Diane Weil v. Edward Elliott , 859 F.3d 812 ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DIANE C. WEIL, Chapter 7 No. 16-55359
Trustee,
Plaintiff-Appellant, D.C. No.
1:11-bk-23855-VK
v.
EDWARD E. ELLIOTT, OPINION
Defendant-Appellee.
Appeal from the United States Bankruptcy Court
for the Central District of California
Victoria S. Kaufman, Bankruptcy Judge, Presiding
Argued and Submitted May 9, 2017
Pasadena, California
Filed June 14, 2017
Before: J. Clifford Wallace, Morgan Christen,
and Paul J. Watford, Circuit Judges.
Opinion by Judge Watford;
Concurrence by Judge Christen
2 WEIL V. ELLIOTT
SUMMARY*
Bankruptcy
The panel reversed the bankruptcy court’s judgment
dismissing a chapter 7 bankruptcy trustee’s adversary
proceeding seeking revocation under 11 U.S.C. § 727(d) of a
debtor’s discharge on the ground that the discharge was
obtained by fraud.
The bankruptcy court granted summary judgment to the
trustee and revoked the discharge. The Bankruptcy Appellate
Panel vacated the bankruptcy court’s judgment on the ground
that the trustee did not file her request for revocation of
discharge within the one-year time limit imposed by
§ 727(e)(1), and so the bankruptcy court lacked subject
matter jurisdiction to revoke the discharge. On remand, the
bankruptcy court entered a new judgment dismissing the
adversary proceeding for lack of jurisdiction.
The panel held that the one-year filing deadline imposed
by § 727(e)(1) is not a jurisdictional constraint, but rather is
a statute of limitations. The panel held that the debtor
forfeited the affirmative defense of the non-jurisdictional time
bar by failing to raise it in the bankruptcy court. The panel
reversed the bankruptcy court’s judgment and remanded with
instructions for the bankruptcy court to reinstate the part of its
earlier judgment revoking the debtor’s discharge.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
WEIL V. ELLIOTT 3
Concurring, Judge Christen agreed with the majority’s
judgment and reasoning in holding that § 727(e)(1) is a
waivable and non-jurisdictional time bar. Judge Christen
wrote to further explain her conclusion that § 727(e)(1) is a
statute of limitations, rather than a non-waivable statute of
repose.
COUNSEL
John Nowlan Tedford IV (argued) and Aaron E. de Leest,
Danning Gill Diamond & Kollitz LLP, Los Angeles,
California, for Plaintiff-Appellant.
Andrew Edward Smyth (argued), SW Smyth LLP, Los
Angeles, California, for Defendant-Appellee.
OPINION
WATFORD, Circuit Judge:
The debtor in this case, Edward Elliott, filed a Chapter 7
bankruptcy petition that fraudulently omitted a key asset: his
own home. No one discovered the fraud while his
bankruptcy case remained pending, and he eventually
received a discharge of his debts under 11 U.S.C. § 727(a).
Months later, the Chapter 7 trustee learned of the fraud. She
filed an adversary proceeding against Elliott in which she
requested, among other relief, a revocation of his discharge
under 11 U.S.C. § 727(d). As relevant here, § 727(d)
provides that, upon the trustee’s request, “the court shall
revoke a discharge granted under subsection (a) of this
section if . . . such discharge was obtained through the fraud
4 WEIL V. ELLIOTT
of the debtor, and the requesting party did not know of such
fraud until after the granting of such discharge.” 11 U.S.C.
§ 727(d)(1).
Section 727(e)(1) sets the filing deadline for seeking
relief under § 727(d)(1). It provides that “[t]he trustee, a
creditor, or the United States trustee may request a revocation
of a discharge . . . under subsection (d)(1) of this section
within one year after such discharge is granted.” 11 U.S.C.
§ 727(e)(1). The trustee does not dispute that she filed her
request for revocation of Elliott’s discharge more than one
year (roughly 15 months) after the discharge was granted.
However, in opposing the trustee’s request for relief, Elliott
never raised the untimeliness of the request as a defense.
The bankruptcy court granted summary judgment to the
trustee. The court found that Elliott had knowingly and
fraudulently failed to disclose his ownership interest in the
home, and had knowingly and fraudulently misrepresented
where he lived. The court further found that the trustee did
not learn of Elliott’s fraud until after the discharge had been
granted. The court entered judgment revoking Elliott’s
discharge pursuant to § 727(d)(1).
