Grant v. Granader (In Re Granader), 561 B.R. 554

Alan Granader borrowed $350,000 from the Alan Granader Irrevocable Family Trust in 2005 by signing a promissory note; he was not a beneficiary of the trust.
Judith Grant (ex-wife) received a divorce judgment (2008) awarding monthly annuity payments from the trust; a separate 2010 stipulated order entered a nondischargeable money judgment against Granader for $47,146 (paid by Granader).
In 2010 the trust assigned the $350,000 promissory note to Grant; the divorce judgment did not reference the promissory note and Granader was not a party to that assignment.
Granader filed Chapter 7 bankruptcy in February 2011, listed the $47,146 on Schedule E and the $350,000 note on Schedule F, and received a discharge in July 2011; case closed August 2011.
In 2015 Grant sought various state-court remedies and then, nearly four years after the discharge, moved to reopen Granader’s bankruptcy to (1) litigate nondischargeability of the $350,000 as a domestic-support-related obligation, (2) recover alleged fraudulent or preferential transfers, and (3) refer Granader for criminal investigation; the bankruptcy court denied reopening and the district court affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the $350,000 promissory note is nondischargeable as a domestic-support obligation	Grant: the debt "relates back" to divorce obligations and is nondischargeable	Granader: the note was separate from divorce proceedings and was discharged in bankruptcy	Court: note was not incurred in course of or in connection with divorce decree; it was discharged; reopening unnecessary
Whether reopening is warranted to pursue recovery of allegedly fraudulent or preferential transfers	Grant: reopening would allow a Chapter 7 trustee to recover transfers for creditors	Granader: state-law fraudulent-transfer remedies exist and may yield better recovery; reopening unnecessary	Court: denied reopening; Grant may pursue state-law remedies; bankruptcy not required; statute-of-limitations considerations favor state action
Whether reopening is required to refer alleged bankruptcy fraud to DOJ	Grant: reopening needed to investigate and refer fraud upon the bankruptcy court	Granader: referral authority does not depend on an open bankruptcy case	Court: reopening not necessary for referral; judge may report suspected bankruptcy fraud without reopening
Whether laches bars reopening	Grant: delay is justified by ongoing state litigation and new facts	Granader: Grant’s delay was not diligent and laches applies	Court: bankruptcy court noted lack of diligence but did not rely solely on laches; alternative, independent bases supported denial, so no abuse of discretion

In re Lee, 530 F.3d 458 (6th Cir. 2008) (standard of review for bankruptcy appeals)
In re Rosinski, 759 F.2d 539 (6th Cir. 1985) (reopening bankruptcy cases committed to bankruptcy court’s discretion)
Costello v. United States, 365 U.S. 265 (U.S. 1961) (elements of laches require lack of diligence and prejudice)
In re Bianucci, 4 F.3d 526 (7th Cir. 1993) (passage of time alone does not establish prejudice for laches)