Court Opinion

ID: 2963979
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:18:23.947976+00
Date Added: 2024-06-11T11:42:48.453241
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                                     
                                 ____________________
        No. 95-1376

                                CATHERINE DUFFY PETIT,

                                Plaintiff, Appellant,

                                          v.

                         PETER C. FESSENDEN, TRUSTEE, ET AL.,

                                Defendants, Appellees.

                                                     
                                 ____________________
        No. 95-1377

                                CATHERINE DUFFY PETIT,

                                Plaintiff, Appellant,

                                          v.

                         PETER C. FESSENDEN, TRUSTEE, ET AL.,

                                Defendants, Appellees.

                                                     
                                 ____________________
        No. 95-1378

                                CATHERINE DUFFY PETIT,

                                Plaintiff, Appellant,

                                          v.

                         PETER C. FESSENDEN, TRUSTEE, ET AL.,

                                Defendants, Appellees.

                                                     
                                 ____________________

                    APPEALS FROM THE UNITED STATES DISTRICT COURT

                              FOR THE DISTRICT OF MAINE

                       [Hon. Gene Carter, U.S. District Judge]
                                          ___________________

                                                     
                                 ____________________

                                 Cyr, Circuit Judge,
                                      _____________

                            Bownes, Senior Circuit Judge,
                                    ____________________

                              and Stahl, Circuit Judge.
                                         _____________

                                                     
                                 ____________________

             Stephen F. Gordon, with whom Gordon & Wise was on brief for
             _________________            _____________
        appellant.
             Peter C. Fessenden, with whom John G. Connor, Law Office of John
             __________________            ______________  __________________
        G. Connor, James F. Molleur, Woodman & Edmands, P.A., U. Charles
        _________  ________________  _______________________  __________
        Remmel, II, Kelly, Remmel & Zimmerman and Mark S. O'Brien, Special
        __________  _________________________     _______________
        Assistant United States Attorney, were on brief for appellees.

                                                     
                                 ____________________

                                    April 3, 1996
                                                     
                                 ____________________

                                          2

                    CYR, Circuit Judge.    Plaintiff Catherine Duffy Petit,
                    CYR, Circuit Judge.
                         _____________

          a  chapter 11  debtor,  appeals from  a  district court  judgment

          affirming  a  bankruptcy  court  order allowing  the  chapter  11

          trustee to reconvene  a meeting of creditors several months after

          its indefinite adjournment, see Bankruptcy Code    341, 11 U.S.C.
                                      ___

            341; Fed. R.  Bankr. P. 2003, thereby purportedly  recommencing

          the 30-day limitation period within which a trustee may interpose

          objections to an exemption claim made by the debtor.  See Fed. R.
                                                                ___

          Bankr. P. 4003(b).  We affirm.

                                          I
                                          I

                                      BACKGROUND
                                      BACKGROUND
                                      __________

                    In  June  1993,   creditors  initiated  an  involuntary

          chapter 7 proceeding against Petit in the United States Bankrupt-

          cy Court for the District of Maine.  The bankruptcy court entered

          the  order for  relief  under chapter  7  on December  10,  1993,

          following its denial of Petit's motion to dismiss the involuntary

          petition.  See 11 U.S.C.   305(a).  One week later, Petit filed a
                     ___

          motion to convert to chapter 11.  See id.   348.  At a hearing on
                                            ___ ___

          February  2,  1994, and  over  the objection  of  the petitioning

          creditors, the  bankruptcy court directed  entry of an  order for

          relief  under chapter 11, and took  under advisement the appoint-

          ment of a chapter 11 trustee.  

                    Petit   filed  her   statement  of   financial  affairs

          (Official  Form 7)  and  schedules (Official  Form 6),  including

          Schedule C (Property  Claimed as  Exempt), see id.    521(1),  on
                                                     ___ ___

          February  25,  1994,  asserting  a claim  to  certain  exemptions

                                          3

          prescribed under federal law, see id.    522(d)(11)(A) ("an award
                                        ___ ___

          under  a crime  victim's reparation  law"); 522(d)(11)(D)  ("pay-

          ment[s],  not to  exceed  $7500, on  account  of personal  bodily

          injury").   In Schedule B, Petit listed as an exempt asset, inter
                                                                      _____

          alia, the entire anticipated  proceeds from a pending state-court
          ____

          action against Key Bank,  having an estimated value in  excess of

          $25  million.   On March  28, 1994,  the  order for  relief under

          chapter 11 was entered on the bankruptcy court docket.

