KSB

Judge Karlin

08-40480 Kellison (Doc. # 30)

In Re Kellison, 08-40480 (Bankr. D. Kan. Jan. 6, 2009) Doc. # 30

PDFClick here for the pdf document.


Case: 08-40480 Doc #: 30 Filed: 01/05/2009

SO ORDERED.
SIGNED this 05 day of January, 2009.


Page 1 of 5

________________________________________
JANICE MILLER KARLIN
UNITED STATES BANKRUPTCY JUDGE
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF KANSAS


IN RE: )
DOUGLAS LEE KELLISON and )
JULIE KAY KELLISON, ) Case No. 08-40480
) Chapter 7
Debtors. )

____________________________________)

ORDER DENYING MOTION TO VACATE

This matter is before the Court on Debtors’ Motion to Set Aside Discharge for the Purpose
of Filing and Approving the Reaffirmation Agreement and Reinstate Discharge.1 On April 17, 2008,
Debtors filed this Chapter 7 petition. The 11 U.S.C. § 3412 meeting of creditors was scheduled and
held on May 20, 2008, and the last day for opposing discharge was set as July 21, 2008. When no
one filed such an objection, the Court entered a discharge order pursuant to Fed. Rule Bankr. P.

1Doc. 17.

2This case was filed after October 17, 2005, when most provisions of the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 became effective. All statutory references are thus to the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005, 11 U.S.C. §§ 101 - 1532 (2005), unless otherwise specifically noted.


Case: 08-40480 Doc #: 30 Filed: 01/05/2009 Page 2 of 5


4004.3 The discharge was granted on August 5, 2008. Seven weeks later, on September 25, 2008,
Debtors filed the instant motion.

Debtors did not provide any statutory or other legal support for the relief they requested, and
a very brief review of available case law indicated that the Court likely lacked the legal authority
to set aside a discharge order to allow a debtor to file a reaffirmation agreement. On November 14,
2008 the Court issued an order requiring Debtors to file a brief providing legal support for their
request to set aside the discharge order, which brief was timely filed. Specifically, the Court
requested Debtors address a recent holding out of the Central District of Illinois, In re Golladay,4
in which that court denied the very relief requested by Debtors in this case.

Debtors’ brief in support of their motion to vacate their discharge sets forth two legal
theories upon which they claim the requested relief is proper. First, Debtors claim that good cause
exists pursuant to Fed. R. Bankr. P. 9024 to set aside the discharge order as a result of excusable
neglect of counsel. Second, Debtors rely upon Ackermann v. United States5 to support their position
that the Court has the authority to find that extraordinary circumstances exist that would allow the
Court to set aside its prior order. Debtors’ counsel claims such extraordinary circumstances exist
because the reaffirmation agreement was inadvertently misplaced in his office, and was not
discovered until after the entry of discharge.

Although Debtors’ brief does address the issues raised in Golladay, the Court’s research
reveals other authority that the Court finds more persuasive, and has determined that it disagrees

3Rule 4004 requires the Court to “forthwith” grant the discharge when all prerequisites for discharge are met.

4391 B.R. 417, 422-23 (Bankr. C.D. Ill. 2008).

5340 U.S. 193, 199-202 (1950).

2


Case: 08-40480 Doc #: 30 Filed: 01/05/2009 Page 3 of 5


with certain portions of the Golladay decision. In particular, the Court finds that Fed. R. Bankr. P.
9024 does not allow the Court to set aside a discharge order under the facts of this case, even though
that option was mentioned as a possibility in Golladay.6

Instead, the Court finds the reasoning set forth in In re Engels7 to be more persuasive on this
issue and adopts the legal analysis in that opinion. In Engels, the court analyzed the requirements
for creating a valid, enforceable reaffirmation agreement, including the fact that the Code requires
a reaffirmation to be made prior to the entry of discharge order.8 The court then discussed the same
arguments Debtors make here, including that the court should utilize its authority under Fed. R.
Bankr. P. 9024 (which incorporates Fed. R. Civ. P. 60(b)), to exercise its equitable powers to set
aside the discharge order so that Debtors can file the reaffirmation agreement. The court held that,
pursuant to § 727(d) and (e), only the case trustee, a creditor, or the U.S. Trustee has standing to
seek a revocation of a debtor’s discharge.9 Further, the court held that Rule 9024 cannot be used to
circumvent a clearly stated substantive provision of the Bankruptcy Code, such as the limitations
on standing for bringing an order revoking discharge found in § 727.

