the debtor’s false oath in a prior Chapter 13 case was not a false oath “in or in connection with” the debtor’s current Chapter 7 case
How later courts described this case
- the debtor’s false oath in a prior Chapter 13 case was not a false oath “in or in connection with” the debtor’s current Chapter 7 case
Written by the judges who cited it.
The opinion
The document below is hereby signed. gente,
Signed: August 13, 2020 ye”
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S. Martin Teel, Jr.
United States Bankruptcy Judge
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re )
)
TANNER SCOTT CAMPBELL, ) Case No. 19-00042
) (Chapter 7)
Debtor. )
)
)
MOSEX EXHIBIT 1 LLC, )
)
Plaintiff, )
)
Vv. ) Adversary Proceeding No.
) 19-10025
TANNER SCOTT CAMPBELL, )
) Not for Publication in
Defendant. ) West’s Bankruptcy Reporter
AMENDED MEMORANDUM DECISION AND ORDER
RE MOTION FOR JUDGMENT ON THE PLEADINGS
Mosex Exhibit 1 LLC (“Mosex”) has filed a complaint seeking
a determination that the debt the debtor owes it is
nondischargeable under 11 U.S.C § 523(a) (2), (4), or (6) and
seeking to deny the debtor a discharge under 11 U.S.C.
§ □□□ □□□ (3) or (4). I will grant in part the debtor’s motion for
judgment on the pleadings, which amounts to a motion under Fed.
R. Civ. P. 12(b6) (6) to dismiss the complaint for failure to state
a claim upon which relief can be granted.
I
I will dismiss as untimely the part of the complaint seeking
a determination of the nondischargeability of the debt owed Mosex
under 11 U.S.C § 523(a)(2), (4), or (6). The notice of the
commencement of the bankruptcy case warned:
File by the deadline to object Filing deadline: 4/22/19
to discharge or to challenge
whether certain debts are
dischargeable:
You must file a complaint:
• if you assert that the debtor is not entitled to
receive a discharge of any debts under any of the
subdivisions of 11 U.S.C. § 727(a)(2) through (7), or
• if you want to have a debt excepted from discharge
under 11 U.S.C § 523(a)(2), (4), or (6).
[Emphasis in original.] (Dkt. No. 8.)1 Mosex failed to obtain
an extension of the April 22, 2019 deadline under Fed. R. Bankr.
P. 4007(c) for Mosex to file a complaint under 11 U.S.C. § 523(c)
to determine that the debt owed it is nondischargeable under 11
U.S.C § 523(a)(2), (4), or (6). Mosex filed its complaint after
the expiration of the April 22, 2019 deadline, and thus its
claims of nondischargeability must be dismissed.
Mosex asserts that in two motions it filed, each titled a
Motion to Extend Time to Object to Discharge of Debtor, it sought
an extension of the Rule 4007(c) deadline. However, the court
1 The citations herein to Docket Numbers are to docket
numbers in the bankruptcy case, Case No. 19-00042.
2
properly treated each Motion to Extend Time to Object to
Discharge of Debtor as only seeking to extend the deadline to
object to the debtor’s discharge and did not grant an extension
of the Rule 4007(c) deadline.
The facts are these. On April 22, 2019, Mosex filed in the
bankruptcy case its Motion to Extend Time to Object to Discharge
of Debtor in which it represented that it “files this Motion to
Extend Time to Object to Discharge of Debtor pursuant to
Bankruptcy Rule 4004(a) and 11 U.S.C. § 727(a).” Under Fed. R.
Bankr. P. 4004, Mosex had until April 22, 2019, to object to the
debtor’s discharge under 11 U.S.C. § 727(a). Rule 4004 (titled
“Grant or Denial of Discharge”) does not deal with the deadline
for a creditor’s filing a complaint to determine the
dischargeability of a debt under 11 U.S.C. § 523(c). It is Fed.
R. Bankr. P. 4007(c) that addresses the deadline to determine the
dischargeability of a debt under 11 U.S.C. § 523(c).
Mosex’s Motion set forth 26 paragraphs reciting reasons for
granting the Motion, and alleged in part:
17. Furthermore, the underlying judgment-debt owed
to Creditor was incurred in substantial part as a result
of the Debtor’s false pretenses, false representations,
actual fraud and willful and malicious conduct. . . .
18. Strong grounds exist for the denial of a
discharge, inter alia, under Bankruptcy Code §§
523(a)(2)(A), 523(a)(2)(B), 523(a)(6), 727(a)(3),
727(a)(4)(A).
