Court Opinion

ID: 3063091
Source: CourtListenerOpinion
Date Created: 2015-10-14 20:56:11.233122+00
Date Added: 2024-06-11T12:45:09.551921
License: Public Domain

[DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________            FILED
                                                 U.S. COURT OF APPEALS
                              No. 09-11871         ELEVENTH CIRCUIT
                                                      MARCH 18, 2010
                          Non-Argument Calendar
                                                        JOHN LEY
                        ________________________
                                                         CLERK

                  D. C. Docket No. 08-00443-CV-CB-M
                      Bankruptcy No. BK-04-11858

ALABAMA DEPT. OF ECONOMIC
AND COMMUNITY AFFAIRS,

                                                           Plaintiff-Appellant,

                                  versus

CHARLES L. LETT, SR.,

                                                         Defendant-Appellee.

                        ________________________

               Appeals from the United States District Court
                  for the Southern District of Alabama
                     _________________________

                             (March 18, 2010)

Before EDMONDSON, WILSON, and FAY, Circuit Judges.
PER CURIAM:

      Plaintiff-Appellant, the Alabama Department of Economic and Community

Affairs (“ADECA”), appeals from a decision of the district court that affirmed a

bankruptcy court decision dismissing proceedings initiated by ADECA against

ADECA’s debtor, Defendant-Appellee Charles L. Lett, Sr., a physician. No

reversible error has been shown; we affirm.

      ADECA obtained a state court consent judgment against Dr. Lett after Dr.

Lett defaulted on a HUD Section 108 loan issued to Dr. Lett and his corporation.

Before ADECA could enforce this judgment, Dr. Lett filed a Chapter 11

bankruptcy proceeding for himself and his corporation. In the bankruptcy

proceedings, ADECA filed an adversary complaint seeking a determination that

Dr. Lett’s debt to ADECA was nondischargeable under 11 U.S.C. § 523. The

bankruptcy court entered a judgment dismissing ADECA’s adversary proceeding

as untimely filed. ADECA’s motion to alter or amend that dismissal was denied;

ADECA appealed the order denying that motion to the district court. The district

court affirmed the bankruptcy court.

      The relevant underlying facts may be briefly summarized. On 19 December

2001, ADECA obtained a state court judgment in the amount of $3.012 million

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against Dr. Lett due to his default on a HUD Section 108 loan. On 26 March 2004,

Dr. Lett filed an individual Chapter 11 bankruptcy petition; and on 29 March 2004,

the bankruptcy court issued to Dr. Lett’s creditors, including ADECA, a “Notice

of Chapter 11 Bankruptcy Case, Meeting of Creditors, & Deadlines” (the

“Notice”). Among the deadlines listed on the form Notice was the date for the first

meeting of the creditors: 13 May 2004.

      The Notice contained a section entitled “Deadline to File a Complaint to

Determine Dischargeability of Certain Debts;” inexplicably, the space for the date

was left blank. ADECA’s counsel stated that he understood the absence of a

specific date meant that no deadline had been set. Later, ADECA’s counsel called

the clerk’s office and was told by clerk’s office personnel that no deadline had

been set by the court.

      Dr. Lett was deposed as part of the bankruptcy proceedings; the deposition

concluded on 23 February 2005. On 24 March 2005, ADECA filed it adversary

complaint alleging that Dr. Lett had committed fraud in obtaining the loan.

      Under Bankruptcy Rule 4007(c), a creditor -- such as ADECA -- who seeks

a determination of the dischargeability of a debt on the grounds alleged by

ADECA, must file a dischargeability complaint in the bankruptcy court no later

than 60 days after the first date set for the debtor’s section 341 meeting of

                                           3
creditors, unless the creditor files a motion for extension of time before the 60 days

have expired and that motion is granted by the bankruptcy court. Because the date

first set for Dr. Lett’s section 341 meeting of creditors was 13 May 2004, under

Rule 4007(c), ADECA had 60 days -- until 12 July 2004 -- to file an adversary

complaint or to seek an extension to file. ADECA sought no extension; its

complaint, filed on 24 March 2005, was filed outside of Rule 4007(c)’s 60-day

time period.

       In answer to ADECA’s complaint, Dr. Lett pleaded the “statute of

limitations” generally as an affirmative defense. Neither side filed pretrial

dispositive motions addressing that defense. In due course, the bankruptcy court

scheduled trial on the merits of ADECA’s complaint. Before trial, Dr. Lett filed a

“position statement” that asserted, among other things, that the two-year limitations

period had expired and that the claim “was filed beyond sixty days of this case

being filed.”1 Again Dr. Lett made unclear references to the statute of limitations

at the close of ADECA’s case. Rule 4007(c) never was cited as the source of the

asserted defense.

       The trial was completed on 2 February 2006. During the course of the trial,

       1
         Although the position statement focused on 60 days from the “case being filed,” Rule
4007(c) requires a nondischargeability complaint to be filed no later than 60 days after “the first
date set for the meeting of creditors.”

                                                 4
Dr. Lett’s counsel made no mention of Rule 4007(c) or the 60-day deadline. Lett’s

counsel also made no mention of Rule 4007(c) or the 60-day deadline in his

closing argument presented in the form of a post-trial brief. ADECA, in its post-

trial rebuttal brief, argued that Dr. Lett was not relying on Rule 4007(c)’s 60-day

deadline. Dr. Lett disputed ADECA’s characterization of his argument in a

“surrebuttal brief.”

