E.D.N.C.: Engell v. Sheetz - Appeal of Discharge or Dischargeability

Summary: Mr. Sheetz filed a Chapter 7 bankruptcy on June 1, 2015, listing, among other creditors, Mr. Engell. The last day to oppose a discharge was August 31, 2015. On August 26, 2015, Mr. Engell filed an pleading titled as “Creditor’s Objection to Debtor’s Exemption” (“the objection”), but which, in fact, asserted that judgment held against Mr. Sheetz was nondischargeable due to fraud and unfair and deceptive trade practices. Subsequently, on October 27, 2015, Mr. Engell filed a motion to amend. On December 31, 2015, the bankruptcy court overruled the objection and denied the motion to amend, holding that Mr. Engell had been required to bring an Adversary Proceeding to oppose discharge and the objection was insufficient. The bankruptcy court further held that the motion to amend was actually a tardy motion to extend time. On January 20, 2016, the bankruptcy court granted Mr. Engell a discharge, to which Mr. Sheetz filed an appeal on February 3, 2016. The district court distinguished between the general discharge granted to a debtor and a determination of the nondischargeability of a specific debt. As such, Mr. Sheetz’ appeal of the January 20th discharge was not a timely appeal of the December 31st order overruling the objection to discharge of his specific claim. Accordingly, the appeal was dismissed as untimely. Commentary: This case is a warning that non-bankruptcy attorneys enter our world at their peril, as small pleading and service issues can be fatal. Perhaps if the North Carolina Bar Examiners would include bankruptcy on the bar exam occasionally, attorneys would pay more attention. For a copy of the opinion, please see: Engell v. Sheetz - Appeal of Discharge or Dischargeability