Elliott appealed to the Ninth Circuit Bankruptcy
Appellate Panel (BAP). The BAP vacated the bankruptcy
court’s judgment on the ground that the trustee had not filed
her request for revocation of discharge within the time limit
imposed by 11 U.S.C. § 727(e)(1). Elliott v. Weil (In re
Elliott), 529 B.R. 747, 755 (9th Cir. BAP 2015). Although
Elliott had not asserted untimeliness as a defense, the BAP
held that it was obliged to address that issue sua sponte
because the time limit imposed by § 727(e)(1) is
jurisdictional. Id. at 751. The trustee’s failure to file her
WEIL V. ELLIOTT 5
request within one year of Elliott’s discharge, the BAP
concluded, meant that the bankruptcy court “lacked subject
matter jurisdiction” to revoke the discharge under
§ 727(d)(1). Id. at 753.
The BAP remanded the case to the bankruptcy court with
instructions to dismiss the trustee’s request for relief under
§ 727(d) and to conduct further proceedings on a separate
claim not relevant here. Id. at 755. On remand, the
bankruptcy court entered a new judgment dismissing the
trustee’s request for relief under § 727(d) for lack of
jurisdiction. The trustee filed an appeal from that judgment
to the BAP, and shortly thereafter requested permission to
take a direct appeal to this court. The BAP granted the
trustee’s request, and we authorized a direct appeal under
28 U.S.C. § 158(d)(2)(A).
The BAP’s decision that the bankruptcy court lacked
subject matter jurisdiction to grant relief under 11 U.S.C.
§ 727(d)(1) was wrong as a matter of law. The time limit
imposed by § 727(e)(1) is not a “jurisdictional” constraint. It
is an ordinary, run-of-the-mill statute of limitations,
specifying the time within which a particular type of action
must be filed. The Supreme Court has repeatedly held that
filing deadlines of this sort are “quintessential claim-
processing rules,” and that unless Congress clearly states
otherwise, such rules will be regarded as non-jurisdictional.
United States v. Kwai Fun Wong, 135 S. Ct. 1625, 1632
(2015) (quoting Henderson v. Shinseki, 562 U.S. 428, 435
(2011)). As the Court recently put it, “Congress must do
something special, beyond setting an exception-free deadline,
to tag a statute of limitations as jurisdictional.” Id.
6 WEIL V. ELLIOTT
Congress did not clearly state that the filing deadline
imposed by § 727(e)(1) should be regarded as jurisdictional.
Nothing in the text of the provision “speak[s] in jurisdictional
terms.” Arbaugh v. Y & H Corp., 546 U.S. 500, 515 (2006)
(quoting Zipes v. Trans World Airlines, Inc., 455 U.S. 385,
394 (1982)). The provision does not, for example, purport to
delineate the classes of cases bankruptcy courts are competent
to adjudicate, as would be true of a statute that actually dealt
with subject matter jurisdiction. See Scarborough v. Principi,
541 U.S. 401, 413–14 (2004); Kontrick v. Ryan, 540 U.S.
443, 455 (2004). Instead, the provision merely states that the
trustee “may request a revocation of a discharge” within the
prescribed time limit. 11 U.S.C. § 727(e)(1). That language
creates a plain-vanilla statute of limitations, with none of the
trappings necessary to rank it as jurisdictional.
Statutory context confirms the non-jurisdictional nature
of § 727(e)(1)’s time limit. As the Court has observed,
“Congress’s separation of a filing deadline from a
jurisdictional grant indicates that the time bar is not
jurisdictional.” Kwai Fun Wong, 135 S. Ct. at 1633. That is
the situation here. Congress granted bankruptcy courts
jurisdiction to adjudicate requests for revocation of discharge
in Title 28, in provisions entirely separate from the filing
deadline found in Title 11. See 28 U.S.C. §§ 157, 1334(b).
This jurisdictional grant is not conditioned on compliance
with the time limit specified in § 727(e)(1), and indeed the
two sets of provisions are not linked together in any way. As
was true in Kwai Fun Wong, treating the time limit at issue
here as jurisdictional would “disregard the structural divide
built into the statute.” 135 S. Ct. at 1633.
The BAP concluded that § 727(e)(1)’s time limit must be
regarded as jurisdictional because it is contained in a statute,
WEIL V. ELLIOTT 7
rather than a court rule. 529 B.R. at 752–53. The BAP based
that conclusion on its reading of Kontrick v. Ryan, 540 U.S.
