Tang-Fok v. Schoenmann (In re Rutherford)

NOT FOR PUBLICATION

Appeal from the United States Bankruptcy Court for the Northern District of California Hannah L. Blumenstiel, Bankruptcy Judge, Presiding

Before: GAN, TAYLOR, and BRAND, Bankruptcy Judges.

MEMORANDUM ^[1]

INTRODUCTION

Appellant and creditor Joannie Tang-Fok appeals the bankruptcy court's order discharging chapter 7^[2] debtor, Linda Marie Rutherford

("Debtor"). Ms. Tang-Fok alleges that Debtor owes her $57, 050 in back rent under a residential lease agreement which terminated prepetition. She contends that the debt should not be discharged because Debtor fraudulently failed to pay rent, issued bad checks, and falsely claimed she would repay the rents after receiving tax refunds and starting a new job.

However, Ms. Tang-Fok did not file an adversary complaint objecting to Debtor's discharge, as required by Rule 4004(d), and the deadline for filing an objection passed before entry of the discharge order. The court properly entered the discharge pursuant to Rule 4004(c)(1). Accordingly, we AFFIRM.

FACTS^[3]

Debtor filed her chapter 7 petition on December 22, 2020. She listed Ms. Tang-Fok in Schedule E/F as an unsecured creditor with a $57, 050 claim for back rent. On December 23, 2020, the court issued Official Form 309A, Notice of Chapter 7 Bankruptcy Case (the "Bankruptcy Notice"). The Bankruptcy Notice provided that the deadline to object to discharge or to challenge whether a particular debt is dischargeable was March 22, 2021. The Bankruptcy Notice further directed that a creditor must file a complaint before the deadline if the creditor asserts that Debtor is not entitled to a discharge under § 727(a)(2)-(7), or the creditor wants to except

the debt from discharge under § 523(a)(2), (4), or (6). Ms. Tang-Fok received the Bankruptcy Notice by mail.

Chapter 7 trustee E. Lynn Schoenmann ("Trustee") concluded the § 341 meeting of creditors on February 3, 2021 and, two days later, entered a report of no distribution. On March 18, 2021, Ms. Tang-Fok filed a proof of claim asserting an unsecured claim of $57, 050. She attached to her proof of claim a letter asserting that the debt should not be discharged, but she did not file a complaint seeking to deny Debtor's discharge or to hold her claim nondischargeable, and she did not file a motion to extend the deadlines.

On March 23, 2021, the court entered an order granting Debtor's discharge, discharging Trustee, and closing the case. Ms. Tang-Fok timely filed a notice of appeal. Debtor filed a motion to dismiss the appeal, which Ms. Tang-Fok opposed, and we took the matter under advisement.^[4]

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and 157(b). We have jurisdiction under 28 U.S.C. § 158.

ISSUE

Did the bankruptcy court err by entering Debtor's discharge under § 727(a) and Rule 4004(c)(1)?

STANDARD OF REVIEW

Whether the bankruptcy court properly entered a discharge pursuant to § 727(a) and Rule 4004(c)(1) is a question of law which we review de novo. In re Petrone, 498 B.R. 1, 3 (1st Cir. BAP 2013). Under de novo review, we look at the matter anew, giving no deference to the bankruptcy court's determinations. Francis v. Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP 2014).

DISCUSSION

On appeal, Ms. Tang-Fok argues that she should not have been listed as a creditor because she made no loan to Debtor. She claims that Debtor made false promises that she would pay the back rents and therefore the debt should not have been discharged. Ms. Tang-Fok cites §§ 523(a)(6) and 727(a)(4) in support of her argument.

Entry of a chapter 7 discharge is a ministerial duty of the bankruptcy court. Filice v. United States (In re Filice), 580 B.R. 259, 265 (Bankr. E.D. Cal. 2018). Section 727(a) provides that the "court shall grant the debtor a discharge" unless any of twelve conditions exist. Many of the conditions require a party in interest to object before the discharge is entered. Id.

Rule...