BiTech, Inc. v. Withrow (In re Withrow)

Citation: 570 B.R. 452Docket: CASE NO. 16-40279-PWB; ADVERSARY PROCEEDING NO. 16-4041-PWB; CASE NO. 16-40281-PWB; ADVERSARY PROCEEDING NO. 16-4042-PWB

Court: United States Bankruptcy Court, N.D. Georgia; April 10, 2017; Us Bankruptcy; United States Bankruptcy Court

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BiTech, Inc. filed claims against Debtors Clinton Orrin Withrow and Sandra Dalane Parker in bankruptcy court, asserting objections to the dischargeability of its debts. The court had established a deadline of May 28, 2016, for filing such complaints, which could be extended with a motion. On May 23, 2016, BiTech sought an extension, which the court granted through July 25, 2016, via Consent Orders. However, BiTech's subsequent complaints, filed on July 21, 2016, only addressed dischargeability under specific provisions of 11 U.S.C. 523 and did not object to the Debtors' discharges under 11 U.S.C. 727. The Debtors moved to dismiss BiTech's complaints, arguing they were untimely and failed to state a claim. BiTech countered that the extension did not limit the grounds for objection. Ultimately, the court granted the motions to dismiss, concluding that BiTech's complaints did not conform to the established requirements for timely filing.

BiTech claims that the reference to Bankruptcy Rule 4004 instead of Rule 4007 was an inadvertent typographical error. It contends that since the Debtors consented to an extension for filing a complaint, the filing should not be considered surprising or harmful, arguing that applying a strict deadline would be inequitable. The Court's primary issue is whether BiTech's complaints regarding the dischargeability of debt under Section 523 are untimely. Based on the Bankruptcy Rules and related motions, it concludes that BiTech's complaints are indeed untimely and do not present a valid claim for relief. 

The distinction between objections to discharge and objections to dischargeability is emphasized, with relevant rules outlined: Rule 4004 governs objections to discharge and requires complaints to be filed within 60 days post-creditors' meeting, while Rule 4007 addresses dischargeability within the same timeframe. Both rules allow for extensions only if motions are filed before the deadline expires. The deadlines set by Rules 4004 and 4007 are rigid, and while Rule 9006(b) allows for late filings under certain conditions, it does not apply to extensions under Rules 4004 or 4007. Thus, the Court affirms that any extensions must strictly adhere to the stipulations outlined in the relevant Bankruptcy Rules.

The Eleventh Circuit mandates that motions to extend the time for filing a dischargeability complaint under Rule 4007(c) must be submitted before the deadline expires, as established in Byrd v. Alton. This principle affirms that bankruptcy courts lack discretion to accept late motions for extension when timeliness is properly challenged by the debtor. The document highlights that BiTech’s motions and Consent Orders explicitly reference "Motion to Extend Time to File Objection to Discharge" and cite Bankruptcy Rule 4004, without any mention of dischargeability, leading to a clear interpretation that only the deadline for objecting to discharge was extended. The summary cites two relevant cases—In re Robinson and In re Noll—both of which reinforce the necessity of precise language in motions regarding the nature of the objections sought. In both cases, the courts ruled that extensions could not be inferred for dischargeability claims when the motions explicitly referenced only objections to discharge. BiTech has not provided any legal arguments to dispute these precedents.

Other creditors have requested deadline extensions for dischargeability complaints under Bankruptcy Rule 4007, indicating a pattern in similar cases. The Court finds BiTech’s complaints regarding the dischargeability of its debt to be untimely and subject to dismissal based on the Bankruptcy Rules and existing Consent Orders. BiTech's argument for equitable relief to allow a late-filed complaint is rejected. Bankruptcy Rule 9006(b)(3) restricts the Court's ability to extend deadlines for Rules 4004 and 4007, which limits recourse even if there were excusable neglect. The Supreme Court's decision in Kontrick v. Ryan establishes that filing deadlines in Bankruptcy Rules are procedural, not jurisdictional, and while it raises the potential for equitable defenses against untimely complaints, this remains an unresolved issue in the Eleventh Circuit. Previous cases in the circuit have examined equitable tolling but ultimately did not affirm its applicability to Rule 4007 deadlines. While some courts allow late filings under exceptional circumstances, equitable tolling is seldom granted and typically requires that a litigant's delay resulted from uncontrollable factors.

Equitable tolling of deadlines applies when a creditor's failure to meet a deadline results from circumstances beyond their control. Courts have allowed late filings when a bankruptcy court misleads a creditor regarding deadlines, such as in Nicholson v. Isaacman, where a complaint was permitted due to reliance on an erroneous second bar date set by the court. Strict enforcement of Rules 4004 and 4007 has been softened in cases where creditors acted based on incorrect notices. However, not all circumstances warrant equitable tolling. For instance, in Choi v. Promax Investments, a creditor's failure to file due to bad weather was deemed insufficient as the creditor did not demonstrate that the weather prevented other filing options. Similarly, in In re Harper, a last-minute technical issue did not justify late filing. Decisions leading to harsh results do not qualify for equitable relief, as seen in In re Faillace, where a late courier service delivery did not warrant an extension. The court found no error by the Clerk’s office, and BiTech had notice of the deadlines, thus no grounds existed for permitting late-filed complaints. The ruling highlights that the bar for invoking equitable powers is high, resulting in the dismissal of the motions. The court deemed it unnecessary to address BiTech's substantive claims due to the ruling on the late filings, noting that deadline extensions only applied to certain creditors.