443 (2004), which held that the time limit specified in Federal
Rule of Bankruptcy Procedure 4004 is non-jurisdictional. Id.
at 447. But nothing in Kontrick says that if a time limit is set
by statute it must be regarded as jurisdictional. If there were
any doubt on that score, it has been erased by a series of
subsequent decisions holding that a variety of statutory filing
deadlines are non-jurisdictional. See, e.g., Kwai Fun Wong,
135 S. Ct. at 1632–33; Sebelius v. Auburn Regional Medical
Center, 133 S. Ct. 817, 821 (2013); Henderson, 562 U.S. at
441; Holland v. Florida, 560 U.S. 631, 645 (2010). Indeed,
post-Kontrick, even statutory filing deadlines found in the
Bankruptcy Code itself, like § 727(e)(1), have been held to be
non-jurisdictional. See, e.g., United Student Aid Funds, Inc.
v. Espinosa, 559 U.S. 260, 270 n.9 (2010); In re Raynor,
617 F.3d 1065, 1070 (8th Cir. 2010).
In sum, the one-year filing deadline imposed by 11 U.S.C.
§ 727(e)(1) is a non-jurisdictional claim-processing rule.
Whether that filing deadline is subject to equitable tolling is
not at issue here. A non-jurisdictional time bar is an
affirmative defense that may be forfeited if not timely raised,
and Elliott forfeited the defense by failing to raise it in the
bankruptcy court. See Kontrick, 540 U.S. at 458–60.
On the merits, the bankruptcy court’s determination that
Elliott fraudulently concealed his ownership interest in the
home is plainly correct; Elliott did not even attempt to
challenge that determination before us. We therefore reverse
the bankruptcy court’s judgment dismissing the trustee’s
request for relief under § 727(d)(1), and we remand the case
to the bankruptcy court with instructions to reinstate the
8 WEIL V. ELLIOTT
portion of its April 7, 2014, judgment revoking Elliott’s
discharge.
REVERSED and REMANDED.
CHRISTEN, Circuit Judge, concurring:
I concur in the majority’s judgment and reasoning;
11 U.S.C. § 727(e)(1) is a waivable and non-jurisdictional
time bar. I write separately to further explain why I conclude
that § 727(e)(1) is a statute of limitations, rather than a statute
of repose.
There are “sometimes arcane distinctions” between
statutes of limitations and statutes of repose, but the case law
in this area is confusing because these limitation periods
share many of the same attributes. See Underwood Cotton
Co. v. Hyundai Merch. Marine (Am.), Inc., 288 F.3d 405, 409
(9th Cir. 2002). Both set time limits for bringing suits after
a specific period. See Black’s Law Dictionary (10th ed.
2014) (defining “statute of limitations” as “a statute
establishing a time limit for suing in a civil case, based on the
date when the claim accrued,” and defining “statute of
repose” as “[a] statute barring any suit that is brought after a
specified time since the defendant acted”). Statutes of
limitations and statutes of repose also serve some of the same
purposes. Compare CTS Corp. v. Waldburger, 134 S. Ct.
2175, 2183 (2014) (“Statutes of repose effect a legislative
judgment that a defendant should ‘be free from liability after
the legislatively determined period of time.’” (citation
omitted)) with In re Neff, 824 F.3d 1181, 1185 (9th Cir.
2016), cert. denied sub nom. DeNoce v. Neff, 137 S. Ct. 831
 WEIL V. ELLIOTT 9
(2017) (“Statutes of limitations serve the policies of ‘repose,
elimination of stale claims, and certainty about a plaintiff’s
opportunity for recovery and a defendant’s potential
liabilities.’” (citation omitted)).
Critical for the resolution of this appeal is that a “statute
of limitations is an affirmative defense . . . [that] may be
waived.” See 51 Am. Jur. 2d Limitation of Actions § 345.