                    The United States Trustee  convened a meeting of credi-

          tors on May  17, 1994.  See  id.   341;  Fed. R. Bankr. P.  2003.
                                  ___  ___

          Before it ended, the meeting  of creditors was "continued without

          date" by the Assistant  United States Trustee.   On June 17,  the

          bankruptcy court approved  the appointment of  defendant-appellee

          Peter  Fessenden, Esquire, as the chapter 11 trustee.  Two months

          later,  on August 22, Fessenden  filed objections to  the list of

          property claimed as  exempt by Petit,  particularly her claim  to

          the anticipated  proceeds from  the pending legal  action against

          Key  Bank.  Petit responded that the objection was time-barred by

          Fed. R.  Bankr. P. 4003(b), because  it was not filed  until more

          than  30 days after the "conclusion" of the meeting of creditors.

          See Taylor v.  Freeland & Kronz, 112 S. Ct. 1644, 1648-49 (1992).
          ___ ______     ________________

          Fessenden meanwhile sent a notice to creditors that the continued

          meeting of  creditors  would be  reconvened on  October 20,  thus

          purportedly  extending    until at least 30 days after October 20

              the time for  filing any  objection to  the list  of property

          claimed  exempt  and  rendering  timely the  objection  filed  by

                                          4

          Fessenden on August 22. 

                    Petit then  sought to quash the  notice reconvening the

          meeting  of creditors,  contending  in the  alternative that  (1)

          Bankruptcy Code   341  permits only the United States  Trustee or

          an express  "designee"     and  not  an undesignated  chapter  11

          trustee    to convene a meeting of creditors and  that the United

          States Trustee had objected to reconvening  the meeting of credi-

          tors  scheduled by  Fessenden; or  (2)  the 30-day  deadline pre-

          scribed in Bankruptcy Rule 4003(b)  for objecting to an exemption

          claim cannot be  enlarged, citing the  Supreme Court decision  in

          Taylor,  112 S. Ct. at 1648 ("[Rule 4003(b)] [d]eadlines may lead
          ______

          to  unwelcome results, but they prompt parties to act and produce

          finality.").  But cf.  Mercer v.  Monzack, 53  F.3d 1  (1st Cir.)
                        ___ ___  ______     _______

          (distinguishing Taylor),  petition for  cert. filed, 64  U.S.L.W.
                          ______    ________ ___  _____ _____

          3439  (U.S. Dec.  12,  1995) (No.  95-970).   Petit  argued  that

          allowing  trustees  to  circumvent  Taylor,  through  the  simple
                                              ______

          expedient  of  routine, indefinite  adjournments  of  meetings of

          creditors, would deprive chapter 11 debtors of the benefit of the

          very policies of repose and finality acknowledged by the  Supreme

          Court in  Taylor.  Petit urged, at the very least, that a meeting
                    ______

          of  creditors adjourned  without  day be  deemed "concluded"  for

          purposes of the  Rule 4003(b)  time-bar if, as  here, the  United

          States Trustee (or chapter 11 trustee) fails  to announce, within

          30  days  of the  adjournment, a  firm  date for  reconvening the

          meeting of creditors.  See In re Levitt, 137 B.R.  881 (Bankr. D.
                                 ___ ____________

          Mass. 1992); infra note 2.
                       _____

                                          5

                    The bankruptcy  court first denied the  motion to quash

          the notice reconvening the  continued meeting of creditors, then,

          after it had been reconvened, ruled that the  Fessenden objection

          to  Petit's exemption claim was not time-barred, In re Petit, 172
                                                           ___________

          B.R.  706 (Bankr. D. Me. 1994) (Votolato, B.J.);1 Petit, 174 B.R.
                                                            _____

          868 (Bankr. D. Me.  1994) (Votolato, B.J.).2  The  district court
                              
          ____________________

               1The  bankruptcy   court  ruled  that   Fessenden  possessed
          unilateral  authority  to  reconvene  the  meeting  of  creditors
          because Bankruptcy Code    102(9) defines the term "United States
          trustee" to include a "designee,"  the term "designee" is synony-
          mous with the term "appointee," and the United States Trustee had
          appointed Fessenden as the chapter 11  trustee.  In light of  our
          holding, we need not resolve this question.

