Equitable Tolling & Due Process For Dischargeability Deadlines (TL90108 v. Ford)

By: Donald L Swanson

The opinion is TL90108 LLC v. Ford, Case No. 21-10456 (11th Cir., decided August 11, 2025).

Facts

A rare vehicle is stolen from the owner’s Milwaukee garage and shipped to Europe in 2001.  The owner dies in 2005 while the vehicle is missing. An Heir of the owner inherits the vehicle, who then sells a part interest in the vehicle to Debtor.

Ten years later, Purchaser buys the stolen vehicle from a third party in an overseas transaction.  When Purchaser tries to register the vehicle in the United States, Wisconsin authorities notify Debtor and Heir of that effort, as owners of record.

So, Debtor and Heir sue Purchaser in a Wisconsin state court, seeking a declaratory judgment of their ownership rights in the vehicle and possession.

The trial court dismisses their complaint with prejudice on statute-of-repose grounds.  On appeal, the Wisconsin Court of Appeals reverses, and Purchaser appeals further to the Wisconsin Supreme Court.

–Bankruptcy

Before the Wisconsin Supreme Court can rule, Debtor files Chapter 11 bankruptcy.  But Debtor fails to identify Purchaser as a creditor or to list any debt associated with the vehicle.  Debtor does, however, list the lawsuit against Purchaser as a pending legal action.

So, Purchaser does not receive any notices from Debtor’s bankruptcy proceeding—and specifically does not receive any notice of the bar date for filing a dischargeability complaint under § 523(a).

About a month after the bankruptcy filing, Debtor files a “Suggestion of Bankruptcy” with the Wisconsin Supreme Court, which filing notifies Purchaser of the bankruptcy proceeding and stays any further consideration of the appeal.

In the bankruptcy, an April 2019 bar date is set for filing a § 523(c) dischargeability complaint.[Fn. 1]  And Purchaser fails to file a § 523(c) complaint by that bar date.

–Fraud Discovered

The Wisconsin Supreme Court eventually agrees that the trial court erred by dismissing the action on statute-of-repose grounds.   

Upon remand to the trial court, the parties begin conducting discovery—which did not happen earlier because of the dismissal.   During such discovery, Purchaser learns that Debtor had conspired with the thief to:

• sell the vehicle to Purchaser; and
• then recover the vehicle in a replevin action.

Based on such information, Purchaser files counterclaims in the Wisconsin action against Debtor for conspiracy to defraud and for unjust enrichment.

–Dischargeability?

In September 2020 (a year and five months after expiration of the bar date for filing a § 523(a) complaint), Purchaser moves the Bankruptcy Court for an order extending the § 523(c) bar date.  In such motion Purchaser:

• explains that it just learned through state court discovery of a fraud claim against Debtor;
• acknowledges the April 2019 deadline for filing a § 523(c) complaint but argues that it could not possibly have obtained the information supporting its fraud complaint before the deadline because discovery had not yet begun in the Wisconsin action;
• urges the bankruptcy court to extend Rule 4007(c)’s bar date based on equitable tolling; and
• also argues that due process requires that the bar date should not apply because of inadequate notice.

Debtor opposes such motion, arguing that Purchaser is barred from filing a § 523(c) complaint after expiration of the Rule 4007(c) bar date, based on the plain language of that Rule and on Eleventh Circuit precedent.

Purchaser replies that the Eleventh Circuit precedent is abrogated by subsequent decisions of the U.S. Supreme Court.

Ruling

After a hearing, the Bankruptcy Court denies the motion to extend the § 523(c) bar date, and such ruling makes its way on appeal to the Eleventh Circuit Court of Appeals, which affirms.

What follows is a summary of the Eleventh Circuit’s analysis.

No Equitable Tolling

The Bankruptcy Court correctly determined that Rule 4007(c)’s bar date may not be equitably tolled.  That’s because:

• Fed.R.Bankr.P. 4007(c) sets a time within which creditors must file a § 523(a) dischargeability complaint;
• the Eleventh Circuit previously held that Rule 4007(c)’s deadline may not be equitably tolled (see In re Alton, 837 F.2d 457 (11th Cir. 1988)); and
• Purchaser’s argument is rejected—that Alton is abrogated by the U.S. Supreme Court’s subsequent decisions in Kontrick v. Ryan, 540 U.S. 443, 447 (2010), and Holland v. Florida, 560 U.S. 631, 634 (2010).

