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Kontrick v. Ryan

January 14, 2004

ANDREW J. KONTRICK, PETITIONER
v.
ROBERT A. RYAN



On Writ Of Certiorari To The United States Court Of Appeals For The Seventh Circuit Court Below: 295 F. 3d 724

SYLLABUS BY THE COURT

OCTOBER TERM, 2003

Argued November 3, 2003

A creditor in Chapter 7 liquidation proceedings has "60 days after the first date set for the meeting of creditors" to file a complaint objecting to the debtor's discharge. Fed. Rule Bkrtcy. Proc. 4004(a). The bankruptcy court may extend that period "for cause" on motion "filed before the time has expired." Fed. Rule Bkrtcy. Proc. 4004(b). Reinforcing Rule 4004(b)'s restriction on extension of the Rule 4004(a) deadline, Rule 9006(b)(3) allows enlargement of "the time for taking action" under Rule 4004(a) "only to the extent and under the conditions stated in [that rule]," i.e., only as permitted by Rule 4004(b).

On April 4, 1997, petitioner Kontrick filed a Chapter 7 bankruptcy petition. After gaining three successive time extensions from the Bankruptcy Court, respondent Ryan, Kontrick's creditor, filed a complaint on January 13, 1998, objecting to Kontrick's discharge. Ryan alleged that Kontrick had transferred property, within one year of filing his petition, with the intent to defraud creditors, and therefore did not qualify for discharge under 11 U. S. C. §§727(a)(2)-(5). Ryan filed an amended complaint on May 6, 1998, with leave of court, but without seeking or gaining a court-approved time extension. The amended complaint alleged with particularity that Kontrick had fraudulently transferred money to his wife, first by removing his own name from the family's once-joint checking account, then by continuing regularly to deposit his salary checks into the account, from which his wife routinely paid family expenses (the "family-account" claim). Kontrick's June 10, 1998, answer to the amended complaint did not raise the untimeliness of the family-account claim; on the merits, the answer admitted the transfers to the family account but denied that Kontrick had violated §727(a)(2)(A). In response to Ryan's summary judgment motion, which appended a statement of material facts, Kontrick cross-moved to strike portions of Ryan's summary judgment filings, but did not ask the court to strike the amended complaint's family-account allegations. On February 25, 2000, the Bankruptcy Court awarded Ryan summary judgment on the family-account claim, concluding that Kontrick was not entitled to discharge because his transfers to the family account were made with intent to defraud at least creditor Ryan. Kontrick then moved for reconsideration. For the first time, Kontrick urged that the court was powerless to adjudicate the family-account claim. The amended complaint containing that claim, Kontrick observed, was untimely under Rules 4004(a) and (b) and 9006(b)(3). Those rules, Kontrick maintained, establish a mandatory, unalterable time limit of the kind Kontrick called "jurisdictional." The Bankruptcy Court denied reconsideration and entered final judgment, holding that Rule 4004's complaint-filing time instructions are not "jurisdictional," and that Kontrick had waived the right to assert the untimeliness of the amended complaint by failing squarely to raise the point before the court reached the merits of Ryan's objections to discharge. The District Court sustained the denial of discharge, and the Seventh Circuit affirmed. Both courts relied on decisions of sister Circuits holding that the timeliness provisions at issue are not "jurisdictional."

Held: A debtor forfeits the right to rely on Rule 4004 if the debtor does not raise the Rule's time limitation before the bankruptcy court reaches the merits of the creditor's objection to discharge. Pp. 8-15.

(a) Only Congress may determine a lower federal court's subject-matter jurisdiction. U. S. Const., Art. III, §1. Congress did so, as pertinent here, by instructing that "objections to discharges" are "[c]ore proceedings" within the bankruptcy courts' jurisdiction. 28 U. S. C. §157(b)(2)(J). Congress did not build time constraints into that statutory authorization. Rather, the time constraints applicable to objections to discharge are contained in Bankruptcy Rules prescribed pursuant to §2075. Such rules "do not create or withdraw federal jurisdiction." Owen Equipment & Erection Co. v. Kroger, 437 U. S. 365, 370. As Bankruptcy Rule 9030 states, the Bankruptcy Rules "shall not be construed to extend or limit the jurisdiction of the courts." The filing deadlines prescribed in Rules 4004 and 9006(b)(3) are claim-processing rules that do not delineate what cases bankruptcy courts are competent to adjudicate. Although Kontrick now concedes that those Rules are not properly labeled "jurisdictional" in the sense of describing a court's subject-matter jurisdiction, he maintains that the Rules have the same import as provisions governing subject-matter jurisdiction. A litigant generally may raise a court's lack of subject-matter jurisdiction at any time in the same civil action. Mansfield, C. & L. M. R. Co. v. Swan, The opinion of the court was delivered by: Justice Ginsburg

This case concerns the duration of a right to object to a pleading on the ground that it was filed out of time. Under the Bankruptcy Rules governing Chapter 7 liquidation proceedings, a creditor has "60 days after the first date set for the meeting of creditors" to file a complaint objecting to the debtor's discharge. Fed. Rule Bkrtcy. Proc. 4004(a). That period may be extended "for cause" on motion "filed before the time has expired." Fed. Rule Bkrtcy. Proc. 4004(b). In the matter before us a creditor, in an untimely pleading, objected to the debtor's discharge. The debtor, however, did not promptly move to dismiss the creditor's plea as impermissibly late. Only after the Bankruptcy Court decided, on the merits, that the discharge should be refused did the debtor, in a motion for reconsideration, urge the untimeliness of the creditor's plea.

Bankruptcy Rule 4004's time prescription, the debtor maintains, is "jurisdictional," i.e., dispositive whenever raised in the proceedings. Rejecting the debtor's "jurisdictional" characterization, the courts below held that Rule 4004's time prescription could not be invoked to upset an adjudication on the merits. We agree that Rule 4004 is not "jurisdictional." Affirming the judgment of the Court of Appeals for the Seventh Circuit, we hold that a debtor forfeits the right to rely on Rule 4004 if the debtor does not raise the Rule's time limitation before the bankruptcy court reaches the merits of the creditor's objection to discharge.

I.

A debtor in a Chapter 7 liquidation case qualifies for an order discharging his debts if he satisfies the conditions stated in §727(a) of the Bankruptcy Code. 11 U. S. C. §727(a).*fn1 A discharge granted under §727(a) frees the debtor from all debts existing at the commencement of the bankruptcy proceeding other than obligations §523 of the Code excepts from discharge. §727(b).*fn2

A debtor's discharge may be opposed by the trustee, the United States trustee, or any creditor. §727(c)(1). Adjudication of "objections to discharg[e]," Congress provided, is a "[c]ore proceedin[g]" within the jurisdiction of the bankruptcy courts. 28 U. S. C. §157(b)(2)(J). No statute, however, specifies a time limit for filing a complaint objecting to the debtor's discharge. Instead, the controlling time prescriptions are contained in the Federal Rules of Bankruptcy Procedure, specifically, Rules 4004(a) and (b) and 9006(b)(3).

In relevant part, Bankruptcy Rule 4004(a) states: "[A] complaint objecting to the debtor's discharge under ยง727(a) of the Code shall be filed no later than 60 days after the first date set for the meeting of creditors." Rule 4004(b), governing extensions of the Rule 4004(a) filing deadline, provides: "[T]he court may for cause extend the time [Rule 4004(a) allows] to file a complaint objecting to discharge" if the motion is "filed before the time has expired." Reinforcing Rule 4004(b)'s restriction on extension of the Rule 4004(a) deadline, Rule 9006(b)(3) allows enlargement of "the time ...


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