               2The  bankruptcy  court  sustained  the  objections  on  the
          following  grounds.   First,  it found  In  re Levitt  inapposite
                                                  _____________
          because the indefinite adjournment of the meeting of creditors by
          the  chapter  7 trustee  in that  case  had been  followed  by an
          unreasonable 15-month delay in reconvening the meeting.  Treating
                       ________
          the  "reasonableness" of any  delay in  reconvening a  meeting of
          creditors  as a matter  requiring case-by-case determination, the
          bankruptcy court  noted several factors which  indicated that the
          delay in this case was not  unreasonable:  (1) Fessenden did  not
          become  the chapter 11 trustee until after the initial meeting of
          creditors, in  part because Petit, a  "particularly litigious and
          obstructionist" debtor, had opposed  the appointment of a chapter
          11 trustee; (2)   the Fessenden  appointment, which occurred  the
          same day the 30-day period  prescribed in Bankruptcy Rule 4003(b)
          expired,  followed the unexpected  withdrawal or disqualification
          of  other  potential  chapter  11 trustee  candidates;  (3)  thus
          Fessenden was relegated to the role of a  mere "spectator" at the
          initial May 17 meeting  of creditors, and did not  participate in
          questioning  Petit  regarding her  schedules;  (4)  the Assistant
          United  States Trustee had informed Petit  at the initial meeting
          of creditors  that  although  it  was  unlikely  the  meeting  of
          creditors  would  be  reconvened,  "some  special  reason"  might
          require  it; and  (5)  Fessenden filed  objections  to the  Petit
          exemption claims 66 days after his appointment. 
               On the  merits, the bankruptcy court found  the Petit exemp-
          tion claims here  at issue  frivolous, for two  reasons.   First,
                                      _________
          Maine law does not permit residents to elect the federal slate of
          property exemptions, and  Petit's contention that  she was not  a
          Maine resident was found to be "farcical."  Her real and personal
          property was all located in Maine, where she also voted, received
          her  mail,  and secured  her driver's  license.   She  adduced no

                                          6

          affirmed.  Petit v. Fessenden (In re Petit), 182 B.R.  59 (D. Me.
                     _____    _________  ___________

          1995); Petit, 182 B.R. 57 (D. Me. 1995).
                 _____

                                          II
                                          II

                                      DISCUSSION
                                      DISCUSSION
                                      __________

          A.   Standard of Review
          A.   Standard of Review
               __________________

                    In a bankruptcy appeal, the  conclusions of law made by

          the district  court are subject  to plenary  review; whereas  the

          facts found by the  bankruptcy court are reviewed only  for clear

          error.   See  Indian Motocycle  Assocs. III  Ltd. Partnership  v.
                   ___  _______________________________________________

          Massachusetts Hous.  Fin. Agency (In re  Indian Motocycle Assocs.
          ________________________________  _______________________________

          III Ltd. Partnership), 66 F.3d 1246, 1249 (1st Cir. 1995).    
          ____________________

          B.   The Claim of Exemptions
          B.   The Claim of Exemptions
               _______________________

                    Although Petit  renews on appeal most  of the arguments

          made below, we do not reach them, see Juniper Dev.  Group v. Kahn
                                            ___ ___________________    ____

          (In re Hemingway Transp.), 993 F.2d 915, 935 (1st Cir.) (court of
           _______________________

          appeals  may affirm  on  any ground  established  by the  record,

          whether  or not  raised or  addressed in  the  bankruptcy court),

          cert. denied,  114 S. Ct. 303  (1993), since she has  not met the
          _____ ______

          first indispensable precondition to  a valid claim of exemptions:

          a  timely claim of exemptions.    See Fed. R. App. P. 11(a); Byrd
             ______                         ___                        ____
                              
          ____________________

          concrete  evidence that she had  resided in Massachusetts for 180
          days prior to the  involuntary chapter 7 petition.   Second, even
          if  Petit had been  permitted by Maine  law to claim  the federal
          exemptions,  she had  not  established that  the pending  lawsuit
          against Key Bank involved a claim arising "under a crime victim's
          reparation  law," see  11 U.S.C.    522(d)(11)(A),  or for  "pay-
                            ___
          ment[s] .  . . on account  of personal bodily injury,"  see id.  
                                                                  ___ ___
          522(d)(11)(D).   Further, Petit had not  claimed these exemptions
          under    522(d) (11)(E)  (compensation for "loss  of future earn-
          ings") because Schedule C did not cite to   522(d)(11)(E). 

