In re Rivera

628 B.R. 309

IN RE: Eddie RIVERA, and Sheleyne Rivera, Debtors.

Case No. 18-42997

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

Signed May 18, 2021

Kristin Snyder, David Ross Ienna, Jaafar Law Group PLLC, Dearborn, Michigan, Attorneys for the Debtors.

OPINION AND ORDER DENYING THE DEBTORS' MOTION TO REOPEN BANKRUPTCY CASE

Thomas J. Tucker, United States Bankruptcy Judge

This case is before the Court on the Debtors' motion, filed May 5, 2021, entitled "Ex Parte Motion to Set Aside Order Closing Case Without Discharge and For Entry of a[n] Order Reopening the Chapter 7 Bankruptcy" (Docket # 19, the "Motion"). The Motion seeks to reopen this case to enable the Debtors each to file a Financial Management Course Certificate (the "Certificate"), and then receive a discharge. The Motion was filed more than two years and nine months after this case was closed. For the following reasons, the Court will deny the Motion.

A. Background

With the assistance of their attorneys, the Debtors filed a voluntary petition for relief under Chapter 7 on March 6, 2018, commencing this case. That same day, the Clerk issued a notice that the first meeting of creditors would be held on April 11, 2018 at 11:00 a.m. (Docket # 9, the "Notice"). On March 7, 2018, the Notice was served by the Bankruptcy Noticing Center by email on the Chapter 7 Trustee, the Debtors' attorney, and some of the creditors, and on March 8, 2018, the Notice was served by the Bankruptcy Noticing Center by mail on the Debtors and the remainder of the creditors (Docket # 10).

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 Debtors were each required to file a Certificate "within 60 days after the first date set for the meeting of creditors," which meant that the deadline was June 11, 2018.⁵

The Debtors failed to file their Certificates by the June 11, 2018 deadline, or at any time thereafter while the case remained open. The Debtors also failed to file a motion to extend the deadline to file the Certificates.

On July 17, 2018, after the case had been fully administered, the case was closed without a discharge, due to the Debtors' failure to file their Certificates. (Docket # 17.) Notice of the Final Decree entered that day (Docket # 18) was served on the Debtors' counsel by e-mail on July 17, 2018, and again on July 19, 2018 through the Court's ECF system. And a notice that the Debtors' bankruptcy case had been closed without a discharge was served by the Bankruptcy Noticing Center by mail on July 19, 2018 on all creditors, and on the Debtors. (Docket # 18). 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 two years and nine months later, on May 5, 2021, the Debtors filed the present Motion (Docket # 19). The Motion states, in relevant part:

4. Debtors did not receive the letter from the court, emails from counsel, or phone calls from counsel regarding the need to complete and file the Certificate regarding the required Financial Management Course.

(Mot. at ¶ 4.)

B. Discussion

The Motion alleges that the reason that the Debtors did not file the required Certificate was because they did not receive any of the communications from the Court or their counsel regarding the necessity to file the Certificate in order to receive their discharge. This is not a valid excuse (1) for the Debtors' failure to timely complete the financial management course and file the required Certificate, by the June 11, 2018 deadline, more than two years and 11 months ago; or (2) for the Debtors' delay of more than two years and nine months after this case was closed before they 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 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, in essence, the Debtors seek to reopen the case to move for an order granting the Debtors a retroactive extension of time to file the Certificate, so the Debtors 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 Debtors have 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 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 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 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 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 Certificate where the debtor had not completed the post-petition financial management course and did not file the motion to reopen and 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 Certificate where the debtor had not completed the post-petition financial management course and did not file the motion to reopen and 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 years. See 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 (Bankr. 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. 819 (Bankr. E.D. Mich. 2017) (delay of 11 months); In re Bragg , 577 B.R. 265 (Bankr. E.D. Mich. 2017) (delay of almost 11 months).

The Court will apply this four-factor approach in this case. The Court finds that the Debtors have not shown either cause to reopen this case, or cause to grant the Debtors a retroactive extension of more than 2 years and eleven months of the deadline to file the Certificate.

Factor 1: whether there is a reasonable explanation for the failure to comply

The Motion does not demonstrate any valid excuse, (1) why the Debtors failed to timely complete the financial management course and file the required Certificate, by the ...