Opinion
Case No. 09-10630.
6-9-2009
In re: James and Marguerite Van Orsdel, Chapter 7 (Judge Aug) Debtors.
This matter is before the court on First Financial Bank, N.A.'s ("Bank") motion to extend time to file a complaint (Doc. 28), the Debtors' response (Doc. 33), and the Bank's reply (Doc. 34).
The Bank wishes to extend the 60 day period for filing a complaint under 11 U.S.C. § 523 and/or §727 for an additional 60 days. The Bank's offered reason is that it is in the process of completing its due diligence regarding various loan and credit obligations of the Debtors.
Extensions of time to file a complaint objecting to the nondischargeability of a debt under 11 U.S.C. § 523 or a complaint objecting to discharge under 11 U.S.C. § 727 are governed by Bankruptcy Rules 4007(c) and 4004(b) respectively. Both Rules expressly state that an extension of time may be granted for "cause." "The `cause' set out . . . is not to be interpreted as `just because I ask.'" In re Garner, 339 B.R. 610, 611 (Bankr. W.D. Tex. 2006). Rather, cause requires a showing of "good reason." Id. Cause must be "compelling and a creditor must show why it is not able to comply with the deadline originally set." In re Lewis, 224 B.R. 619 (Bankr. S.D. Ohio 1997)(Hopkins, J.). The standard is not, as suggested by the Bank, one of extending a professional courtesy.
The Bank has only requested an extension of time and has stated no reason, much less a compelling reason, to extend the deadline. For ths reason alone, the motion should be denied. However, there are additional reasons supporting a holding against the Bank.
One, since the filing of the petition, the Bank has not requested any documents or information from the Debtors or their counsel. See Doc. 33, ¶ 3.
Two, a close reading of the Bank's reply suggests that the request for the extension of time may stem from the fact that the Bank recently provided additional documents to its own counsel. See Doc. 34, p. 2.
Three, the Bank has already conducted some discovery, including depositions of both Debtors, in a state court proceeding involving the same underlying loan transactions. Thus, the Bank has already had an opportunity to conduct discovery relative to some of the issues encompassed by §§ 523 and 727, e.g., fraud and the concealment of assets. If some discovery has already been accomplished, the deadline should not be extended to allow the creditor an opportunity to "fish around." In re Garner, 339 B.R. at 610.
Four, the Bank notes that this is an asset case and that the trustee does not intend to file a final report until June, 2010, suggesting that this is a reason to extend the deadline. We disagree. The timing of the liquidation and distribution of the estate assets is generally unrelated to the issuance of the debtor's discharge. As pointed out by the Debtors, debtors with assets are entitled to the same prompt fresh start as debtors without assets.
Five, contrary to the Bank's contention, an extension of time would be prejudicial to the Debtors as they have been unable to secure refinancing because they do not yet have their discharge. See Doc. 33, ¶ 5.
Six, the fact that the Debtors obtained an extension of time to file their schedules is of no merit because the Bank has not argued that it was prejudiced thereby. In any event, the schedules were filed before the first date set for the §341 meeting of creditors, the trigger for both 60 day periods.
Seventh, the Bank's reference to Rule 9006(b)(1) as setting forth the standard governing the enlargement of time is misplaced. Pursuant to Bankruptcy Rule 9006(b)(3), Rule 9006(b) is not applicable to the enlargement of time under Rules 4004(a) and 4007(c).
Accordingly, the motion is hereby DENIED.
IT IS SO ORDERED. --------------- Notes: The Bank's contention that the Debtors' response was untimely filed is not well-taken. The Bank's motion was served by ordinary U.S. Mail; under Bankruptcy Rule 9006(f), an additional three day period is added to the 20 day response period.