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Memorandum of Decision re Extension of Time for Appeal (In re Hand)In re No. 97-45863 TR WILLIAM HAND and SHERRY E. HAND Debtors. ___________________________/ FIRST NATIONAL MORTGAGE A.P. No. 97-4437 AT COMPANY, A California Chapter 7 Corporation Plaintiff, vs. SHERRY E. HAND Defendant. ___________________________/ MEMORANDUM OF DECISION On September 3, 1998, the Court took under submission plaintiff’s motion for an extension of time within which to file a notice of appeal from a judgment in favor of the defendant in a nondischargeability action. For the reasons stated below, the motion is denied.FACTS In the above-captioned adversary proceeding, plaintiff sought a nondischargeable judgment against defendant pursuant to 11 U.S.C. § 523(a)(2)(A). Trial was commenced on January 15, 1998. At the conclusion of the trial, after closing argument, the Court made an oral ruling that, although the plaintiff had established defendant’s fraudulent conduct, it had failed to establish that defendant received any benefit as a result of that conduct. The plaintiff requested an opportunity to brief the issue of what type of benefit is required for a judgment under 11 U.S.C. § 523(a)(2)(A) and what evidence had been presented to establish that issue. The Court granted the request.Thereafter, after reviewing the briefs filed by the parties’ counsel, the Court concluded that plaintiff had failed to establish that defendant benefitted from her misconduct as required by the applicable authorities. However, the Court noted that one exhibit, that had not been admitted into evidence, might have supported a finding on this issue. The Court ordered that the trial be reopened to permit this document to be offered into evidence on the condition that plaintiff pay defendant’s costs occasioned by the further proceedings. The reopened trial was conducted on May 14, 1998. However, at the reopened trial, plaintiff failed to properly authenticate the critical document or establish why its admission was not barred by the hearsay rule. Consequently, the Court issued an oral ruling in favor of defendant and directed defendant’s counsel to submit a proposed form of judgment in accordance with its ruling. On May 20, 1998, the defendant’s attorney sent a proposed form of judgment to Chris Seaman (“Seaman”), plaintiff’s trial attorney, for his approval or comments. David R. Sylva (“Sylva”), the name attorney in the firm, responded in writing on May 27, 1998, stating that he had ordered a transcript of the hearing and wished to review it before commenting on the proposed judgment. Defendant’s attorney phoned Sylva’s office several times thereafter, seeking a response with respect to the judgment. His calls were not returned, and he received no written response to his earlier inquiry with respect to the form of the judgment. On July 9, 1998, defendant’s attorney filed with the Court and served on Sylva a Declaration and Request For Entry of Judgment After Trial, which included a copy of the proposed form of judgment. The judgment was returned unsigned initially because it neither contained the signature of opposing counsel nor was there attached to it a proof of service evidencing service of the proposed form of judgment on plaintiff’s counsel as required by the Court’s local rules. Thereafter, on July 27, 1998, the proposed judgment was resubmitted with a proof of service. The proposed judgment was lodged to permit plaintiff to communicate any objections as to form to the Court. When no such objections were received, the order was signed and, on August 6, 1998, entered. On August 24, 1998, 18 days after the entry of the judgment, plaintiff filed a motion to extend the time for filing a notice of appeal based on excusable neglect. In support of its motion, plaintiff filed a declaration executed by Sylva. In his declaration, Sylva stated that the dischargeability action had been handled by Seaman who had “abruptly quit the practice of law in the interim between trial on this matter and entry of Judgment.” Sylva further stated that “[n]o other attorney in the office was directly handling the matter nor apprised of the short ten day period for appeal.” At the hearing on the motion, the Court questioned whether the definition of excusable neglect set forth in Pioneer Investment Services Co. v. Brunswick Associates Limited Partnership, 507 U.S. 380, 388-95 (1993), a case involving a late filed proof of claim in a chapter 11 case, would apply to a motion to extend the time for filing a notice of appeal. The parties were unable to assist the Court with respect to this issue. As a result, the Court took the motion under submission. DISCUSSION The first issue presented is whether the definition of excusable neglect set forth in Pioneer applies to a motion to extend the time for filing a notice of appeal. As discussed below in section 1, the Court concludes that it does. Therefore, the next issue presented is whether, under these standards, plaintiff’s motion should be granted. As discussed in section 2, the Court concludes that it should not.1. The Pioneer standards for excusable neglect