In Re Coggin
Bankr. L. Rep. P 76,063
In re Thomas Edward COGGIN, Debtor.
Phyllis B. COGGIN, Plaintiff-Appellee,
v.
Thomas Edward COGGIN,
Defendant-Cross-Plaintiff-Appellant-Cross-Appellee,
Thomas E. Reynolds, Trustee-Cross-Defendant-Appellee-Cross-Appellant.
No. 93-6914.
United States Court of Appeals,
Eleventh Circuit.
Sept. 8, 1994.
J.N. Holt, Birmingham, AL, for appellant.
Thomas E. Reynolds, pro se.
Appeals from the United States District Court for the Northern District of Alabama.
Before BIRCH and CARNES, Circuit Judges and MORENO*, District Judge.
BIRCH, Circuit Judge:
This case requires us to untangle a knot that each party has played a role in tying. The appellant and debtor in the underlying bankruptcy case, Thomas Edward Coggin ("Coggin"), appeals the district court's affirmance of the decision of the bankruptcy court. The bankruptcy court held that it had jurisdiction over the challenges to Coggin's discharge. The challenges were filed after the statutorily mandated date by the appellees, Phyllis B. Coggin ("Mrs. Coggin"), a creditor and Coggin's ex-wife, and Thomas E. Reynolds (the "trustee"). Coggin argues that the appellees' motions to extend the time for filing such challenges to his discharge were not timely made and, therefore, should not have been granted. Coggin also challenges the bankruptcy court's denial of his discharge. The trustee cross appeals the bankruptcy court's determination that the value of Coggin's avoidable conveyance to his son, Tommy, is not recoverable by the estate from Coggin himself. We affirm the bankruptcy and district court decisions in all respects.
I. BACKGROUND
On April 25, 1989, Coggin filed a voluntary Chapter 7 petition in the United States Bankruptcy Court for the Northern District of Alabama. The bankruptcy court set the section 3411 hearing for June 5, 1989, and fixed August 4, 1989 as the last day for filing a complaint objecting to Coggin's discharge under section 727 or 523 (the "bar date"). On July 28, 1989, the trustee filed a motion to extend the bar date, pursuant to
On September 28, 1989, Mrs. Coggin initiated an adversary proceeding by filing a complaint objecting to the discharge of certain debts of Coggin, pursuant to section 523, or, in the alternative, objecting to his discharge generally, pursuant to section 727. The bankruptcy court granted partial summary judgment to Mrs. Coggin, holding that Coggin was obligated to Mrs. Coggin for past due monthly alimony in the amount of $17,486.50 and that such obligation was nondischargeable under section 523. Coggin does not appeal this decision. On October 26, 1989, the trustee filed a complaint objecting to Coggin's discharge under sections 727(a)(2)(A) and 727(a)(4)(A). Specifically, the trustee made two arguments under section 727(a)(4)(A) and one under section 727(a)(2)(A). First, he asserted that Coggin had knowingly and fraudulently made false oaths, in violation of section 727(a)(4)(A), by failing to disclose that he was to receive $8,000 from the settlement of a lawsuit. Second, the trustee asserted that Coggin had again knowingly and fraudulently made a false oath when he failed to disclose a transfer of $13,000 to his son, Tommy, within one year of his filing the petition.3 Lastly, the trustee alleged that Coggin's transfer of $13,000 to his son, an occurrence which Coggin does not dispute, was a transfer made with the intent to hinder, delay, or defraud creditors in violation of section 727(a)(2)(A).
Coggin filed a motion to dismiss both the trustee's and Mrs. Coggin's complaints on the basis that they had failed to file the complaints by the bar date and had not properly moved for an extension of the bar date under
In April, 1990, trial was held on the claims of the trustee and on Mrs. Coggin's claim that Coggin owed her a portion of several tax refund checks. The bankruptcy court found that Coggin owed Mrs. Coggin $8,398.67 in tax refunds and that such obligation was nondischargeable under section 523(a)(6). The court also found that sufficient evidence was presented to deny Coggin's discharge on all three grounds asserted by the trustee--the two false oaths under section 727(a)(4)(A) and the $13,000 transfer under section 727(a)(2)(A).
The district court affirmed the bankruptcy court in all respects on September 30, 1993. Coggin timely filed this appeal. He challenges the rejection of his argument that the trustee and Mrs. Coggin's motions for extension of the bar date were untimely. He also appeals the judgments made against him as to dischargeability under section 727.
