In the

United States Court of Appeals

For the Seventh Circuit

No. 08-3358

IN RE:

BRUCE S. SMITH, M.D.,

Debtor.

TRINA TIDWELL and SANDRA STERLING-AHLLA,

Plaintiffs-Appellees,

v.

BRUCE S. SMITH, M.D.,

Defendant-Appellant.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 08 CV 46—Harry D. Leinenweber, Judge.

ARGUED MAY 14, 2009—DECIDED SEPTEMBER 23, 2009
2 No. 08-3358

The Honorable Joseph S. Van Bokkelen, of the Northern



District of Indiana, sitting by designation.

Before ROVNER and EVANS, Circuit Judges, and

VAN BOKKELEN, District Judge.



ROVNER, Circuit Judge. When defendant-appellant

Dr. Bruce S. Smith filed a Chapter 7 bankruptcy petition

in September 2005, he failed to include appellees Trina

Tidwell and Sandra Sterling-Ahlla on his schedule of

creditors holding unsecured, nonpriority claims. Tidwell

and Sterling-Ahlla had sued Smith in state court for

sexual assault. Because Smith omitted Tidwell and

Sterling-Ahlla from his list of creditors, neither of them

was sent notice of his bankruptcy petition. Their

counsel learned of Smith’s pending bankruptcy only

weeks before his discharge and took no action at that time.

Roughly one year after the discharge, Tidwell and

Sterling-Ahlla (whom we shall also refer to as the “plaintiffs”) filed motions asking the bankruptcy court for

leave to proceed with their lawsuits against Smith, along

with adversary complaints asking the court to declare

their claims against Smith nondischargeable pursuant

to 11 U.S.C. § 523(a)(3)(B) and (a)(6). Following an evidentiary hearing, the court granted their request in

part. The court found that Smith had deliberately and

fraudulently failed to schedule the plaintiffs’ claims and

that their counsel had not been put on notice of the bankruptcy in time enough to permit them to seek a declaration of nondischargeability prior to Smith’s discharge.
No. 08-3358 3

Tidwell v. Smith (In re Smith), 379 B.R. 315 (Bankr.

N.D. Ill. 2007). The court therefore granted Tidwell and

Sterling-Ahlla leave to proceed with their suits against

Smith in state court and reserved judgment as to whether

their claims were in fact nondischargeable pursuant to

section 523(a)(6) until such time as they prevailed in the

state-court litigation. Smith appealed to the district court,

which affirmed the bankruptcy court’s decision. Smith v.

Tidwell (In re Smith), No. 08 C 46, 2008 WL 4067306

(N.D. Ill. Aug. 27, 2008).

Smith again appeals, contending that the evidence does

not support the bankruptcy court’s findings that he

deliberately omitted Tidwell and Sterling-Ahlla from his

schedule of unsecured creditors and that they did not

become aware of his bankruptcy in time to seek a declaration of nondischargeability before the bankruptcy

proceeding was closed. We agree with the lower courts

that the eleventh-hour notice of the bankruptcy that

Tidwell and Sterling-Ahlla received did not afford them

sufficient time in which to protect their rights before

Smith was discharged. Their post-discharge complaints

were therefore timely, and we affirm on that basis without reaching the question of whether Smith omitted

Tidwell and Sterling-Ahlla from his list of unsecured

creditors with fraudulent intent.

I.

Tidwell and Sterling-Ahlla separately filed suit against

Smith in the Circuit Court of Cook County, Illinois on

December 18, 2003. Each alleged that Smith, a physician
4 No. 08-3358

Although the statute and bankruptcy rules require a debtor to 1

identify his creditors by their own names, rather than by their

representatives, the bankruptcy court found that notice to

Robinson constituted notice to his clients. 379 B.R. at 324 n.2.

specializing in obstetrics and gynecology, had unlawfully

engaged in sexual intercourse with her during a routine

prenatal examination.

Smith first sought the protection of Chapter 7 in a

petition filed on June 24, 2004. By the terms of 11 U.S.C.

§ 521(1) and Fed. R. Bankr. P. 1007(a)(1), he was required

to identify all creditors holding unsecured, nonpriority

claims on Schedule F of his petition. The clerk of the

bankruptcy court in turns sends notice of the filing of a

bankruptcy petition to all identified creditors, including

those on Schedule F. See Fed. R. Bankr. P. 2002. Smith

did not list Tidwell and Sterling-Ahlla by name on that

schedule, but he did list their attorney, Darryl Robinson,

indicating (incorrectly) that Robinson represented the

unidentified plaintiffs in a “medical malpractice claim.”

Bankr. No. 04-23845, Doc. No. 1 at 6. Robinson, presumably, received notice of the petition as a result: the

service list for the notice of bankruptcy mailed on June 25,

2004 indicates that he was among those creditors who

were served with notice. Id., Doc. No. 5 at 3. However, 1

the bankruptcy court dismissed the 2004 petition on the

motion of the United States Trustee, who argued that

in view of Smith’s ongoing employment, substantial

income, and unreasonably high monthly expenses, discharging his debts pursuant to Chapter 7 rather than
No. 08-3358 5

funding a repayment plan pursuant to Chapter 13

would amount to a “substantial abuse” of Chapter 7’s

provisions. See 11 U.S.C. § 707(b). The case was dismissed

on November 23, 2004, and the proceeding was closed

and the trustee was discharged on January 31, 2005.

