Court Opinion

ID: 4663482
Source: CourtListenerOpinion
Date Created: 2021-02-27 00:00:33.56594+00
Date Added: 2024-06-11T08:02:29.102616
License: Public Domain

NOT FOR PUBLICATION                               FILED
                                                                             FEB 26 2021
                                                                   SUSAN M. SPRAUL, CLERK
                                                                        U.S. BKCY. APP. PANEL
                                                                        OF THE NINTH CIRCUIT

          UNITED STATES BANKRUPTCY APPELLATE PANEL
                    OF THE NINTH CIRCUIT

In re:                                               BAP No. CC-20-1006-GFL
ARNO ARUTYUNYAN,
           Debtor.                                   Bk. No. 2:19-bk-16510-RK

SOROUSH JANAMIAN,                                    Adv. No. 2:19-ap-01381-RK
            Appellant,
v.                                                   MEMORANDUM 1

ARNO ARUTYUNYAN,
           Appellee.

               Appeal from the United States Bankruptcy Court
                    for the Central District of California
                Robert N. Kwan, Bankruptcy Judge, Presiding

Before: GAN, FARIS, and LAFFERTY, Bankruptcy Judges.

                                 INTRODUCTION

      Creditor Soroush Janamian (“Janamian”) appeals the bankruptcy

court’s order granting chapter 7 2 debtor Arno Arutyunyan’s (“Debtor”)

      1  This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
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motion to dismiss Janamian’s adversary complaint pursuant to Civil Rule

12(b)(6), made applicable by Rule 7012. In the adversary proceeding,

Janamian sought to except his debt from discharge under §§ 523(a)(2), (4),

and (6). However, he failed to file the complaint by the deadline imposed

under Rule 4007(c) or seek an extension of the deadline in accordance with

that Rule.

      The bankruptcy court was right. It could not retroactively extend the

deadline. Accordingly, we AFFIRM.

                                        FACTS 3

      Debtor filed his chapter 7 petition on June 3, 2019. He listed Janamian

on Schedule E/F as a creditor with an unsecured claim of $104,577. All

creditors, including Janamian, received notice from the court that the

deadline for filing a nondischargeability complaint was September 6, 2019.

      On September 13, 2019, Janamian filed his adversary complaint

seeking to except his debt from discharge under § 523(a)(2), (4) and (6). The

complaint was signed and dated by Janamian on September 6, 2019.

      Debtor filed a motion to dismiss the complaint and argued that

Janamian did not file the complaint within the time limit of Rule 4007(c)

      2   Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101–1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure
        3 We exercise our discretion to take judicial notice of documents electronically

filed in the adversary proceeding and the main case. See Atwood v. Chase Manhattan
Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
                                            3
and did not file a motion to extend the deadline. Janamian did not file a

response to the motion to dismiss prior to the hearing. Instead, he asserted

in the joint status report that he was not served with the motion to dismiss

and had no knowledge of it.

      At the hearing on the motion to dismiss, Janamian stated that neither

he nor his attorney were served with the motion. He requested a

continuance to allow him to file an opposition to the motion to dismiss. The

bankruptcy court permitted Janamian to file an opposition and informed

the parties that after receiving the opposition and Debtor’s reply, it would

take the matter under submission unless it determined that a further

hearing would be needed.

      Janamian argued in his opposition that the time limit was not

jurisdictional, and because he made a good faith effort to timely file the

complaint, the bankruptcy court should grant equitable relief. Janamian

also provided a declaration of Alex Spada, a registered process server who

worked for Janamian.

      Pursuant to the declaration, Mr. Spada received the complaint from

Janamian on September 6, 2019 and unsuccessfully attempted to “fax file”

it with the court. On September 9, 2019, he submitted the complaint to One

Legal, an electronic filing service, for filing with the court. Mr. Spada then

contacted One Legal on September 11, 2019 and was told that the

complaint was rejected because the court needed the “original paperwork.”

On September 12, 2019, he tried to file the complaint at the bankruptcy

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court but was told he needed to file the complaint with the “original wet

signature.” Finally, he obtained the original complaint and filed it on

September 13, 2019.

      Debtor argued in his reply that Janamian had notice of the deadline,

and he failed to provide any basis for equitable relief.

      The bankruptcy court issued a memorandum decision and entered an

order dismissing the complaint with prejudice. The bankruptcy court held

that pursuant to Rule 4007(c), Janamian was required to either file his

complaint or a motion for an extension by September 6, 2019. The court

determined that fax filing is not a proper method of filing a complaint

under Rule 5005(a) and generally only attorneys can electronically file

documents using the court’s electronic filing system. The court further

reasoned that pursuant to Local Bankruptcy Rule 1071-1(c), documents

filed non-electronically must be filed in the clerk’s office and must be

accompanied by the required fee and signature.

