Court Opinion

ID: 2978072
Source: CourtListenerOpinion
Date Created: 2015-09-22 18:18:53.782982+00
Date Added: 2024-06-11T11:44:10.439881
License: Public Domain

ELECTRONIC CITATION: 2009 FED App. 0005P (6th Cir.)
                            File Name: 09b0005p.06

            BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT

In re: JOY ANN DUTKIEWICZ,                        )
                                                  )
                  Debtor.                         )
_____________________________________             )
                                                  )
JEFF A. MOYER, CHAPTER 7 TRUSTEE,                 )
                                                  )
                   Appellant,                     )
                                                  )
       v.                                         )      No. 09-8001
                                                  )
JOY ANN DUTKIEWICZ,                               )
                                                  )
                                                  )
                   Appellee.                      )
                                                  )

                    Appeal from the United States Bankruptcy Court
                         for the Western District of Michigan
                                  Case No. 08-05019

                                   Argued: May 20, 2009

                               Decided and Filed: July 6, 2009

   Before: FULTON, HARRIS, and SHEA-STONUM, Bankruptcy Appellate Panel Judges.
                             ____________________

                                        COUNSEL

ARGUED: Jeff A. Moyer, THE BANKRUPTCY GROUP, INC., Wyoming, Michigan, for
Appellant. Jon D. Stratman, DAVID ANDERSON & ASSOCIATES, P.C., Grand Rapids,
Michigan, for Appellee. ON BRIEF: Jeff A. Moyer, THE BANKRUPTCY GROUP, INC.,
Wyoming, Michigan, for Appellant. Jon D. Stratman, DAVID ANDERSON & ASSOCIATES,
P.C., Grand Rapids, Michigan, for Appellee.
                                     ____________________

                                           OPINION
                                     ____________________

       ARTHUR I. HARRIS, Bankruptcy Appellate Panel Judge. In this case, Jeff A. Moyer,
Chapter 7 Trustee, (“Trustee”) appeals an order of the bankruptcy court overruling his objection to
Joy Dutkiewicz’s (“Debtor”) claim of exemptions as untimely. For the reasons that follow, we
AFFIRM the order of the bankruptcy court.

                                     I. ISSUE ON APPEAL

       Whether the bankruptcy court erred when it found that the Trustee’s objection to the Debtor’s
claim of exemptions was untimely.

                    II. JURISDICTION AND STANDARD OF REVIEW

       The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal.
The United States District Court for the Western District of Michigan has authorized appeals to the
Panel, and neither party has timely elected to have this appeal heard by the district court. 28 U.S.C.
§§ 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to
28 U.S.C. § 158(a)(1). An order on an objection to a debtor’s claim of exemption is a final order
for purposes of appeal. See Baumgart v. Alam (In re Alam), 359 B.R. 142, 145 (B.A.P. 6th Cir.
2006) (citing Wicheff v. Baumgart (In re Wicheff), 215 B.R. 839, 840 (B.A.P. 6th Cir. 1998)).

       The bankruptcy court’s conclusions of law are reviewed de novo. See Riverview Trenton R.R.
Co. v. DSC, Ltd. (In re DSC, Ltd.), 486 F.3d 940 (6th Cir. 2007). “Under a de novo standard of
review, the reviewing court decides an issue independently of, and without deference to, the trial
court’s determination.” Menninger v. Accredited Home Lenders (In re Morgeson), 371 B.R. 798,
800 (B.A.P. 6th Cir. 2007). The court’s findings of fact are reviewed under the clearly erroneous
standard. See In re DSC, Ltd., 486 F.3d at 944. “A finding of fact is clearly erroneous ‘when
although there is evidence to support it, the reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been committed.’ ” Id. (quoting Anderson v. City of
Bessemer City, N.C., 470 U.S. 564, 573, 105 S. Ct. 1504, 1511 (1985)).

