DeNoce v. Neff (In Re Neff)
505 B.R. 255
9th Cir. BAP2014Background
- Debtor Ronald Neff transferred real property (Lake Harbor Property) to a revocable living trust in March 2008; the quitclaim deed was recorded April 7, 2010.
- Neff filed three bankruptcy cases: Chapter 13 (Mar 4, 2010) dismissed; Chapter 13 (Jun 18, 2010) dismissed; Chapter 7 (Oct 24, 2011) filed before the second dismissal was entered.
- Creditor Douglas DeNoce sued under 11 U.S.C. § 727(a)(2) seeking denial of discharge, alleging the transfer was fraudulent and within the one-year lookback.
- Neff moved for partial summary judgment arguing the transfer was more than one year before the Chapter 7 petition and thus outside § 727(a)(2)(A)’s reach.
- DeNoce argued the one-year lookback should be equitably tolled because of Neff’s prior bankruptcies (citing Young and Womble), and alternatively invoked continuing concealment.
- The bankruptcy court ruled the one-year period in § 727(a)(2)(A) is a statute of repose not subject to equitable tolling, granted Neff’s partial SJ and denied DeNoce’s cross-motion; the BAP affirmed.
Issues
| Issue | Plaintiff's Argument (DeNoce) | Defendant's Argument (Neff) | Held |
|---|---|---|---|
| Whether the one-year lookback in § 727(a)(2)(A) is subject to equitable tolling | The one-year period is a limitations period like the provision in Young and Womble, so prior bankruptcies toll the lookback | The one-year period is a statute of repose tied to the petition date and not subject to equitable tolling | The one-year period is a statute of repose and cannot be equitably tolled; affirmed |
| Whether continuing concealment tolled the one-year period | Neff concealed his interest in the property into the year before the Chapter 7 filing, so concealment extends the period | Title was publicly in Neff’s name within the year before filing; no concealment of an interest continued into the lookback year | Continuing concealment did not apply; no concealment of an interest into the year before filing |
| Whether the transfer could support § 727(a)(2)(B) (postpetition transfer) | Prior dismissals and filings make the April 7, 2010 transfer effectively postpetition as part of the bankruptcy process | The transfer occurred outside the Chapter 7 petition year and was not postpetition relative to the Chapter 7 filing | Transfer occurred more than one year before Chapter 7 filing; § 727(a)(2)(B) not implicated |
| Whether equitable concerns (loophole from serial filings) require judicial tolling | Tolling needed to prevent debtors from evaporating claims by serial filings | Congress could address any loophole; courts should not rewrite § 727 timing rules | Court declined to apply equitable tolling; policy concerns are for Congress |
Key Cases Cited
- Young v. United States, 535 U.S. 43 (Sup. Ct. 2002) (equitable tolling applied to a bankruptcy lookback period for tax nondischargeability)
- Tidewater Fin. Co. v. Williams, 498 F.3d 249 (4th Cir. 2007) (lookback in § 727 is a statute of repose; equitable tolling inapplicable)
- Womble v. Pher Partners (In re Womble), 299 B.R. 810 (N.D. Tex. 2003) (applied equitable tolling to § 727(a)(2)(A); district court decision relied on Young)
- Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (Sup. Ct. 1991) (statutes of repose and limitations analyzed; repose bars tolling)
- Hughes v. Lawson (In re Lawson), 122 F.3d 1237 (9th Cir. 1997) (continuing concealment doctrine requires concealment of an interest into the lookback year)