In re Flake

642 B.R. 261

IN RE: Debra Michelle FLAKE, Debtor.

Case No. 16-56552

United States Bankruptcy Court, E.D. Michigan, Southern Division.

Signed August 16, 2022

Stephen D. Parker, Parker Law Firm, PLLC, Bloomfield Hills, Michigan, Attorney for the Debtor.

OPINION AND ORDER DENYING THE DEBTOR'S MOTION TO REOPEN CASE

Thomas J. Tucker, United States Bankruptcy Judge

This Chapter 13 case is before the Court on the Debtor's motion filed on August 9, 2022, entitled "Motion to Reopen Debtor's Chapter 13 Case" (Docket # 96, the "Motion"). The Motion seeks to reopen this case to enable the Debtor to file a Financial Management Course Certificate ("Certificate"), and to file a certification regarding domestic support obligations, and then receive a discharge. The Motion was filed almost 3 years after this case was closed. The case was closed on September 11, 2019, without a discharge, due to the Debtor's failure to timely file "the Local Form Certification Regarding Domestic Support Obligations" and due to the Debtor's failure to timely file the Certificate (Docket # 93 ("Final Decree").)

For the following reasons, the Court will deny the Motion.

A. Background

With the assistance of her attorney, the Debtor filed a voluntary petition for relief under Chapter 13 on December 11, 2016, commencing this case. On December 13, 2016, the Clerk issued a notice that the first meeting of creditors would be held on January 24, 2017 at 11:00 a.m. (Docket # 8, the "Notice"). On December 13, 2016, the Notice was served by the Bankruptcy Noticing Center by email on the Chapter 13 Trustee, the Debtor's attorney, some of the creditors, and on December 15, 2016, the Notice was served by the Bankruptcy Noticing Center by mail on the remainder of the creditors, and directly on the Debtor at her address of record (Docket # 16).

Under Fed. R. Bankr. P. 1007(b)(7)(A),¹ 1007(c),² and 4004(c)(4),³ and 11 U.S.C. § 1328(g)(1),⁴ to obtain a discharge under 11 U.S.C. § 1328, the Debtor in this Chapter 13 case was required to file a Financial Management Course Certificate no later than the date when the last payment was made by the Debtor under her confirmed plan.

The Debtor's Chapter 13 plan was confirmed on August 10, 2018.⁵ The confirmed plan provided for payments by the Debtor for 60 months, and a monthly payment of $2,068.95.⁶ The Debtor completed all her required plan payments on March 18, 2019.⁷ On May 15, 2019, the Chapter 13 Trustee filed a notice of the completion of all payments under the plan under Local Rule 2015-3(a).⁸ Under E.D. Mich. LBR 4004-1, that meant that the deadline for the Debtor to file her Certification Regarding Domestic Support Obligations was June 12, 2019.⁹ That also meant that under Fed. R. Bankr. P. 1007(c), quoted in footnote 2, that the deadline for the Debtor to file her Financial Management Course Certificate was March 18, 2019.

The Debtor failed to file the Certification Regarding Domestic Support Obligations by the June 12, 2019 deadline, and to date, still has not filed it.

The Debtor also failed to file her Financial Management Course Certificates by the March 18, 2019 deadline, or at any time thereafter while the case remained open, or even as of now. The Debtor also failed to file a motion to extend the deadline to file the Financial Management Course Certificate.

On September 11, 2019, after the case had been fully administered, the case was closed without a discharge, due to the Debtor's failure to file "the Local Form Certification Regarding Domestic Support Obligations for discharge," and also due to the fact that the "Debtor[ ] has not filed a Financial Management Course Certificate proving compliance with the required instructional course requirement for discharge." (See Docket # 93.) Notice of the Final Decree entered that day (Docket # 93) was served on the Debtor's counsel by e-mail on September 11, 2019 through the Court's ECF system. And a notice that the Debtor's bankruptcy case had been closed without a discharge was served by the Bankruptcy Noticing Center by mail on September 13, 2019 on all creditors not served by email, and on the Debtor. (Docket # 95). Such notice stated: "All creditors and parties in interest are notified that the above-captioned case has been closed without entry of discharge as Debtor(s) failed to comply with the Local Form Certification Regarding Domestic Support Obligations.") (Id .)

Almost three years later, on August 9, 2022, the Debtor filed the present Motion (Docket # 96).