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                                           III.   FACTS

       The Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on
June 5, 2008. The first meeting of creditors was held on July 15, 2008. The Debtor appeared and
answered questions of the Trustee. During the meeting, the Trustee requested that the Debtor
provide the Trustee with a copy of the Debtor’s divorce judgment. At the conclusion of his
questions, the Trustee stated:

       That’s all the questions I have for you at this time. To the extent my review of the
       information provided to me [or upon receipt of the Divorce Judgment] causes me to
       need any further information or need to ask any further questions I’ll contact Mr.
       Andersen’s office directly. Assuming that doesn’t become necessary, I’ll close your
       file at that time. You should receive notice of your Chapter 7 Discharge 3 to 4
       months from today directly from the Bankruptcy Court. Thank you for coming in
       today and good luck to you.

(J.A. at 34-35.) While the Trustee asserts that the Debtor’s failure to provide a copy of the Debtor’s
divorce judgment prior to or at the § 341 meeting resulted in the administration of the Debtor’s estate
being delayed, he did not call a subsequent meeting after receiving a copy of the divorce judgment.
The record does not reflect when the Trustee actually received a copy of the divorce judgment. On
September 16, 2008, the Trustee filed his Report of First Meeting Held, and on September 29, 2008,
he filed an objection to the Debtor’s claim of exemptions. The Trustee asserted that funds owed to
the Debtor under the divorce judgment were not exempt as spousal support but rather were in the
nature of a property settlement.

       The Debtor did not oppose the Trustee’s objection on the merits. She contended, however,
that the objection was untimely pursuant to Rule 4003(b) of the Federal Rules of Bankruptcy
Procedure and Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644 (1992).                    On
November 19, 2008, the bankruptcy court heard oral argument on the issue of whether the § 341
meeting “concluded” on July 15, 2008. After additional briefing by the parties, the bankruptcy court
issued its memorandum of decision on December 30, 2008, holding that the meeting had concluded
on July 15, 2008, resulting in the Trustee’s objection being untimely. The bankruptcy court issued
a separate order overruling the Trustee’s objection on December 30, 2008.

                                                  -3-
       The Trustee filed this timely appeal on January 9, 2009. The Debtor filed a motion for
certification of direct appeal to the Sixth Circuit Court of Appeals on February 23, 2009. This Panel
issued an order denying that motion on April 13, 2009, because the motion did not comply with Rule
8001(f)(3)(C) of the Federal Rules of Bankruptcy Procedure. See In re Dutkiewicz, 403 B.R. 472
(B.A.P. 6th Cir. 2009).

                                       IV.    DISCUSSION

       Upon the filing of a bankruptcy petition all of the debtor’s property becomes property of the
bankruptcy estate. 11 U.S.C. § 541. The Bankruptcy Code, however, permits a debtor to provide
a list of exempt property. 11 U.S.C. § 522(b), (l). The listed property is allowed as exempt unless
a party in interest objects. 11 U.S.C. § 522(l); Taylor, 503 U.S. at 642. Any objection to the initial
list of property claimed as exempt must be made within 30 days after the conclusion of the meeting
of creditors, unless further time is granted by the court. Fed. R. Bankr. P. 4003(b). If an interested
party does not object within the 30 days after the conclusion of the meeting of creditors, the party
is barred from objecting to the debtor’s claim of exemptions even if the debtor has no “colorable
statutory basis” for claiming the exemptions. Taylor, 503 U.S. at 643-44.

       Pursuant to 11 U.S.C. § 341, the United States Trustee must convene a meeting of creditors
within a reasonable time after the order for relief is entered. Federal Rule of Bankruptcy Procedure
2003 governs the commencement and continuance of the meeting of creditors. Rule 2003(e)
provides that the meeting “may be adjourned from time to time by announcement at the meeting of
the adjourned date and time without further written notice.” While Rule 2003(e) permits the trustee
to adjourn and continue the meeting at some later date, neither the Bankruptcy Code nor the Federal
Rules of Bankruptcy Procedure specify the manner in which the meeting is to be “concluded.” In
re Cherry, 341 B.R. 581, 585 (Bankr. S.D. Tex. 2006).

