United States District Court, M.D. Tennessee, Nashville Division
For Latif Abdulsayed, Afaf Hanna, Appellants: Kristin J. Fecteau, LEAD ATTORNEY, Law Office of Kristin Fecteau, Nashville, TN.
For Randal Peyton Hand, Linda Sue Hand, Appellees: Edgar Meyer Rothschild, III, LEAD ATTORNEY, Rothschild & Associates, Nashville, TN; Mary Elizabeth Ausbrooks, LEAD ATTORNEY, Clark & Washington, P.C., Nashville, TN.
For Henry E. Hildebrand, III, Trustee: Henry E. Hildebrand, III, LEAD ATTORNEY, Lassiter, Tidwell, & Davis PLLC, Nashville, TN.
KEVIN H. SHARP, CHIEF UNITED STATES DISTRICT JUDGE.
The appeal before the Court arises from an order issued by the Bankruptcy Court on September 12, 2013, denying Appellants' " Motion for extension of the deadline by which to Object to Debtor's Discharge or to Challenge Dischargeability of Certain Debts under Rule 9006(b) (1) of the Federal Rules of Bankruptcy Procedure." On appeal, Appellants submitted two issues for the Court's review:
1. The Bankruptcy Court erred in failing to consider the doctrine of equitable estoppel as grounds to use its equitable power to allow Appellants to be granted an extension of time to file an Exception to Dischargeability.
2. The Bankruptcy Court erred in its application of facts in this case to the doctrine of equitable tolling and should have found that grounds exist pursuant to equitable tolling to allow Appellants an extension of time to file an Exception to Dischargeability.
(Docket No. 4, at 6).
The Court has appellate jurisdiction to hear appeals from bankruptcy court pursuant to 28 U.S.C. § 158. In determining appeals from bankruptcy court, the Court reviews findings of fact for clear error and conclusions of law de novo . See Behlke v. Eisen (In re Behlke), 358 F.3d 429, 433 (6th Cir. 2004). A finding of fact is clearly erroneous if " the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Heights Cmty. Cong. v. Hilltop Realty, Inc., 774 F.2d 135, 140 (6th Cir. 1985). Equitable determinations made by the bankruptcy court are reviewed for abuse of discretion. LPP Mortg., Ltd. v. Brinley, 547 F.3d 643, 647 (6th Cir. 2008) (quoting Chase Manhattan Mortg. Corp. v. Shapiro (In re Lee), 530 F.3d 458, 463 (6th Cir. 2008)). " An abuse of discretion is defined as a 'definite and firm conviction that the [court below] committed a clear error of judgment.'" Mayor of Baltimore v. West Virginia (In re Eagle-Picher Indus. Inc.), 285 F.3d 522, 529 (6th Cir. 2002) (quoting Soberay Mach. & Equip. Co. v. MRF Ltd., Inc., 181 F.3d 759, 770 (6th Cir. 1999); Bowling v. Pfizer, Inc., 102 F.3d 777, 780 (6th Cir. 1996)). " The question is not how the reviewing court would have ruled, but rather whether a reasonable person could agree with the bankruptcy court's decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion." (Id.)
I. SUMMARY OF THE FACTS
Appellants in this action, Latif Abdulsayed and Afaf Hanna, bought property and real estate, " Baker's Market, " from Appellees, Randal and Linda Sue Hand. Soon after making a down payment of $190, 000 and taking control of the property, Appellants discovered that despite the sellers' assurances to the contrary, they did not in fact hold clean and clear title. Two outstanding liens existed on the property totaling $448, 839.81, more than half of the sale price. Moreover, the sellers' representations regarding monthly sales were inaccurate.
Appellants sued Appellees in Tennessee state court alleging breach of contract, fraud, and misrepresentation. The trial court originally found for Appellees, but the decision was reversed by the Court of Appeals, which held Appellants had " proved all essential elements of their claim of intentional misrepresentation." (Docket No. 1-10, at 20). It ordered " rescission of the contract, the return to [Appellants] of their $190, 000 down payment, and restoring to [Appellees] all of their rights, title, and interests to the business and real estate, " and remanded the case to the trial court for proceedings consistent with this opinion. (Id.).
Shortly thereafter, while the Parties awaited a final judgment from the trial court in March 2013, the Hands filed a voluntary petition under Chapter 13 of the United States Bankruptcy Code. The Parties discussed the matter and initially agreed that this did not change their particular situation. Appellees' bankruptcy counsel, Edgar Rothschild, communicated to Appellants' counsel, Kristin Fecteau, on April 2 that he would " likely enter an agreement that this debt is non-dischargeable based on the clear language in [the Court ...