Goldstein V. Diamond (In Re Diamond), 8TH CIR. 2014
The Eighth Circuit Court of Appeals recently ruled that a creditor which wants to file a “nondischargeability” complaint against a debtor, brought pursuant to 11 USC §523(a)(3)(B) is not required to move to reopen the underlying bankruptcy case, and get the underlying bankruptcy case re-opened, before filing the 523(a)(3)(B) nondischargeability adversary proceeding. The 8th Circuit reasoned that the bankruptcy court’s jurisdiction arises from § 1334 and does not terminate simply because a bankruptcy case is closed.
A 523(a)(3)(B) adversary proceeding can be brought by a creditor where the creditor was NOT properly scheduled, in the debtor’s bankruptcy schedules, and so that the creditor was not notified by the Bankruptcy Court that the debtor had filed bankruptcy, AND if the creditor did not from any other source find out debtor had filed bankruptcy, in time for the creditor to bring a timely nondischargeability adversary proceeding pursuant to 11 USC 523(a)(2) (fraud, misrepresentation by debtor), 523(a)(4) (breach of fiduciary duty, larcency, embezzlement by debtor) or 523(a)(6) (wilful and malicious act by debtor), within the 60 days after date first set for 341a meeting of debtor time-deadline for filing 523(a)(2), (4), (6) “nondischargaebility” adversary proceedings.
However, California is NOT part of the 8th Circuit. California, Washington, Oregon, Idaho New Mexico, Alaska and Hawaii are all in the area where the federal Circuit Court is the 9th Circuit Court of Appeals.
Bankruptcy Judges in CD CA California (and in many other bankruptcy courts) require that a creditor who wants to bring an 11 USC 523(a)(3)(B) “nondischargeability” adversary proceeding move to reopen the debtor’s bankruptcy case, if that case has been closed, and get the bankruptcy case reopened, before filing the 523(a)(3)(B) adversary proceeding.