Court Opinion

ID: 9407843
Source: CourtListenerOpinion
Date Created: 2023-07-10 17:00:42.571553+00
Date Added: 2024-06-11T17:16:32.047887
License: Public Domain

PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                 ______________

                       No. 22-2532
                     ______________

                 In re: Louis N. Delloso,
                              Debtor

       Strategic Funding Source, Inc. d/b/a Kapitus,
                            Appellant
                     ______________

 On Appeal from the United States Bankruptcy Court for the
                   District of Delaware
                  (D.C. No.: 16-10832)
       Bankruptcy Judge: Hon. Craig T. Goldblatt
                    ______________

                 Argued on April 25, 2023
                    ______________

 Before: KRAUSE, BIBAS and RENDELL, Circuit Judges.

                   (Filed: July 10, 2023)

Matthew Beebe
Meluney Alleman & Spence
1143 Savannah Road
Suite 3-A
Lewes, DE 19958

James M. Sullivan [ARGUED]
Windels Marx Lane & Mittendorf
156 W. 56th St.
New York, NY 10019
      Counsel for Appellant

Kasey H. DeSantis [ARGUED]
Neal J. Levitsky
Fox Rothschild
919 N. Market Street
Suite 300
Wilmington, DE 19801
       Counsel for Appellee

                      _______________

                OPINION OF THE COURT
                    _______________
RENDELL, Circuit Judge.

       Appellant Strategic Funding Source, Inc. d/b/a Kapitus
appeals the Bankruptcy Court’s denial of Kapitus’s motion to
reopen the chapter 7 bankruptcy case of Louis N. Delloso more
than five years after the Bankruptcy Court closed the case.
Kapitus, one of Delloso’s creditors, sought to reopen his
bankruptcy case to challenge the dischargeability of Delloso’s
debt, as Kapitus believes that, before petitioning for
bankruptcy, Delloso fraudulently transferred assets that should

                              2
have been part of the bankruptcy estate to a company that he
owns and operates today.

        The Bankruptcy Court declined to reopen the
proceedings for two reasons. First, it was clear that any
complaint to assert that the debt was dischargeable or to revoke
the dischargeability of the debt would be untimely under
applicable bankruptcy rules, and the time could not be
extended by equitable tolling. Second, assuming Kapitus’s
allegations were true, it could obtain appropriate and sufficient
alternative relief by suing Delloso and his new company in
state court, which Kapitus had already done in New York. We
agree with the rigorous and well-reasoned opinion of the
Bankruptcy Court, discern no error in its analysis, and find no
abuse of discretion in its decision to deny the motion to reopen.
We will affirm.

                               I.1

      In 2011, Kapitus agreed to purchase certain receivables
from Greenville Concrete, a company owned, in part, by
Delloso, for $909,775. Under this agreement, Greenville
Concrete would deposit its receivables into a designated
account for Kapitus’s benefit. The parties continued under this

1
  Many of the facts set forth in this section are drawn from
Kapitus’s underlying motion to reopen, which we assume to be
true, as the Bankruptcy Court did, for purposes of resolving
this case. See A3 n.3 (explaining that “the Court will resolve
the motion to reopen under the motion to dismiss standard
applicable under Fed. R. Bankr. P. 8. The Court accordingly
accepts as true . . . the factual allegations set forth in [the]
motion.”).

                               3
agreement without incident until March 6, 2013, when
Greenville Concrete failed to deposit certain receivables into
the account. Kapitus responded by issuing a notice of default.

       Unable to resolve the dispute without court
intervention, Kapitus sued Greenville Concrete in New York
state court for breach of contract. Later, the two entities
reached a settlement whereby Greenville Concrete agreed to
make weekly payments until reaching a set amount and, if
Greenville Concrete were to default on this new agreement,
Kapitus would be permitted to enter a judgment against
Greenville Concrete and Delloso. Greenville Concrete
defaulted and Kapitus obtained a state court judgment against
Delloso and Greenville for $776,600.25.

       On March 31, 2016, Delloso filed a chapter 7 voluntary
bankruptcy petition in which he listed, among other debts, the
$776,600.25 he owed to Kapitus. He also disclosed that his
sole employer for the preceding three years was “Bari Concrete
Construction.” A85. As 11 U.S.C. § 341 required, the
Bankruptcy Court scheduled the creditors’ meeting for May 4,
2016, and notified the creditors that the “[l]ast day to oppose
discharge or dischargeability” was July 5, 2016. A30.

       On July 5, 2016, the bankruptcy trustee reported that the
bankruptcy estate had no assets for distribution. Accordingly,
the trustee “issued the standard notice” and explained that
because this case was a “no-asset case,” “creditors should not
file proofs of claim unless and until it appeared that assets
would be available for distribution.” A3. As there were no
assets for distribution, Kapitus did not file a proof of claim.
And none of Delloso’s creditors filed adversary complaints to
oppose the discharge or the dischargeability of any debt. The

                               4
next day, the Bankruptcy Court granted Delloso’s discharge.
On August 5, 2016, the Bankruptcy Court closed the case.

