t of Sm ith’s in c om e a n d e x p e n se s a t t h at tim e. It w as n otine vit ab le th atS m i thwoul d fi l e a se co nd pe titi on, and o fc o ur se the pla i nti ff s had no w ay ofdi vi ni ng whe n h e m igh t d o s o. See M oun t ai n We s t Fe d. Cre di t U ni on v. St r adi nge r (In re Stra din ger) , B an kr . N o. 05 -65 11 3-7, 20 07 W L 23 19 81 2, at *7 ( Bankr. D. M ont. A ug. 9, 20 07) (kno w l edge that debt or w as conte m p latingbank ruptcy does not am ount t o noti ce that s he i n f act fi l ed bankr up tcy peti ti on a t l ate r d at e) (c oll. ca se s). Inan y c as e, T id w ell an d Ste rlin g- A h lla we r e e nt i t l e d t o p ro m ptn o t i c e tha tS mi th ha d fi l e d a seco nd bankr up tcy p etit i on

— the s am e no ti ce that m ost ofhi s o th er cr edi tor s di d rec ei ve

— and i t i s undis pu ted th at they were not gi ven thi s no ti ce. The fi rs t a nd o nly noti ce they r ecei ved w as the m oti on t o tr ansfer , wh i ch as w e h av e d i sc u ss ed w as to o litt le a n d to o lat e t o e n ab le them t o t a k e a pp r o pr i a t e a c t i o n b e f o r e S mi th wa s di sc ha r g e d. Because Tidw el l and S ter l i ng- A hl l a w er e not given ti m el y a nd suffi ci ent no ti ce o fS m i th’ s ba nkruptcy f or them to fi l e co m pla i nts t o deter m i ne the nondi sch ar geab il i tyo fthe i r c l ai m s i n c o m pl i an ce wi ththe schedule se t bythe bankr up tcy cour t, theyr em ai ned fr ee to fi l e su chc o m pl aint s ata nyt i m e. F ed. R. Ba nk er. P. 40 07 (b ); Staff

erv. Predovich , sup ra , 306 F.3d at97 1-7 2; see also Wa lk er, 149 B .R . at 5 16 -17 ; M endiola , 99 B .R . at 8 68 n .6; In reElisc u , 8 5 B
. R. 48 0, 48 1 ( Bankr. N
. D. I l l

. 19 88)
. Laches m i ght b e a defense to a co m pla i nt fi l ed long afteran u n sc h ed u led cr ed ito r lea rn s o f th e d ebto r’s ba n kr u p tc y. See28 N o. 08

- 3358 Sta ffer, 30 6 F
. 3d at 973. But beca use no such defe nse has been ra i sed her e, we need not explo re thatposs ibi l i ty.

III. U nd erthes e ci rcum sta nces, the bankr up tcy cour t a pp ro p riately ex ercised i ts d iscretion to a llo w the sta te-cou rt c as es ag a i n s t Sm ith to p ro c ee d . I t c om m itt ed n o e rro r in fin d in g t h at T i d w e l l an d Ste rlin g-A h lla re c eiv ed ins u ffici en t noti ce o fS m i th’ s peti ti on t o have com pel l ed them to tak e a cti on t o preserv e thei r ri ghts bef or e the bardate and bef or e S m i th was dis charg ed; thei r post- disc harg e advers ar y c om pla i nts a nd r eque st s f orl eave to pro ceed w i th the st ate
- cour t l i ti gat i on were ther ef or e t i m el y. A FFI RMED .

9- 23- 09