                                          7

          v. Ronayne, 61  F.3d 1026,  1029 n.4 (1st  Cir. 1995)  (appellant
             _______

          must  include  in appellate  record  all  materials essential  to

          appellate claim).  

                    A debtor must list the property claimed as exempt under

          Bankruptcy Code   522 within the applicable time limit prescribed

          in Bankruptcy  Rule 1007.   See  Fed. R. Bankr.  P. 4003(a).   An
                                      ___

          alleged  debtor  in  an  involuntary case  must  file  schedules,

          including any Schedule  C    Property Claimed as  Exempt, "within

          15 days after the entry of the  order of relief."  Fed. R. Bankr.

          P. 1007(c).  Schedules duly filed in a chapter 7 case are "deemed

          filed in a superseding case  unless the court directs otherwise."

          Id.    Any extension of the filing  deadlines prescribed by Bank-
          ___

          ruptcy  Rule 1007(c)  "may be  granted only  on motion  for cause

          shown and  on  notice to  the United  States trustee  and to  any

          committee  elected pursuant to    705 or appointed  pursuant to  

          1102 of the Code, trustee, examiner,  or other party as the court

          may  direct."   Id.;  see  also  Fed.  R.  Bankr.  P.  9006(b)(1)
                          ___   ___  ____

          (imposing a  heightened showing of "excusable  neglect" where the

          motion to extend the time for filing is made after the expiration

          of the original 15-day filing period). 

                    Petit  filed no  schedules  until  February  25,  1994,

          despite the fact  that the order for  relief under chapter 7  had

          been entered on December 10, 1993, which meant that her schedules

          were due not later than December 26, 1993, absent a timely motion

          to extend the filing period for cause shown or excusable neglect.

          Nonetheless, no request to  extend the filing time was  ever made

                                          8

          pursuant to Bankruptcy Rule 1007(c).  See, e.g., Bryant v. Smith,
                                                ___  ____  ______    _____

          165  B.R.  176, 181-82  (W.D. Va.  1994)  ("The court  finds that

          untimely filed  schedules waive  a debtor's exemption  unless the

          untimely  filing  is permitted  by  the bankruptcy  judge  in his

          discretion for cause shown or excusable neglect.").  

                    During  the 15-day window allowed under Bankruptcy Rule

          1007(c), Petit did file a motion to convert the chapter 7 case to

          chapter 11, but this motion neither excused the failure to comply

          with  Bankruptcy  Rule  1007(c),  nor tolled  the  15-day  filing

          period.  Finally, the automatic "deeming" provision in Bankruptcy

          Rule  1007(c),  see supra  p. 8,  can afford  no refuge  since no
                          ___ _____

          chapter 7  schedules were  ever filed.   Nor did  the chapter  11

          schedules eventually filed by  Petit cure her procedural default.

                    First, although  an order of conversion  constitutes an

          "order for  relief" under the chapter  to which the case  is con-

          verted, see 11 U.S.C.    348(a), it "does not effect a  change in
                  ___

          the date of . . . the order for relief."  That is to say, "[s]ec-

          tion 348(a) provides that 'those provisions of the Code which are

          keyed to  the date of  entry of  the order for  relief for  their

          operation are unaffected . . .  by conversion.'"  F & M Marquette
                                                            _______________

          Nat'l Bank v. Richards, 780 F.2d 24, 25  (8th Cir. 1985) (quoting
          __________    ________

          2  Lawrence P.  King, Collier  on Bankruptcy    348.02  (15th ed.
                                ______________________

          1979)); see Schwartz v. Jetronic Indus., Inc. (In re Harry Levin,
                  ___ ________    _____________________  __________________

          Inc.), 175 B.R. 560, 570 (Bankr. E.D. Pa. 1994); Leydet v. Leydet
          ____                                             ______    ______

          (In re  Leydet), 150 B.R. 641, 642 (Bankr. E.D. Va. 1993).  Since
           _____________

                                          9

          the  time  limits  prescribed  in Bankruptcy  Rules  1007(c)  and

          4003(a) are  keyed to the date of the order for relief, which had

          already been entered on  December 10, 1993, the order  of conver-

          sion could  not  effect  an automatic  extension  of  the  15-day

          deadline (December 26, 1993) for filing schedules.

