concurring.
I concur in the result and write separately to expose the majority’s assertion that laches never applies to § 523(a)(3)(B) dischargeability actions as neither necessary to the decision of this appeal nor prudent appellate decision-making. The assertion is mere dictum that should be regarded as having doubtful precedential value.
Our reversal of the dismissal on summary judgment of Selinger’s § 523(a)(3)(B) action based on laches should assume without deciding that laches is available as a defense and conclude the bankruptcy court erred in applying laches in this instance. *847What is essential to our decision in this appeal is that the dismissal based on lach-es was error; what is not essential is that laches never applies.
This is no trivial matter. The important question of how unscheduled creditors legitimately can go about pursuing arguably nondischargeable debts in the face of a bankruptcy discharge is poorly explored and, especially where the question of dis-chargeability is not yet resolved, fraught with opportunity for abuse that promotes dysfunction between state and federal courts. The dearth of decisional law on this complex subject warrants that we proceed with caution in the interest of providing competent precedent and guidance for nonbankruptcy courts and litigants.
This appeal illustrates the problem and the confusion. The debtor (“Beaty”) ignored the state court proceeding until after the judgment for fraud and willful and malicious conduct was entered and then tried to block collection proceedings (and assessment of punitive damages) by filing a “Notice of Injunction” in which he inaccurately represented that the discharge functioned to enjoin prosecution of the particular lawsuit in that court — it did not and does not. Selinger’s money judgment would be enforceable if some court with jurisdiction (state courts have concurrent jurisdiction over § 523(a)(3) disputes) were to decide the § 523(a)(3)(B) question in Selinger’s favor. Whatever one may think of the utility or ethics of a tactic of trying to let opponents and nonbankruptcy courts be bamboozled about matters of bankruptcy law, such tactics disserve the law and in this instance launched an eight-year-and-counting odyssey.
As I shall explain, the correct result in reviewing the summary judgment in Beaty’s favor is to view Selinger’s 1993 California judgment for fraud and willful and malicious conduct in the light most favorable to Selinger, which is that it qualifies for issue and claim preclusion under California law, with the consequence that (Beaty having admitted the other essential elements in his answer) the debt is presumptively nondischargeable under § 523(a)(3)(B). Sehnger’s § 523(a)(3)(B) action was timely filed, there being no limitations period. Assuming, without deciding, that the protection of laches applies, it was an abuse of discretion to impose laches because Selinger was diligent, Beaty (particularly if California’s issue and claim preclusion rules apply with respect to the dispositive substantive questions) was not prejudiced by being unfairly deprived of the ability to defend in an action to determine the discharge status of the 1993 California judgment, and because any arguable prejudice was self-inflicted.
Before explaining in greater detail, it is necessary to restate the salient facts.
FACTS
Appellee Thomas Beaty was a joint debtor in a chapter 7 bankruptcy case filed September 12, 1991, that resulted in a discharge entered January 10, 1992, and that continued to be administered by the chapter 7 trustee until April 1995.
Appellant David Selinger was, when Beaty’s bankruptcy case was commenced, the plaintiff in a pending civil action entitled Selinger v. Saraston Dev. Co. & Does 1-50, filed January 17, 1991, in San Diego County Municipal Court alleging, among other things, fraud and willful and malicious conduct.
Although all of Beaty’s relevant fraudulent and willful and malicious conduct occurred before bankruptcy, neither Beaty nor Selinger knew each other’s identity until after the deadline for nondischarge-ability actions.
*848The state court substituted Beaty for defendant Doe 3 in March 1992, about two months after Beaty’s discharge issued. Beaty did not respond to service.
The state court entered a default judgment against Beaty on June 10,1993. The face of the judgment recited that Beaty had been served and had not responded, that the court had taken evidence, that Beaty had willfully suppressed a material fact to Selinger’s detriment, and that Beaty’s “conduct was fraudulent, willful, malicious, and in conscious disregard for the rights of’ Selinger. It awarded general damages of $5,000 and unspecified costs and specified that punitive damages would “be determined at a later date.” The court also ordered that Beaty produce various financial records and testify at deposition regarding his wealth.
Beaty responded by filing on June 17, 1993, a “Notice of Injunction Against Further Proceedings” to which was attached a copy of the discharge and which stated: “[t]he effect of this Discharge of Debtor is equivalent to an automatic injunction against creditors from commencing or continuing any lawsuit, enforcement of any judgment, enforcement of any hen against property, or continuing any levy on property, including wages; or to take any action to [enjforce any such claim.”