Paragraph 26 indicated: “Accordingly, good cause exists to extend
the deadline to file a complaint objecting to the Debtor’s
3
discharge under Section 727 and for a determination of
non-dischargeability of debt under Section 523(c).” However, the
Motion then concluded by stating:
WHEREFORE, Creditor respectfully requests that the Court
grant this Motion and extend the time to file a complaint
objecting to the discharge of the Debtor for forty-five
(45) days to June 6, 2019.
Moreover, the proposed order submitted with the Motion read:
ORDER GRANTING MOTION TO EXTEND TIME
TO OBJECT TO DISCHARGE OF DEBTOR
This matter is before the Court on a Motion filed by
MOSEX Exhibit 1 LLC (“Creditor”) to extend the deadline
to file a complaint objecting to the Debtor’s discharge
pursuant to Bankruptcy Rule 4004(a) and § 727(a).
Wherefore, for good cause shown, the movant is entitled
to the relief sought, and it is hereby
ORDERED that the Motion is granted and the deadline
to file a complaint objecting to the Debtor’s discharge
is extended for forty-five (45) days from the date of
this order, or to June 6, 2019, whichever date is later.
[Emphasis added.]
On April 22, 2019, the Chapter 7 trustee filed a motion to
extend the time “to object to Debtor’s discharge” and to object
to exemptions, and on May 14, 2019, the court granted the
trustee’s motion in an Order Extending Time to Object to
Exemptions and to Discharge which “ORDERED that the time for
objecting to the Debtor’s exemptions and to discharge are
extended to June 6, 2019.” The trustee was not a creditor and
had not moved under Fed. R. Bankr. P. 4007(c) to extend the time
for all creditors to file complaints under 11 U.S.C. § 523(c) for
4
a determination of the dischargeability of debts. The Order
Extending Time to Object to Exemptions and to Discharge plainly
did not extend the time to file a complaint under 11 U.S.C.
§ 523(c). The Order Extending Time to Object to Exemptions and
to Discharge extended the deadline for all creditors to object to
discharge to June 6, 2019.
On May 13, 2019, the debtor moved to dismiss Mosex’s Motion
to Extend Time to Object to Discharge of Debtor for lack of
proper service, but the court found it unnecessary to address
whether there had been proper service. Because the Order
Extending Time to Object to Exemptions and to Discharge had
extended to June 6, 2019, the deadline for all creditors to
object to discharge, the court entered orders on May 21, 2019,
dismissing as moot both Mosex’s Motion to Extend Time and the
debtor’s motion to dismiss Mosex’s Motion to Extend Time.2 In
dismissing Mosex’s Motion to Extend Time to Object to Discharge
as moot the court necessarily did not view Mosex’s Motion to
Extend Time to Object to Discharge as seeking an extension of
time for Mosex to file a complaint under 11 U.S.C. § 523(c) to
2 The May 21, 2019 Order Dismissing, as Moot, Creditor’s
Motion to Extend Time to Object to Discharge (Dkt. No. 48) noted:
“The Chapter 7 trustee has obtained an order extending to June 6,
2019, the deadline to object to discharge, and that order applies
to all creditors . . . .” and then “ORDERED that the Motion to
Extend Time to Object to Discharge filed herein by MOSEX Exhibit
1 LLC (Dkt. No. 22) is dismissed as moot.”
5
determine that the debt owed it was nondischargeable. Mosex did
not file a motion to amend that order and did not file a notice
of appeal regarding that order.
On April 22, 2019, the United States Trustee filed a Motion
to Extend Time to File a Complaint Objecting to Debtor Discharge
(Dkt. No. 24) seeking an extension of the time “for filing a
complaint objecting to the discharge of the debtor” to July
22, 2019. On May 14, 2019, the court granted the United States
Trustee’s Motion in an Order Granting United States Trustee’s
Motion to Extend Time to File Complaint Objecting to Debtor
Discharge (Dkt. No. 43) granting the request of the United States
Trustee to extend the deadline to file a complaint objecting to
the debtor’s discharge to July 22, 2019. The United States
Trustee was not a creditor and had not moved under Fed. R. Bankr.
P. 4007(c) to extend the time for all creditors to file
complaints under 11 U.S.C. § 523(c) for a determination of the
dischargeability of debts. The Order Granting United States
Trustee’s Motion to Extend Time to File Complaint Objecting to
Debtor Discharge plainly did not extend the time for any creditor
to file a complaint under 11 U.S.C. § 523(c).