–The Bankruptcy framework

In a Chapter 11, most of a debtor’s pre-petition debts are ordinarily discharged, giving the debtor a fresh start. But some debts may be excepted from discharge, including  debts obtained by “false pretenses, a false representation, or actual fraud.” § 523(a)(2)(A).

Fed.R.Bankr.P. 4007(c) dictates when a § 523(c) complaint must be filed:

• by the bar date, which must be set “within 60 days after the first date set for the § 341(a) meeting of creditors”; but
• the bar date can be extended for cause on a party in interest’s motion filed before the time expires.

Another federal bankruptcy rule (9006(b)(3)) provides:

• “The court may extend the time to . . . act under Rule . . . 4007(c) . . . but only as permitted by [Rule 4007(c)]”; and
• in Rule 4007(c), as noted above, the only authorization for an extension is when the motion to extend is filed before the bar date expires—no mention is made of equitable doctrines or other tolling mechanisms.

—In re Alton

Alton arises from a creditor’s suit to recover money that the debtor allegedly took by fraud.

In response, debtor files Chapter 11 bankruptcy and sends notice of the bankruptcy to plaintiff, who acknowledges receipt.  But debtor does not list plaintiff as a creditor in the bankruptcy—so, plaintiff does not received notice of the Rule 4007(c) bar date.

After the bar date expires, plaintiff files a motion to extend the bar date, which motion the Bankruptcy Court denies as being filed too late, reasoning that plaintiff received timely notice of the Chapter 11 proceeding “and therefore had a duty to inform himself about hearing dates and bar dates.”

On appeal, the District Court affirms.  And plaintiff appeals to the Eleventh Circuit, arguing that the bar date should have been extended on equitable grounds because of “debtor’s own conduct” in failing to list plaintiff as a creditor that caused plaintiff to miss the filing deadline.

The Eleventh Circuit rejects such argument:

• acknowledging that the Court is “troubled” by debtor’s failure to list plaintiff as a creditor in the bankruptcy, which deprives plaintiff of court-issued notices; and
• acknowledging that the extension denial is a “harsh” result; but
• explaining that debtor put plaintiff on actual notice of the bankruptcy; and
• concluding that “the time specifications set out in the Bankruptcy Code are sufficiently clear to have placed an obligation” on a creditor with actual notice of the bankruptcy “to follow the case and to take the timely action necessary.”

Moreover:

• Rule 4007(c) requires that any motion to extend the time period for filing a § 523(c) complaint “must be made before the running of that period”;  
• “It is not our place to change” Rule 4007(c), since such rule is “clear” on when a motion to extend the bar date must be filed; and
• even intentionally misleading actions by a debtor cannot negate a creditor’s obligation to timely file a § 523(c) complaint or an extension motion before the bar date.

–No Abrogation by Supreme Court

Purchaser argues that Alton is undermined to the point of abrogation by the U.S. Supreme Court.  The Eleventh Circuit rejects this argument.  Here’s why.

In Kontrick, the Supreme Court examines Fed.R.Bankr.P. 4004 which, like Rule 4007, imposes deadlines for certain bankruptcy filings:

• at issue in Kontrick is whether a debtor can raise Rule 4004 as a defense at any point in the bankruptcy proceeding (as a jurisdictional rule) or whether Rule 4004 instead could be forfeited if not timely raised (as a nonjurisdictional claim-processing rule);
• the Supreme Court holds that Rule 4004 is a nonjurisdictional claim-processing rule and that the debtor had forfeited the rule’s protection by waiting too long to raise it; but
• Kontrick does not address equitable tolling or any other equity-based exception.

Then, in Holland the Supreme Court:

• considers whether the nonjurisdictional statute of limitations in the Antiterrorism and Effective Death Penalty Act may be equitably tolled; and
• concludes that “a nonjurisdictional federal statute of limitations is normally subject to a rebuttable presumption in favor of equitable tolling.”

So, Purchaser asserts that, based on a combination of Kontrick and Holland, the statute of limitations in Rule 4004 (and the closely related bar date in Rule 4007(c)) are subject to equitable tolling.

