529 B.R. 268
9th Cir. BAP2015Background
- Debtor Mahakian omitted William Maxwell Investments (WMI) from schedules in a no-asset Chapter 7 case; WMI later acquired the debt via foreclosure on collateral.
- After discharge, the trustee noticed assets and creditors; WMI did not receive notice of the claims bar date and filed no proof of claim timely.
- Debtor amended Schedule F to include WMI and filed a late proof of claim on WMI’s behalf, well after the bar date and Rule 3004 window.
- WMI sued in Arizona to collect a deficiency on the guaranteed loan; Debtor sought a discharge determination for the WMI debt and injunctive relief.
- Bankruptcy court granted summary judgment for WMI, holding the WMI debt was excepted from discharge under § 523(a)(3)(A); Retroactive POC motion denied; Debtor appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of appeal | Mahakian argues excess review of Retroactive POC Order and Rule 9006 excusable neglect. | WMI contends only the MSJ Judgment was appealed, not the Retroactive POC Order. | We exercise jurisdiction over both orders under liberal NOA interpretation. |
| Whether Pioneer excusable neglect applies to untimely POC | Debtor argues excusable neglect makes the POC timely for discharge purposes under §523(a)(3)(A). | WMI argues excusable neglect does not override the plain §523(a)(3)(A) language and rules governing POC timing. | Excusable neglect does not render an unscheduled debt dischargeable; §523(a)(3)(A) language controls. |
| Plain language of §523(a)(3)(A) governs discharge | Debtor contends the statute allows discharge if tardy filing is excusable and timely for payment under §726(a)(2)(C). | WMI maintains §523(a)(3)(A) requires scheduling and creditor notice for dischargeability; §726(a)(2)(C) is inapplicable here. | Debt is excepted from discharge because WMI was neither listed nor scheduled and had no timely notice. |
Key Cases Cited
- In re Beezley, 954 F.2d 1433 (9th Cir. 1993) (supports plain-language reading of §523(a)(3)(A) over equitable considerations)
- In re Nielsen, 383 F.3d 922 (9th Cir. 2004) (assimilates Beezley approach to §523(a)(3)(A))
- In re Laczko, 37 B.R. 676 (9th Cir. BAP 1984) (no power to disregard clear §523(a)(3)(A) language)
- Purcell v. Khan (In re Purcell), 362 B.R. 465 (Bankr. E.D. Cal. 2007) (rejects equitable exceptions to §523(a)(3)(A) in similar contexts)
- Lamie v. U.S. Tr. & Trs., 540 U.S. 526 (2004) (limits court discretion to reframe statutory text)