        More than five years later, on November 15, 2021,
Kapitus moved to reopen the case. Kapitus alleged that in late
2020, as it was “attempting to enforce the Judgment against
Greenville, [it] learned that Bari,” the company Delloso
identified as his employer in his chapter 7 petition, “was a
concrete construction business associated with [Delloso].”
A125. Kapitus explained that it learned that “Bari used the
same addresses previously associated with Greenville, was
controlled by [Delloso] and appeared to operate as a mere
continuation of Greenville.” Id. Kapitus also explained that it
had brought suit in New York state court against Bari Concrete
seeking satisfaction of the $776,600.25 judgment against
Greenville Concrete and relief under various state laws for,
among other things, “fraudulent conveyance,” “conversion,”
and “unjust enrichment.” A126.

      Kapitus urged the Bankruptcy Court to reopen
Delloso’s chapter 7 case to permit it to file an adversary
complaint challenging the dischargeability of its debt under 11
U.S.C. § 523(a)(2), (4) and (6). Kapitus further urged that
Delloso’s transfer of assets from Greenville Concrete to Bari
Concrete just before Delloso’s filing of his chapter 7 petition
was a fraudulent conveyance that rendered the $776,600.25
judgment a non-dischargeable debt.

       In the alternative, it posited that even if the Bankruptcy
Court were to conclude that its debt was dischargeable, the
discharge of the debt should be revoked under 11 U.S.C. §
727(d)(1). Under § 727, a bankruptcy court “shall revoke a
discharge . . . if . . . such discharge was obtained through fraud

                                5
of the debtor, and the requesting party did not know of such
fraud until after the granting of such discharge[,]” 11 U.S.C.
§ 727(d)(1), and provided that the request for revocation is
made “within one year after such discharge is granted,” 11
U.S.C. § 727(e)(1).

        Finally, Kapitus urged the Bankruptcy Court to exercise
its discretion under 11 U.S.C. § 350 to reopen the case for
cause, reappoint a trustee, and administer a previously
undisclosed asset—Delloso’s purported ownership interest in
Bari Concrete.

        After oral argument, the Bankruptcy Court declined to
exercise its discretion and reopen the long-closed case for two
of the reasons that had been cited by the Bankruptcy Court for
the District of Delaware in In re: New Century TRS Holdings,
Inc., No. 07-10416 (BLS), 2021 WL 4767924, at *6-7 (Bankr.
D. Del. Oct. 12, 2021).2

2
  In New Century, the Delaware Bankruptcy Court listed
several nonexclusive considerations in deciding whether to
reopen a case:

              (i)     the length of time that the case was
                      closed;
              (ii)    whether a non-bankruptcy forum, such as
                      a state court, has the ability to determine
                      the dispute to be posed by the debtor were
                      the case reopened;
              (iii)   whether prior litigation in bankruptcy
                      court implicitly determined that the state
                      court would be the appropriate forum to

                                6
        First, even if the Bankruptcy Court were to reopen the
case, Kapitus could not obtain the relief it sought. Whether
Kapitus filed a complaint to challenge the dischargeability of
the $776,600.25 debt under § 523 or otherwise requested the
revocation of Delloso’s discharge under § 727(d)(1), its
requests were “time-barred.” A2. While Kapitus urged the
court to apply equitable tolling to allow its claims for relief, the
Bankruptcy Court concluded that applying that tolling to § 523
“would be inconsistent with the command of Rule 9006(b)
stating that the time periods set out in Rule 4007(c) may be
extended ‘only to the extent and under the conditions stated in’
the Rule.” A14 (quoting Fed. R. Bankr. P. 9006(b)).
Moreover, the claim under § 727(d) to revoke the discharge of
the debt for fraud was foreclosed by Rule 9024. As the Court
later noted, the upshot would be that “[p]ermitting equitable
tolling would operate to extend the time limit under conditions
not stated in the rule itself.” A14. Such a result, the Court
reasoned, would contradict the text of the timing rules that
leave little room for flexibility and thus would not be permitted

                      determine the rights, post-bankruptcy, of
                      the parties;
               (iv)   whether any parties would be prejudiced
                      were the case reopened or not reopened;
               (v)    the extent of the benefit which the debtor
                      seeks to achieve by reopening; and
               (vi)   whether it is clear at the outset that the
                      debtor would not be entitled to any relief
                      after the case were reopened.

