  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
I. COMMENCEMENT, TIMING AND PROCEDURE
A. Amending complaint after filing deadline
1. Not allowing amendment
Ditto v. McCurdy, No. 02-16252, 2007 WL 4355367 (9th Cir Dec. 14, 2007) (Bankruptcy court appropriately applied Rule 15 to refuse amendment to add S 727 action when discharge had been entered 15 months earlier and S 727 claim would be untimely because it would not relate back. Original complaint contained S 523(a)(6) and S 727(a) causes of action. A judgment of nondischargeability under S 523(a)(6) was entered and plaintiff then dismissed the S 727(a) objection to discharge. The S 523(a)(6) judgment was based on a state court judgment that was reversed on appeal. After reversal of state court judgment debtor was granted Rule 60 relief from the S 523(a)(6) determination of nondischargeability. Plaintiff then moved to amend complaint to reinstate S 727(a) cause of action. "The bankruptcy court granted McCurdy a discharge in bankruptcy on February 15, 2000. Ditto did not move to amend her complaint to restore her S 727 objection until May 25, 2001 — more than fifteen months later. '[A] total bar to discharge is an extreme penalty'. . . . If the ordinary action of S 727(a) is extreme, it must surely be still more extreme to order, retroactively, a revocation of the discharge. Given the value of finality in bankruptcy, as well as the difficulty of unscrambling an egg by effectively revoking discharge . . . we hold that the bankruptcy court did not err in denying Ditto leave to amend her complaint." In a footnote: "We also note that Ditto's original complaint in the adversary proceeding was based solely on the malpractice judgment and makes no mention of McCurdy's alleged misuse of the corporate form, which she now claims as the basis for her S 727 objection. Even if the amendment were allowed, any claim arising out of McCurdy's purported corporate fraud would not relate back to the original complaint because it does not 'arise out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading.' FED. R. CIV. P. 15(c)(2). Hence, her claim would be untimely. See FED. R. BANKR. P. 4004(a) (limiting S 727(a) objections to '60 days after the date of the first date set for the meeting of creditors under [11 U.S.C.] S 341(a)').").
B. Estoppel and res judicata
1. Res judicata or "claim preclusion" generally not available in discharge and dischargeability proceedings
Hansen v. Moore (In re Hansen), 368 B.R. 868 (B.A.P. 9th Cir. 2007) (Individual creditors are not barred by res judicata from litigating S 727 complaints when debtor litigated and settled a S 727 complaint with the trustee; creditors and trustee are not in privity for purposes of claim preclusion. "A judicially approved settlement operates as a final judgment on the merits for purposes of claim preclusion. . . . [T]he claims are identical. . . . All the claims in the S 727 actions arose out of the same basic facts. . . . [T]he only element at issues is privity between trustee and creditors. . . . [T]he trustee was not in privity with [creditors] . . . S 727 grants the trustee and each creditor an independent right to file an action to deny discharge. . . . [T]he interests of trustees and creditors, while similar, are not identical. . . . [T]he trustee may settle a case with the idea of maximizing