       The parties here agree that the meeting of creditors required by 11 U.S.C. § 341 was
scheduled and held on July 15, 2008. They disagree, however, as to when the meeting “concluded”
for purposes of Rule 4003(b). The Trustee contends that the July 15, 2008, meeting was adjourned
and not concluded until he filed his Report of First Meeting Held on September 16, 2008. The
Debtor asserts that the meeting concluded on July 15, 2008, because the Trustee did not properly

                                                 -4-
adjourn the meeting pursuant to Rule 2003(e). The bankruptcy court held that the meeting concluded
on July 15, 2008, and overruled the Trustee’s objection as untimely.

        The issue of when a § 341 meeting has “concluded” for purposes of Rule 4003(b) has not
been addressed by the United States Supreme Court, the Sixth Circuit Court of Appeals, or the
Bankruptcy Appellate Panel for the Sixth Circuit. However, other courts, including the Fifth and
Ninth Circuit Courts of Appeals, have considered the issue. At least three approaches have emerged:
the bright-line, the debtor’s burden, and the case-by-case approach.

        Pursuant to the “bright-line” approach, which has been adopted by the Ninth Circuit Court
of Appeals, the trustee must announce a specific date to which the meeting is being adjourned within
30 days of the last meeting held or the meeting will be deemed to have concluded on the last date
it was convened. See Smith v. Kennedy (In re Smith), 235 F.3d 472, 476 (9th Cir. 2000) (“[A]
delayed announcement would have to be made at least within thirty days of the last meeting held;
otherwise, the whole purpose of the thirty-day requirement of Rule 4003(b) would be frustrated.”);
In re Friedlander, 284 B.R. 525, 527 (Bankr. D. Mass. 2002) (where trustee fails to announce an
adjourned date and time within thirty days of the date on which the meeting of creditors was last
held, the meeting is deemed to have concluded on the last meeting date); In re Levitt, 137 B.R. 881,
883 (Bankr. D. Mass. 1992) (same). “As the Supreme Court observed in Taylor, ‘[d]eadlines may
lead to unwelcome results, but they prompt parties to act and they produce finality.’ ” In re Smith,
235 F.3d at 476 (quoting Taylor, 503 U.S. at 644). In adopting the “bright-line” approach in Smith,
the Ninth Circuit Court of Appeals explained that “[t]o authorize trustees to adjourn meetings
indefinitely, even when it is unlikely that any subsequent meeting will in fact be called, would nullify
the thirty-day requirement of Rule 4003(b), rendering the holding in Taylor hollow, and undermining
the concerns expressed by the Supreme Court about promptness and finality.” Id. Courts favoring
this approach note that a bright-line rule provides certainty to trustees as to what assets are to be
administered, and allows debtors to move on with their fresh start by allowing exemptions to become
final within a definite and relatively short time. See In re Friedlander, 284 B.R. at 527; In re Levitt,
137 B.R. at 883.

        Under the “debtor’s burden” approach, the meeting is concluded either when the trustee
declares it concluded, or the debtor obtains a court order concluding the § 341 meeting. See In re