Selinger, acting pro se, filed an adversary proceeding on August 29, 1994, “objecting” to Beaty’s discharge under 11 U.S.C. § 727, notwithstanding that the discharge had been entered January 10, 1992. The bankruptcy court dismissed the § 727 adversary proceeding on June 13, 1995. Selinger appealed to the U.S. District Court for the Southern District of California, which court affirmed the dismissal on April 14,1997.
On April 24, 1998, Selinger, again acting pro se, filed both a motion to reopen the parent bankruptcy case and an adversary proceeding seeking a determination of dis-chargeability of the judgment debt under § 523(a)(3)(B).
Selinger alleged that the underlying judgment debt was nondischargeable under §§ 523(a)(2), (4), and (6), and that he did not know of the existence of Beaty’s bankruptcy case in time to file a timely complaint under §§ 523(a)(2), (4), and (6).
The relief Selinger requested was a declaration that the judgment debt was non-dischargeable, that the discharge injunction be “modified” so as to allow continued prosecution of the state court action to determine punitive damages, costs and fees, and that any such future award be similarly nondischargeable.
Although the bankruptcy court denied the motion to reopen the bankruptcy case on the premise that reopening was irrelevant to dischargeability, another bankruptcy judge nevertheless dismissed Selinger’s § 523(a)(3)(B) complaint, ruling that it was time barred as of the original December 16, 1991, deadline for actions under §§ 523(a)(2), (4), and (6), and that the denial of the motion to reopen compelled dismissal. Selinger appealed.
Our prior panel reversed, ruling that § 523(a)(3)(B) complaints may be filed “at any time” and that reopening the parent bankruptcy case is irrelevant to the bankruptcy court’s exercise of jurisdiction over a § 523(a)(3)(B) complaint. And we refused to entertain Beaty’s argument raised for the first time on appeal that laches should be applied to defeat Selinger’s complaint. Selinger v. Beaty (In re Beaty), No. SC-98-1657-JRRy (9th Cir. BAP Dec. 30, 1999).
On remand, Beaty answered, admitting Selinger’s allegation that he did not know of the bankruptcy before the original deadline to file complaints under §§ 523(a)(2), *849(4), and (6), and asserting laches as an affirmative defense.
Beaty and Selinger each moved for summary judgment — one on laches, the other on issue preclusion (collateral estoppel). The bankruptcy court granted Beaty’s laches motion, denied Selinger’s cross motion on the issue preclusion theory, and dismissed the complaint with prejudice. A timely motion to alter or amend was denied. This appeal ensued.
DISCUSSION
I
I am not persuaded by the majority’s reasoning that laches is not applicable to any § 523(a)(3) action in general. Nor do I think that such a view is a logical extension of Judge O’Scannlain’s Beezley concurrence. Beezley v. California Land Title Co. (In re Beezley), 994 F.2d 1433 (9th Cir.1993), noted in Helbling & Klein, The Emerging Harmless Innocent Omission Defense to Nondischargeability under Bankruptcy Code § 523(a)(3)(A): Making Sense of the Confusion over Reopening Cases and Amending Schedules to Add Omitted Debts, 69 Am.Bankr.L.J. 33, 52-53 (1995). Moreover, the authorization in Rule 4007(b) for filing such an action “at any time” does not, in my view, forbid a court from applying laches in appropriate circumstances; in other words, the phrase “at any time” does not mean “at any time no matter what and no matter how inequitable.” Fed.R.BanKR.P. 4007(b).
Regardless of what one may think about the potential role for laches under § 523(a)(3)(A), the prospect of a “trial within a trial” is key to understanding the potential role for laches as a § 523(a)(3)(B) defense.
The essential elements of § 523(a)(3)(B) include the formal prerequisites that the creditor was neither listed nor scheduled and did not otherwise know of the bankruptcy in time to file a timely discharge-ability action under § 523(a)(2), (4), or (6) and, in addition, require proof of all the essential elements of those subsections in what amounts to a trial within a trial. Fidelity Nat’l Title Ins. Co. v. Franklin (In re Franklin), 179 B.R. 913, 923-24 (Bankr.E.D.Cal.1995).
The unavailability of laches creates opportunities for mischief. Consider a hypothetical (innocently) omitted creditor who has documentary evidence suggestive of fraud in a completed transaction; assume further that the testimony of a particular percipient witness would dispel all inference of fraud in the mind of any rational trier of fact. If that creditor, knowing that the key defense witness is terminally ill and knowing that a § 523(a)(3)(B) action can be filed “at any time,” intentionally defers making any assertion of fraud until after the key witness dies, then the inability to invoke laches would be a problem.