2021 WL 4767924 at, *6-7 (citing In re Rashid, No. Civ. A.
04-1585, 2004 WL 2861872, at *3 (E.D. Pa. Dec. 13, 2004)).

                                 7
under the Supreme Court’s decision in Nutraceutical Corp. v.
Lambert, 139 S. Ct. 710 (2019).

       Second, the Court reasoned that there was “no need to
reopen a long-closed bankruptcy case . . . because Kapitus may
obtain relief in the New York Action.” A23. The availability
of an alternative forum in which to seek relief, thus,
“counsel[ed] strongly against reopening [the] bankruptcy
case.” A23.

        The Bankruptcy Court denied the motion to reopen. The
parties then requested certification for immediate appeal to this
Court because the appeal had the potential to “advance the
progress of the case or proceeding” materially. A320. We
granted the request.

                               II.

        The Bankruptcy Court had jurisdiction under 28 U.S.C.
§§ 157 and 1334. As we granted the parties’ request for
certification of immediate appeal, we have jurisdiction under
28 U.S.C. § 158(d)(2).

                              III.

                               A.

       Kapitus styled its motion in the Bankruptcy Court as a
“Creditor Motion for Order to (I) Reopen Debtor’s Case
Pursuant to Bankruptcy Code § 350(b) and Rule 5010 of the
Federal Rules of Bankruptcy Procedure to Allow Creditor to
File Complaint Seeking to Revoke the Debtor’s Discharge as
to Creditor’s Claim Pursuant to Bankruptcy Code [§] 523(a) or

                               8
Alternatively as to All Creditors Pursuant to Bankruptcy Code
§ 727(d)(1); (II) Alternatively, (A) Reopen Debtor’s Case
Pursuant to Bankruptcy Code § 350(b) to Administer a
Previously Undisclosed Asset and (B) Direct the United States
Trustee to Appoint a Bankruptcy Trustee; and (III) Grant Such
Other Relief as the Court May Deem Just and Proper.” A120.
        As noted above, in determining whether to reopen the
case, the Bankruptcy Court considered the factors outlined in
New Century and relied on two of them when it decided to
deny the motion. First, the Court looked to the sixth factor,
which examines “whether it is clear at the outset that the debtor
would not be entitled to any relief after the case were
reopened.” 2021 WL 4767924, at *7. It found that factor
counseled against reopening. Kapitus does not challenge the
propriety of considering this factor; instead, Kapitus urges that
reopening is warranted to permit it to pursue potentially viable
theories of relief. Second, the Court relied on the second New
Century factor, which asks “whether a non-bankruptcy forum,
such as a state court, has the ability to determine the dispute to
be posed by the debtor were the case reopened.” Id. at *6.
Kapitus contends that the existence of other legal avenues for
relief should not prevent the reopening of the case to deal with
a newly discovered asset.

       Kapitus’s primary argument on appeal is that the
Bankruptcy Rules that govern the time for pursuing its
claims—specifically, Rules 4007(c) and 9006(b)—are subject
to equitable doctrines, like equitable tolling, and the Court’s
powers under Bankruptcy Code § 105(a), such that it should be
permitted to challenge Delloso’s discharge if the case were
reopened. We begin with the Bankruptcy Code and Rules.

                                9
       The Bankruptcy Code provisions on which Kapitus
relies—namely, §§ 350(b), 523(a), and 727(d)(1)—contain
grants of power permitting bankruptcy courts to reopen a case,
provide for an exception to discharge, and revoke a discharge,
respectively. The timing of a creditor’s request for the Court
to exercise those powers is controlled by the Bankruptcy Rules.
Rule 4007(c) provides:

       [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
       motion shall be filed before the time has expired.

Fed. R. Bankr. P. 4007(c). And Rule 9006(b), which governs
general enlargements of time limits set forth in the Bankruptcy
Rules, provides:

       The court may enlarge the time for taking action
       under . . . 4007(c) . . . only to the extent and
       under the conditions stated in those rules.

Fed. R. Bankr. P. 9006(b)(3) (emphasis added). Rule 5010
merely states that a case may be reopened upon the motion of
the debtor or other party in interest. Thus, Kapitus’s motion is
clearly time-barred under the Rules, yet he contends that
equitable principles should apply to allow his complaint to
proceed.

                              B.

       Kapitus urges that the Bankruptcy Court erred in relying
on the Supreme Court’s decision in Nutraceutical to conclude

                              10
that it lacked the authority to toll the deadline for Kapitus to
challenge the dischargeability of its debt under the Bankruptcy
Rules. We disagree. The Bankruptcy Court was correct that
the principles articulated in Nutraceutical guide the analysis
here such that the plain text of Rules 4007(c), 9006(b), and
9024 control.