                                                  -5-
Koss, 319 B.R. 317, 321 (Bankr. D. Mass. 2005) (holding that meeting is not concluded until trustee
declares so or court so orders; rejecting bright-line approach previously adopted by court in In re
Levitt); In re Flynn, 200 B.R. 481, 484 (Bankr. D. Mass. 1996) (same); In re DiGregorio, 187 B.R.
273, 276 (Bankr. N.D. Ill. 1995) (holding that meeting can continue indefinitely; debtor has burden
to move for court to conclude meeting; motions to be taken on case-by-case basis and action taken
“only if debtor objects to continuance, and the adjournment is found to be ‘arbitrary, capricious, or
an abuse of discretion’”) (quoting In re Vance, 120 B.R. 181, 196 (Bankr. N.D. Okla. 1990)). Courts
adopting this approach express a reluctance to impose a precise deadline, such as the 30-day deadline
of the bright-line approach, where the statutes and rules do not provide one. See In re Flynn, 200
B.R. at 484. Courts following the “debtor’s burden” approach are concerned that considering the
reasonableness of the trustee’s actions is too uncertain. Id. Instead, these courts believe placing the
burden on the debtor is justified because “the debtor has the greatest interest in concluding the
meeting so as to trigger the 30-day objection period . . . .” In re DiGregorio, 187 B.R. at 276. Both
the Fifth and Ninth Circuit Courts of Appeals have rejected this approach. See In re Smith, 235 F.3d
at 477 n.4; Peres v. Sherman (In re Peres), 530 F.3d 375, 378 (5th Cir. 2008).

        The case-by-case approach, which has been adopted by the Fifth Circuit Court of Appeals,
considers the facts and circumstances on a case-by-case basis to determine whether a meeting of
creditors was concluded or adjourned. See In re Peres, 530 F.3d at 378 (holding case-by-case
approach affords trustee discretion while restraining ability to indefinitely postpone meeting); Petit
v. Fessenden, 182 B.R. 59, 63 n.4 (D. Me. 1995) (finding appropriate a rule that recognizes need for
finality but allows flexibility of considering facts on a case-by-case basis); In re Cherry, 341 B.R.
at 587 (applying case-by-case approach); In re James, 260 B.R. 368, 372 (Bankr. E.D.N.C. 2001)
(same); In re Brown, 221 B.R. 902, 906 (Bankr. M.D. Fla. 1998) (case-by-case approach allows
trustees discretion to perform their duties, but with some limitations based on reasonableness). The
Fifth Circuit Court of Appeals has identified four factors which other courts have considered in
determining the reasonableness of a trustee’s delay in adjourning a meeting of creditors: “(1) the
length of the delay; (2) the complexity of the estate; (3) the cooperativeness of the debtor; and (4) the
existence of any ambiguity regarding whether the trustee continued or concluded the meeting.” In
re Peres, 530 F.3d at 378. The case-by-case approach is grounded in an effort to afford trustees

                                                   -6-
discretion yet prevent them from indefinitely postponing the meeting. See In re Cherry, 341 B.R.
at 587.

          The bankruptcy court in the present case stated that it “favor[ed] the case-by-case approach
. . . as more faithful to the text and policy of Rule 2003(e).” (J.A. at 121.) The court then went on
to state:

          [A] bright-line is necessary. It is, therefore, reasonable to conclude that the
          adjournment of the first meeting of creditors must be effected by some objective
          notification to the debtor and creditors, so each knows where that bright line falls.
          . . . . Rule 4003(b)(1), with its strict 30 day deadline, is very unforgiving. Freeland
          & Kronz, supra.

(J.A. at 121.) The court then explained that Rule 2003(e) requires objective notice by the trustee of
his intent to adjourn the meeting, notice which must be written unless the trustee gives specific oral
notice of a new date and time for the meeting to everyone present. The court noted that expressing
the need for further questioning or investigation does not by itself continue the meeting without also
providing prompt written notice of adjournment. The bankruptcy court found that the Trustee’s
statements at the meeting suggested only that his investigation was not complete and did not “qualify
as an unequivocal and specific oral announcement . . . to adjourn the First Meeting,” and that no
written notice of an adjourned date was provided within a reasonable time following the July 15,
2008, meeting. Therefore, the bankruptcy court held that the meeting concluded on July 15, 2008,
and the objection, filed more than two months later, was untimely. The Trustee also argued before
the bankruptcy court that by analogy to the rules governing entry of judgments, Federal Rules of
Bankruptcy Procedure 9021 and 5003, the court should adopt the entry of the Trustee’s Report of
First Meeting Held filed on September 16, 2008, as the date the first meeting was concluded. The
bankruptcy court rejected this argument. The Trustee did not present this argument before us, and,
therefore, it is waived. See United States v. Elder, 90 F.3d 1110, 1118 (6th Cir. 1996) (arguments
not addressed are deemed waived).

