Plaintiffs and Debtor/Defendant had been embroiled in litigation over family trusts in which the Debtor served as trustee. On the eve of a scheduled deposition, the Debtor filed his Chapter 7 bankruptcy case.
Plaintiffs actively participated in the bankruptcy case, scheduling a Rule 2004 examination and requesting the production of various documents. Throughout this process, the Debtor resisted production and engaged in a pattern of delay.
In May 2019, within a year after the granting of the Debtor’s discharge but well after the expiration of the dischargeability deadline, Plaintiffs filed their Complaint, alleging claims under 11 U.S.C. § 727 for revocation of discharge and to except their claims from discharge under 11 U.S.C. §523(a)(4), (a)(2), and (2)(6). The Debtor filed a Motion to Dismiss the dischargeability claims on the basis that no timely extension was sought and the claims were filed after the expiration of the deadline established by Fed.R.Bankr.P. 4007(c).
The Court, relying on Kontrick v. Ryan, 540 U.S. 443, 447 (2004), wherein the United States Supreme Court held that the time period within which to object to discharge under 11 U.S.C. § 727 prescribed in Fed. R. Bankr. P. 4004(a) is not “jurisdictional,” concluded the deadlines to object the dischargeability established by Fed.R.Bankr.P. 4007(c) are similarly “procedural” and therefore subject to equitable defenses including equitable tolling.
Recognizing the Plaintiffs bear the burden of proof to establish the doctrine of equitable tolling applies, the Court looked to the factual allegations set forth in the Complaint and held they were sufficient to withstand a Motion to Dismiss.