Here is how the Eleventh Circuit responds:

• to begin with, we agree that Rule 4007(c) is a nonjurisdictional claim-processing rule, and not a jurisdictional requirement; but
• such Supreme Court decisions do not undermine or abrogate the Eleventh Circuit  precedent—that’s because the Supreme Court never discussed our precedent, did not otherwise comment on its precise issue, and neither demolished nor eviscerated its fundamental props; and
• an intervening decision that merely weakens the holding of the Eleventh Circuit precedent is not sufficient to abrogate that holding.

Put another way: so long as our precedent’s holding retains at least “one valid basis or rationale,” it remains binding.  Such valid basis remains for Alton.

Neither Kontrick nor Holland is clearly on point with nor clearly contrary to Alton.  That’s because:

• Kontrick expressly declines to reach the equitable tolling question;
• Holland addresses a different question—i.e., equitable tolling’s applicability to another law (not a federal bankruptcy rule);
• the Supreme Court has not discussed Alton or commented on the precise Alton issue;
• even though the Supreme Court mentions Alton and the equitable tolling issue in Kontrick, it does so only to illustrate that the circuits have disagreed over the applicability of equitable tolling under Rule 4007; and
  • the Supreme Court’s characterization of the issue in Alton as an open question is far from enough to abrogate our precedent.

Neither Kontrick nor Holland demolishes and eviscerates Alton’s fundamental propositions because Alton relies exclusively on the plain language of Rule 4007(c) for concluding that a § 523(c) complaint must be filed before the bar date—not on a jurisdictional v. nonjurisdictional distinction

Additionally, the subsequent the Supreme Court decision of Nutraceutical Corp. v. Lambert, 586 U.S. 188 (2019), confirms the foundation principle of Alton:

• whether a rule precludes equitable tolling turns not on its jurisdictional character but rather on whether the text of the rule leaves room for such flexibility; and
• Fed.R.Civ.P. 23(f) and related rules are not subject to equitable tolling because such rules express a clear intent to compel rigorous enforcement of Rule 23(f)’s deadline, even where good cause for equitable tolling might otherwise exist.

The Eleventh Circuit concludes: Lambert informs us that Alton’s foundation—that Rule 4007(c)’s mandatory language does not allow for equitable tolling—remains a valid basis or rationale after Kontrick and Holland.

No Due Process Violation

Purchaser received actual notice of the bankruptcy proceeding before expiration of the § 523(a) bar date, which was sufficient to satisfy due process.

Purchaser points to our recognition in Alton that “due process provides an avenue for federal courts to extend the Rule 4007(c) deadline” (837 F.2d at 460–61, 461 n.4).  But we conclude as a matter of law that such an extension is not warranted here because Purchaser received all the notice our precedent requires to satisfy due process.

In this context, sufficient notice means a notice that is adequate to apprise the creditor of the pendency of the action and afford the creditor an opportunity to present objections:

• if a creditor has no notice of the bankruptcy proceeding, that creditor’s claim cannot be discharged in the bankruptcy; but
• so long as a creditor has knowledge of the pending bankruptcy, that creditor is bound by the bar date—whether or not the creditor receives official notice from the court of the bar date.

Here, it is undisputed that Debtor provided Purchaser with actual notice of the bankruptcy before expiration of the Rule 4007(c) bar date, in the form of a suggestion of bankruptcy filed with the Wisconsin Supreme Court.  Therefore:

• because of actual knowledge of the bankruptcy case, Purchaser’s due process argument fails; and
• as we concluded in Alton, the language of § 523 makes actual notice of the bankruptcy case sufficient to impose on the creditor a duty-to-inquire.

Conclusion

Good to know.

————————

Footnote 1.  This deadline comes from Fed.R.Bankr.P. 4007(c), which says: “a complaint to determine whether a debt is dischargeable under § 523(c) must be filed within 60 days after the first date set for the § 341(a) meeting of creditors.” 

Footnote 2.  Fed.R.Bankr.P. 4007(c) says: “Except as (d) provides, a complaint to determine whether a debt is dischargeable under §523(c) must be filed within 60 days after the first date set for the §341(a) meeting of creditors. The clerk must give all creditors at least 30 days’ notice of the time to file in the manner provided by Rule 2002. On a party in interest’s motion filed before the time expires, the court may, after notice and a hearing and for cause, extend the time to file.”

** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.