After Smith’s financial situation deteriorated further

with the loss of his job, he filed a second Chapter 7 bankruptcy petition on September 26, 2005. The attorney who

prepared Smith’s second petition was not the same one

who prepared his first petition. However, Smith’s new

counsel worked for a firm that specializes in bankruptcy, he was experienced with Chapter 7 cases, and he

had a copy of the 2004 petition which he referenced in

preparing the new petition. The lawsuits filed by Tidwell

and Sterling-Ahlla were identified in the Statement of

Financial Affairs attached to the 2005 petition, but neither

they nor their attorney was listed on Schedule F. The

bankruptcy clerk mailed notices to the scheduled

creditors on September 27, 2005, indicating that Smith

had filed a bankruptcy petition, noting the automatic

stay of collection and other actions against the debtor,

and setting forth a number of important dates, including

that of the creditors’ meeting (November 8, 2005), and

the deadline for filing a complaint objecting to the discharge of the debtor or to determine the dischargeability

of any debt (January 9, 2006). As a result of their omission

from Schedule F, neither Tidwell nor Sterling-Ahlla

(nor their attorney) received that notice. Prior to December 23, 2005, Smith made no attempt to invoke the automatic stay in the state-court suits filed by Tidwell and

Sterling-Ahlla, and he did not otherwise notify the

state court, Tidwell, or Sterling-Ahlla of the stay.
6 No. 08-3358

Section 523(a)(6) of the Bankruptcy Code exempts

from discharge any debt “for willful or malicious injury

by the debtor to another entity or to the property of

another entity,” and because the lawsuits filed by Tidwell

and Sterling-Ahlla allege that Smith sexually assaulted

them, their claims against Smith are potentially

nondischargeable under that provision. See generally

Kawaauhau v. Geiger, 523 U.S. 57, 61-62, 118 S. Ct. 974, 977

(1998); In re Thirtyacre, 36 F.3d 697, 700 (7th Cir. 1994); see

also, e.g., In re Fors, 259 B.R. 131, 137 (8th Cir. B.A.P. 2001);

Pettey v. Belanger ex rel. Belanger, 232 B.R. 543, 546-47

(D. Mass. 1999). A creditor who holds such a debt is

obliged to file a proof of claim and a timely request

that the bankruptcy court determine the debt to be

nondischargeable. 11 U.S.C. § 523(c)(1); see also

§ 523(a)(3)(B); Fed. R. Banker. P. 4007(a). The failure to

take that step will result in the discharge of the claim.

§ 523(c)(1); In re Mendiola, 99 B.R. 864, 866 (Bankr. N.D.

Ill. 1989). Bankruptcy Rule 4007(c) allows a creditor sixty

days from the first date set for the creditors’ meeting

in which to file a complaint to determine the

dischargeability of a debt. In this case, the creditors’

meeting was set for November 8, 2005; therefore, the

presumptive deadline for seeking a determination that

a debt was nondischargeable was January 8, 2006 (sixtyone days after the creditors’ meeting, as the sixtieth day

fell on a Sunday), see 379 B.R. at 321 ¶ 11, although the

notice to creditors identified the deadline as January 9,

2006. Because they were omitted from Smith’s Schedule F,

neither Tidwell nor Sterling-Ahlla received notice of the

creditors’ meeting, and as of January 9, 2006, they had
No. 08-3358 7

taken no steps to have their claims against Smith

declared nondischargeable. The creditors’ meeting on

November 8, 2005, resulted in a no-asset report by the

trustee. On January 17, 2006, the bankruptcy court issued

a discharge order, and on January 23, 2006, the Chapter 7

proceeding was closed. Pursuant to 11 U.S.C. § 727(b), that

order discharged Smith from all prepetition debts except

as provided in section 523, which sets forth the various

categories of debts which are exempt from discharge.

The discharge also operated as an injunction against the

commencement or continuation of any action to collect

from Smith any debt from which he was discharged as a

result of the bankruptcy proceeding. See 11 U.S.C.

§ 524(a)(2).

Tidwell and Sterling-Ahlla were first placed on notice

of Smith’s bankruptcy in late December 2005, when the

attorneys defending Smith in their lawsuits filed

motions asking the state court to transfer the suits to

that court’s bankruptcy calendar. Copies of these

motions were served by fax on Robinson, the attorney

representing Tidwell and Sterling-Ahlla, on December 23,

2005, the day after they were filed. Robinson was out

of town on December 23, and he remained unaware of

the motions until he returned to his office on or about

January 4, 2006. Beyond stating generally that Smith had

filed a bankruptcy petition and that notice of the bankruptcy had been issued, the motions did not provide

any information about the status of the bankruptcy—e.g.,

when or whether there had been a creditors’ meeting or

by what date objections to the dischargeability of a debt

were due. The state court granted Smith’s motion on
8 No. 08-3358

Although the complaints also cited section 726 of the Bank2

ruptcy Code, it was obvious, as the bankruptcy court recog-

(continued...)

January 6, 2006, and the two lawsuits were placed on

dormant status on the court’s bankruptcy calendar.