On June 6, 2019, Mosex filed a further Motion to Extend Time
to Object to Discharge, once again stating “good cause exists to
extend the deadline to file a complaint objecting to the Debtor’s
discharge under Section 727 and for a determination of
6
non-dischargeability of debt under Section 523(c).” However,
once again, this Motion to Extend Time (like Mosex’s first Motion
to Extend Time) concluded by stating “WHEREFORE, Creditor
respectfully requests that the Court grant this Motion and extend
the time to file a complaint objecting to the discharge of the
Debtor to July 22, 2019.” And the proposed order Mosex submitted
would have “ORDERED that the Motion is granted and the deadline
to file a complaint objecting to the Debtor’s discharge is
extended for forty-five (45) days from the date of this order, or
to July 22, 2019, whichever date is later.” In ruling on that
motion, which timely sought an extension of the existing June 6,
2019 deadline to object to discharge, the court stated:
The United States Trustee and the Chapter 7 trustee have
already obtained orders granting extensions to July 22,
2019, of the deadline to object to discharge. Although
those orders by their terms are limited to the United
States Trustee and the Chapter 7 trustee, the motions
leading to those orders requested additional time so that
investigations of the circumstances in this case can be
completed in order to better determine whether the filing
of a complaint objecting to discharge is warranted. The
Creditor should be given the same amount of additional
time to evaluate whether to object to the debtor’s
receiving a discharge.
[Emphasis added.]3 The order then:
ORDERED [that] the deadline for MOSEX Exhibit 1
LLC to file a complaint objecting to the Debtor’s
discharge is extended to July 22, 2019. It is further
3 In fact, only the United States Trustee, and not the
Chapter 7 trustee, had obtained an order (Dkt. No. 43) extending
to July 22, 2019, the deadline for his filing a complaint
objecting to discharge.
7
ORDERED that any further relief sought by the
Motion to Extend Time to Object to Discharge of Debtor
(Dkt. No. 56) is denied.
[Emphasis added.] Mosex did not seek amendment of that order or
appeal that order. Mosex filed its complaint on July 22, 2019.
Because there was no extension of the April 22, 2019 deadline to
file a complaint regarding nondischargeability, the complaint’s
claims regarding nondischargeability must be dismissed as
untimely.
On the other hand, the debtor’s Answer in this adversary
proceeding, filed on August 26, 2019, and his motion for judgment
on the pleadings do not assert (and could not assert) that the
claims under 11 U.S.C. § 727(a) to deny the debtor a discharge
are time-barred under Rule 4004. The claims under § 727(a) are
timely.
II
Count IV of Mosex’s complaint seeks a denial of the debtor’s
discharge under 11 U.S.C. § 727(a)(3). Mosex alleges that
“Debtor, in his operation of his fraudulent scheme, concealed,
destroyed, mutilated, falsified, or failed to keep or preserve
any recorded information, including books, documents, records,
and papers, from which the Debtor's financial condition or
business transactions might be ascertained.” Compl. ¶ 74. That
conclusory allegation standing alone would not suffice to state a
claim upon which relief can be granted. Moreover, it does not
8
even address whether the failure “was justified under all of the
circumstances of the case.” However, Court IV incorporates these
prior allegations:
55. Since January 1, 2015, the Debtor has withdrawn
$206,262.88 in cash from ATM machines over 996 individual
cash withdrawal transactions in denominations generally
between $200.00 and $400.00 at an average rate of
$3,996.59 in cash withdrawals per month since January 1,
2015.
56. The Debtor unconvincingly attempted to assert
that his average of 20 separate trips per month to ATM
machines to withdraw cash in small denominations is not
unusual. [Footnote: The Debtor acknowledged that he does
not know anyone else who engages in this Practice. End
of Footnote.] He admits to the $206,262.88 in cash
withdraws but could not specifically account for how he
spent a single dime of the money. Moreover, the Debtor
insisted (in the absence of credibility) that he spends
his cash before he withdraws more cash. If that is true,
then the Debtor somehow spends an average of an
additional $133.33 in cash every day [$4,000.00 per
month] on unknown expenses off the grid that are separate
from the Debtor’s statement of monthly expenses.
* * *
58. The Debtor has no records of how he (allegedly)
disposed of $206,262.88 in cash pursuant to his
outrageous ATM withdrawal scheme.
59. The Debtor has concealed, destroyed, mutilated,
falsified, or failed to keep or preserve any recorded
information, including books, documents, records, and
papers, from which the Debtor's financial condition or
business transactions might be ascertained. This
behavior was not justified under the circumstances of the
case. . . . The Debtor failed to maintain records which
would demonstrate the falsity of his statements under
oath, among other things.
