In re Williams

636 B.R. 484

IN RE: Donna Denice WILLIAMS, Debtor.

Case No. 19-41422

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

Signed February 15, 2022

A. Rita Kostopoulos, Daniel E. Bassir, Kostopoulos & Associates, PLLC, Warren, Michigan, Attorneys for the 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 February 9, 2022, entitled "Ex-Parte Motion to Reopen Chapter 7 Case" (Docket # 40, the "Motion"). The Motion seeks to reopen this case to enable the Debtor to file a Financial Management Course Certificate (the "Financial Management Course Certificate"), and then receive a discharge.

The Motion was filed more than 20 months after this case was closed without a discharge. For the reasons stated below, the Court will deny the Motion.

A. Background

With the assistance of her attorney, the Debtor filed a voluntary petition for relief under Chapter 7 on February 1, 2019, commencing this case. That same day, the Clerk issued a notice that the first meeting of creditors would be held on March 13, 2019 at 8:30 a.m. (Docket # 5, the "Notice"). The Notice was served on the Debtor's attorney by e-mail, by the Court's ECF system, on February 1, 2019. On February 3, 2019, the Notice was served by the Bankruptcy Noticing Center by email on the Chapter 7 Trustee and on the Debtor's attorney, among others, and the Notice was served by the Bankruptcy Noticing Center by mail on the Debtor. (Docket # 7).

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 May 13, 2019.⁵

The Debtor failed to file the Financial Management Course Certificate by the May 13, 2019 deadline, or at any time thereafter while the case remained open. The Debtor also failed to file a motion to extend the deadline to file the Financial Management Course Certificate.

On May 14, 2019, 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 # 38.) That same day, the Court's ECF system served the Debtor's attorney by e-mail with a notice that the Debtor's bankruptcy case had been closed without a discharge. (Id. ) A notice of the same thing was served on the Debtor by the Bankruptcy Noticing Center, by mail, on May 16, 2019. (Docket # 39). 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 20 months later, on February 9, 2022, the Debtor filed the Motion (Docket # 40). The Motion states, in relevant part:

3. Debtor misunderstood the requirement of having to take the Personal Financial Management Course.

4. Since Debtor relied on this belief, a Personal Financial Management Course Certificate was not filed in this case, as is required by Bankruptcy Rule 1007(b)(7).

(Mot. at ¶¶ 3-4).

B. Discussion

The Motion does not demonstrate 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 20 months after this case was closed before she 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, in essence, the Debtor seeks to reopen the case 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 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 Lewis , No. 16-54136, 635 B.R. 157 (Bankr. E.D. Mich. Jan. 20, 2022) (Chapter 13 case) (delay of more than two years); In re Motley , No. 18-53216, 635 B.R. 150 (Bankr. E.D. Mich. Jan. 14, 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. 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 Debtor has not shown...