Although the majority accurately observes that one defensive measure for the debtor who knows there exists a potential omitted debt nondischargeability action is to preempt the creditor’s ability to control timing by filing a § 523(a)(3)(B) action seeking a determination that the debt was discharged, such a preemptive strike strategy has no utility for a debtor who has no reason to suspect the existence of such a cause of action.
In short, there is a potential role for the laches defense in actions under § 523(a)(3). The majority’s attempt to use the instant appeal, in which laches was incorrectly applied, as the occasion to banish laches from § 523(a)(3)(B) risks throwing out the baby with the bath water.
II
The correct resolution of this appeal is to assume, without deciding, that laches is *850available and to focus upon the plain error of applying laches against Selinger.
Laches generally requires proof of (1) lack of diligence by the plaintiff and (2) prejudice to the defendant. Costello v. United States, 365 U.S. 265, 282, 81 S.Ct. 534, 5 L.Ed.2d 551 (1961); United States v. Marolf, 173 F.3d 1213, 1218 (9th Cir. 1999). To which is added the requirement that the defendant must not have engaged in conduct, that impairs the plaintiffs diligence. Holmberg v. Armbrecht, 327 U.S. 392, 396, 66 S.Ct. 582, 90 L.Ed. 743 (1946); 30A C.J.S. Equity § 151 (1992).
Beaty loses on all three counts. First, Selinger has been nothing if not persistent. He has been prosecuting, with pertinacity and undaunted by failure, some action addressed to the bankruptcy status of the judgment debt for most of the eight years since the problem arose. This is diligence.
To the extent that the bankruptcy court charged Selinger with lack of diligence for not figuring out the correct remedy in the first instance, it erred. It is settled that a long-term failure to figure out the appropriate remedy, even though the remedy is well known, is not sufficient to warrant laches if the party has been otherwise diligent and there is no prejudice. Southern Pac. Co. v. Bogert, 250 U.S. 483, 39 S.Ct. 533, 63 L.Ed. 1099 (1919). Indeed, the similarity of the instant situation to Bogert, where the plaintiffs spent 22 years litigating various actions challenging a corporate reorganization before they figured out the correct remedy, is striking. Bogert, 250 U.S. at 488-89, 39 S.Ct. 533.
Moreover, while the § 523(a)(3)(B) remedy was plain on the face of the statute, it was not well-understood during the relevant period. Rather, the 1990’s was a period during which the decisional law was working itself out. Compare Costa v. Welch (In re Costa), 172 B.R. 954, 961-65 (Bankr.E.D.Cal.1994), and Franklin, 179 B.R. at 918 & 924, with Menk v. LaPaglia (In re Menk), 241 B.R. 896, 916 (9th Cir. BAP 1999), and Helbling & Klein, supra. In short, Selinger was plainly diligent.
Second, Beaty did not demonstrate prejudice. There is no indication that his ability to defend the discharge status of the debt to Selinger has been made more difficult by virtue of the passage of time. To the contrary, the Ninth Circuit’s Baldwm-Harmon doctrine suggests that probably nothing of a factual nature relating to the merits of Beaty’s fraud and willful and malicious conduct remains to be litigated. Baldwin v. Kilpatrick (In re Baldwin), 249 F.3d 912 (9th Cir.2001); Harmon v. Kobrin (In re Harmon), 250 F.3d 1240 (9th Cir.2001). And Beaty has in his answer apparently conceded the balance of the essential elements of an action under § 523(a)(3)(B).
Finally, Beaty bears considerable responsibility for the fact that this has dragged on for years. The Notice of Injunction that he filed in the state court in an effort to block judgment collection unambiguously misstated the law regarding the effect of the discharge when it said that: “[t]he effect of this Discharge of Debtor is equivalent to an automatic injunction against creditors from commencing or continuing any lawsuit, enforcement of any judgment, enforcement of any lien against property, or continuing any levy on property, including wages; or to take any action to [enjforce any such claim.” To the contrary, under black-letter law, the discharge injunction does not shield the debtor from actions on nondischargeable debt. Beaty may have hoped that Selinger would be bamboozled into abandoning the quest in the face of Beaty’s misstatement of the law, but it should be counted as self-inflicted delay that precludes him from complaining that it took Selinger too long to figure out that he was being conned.
*851In sum, I would assume (without deciding) that laches is available as a defense to § 523(a)(3)(B) actions and reverse the application of laches in this instance.