* * *
61. The Debtor depleted his estate of $206,262.88 in
cash and that cash has gone missing. The Debtor’s
9
explanations, consisting primarily of assertions of the
absence of memory, are utterly unavailing. [Footnote: For
example, in a deposition, the Debtor testified that he
withdrew cash from an ATM the prior night. When the
Debtor was asked to show the cash from his wallet in the
deposition (approximately 10 hours after he withdrew it),
all the cash was gone from the Debtor’s wallet. The
Debtor could not credibly account for why the cash was
missing and where it went. End of Footnote.]
These allegations suffice to state a claim for denial of
discharge under 11 U.S.C. § 727(a)(3).4 However, beyond that,
the complaint does not state a basis for denying the debtor a
discharge under § 727(a)(3).
III
Count V of the complaint seeks a denial of discharge under
11 U.S.C. § 727(a)(4). In pertinent part, the complaint alleges:
78. Debtor, knowingly and fraudulently, in or in
connection with the case, made a false oath or account.
79. By virtue of the Debtor’s false representations
and omissions, and the oath he took concerning the
veracity of his submissions, the Debtor’s discharge
should be denied under Bankruptcy Code § 727(a)(4)(A).
These conclusory allegations do not suffice to state a claim upon
which relief can be granted. The debtor and Mosex engaged in
lengthy litigation prior to the commencement of the bankruptcy
case, and Mosex’s complaint identifies instances in which the
debtor made false statements under oath in that litigation.
4 I reject as frivolous the debtor’s argument that this
court lacks jurisdiction under Rule 12(b)(1), Federal Rules of
Civil Procedure, over the subject matter of Counts IV and V of
the complaint.
10
However, those statements were not made “in connection with the
case” in order to justify a denial of discharge under
§ 727(a)(4)(A). For § 727(a)(4)(A) to apply, the debtor’s false
oath must be made in or in connection with the bankruptcy case.
A statement made under oath but made prior to the commencement of
a bankruptcy case is not, within the meaning of 11 U.S.C.
§ 727(a)(4), a false oath “in or in connection with the case.”
See Ong v. Ong-Maguire (In re Ong-Maguire), No. ADV 09-1176-JMD,
2010 WL 2775062, at *4 (Bankr. D.N.H. July 13, 2010) (the
debtor’s alleged false oath upon filing a trustee certificate in
a registry of deeds, before she filed her bankruptcy case, was
not made “in connection with the case”). See also Strauss v.
Brown (In re Brown), 531 B.R. 236, 263 (Bankr. W.D. Mo. 2015)
(the debtor’s false oath in a prior Chapter 13 case was not a
false oath “in or in connection with” the debtor’s current
Chapter 7 case).5 Mosex’s complaint fails to identify any
instance in which the debtor knowingly and fraudulently, in or in
connection with the case, made a false oath or account.
Based on ATM withdrawals acknowledged by the debtor, Mosex
alleges that “the Debtor somehow spends an average of an
additional $133.33 in cash every day [$4,000.00 per month] on
5 However, a false oath made in a prior bankruptcy case and
within one year before the commencement of the current bankruptcy
case may be a basis for denial of discharge under 11 U.S.C.
§ 727(a)(7).
11
unknown expenses off the grid that are separate from the Debtor’s
statement of monthly expenses.” (Compl. ¶ 56.) This suggests
that the debtor’s Schedule J (the statement of monthly expenses)
may have been inaccurate. Mosex acknowledges that the debtor has
revealed ATM withdrawals leading to that average of $133.33 per
day in cash, and Mosex does not allege that the failure to
disclose the cash withdrawals on Schedule J was done knowingly
and fraudulently. Understating expenses on Schedule J (in
contrast to overstating expenses on Schedule J) is usually not
done with an intent to defraud anyone. The allegations of the
complaint fail to state a claim upon which relief can be granted
regarding denying the debtor a discharge based on 11 U.S.C.
§ 727(a)(4).
IV
Based on the foregoing, it is
ORDERED that Counts I, II, III, and V of the complaint are
DISMISSED. It is further
ORDERED that the motion to dismiss is otherwise denied, and
Count IV remains pending with respect to the allegations of
paragraphs 55, 56, 58, 59, and 61 of the complaint.
[Signed and dated above.]
Copies to: All counsel of record; Office of United States
Trustee.
12
R:\Common\TeelSM\Judge Temp Docs\Mosex v. Campbell - Amended Mem Decsn re Mtn for Judgment v2.wpd