# U ni te d S ta te s B an kr up tc y A pp el la te P an el For the Eig hth Circu it

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No. 1 3- 60 41

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In re: Jac ki e L. Ben ne tt , als o k no wn as Jac ki e L. Hay m on , als o k no wn as Jac ki e L. Barf ie ld

ll ll ll ll ll ll ll ll ll ll l Deb to r

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Bo ng H. Chae

ll ll ll ll ll ll ll ll ll ll l Cr ed it or

- App el la nt

v.

Ja ck ie L. Benn et t

ll ll ll ll ll ll ll ll ll ll l Deb to r - Ap pe ll ee

__

__ __ __ __ __ App eal fro m

Uni te d S ta te s B an kr up tc y Co ur t fo r th e Dis tri ct of Ne br as ka - Om ah a

__

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Su bm it te d: Octo be r 29 , 20 13 Fil ed : No ve m

be r 13 , 20 13

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Befo re KRESSEL, SCHERM ER an d S HODEEN, Ban kr up tc y Ju dg es

.

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SCHERM ER, Ban kr up tc y Ju dg eBo ng H. Ch ae ap pe al s fro m th e or de rs of th e ba nk ru pt cy co ur t de nyin g h is 1

req ue st s fo r rel ie f fro m th e au to m at ic st ay an d for abs te nt io n and rem an d. W e ha ve juri sd ic ti on ov er th is ap pe al fro m th e fin al or de rs of t h e b a n k r u p t cy co ur t. Se e 28 U.S.C. § 1 58 (b ). For th e rea so ns set for th be lo w, we affi rm

.

IS SUE The m ai n is su e in th is ap pe al is whe th er th e ba nk ru pt cy co ur t pr op erl y de ni ed
Mr. Ch ae’s req ue st fo r rel ie f fro m th e au to m at ic st ay

. W e al so co ns id er whe th er Mr.
Ch ae was en ti tl ed to rel ie f on hi s req ue st fo r th e ba nk ru pt cy co ur t to ab s t a i n a nd

rem an d. We ho ld th at th e ba nk ru pt cy co ur t p ro pe rly den ie d M r. Ch ae’s req ue st for

st ay rel ie f, an d t ha t t he re was no ba si s fo r an ord er o f ab st en ti on an d re m an d.

BACKGRO UND In Feb ru ary, 20 13 , deb to r Ja ck ie L. B en ne tt (th e “ Deb to r”), fil ed a vo lu nt ary
pe ti ti on fo r rel ie f un de r Ch ap te r 7 of Tit le 11 of th e Uni te d St a te s Co de (th e

“ Ban kr up tc y Co de ”). The reco rd refl ect s th at Mr. Ch ae was se rv ed wit h a co py of th e No ti ce of Ch ap te r 7 Ba nk ru pt cy Ca se , Meet in g of Cr ed it or s, & Dea dl in es (th e

“ Not ic e”) in th e Deb to r’s ba nk ru pt cy cas e. The Not ic e cl earl y st at es th at May 20
, 20 13 is th e “De a d l in e to Object io n to Deb to r’s Dis ch arg e or to Ch al le ng e Dis ch arg eab il it y

of C ert ai n Deb ts .”

Pre- pe ti ti on , Mr. Ch ae fil ed an act io n in st at e co ur t ag ai ns t th e Deb to r, al le gi ng

m al pr act ic e, ne gl ig en ce an d frau d. The st at e co ur t act io n was pe nd in g on th e pe ti ti on da te , an d was th eref

or e st ay ed b y t h e Deb to r’s ba nk ru pt cy fil in g. The reaf te r, Mr.
Ch ae fil ed hi s m ot io n fo r rel ie f fro m th e st ay an d fo r a b st en ti on an d rem an d in th e ba nk ru pt cy

co ur t.

The Hon or a b l e Tim ot hy J. Mah on ey , Uni te d St at es Ban kr up tc y Ju dg e 1 fo r th e Dis tri ct of Ne br as ka

.

2The ba nk ru pt cy co ur t he ld a he ari ng on May 24
, 20 13 an d de ni ed Mr. Ch ae

req ue st fo r st ay rel ie f. Bec au se Mr. Chae was no t ab le to pa rti ci pa te in th e May 24
, 20 13 he ari ng , th e ba nk ru pt cy co ur t gr an te d Mr. Ch ae’s mo t io n to ha ve th e he ari ng

res ch ed ul ed to a la te r da te

. The he ari ng was res ch ed ul ed for Ju ne 17 , 20 13 . In th e

m ean ti m e, th e Deb to r ob ta in ed a Ch ap te r 7 d is ch arg e o n M ay 27 , 20 13

.