Just shy of a year later, on December 20, 2006, Tidwell

and Sterling-Ahlla filed motions with the bankruptcy

court seeking a declaration that Smith’s discharge had

no effect on their lawsuits and that they were free to

proceed against Smith in state court. The motions

noted that because Smith had omitted Tidwell and

Sterling-Ahlla from his list of unsecured creditors

despite knowing of their suits, they remained ignorant

of his bankruptcy petition until he asked the state court

to transfer their suits to the bankruptcy calendar. The

bankruptcy court continued the hearing on the motions

in order to allow Tidwell and Sterling-Ahlla to prepare

adversary complaints against Smith, which they filed

on January 8, 2007. As amended, the complaints alleged

that because Smith had committed the intentional tort

of sexual assault and was subject to punitive damages,

their claims were exempt from discharge pursuant to

section 523(a)(6) and that they were entitled to a declaration to that effect. Alternatively, the complaints sought

relief under section 727, which in relevant part permits

a creditor within one year of the discharge to ask that

the discharge be revoked on the ground that it was obtained through the debtor’s fraud. See § 727(d)(1) and

(e)(1). The bankruptcy court denied Smith’s motion to

2
No. 08-3358 9

(...continued) 2

nized, that the plaintiffs meant to rely on section 727, which

deals with the discharge of the debtor. 379 B.R. at 323.

dismiss the complaints as untimely and set the complaints

and the motions for leave to proceed with the state-court

lawsuits down for a hearing on the merits.

The court subsequently received testimony regarding

both the omission of Tidwell and Sterling-Ahlla from

the list of Smith’s unsecured creditors and the notice

that their attorney, Robinson, had received in December 2005 regarding the request to transfer their suits to the

state court’s bankruptcy calendar. On the latter point,

Chykola Jones, the office clerk at Robinson’s law firm,

testified that it was her practice to place incoming correspondence, including faxes, on the recipient’s desk. Jones

also testified that she is not an attorney and has not

worked for attorneys who practiced bankruptcy law,

and thus would not have appreciated the significance of

the motions to transfer that were faxed to Robinson.

Smith’s bankruptcy attorney, Nathaniel Sinn, then

testified regarding the preparation of Smith’s second

bankruptcy petition. At the time he prepared that petition

in 2005, Sinn worked for the Chicago office of Legal

Helpers, a firm that specializes in consumer bankruptcies.

Although Sinn had been practicing law for less than a

year, and had been working on bankruptcy matters for

only seven or eight months, he had helped to prepare

several hundred Chapter 7 petitions in that time. Typically,

a law clerk or legal assistant in the office would prepare
10 No. 08-3358

a first draft of the petition, the draft would then be sent

to the client for corrections, and then Sinn would meet

with the client to review the revised draft before the

petition was signed and filed. Sinn understood that

Tidwell and Sterling-Ahlla, as unsecured creditors of

Smith, should have been included in Schedule F. He

further testified that when a debtor has filed a previous

bankruptcy petition, he will compare that petition with

the one he is working on; and Sinn recalled that he had

a copy of Smith’s 2004 petition and schedules, which of

course listed Robinson as the plaintiffs’ representative.

He also reviewed the completed petition with Smith

before Smith signed it. In the course of that review,

Sinn went through the listed creditors and asked Smith

whether there were any others that had not been listed;

had Smith identified anyone else, he would have

added them to the list of creditors. Sinn testified that

Smith never asked him to withhold any creditors from

the petition, and he would not have done so had Smith

asked. Sinn could not explain why, in preparing the

2005 petition, the suits filed by Tidwell and Sterling-Ahlla

were included in the Statement of Financial Affairs but

neither Tidwell nor Sterling-Ahlla were identified as

unsecured creditors in Schedule F. He testified that the

omission was “just an error” on his part, R. 5 Ex. A at 31,

and not a deliberate act of fraud or deception. He attributed the mistake to the heavy workload that he and his

firm were experiencing as debtors rushed to file for bankruptcy before the less consumer-friendly provisions of

the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect in October 2005. Finally, Smith
No. 08-3358 11

himself testified. Smith acknowledged that he had the

opportunity to and did review his second bankruptcy

petition before it was filed. Like Sinn, Smith denied

that the omission of Tidwell and Sterling-Ahlla from

Schedule F reflected an effort to hide their claims. Smith

said that he did not appreciate the significance of the

fact that Tidwell and Sterling-Ahlla had been omitted

from Schedule F. He relied on Sinn to prepare the

petition and make the appropriate disclosures; and it

was his understanding that everything that had been

disclosed on his first petition was included in the second. In response to questions posed by the court, Smith

disclosed that his former employer had failed to

purchase an insurance “tail rider” extending his claimsmade coverage for medical malpractice. Although

Smith’s insurer was providing him with a defense to

the suits filed by Tidwell and Sterling-Ahlla, it was his

understanding that he alone would be liable to pay any

judgment entered against him in those suits.

After hearing the evidence, the bankruptcy court concluded that the plaintiffs were entitled to proceed in

state court against Smith, and it entered an order to that

effect. Two key findings led the court to that conclusion.

First, the court found that Smith’s omission of Tidwell

and Sterling-Ahlla from the Schedule F he filed was

deliberate rather than inadvertent. When Smith signed

the 2005 petition, he subscribed to an oath that he had

read the schedules included with the petition and that

they were true and correct to the best of his knowledge.

