JAMES J. ROBINSON, Bankruptcy Judge.
This case came before the Court on the Motion for Relief from Judgment or Order ("Motion" Doc. 70) filed by creditor, Citizens Bank & Trust ("Citizens"). The court conducted a hearing on November 1, 2016, and the parties have since submitted their briefs (Docs. 84, 85, and 86). The court considered the matters of record in its electronic docket pertaining to the instant case and an earlier case filed by the Debtors, the pleadings and submissions related to the Motion, as well as the arguments of counsel and the relevant statutory and case law. For the reasons that follow, the court finds the Motion is due to be denied.
The Debtors have filed two chapter 13 cases. The first, case no. 07-41114-JJR13, was filed June 28, 2007, but it was dismissed without a discharge on June 29, 2012 when the court granted the trustee's motion to dismiss (first case Doc. 181). The instant case — the second case — was filed on July 25, 2012, and after all allowed claims were paid in full (Doc. 65), the Debtors were granted a discharge on July 6, 2016 (Doc. 68). In both cases, Citizens was shown on the Debtors' schedules as their largest general unsecured creditor.
In the first case, Citizens appeared through a lawyer that routinely handles its bankruptcy cases ("Counsel"). Counsel filed a proof of claim in the first case on Citizens' behalf, and the claim designated Counsel as the "notice address" for claim-related matters.
It is undisputed that the initial notice to creditors in this second case — the notice required by Rule 2002(f) (Doc. 16) — was sent to, and received by Citizens in due course. That notice advised of the order for relief, the time and location of the meeting of creditors to be conducted pursuant to Rule 2003 and section 341(a) of the Bankruptcy Code,
The Citizens employee who received the initial notice and plan in the instant case (and apparently all subsequent notices in this case through BNC and through regular mail) did not realize — due to a unilateral, albeit plausible oversight — that the Debtors had filed a second case with a new case number and deadlines. The employee mistakenly believed that the notices pertained to the previously dismissed first case, and assumed Counsel was receiving the same notices. (Docs. 70, 84.) It is worth noting that the Debtors filed and served, via mail to Citizens' business address, a Motion to Extend Stay ("Motion to Extend" Doc. 10) in the instant-second case. The Motion to Extend recited in detail that the first case had been dismissed, that a second case had been filed, and asked the court to maintain the automatic stay in the second case. The Motion to Extend was not served on Counsel but he was served with notice that the first case had been dismissed. (first case Doc. 182.) With no proof of claim or other participation by Citizens, the instant case proceeded to plan confirmation, and after payment of amounts sufficient to fully pay all allowed claims — claims filed by the bar date — the Debtors received a discharge on July 6, 2016. (Doc. 68.)
At the commencement of both cases, the Debtors owned a yacht. According to the Debtors' schedules, the yacht had sufficient value to require payment of all unsecured debts in full with interest, including the debt that remained owing to Citizens when the second case was filed.
Upon learning that its claim had been discharged with no payment, Citizens, through Counsel, filed the Motion to vacate the discharge. The Motion cites Rule 9024, or alternatively Code § 105, as grounds for setting aside the Debtors' discharge at least to the extent of Citizens' claim.
In general, Rule 9024, applying Fed. R. Civ. P. 60 to bankruptcy cases, allows a court to relieve a party from a final judgment, order, or proceeding upon a finding of mistake, inadvertence, excusable neglect, discovery of new evidence, fraud, misrepresentation or misconduct by an opposing party, or any other reason that justifies relief. Code § 105(a) provides, "The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Code]." As discussed below, the evidence does not support a finding of fraud on the part of the Debtors. Rather, the court finds that Citizens' failure to pay attention to the notices it received, believing that Counsel was also receiving the same notices, does not equate to a mistake, inadvertence, or excusable neglect relative to entry of the order of discharge; it was simply the result of Citizens not sufficiently attending to notices it received during the four years between dismissal of the first case and the discharge granted in the second. The relief Citizens seeks would require the court to set aside the Debtors' discharge, thereby relieving Citizens of the consequences of not filing a timely proof of claim.
Citizens argues that it was not provided adequate notice of the Debtors' second case as required by Code § 342, or alternatively Rule 2002(g). In essence, Citizens asserts that the Debtors' failure to list Counsel on the matrix, and the Debtors' failure to send notice of their second case or plan directly to Counsel at his address as used in the first case, were violations of that Code section and Rule. Additionally, in its brief Citizens stresses that the actual notice its employee received during the instant case was not "appropriate" notice of the order for relief, and argued that for notice of the second case to have been "appropriate" it should have been given to Counsel to avoid an abuse of the spirit and letter of the Code.
If the notice, sent to and received by Citizens, were determined to be not "appropriate" and, therefore, insufficient to satisfy Code § 342, then Citizens would have potential grounds under Code § 523(a)(3)(A) to have its debt excepted from discharge. Under that scenario, Citizens possibly would have "neither [been] listed nor scheduled . . . in time to permit . . . timely filing of a proof of claim. . . ." Id.
Code § 1328(e) allows the court to revoke a debtor's discharge if the discharge was obtained by fraud. However, the facts in this case do not support a finding fraud, and Citizens admits it is not alleging fraud. (Doc. 86.) The Debtors properly scheduled Citizens as a creditor and the notice Citizens received was sufficient and appropriate, despite a lack of notice directed to Counsel. While the employee's mistake ultimately resulted in a windfall to the Debtors equal to the amount that would otherwise have been paid to Citizens had the yacht been sold and Citizens' claim had been allowed and paid, the court finds no trickery or deception calculated to deceive Citizens, on the part of the Debtors or their attorney. The Debtors did what the Code and Rules required by scheduling Citizens at its business address, and all notices were so directed. To hold that Counsel and his address should have been listed on the matrix to receive notice would elevate what would perhaps have been a professional courtesy to the level of a due process requirement, and the court does not read § 342(a) or Rule 2002(g) as authorizing such a stretch.
Finally, Citizens is correct that the Debtors did not comply with the provision of their confirmed plan that required the sale of the yacht and application of the proceeds to unsecured claims. Such noncompliance is excused, however, because all allowed unsecured claims were paid in full with interest, and that is all the Code requires: "[A]s soon as practicable after completion by the debtor of all payments under the plan, . . . the court shall grant the debtor a discharge of all debts provided for by the plan or disallowed under section 502 of [the Code]. . . ." Code § 1328(a). Inasmuch as the plan payments were fully paid, with interest, the requirements of the plan were satisfied, and a sale of the yacht would be superfluous. Citizens lost its opportunity to be paid in the Debtors' second case, and also its right to enforce strict compliance with the plan's sale provision, when Citizens failed to file a proof of claim that would have elevated its claim to allowed status. Based upon the foregoing, the Motion (Doc. 70) is DENIED.
So done and ordered.