Afte r a Ju ne 17
, 20 13 he ari ng at whi ch bo th pa rti es ap pe ared
, th e ba nk ru pt cy

co ur t m ad e it s fin di ng s of fact an d co nc lu si on s of la w on th e reco rd

. The ba nk ru pt cy

co ur t s t a t e d th at Mr. Ch ae’s m al pr act ic e an d ne gl ig en ce act io ns are di sc ha rg eab le
de bt s in th e Deb to r’s Ch ap te r 7 cas e. Mr. Ch ae’s frau d cas e w o u l d be di sm is se d if
he di d no t fil e an ad ve rs ary pr oc eed in g by th e ap pl ic ab le de ad li ne , whi ch he di d no t do
, an d th e di sc ha rg e ob ta in ed by th e Deb to r di sc ha rg ed th e frau d clai m

. Mr. Chae

rece iv ed no ti ce of th e de ad li ne fo r fil in g an ad ve rs ary pr oc eed in g reg ard in g hi s frau d
cl ai m

. The re was no th in g le ft fo r Mr. Ch ae to li ti ga te in st at e co ur t, be cau se al l of hi s al le ge d cau se s of act io n h a d be en di sc ha rg ed

. The ba nk ru pt cy co ur t en te red te xt

or de rs de nyin g Mr. Ch ae’s req ue st s fo r st ay rel ie f or fo r th e ba nk ru p t c y c o u r t to ab st ai n an d rem an d. Mr. Ch ae th en fil ed hi s ti m el y no ti ce of ap pe al of th e ba nk ru pt cy

co ur t’s J un e 1 7, 2 01 3 o rd ers

.

The reaf te r, Mr. Ch ae fil ed a m ot io n as ki ng th e ba nk ru pt cy co ur t to se t fo rth it s fin di ng s of fact and co nc lu si on s of law in writ in g. On Ju ly 3, 20 13
, th e ba nk ru pt cy

co ur t en te red an or de r se tt in g fo rth (v erb at im ) th e st at em en ts th at th e co ur t m ad e on th e rec or d a t t he Ju ne 17 , 20 13 he ari ng

.

STANDARD OF REVIEW The ba nk ru pt cy co u r t ’s fin di ng s of fact are rev ie wed fo r cl ear erro r, an d it s

co nc lu si on s of la w are rev ie wed de no vo

. Se av er v. New Bu f f a l o Au to Sa le s (In re Hecke r)

, 49 6 B.R. 54 1, 54 8 (B.A.P. 8t h Ci r. 21 3) (ci ta ti on om it te d)

. W e rev ie w th e ba nk ru pt cy co ur t’s de ci si on reg ard in g whe th er to gr an t rel ie f fro m th e au to m at ic st ay fo r an ab us e of di sc ret io n. Cr os sr oa ds For d, In c. v. Dea le r Co mpu te r Se rv s., In c. (In

re Cr os sr oa ds For d, In c.)
, 44 9 B

. R

. 3 6 6
, 36 7 (B.A.P. 8t h Ci r. 20 11 ) (ci ta ti on

3om it te d)

. “ An ab us e of di sc ret io n wil l be fo un d if th e co ur t’s jud gm en t was ba se d on

cl ear l y erro ne ou s fact ua l fin di ng s or erro ne ou s le ga l co nc lu si on s.” Id

. (ci ta ti on

om it te d)

.

DISCUSS IO N The ba nk ru pt cy co ur t d i d no t ab us e it s di sc ret io n by de nyin g Mr. Ch ae’s

req ue st fo r rel ie f fro m

th e au to m at ic st ay . It co rrec tl y de te rm in ed th at th ere was no
pu rp os e fo r gr an ti ng st ay rel i e f si nc e th e m al pr act ic e an d ne gl ig en ce act io ns were di sc ha rg eab le de bt s, an d th e frau d cl ai m was di sc ha rg ed whe n Mr. Ch ae fai le d to fil e

an ad ve rs ary pr oc eed in g by th e de ad li ne to do so

. As th e ba nk ru pt cy co ur t no te d, al l
of Mr. Ch ae’s ca us es of a ct io n h ad be en di sc ha rg ed

.

Sect io n 5 23 (c)( 1) of t he Ban kr up tc y Co de pro vi de s t ha t:

th e de bt or sh al l be di sc ha rg ed f r o m a de bt of a ki nd sp eci fie d in
pa rag rap h (2 ), (4 ), or (6 ) of su bs ect io n (a) of th i s s e c t io n, un le ss , on req ue st of th e cred it or to who m su ch de bt is owe d, an d aft er no ti ce an d

a he ari ng , th e co ur t de te rm in es su ch de bt to be ex cep te d fro m di sc ha rg e

un de r pa rag rap h (2 ), (4 ), or (6 )
, as th e cas e m ay be
, of su bs ect io n (a) of th is sec ti on

.