379 B.R. at 320 ¶ 6. In fact, Schedule F was incomplete,
12 No. 08-3358

and because Smith was aware of the state-court litigation, had mentioned that litigation in his Statement of

Financial Affairs, had listed the attorney representing

Tidwell and Sterling-Ahlla in the Schedule F he filed

in support of his 2004 bankruptcy petition, and had a

financial motive for omitting the litigation from Schedule

F (as it was unlikely that his insurer would cover any

judgment entered against him), the court deemed Smith’s

oath to be “intentionally false.” 379 B.R. at 320 ¶ 7. The

court rejected attorney Sinn’s testimony that the

omission of Tidwell and Sterling-Ahlla resulted from a

simple error on his part. The court pointed out that Sinn

was knowledgeable and experienced in the preparation

of Chapter 7 bankruptcy petitions, that he typically

consulted the Schedule F filed with a prior bankruptcy

petition in preparing a second one, that he always reviewed the Statement of Financial Affairs before

finalizing the petition, and that he had included the suits

Tidwell and Sterling-Ahlla had filed in the Statement of

Financial Affairs. In view of those facts, the court found it

implausible that the failure to also include the suits on

Schedule F was a mere oversight. Id. at 320-21 ¶ 8.

Second, although the plaintiffs’ counsel, Robinson, did

receive notice of the 2005 bankruptcy before the deadline

for objecting to the dischargeability of any debt expired

and before Smith was granted a discharge, the court

deemed the notice too late and insufficiently enlightening

to obligate Robinson to act at that time. Id. at 327-30. The

court acknowledged that, pursuant to section 523(a)(3)(B),

an unscheduled, nondischargeable debt will be discharged so long as the creditor had notice or actual knowl-
No. 08-3358 13

The court was assuming that the deadline for objecting to the 3

dischargeability of a debt was January 8, 2006, although the

notice sent to creditors had specified January 9, 2006, as the

deadline.

edge of the bankruptcy in time to object to the dischargeability of the debt. Id. at 326. The court summarily

rejected as “absurd” Smith’s assertion that because the

plaintiffs’ claims were scheduled in his 2004 bankruptcy

petition, Tidwell and Sterling-Ahlla somehow should

have known of his 2005 petition, notwithstanding the

fact that they were never served with notice of the

second petition as a result of their omission from his list

of creditors. Id. at 324. On the other hand, the court did

agree that when Robinson’s office was served by fax on

December 23, 2005, with a copy of Smith’s motion to

transfer the two suits to the state court’s bankruptcy

calender, he was provided with actual notice of the pending bankruptcy, and through him Tidwell and SterlingAhlla were also given notice. Id. at 327. But due process

entitled the plaintiffs to reasonable notice. Id. at 326-27.

In the court’s view, that meant notice which alerted

the plaintiffs to key deadlines in time enough for them

to take action in compliance with those deadlines. Id. at

327-30. By the time Robinson received the fax, Smith’s

bankruptcy petition had been pending for nearly ninety

days, the creditors’ meeting had been held more than a

month earlier, and the deadline for filing objections to

the dischargeability of a debt was just sixteen days off.

See 379 B.R. at 328. Moreover, the motion served on 3

Robinson gave no warning of the imminent bar dates. Id.
14 No. 08-3358

Under those circumstances, the court concluded that the

belated notice Tidwell and Sterling-Ahlla were given of

Smith’s bankruptcy did not supply them with sufficient

time and information to take appropriate action while

the bankruptcy proceeding was still open. Id. at 327-30.

The bankruptcy court consequently deemed Count I of

the plaintiffs’ adversary complaints to have been timely

filed and allowed their complaints to stand as an objection to dischargeability pursuant to sections 523(a)(3)(B),

523(a)(6), and 523(c)(1), id. at 330, 331; and the court

indicated that the discharge injunction would be

amended to allow the plaintiffs’ state-court cases to

proceed to final judgment, id. at 331. The court dismissed

Counts II and III of their adversary complaints, which

had sought revocation of the discharge pursuant to

section 727(d)(1). Id. at 325, 327. Relief under that provision is appropriate when the debtor procured his discharge through fraud, and the party requesting revocation did not learn of the fraud until after the discharge

was granted. Id. at 325; see, e.g., Citibank, N.A. v. Emery (In

re Emery), 132 F.3d 892, 895 (2d Cir. 1998); United States

v. Willey, 57 F.3d 1374, 1392 n.33 (5th Cir. 1995). Those

requirements normally are read strictly in favor of the

debtor, as revoking a discharge reinstates all debts and

thus wholly deprives the debtor of the fresh start that

Chapter 7 is intended to give him. 379 B.R. at 325; see

Wood v. Cochard (In re Cochard), 177 B.R. 639, 642 (Bankr.

E.D. Mo. 1995). Here, Tidwell and Sterling-Ahlla became

aware of Smith’s bankruptcy in advance of his discharge,

obviously knew that they had not been properly notified

of the bankruptcy, and with quick investigation might
No. 08-3358 15

have determined before the discharge issued that Smith’s

failure to include them on his list of unsecured creditors

was intentional. Still, given that they had only days in

which to make that determination, the court was willing

to assume that the plaintiffs were not on notice of the

fraud until after the discharge and that they were

entitled to seek revocation of the discharge. 379 B.R. at

325. But, in view of the relief available to Tidwell and

Sterling-Ahlla under section 523(a)(3)(B), which the

court viewed as a more appropriate vehicle for relief, the

court found it unnecessary to entertain the possibility of

revoking Smith’s discharge. Id. Given that the plaintiffs’

claims against Smith had not yet been liquidated, the

court elected to postpone decision as to the dischargeability of the claims until such time as judgments were

entered in the state-court actions. Id. at 330. If Tidwell

and Sterling-Ahlla were successful in their state-court

proceedings against Smith, they could return to the

bankruptcy court to seek judgments of nondischargeability. Id. at 330-31.