The Court adopts the reasoning and conclusions reached by the court in In re Engels, and
finds that the Debtors lack the authority to set aside their discharge in this case. The procedures for
revoking a discharge are clearly set forth in § 727(d) and (e), and neither of those subsections allow
a debtor to seek revocation of his or her own discharge in order to file a reaffirmation agreement.

6Golladay, 391 B.R. at 423-24.

7384 B.R. 593 (Bankr. N.D. Okla. 2008)

8Id. at 596 (citing 11 U.S.C. § 524(c)(3) and In re Herrera, 380 B.R. 446, 450 (Bankr. W.D. Tex. 2007)).

9Id. at 598-99.

3


Case: 08-40480 Doc #: 30 Filed: 01/05/2009 Page 4 of 5


Although Rule 9024 may facially appear to provide the Court with the authority to amend its prior
order granting the Debtors’ discharge, a bankruptcy rule may not circumvent clear statutory
provisions, including the specific limitations on the identity of persons eligible to bring a motion to
revoke a discharge expressly enumerated in § 707(d) and (e).10

Allowing Debtors to set aside their discharge order after failing to timely file a reaffirmation
agreement would directly circumvent both the mandate in § 524(c)(1) that requires such agreement
be made prior to the entry of discharge, as well as those in § 707(d) and (e) that specifically limit
those individuals or entities with standing to revoke an order granting discharge. To grant the relief
requested in this motion would essentially write the requirements of those specific statutory
provisions out of the Bankruptcy Code. The Court will not, and in fact finds that it cannot, utilize
the general provisions of Rule 9024 or its general equitable powers to grant the relief requested in
this motion.11

IT IS, THEREFORE, BY THE COURT ORDERED that the Debtors’ Motion to Set
Aside Discharge for the Purpose of Filing and Approving the Reaffirmation Agreement and
Reinstate Discharge12 is denied.

10See In re Asay, 364 B.R. 423, 426 (Bankr. D. N.M. 2007) (“The Federal Rules of Bankruptcy Procedure are
not the equivalent of statutory law, and when there is an apparent conflict between the Rules and the Code, the Code
prevails.”). See also 28 U.S.C. § 2075 (implements the Federal Rules of Bankruptcy Procedure and states that “[s]uch
rules shall not abridge, enlarge or modify any substantive right.” ).

11Even if the Court did have the ability to set aside the discharge order under Rule 9024, the Court finds that
the facts of this case do not rise to the “extraordinary” circumstances necessary to justify setting aside the discharge
order. See Golladay, 391 B.R. at 423 (holding that “a debtor seeking relief under this Rule must show ‘extraordinary’
circumstances which prevented relief through usual channels) (citing Ackermann v. U.S., 340 U.S. 193 199-202 (1950)).
The explanation given by Debtors for the delay in timely filing the reaffirmation, although understandable, are not
sufficiently “extraordinary”to warrant the relief requested. This is especially true given the fact that Congress expressly
placed numerous procedural hurdles in the path of effectuating a binding reaffirmation agreement, with the apparent
intent to protect debtors. See In re Schott, 282 B.R. 1, 7 (10th Cir. BAP 2002).

12Doc. 17.

4


Case: 08-40480 Doc #: 30 Filed: 01/05/2009 Page 5 of 5


###


5

 

You are here: Home Opinions Judge Karlin 08-40480 Kellison (Doc. # 30)