714 F.3d 462
7th Cir.2013Background
- Four defendants in adversary actions seek direct appeal from the bankruptcy court under 28 U.S.C. §§ 158(d)(2)(A)(i), (B)(i), which the court grants after certification.
- Draiman filed Chapter 11 in 2009, converted to Chapter 7 in 2011, and Fogel became interim trustee on May 13, 2011 and later permanent trustee by operation of law on June 30, 2011.
- The avoidance-action statute of limitations runs two years from bankruptcy filing, § 546(a)(1)(A).
- Section 546(a)(1)(B) extends the period to one year after appointment or election of the first trustee under 702 if that occurs within the two-year window.
- Defendants contend the extension runs only from the interim trustee’s appointment under 701, not from the later permanent appointment under 702.
- The bankruptcy court purportedly found an ambiguity and allowed the extension for an interim-to-permanent sequence, contrary to text and prior authority.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether interim trustee appointment extends the § 546(a)(1)(B) period | Draiman asserts extension runs from 702 appointment. | Fogel contends extension runs from 701 interim appointment. | No extension from interim; extension only when 702 appointment/election occurs within two years. |
Key Cases Cited
- In re American Pad & Paper Co., 478 F.3d 546 (3d Cir. 2007) (extensive discussion on whether interim trustees trigger tolling)
- In re Parmetex, Inc., 199 F.3d 1029 (9th Cir. 1999) (interim trustee appointment can toll limitations)
- Reich v. Great Lakes Indian Fish & Wildlife Comm’n, 4 F.3d 490 (7th Cir. 1993) (extrinsic ambiguity framework in statutory interpretation)
- In re Kahn, 133 F.3d 932 (10th Cir. 1998) (extrinsic ambiguity framework in statutory interpretation)
- McConnell v. Pickering Lumber Corp., 217 F.2d 44 (9th Cir. 1954) (extrinsic ambiguity framework in statutory interpretation)