Court Opinion

ID: 3018935
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:20:02.80216+00
Date Added: 2024-06-11T11:47:12.032291
License: Public Domain

United States Bankruptcy Appellate Panel
                                        FOR THE EIGHTH CIRCUIT

                                                 No. 97-6037

Stephan Arleaux,                                     *
                                                     *
                   Appellant                         *
                                                     * Appeal from the United States
        v.                                           * Bankruptcy Court for the
                                                     * Southern District of Iowa
Selisia Arleaux,                            *
                                                     *
                   Appellee                          *

                                           Submitted: June 24, 1997

                                             Filed: July 16, 1997

Before KOGER, Chief Judge, KRESSEL and DREHER, Bankruptcy Judges.

KRESSEL, Bankruptcy Judge.

                                                BACKGROUND
        The appellant is the debtor in this Chapter 7 case. The appellee is his ex-wife. In October of 1994,

Selisia Arleaux filed for divorce.   On February 7, 1995, the debtor filed an individual Chapter 7 petition,

and a discharge was entered on May 10, 1995. On March 25, 1996, the Iowa District Court for Polk County

entered a decree dissolving the parties’ marriage and awarding

                                                         1
Selisia Arleaux alimony and child support.1 In response, the debtor moved to reopen his bankruptcy case to

file a complaint to determine the dischargeability of his debt for alimony and support. His ex-wife opposed

the motion. Noting that the debt was incurred after the order for relief was entered, the bankruptcy court2

denied the debtor’s motion. The debtor appeals.

                                                DISCUSSION

         In his appeal, the debtor asks this Court to reverse the bankruptcy court’s decision denying his

motion to reopen his bankruptcy case.3 11 U.S.C. § 350 governs the reopening of bankruptcy cases. Section

350(b) provides that “[a] case may be reopened in the court in which such case was closed to administer

assets, to accord relief to the debtor, or for other cause.” 11 U.S.C. § 350(b).

         It is well settled that bankruptcy judges enjoy considerable discretion in deciding whether to reopen

cases. In re Rosinski, 759 F.2d 539, 540-41 (6th Cir. 1985) (“[D]ecisions as to whether to reopen

bankruptcy cases . . . are committed to the sound discretion of the bankruptcy judge. . . .”); Hawkins v.

Landmark Fin. Co., 727 F.2d 324, 326 (4th Cir. 1984) (holding that the decision to reopen “is committed to

the court’s discretion.”).

         1
          The decision is currently on appeal before the Iowa Supreme Court.
         2
         The Honorable Russell J. Hill, Chief United States Bankruptcy Judge for the Southern
District of Iowa.
         3
         The debtor also made a motion to strike his ex-wife’s brief. Both parties have strayed
from the record in their submissions to the court. For purposes of this appeal, we rely on the
record solely as developed in the bankruptcy court and not on the recitation of facts in the parties’
briefs. Therefore, the debtor’s motion to strike his ex-wife’s brief is unnecessary. Accordingly, it
is denied.

                                                        2
        Accordingly, we review the bankruptcy court’s decision not to reopen for an abuse of discretion. In

re Herzig, 96 B.R. 264, 266 (B.A.P. 9th Cir. 1989) (holding that decision to reopen “will not be set aside

absent an abuse of discretion.”); Citizens Bank & Trust Co. v. Case (In re Case), 937 F.2d 1014, 1018 (5th

Cir. 1991) (“Our review of the bankruptcy court’s decision to reopen an estate or proceeding is governed by

the abuse of discretion standard.”).

        In the instant case, the bankruptcy judge based his denial of the debtor’s motion largely on the

conclusion that reopening the case would provide no relief to the debtor. Ordinarily, when a request is made

to reopen a case for the purpose of filing a dischargeability complaint, the court should reopen routinely and

reach the merits of the underlying dispute only in the context of the adversary proceeding, not as part of the

motion to reopen. However, where, as here, the proposed dischargeability complaint is completely lacking in

merit, it is not inappropriate for the court to examine the issues, nor is it an abuse of discretion to deny the

motion to reopen.4

        For example, in In re Beezley, 994 F.2d 1433 (9th Cir. 1993), the debtor moved to reopen his case to

add an omitted creditor to his bankruptcy schedules. Noting that the debtor’s case was a “no-asset, no bar-

date Chapter 7 proceeding,” the court remarked that the debtor’s request to amend his bankruptcy schedules

to discharge the omitted debt was “a request for that which is legally irrelevant.” Id. at 1437. Therefore, the