Smith appealed to the district court, which affirmed the

bankruptcy court’s decision. 2008 WL 4067306. The court

found no fault with the bankruptcy court’s determination

that Smith had committed fraud by intentionally

omitting Tidwell and Sterling-Ahlla from Schedule F.

Smith’s debt to the plaintiffs was potentially nondischargeable, and given that his malpractice insurer

might not cover any judgment entered in favor of the

plaintiffs, the court agreed that it was a permissible

inference that Smith had intentionally failed to schedule

their claims. Id., at *2. “Since the evidence disclosed that
16 No. 08-3358

Smith had lost his job, undoubtedly as a result of the

alleged intentional tort, the reason for filing the bankruptcy petition must have been, at least in part, to avoid

personal liability to [Tidwell and Sterling-Ahlla].” Id.

Alternatively, even assuming that the finding of fraud

might be clearly erroneous, the court found “compelling”

the bankruptcy court’s additional finding that the plaintiffs, although they did learn of the bankruptcy prior to

the discharge, did not receive the timely and sufficient

notice to which due process entitled them. Id., at *3. Not

only did Tidwell and Sterling-Ahlla not receive notice

of Smith’s petition until almost three months after he

filed it, but the motion informing them of Smith’s petition

did not include any information regarding the date

and result of the creditors’ meeting. Therefore, Tidwell

and Sterling-Ahlla could not calculate the bar date for

objecting to discharge or dischargeability. Id., at *3. The

court noted that a central consideration in evaluating

the reasonableness of the notice given to a creditor in a

bankruptcy proceeding is whether the notice left the

creditor without “sufficient time to take meaningful

action,” such that the creditor was actually prejudiced. Id.

(citing Hartigan v. Peters, 871 F.2d 1336, 1340 (7th Cir.

1989)). Here, the timing of the notice prejudiced the

creditors because it was given only two days before

Christmas, a normally quiet period for attorneys. Id.

Also, given that Robinson is not a bankruptcy attorney,

and thus was not knowledgeable about the procedures

and practices of bankruptcy proceedings, the belated

notice he received of the bankruptcy did not give him

sufficient time to take meaningful action. Id. The
No. 08-3358 17

district court noted finally that Smith was not without

recourse, because he still would have the opportunity

to defend the two state-court cases, and even if he lost

either or both, he would also have the right to object to

making the debts nondischargeable in the bankruptcy

court. Id.

II.

We have jurisdiction to review the district court’s

affirmance of the bankruptcy court, provided that the

bankruptcy court’s order is appropriately characterized

as a “final” decision. 28 U.S.C. § 158(d)(1); see Zedan v.

Habash, 529 F.3d 398, 402 (7th Cir. 2008) (citing In re

Salem, 465 F.3d 767, 771 (7th Cir. 2006)). Finality in the

context of bankruptcy jurisprudence is “ ‘considerably

more flexible than in an ordinary civil appeal taken

under 28 U.S.C. § 1291.’ ” Id. at 402 (quoting In re Gould,

977 F.2d 1038, 1040-41 & n.2 (7th Cir. 1992)). An order of

the bankruptcy court may be considered final, and thus

immediately appealable, when it definitively resolves a

discrete dispute within the larger case. In re Comdisco, Inc.,

538 F.3d 647, 651 (7th Cir. 2008) (quoting In re Saco Local

Dev. Corp., 711 F.2d 441, 444 (1st Cir. 1983) (Breyer, J.)); see

also Chiplease, Inc. v. Steinberg (In re Resource Tech. Corp.),

528 F.3d 467, 474 (7th Cir.), cert. denied, 129 S. Ct. 636 (2008).

The order at issue here arose from a stand-alone, postdischarge proceeding commenced by Tidwell and SterlingAhlla which sought, among other relief, modification of

the discharge injunction to permit their lawsuits against

Smith in state court to proceed. See Hendrix v. Page (In re
18 No. 08-3358

Hendrix), 986 F.2d 195, 197 (7th Cir. 1993). The bankruptcy

court’s decision to grant that request ends this stand-alone

proceeding for now. The court did not reach the

dischargeability of the claims that Tidwell and SterlingAhlla have filed against Smith; resolution of that

issue has been postponed pending the outcome of the

litigation in state court. That may take years; and if

neither of the plaintiffs prevails in her lawsuit against

Smith, then there will be no further action for the bankruptcy court to take. In the meantime, Smith must

defend himself in the lawsuits (although his insurer

apparently will supply that defense) with the prospect of

being held liable to Tidwell and Sterling-Ahlla (and

possibly with no insurance coverage) hanging over his

head. To that extent, the district court’s decision to

allow the state-court suits to go forward has already

deprived him of the fresh start that the discharge

order otherwise gave him. The bankruptcy court’s order

was therefore final for purposes of section 158(d)(1) and

we have jurisdiction to review the district court’s

decision to affirm that order. See Staffer v. Predovich (In re

Staffer), 306 F.3d 967, 970-71 (9th Cir. 2002) (deeming final

and appealable denial of motion to reopen bankruptcy

for purpose of filing of adversary complaint to determine

dischargeability of unscheduled debt); Hendrix, 986 F.2d

at 197 (bankruptcy court’s order granting creditors’

motion to modify discharge to permit them to reopen statecourt personal-injury lawsuit for purpose of proceeding against debtor’s insurance carrier was final,

appealable order); In re Barnes, 969 F.2d 526, 527-28 (7th

Cir. 1992) (order granting debtor’s motion to reopen
No. 08-3358 19

bankruptcy and declare unscheduled debt discharged

was final and appealable).

