Unpublished Disposition, 908 F.2d 976 (9th Cir. 1987)

MEMORANDUM^* 

Dominick J. Addonizio and other limited partners of La Habra Community Hospital Partnership (the Limited Partners) appeal from a judgment of the district court denying their appeal from a bankruptcy court order. The Limited Partners had filed a complaint to determine dischargeability (CTDD) against the debtor, George Gaulding, the general partner in the partnership. The bankruptcy court dismissed this complaint as untimely, and the district court affirmed. We affirm the district court.

PROCEEDINGS

In September 1985, 39 of the Limited Partners brought an arbitration proceeding against Gaulding, alleging various defalcations and breaches of fiduciary duty while he was acting as the sole general partner of the partnership. On February 3, 1986, the day before the arbitration proceeding was to begin, Gaulding filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. In his list of his 20 largest unsecured creditors, Gaulding listed the partnership as a creditor with an estimated disputed claim of $1.2 million. He gave the address of the partnership as his own business address. He did not list the names or the addresses of the Limited Partners. Gaulding personally informed counsel for the Limited Partners of his filing.

On February 21, 1986, counsel for the Limited Partners filed with the bankruptcy court a Request for Special Notice. This request was also served on Gaulding.

On March 7, 1986, the clerk of the bankruptcy court mailed the notice of the bar date for a CTDD, setting the date as May 27, 1986. This notice was not sent to the Limited Partners.

On March 14, 1986, counsel for the Limited Partners appeared at a bankruptcy hearing at which Gaulding moved to extend the time to file his schedules. The Limited Partners noted that they had not been provided adequate notice of this hearing and asked that the court order Gaulding to give them notice of all proceedings in the case. The bankruptcy judge replied that the Request for Special Notice was sufficient to insure notice to the Limited Partners of any proceedings. At the March 14, 1986 hearing the Limited Partners learned that the first meeting of creditors would be held on March 27, 1986.

May 27, 1986, the bar date, arrived without the Limited Partners having filed their CTDD. On June 3, 1986, they were informed of the bar date. On July 2, 1986, they filed their CTDD.

On April 20, 1987, Gaulding moved to dismiss the CTDD on the grounds it had not been filed by the bar date of May 27, 1986. The bankruptcy court granted this motion. The district court affirmed. The Limited Partners appeal.

ANALYSIS

A bankruptcy court is in origin and purpose a court of equity. It is, to be sure, a court created by statute and bound by statute. The equity it does cannot disregard the statutory limitations. Teamsters Local No. 310 v. Ingrum (In re Tucson Yellow Cab Co.), 789 F.2d 701, 704 (9th Cir. 1986).

Under the statute, a debt will be discharged even if the debtor failed to schedule the creditor in time to permit a timely filing of proof of claim if "such creditor had notice or actual knowledge of the case in time for such timely filing and request." 11 U.S.C. § 523(a) (3) (B). Thus the mere failure of the debtor to list a creditor does not excuse compliance with the statute if the creditor had actual notice of the bankruptcy proceedings in time to file a CTDD. Lompa v. Price (In re Price), 871 F.2d 97, 99 (9th Cir. 1989).

The Limited Partners had such actual notice of the bankruptcy proceedings on the day the petition was filed. They were aware of the date set for the first creditors' meeting. The deadline for filing a CTDD is nondiscretionary and is set "60 days following the first date set for the meeting of creditors." Bankr.Rule 4007(c). Although the Limited Partners should have received notice of the bar date from the court pursuant to their special request, they were not misled by any erroneous bar date set by the court. The fact that Gaulding failed to list them as creditors in his petition does not relieve them from inquiry notice as to nondiscretionary deadlines. In re Price, 871 F.2d at 99.

Neither parties chose to address the ethical issues implicit in this case and, therefore, we do not ourselves decide them. We think it appropriate, however, to refer to the Office of Trial Counsel of the State Bar of California the conduct of counsel. It appears from the record that Gaulding violated his fiduciary duty to his limited partners, see Cal.Corp.Code Sec. 15509(1) (Deering 1979), when he failed to include them in his list of creditors and thereby cut them off from notices sent by the bankruptcy court. Counsel for Gaulding appears to have aided and abetted this breach of fiduciary duty.

AFFIRMED.