11 U.S.C. § 52 3( c)(1 ). In tu rn , Ban kr up tc y Co de § 52 3( a)(2 )(A) go ve rn s acti on s to

e x cep t a de bt fro m a de bt or ’s di sc ha rg e “ fo r m on ey , pr op ert y , se rv ic es o r a n

ex te ns io n, ren ewal
, or refi na nc in g of cred it
, to th e ex te nt ob ta in ed by

. . . fal se
pr et en se s, a fal se rep res en ta ti on , or act ua l frau d

. . . .” 11 U.S.C. § 52 3( a)(2 )(A).
Fed eral Ru le of Ban kr up tc y Pro ced ur e 40 07 se ts fo rth th e ti m e to fil e an act io n un de r § 52 3( c) (in cl ud in g a frau d cl ai m un de r § 52 3( a)(2 )(A)). Fed

. R. Ban kr

. P. 40 07 (c).
It s ta te s t ha t:

a co mp l a i n t to de te rm in e th e di sc ha rg eab il it y of a de bt un de r § 52 3( c) sh al l be fil ed no la te r th an 60 da y s aft er th e fir st da te se t fo r th e m eet in g of cred it or s un de r § 34 1( a). The c o u r t s h al l gi ve al l cred it or s no le ss th an 30 da y s’ no ti ce of th e ti m e so fix ed in th e m an ne r pr ov id ed in Ru le 20 02

. On m ot io n of a pa rty in in te res t, aft er he ari ng on no ti ce, th e co ur t

4fo r cau se m ay ex te nd th e ti m e fix ed un de r th is su bd iv is io n. The m ot io n

sh al l b e fi le d b efo re t he ti m e ex pi res

.

Id

. The reco rd refl ect s t h a t in Feb ru ary, 20 13
, th e ba nk ru pt cy co ur t en te red it s Not ic e, an d th e Not ic e st at es th at th e m eet in g of cr ed it or s was sch ed ul ed fo r Mar ch
21 , 2 01 3, an d May 2 0, 20 13 was th e “ Dead li ne to Object io n t o Deb to r’s Dis ch arg e

or to Ch al le ng e Dis ch arg eab il it y of Cert ai n Deb ts .” The No ti ce was ser ve d o n M r. C h ae in Feb ru ary, 20 13

. The ba nk ru pt cy co ur t pr op erl y fo un d th at Mr

. C h a e h a d

no ti ce of th e de ad li ne fo r fil in g an ad ve rs ary pr oc eed in g. The re is no reco rd of a
req ue st by Mr. Ch ae, pr io r to th e May 20
, 20 13 de ad li ne , to ex te nd th e de ad li ne to fil e hi s fr au d a ct io n.

In ad di ti on , th e ba nk ru pt cy co ur t was co rrec t whe n it de ni ed th e rel ie f

req ue st ed by Mr. Ch ae be cau se th e st ay was no t in effe ct at th e ti m e whe n th e ba nk ru pt cy co ur t en te red th e or d ers fro m whi ch Mr. Ch ae ap pe al s. The Deb to r ob ta in ed a di sc ha rg e pr io r to th e da te whe n th e ba nk ru pt cy co ur t he ld it s res ch ed ul ed
he ari ng an d en te red th e or de rs

. Se e 11 U.S.C. § 36 2( c)(2 ) (The au to m at ic st ay ex pi res
up on th e earl ie st of cl os in g of th e cas e, di sm is sa l of th e cas e or , in th e Ch ap te r 7 cas e

o f a n in di vi du al
, th e ti m e whe n th e ba nk ru pt cy co ur t ei th er gr an ts or de ni es a di sc ha rg e.).

Fo r th e sa m e reas on th at th ere was no reas on to gr an t Mr. Ch ae’s req ue st fo r
st ay rel ie f, th ere was als o n o re as on for th e b an kr up tc y co ur t t o a bs ta in an d re m an d
th e cas e to th e st at e co ur t. As th e ba nk ru pt cy co ur t no te d, th ere wer e n o re m ai ni ng

cau se s of act io n by Mr. Ch ae be cau se al l of th em were di sc ha rg ed

. In ad di ti on , th ere

was no th in g to ab st ai n from he ari ng or to rem an d be cau se Mr. Ch ae nev er rem ov ed
hi s st at e co ur t act io n to th e ba nk ru pt cy co ur t, an d th ere was no act io n pe nd in g in th e ba nk ru pt cy

co ur t as ki ng for th e rel ie f Mr. Ch ae s ou gh t i n h is st at e co ur t ac ti on

.

CONCLUSI ON Fo r th e rea so ns st at ed , we affi rm

.

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