United States Bankruptcy Appellate Panel

For the Eighth Circuit

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No. 13-6041

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In re: Jackie L. Bennett, also known as Jackie L. Haymon, also known as Jackie L.

Barfield

lllllllllllllllllllllDebtor

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Bong H. Chae

lllllllllllllllllllllCreditor - Appellant

v.

Jackie L. Bennett

lllllllllllllllllllllDebtor - Appellee

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 Appeal from United States Bankruptcy Court 

for the District of Nebraska - Omaha

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 Submitted: October 29, 2013

 Filed: November 13, 2013

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Before KRESSEL, SCHERMER and SHODEEN, Bankruptcy Judges. 

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SCHERMER, Bankruptcy Judge
Bong H. Chae appeals from the orders of the bankruptcy court denying his 1

requests for relief from the automatic stay and for abstention and remand. We have

jurisdiction over this appeal from the final orders of the bankruptcy court. See 28

U.S.C. § 158(b). For the reasons set forth below, we affirm.

ISSUE

The main issue in this appeal is whether the bankruptcy court properly denied

Mr. Chae’s request for relief from the automatic stay. We also consider whether Mr.

Chae was entitled to relief on his request for the bankruptcy court to abstain and

remand. We hold that the bankruptcy court properly denied Mr. Chae’s request for

stay relief, and that there was no basis for an order of abstention and remand.

BACKGROUND 

In February, 2013, debtor Jackie L. Bennett (the “Debtor”), filed a voluntary

petition for relief under Chapter 7 of Title 11 of the United States Code (the

“BankruptcyCode”). The record reflects that Mr. Chae wasserved with a copy of the

Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines (the

“Notice”) in the Debtor’s bankruptcy case. The Notice clearly states that May 20,

2013 is the “Deadline to Objection to Debtor’s Discharge or to Challenge

Dischargeability of Certain Debts.” 

Pre-petition, Mr. Chae filed an action in state court against the Debtor, alleging

malpractice, negligence and fraud. The state court action was pending on the petition

date, and was therefore stayed by the Debtor’s bankruptcy filing. Thereafter, Mr.

Chae filed his motion for relief from the stay and for abstention and remand in the

bankruptcy court. 

The Honorable Timothy J. Mahoney, United States Bankruptcy Judge

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for the District of Nebraska.

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The bankruptcy court held a hearing on May 24, 2013 and denied Mr. Chae

request for stay relief. Because Mr. Chae was not able to participate in the May 24,

2013 hearing, the bankruptcy court granted Mr. Chae’s motion to have the hearing

rescheduled to a later date. The hearing was rescheduled for June 17, 2013. In the

meantime, the Debtor obtained a Chapter 7 discharge on May 27, 2013. 

After a June 17, 2013 hearing at which both parties appeared, the bankruptcy

court made its findings of fact and conclusions of law on the record. The bankruptcy

court stated that Mr. Chae’s malpractice and negligence actions are dischargeable

debts in the Debtor’s Chapter 7 case. Mr. Chae’s fraud case would be dismissed if

he did not file an adversary proceeding by the applicable deadline, which he did not

do, and the discharge obtained by the Debtor discharged the fraud claim. Mr. Chae

received notice of the deadline for filing an adversary proceeding regarding his fraud

claim. There was nothing left for Mr. Chae to litigate in state court, because all of his

alleged causes of action had been discharged. The bankruptcy court entered text

orders denying Mr. Chae’s requests for stay relief or for the bankruptcy court to

abstain and remand. Mr. Chae then filed his timely notice of appeal of the bankruptcy

court’s June 17, 2013 orders. 

Thereafter, Mr. Chae filed a motion asking the bankruptcy court to set forth its

findings of fact and conclusions of law in writing. On July 3, 2013, the bankruptcy

court entered an order setting forth (verbatim) the statements that the court made on

the record at the June 17, 2013 hearing. 