Additionally, the trustee brought suit against Coggin and his son, Tommy, for recovery of the $13,000 payment Coggin made to Tommy. The trustee settled his case with Tommy prior to the trial in the bankruptcy court. The bankruptcy court found that the transfer of $13,000, in addition to being grounds for denying Coggin's discharge, was also an avoidable conveyance under section 548. The court held, however, that the trustee could not recover that transfer from Coggin under section 550(a)(1). This ruling was affirmed by the district court. The trustee cross appeals this denial of recovery from Coggin.
II. DISCUSSION
In reviewing the judgment of the bankruptcy court in this case, we are presented with three specific holdings. First, we examine the determination of the bankruptcy court that the appellees' motions for extending the bar date were timely made. Second, we evaluate the bankruptcy court's denial of Coggin's discharge under section 727. Finally, we review the determination that a trustee cannot, under section 550(a)(1), recover the value of a fraudulent transfer from the transferring debtor.
A. Timeliness Of Motion To Extend Time
The bankruptcy court's determination that the appellees' motions to extend the bar date were timely made is a question of law reviewable de novo. Southtrust Bank v. Thomas (In re Thomas),
The trustee filed a motion to extend the bar date on July 28, 1989, seven days prior to the bar date. Mrs. Coggin filed a similar motion to extend time on August 3, 1989, the day before the bar date. The bankruptcy court granted both motions ex parte, without a hearing of any kind, on the day each motion was filed. In the case of the trustee's motion, neither Coggin nor his attorney was ever served with the motion. Coggin admits, however, that after the court granted the motion, he received a copy of the order in the mail. Mrs. Coggin's motion contains a certificate of service which includes Coggin's attorney, but not Coggin himself. There is no evidence as to whether the order granting her motion was sent to Coggin.
A motion to extend the bar date is a contested matter under the Code. Collier on Bankruptcy states:Broadly speaking, proceedings in bankruptcy cases can be divided into: (1) adversary proceedings, governed by Part VII of the Bankruptcy Rules; (2) administrative matters, in which there is no adversary party (for example, an unopposed motion by a trustee to sell property of the estate); and (3) contested matters, which do not qualify as adversary proceedings because they are not defined as such by Rule 7001 but which, nevertheless, resemble adversary proceedings in that there are two parties who are opposing each other with respect to relief sought by one of them.
9 Collier on Bankruptcy p 9014.03 (15th ed. 1994) (footnote omitted). A motion to extend time best fits in the third category, as it is opposed by the debtor, but is not an adversary proceeding enumerated in Rule 7001. As a result, Rule 9014 applies to this motion.4 Rule 9014 provides in pertinent part:
In a contested matter in a case under the Code not otherwise governed by these rules, relief shall be requested by motion, and reasonable notice and opportunity for hearing shall be afforded the party against whom relief is sought. No response is required under this rule unless the court orders an answer to a motion. The motion shall be served in the manner provided for service of a summons and complaint by Rule 7004....
Under Rule 7004(b)(9), if a movant is conducting service by mail, such service must be made on both the debtor and his attorney. There is no question here that neither the trustee nor Mrs. Coggin executed service on Coggin himself. Under
In support of his position, Coggin cites several cases that hold that a motion is "made" when it is served. The majority of these cases, however, can be distinguished. Coggin cites a line of cases in which courts have held that a motion to amend findings, or to make additional findings and amend the judgment, is made when it is served, not when it is filed. Sonoma v. Sells (In re Sonoma V),
Although
5A Moore's Federal Practice p 52.11 n. 8. In support of this proposition, Moore's currently cites Keohane itself. It does so, however, with the following parenthetical explanation: "[T]he court reasoned that if a
This explanation shows that these cases are not authoritative relative to a motion under
Two bankruptcy court decisions, however, have explicitly held that under
Prior decisions of the bankruptcy court support our position. Although we have found no other case that directly addresses the issue of whether a motion under
Our position is supported by Collier on Bankruptcy, which states: "Current Bankruptcy
Common sense also supports our conclusion that a motion under section 4004(b) is "made" when it is filed, rather than when it is served.
Immediately; without delay; directly; within a reasonable time under the circumstances of the case; promptly and with reasonable dispatch. Within such time as to permit that which is to be done, to be done lawfully and according to the practical and ordinary course of things to be performed or accomplished. The first opportunity offered.