      After receiving the post-trial briefing, the bankruptcy court dismissed

ADECA’s complaint: it was not filed within the 60-day time period required by

Rule 4007(c). ADECA filed a motion to alter or amend the judgment; it contended

that the late filing of its complaint in the adversary proceeding should be excused

because (1) Dr. Lett forfeited the Rule 4007(c) defense when he failed to present it

before trial, or (2) the bankruptcy court should have extended the Rule 4007(c)

time period under the doctrine of equitable tolling. ADECA’s motion was denied;

and the district court affirmed that denial.

      We have jurisdiction pursuant to 28 U.S.C. § 158(d). Determinations of law

-- from the bankruptcy court or the district court -- are reviewed de novo. In re

International Administrative Services, Inc., 408 F.3d 686, 698 (11th Cir. 2005);

findings of fact made by the bankruptcy court are reviewed for clear error. In re

JLJ Inc., 988 F.2d 1112, 1116 (11th Cir. 1993).

                                               5
       ADECA argues first that Dr. Lett waived the Rule 4007(c) defense by failing

to present it to the bankruptcy court until its post-trial “surrebuttal brief.” Defenses

afforded by the bankruptcy rules can be forfeited if the party seeking the benefit of

the rule waits too long to raise the point. See Kontrick v. Ryan, 124 S.Ct. 906, 916

(2004) (considering limitations period in Bankruptcy Rule 4004).2 So, if Dr. Lett

failed to raise the Rule 4007(c) defense before litigation on the merits, the benefits

of the defense would have be forfeited. But the district court determined that Dr.

Lett’s answer -- which raised a statute of limitations defense -- raised the Rule

4007(c) limitations period as a defense. We agree that Dr. Lett preserved the Rule

4007(c) defense when he pleaded the statute of limitations in his answer even

though the answer contained no specific reference to Rule 4007(c).

       In discussing the time period for filing claims set out in Bankruptcy Rule

4004, the Supreme Court made clear that such rules constitute a time bar to the

filing of a complaint; the Court further opined that “[t]ime bars ... generally must

be raised in an answer or responsive pleading.” Kontrick, 124 S.Ct. at 917, citing

Fed.R.Civ.P 8(c), made applicable to adversary bankruptcy proceedings by

Bankruptcy Rule 7008(a). Rule 8(c) requires a party to plead certain affirmative

defenses -- including the statute of limitations -- but sets forth no other details of

       2
       Bankruptcy Rules 4004 and 4007 essentially have the same time prescriptions. See
Kontrick, 124 S.Ct. at 911 n.3.

                                             6
the pleading requirements. Other courts, citing Kontrick, have held that the time-

limits prescribed in Rules 4004 and 4007 are akin to statutes of limitations, see

Disch v. Rasmussen, 417 F.3d 769, 776 (7th Cir. 2005. We have referred to

similar time requirements as statutes of limitations. See Bryant v. U.S. Dept. of

Agriculture , 967 F.2d 501, 504 (11th Cir. 1992) (treating 30-day period in which

to file Title VII action after receipt of right to sue letter as akin to statute of

limitations). At the pleading stage, by asserting a statute of limitations defense in

his answer, Dr. Lett preserved the limitations defense provided by Rule 4007(c).

       ADECA argues that even if the Rule 4007(c) defense was preserved, Dr.

Lett “subsequently forfeited” that defense by failing to pursue it until after trial.

But the bankruptcy court concluded that the Rule 4007(c) defense was raised --

albeit inartfully -- by Dr. Lett (1) in his answer; (2) in his pretrial position

statement; (3) at the close of ADECA’s evidence; and (4) in a post-trial brief. And

once preserved, the timing of when a defense should be heard is within the sound

discretion of the trial court. “[D]istrict courts enjoy broad discretion in deciding

how best to manage the cases before them.” Chudasama v. Mazda Motor Corp.,,

123 F.3d 1353, 1366 (11th Cir. 1997). While that discretion is not unfettered, see

id. at 1367, the trial court is in the best position to determine whether, in the

orderly and fair administration of the case, an issue was sufficiently preserved

                                              7
pretrial and, appropriately, could be ruled on after the presentation of evidence at

trial. ADECA demonstrates no unfair prejudice. While litigation expenses may

have been avoided if the bankruptcy court earlier had resolved issues related to the

timeliness of ADECA’s complaint, we can not say that, under these circumstances,

the bankruptcy court decision rests on clearly erroneous factual findings or that a

clear abuse of discretion was committed when the Rule 4007(c) ruling was made

post-trial.

       ADECA also argues that the bankruptcy court should have extended the

Rule 4007(c) filing period in the light of the clerk’s office’s failure to include a

date in the Notice and that office’s assurance that no date had been set. As

explained fully in the district court’s order affirming the bankruptcy court’s

decision denying ADECA’s motion to alter or amend the judgment, circuit

precedent supports squarely the denial of equitable relief. See In re Williamson, 15

F.3d 1037 (11th Cir. 1994) (rejecting argument that reliance on date “to be set” in

bankruptcy notice, coupled with assurances from clerk’s office that no date had

been set, warrants extension of Rule 4007(c)’s 60-day filing requirement); see also

In re Alton, 837 F.2d 457, 460 (11th Cir. 1988). Precedent precludes ADECA’s

argument that inclusion of a date in the Notice was required to trigger Rule

4007(c)’s 60-day filing limitation. And, again for reasons explained fully in the

                                            8
district court’s order, ADECA fails to show that the bankruptcy court abused its

discretion by failing to toll the Rule 4407(c) limitations period based on equitable

considerations.3

       AFFIRMED.

       3
         In Kontrick, 124 S.Ct. at 916, the Supreme Court expressly left open whether equitable
grounds ever may afford relief from the deadlines set out in Bankruptcy Rules 4004 and 4007.
Because no sufficient case has been made for equitable tolling, we need say nothing on this issue
left open in Kontrick.

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