Because our review in a bankruptcy appeal is plenary,

we apply the same standards that the district court did

in reviewing the bankruptcy court’s decision. Wiese v.

Cmty. Bank of Cent. Wis. (In re Wiese), 552 F.3d 584, 588 (7th

Cir. 2009) (citing Corp. Assets, Inc. v. Paloian, 368 F.3d 761,

767 (7th Cir. 2004)); see also Fed. R. Bankr. P. 8013. We

examine the bankruptcy court’s determinations of law

de novo and its findings of fact for clear error. Wiese,

552 F.3d at 588 (citing In re ABC-Naco, Inc., 483 F.3d

470, 472 (7th Cir. 2007)); Rule 8013. “A finding is ‘clearly

erroneous’ when although there is evidence to support

it, the reviewing court on the entire evidence is left

with the definite and firm conviction that a mistake has

been committed.” United States v. U.S. Gypsum Co., 333

U.S. 364, 395, 68 S. Ct. 525, 542 (1948).

Smith’s initial challenge is to the bankruptcy court’s

factual determination that his failure to schedule Tidwell

and Sterling-Ahlla’s lawsuits was fraudulent, but we

need not decide whether or not that finding was clearly

erroneous. Fraud is a prerequisite to revocation of the

debtor’s discharge pursuant to section 727(d)(1). E.g.,

Citibank, N.A. v. Emery, supra, 132 F.3d at 895. Revocation

of Smith’s discharge was one of the forms of relief that

Tidwell and Sterling-Ahlla sought in their adversary

complaints. But the bankruptcy court deemed that

harsh remedy—which as we have noted would have

reinstated all of Smith’s debts, not just his debts to Tidwell

and Sterling-Ahlla, see Wood v. Cochard, supra, 177 B.R. at
20 No. 08-3358

642—inappropriate in view of the relief available to

the plaintiffs under section 523; the court therefore dismissed the portions of the adversary complaints seeking

revocation. That aspect of the bankruptcy court’s decision

has not been challenged in this appeal. All that need

be shown to establish a right to relief under section

523(a)(3)(B) is that the debt in question was unscheduled and the creditor did not have notice or actual knowledge of the bankruptcy in time to file a claim and a

request for a determination that the debt was nondischargeable. See Judd v. Wolfe (In re Wolfe), 78 F.3d 110, 115-

16 (3d Cir. 1996); Beezley v. Calif. Land Title Co. (In re

Beezley), 994 F.2d 1433, 1437 (9th Cir. 1993) (O’Scannlain, J.,

concurring); Byrd v. Alton (In re Alton), 837 F.2d 457,

460 (11th Cir. 1988) (per curiam); Neeley v. Murchison, 815

F.2d 345, 347 (5th Cir. 1987). Whether or not the debtor’s

failure to schedule the debt was deliberate is irrelevant.

Alton, 837 F.2d at 459 (creditor holding nondischargeable

claim who received actual notice of pending bankruptcy

in time to seek declaration of nondischargeability prior to

bar date was precluded from seeking relief after debtor’s

discharge, notwithstanding possibility that debtor may

have deliberately failed to list creditor: “Despite the

misleading actions, inadvertent or intentional, of debtor

Alton, the time specifications set out in the Bankruptcy

Code are sufficiently clear to have placed an obligation

on creditor Byrd to follow the case and to take the

timely action necessary to pursue his claim. We leave it

to the Bankruptcy Court to decide whether debtor

Alton’s actions, if in bad faith, can and should affect

confirmation of his reorganization plan.”); Stucker v.
No. 08-3358 21

As a number of courts, including our own, have indicated, the 4

debtor’s mental state in omitting a known creditor may be

relevant to the question of whether an unscheduled debt that

was otherwise dischargeable under 523(a)(3)(A) was, in fact,

discharged. See Stark v. St. Mary’s Hosp. (In re Stark), 717 F.2d

322, 324 (7th Cir. 1983) (per curiam) (allowing debtor in no-asset

case to reopen bankruptcy to add omitted creditor holding

otherwise dischargeable debt “where there is no evidence

of fraud or intentional design”); see also Colonial Sur. Co. v.

Weizman, 564 F.3d 526, 532 (1st Cir. 2009) (endorsing Stark’s

approach); Stone v. Caplan (In re Stone), 10 F.3d 285, 291 (5th Cir.

1994) (collecting cases for proposition that “a court should not

discharge a debt under section 523(a)(3)[(A)] if the debtor’s

failure to schedule that debt was due to intentional design,

fraud, or improper motive”). But see Lauren A. Helbling &

Christopher M. Klein, The Emerging Harmless Innocent

Omission Defense to Nondischargeability Under Bankruptcy Code

§ 523(a)(3)(A): Making Sense of the Confusion Over Reopening

Cases and Amending Schedules to Add Omitted Debts, 69 Am.

Bankr. L. J. 33 (1995) (criticizing analysis of Stark and similar

cases which have considered debtor’s mental state in omitting

debt as relevant to whether bankruptcy case should be

reopened to permit amendment of schedules in order to add

debts that were omitted innocently and proposing instead

recognition of equitable, harmless innocent omission defense to

(continued...)

