Todd McNally v. United States Bankruptcy Court for the District of Colorado, 17-1

In 2006 Michael Carns invested $700,000 in a Florida shopping-center project promoted by Todd McNally; the project failed and Carns obtained a $700,000 default judgment in 2008.
McNally filed Chapter 7 in Colorado on August 6, 2014; he initially omitted Carns from the creditor matrix but on August 18, 2014 amended Schedule F to list Carns “c/o James D. Gibson” and mailed notice to Gibson. Gibson claimed he never received the mailing and did not forward it.
The deadline to object to dischargeability passed and McNally received his discharge on November 13, 2014. Carns learned of the bankruptcy later and moved to reopen the case; he filed an adversary complaint seeking revocation of discharge under 11 U.S.C. § 727(d)(1) and nondischargeability of the judgment debt.
At trial the bankruptcy court found (1) McNally did not act with fraudulent intent in his schedules, and some alleged omissions were not material, so revocation under § 727(d)(1) failed; and (2) notice mailed to Carns’ counsel Gibson was sufficient, so Carns’ § 523(a)(3) nondischargeability claim failed.
The district BAP affirmed: it declined to disturb credibility findings on intent, found the mailbox presumption unrebutted, and concluded notice to counsel was reasonably calculated to apprise Carns.

Issue	Plaintiff's Argument (Carns)	Defendant's Argument (McNally)	Held
Whether discharge must be revoked under § 727(d)(1) based on alleged false oaths/omissions (fraud & materiality)	McNally omitted material assets (VAL interest, transfers, FX accounts, book royalties), showing fraudulent intent and material omissions warranting revocation	Omissions were inadvertent or immaterial; debtor lacked fraudulent intent and was credible	Court held no fraudulent intent; materiality findings not disturbed; § 727(d)(1) claim denied and affirmed on appeal
Whether Carns’ debt is nondischargeable under § 523(a)(3) because he lacked timely notice (mailed to former/agent counsel) and thus could not timely file a complaint	Mailing to Gibson did not provide Carns constitutionally adequate notice because Gibson was no longer representing Carns; therefore § 523(a)(3) exception applies	Mailing to Gibson was reasonably calculated to give notice: Gibson continued to represent Carns on collection matters, mailbox presumption applies, and notice to counsel is ordinarily sufficient	Court held notice to Gibson was sufficient under § 342(a) and due process; § 523(a)(3) claim denied and affirmed

Calder v. United States Trustee, 907 F.2d 953 (10th Cir. 1990) (material omission from schedules can be a false oath barring discharge)
Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365 (2007) (bankruptcy relies on full, truthful disclosure by debtor)
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) (due process requires notice reasonably calculated to apprise interested parties)
In re Schicke, 290 B.R. 792 (10th Cir. BAP 2003) (notice mailed to creditor’s attorney is ordinarily sufficient when attorney is agent in enforcement/collection matters)
United States Trustee v. Garland (In re Garland), 417 B.R. 805 (10th Cir. BAP 2009) (discussing inference of fraudulent intent and badges of fraud)