592 B.R. 604
Bankr. E.D. Pa.2018Background
- Debtor Tatyana Mazik filed a Chapter 13 bankruptcy on January 31, 2018; Chicago Title previously sued in an earlier Chapter 7 case that was dismissed.
- Chicago Title insured two mortgage loans (the Horseshoe Lane Note and Rockwell Road Note) that became unsecured because the mortgages were allegedly not recorded due to a fraudulent scheme involving the Debtor and her husband.
- Bank of America acquired the notes, made a title insurance claim, Chicago Title paid Bank of America in 2015 and obtained assignment of the Notes. Both Notes are in default and total over $1 million including fees and interest.
- Chicago Title filed an adversary complaint on July 2, 2018 seeking nondischargeability under 11 U.S.C. § 523(a)(2)(A) and § 523(a)(6); the Rule 4007(c) 60‑day deadline expired June 4, 2018.
- Debtor moved to dismiss under Fed. R. Civ. P. 12(b)(6) asserting (1) state statute‑of‑limitations bars the underlying claim, (2) Chicago Title missed the Rule 4007(c) deadline for § 523 complaints, and (3) Complaint fails to state a claim against the Debtor.
- Court dismissed the Complaint as untimely under Rule 4007(c) but granted Chicago Title leave to amend to assert a § 523(a)(3) claim (failure to list/schedule) that could preserve § 523(a)(2) and (a)(6) relief if properly pleaded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether underlying debt is time‑barred under Pennsylvania law | Chicago Title: acceleration occurred within four years; claims not barred | Mazik: statute of limitations expired before bankruptcy | Held for Chicago Title — statute of limitations not plainly expired on face of complaint |
| Whether adversary complaint under §523(a)(2)/(a)(6) was timely under Fed. R. Bankr. P. 4007(c) | Chicago Title: equitable tolling, Rule 9006(b) enlargement, or §523(a)(3)(B) excuse applies | Mazik: complaint was filed after the 60‑day deadline; late filing cannot be extended | Held for Mazik — complaint untimely under Rule 4007(c); Rule 9006(b) cannot extend it and court declines equitable tolling |
| Whether §523(a)(3)(B) permits relief from Rule 4007(c) deadline | Chicago Title: §523(a)(3)(B) excuses lack of timely §523(c) filing when creditor lacked notice | Mazik: §523(a)(3)(B) does not extend Rule 4007(c) deadline | Held for Mazik — §523(a)(3)(B) is a separate cause of action; it does not extend the Rule 4007(c) deadline but provides an alternate route via a §523(a)(3) claim |
| Whether the Complaint states a claim against the Debtor (vs. her husband) | Chicago Title: Complaint alleges Debtor participated in scheme; states §523(a)(2) and (a)(6) claims | Mazik: allegations at best against husband, not Debtor | Held for Chicago Title on sufficiency — facts plausibly allege Debtor’s participation, but claims are dismissed as untimely; leave to amend to plead §523(a)(3) lack‑of‑notice allegations granted |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not entitled to assumption of truth)
- Santiago v. Warminster Twp., 629 F.3d 121 (Third Circuit three‑part pleading test)
- Kost v. Kozakiewicz, 1 F.3d 176 (Rule 12(b)(6) addresses legal sufficiency)
- In re Weinberg, [citation="197 F. App'x 182"] (Rule 9006(b)(3) bars post‑deadline enlargement of Rule 4007(c) period)
- In re Menk, 241 B.R. 896 (§523(a)(3) is not governed by Rule 4007(c) deadline)