apply to a motion for an extension of time to file a notice of appeal pursuant to Rule 8002(c). The deadline for filing a notice of appeal from an order or judgment of the bankruptcy court is ten days from the date of entry of the order or judgment. Fed. R. Bankr. P. 8002(a). However, a party may obtain an extension of time for filing a notice of appeal provided certain conditions are met. First, the extension may only be granted upon a showing of excusable neglect. Second, the motion must be made within twenty days of the expiration of the ten-day appeal period and may not extend the time for filing the notice of appeal beyond this additional twenty-day period. See Fed. R. Bankr. P. 8002(c). Rule 8002(c) states: 1. The bankruptcy judge may extend the time for filing the notice of appeal by any party, unless the judgment, order, or decree appealed from:
(B) authorizes the sale or lease of property or the use of cash collateral under § 363; (C) authorizes the obtaining of credit under § 364; (D) authorizes the assumption or assignment of an executory contract or unexpired lease under § 365; (E) approves a disclosure statement under § 1125; or (F) confirms a plan under § 943, § 1129, § 1225, or § 1325 of the Code. (2) A request to extend the time for filing a notice of appeal must be made by written motion filed before the time for filing a notice of appeal has expired, except that such a motion filed not later than 20 days after the expiration of the time for filing a notice of appeal may be granted upon a showing of excusable neglect. An extension of time for filing a notice of appeal may not exceed 20 days from the expiration of the time for filing a notice of appeal otherwise prescribed by this rule or 10 days from the date of entry of the order granting the motion, whichever is later. Defendant does not contend that plaintiff has failed to satisfy the second of these two factors. Furthermore, there is no dispute as to whether plaintiff’s failure to file a timely notice of appeal constitutes neglect. The only issue is whether plaintiff’s neglect is excusable. Traditionally, whether neglect is excusable has been determined by considering only the reason for the moving party’s conduct. See Pioneer, 507 U.S. at 384-85, (citing In re South Atl. Fin. Corp., 767 F.2d 814, 817 (11th Cir. 1985)); In re Sitzberger, 65 B.R. 256, 258 (Bankr. S.D. Cal. 1986). However, in Pioneer, the Supreme Court took a somewhat broader approach. The issue presented in Pioneer was whether a creditor’s failure to file a timely proof of claim in a chapter 11 case constituted excusable neglect pursuant to Rule 9006(b)(1) of the Federal Rules of Bankruptcy Procedure. See 507 U.S. at 382-83. In concluding that it did, the Supreme Court stated that the “determination is at bottom an equitable one, taking account of all relevant circumstances surrounding the party’s omission.” Id. at 395. The Supreme Court further stated that among the circumstances to be considered were: “the danger of prejudice to the debtor, the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith.” Id. The Supreme Court noted that the purpose of the rule was to “deter creditors or other parties from freely ignoring court-ordered deadlines in the hopes of winning a permissive reprieve....” Id. At the hearing on the motion, the Court questioned whether the the Pioneer definition of excusable neglect should be applied to a determination of this issue in the context of a motion to extend the time for filing a notice of appeal pursuant to Rule 8002(c). The parties were unable to cite any relevant authority. However, having researched the issue, the Court has discovered that the Ninth Circuit Bankruptcy Appellate Panel has addressed this issue and concluded that the Pioneer definition does apply. See In re Cahn, 188 B.R. 627, 631-32 (Bankr. 9th Cir. 1995). Because the Ninth Circuit Court of Appeals had applied the Pioneer definition of excusable neglect to a case involving Rule 4(a)(5) of the Federal Rules of Appellate Procedure and because “[b]ankruptcy rules are generally construed in the same manner as the Federal Rules of Appellate Procedure...,” the Panel concluded that Rule 8002 should be construed in the same manner as Rule 4(a)(5). See id. This decision constitutes controlling authority and, in any event, appears correctly decided. Therefore, this Court need only examine whether, under the definition set forth in Pioneer, plaintiff’s neglect is excusable. 2. Plaintiff’s neglect is not excusable according to the definition established in Pioneer. As noted above, the factors to be considered in determining whether a party’s neglect is excusable include: (a) the length of the delay and its impact on the judicial proceedings, (b) the reason for the delay, including whether it was within the moving party’s control, (c) the potential for prejudice to the debtor, and (d) the moving party’s good or bad faith. Each of the factors will be considered under the facts of the instant case. (a) The moving party’s good or bad faith. The facts do not support a finding that plaintiff acted in bad faith by failing to file a notice of appeal in a timely manner.