Cardinal Bldg. Materials, Inc. (In re Stucker), 153 B.R. 219, 222

(Bankr. N.D. Ill. 1993) (“there is nothing in the text of

section 523(a)(3)(A) or (B) which references a debtor’s

state of mind with regard to the omission in scheduling a

creditor’s claim”); see also Mendiola, supra, 99 B.R. at 869-

70). Thus, as the district court recognized, the bank

4
22 No. 08-3358

(...continued) 4

§ 523(a)(3)(A) nondischargeability actions). But, as stated

above, the debtor’s state of mind is not relevant to whether

an unscheduled debt that was otherwise nondischargeable

under section 523(a)(2), (4), or (6) was nonetheless discharged pursuant to section 523(a)(3)(B).

ruptcy court’s additional finding that Tidwell and SterlingAhlla lacked timely notice of Smith’s bankruptcy is by

itself sufficient to sustain the court’s decision to allow

their state-court suits to go forward. 2008 WL 4067306,

at *3.

Smith also argues that despite his failure to include them

in his Schedule F, Tidwell and Sterling-Ahlla were on

notice of his 2005 bankruptcy petition and thus were

obliged to seek relief from the bankruptcy court before

he was discharged. He relies principally on the motion

to transfer Tidwell and Sterling-Ahlla’s lawsuits to the

state court’s bankruptcy calendar that was served on

their attorney by fax on December 23, 2005. Smith asserts

that the motion made the plaintiffs aware of the pending

bankruptcy proceeding in time enough for them to

object to the discharge of their claims before the bar date.

He secondarily contends that because Tidwell and SterlingAhlla were previously identified (through their attorney)

as unsecured creditors on Schedule F of his 2004 petition,

they should somehow have been aware of his 2005 petition.

The adequacy of the notice that Tidwell and SterlingAhlla received presents a mixed question of law and fact,

in that it calls for the application of legal standards to the
No. 08-3358 23

unique facts of this case. See Thomas v. Gen. Motors Acceptance Corp., 288 F.3d 305, 307 (7th Cir. 2002). A lower

court’s answer to such a question is normally reviewed

for clear error, although de novo review is required as

to certain mixed findings, usually those having a constitutional dimension. Id. The constitutional mandate of

due process does come into play here. Still, our decision

in United States v. Kirtley, 5 F.3d 1110, 1111-12 (7th Cir.

1993), which considered whether the notice given to a

defendant of the violations that led to revocation of his

probation complied with due process as well as the

relevant rule of criminal procedure, points toward

review for clear error. However, other decisions considering the sufficiency of notice in various contexts,

emanating from this circuit and others, have engaged in

de novo review. E.g., Brawders v. County of Ventura (In re

Brawders), 503 F.3d 856, 866 (9th Cir. 2007) (adequacy of

notice regarding proposed modification of creditors’

rights in Chapter 13 bankruptcy plan); Peralta-Cabrera v.

Gonzales, 501 F.3d 837, 843 (7th Cir. 2007) (adequacy of

notice of deportation hearing); DeJulius v. New England

Health Care Employees Pension Fund, 429 F.3d 935, 942 (10th

Cir. 2005) (adequacy of notice procedures in securities

fraud class action); Lobzun v. United States, 422 F.3d 503,

507 (7th Cir. 2005) (adequacy of forfeiture notice procedures). We need not explore the subject further; our

decision would be the same regardless of what degree

of appellate scrutiny we applied.

We agree with both the bankruptcy and district courts

that the motion to transfer did not supply Tidwell and

Sterling-Ahlla with adequate notice of Smith’s second
24 No. 08-3358

bankruptcy, such that they were required to act before

Smith was discharged and the bankruptcy proceeding

was closed. Although it is undisputed that the plaintiffs’ attorney did become aware of the pending bankruptcy as a result of that motion, and that he acquired that

knowledge while there was still some time left in the

bankruptcy proceeding for Tidwell and Sterling-Ahlla

to file proofs of claim and to seek a declaration that

their claims were nondischargeable, this alone does not

establish that the notice was adequate. “An elementary

and fundamental requirement of due process in any

proceeding which is to be accorded finality is notice

reasonably calculated, under all the circumstances, to

apprise interested parties of the pendency of the action

and afford them an opportunity to present their objections.” Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S.

306, 314, 70 S. Ct. 652, 657 (1950). The notice must not

only reasonably convey the required information, but it

must also “afford a reasonable time for those interested

to make their appearance.” Id. at 314, 70 S. Ct. at 657. A key

function of the notice provided to a creditor in a bankruptcy proceeding is to give the creditor the opportunity to file a proof of claim and, where the debt is

potentially nondischargeable, to request a determination

of nondischargeability. Chanute Prod. Credit Ass’n v.

Schicke (In re Schicke), 290 B.R. 792, 800 (10th Cir. B.A.P.

2003), aff’d without published op., 97 Fed. Appx. 249 (10th

Cir. 2004); In re O’Shaughnessy, 252 B.R. 722, 732 (Bankr.

N.D. Ill. 2000) (quoting In re Marino, 195 B.R. 886, 894

(Bankr. N.D. Ill. 1996)); see generally Zurich Am. Ins. Co. v.

Tessler (In re J.A. Jones, Inc.), 492 F.3d 242, 249 (4th Cir.
No. 08-3358 25

2007); United States v. Hairopoulos (In re Hairopoulos), 118

F.3d 1240, 1244-45 (8th Cir. 1997); Chemetron Corp. v. Jones,

72 F.3d 341, 348 (3d Cir. 1995).

The motion to transfer did not serve these interests.