        In Nutraceutical, the Supreme Court clarified that even
if a timing rule is not jurisdictional in character, where the text
of “the pertinent rule or rules invoked show a clear intent to
preclude tolling, courts are without authority to make
exceptions merely because a litigant appears to have been
diligent, reasonably mistaken, or otherwise deserving.” 139 S.
Ct. at 714 (citing Carlisle v. United States, 517 U.S. 416, 421
(1996)). There, Troy Lambert filed a putative class action
against Nutraceutical Corporation for alleged violations of a
state consumer protection law. Id. at 713. Later, the district
court issued an order denying class certification, which started
Lambert’s fourteen-day window to appeal the decertification
order. Id. But rather than file an immediate appeal as required
by Federal Rule of Civil Procedure 23, Lambert informed the
district court that he would, instead, move for reconsideration
of the order. Id. The district court set a deadline for the motion
for reconsideration, which Lambert met. Id. Unpersuaded by
Lambert’s filing, the district court denied the motion. Id.
Lambert then appealed the order denying his motion for
reconsideration and the underlying order denying class
certification. Id.

       On appeal, Nutraceutical argued that Lambert’s appeal
was untimely under Rule 23, which requires a party to appeal
an order decertifying a class or denying class certification
“within 14 days after the order is entered,” Fed. R. Civ. P.

                                11
23(f), not, as was the case, within 14 days after a motion for
reconsideration is denied. Id. Yet even after conceding
Lambert’s appeal was untimely, the Ninth Circuit still excused
that untimeliness by tolling the Rule 23(f) deadline. Id. It
“reasoned that Rule 23(f)’s time limit is ‘non-jurisdictional,
and that equitable remedies softening the deadline are therefore
generally available.” Id. (quoting Lambert v. Nutraceutical,
870 F.3d 1170, 1176 (9th Cir. 2017)). While the Supreme
Court agreed that Rule 23(f) is “nonjurisdictional,” it rejected
the Ninth Circuit’s conclusion that as a “nonjurisdictional” rule
it “necessarily, [is] subject to equitable tolling.” Id. at 714.

        The Supreme Court began its analysis by recognizing
that “[b]ecause Rule 23(f)’s time limitation is found in a
procedural rule, not a statute, it is properly classified as a
nonjursidictional claim-processing rule.” Id. Yet “[t]he mere
fact that a time limit lacks jurisdictional force . . . does not
render it malleable in every respect.” Id. “Whether a rule
precludes equitable tolling turns not on its jurisdictional
character but rather on whether the text of the rule leaves room
for such flexibility.” Id. Thus, “[w]here the pertinent rule or
rules invoked show a clear intent to preclude tolling, courts are
without authority to make exceptions merely because a litigant
appears to have been diligent, reasonably mistaken, or
otherwise deserving.” Id. (citing Carlisle, 517 U.S. at 421).
The clear intent to preclude tolling turns on the text of the rule
because “[c]ourts may not disregard a properly raised
procedural rule’s plain import any more than they may a
statute’s.” Id. (citing Bank of Nova Scotia v. United States,
487 U.S. 250, 255 (1988)).

       Turning to the text of Rule 23(f), the Supreme Court had
no difficulty discerning the rule’s clear intent that the deadline

                               12
set forth in the rule could not be subject to tolling. Id. at 715.
The Supreme Court noted that under the rule, any appeal “must
be filed within the time specified,” and while “the simple fact
that a deadline is phrased in an unqualified manner does not
necessarily establish that tolling is unavailable[,] . . . [h]ere,
however, the Federal Rules of Appellate Procedure single out
Civil Rule 23(f) for inflexible treatment.” Id. (internal
citations omitted) (emphasis added). Specifically, Federal
Rule of Appellate Procedure 26(b) contains an “express
carveout: A court of appeals ‘may not extend the time to
file . . . a petition for permission to appeal.’” Id. (quoting Fed.
R. App. P. 26(b)(1)).            The Court observed that this
demonstrated “a clear intent to compel rigorous enforcement
of Rule 23(f)’s deadline, even where good cause for equitable
tolling might otherwise exist.” Id.

        In further support of the conclusion that Rule 23(f)’s
deadline could not be tolled, the Supreme Court relied on its
decision in Carlisle, 517 U.S. 416. There, the Supreme Court
observed that where Federal Rule of Appellate Procedure 45(b)
“made clear that ‘the court may not extend the time for taking
any action’ under [Federal Rule of Criminal Procedure 29]
‘except to the extent and under the conditions’ stated therein,”
“the text’s purpose to foreclose acceptance of untimely
motions” was “plain and unambiguous.” Nutraceutical, 139 S.
Ct. at 715 (quoting Carlisle, 517 U.S. at 421). Thus, given Rule
26(b)’s clarity, the Supreme Court readily concluded that
equitable tolling was unavailable despite the rule’s
nonjurisdictional character.