B. Discussion

The Motion alleges that the reason the Debtor did not take the financial management course, and did not timely file the required Financial Management Course Certificate, and did not timely file the Certification Regarding Domestic Support Obligations, was because she was "working full time ... [and] was also the primary caretaker of her elderly father who was sick at the time, [and] getting the necessary documents back to her counsel in a timely manner was not at the forefront of the Debtor's mind while caring for her father." (Mot. at ¶ 3.) The Court finds that these excuses alleged by the Debtor are not adequate or valid excuses, (1) for the Debtor's failure to timely complete the financial management course and file the required Financial Management Course Certificate by the March 18, 2019 deadline, three years and five months ago; or (2) for the Debtor's failure to timely file the Certification Regarding Domestic Support Obligations by the June 12, 2019 deadline, three years and two months ago; or (3) for the Debtor's delay of almost three years after this case was closed before she moved to reopen it.

Section 350(b) of the Bankruptcy Code, Federal Bankruptcy Rule 5010,¹⁰ and Local Bankruptcy Rule 5010-1¹¹ govern motions to reopen a case for the purpose of filing "either a Certification About Financial Management Course or a Certification Regarding Domestic Support Obligations." Bankruptcy Code Section 350(b) states that "a case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause." 11 U.S.C. § 350(b). Here, in essence, the Debtor seeks to reopen the case to move for an order granting the Debtor a retroactive extension of time of over three years to file a Financial Management Course Certificate, and to file the Certification Regarding Domestic Support Obligations, so the Debtor can obtain a discharge.

"It is well settled that decisions as to whether to reopen bankruptcy cases ... are committed to the sound discretion of the bankruptcy judge ...." Rosinski v. Rosinski (In re Rosinski ), 759 F.2d 539, 540-41 (6th Cir. 1985) (citations omitted).

"To make the decision, courts may consider ‘the equities of each case with an eye toward the principles which underlie the Bankruptcy Code." In re Chrisman , No. 09-30662, 2016 WL 4447251, at *1 (Bankr. N.D. Ohio August 22, 2016) (citation omitted). The Debtor has the burden of establishing that "cause" exists to reopen this case. See id. (citing Rosinski , 759 F.2d 539 (6th Cir. 1985) ).

Bankruptcy Rule 9006(b)(3) states, in relevant part, that "the court may enlarge the time to file the statement required under Rule 1007(b)(7) [(the Financial Management Course Certificate)] ... only to the extent and under the conditions stated in Rule 1007(c). Fed. R. Bankr. P. 9006(b)(3). Bankruptcy Rule 1007(c), in turn, permits a bankruptcy court "at any time and in its discretion, [to] enlarge the time to file the statement required by subdivision (b)(7) [of Bankruptcy Rule 1007(c) [(namely, a Financial Management Course Certificate)]." Fed. R. Bankr. P. 1007(c). However, with an exception not applicable here, any such extension "may be granted only on motion for cause shown and on notice to the United States trustee, any committee elected under § 705 or appointed under § 1102 of the Code, trustee, examiner, or other party as the court may direct." Fed. R. Bankr. P. 1007(c) (emphasis added).

Several reported bankruptcy cases, including cases decided by the undersigned judge, have considered whether "cause" exists to grant a debtor's motion to reopen a case to file a Financial Management Course Certificate after the debtor's case was closed without a discharge. Such cases apply a four-part test, and have denied the motion where the Debtor had not completed a post-petition financial management course and filed the motion to reopen and a Financial Management Course Certificate within a relatively short time after the case was closed. The four factors that these cases have considered are: "(1) whether there is a reasonable explanation for the failure to comply; (2) whether the request was timely; (3) whether fault lies with counsel; and (4) whether creditors are prejudiced." See , e.g. , In re Barrett, 569 B.R. 687, 690-92 (Bankr. E.D. Mich. 2017) (applying the 4-part test and denying a debtor's motion to reopen to file a Financial Management Course Certificate where the debtor had not completed the post-petition financial management course and did not file the motion to reopen and Financial Management Course Certificate until more than 8 years after the case was closed); In re Chrisman , No. 09-30662, 2016 WL 4447251, at *2-3 (Bankr. N.D. Ohio Aug. 22, 2016) (denying a debtor's motion to reopen to file a Financial Management Course Certificate where the debtor had not completed the post-petition financial management course and did not file the motion to reopen and Financial Management Course Certificate until more than 7 years after the case was closed); In re McGuinness , No. 08-10746, 2015 WL 6395655, at *2, 4 (Bankr. D.R.I. Oct. 22, 2015) (more than 7 year delay); In re Johnson , 500 B.R. 594, 597 (Bankr. D. Minn. 2013) (more than 4 year delay); cf. In re Heinbuch , No. 06-60670, 2016 WL 1417913, *3-4 (Bankr. N.D. Ohio April 7, 2016) (approximately 7 year delay).

This Court has denied motions to reopen in numerous cases, where the delay ranged from 10 months to more than 11 and a half...