Robinson’s office did not receive a copy of the motion

to transfer until December 23, 2005, almost ninety days

after Smith filed his bankruptcy petition and well over a

month after the creditors’ meeting on November 8, 2005.

The motion revealed little more than the pendency of

Smith’s bankruptcy; it said nothing as to when the bankruptcy was filed, whether or when a creditors’ meeting

had taken place, or when objections to discharge or to

the dischargeability of any debt were due. Thus, Robinson

had no way of knowing without further investigation

how much time remained for Tidwell and Sterling-Ahlla

to preserve their rights as creditors. Because the notice

was given only sixteen or seventeen days before the

deadline for dischargeability complaints (see n.3, supra),

there was little time left at that point for Robinson to

investigate the bankruptcy, ascertain the relevant deadlines, and take appropriate action before the bar date

in January. Moreover, Robinson is not a bankruptcy

specialist; he is a personal injury attorney. Even if he

had seen the notice on December 23, 2005 (rather than on

January 4, 2006 when he returned to his office), it is still

unlikely he would have had sufficient time to discuss

the appropriate course of action with an attorney who

specializes in bankruptcy law, consult with his clients,

and file the appropriate documents before the deadline

for objecting to the dischargeability of his clients’ claims

expired. This is particularly so given that the motion
26 No. 08-3358

was served during the end-of-year period when many

people are occupied with holidays, vacations, and family

events and little business is transacted. On these facts,

the minimal notice belatedly supplied by way of the

motion to transfer did not give the plaintiffs a reasonable opportunity to take appropriate action before the

deadline for objecting to dischargeability passed and

before Smith was discharged. See Mfrs. Hanover v. Dewalt

(In re Dewalt), 961 F.2d 848, 851 (9th Cir. 1992) (in most

cases, at least thirty days’ notice to creditor is necessary

and sufficient to satisfy § 523(a)(3)(B); notice supplied

seven days prior to bar date is insufficient); Sophir Co. v.

Heiney (In re Heiney), 194 B.R. 898, 902-03 (D. Colo. 1996)

(notice received eighteen days prior to bar date insufficient); In re Walker, 149 B.R. 511, 515-17 (Bankr. N.D. Ill.

1992) (knowledge of bankruptcy acquired by unrepresented creditor twenty days prior to bar date insufficient);

cf. Muse v. Muse (In re Muse), 289 B.R. 619, 623-24 (Bankr.

W.D. Pa. 2003) (notice provided seventy-seven days

prior to deadline for nondischargeability complaint

sufficient); Herman v. Bateman (In re Bateman), 254 B.R. 866,

874-75 (Bankr. D. Md. 2000) (notice received twenty-six

days prior to bar date sufficient); Marino, 195 B.R. at 895-

97 (two months’ notice was adequate); but see also Grossie

v. Sam (In re Sam), 894 F.2d 778, 781-82 (5th Cir. 1990)

(eighteen days’ notice sufficient).

The notion that Sterling-Ahlla and Tidwell were on

inquiry notice that Smith might have filed a bankruptcy

petition in 2005 because their attorney had been

scheduled and notified of his 2004 petition is untenable.
No. 08-3358 27

The 2004 petition had been dismissed for “substantial

abuse” of the Chapter 7 process in light of Smith’s

income and expenses at that time. It was not inevitable

that Smith would file a second petition, and of course the

plaintiffs had no way of divining when he might do so. See

Mountain West Fed. Credit Union v. Stradinger (In re

Stradinger), Bankr. No. 05-65113-7, 2007 WL 2319812, at *7

(Bankr. D. Mont. Aug. 9, 2007) (knowledge that debtor

was contemplating bankruptcy does not amount to

notice that she in fact filed bankruptcy petition at later

date) (coll. cases). In any case, Tidwell and Sterling-Ahlla

were entitled to prompt notice that Smith had filed a

second bankruptcy petition—the same notice that most

of his other creditors did receive—and it is undisputed

that they were not given this notice. The first and only

notice they received was the motion to transfer, which as

we have discussed was too little and too late to enable

them to take appropriate action before Smith was discharged.

Because Tidwell and Sterling-Ahlla were not given

timely and sufficient notice of Smith’s bankruptcy for

them to file complaints to determine the nondischargeability of their claims in compliance with the

schedule set by the bankruptcy court, they remained free

to file such complaints at any time. Fed. R. Banker. P.

4007(b); Staffer v. Predovich, supra, 306 F.3d at 971-72; see also

Walker, 149 B.R. at 516-17; Mendiola, 99 B.R. at 868 n.6; In

re Eliscu, 85 B.R. 480, 481 (Bankr. N.D. Ill. 1988). Laches

might be a defense to a complaint filed long after an

unscheduled creditor learns of the debtor’s bankruptcy. See
28 No. 08-3358

Staffer, 306 F.3d at 973. But because no such defense has

been raised here, we need not explore that possibility.

III.

Under these circumstances, the bankruptcy court appropriately exercised its discretion to allow the state-court

cases against Smith to proceed. It committed no error in

finding that Tidwell and Sterling-Ahlla received insufficient notice of Smith’s petition to have compelled them

to take action to preserve their rights before the bar date

and before Smith was discharged; their post-discharge

adversary complaints and requests for leave to proceed

with the state-court litigation were therefore timely.

AFFIRMED.

9-23-09