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#1926

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS

In Re:

BENNY LEIGH EDMONDS, SHIRLEY JEANNINE EDMONDS,

DEBTOR(S)

NO. 84-40451-7

CHAPTER 7

LAWRENCE NATIONAL BANK,

PLAINTIFF,

v.

BENNY LEIGH EDMONDS, SHIRLEY JEANNINE EDMONDS,

DEFENDANTS

ADV. NO. 86-0327

DECISION ON MOTION FOR SUMMARY JUDGMENT

This adversary proceeding is before the Court on the debtors' motion for summary judgment. The debtors are represented by Gary H. Hanson and Tom R. Barnes of Stumbo, Hanson & Hendricks, Topeka, Kansas. The plaintiff bank is represented by Donald E. Bucher of Moore & Bucher, P.C., Kansas City, Missouri. The Court has reviewed the relevant pleadings and is now ready to rule.

FACTS

The relevant facts are not in dispute. The debtors obtained a chapter 7 discharge and, more than one year thereafter, the bank filed a complaint alleging grounds to set the discharge aside under 11 U.S.C.A. §727(e)(1). See also Fed. Rule of Bankruptcy Procedure 9024 (making FRCP 60 applicable to bankruptcy proceedings). During the intervening period, the bank negotiated with the debtors in an attempt to get them to agree to pay its discharged debt, threatening to file a complaint to set aside the discharge if the debtors refused to do so. In order to obtain certain business benefits from the bank unrelated to the discharge, the debtors signed an agreement after the one-year limitations period fixed by §727(e)(1) had expired. The parties concur that the debtors then somehow accomplished a unilateral rescission of the agreement. More than four months after the debtors had signed the agreement, the bank filed this proceeding. The bank complains that the debtors deliberately extended the negotiations beyond the §727(e)(1) deadline, again defrauding the bank, and asks the Court to exercise its power under §105 to extend the bank's opportunity to file a timely complaint.

DISCUSSION AND CONCLUSIONS

Subsection (e)(1) of §727 reads as follows: "The trustee, a creditor, or the United States trustee may request a revocation of a discharge -- (1) under subsection (d)(1) of this section within one year after such discharge is granted." Subsection (d)(1) reads: "On request of the trustee, a creditor, or the United States trustee, and after notice and a hearing, the court shall revoke a discharge greanted under subsection (a) of this section if -- (1) such discharge was obtained through the fraud of the debtor, and the requesting party did not know of such fraud until after the granting of such discharge." Unquestionably the bank was aware of the debtors' alleged fraud soon enough to bring a timely complaint to set aside their discharge. Nevertheless, the bank asks the Court to use its equitable power under §105 and declare this late complaint timely.

The Court doubts it has the authority under §105 to grant the relief requested, and concludes it would not be equitable to do so in any event. But for the fact the bank was attempting to negotiate an agreement which would violate the discharge injunction of §524(a)(2) and so be unenforceable, and which would benefit it alone rather than all the creditors as a successful §727(e)(1) complaint would do, the bank could have filed a timely complaint. The Court believes the power granted by §105 does not authorize it to override the explicit mandates of other provisions of the Bankruptcy Code. In re Wood, 87 B.R. 170, 172 (Bankr.D.Kan. 1988); see also In re Morgan, 758 F.2d 137, 141 (7th Cir. 1981) (under the Bankruptcy Act, a provision similar to §727(e) precluded the court from using equitable powers to revoke a discharge more than one year after it was entered). Even if the Court thought it had the power to revoke the debtors' discharge based on a late-filed complaint, the Court does not believe it would be appropriate to grant equitable relief when the bank's failure to file a timely complaint was caused by its attempt to circumvent another provision of the Code. Those who seek equity must themselves have acted equitably. E.g., Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 814-15, 65 S.Ct. 993, 89 L.Ed. 1381 (1945); Hocker v. New Hampshire Ins. Co., 922 F.2d 1476, 1485-86 (10th Cir. 1991). The debtors' motion for summary judgment will be granted. A judgment based on this ruling will be entered on a separate document as required by FRBP 9021 and FRCP 58.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this 21st day of July, 1993.













__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS





In Re: )

BENNY LEIGH EDMONDS, ) NO. 84-40451-7

SHIRLEY JEANNINE EDMONDS, ) CHAPTER 7

DEBTOR(S). )

)

LAWRENCE NATIONAL BANK, )

PLAINTIFF, )

v. ) ADV. NO. 86-0327

)

BENNY LEIGH EDMONDS, )

SHIRLEY JEANNINE EDMONDS, )

DEFENDANTS. )

JUDGMENT ON DECISION

This adversary proceeding was before the Court on the debtors' motion for summary judgment. The debtors were represented by Gary H. Hanson and Tom R. Barnes of Stumbo, Hanson & Hendricks, Topeka, Kansas. The plaintiff bank was represented by Donald E. Bucher of Moore & Bucher, P.C., Kansas City, Missouri.

Based on the "Decision on Motion for Summary Judgment" which announced the Court's ruling, judgment is hereby entered granting the debtors' motion for summary judgment and denying the relief sought by the bank in this proceeding.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of July, 1993.













__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

 

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