                    Second, Petit inexplicably made matters more problemat-

          ic by disregarding a  ready opportunity, and her  clear responsi-

          bility, to  cure  the procedural  default  by complying  with  an

          explicit bankruptcy court order directing  her to file chapter 11

          schedules not later than February 23,  1994.  See Fed. R.  Bankr.
                                                        ___

          P. 9006(b), (c).    Instead,  Petit failed  to file the  required

          chapter  11 schedules  until  February 25,  two  days beyond  the

          deadline.   Thus, Petit's  chapter 11 schedules  were time-barred

          even  viewed in the most  favorable light, without  regard to her

          failure to notify the  United States Trustee of her  intention to

          request  an extension under Rule  4003(a) or to  allege or demon-

          strate  either  excusable neglect  or good  cause.   See  Fed. R.
                                                               ___

          Bankr. P. 1007(c), 9006(b)(1). 

                    The Taylor Court recognized that a debtor should not be
                        ______

          indefinitely  or  unreasonably  delayed  in  reacquiring property

          while the trustee  or creditors  ponder whether or  not to  lodge

          objections  to a claim of exemptions.   See Taylor, 112 S. Ct. at
                                                  ___ ______

          1644; In re Young, 806  F.2d 1303, 1305 (5th Cir. 1987);  Fed. R.
                ___________

          Bankr.  P.  4003(b), 9006(b)(3)  (trustee  must  move for  filing

          extension  before  end of  30-day period).    Unless and  until a

          debtor files a  timely claim of exemptions, however,  as required

                                          10

          by  the Bankruptcy  Code  and  the  Federal Rules  of  Bankruptcy

          Procedure,  there is no "list of property claimed exempt" for the

          trustee or creditors  to oppose.   See, e.g.,  Redfield v.  Peat,
                                             ___  ____   ________     _____

          Marwick and Co. (In re Robertson), 105 B.R. 440, 450 (Bankr. N.D.
          _______________  _______________

          Ill.  1989) ("The Debtor and  other Defendants here  who seek the

          normal  benefit that flows from  a timely claim  of exemption not

          timely objected to, rest  their contention on a  late-filed claim

          that the Court never allowed to be filed. . . . In this case, the

          exemption claim  late-filed without  notice, motion, or  leave of

          Court,  is not entitled to the automatic allowance that Bankr. R.

          4003(a) gives to  a timely  filed exemption  claim if  it is  not

          timely objected to.   He who seeks  to benefit by the  Bankruptcy

          Rules must abide by them.").  In these circumstances, the princi-

          ple of repose relied  upon in Taylor supports the  rulings below.
                                        ______

          Taylor, 112 S. Ct. at 1648 ("[Rule 4003(b)] deadlines may lead to
          ______

          unwelcome results, but  they prompt  parties to  act and  produce

          finality.").3 

                    The district court judgment is affirmed and the case is
                    The district court judgment is affirmed and the case is
                    _______________________________________________________

          remanded to the bankruptcy  court for further proceedings consis-
          remanded to the bankruptcy  court for further proceedings consis-
          _________________________________________________________________

          tent with this opinion.  Costs are awarded to appellees.   
          tent with this opinion.  Costs are awarded to appellees.
          ______________________   ______________________________

                              
          ____________________

               3In  opposing Petit's  claim of  exemptions, the  chapter 11
          trustee agreed, in principle,  not to oppose her claim  of exemp-
          tions insofar as it pertained to legitimate state-law exemptions,
          if any.  Consequently,  we express no opinion on  the preliminary
          and  related  question whether,  upon  remand  to the  bankruptcy
          court, Petit  should prevail on any motion  to extend the time in
          which  to file  such  a claim  of  exemptions for  good  cause or
          excusable neglect.

                                          11