          The Trustee argues that although the bankruptcy court stated that it favored the case-by-case
approach, it nevertheless applied a bright-line test by essentially requiring that the Trustee give a
specific date and time orally at the meeting, or written notice of an adjourned date within a
reasonable time after the first meeting. He also asserts that the bankruptcy court failed to consider

                                                    -7-
the reasonableness of his actions. The Trustee urges us to hold that his statements at the meeting on
July 16, 2008, constituted holding the meeting open, that his actions were reasonable, and that the
meeting was not concluded until September 16, 2008, when he filed his Report of First Meeting
Held.

        The Debtor urges us to adopt an entirely different approach under which the meeting always
concludes on the date it is initially held. This approach, she urges, has the advantage of providing
a “simple rule with an objective standard that is easily applied.” (Appellee’s Br. at 7.) In urging this
approach, the Debtor notes that the Bankruptcy Code and Federal Rules of Bankruptcy Procedure
do not define the words “meeting” or “concluded” and that therefore we must turn to their ordinary
and natural meanings. See U.S. v. McBride, 362 F.3d 360, 371 (6th Cir. 2004) (undefined terms in
statutes should be given their ordinary and natural meaning).

        Black’s Law Dictionary (“Black’s”) defines “meeting,” in pertinent part, as “[a] coming
together of persons; an assembly.” BLACK’S LAW DICTIONARY 982 (6th ed. 1990). Black’s
defines “concluded” as “[e]nded; determined; estopped; prevented from.” Id. at 290. According
to the Debtor, in the context of Rule 4003 the word “concluded” means “ended.” She asserts then
that because a meeting is a gathering of people, a meeting ends or “concludes” when those persons
are no longer gathered. Therefore, under a “plain meaning” approach, adjourned meetings do not
constitute a single, continuous meeting, but rather a series of meetings with each meeting concluding
when the necessary parties, the trustee and debtor, leave. Consequently, “[b]ecause the end of the
initial meeting in a series of meetings is the first time at which it can be said that a meeting has
‘concluded,’ the deadline to object to exemptions should be construed as always running from this
date.” (Appellee’s Br. at 6.) Under the Debtor’s proposed approach, the bankruptcy court should
be affirmed because the meeting concluded on the day it was convened. We reject the Debtor’s
suggested approach, however, because the language of Rule 2003(e) does not provide for a series
of individual meetings. Rather, Rule 2003(e) provides: “The meeting may be adjourned from time
to time.” Fed. R. Bankr. P. 2003(e) (emphasis added).

        The only two circuit courts to address this issue have rejected the debtor’s burden approach.
In Smith, the Ninth Circuit Court of Appeals rejected the approach as paying insufficient heed to the
Supreme Court’s interest in firm, explicit deadlines as expressed in Taylor, 503 U.S. at 644, and the

                                                  -8-
trustee’s duty to keep the bankruptcy process moving. See In re Smith, 235 F.3d at 477 n.4. The
Fifth Circuit rejected the approach as “ignor[ing] the clearly-established policy of the Bankruptcy
Code of encouraging promptness in the filing of objections to exemptions, because it would permit
a trustee to continue a meeting of creditors indefinitely.” In re Peres, 530 F.3d at 378. We likewise
reject the debtor’s burden approach. However, on the facts of this case, it is not necessary for us to
adopt either the bright-line or the case-by-case approach because, under either approach, the
Trustee’s objection was untimely. See Bellsouth Telecomm., Inc. v. Farris, 542 F.3d 499, 505 (6th
Cir. 2008) (deciding only what is necessary to resolve current case); Premier Capital, Inc. v.
DeCarolis (In re DeCarolis), 259 B.R. 467, 470-71 (B.A.P. 1st Cir. 2001) (rejecting the bright-line
approach, but finding it unnecessary on the facts of the case to decide between the case-by-case or
debtor’s burden approach).