Ninth Circuit reasoned that the bankruptcy court

        4
         This is somewhat analogous to a Rule 60(b)(1) motion. Rule 60(b)(1) provides that
“[o]n motion and upon such terms as are just, the court may relieve a party or a party’s legal
representative from a final judgment, order, or proceeding for . . . mistake, inadvertence, surprise,
or excusable neglect. . . .” Fed. R. Civ. P. 60(b)(1). Courts routinely deny Rule 60(b)(1) motions
unless the movant can demonstrate a meritorious defense. See United States v. 50th Street
South, 5 F.3d 1137, 1138 (8th Cir. 1993); Hoover v. Valley West D M, 823 F.2d 277, 280 (8th
Cir. 1987); Marshall v. Boyd, 658 F.2d 552, 555 (8th Cir. 1981); Assman v. Fleming, 159 F.2d
332, 336 (8th Cir. 1947).

                                                         3
did not abuse its discretion in summarily denying the debtor’s motion: “The bankruptcy court was surely not

required to involve itself in such a pointless exercise [and] could, without abuse of discretion, have simply

rejected [the debtor’s] motion out of hand.” Id. See In re Herzig, 96 B.R. at 267 (denying debtor’s motion to

reopen because “the recovery of unadministered assets appears too remote . . . to justify the reopening of the

case.”); In re Hardy, No. 91-20469, 1997 WL 192273, at *8 (Bankr. E.D. Va. Jan. 28, 1997) (denying

debtor’s motion to reopen his case to bring an action under 11 U.S.C. § 525 (b) because the debtor could not

demonstrate an employer-employee relationship).

         In their submissions to the Court, the parties cite numerous cases, which, in the main, are off the

mark. For example, the debtor argues that his debt to his ex-wife was discharged in bankruptcy because it is

in the nature of a property settlement. See 11 U.S.C. § 523(a)(5). However, as the bankruptcy court

correctly recognized, the classification of the debt is irrelevant since it was incurred after the debtor filed his

bankruptcy petition.

         Contrary to the parties’ positions, the issue presently before this Court is one of timing. See In re

Neier, 45 B.R. 740, 743 (Bankr. N.D. Ohio 1985) (holding that “timing is the dispositive issue” in

dischargeability case). In this case, the debtor filed his bankruptcy petition on February 7, 1995. The debtor

received his discharge on May 10, 1995. On March 25, 1996, the divorce court entered its decree awarding

Selisia Arleaux alimony and child support. The debtor seeks to discharge this debt even though it arose post-

petition and, in fact, even after the discharge was entered.

         The Code is clear that he cannot do so. 11 U.S.C. § 727 provides that a Chapter 7 discharge

“discharges the debtor from all debts that arose before the date of the order for relief. . .

                                                         4
.” (emphasis added).5 In In re Neier, 45 B.R. 740 (N.D. Ohio 1985), a case strikingly similar to this one, the

debtor sought to enjoin his ex-wife from enforcing the provisions of a divorce decree entered after the debtor

filed his bankruptcy petition. The bankruptcy court denied the debtor’s request for injunctive relief, holding

that the discharge did not operate to discharge the debtor from debts which were incurred after the filing of

the bankruptcy petition:

         [T]he law is clear that a discharge only applies to those debts “that arose before the date of
         the order for relief” as provided by § 727 (b) and that this obligation was a new debt created
         in a divorce decree more than one year after the debtor filed his petition in bankruptcy.

Id. at 741.

                                               CONCLUSION

         Since the bankruptcy court correctly concluded that the debtor’s dischargeability claim was without

merit, we find that it did not abuse its discretion in denying the debtor’s motion to reopen his bankruptcy

case. Accordingly, the decision of the bankruptcy court is affirmed.

         A true copy.

                 Attest:

                       CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR
                 THE EIGHTH CIRCUIT

         5
          In a voluntary case, the filing of a petition also acts as the order for relief. 11 U.S.C §
301.

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