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In re Katsman

United States Court of Appeals, Seventh Circuit

November 19, 2014

IN RE: SOFIA KATSMAN, Debtor. VLADIMIR SKAVYSH, Plaintiff-Appellee,
v.
SOFIA KATSMAN, Defendant-Appellant

Argued September 23, 2014.

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 12 C 3807 -- Charles R. Norgle, Judge.

For In the Matter of: SOFIA KATSMAN, Debtor - Appellant: David Freydin, Skokie, IL; Jonathan David Golding, Attorney, Richard N. Golding, Attorney, Golding Law Offices, Chicago, IL.

For Vladimir Skavysh, Plaintiff - Appellee: Matthew Lee Stone, Attorney, Skokie, IL.

For Brian A. Audette, Trustee: Brian A. Audette, Attorney, Perkins Coie Llp, Chicago, IL.

Before POSNER, ROVNER, and WILLIAMS, Circuit Judges.

OPINION

Page 1049

Posner, Circuit Judge.

Sofia Katsman, represented by a lawyer named David Freydin, filed for bankruptcy under Chapter 7 of the Bankruptcy Code. After she filed Schedule F of the bankruptcy petition--the schedule on which the debtor is required to list the names of (and other relevant information concerning) " all entities holding unsecured claims without priority against the debtor or the property of the debtor, as of the date of filing of the petition," the trustee in bankruptcy reported tat no assets were available for distribution to the creditors from the estate in bankruptcy. The usual result of such a report is the discharge of the debtor from bankruptcy, wiping out the creditors' claims.

But before discharge could be ordered, Vladimir Skavysh, the son of the debtor's ex-husband, filed an adversary proceeding in the bankruptcy challenging the discharge of the debtor. See Rule 7001(4) of the Federal Rules of Bankruptcy Procedure. He invoked a provision of the Bankruptcy Code that denies discharge if " the debtor knowingly and fraudulently, in or in connection with the case[,] made a false oath or account." 11 U.S.C. § 727(a)(4)(A). Skavysh's objective was, by persuading the bankruptcy court to deny discharge, to enable Katsman's creditors, of whom Skavysh is one, to enforce their claims against her. The bankruptcy judge conducted a trial of Skavysh's objection to discharge and concluded that although there were omissions in Katsman's schedules, they were not fraudulent. The only witness at the trial was Katsman, and the judge decided that her testimony had been truthful.

The judge's rejection of Skavysh's objection to discharge was not a final order in the bankruptcy proceeding as a whole, but it was a final order with respect to the adversary proceeding between Skavysh and Katsman. And as explained in Zedan v. Habash, 529 F.3d 398, 402 (7th Cir. 2008), " an order [that] resolves a discrete dispute that, but for the continuing bankruptcy, would have been a stand-alone suit by or against the trustee" in bankruptcy is deemed final and therefore appealable under 28 U.S.C. § 158(a)(1). Otherwise, because bankruptcy proceedings can drag out for a very long time, the resolution of entirely separable disputes embedded in the overall proceeding would often be long delayed for no good reason.

So Skavysh was able to appeal the bankruptcy judge's order to the district court. The district judge reversed and ruled that Skavysh's objection was valid and that Katsman therefore was not entitled to a discharge. She appeals the district court's ruling to us, pursuant to 28 U.S.C. § 158(d)(1).

She admitted at the trial in the bankruptcy court that she had deliberately omitted four creditors from her Schedule F. They were friends and family members who had lent her money for ...


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