       The only meeting held in this case was on July 15, 2008. The Trustee did not announce an
adjourned date within 30 days from that date. Therefore, under the bright-line approach, the meeting
was concluded on July 15, 2008, and the Trustee’s objection to the Debtor’s claim of exemptions,
which was not filed until more than two months later, was untimely. Applying the case-by-case
approach and the factors set forth by the Fifth Circuit in Peres, we would agree with the bankruptcy
court that the meeting was concluded on July 15, 2008. In arguing that the meeting was not
concluded until September 16, 2008, the Trustee focuses on the relatively short delay of
approximately two months between the initial meeting on July 15, 2008, and the September 16,
2008, filing of his Report of First Meeting Held, as compared to much longer delays in other cases
where courts have found the actions of trustees reasonable. While the delay of approximately two
months here was indeed relatively brief, the estate was not complex, and the Debtor was cooperative.
More importantly, the Trustee did not state clearly that he was keeping the meeting open, which
created ambiguity as to whether he was continuing or concluding the meeting. As the bankruptcy
court stated, expressing the possible need for further questioning or investigation does not by itself
continue the meeting. For example, the Trustee’s possible need for further information or further
questions, expressed at the July 15, 2008, meeting, might well have been handled informally through
Debtor’s counsel, as the Trustee indicated, or through a Rule 2004 examination.

       This ambiguity as to whether the meeting was ever adjourned distinguishes the present case
from the cases cited by the Trustee. Cf. In re Peres, 530 F.3d at 376 (undisputed that meeting was

                                                 -9-
continued without a formal announcement as to the date of continuation); Petit v. Fessenden, 182
B.R. at 62 (U.S. Trustee ended previous meeting by saying: “‘All right, for probably the third time,
this meeting is continued without a date.’”); In re Koss, 319 B.R. at 321 (parties did not dispute
whether meeting was held open for seven months); In re Brown, 221 B.R. at 903 (although no tape
recording of meeting existed, “Trustee either implicitly or explicitly continued the meeting of
creditors to an unspecified future date”); In re Flynn, 200 B.R. at 482 (undisputed that meeting had
been continued generally); In re DiGregorio, 187 B.R. at 274 n.1 (attorney representing U.S. Trustee
“stated at the meeting, ‘ . . . I’m going to go ahead and adjourn the meeting. I am going to continue
it generally, I’m not concluding it.’”); In re Havanec, 175 B.R. 920, 921-22 (Bankr. N.D. Ohio 1994)
(undisputed that representative of U.S. Trustee stated “forcefully and publicly” at the meeting that
the meeting was adjourned indefinitely). Had the Trustee clearly indicated on July 15, 2008, that the
meeting was being held open, a delay of several months before concluding the meeting may well
have been acceptable under the case-by-case approach. Nevertheless, given the ambiguity regarding
whether the Trustee even continued the meeting to an unspecified date, we cannot say that the
bankruptcy court erred in ruling that the § 341 meeting concluded on July 15, 2008, the date the
meeting was held. See In re Peres, 530 F.3d at 379 (listing “existence of any ambiguity regarding
whether the trustee continued or concluded the meeting” as a factor in the case-by-case analysis).
Because the Trustee’s objection to the Debtor’s claim of exemptions was filed more than 30 days
after the § 341 meeting of creditors concluded, it was untimely under Rule 4003(b).

                                       V. CONCLUSION

       For the foregoing reasons, the order of the bankruptcy court overruling the Trustee’s
objection to the Debtor’s claim of exemptions is AFFIRMED.

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