       Although the Supreme Court in Nutraceutical construed
different procedural rules, bankruptcy courts have properly
heeded the Supreme Court’s instructions in that case to

                                13
determine whether the timing rules governing the submission
of complaints challenging the dischargeability of debt are
subject to tolling. Indeed, the Bankruptcy Court here joined
two others in our circuit to conclude that Rule 4007(c)’s
deadline cannot be tolled. In re Zakarin, 602 B.R. 275, 283
(Bankr. D.N.J. May 9, 2019) (concluding “that Rule 4007 does
not permit equitable tolling”); In re Zaidi, Case No. 19-13997,
2020 WL 1580258, at *2 (Bankr. D.N.J. March 30, 2020)
(“The text of both Rule 4004 and 4007 simply do not ‘leave
room for [the] flexibility” of equitable tolling.); see also In re
Wilding, 620 B.R. 843, 867 (Bankr. D.N.J. 2020) (citing
Zakarin for the proposition that it is doubtful that equitable
tolling is available under Rule 4007(c)).

        In Zakarin, counsel for a creditor contacted the
bankruptcy court on the last day of the 60-day period in which
to file a complaint challenging the dischargeability of a debt,
explaining that he had prepared a complaint, but technical
problems stopped him from docketing it. 602 B.R. at 277.
Although counsel eventually docketed the complaint three
days later, he was not licensed to practice in the district and,
therefore, his filing was considered a legal nullity. Id. A
cognizable complaint was not submitted until more than two
months after the filing deadline had passed. Id. at 286. To
correct this error, the creditor moved to extend the time to file
its complaint under Rule 4007(c) and urged the bankruptcy
court to apply equitable tolling to deem the admittedly late
complaint timely. Id. at 279.

       The bankruptcy court concluded, however, that Rule
4007(c) “does not permit equitable tolling.” Id. at 283. In
reaching this conclusion, the court noted that whether tolling
was available under Rule 4007(c) had divided the courts and

                               14
that “[t]here is no binding case law in the Third Circuit.” Id. at
281. The bankruptcy court first reviewed the Supreme Court’s
decision in Kontrick v. Ryan, 540 U.S. 443 (2004), as the
holding in that case appeared to have engendered the disparate
views of the lower courts regarding Rule 4007(c). Zacharin,
602 B.R. at 280-81. Kontrick appeared to have provided strong
persuasive authority to support the proposition that Rule
4007(c), like Rule 4004, is nonjurisdictional in character. But
the Supreme Court itself explained that it would not resolve the
question of whether Rule 4007(c) may be equitably tolled.
Kontrick, 540 U.S. at 454 (“Whether [Rules 4004 and 4007],
despite their strict limitations, could be softened on equitable
grounds is . . . a question we do not reach.”). Without guidance
on this latter question, the lower courts arrived at varying
conclusions. Compare, e.g., Anwar v. Johnson, 720 F.3d 1183
(9th Cir. 2013) (concluding that despite the nonjurisdictional
nature of Rules 4007(c) and 9006(b), the text of the rules does
not allow tolling), with In re Rychalsky, 318 B.R. 61 (Bankr.
E.D. Pa. 2004) (concluding that equitable tolling was
available).

        The bankruptcy court in Zakarin concluded that
Nutraceutical supplied the analytical framework to answer
whether Rule 4007(c), despite being a nonjurisdictional claim-
processing rule, still expressed a clear intent to preclude
tolling. The bankruptcy court applied the Nutraceutical
framework to Rule 4007(c) and concluded that “[j]ust as with
Appellate Rule 23(f), the Bankruptcy Rules ‘express a clear
intent to compel rigorous enforcement’ of Rule 4007(c)’s
deadline ‘even where good cause for equitable tolling might
otherwise exist.’” Zakarin, 602 B.R. at 283 (quoting
Nutraceutical, 139 S. Ct. at 715). And while the bankruptcy
court “agree[d] that ‘[d]eadlines may lead to unwelcome

                               15
results, . . . they prompt parties to act and they produce
finality.’” Id. (quoting Taylor v. Freeland & Kronz, 503 U.S.
638, 644 (1992)).

       The Bankruptcy Court here adopted the reasoning of
Zakarin. Similarly, the bankruptcy court in Zaidi voiced its
“complete agreement with the analysis in Zakarin,” 2020 WL
1580258, at *2. We agree with the analysis of the bankruptcy
courts in Zakarin, Zaidi, and this case.

                               C.