Black's Law Dictionary 654 (6th ed. 1990) (citation omitted). Under
Having ruled that a motion under
As a corollary to our holding that a motion is "made" when filed, we also hold that failure to serve the debtor or his attorney or both prior to the expiration of the bar date does not constitute failure to "make" a motion within the prescribed time. It is well-settled that under the new Bankruptcy Rules, the bankruptcy court has no discretion to grant an extension of the bar date when a motion to do so is not "made" prior to the expiration of the bar date. See In re Lane,
We are called upon here to determine whether the bankruptcy court erred as a matter of law in allowing the appellees additional time to file a complaint objecting to Coggin's discharge. The facts of this case indicate that the court had this power and did not abuse its discretion in doing so. Thinking that it had the power to give the appellees an extension ex parte, the court granted their motions as soon as they were submitted, with no notice and no opportunity for Coggin to be heard. This decision, of course, was erroneous, as it was contrary to the plain language of
Having decided that the motions of the appellees to extend the bar date were properly "made" when filed, and that their failure to serve Coggin in this case was excusable due to the error of the court, we must determine whether the court properly granted those motions. We are not addressing the merits of such a decision, but rather whether the process followed by the court was proper. Upon determining that it had erred in granting the motions ex parte, the court set aside its earlier order pursuant to section 105(a) and afforded Coggin a hearing and an opportunity to dispute the appellees' motions for extension of the bar date. After the hearing, the court found that there were sufficient facts to justify the grant of the extension and that Coggin was not prejudiced by the extension.
Section 105(a) provides that a bankruptcy court "may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title."
B. Validity Of Denial Of Discharge
Coggin next complains that the court erred in denying his discharge under section 727.10 The bankruptcy court denied Coggin's discharge on two bases. First, it found that certain statements or omissions Coggin made constituted knowingly and fraudulently made false oaths under section 727(a)(4)(A). Secondly, it held that the transfer of $13,000 to his son, Tommy, constituted a transfer of property of the debtor with the actual intent to hinder, delay or defraud a creditor, in violation of section 727(a)(2)(A). Coggin challenges both of these determinations.
The bankruptcy court held that Coggin should be denied a discharge under section 727(a)(2)(A). Section 727(a) provides in pertinent part:
(a) The court shall grant the debtor a discharge, unless--
....
(2) the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed--
(A) property of the debtor, within one year before the date of the filing of the petition ....
Coggin converted various assets to cash in February and March, 1989 and then transferred Thirteen Thousand Dollars ($13,000) in cash to his son, Tommy. It is clear from the testimony that the transfer of such sum was to pay future child support obligations and was to avoid the claims of his ex-wife. Such transfer was with the intent to hinder, delay and defraud his Creditors, including his ex-wife, and constitutes a violation of Sec. 727(a)(2)(A), Bankruptcy Code.
....
The transfer of the Thirteen Thousand Dollars ($13,000) from Coggin to Tommy was made with the actual intent to hinder, delay or defraud Phyllis Coggin and the other Creditors of the Debtor. The transfer was made while the Debtor was insolvent and while there were many existing Creditors. Pursuant to Section 502(b)(5), Bankruptcy Code, Tommy would not be able to have any claim with the estate in that, even though the obligation of Coggin to pay child support would not be dischargeable through his bankruptcy. [sic] Only a pre-petition obligation for support could be considered a Claim in the Estate. Congress clearly intended that post-petition support obligations were to be paid out of the Debtor's post-petition income, and not from property of the Estate. The overall plan and concept of bankruptcy, in this regard, is that the assets of the Estate are to be used only to pay the legitimate Claims of the Creditors in existence as of the filing of the Petition. The future support owed to Tommy was not a matured debt and, thus, Section 502(b)(5) would prevent the payment of such Claim from the assets of the estate. For this reason, the Debtor could not be permitted to pay such support from those assets before the filing of his Petition.
... The Court is convinced that the transfer of the Thirteen Thousand Dollars ($13,000) by Coggin to Tommy was a transfer made within one year before the filing of the Petition and was made with the actual intent to hinder, delay or defraud Phyllis Coggin or the other Creditors of the Debtor.