STANDARD OF REVIEW

The bankruptcy court’s findings of fact are reviewed for clear error, and its

conclusions of law are reviewed de novo. Seaver v. New Buffalo Auto Sales (In re

Hecker), 496 B.R. 541, 548 (B.A.P. 8th Cir. 213) (citation omitted). We review the

bankruptcy court’s decision regarding whether to grant relief from the automatic stay

for an abuse of discretion. Crossroads Ford, Inc. v. Dealer Computer Servs., Inc. (In

re Crossroads Ford, Inc.), 449 B.R. 366, 367 (B.A.P. 8th Cir. 2011) (citation

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omitted). “An abuse of discretion will be found if the court’s judgment was based on

clearly erroneous factual findings or erroneous legal conclusions.” Id. (citation

omitted). 

DISCUSSION

The bankruptcy court did not abuse its discretion by denying Mr. Chae’s

request for relief from the automatic stay. It correctly determined that there was no

purpose for granting stay relief since the malpractice and negligence actions were

dischargeable debts, and the fraud claim was discharged when Mr. Chae failed to file

an adversary proceeding by the deadline to do so. As the bankruptcy court noted, all

of Mr. Chae’s causes of action had been discharged. 

Section 523(c)(1) of the Bankruptcy Code provides that:

the debtor shall be discharged from a debt of a kind specified in

paragraph (2), (4), or (6) of subsection (a) of this section, unless, on

request of the creditor to whom such debt is owed, and after notice and

a hearing, the court determines such debt to be excepted from discharge

under paragraph (2), (4), or (6) , as the case may be, of subsection (a) of

this section.

11 U.S.C. § 523(c)(1). In turn, Bankruptcy Code § 523(a)(2)(A) governs actions to

except a debt from a debtor’s discharge “for money, property, services or an

extension, renewal, or refinancing of credit, to the extent obtained by . . . false

pretenses, a false representation, or actual fraud . . . .” 11 U.S.C. § 523(a)(2)(A). 

Federal Rule of Bankruptcy Procedure 4007 setsforth the time to file an action under

§ 523(c) (including a fraud claim under § 523(a)(2)(A)). Fed. R. Bankr. P. 4007(c). 

It states that:

a complaint to determine the dischargeability of a debt under § 523(c)

shall be filed no later than 60 days after the first date set for the meeting

of creditors under § 341(a). The court shall give all creditors no less

than 30 days’ notice of the time so fixed in the manner provided in Rule

2002. On motion of a party in interest, after hearing on notice, the court

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for cause may extend the time fixed under this subdivision. The motion

shall be filed before the time expires. 

Id. The record reflects that in February, 2013, the bankruptcy court entered its

Notice, and the Notice states that the meeting of creditors was scheduled for March

21, 2013, and May 20, 2013 was the “Deadline to Objection to Debtor’s Discharge

or to Challenge Dischargeability of Certain Debts.” The Notice was served on Mr.

Chae in February, 2013. The bankruptcy court properly found that Mr. Chae had

notice of the deadline for filing an adversary proceeding. There is no record of a

request by Mr. Chae, prior to the May 20, 2013 deadline, to extend the deadline to file

his fraud action. 

In addition, the bankruptcy court was correct when it denied the relief

requested by Mr. Chae because the stay was not in effect at the time when the

bankruptcy court entered the orders from which Mr. Chae appeals. The Debtor

obtained a discharge prior to the date when the bankruptcy court held its rescheduled

hearing and entered the orders. See 11 U.S.C. § 362(c)(2) (The automatic stay expires

upon the earliest of closing of the case, dismissal of the case or, in the Chapter 7 case

of an individual, the time when the bankruptcy court either grants or denies a

discharge.). 

For the same reason that there was no reason to grant Mr. Chae’s request for

stay relief, there was also no reason for the bankruptcy court to abstain and remand

the case to the state court. As the bankruptcy court noted, there were no remaining

causes of action by Mr. Chae because all of them were discharged. In addition, there

was nothing to abstain from hearing or to remand because Mr. Chae never removed

his state court action to the bankruptcy court, and there was no action pending in the

bankruptcy court asking for the relief Mr. Chae sought in his state court action. 

CONCLUSION

For the reasons stated, we affirm.

 

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