Weil v. Elliott

          Argued and Submitted May 9, 2017 Pasadena, California

         Appeal from the United States Bankruptcy Court No. 1:11-bk-23855-VK for the Central District of California Victoria S. Kaufman, Bankruptcy Judge, Presiding

          John Nowlan Tedford IV (argued) and Aaron E. de Leest, Danning Gill Diamond & Kollitz LLP, Los Angeles, California, for Plaintiff-Appellant.

          Andrew Edward Smyth (argued), SW Smyth LLP, Los Angeles, California, for Defendant-Appellee.

          Before: J. Clifford Wallace, Morgan Christen, and Paul J. Watford, Circuit Judges.

         SUMMARY^[*]

         Bankruptcy

         The panel reversed the bankruptcy court's judgment dismissing a chapter 7 bankruptcy trustee's adversary proceeding seeking revocation under 11 U.S.C. § 727(d) of a debtor's discharge on the ground that the discharge was obtained by fraud.

         The bankruptcy court granted summary judgment to the trustee and revoked the discharge. The Bankruptcy Appellate Panel vacated the bankruptcy court's judgment on the ground that the trustee did not file her request for revocation of discharge within the one-year time limit imposed by § 727(e)(1), and so the bankruptcy court lacked subject matter jurisdiction to revoke the discharge. On remand, the bankruptcy court entered a new judgment dismissing the adversary proceeding for lack of jurisdiction.

         The panel held that the one-year filing deadline imposed by § 727(e)(1) is not a jurisdictional constraint, but rather is a statute of limitations. The panel held that the debtor forfeited the affirmative defense of the non-jurisdictional time bar by failing to raise it in the bankruptcy court. The panel reversed the bankruptcy court's judgment and remanded with instructions for the bankruptcy court to reinstate the part of its earlier judgment revoking the debtor's discharge.

         Concurring, Judge Christen agreed with the majority's judgment and reasoning in holding that § 727(e)(1) is a waivable and non-jurisdictional time bar. Judge Christen wrote to further explain her conclusion that § 727(e)(1) is a statute of limitations, rather than a non-waivable statute of repose.

          OPINION

          WATFORD, Circuit Judge.

         The debtor in this case, Edward Elliott, filed a Chapter 7 bankruptcy petition that fraudulently omitted a key asset: his own home. No one discovered the fraud while his bankruptcy case remained pending, and he eventually received a discharge of his debts under 11 U.S.C. § 727(a). Months later, the Chapter 7 trustee learned of the fraud. She filed an adversary proceeding against Elliott in which she requested, among other relief, a revocation of his discharge under 11 U.S.C. § 727(d). As relevant here, § 727(d) provides that, upon the trustee's request, "the court shall revoke a discharge granted under subsection (a) of this section if . . . such discharge was obtained through the fraud of the debtor, and the requesting party did not know of such fraud until after the granting of such discharge." 11 U.S.C. § 727(d)(1).

         Section 727(e)(1) sets the filing deadline for seeking relief under § 727(d)(1). It provides that "[t]he trustee, a creditor, or the United States trustee may request a revocation of a discharge . . . under subsection (d)(1) of this section within one year after such discharge is granted." 11 U.S.C. § 727(e)(1). The trustee does not dispute that she filed her request for revocation of Elliott's discharge more than one year (roughly 15 months) after the discharge was granted. ...