Bankruptcy Court Memorandum of Decision at 9, 11-12 (citation omitted). The bankruptcy court's finding that the transfer in question was made with the actual intent to hinder, delay, or defraud is a question of fact which we will disturb only if it is clearly erroneous. Williamson v. Fireman's Fund Ins. Co.,
A denial of discharge under
C. Trustee's Cross Appeal For Money Judgment Against Debtor
Finally, the trustee appeals the bankruptcy court's determination that the Code vested no power in the trustee to recover the amount transferred to Tommy from Coggin. The bankruptcy court held that although the transfer from Coggin to Tommy was avoidable under section 548, "Section 550 does not authorize or permit recovery against a Debtor for the value of property fraudulently transferred." Bankruptcy Court Memorandum of Decision at 13. Based on our analysis affirming the finding of a fraudulent transfer in violation of
(1) the initial transferee of such transfer or the entity for whose benefit such transfer was made.
This issue appears to be one of first impression. We have not found, and the parties did not cite, a single case in which a court decided whether a transferring debtor is an "entity for whose benefit such transfer was made" under the Code. By applying its plain language and apparent purpose, and by consulting our bankruptcy compass, however, we hold that
The traditional usage of
In the typical case where a guarantor is the "entity" from which the trustee can recover under
We have found no cases in which a court allowed a trustee to recover the value of an avoidable conveyance directly from the transferring debtor under
III. CONCLUSION
Coggin has challenged the bankruptcy court's determination that the trustee and Mrs. Coggin "made" their motions to extend the bar date in a timely fashion, and that he is a nondischargeable debtor under
AFFIRMED.
Notes
Honorable Federico A. Moreno, U.S. District Judge for the Southern District of Florida, sitting by designation
Unless otherwise noted, all references to sections are to the Bankruptcy Code
Hereinafter all references to rules will be to the Federal Rules of Bankruptcy Procedure, unless otherwise noted
There was much discussion and dispute in the lower courts as to whether Coggin's statements or failures to disclose were, in fact, false. Because we uphold the determination of nondischargeability under Sec. 727(a)(2)(A), we need not address the issue of nondischargeability under Sec. 727(a)(4)(A). Therefore, the truthfulness or falsity of Coggin's statements is irrelevant, and we do not address the arguments or repeat the alleged false statements or omissions
Coggin agrees that Rule 7004 governs the method of service here. Presumably he would also agree that other portions of Rule 7004, including those relating to timing of service, also apply
It is important to note that Rule 7004(g) makes clear that the numbers of the Federal Rules of Civil Procedure referred to in Rule 7004 are the numbers in effect on January 1, 1990, prior to any amendments. Therefore, although the timing of service of a summons and complaint is now governed by FRCP 4(m), the reference to FRCP 4(j) in Rule 7004(a) is to the pre-amendment version in which FRCP 4(j) was still the section governing service of a summons and complaint
See In re Harvey,
We do make the following comments about service, however. First, service, like filing, will generally be expected to be made prior to the expiration of the original bar date. Service by mail is permitted, and service is considered complete when mailed.
As we noted at the outset, this case is a knot that each party participated in tying. Coggin, when he received notice that the trustee's motion had been granted, apparently prior to the expiration of the bar date, should have moved the court to revoke or amend that grant, as it was improper without a hearing on notice. Instead, whether consciously or not, Coggin sat on his rights and later brought this jurisdictional challenge
Coggin also challenges the bankruptcy and district courts' determinations relating to a 1986 tax refund he received which is addressed in his divorce decree. The bankruptcy court held that he owed Mrs. Coggin one-half of the actual amount of the refund received after the 1986 return was amended. The court also held that this obligation was nondischargeable. Coggin does not, in his brief, address the issue of the dischargeability of this debt. He does, however, challenge the determination of the amount of the refund owed to his former wife. After a careful examination of the evidence and decisions of the lower courts, we find no error in their determinations and affirm their holdings in all respects relevant to this obligation
Coggin does not materially dispute this point in his brief aside from a reiteration of his challenge to the finding that he committed a transfer in violation of Sec. 727(a)(2)(A)
There has apparently been a settlement between the trustee and Tommy. If that settlement calls for Tommy to repay any monies to the estate, that amount would, of course, be deducted from any right of recovery the estate has against Coggin. The estate is entitled to only one satisfaction.
Much of the controversy in this area deals with a very specific issue: whether a payment which is avoidable under Sec. 547(b)(4)(B) as a preferential transfer to an insider within one year but more than ninety days prior to the filing of the petition may be recovered not only from the insider but also from the non-insider who is either the guarantor or the direct transferee. The courts are split on this question. Compare Levit v. Ingersoll Rand Fin. Corp.,
There is very little legislative history on