Akers v. Mattei (In re Dugger), No. SC-11-1052, 2012 WL 2086562, at *7–*9 (B.A.P. 9th Cir. June 8, 2012) (Pappas, Markell, Case)

Two-year limitation in § 546(a) bars Chapter 7 trustee’s avoidance action after conversion from Chapter 13 when Chapter 7 trustee failed to prove “extraordinary circumstances” to support equitable tolling; Chapter 13 trustee was not aware of potentially avoidable transfers, but to carry burden of proof with respect to equitable tolling, Chapter 7 trustee must prove both due diligence and extraordinary circumstances. Chapter 13 case converted to Chapter 7 more than two years after the petition. There were real property interests that were not listed in the schedules during the Chapter 13 portion of the case. The limitation in § 546(a) had expired and would bar the Chapter 7 trustee’s recovery action unless the limitations statute was equitably tolled. “The two-year limitations period in § 546(a)(1) is subject to equitable tolling. . . . ‘A litigant seeking equitable tolling bears the burden of establishing two elements: (1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way.’ . . . [T]he modern burden of proof to invoke equitable tolling requires that Trustee show both due diligence and the presence of extraordinary circumstances. . . . ‘There is no evidence of wrongful conduct or fraud by the debtor or any other extraordinary circumstances during the relevant time period which justify equitable tolling.’”

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