In re Keller

638 B.R. 582

IN RE: Ryan August KELLER, Debtor.

Case No. 20-41004

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

Signed April 8, 2022

Marguerite Hammerschmidt, HS&A, P.C., Royal Oak, Michigan, Attorney for Debtor.

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

Thomas J. Tucker, United States Bankruptcy Judge

This case is before the Court on the Debtor's motion, filed April 7, 2022, entitled "Motion to Reopen Chapter 7 Bankruptcy Case Pursuant to 11 U.S.C. [§] 350(b) for Purposes of Entering Certificate of Debtor Education" (Docket # 21, the "Motion"). The Motion seeks to reopen this case to enable the Debtor to file a Financial Management Course Certificate, and then receive a discharge. The Motion was filed more than 21 months after this case was closed without a discharge on May 26, 2020. For the following reasons, the Court will deny the Motion.

A. Background

The Debtor filed a voluntary petition for relief under Chapter 7 on January 24, 2020, commencing this case. That same day, the Clerk issued a notice that the first meeting of creditors would be held on February 26, 2020 at 12:30 p.m. (Docket # 8, the "Notice"). The Notice was served on the Debtor's attorney by e-mail, through the Court's ECF system, on January 24, 2020. The Notice also was served on the Debtor's attorney by both e-mail and by first class mail, by the Bankruptcy Noticing Center, on January 26, 2020 (Docket # 9). On January 26, 2020, the Notice was served by the Bankruptcy Noticing Center on the Debtor, by first class mail. (Id. ).

Under Fed. R. Bankr. P. 1007(b)(7)(A),¹ 1007(c),² and 4004(c)(1)(H),³ and 11 U.S.C. § 727(a)(11),⁴ to obtain a discharge under 11 U.S.C. § 727, the Debtor was required to file a Financial Management Course Certificate "within 60 days after the first date set for the meeting of creditors," which meant that the deadline was April 27, 2020.⁵

The Debtor failed to file the Financial Management Course Certificate by the April 27, 2020 deadline, or at any time thereafter while the case remained open. The Debtor also failed to file any motion to extend the deadline to file the Financial Management Course Certificate.

On May 26, 2020, after the case had been fully administered, the case was closed without a discharge, due to the Debtor's failure to file the Financial Management Course Certificate. (Docket # 19.) The notice that the Debtor's bankruptcy case had been closed without a discharge was served on the Debtor's counsel by e-mail on May 26, 2020, through the Court's ECF system. And such notice was served by the Bankruptcy Noticing Center by first class mail on May 28, 2020, on the Debtor and on the creditors that had not been served electronically. (Docket # 20). 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) did not file Official Form 423, Certification About a Financial Management Course." (Id .)

More than 21 months later, on April 7, 2022, the Debtor filed the Motion (Docket # 21). The Motion states, in relevant part:

3. That the Debtors(s) completed a course on personal financial management on April 7, 2022 but after the Case was closed.

....

6. That the Debtor(s) would suffer an undue hardship if their Motion to Reopen the case would be denied, for the Debtor(s) would not receive a discharge of their debts.

(Mot. at ¶¶ 3, 6.)

B. Discussion

The Motion does not allege any excuse, let alone a valid excuse, for (1) the Debtor's failure to timely complete the financial management course and file the required Financial Management Course Certificate; and (2) the Debtor waiting more than 21 months after this case was closed before he moved to reopen it.

Section 350(b) of the Bankruptcy Code, Federal Bankruptcy Rule 5010,⁶ and Local Bankruptcy Rule 5010-1⁷ govern motions to reopen a case for the purpose of filing a Financial Management Course Certificate. 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, the Debtor seeks to reopen the case, in essence, to move for an order granting the Debtor a retroactive extension of time to file the Financial Management Course Certificate, 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 the 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 the Financial Management Course Certificate until more than 7 years after the case was closed); In re McGuiness , 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 years. See In re Page , 637 B.R. 1 (Bankr. E.D. Mich. 2022) (delay of more than 19 months); In re Williams , 636 B.R. 484 (Bankr. E.D. Mich. 2022) (delay of more than 20 months); In re Lewis , 635 B.R. 157 (Bankr. E.D. Mich. 2022) (Chapter 13 case) (delay of more than two years); In re Motley , 635 B.R. 150 (Bankr. E.D. Mich. 2022) (delay of almost 3 years); In re Brown , 634 B.R. 748 (Bankr. E.D. Mich. 2022) (delay of 15 months); In re Rivera , 628 B.R. 309 (Bankr. E.D. Mich. 2021) (delay of 2 years and 9 months); In re Szymanski, 625 B.R. 875 (Bankr. E.D. Mich. 2021) (delay of more than 18 months); In re Hendricks , 625 B.R. 694 (Bankr. E.D. Mich. 2021) (delay of more than 14 months); In re Smith , 625 B.R. 41 (Bankr. E.D. Mich. 2021) (delay of almost 17 months); In re Lemon , 625 B.R. 47 (Bankruptcy E.D. Mich. 2021) (delay of 15 months); In re Aziz , 622 B.R. 694 (Bankr. E.D. Mich. 2020) (delay of four years and eight months); In re Smith , 620 B.R. 888 (Bankr. E.D. Mich. 2020) (delay of two and a half years); In re Suell , 619 B.R. 642 (Bankr. E.D. Mich. 2020) (delay of almost two years); In re Raza , 617 B.R. 290 (Bankr. E.D. Mich. 2020) (delay of 11 and a half years); In re Locklear , 613 B.R. 108 (Bankr. E.D. Mich. 2020) (delay of nearly 12 months); In re Jackson , 613 B.R. 113 (Bankr. E.D. Mich. 2020) (delay of 13 months); In re Szczepanski, 596 B.R. 859 (Bankr. E.D. Mich. 2019) (delay of more than 15 months); In re Lockhart , 582 B.R. 1 (Bankr. E.D. Mich. 2018) (delay of more than 1 year); Barrett, 569 B.R. at 688 (delay of more than 8 years) ; In re Kessler , 588 B.R. 191 (Bankr. E.D. Mich. 2018) (delay of 5 years); In re Moore , 591 B.R. 680 (Bankr. E.D. Mich. 2018) (delay of 10 months); In re Garnett , 579 B.R. 818, 823 (Bankr. E.D. Mich. 2018) (delay of more than 5 and one half years); In re Rondeau , 574 B.R. 824 (Bankr. E.D. Mich. 2017) (delay of more than 3 years); In re Wilson , 575 B.R. 783 (Bankr. E.D. Mich. 2017) (delay of almost 15 months); In re Whitaker , 574 B.R....