        We first conclude that because the “time limitation”
here is found “in . . . procedural rule[s], not a statute, it is
properly classified as a nonjurisdictional claim-processing
rule.” Nutraceutical, 139 S. Ct. at 714. The time limitation for
a complaint challenging the dischargeability of a debt under §
523 is found in Bankruptcy Rules 4007(c) and 9006(b). As the
Supreme Court instructed, however, “[t]he mere fact that a
time limit lacks jurisdictional force . . . does not render it
malleable in every respect.” Id. Thus, we recognize, as the
Bankruptcy Court did, that to decide whether equitable tolling
is available under Rule 4007(c) and Rule 9006(b), we must
answer “whether ‘the text of the rule[s] leaves room for such
flexibility.’” A15 (quoting Nutraceutical, 139 S. Ct. at 714).
If the “rule[s] show[] ‘a clear intent to preclude tolling, courts
are without authority to make exceptions merely because a
litigant appears to have been diligent, reasonably mistaken, or
otherwise deserving.’” Id.

      We turn next to the text of Rule 4007(c). See id. at 714
(emphasizing that “[c]ourts may not disregard a properly raised
procedural rule’s plain import any more than they may a

                               16
statute’s”). As noted above, the rule provides 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) . . . .” Fed. R. Bankr. P.
4007(c) (emphasis added). Although the rule employs the
words “shall be filed,” which suggests, on its face, that the rule
is to be strictly enforced, the Supreme Court has cautioned that
“the simple fact that a deadline is phrased in an unqualified
manner does not necessarily establish that tolling is
unavailable.” Nutraceutical, 139 S. Ct. at 715. Yet the text of
Rule 4007(c) reveals more.

        The rule itself provides an exception to its blanket 60-
day deadline for filing a complaint in that “[o]n motion of a
party . . . after hearing on notice, the court may for cause extend
the time under this subdivision. The motion shall be filed
before the time has expired.” Fed. R. Bankr. P. 4007(c)
(emphasis added). This expressly carves out a single and
narrowly circumscribed exception to the general rule—the
court may exercise its discretion to enlarge the time to file a
complaint challenging the dischargeability of a debt, but only
upon a motion filed before the time for filing the complaint has
expired. Id. Nothing in the rule suggests that a court can sua
sponte extend the time for filing a complaint. And, indeed, a
court acting on a motion to extend this time limit is directed
specifically to provide notice to the parties regarding the
motion and entertain a hearing. Id. The existence of a specific
exception to the general rule that delineates the procedure a
court must take to grant an exception appears to evince a clear
intent that other exceptions to the time limit requirement,
including equitable tolling, do not apply.

                                17
        But there is more. Rule 9006 singles out Rule 4007(c)
for “inflexible treatment,” Nutraceutical, 139 S. Ct. at 715,
buttressing the conclusion that only the exceptions outlined in
the rule itself are available: the court may enlarge the time for
taking action under § 4007(c) only to the extent and under the
conditions stated in the rule. Much like how the Supreme
Court in Nutraceutical concluded that by singling out Rule
23(f) for inflexible treatment the Federal Rules of Appellate
Procedure showed an intent to make tolling unavailable, we
view Rule 9006(b)’s singling out of Rule 4007(c) as
evidencing an intent to preclude equitable tolling. Though the
Court in Nutraceutical may have focused on the phrase “may
not extend,” we view the phrase “only to the extent and under
the conditions,” Fed. R. Bankr. P. 9006(b)(3), to reflect the
same inflexibility. Cf. Konrick, 540 U.S. at 446 n.10 (“Like
Federal Rule of Criminal Procedure 45(b) and Federal Rule of
Appellate Procedure 26(b), Bankruptcy Rule 9006(b) is
modeled on Federal Rule of Civil Procedure 6(b).”).

        Thus, while Rule 9006(b) generally grants the
bankruptcy courts power to enlarge time limits imposed under
the bankruptcy rules, Rule 9006(b)(3) expressly limits the
power to enlarge the time limit for filing a complaint under §
523 “to the extent and under the conditions stated in [Rule
4007(c)].” Fed. R. Bankr. P. 9006(b)(3). Taken together with
the text of Rule 4007(c), we conclude that this expresses a clear
intent to preclude exceptions to the time limit for challenging
the dischargeability of a debt, including those based on
equitable tolling.3

3
  Although Kapitus also sought relief under § 727 before the
Bankruptcy Court, we note that Kapitus does not challenge that
aspect of the Bankruptcy Court’s opinion in which it rejected

