Styler v. Tall Oaks, Inc. (In re Hatch), 93 B.R. 263 (Bankr.D.Utah)
PUBLISHED
Trustee's attorney filed a complaint alleging a fraudulent transfer under 11 U.S.C. § 548, which defendant moved to dismiss on the ground that it had not been timely served with the complaint as required by Bankruptcy Rule 7004(a) and Fed.R.Civ.P. 4(j). Those rules require that a complaint be served on the defendant within 120 days of its filing, unless good cause is established for failing to do so. Trustee's attorney admitted taking no steps to serve the complaint after filing it, claiming that he had filed the complaint based on summary information and, thereafter, attempted to obtain documentation from which he could prove the claims made. The court found that this explanation did not satisfy the standard of "good cause" for failing to serve the complaint, and that dismissal of the complaint was therefore mandatory, despite the fact that refiling would be barred by the statutory time period set forth in 11 U.S.C. § 546(a)(1). Based on the admissions by trustee's attorney, the court further held that the complaint had been filed for an improper purpose, which was to toll the § 546(a)(1) time period so that trustee could develop the evidence needed to prove the complaint's allegations. Therefore, the court determined that sanctions were mandatory under Bankruptcy Rule 9011, and awarded defendant all fees and costs it had incurred since the filing of the complaint, payable equally by trustee and her attorney.