“A statute of repose, like a jurisdictional prerequisite,
‘extinguishes a cause of action after a fixed period of time . . .
regardless of when the cause of action accrued’” and may not
be waived. See Albillo-De Leon v. Gonzales, 410 F.3d 1090,
1097 n.5 (9th Cir. 2005) (alteration in original) (quoting
51 Am. Jur. 2d Limitation of Actions § 12).
I am persuaded that § 727(e)(1) is a statute of limitations,
and not a statute of repose, for several reasons. First, rather
than purporting to restrict the authority of the court, the text
of § 727(e)(1) speaks to what litigants must do to request a
revocation of discharge and when they may file such a
request. See § 727(e)(1) (“The trustee, a creditor, or the
United States trustee may request a revocation of a discharge
. . . under subsection (d)(1) of this section within one year
after such discharge is granted . . . .”). Section 727(e)(1)’s
permissive language appears to be a deliberate choice made
by Congress when enacting the Bankruptcy Reform Act of
1978. Previous versions of this provision suggested
limitations on the power of courts and judges to revoke
discharges, rather than limitations on the ability of litigants to
request revocation. Compare Bankruptcy Act of 1898, ch.
541, § 15, 30 Stat. 550 (1898) (“The judge may, upon the
application of parties in interest who have not been guilty of
undue laches, filed at any time within one year after a
discharge shall have been granted, revoke it . . . if it . . . was
10 WEIL V. ELLIOTT
obtained through the fraud of the bankrupt . . . .” (emphasis
added)), and Pub. L. 91-467, § 4, 84 Stat. 991 (1970)
(superseded 1978) (“The court may revoke a discharge upon
the application of a creditor, the trustee, the United States
attorney, or any other party in interest, who has not been
guilty of laches, filed at any time within one year after a
discharge has been granted . . .” (emphasis added)) with
§ 727(e)(1) (“The trustee, a creditor, or the United States
trustee may request . . .” (emphasis added)). This language
strongly indicates that Congress did not intend § 727(e)(1) to
limit the court’s authority to revoke discharges.
Second, § 727(e)(1) does not fit the typical profile of
statutes of repose. Much of the case law concerning statutes
of repose arises from products liability claims subject to
limitation periods that only work total claim forfeitures after
very long periods of time. See, e.g., Blazevska v. Raytheon
Aircraft Co., 522 F.3d 948, 951 (9th Cir. 2008) (interpreting
the General Aviation Revitalization Act’s 18-year statute of
repose for civil actions “arising out of an accident involving
a general aviation aircraft”); Pardo v. Olson & Sons, Inc.,
40 F.3d 1063, 1065–66 (9th Cir. 1994) (addressing
Washington products liability statute barring “a product
liability claim where the product has passed its ‘useful safe
life’” and presuming that time period to be at least 12 years
(quoting Wash. Rev. Code § 7.72.060)); see also Underwood
Cotton Co., 288 F.3d at 408 (concluding a one-year time bar
had a “short fuse,” and that the time limit for a statute of
repose would typically be longer); Black’s Law Dictionary
(10th ed. 2014) (noting a statute of repose is triggered by
action of the defendant, “such as . . . designing or
manufacturing a product”).
WEIL V. ELLIOTT 11
I am not persuaded that the Bankruptcy Code’s
underlying policy goals, favoring finality and “fresh starts”
for debtors, indicate that § 727(e)(1) is a statute of repose.
See S. Rep. 95-989, at 98 (1978) (“[Section 727] is the heart
of the fresh start provisions of the bankruptcy law.”); H.R.
Rep. 95-595, at 5967 (1978) (same); see also CTS Corp.,
134 S. Ct. at 2183 (“Like a discharge in bankruptcy, a statute
of repose can be said to provide a fresh start or freedom from
liability.”). In § 727(d), Congress expressly required that a
discharge must be revoked in certain circumstances, including
if the debtor’s “fresh start” was procured by fraud. See
§ 727(d). Also, although § 727 provides a fresh start, it does
not secure absolute finality; 11 U.S.C. § 350 allows
bankruptcy proceedings to be reopened, without any express
time limitation, upon a proper showing.
I agree with the majority that equitable tolling is not at
issue in this case, so we need not decide whether the
limitations period in § 727(e)(1) is a “regular” statute of
limitations or a “mandatory” and non-tollable limitations
period. See Sebelius v. Auburn Reg’l Med. Ctr., 133 S. Ct.
817, 826–28 (2013) (concluding that equitable tolling does
not apply to a particular non-jurisdictional limitations period);
United States v. Brockamp, 519 U.S. 347 (1997) (same).
For these reasons and those stated in the majority opinion,
I conclude that § 727(e)(1) is a non-jurisdictional statute of
limitations subject to waiver, not a statute of repose.