                               18
                               D.

       Kapitus, however, urges that Nutraceutical should not
guide the analysis here. It cites various out-of-circuit
bankruptcy court cases, which purportedly show that
Nutraceutical is inapplicable. In citing these cases, not only
does Kapitus ignore the weight of the bankruptcy cases from
within this circuit that have relied on the Nutraceutical
framework to resolve the issue presented in this case, see
Section III.B, supra, but it also ignores that the cases it relies
on draw upon cases that either preceded Nutraceutical or are
founded on the mistaken view, based on Kontrick, 540 U.S.
443, that the nonjurisdictional character of the bankruptcy rules
ends the inquiry. See In re Klaynberg, Case No. 22-10165
(MG), 2022 WL 4350985, at *4 (Bankr. S.D.N.Y. Sept. 19,
2022) (concluding that because Rule 9006(b)(3) is
nonjurisdictional it is subject to tolling); In re Heng Li Zhu,
Case No. 19-11870-JLG, 2022 WL 3364579, at *9 (Bankr.
S.D.N.Y. Aug. 12, 2022) (following the same reasoning to
reach the same conclusion regarding Rules 4004(a) and
4007(c)); In re Conte, Case No. 21-13189, 2022 WL 1216280,
at *2 (Bankr. N.D. Oh. Apr. 25, 2022) (same); Matter of
Podwinski, Case No. BK19-41937-TLS, 2021 WL 371769
(Bankr. D. Neb. Feb. 2, 2021) (same). But the Supreme Court

Kaptitus’s complaint under § 727(d)(1) as untimely.
Nevertheless, we note that while one might anticipate some
room for equitable considerations given the subject of §
727(d), namely undiscovered fraud, Rule 9024’s strict
statement that the request to revoke the discharge “may be filed
only” within the time allowed under § 727(e) appears to
express an intent to foreclose such flexibility.

                               19
has, as we have explained, held that while there exists a
presumption that tolling is available to extend the timeframes
established under such nonjurisdictional rules, the presumption
is rebuttable. Boechler, P.C. v. Comm’r of Internal Revenue,
142 S. Ct. 1493, 1500 (2022). Indeed, the core teaching of
Nutraceutical is that the text of a rule is central to whether the
rule “leaves room for such flexibility,” 139 S. Ct. at 714, not
merely the rule’s character as jurisdictional or
nonjurisdictional.
        Moreover, Kapitus also urges that Nutraceutical does
not apply because it did not involve “deadlines set forth in [the]
Bankruptcy Rules,” Appellant’s Br. 26. But we read its
analysis as applying to rules more generally. Kapitus’s
reliance on Boechler, 142 S. Ct. 1493, is somewhat
disingenuous as that decision did not involve “deadlines set
forth in [the] Bankruptcy Rules,” Appellant’s Br. 26.

       In Boechler, the Supreme Court considered whether
under 26 U.S.C. § 6330(d)(1), the 30-day deadline to petition
the Tax Court for review of an adverse decision after a
“collection due process hearing” could be equitably tolled for
a taxpayer who missed the deadline by one day. Id. at 1496-
97. Although the IRS Commissioner concluded that the time
limit was not subject to equitable tolling, the Supreme Court
disagreed. Id.

        The Supreme Court first concluded that § 6330(d)(1)’s
time limit was nonjurisdictional in nature and, therefore,
presumptively subject to tolling. Id. at 1500. Next, the Court
concluded that nothing in the text or structure of § 6330(d)(1)
rebutted this presumption. Id. “Section 6330(d)(1) does not
expressly prohibit equitable tolling, and its short, 30-day time
limit is directed at the taxpayer, not the court.” Id. Moreover,

                               20
“[t]he deadline also appears in a section of the Tax Code that
is ‘unusually protective’ of taxpayers and a scheme in which
‘laymen, unassisted by trained lawyer,’ often ‘initiate the
process.’” Id. (quoting Sebelius v. Auburn Reg’l Med. Ctr.,
568 U.S. 145, 160 (2013)).

       By contrast, in this case, Rules 4007(c) and 9006(b) are
explicit that any enlargement of time to file a complaint under
§ 523 may be granted by a court only upon motion by as set
forth under Rule 4007(c). And, unlike § 6330(d)(1) that targets
only a taxpayer’s conduct, Rule 4007(c) imposes on the court
a notice and hearing requirement before it may grant any
extension of time. Thus, Rule 4007(c), by its terms, is intended
to affect the court’s inherent power to manage its proceedings.
Finally, unlike § 6330(d)(1), which appears in a Tax Code
section that is “unusually protective” of unsophisticated and
unrepresented taxpayers, Rule 4007(c) is targeted at creditors
who are often sophisticated and represented by counsel. See,
e.g., A64-80 (listing Delloso’s creditors including institutions
such as Ally Financial, Capital One Bank, Citibank, HSBC,
Synchrony Bank, and TD Bank). Boechler is readily
distinguishable from this case and does little to advance
Kapitus’s cause.

