Opinion
CASE NO. 17-40013 PROC. NO. 18-4001
04-16-2018
IN RE: JOHN RICHARD COBLE Debtor CO-ALLIANCE, LLP Plaintiff v. JOHN RICHARD COBLE Defendant
NOT FOR PUBLICATION
DECISION AND ORDER
On April 16, 2018
The debtors filed a petition for relief under Chapter 11 of the United States Bankruptcy Code on January 14, 2017. The following Monday, January 17, 2017, the court issued a notice to all debtors' creditors advising them of the bankruptcy and that the deadline for filing complaints to determine dischargeability of debt was April 24, 2017. The plaintiff filed this adversary proceeding on January 29, 2018. Count II of the complaint asks the court to declare that the debtor's obligation to the plaintiff it is a non-dischargeable debt pursuant to § 523(a)(2) of the United States Bankruptcy Code. The defendant filed a motion to dismiss that count because the complaint is untimely; defendant makes no challenge to Count I. That motion is presently before the court.
Creditors holding debts which may be excepted from discharge pursuant to subparagraphs (2), (4), and (6) of § 523(a) must ask the bankruptcy court to make that determination or the debt will be discharged. 11 U.S.C § 523(c). In re Betts, 142 B.R. 819, 824 (Bankr. N.D. Ill. 1992). Rule 4007(c) of the Federal Rules of Bankruptcy Procedure establishes the deadline by which the issue must be raised. "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 . . . ." Fed. R. Bankr. P. Rule 4007(c). This rule functions as a statute of limitations and bars the prosecution of actions brought after the time permitted by the rule, unless the defense is waived or the debtor estopped from asserting it. See, In re Maughan, 340 F.3d 337 (6th Cir. 2003); In re Kontrick, 295 F.3d 724, 733 (7th Cir. 2002) aff'd, Kontrick v. Ryan, 540 U.S. 441, 124 S.Ct. 906 (2004); 9 Collier on Bankruptcy ¶ 4007.04[1][c]. See also, In re Martinsen, 449 B.R. 917, 923 (Bankr. W.D. Wis. 2011).
Plaintiff argues that the debtor should be estopped from challenging the untimeliness of the dischargeability claim because, early in the case, in connection with the resolution of other disputes, the debtor agreed to file a plan that would pay the plaintiff at least $221,000. Based upon those assurances regarding the payment of its claim, the plaintiff did not file a dischargeability complaint within the time required. The debtor has now reneged on that promise, prompting the present claim. In response, the debtor does not contend that estoppel cannot apply to the dischargeability deadline, in the same way it does to other statutes of limitations. Instead, the debtor argues that the facts the plaintiff relies upon for its claim of estoppel are not sufficient to support it. It argues the debtor never prevented the plaintiff from filing its claim or promised not to raise the statute of limitations. In its perception, "Debtor [never] did anything other than promise to file a plan that would make [the plaintiff] whole." Debtor's Reply Brief, filed April 10, 2018, p 2. That, however, seems to be the crux of the plaintiff's ire; if that promise had been acted upon, there would have been no need for a dischargeability determination.
Waiver and estoppel are doctrines that spring from considerations of fairness. See, U.S. D.I.D. Corp. v. Windstream Communications, Inc., 775 F.3d 128, 136 (2nd Cir. 2014) citing 31 C.J.S. Estoppel and Waiver § 86; Bailey v. International Broth. of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, Local 374, 175 F.3d 526, 530 (7th Cir. 1999). They are also factually sensitive issues involving actions and reactions; reliance and inducement; opportunities and alternatives, etc. See e.g., Mull v. ARCO Durethene Plastics, Inc., 784 F.2d 284, 292 (7th Cir. 1986) (discussing equitable estoppel); Studiengesellschaft Kohle mbH v. Eastman Kodak Co., 616 F.2d 1315, 1325 (5th Cir. 1980). When evaluated in the context of a motion to dismiss, the court should not resolve the issue definitively; but, instead, ask whether the facts, when viewed in a light favorable to the one making the claim, are sufficient to state a plausible claim of estoppel. See, Jordan v. DMG America, Inc., 2010 WL 3946067 *2 (W.D. N.C. 2010); Zenith Laboratories, Inc. v. Bristol-Myers Squibb Co., 1991 WL 267892 *13 (D. N.J. 1991); In re Widner, 2010 WL 1427300 (Bankr. E.D. Tenn. 2010). This is little different from considering whether a complaint states a claim upon which relief can be granted. See e.g., Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937 (2009); Bell Atlantic v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964 (2007). Plaintiff's claim easily satisfies that standard and defendant's motion to dismiss Count II is DENIED. The defendant shall file an answer within ten (10) days.
SO ORDERED.
/s/ Robert E . Grant
Chief Judge, United States Bankruptcy Court