File a motion to dismiss an adversary complaint for denial of discharge in United States Bankruptcy Court

File a motion to dismiss an adversary complaint for denial of discharge in United States Bankruptcy Court under Title 11 United States Code section 727 is the topic of this blog post.   

The motion is made pursuant to Federal Rules of Bankruptcy Procedure 7012(b)(6), ("FRBP") which is the section used in Bankruptcy Court instead of the Federal Rules of Civil Procedure  12(b)(6).

The motion is made on the grounds that the adversary complaint fails to state a claim for relief.

Consider a hypothetical example of a case in which a creditor filed an adversary complaint alleging that the Debtor deliberately failed to list the creditor on their bankruptcy schedules. The adversary complaint requested a denial of discharge under 11 U.S.C. § 727(a)(4) due to an alleged false oath by the Debtor in that they failed to list the creditor.

The Debtor in the case filed a voluntary Petition for bankruptcy pursuant to Chapter 7 of the U.S. Bankruptcy Code. And the Chapter 7 Trustee filed their Final Report under FRBP 5009 which stated that there was no property available for distribution, in other words a no-asset case. Unfortunately an unsecured judgment creditor was omitted from the bankruptcy petition.

The Debtor denied that the failure to list the creditor was deliberate or done with fraudulent intent The Debtor filed a motion to dismiss and contended that the Complaint fails to state a claim for relief as it fails to state facts sufficient to show that: (1) the debtor made a false oath in connection with the case; (2) the oath related to a material fact; (3) the oath was made knowingly; and (4) the oath was made fraudulently. The Debtor also contended that the Complaint failed to state a claim for relief as it also failed to state facts sufficient to show that (1) the debtor made the representations, e.g., a false statement or omission in bankruptcy schedules; (2) at the time he knew they were false; and (3) he made them with the intention and purpose of deceiving the creditors.

Finally, the Debtor also contended that had the creditor waited until after the bankruptcy case was closed they would not be entitled to have the case re-opened because relief would be unnecessary as case law in the Ninth Circuit is clear that reopening to add an omitted creditor is not necessary in a Chapter 7 "no asset/no bar date" case where the court sends a notice directing creditors not to file a proof of claim. Relief is unnecessary because if the omitted debt is dischargeable, it was already discharged. Because the creditor was objecting to the discharge of the Debtor they bear the burden of proving by a preponderance of the evidence that the discharge should be denied as the Court construe § 727 liberally in favor of debtors and strictly against the party objecting to discharge.

The adversary complaint merely made conclusory allegations without any showing of the four elements discussed.  And the false oath must relate to a material fact. The adversary complaint failed to detail how the alleged false oath relates to any material fact, other than the fact that the creditor was not listed. The adversary complaint failed to state how that "omission" relates to any material fact.

The creditor had not alleged how the failure to list them as a creditor has detrimentally affected the administration of the estate.

Because the adversary complaint failed to state any facts which showed that the Debtor made any false oath or omission with the knowledge at the time he made it that it was false, and that he made it with the intention and purpose of deceiving the creditors, the creditor failed to meet their burden of showing that the discharge of the Debtor should be denied.

This case was deemed a no asset case, as evidenced by the Final Report filed by the Chapter 7 Trustee which was in fact admitted in the adversary complaint. Conclusory allegations or legal conclusions are not sufficient to prevent a motion to dismiss.

Attorneys or parties in who wish to view a portion of an 11 page sample motion to dismiss an adversary complaint under 11 U.S.C. § 727 in United States Bankruptcy Court containing a memorandum of points and authorities with citations to case law and statutory authority and proof service by mail. can use the link shown below. 

Sample motion to dismiss adversary complaint for denial of discharge

 
The author of this blog post, Stan Burman, is an entrepreneur and freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for California and Federal litigation.

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DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

The materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.