       Thwarted by the Rules and Supreme Court precedent,
Kapitus urges that the Bankruptcy Rules conflict with § 105(a)
of the Bankruptcy Code and the former must yield to the latter.
Under § 105, “[t]he court may issue any order, process, or
judgment that is necessary or appropriate to carry out the
provisions of this title.” 11 U.S.C. § 105(a). Kapitus reasons
that “[a]s a statutory provision, Bankruptcy Section 105(a)
trumps Bankruptcy Rules 4007(c) and 9006(b) to the extent
those Rules abridge the substantive rights set forth in

                              21
Bankruptcy Section 105(a).” Appellant’s Br. 30. Kapitus also
reasons that the Bankruptcy Court erred in concluding it could
not exercise its inherent powers to toll the time limit imposed
by Rules 4007(c) and 9006(b). As it did below, Kapitus relies
heavily on the Supreme Court’s decision in Marrama v.
Citizens Bank of Massachusetts, 549 U.S. 365 (2007) for
support. But as the Bankruptcy Court adeptly explained,
Kapitus reads Marrama too broadly.
         Kapitus cites Marrama for the sweeping proposition that
a bankruptcy court’s inherent powers to address fraud extend
to tolling the limitations period under Rules 4007(c) and
9006(b). The Bankruptcy Court, however, explained that
“[t]he basic holding of Marrama was only that a debtor whose
bad faith conduct rendered him ineligible to proceed in a
chapter 13 case could be denied the right, under section 706(a),
to convert from chapter 7 to chapter 13.” A19. The
Bankruptcy Court noted that the Supreme Court’s opinion in
Law v. Siegel, 571 U.S. 415 (2014), made clear that Marrama
does not support the broad proposition that courts have
unfettered authority carry out the provisions of the Bankruptcy
Code. There, the Supreme Court cautioned that “in exercising
[its] statutory and inherent powers, a bankruptcy court may not
contravene specific statutory provisions.” Id. at 421. It added
that “[a]t most, Marrama’s dictum [regarding the courts’ power
under § 105] suggests that in some circumstances a bankruptcy
court may be authorized to dispense with futile procedural
niceties in order to reach more expeditiously an end result
required by the Code.” Id. at 426; see also In re Combustion
Engineering, Inc., 391 F.3d 190, 236 (3d Cir. 2004) (“[T]he
‘equitable powers emanating from § 105(a) . . . are not a license
for a court to disregard the clear language and meaning of the
bankruptcy statutes and rules.’”) (quoting In re Barbieri, 199
F.3d 616, 620-21 (2d Cir. 1999)); Anwar, 720 F.3d at 1187

                               22
(concluding that the equitable powers of the courts are subject
to the “confines . . . [and] deadlines set by the Federal Rules of
Bankruptcy Procedure”) (citing Zidell, Inc. v. Forsch, 920 F.2d
1428, 1432 (9th Cir. 1990)).

        While, as Kapitus urges, Rules 4007(c) and 9006(b) are
rules and not provisions of the Bankruptcy Code, and any
conflict between the rules and the Code must be resolved in
favor of the Code, this does little to advance its cause because
here there is no conflict. As the Bankruptcy Court reasoned:
Nothing in Rule 9006(b) prevents a bankruptcy court from
taking appropriate [discretionary] action to address an abuse of
process. The rule merely imposes a time limit on a creditor’s
ability to point to a debtor’s (pre-bankruptcy) fraud as a basis
for contending that a particular debt is nondischargeable. That
poses no conflict with the grant of authority provided in § 105.
A21. Nothing in our decision here affects the bankruptcy
courts’ power under § 105 to carry out the provisions of the
Bankruptcy Code. Instead, we hold only that the Bankruptcy
Court was correct in concluding that Rules 4007(c) and
9006(b), read together, express an intent that tolling is
unavailable. A bankruptcy court faced with fraud may still
engage in any appropriate action to root out the fraud and
prevent an abuse of process in a manner consistent with the
Bankruptcy Code and Rules.

                               E.

       Kapitus also urges that the Bankruptcy Court should not
have based its decision denying the request to reopen the case
on the existence of its suit against Bari and the New York
courts. Instead, it urges that the Court abused its discretion in
failing to reopen the case to administer Delloso’s previously

                               23
undisclosed interest in Bari Concrete. Kapitus argues that the
Bankruptcy Court should have reopened the case not just for
its benefit, but for the benefit of all creditors because if Kapitus
fails to recover in New York state court, Delloso will have
successfully defrauded the bankruptcy system. But the
Bankruptcy Court weighed the prospect of “reopening the
bankruptcy case to administer the alleged newly discovered
asset” against the cost of opening the long-closed case and
“appoint[ing] a [new] trustee[,]” concluding that if the asset
was valuable, New York state creditor remedies would be
adequate. A24. We do not think that its balancing of these
factors constituted an abuse of its discretion.4

                                IV.

      For these reasons, we will affirm the Bankruptcy
Court’s order denying Kapitus’s motion to reopen.

4
  Moreover, Kapitus does not address how such a theory—to
reopen whenever there is a newly discovered asset—can
somehow escape the prevailing time bars.

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