      The bankruptcy court held that under Ninth Circuit precedent, it had

no discretion to retroactively extend the deadline and therefore, the

complaint was untimely and must be dismissed with prejudice. Janamian

timely appealed.

                              JURISDICTION

      The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(I). We have jurisdiction under 28 U.S.C. § 158.

                                       5
                                    ISSUE

      Did the bankruptcy court err by dismissing the complaint?

                         STANDARD OF REVIEW

      We review the bankruptcy court’s decision to dismiss a complaint

with prejudice for abuse of discretion. Anwar v. Johnson, 720 F.3d 1183, 1186

(9th Cir. 2013). A bankruptcy court abuses its discretion if it applies an

incorrect legal standard or its factual findings are illogical, implausible, or

without support in the record. TrafficSchool.com v. Edriver, Inc., 653 F.3d 820,

832 (9th Cir. 2011).

                                DISCUSSION

      To challenge the dischargeability of a debt under §§ 523(a)(2), (4), or

(6), a creditor must affirmatively request an exception from discharge.

§ 523(c). Rule 4007(c) requires 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).” Pursuant

to Rule 9006(b)(3), the bankruptcy court can extend this deadline only to

the extent and under the conditions stated in Rule 4007(c), which permits

an extension for cause, on a motion from a party in interest filed within the

sixty-day deadline.

      Rules 4007(c) and 9006(b) are not jurisdictional. They are claim

processing rules which operate to (1) inform creditors of the time to file a

complaint; (2) instruct the court on the limits of its discretion to extend the

deadline; and (3) provide debtors with an affirmative defense to an

                                       6
untimely filed complaint. See Kontrick v. Ryan, 540 U.S. 443, 455-56 (2004)

(analyzing Rule 4004). Janamian had notice of the deadline and Debtor

timely raised the defense in his motion to dismiss.

      Janamian acknowledges that he had notice of the deadline, and he

does not dispute that he failed to file the complaint or a motion to extend

the deadline within the time limit imposed by Rule 4007(c). Instead, he

argues that the bankruptcy court erred by failing to conduct an evidentiary

hearing to determine whether the facts involved in Janamian’s attempts to

timely file the complaint warranted equitable relief from the deadline.

      The Ninth Circuit has “repeatedly held that the sixty-day time limit

for filing nondischargeability complaints under 11 U.S.C. § 523(c) is ‘strict’

and, without qualification, ‘cannot be extended unless a motion is made

before the 60-day limit expires.’” Anwar, 720 F.3d at 1187 (quoting Allred v.

Kennerly (In re Kennerly), 995 F.2d 145, 146 (9th Cir. 1993)). Bankruptcy

courts lack equitable power to retroactively extend the deadline under

§ 105(a) because doing so would conflict with the plain language of Rules

4007(c) and 9006(b)(3). Id.

      Janamian did not request an evidentiary hearing, but the factual

circumstances surrounding his failure to timely file the complaint are not

relevant to the bankruptcy court’s decision. It is immaterial that Janamian

made a good faith effort to file the complaint on time. See id. at 1188 (“[T]he

fact that [plaintiff] missed the deadline by less than an hour is

                                       7
immaterial.”). It is also immaterial that his “untimely filing stemmed from

difficulty with an electronic filing system.” Id.

      The Ninth Circuit has recognized a limited exception to the sixty-day

time limit for “extraordinary” circumstances. Willms v. Sanderson, 723 F.3d

1094, 1103 (9th Cir. 2013); In re Kennerly, 995 F.2d at 147. But this

“extraordinary circumstances” exception applies only where the

bankruptcy court “explicitly misleads a party” into untimely filing its

complaint. In re Kennerly, 995 F.2d at 147-48; Merenda v. Brown (In re Brown),

102 B.R. 187, 189 (9th Cir. BAP 1989). “Absent action by the court that could

have misled the creditor, there is no authority for finding ‘extraordinary

circumstances’ that would allow an untimely complaint to go forward.”

Classic Auto Refinishing, Inc. v. Marino (In re Marino), 143 B.R. 728, 733 (9th

Cir. BAP 1992), aff’d, 37 F.3d 1354 (9th Cir. 1994).

       Janamian does not argue that he was misled by the bankruptcy

court. He failed to timely file the complaint because he chose to “fax file” it

instead of filing the complaint “in the divisional office of the clerk,”

“accompanied by [the] required fee and signature” as required by Local

Bankruptcy Rules 1071-1(c) and 5005-1.

      Regardless of the problems Janamian encountered in his attempts to

file the complaint, the bankruptcy court lacked equitable power to deviate

from the strict terms of Rule 4007(c). Janamian did not file the complaint or

a motion to extend within the time set by Rule 4007(c) and the bankruptcy

court did not abuse its discretion by granting the motion to dismiss.

                                        8
                            CONCLUSION

     Based on the foregoing, we AFFIRM the bankruptcy court’s order

dismissing the adversary complaint with prejudice.

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