As noted above, plaintiff filed its motion to extend only eight days after the deadline for filing its notice of appeal. This delay may be seen either as slight or substantial, depending on the context in which it is viewed. Viewed in the context of the procedure in which it occurred, the delay may appear significant. If the motion had been filed more than twenty days after the deadline, the Court would have been unable to grant it. On the other hand, although the appeal process inevitably delays the final resolution of a legal dispute, the slight additional delay caused by a late filed notice of appeal does not contribute greatly to this effect. Moreover, the delay in concluding this adversary proceeding has no prejudicial effect on the underlying bankruptcy case. By contrast, in Pioneer, the late filed proof of claim had the potential to delay the conclusion of the bankruptcy case as a whole. In sum, the Court does not believe that this factor weighs heavily against granting the plaintiff’s motion.
As noted above, plaintiff’s excuse for the failure to file a timely notice of appeal is that its trial attorney--Seaman--ostensibly the only attorney in the office familiar with the case, abruptly left the practice of law. The name attorney of the firm further cites as excuse for plaintiff’s neglect his own unfamiliarity with bankruptcy appellate rules. It is well established that an attorney’s unfamiliarity with the law or rules does not constitute excusable neglect. See Pioneer, 507 U.S. at 392. Thus, the only question is whether Seaman’s having abruptly left the firm excuses plaintiff’s neglect. Under these facts, at least, the Court concludes that it does not. The precise date on which Seaman left the firm is not stated. However, it is clear from the undisputed facts recited above that, by May 27, 1998, Sylva, the principal attorney in the firm, knew that the Court had ruled against the firm’s client and that a judgment in some form would be entered in the near future. More than two months elapsed before the judgment was entered. A copy of the proposed form of judgment was served on Sylva some time before it was signed and entered. Sylva had ample time after becoming aware that a judgment was imminent to familiarize himself with the facts and law of the case, to determine whether the client wished to appeal the judgment and to determine whether such an appeal would be in good faith. Sylva simply failed to use this time to his and to his client’s advantage. The neglect was clearly within his control. The Court cannot sanction such lax practice. (d) Prejudice to the Debtor. The “fresh start” that a debtor enjoys after discharge of her debts is a fundamental goal of the bankruptcy process. The debtor cites as prejudice caused by plaintiff’s delay in filing its notice of appeal the delay in her peaceful enjoyment of her “fresh start.” As noted above, the appeal process itself would occasion this delay. Nevertheless, an appeal from a trial court’s judgment is integral to the judicial process. The additional delay occasioned by a late filed notice of appeal does not significantly contribute to that overall delay. However, in the context of this proceeding, this prejudice cannot be ignored. Congress has provided a short deadline for filing adversary proceedings of this nature so that parties may resolve such claims promptly in order to obtain their “fresh start” if appropriate. While this proceeding was timely filed, its prosecution was more protracted than usual. As noted above, at the conclusion of the originally scheduled trial, the Court questioned whether plaintiff had established that the debtor received any benefit as a result of her misconduct. After taking the matter under submission and concluding that plaintiff had not, the Court gave plaintiff another opportunity to establish this element of plaintiff’s claim. Plaintiff failed to do so. In part, at least, this failure was avoidable: i.e., plaintiff presumably could have provided a witness capable of authenticating the critical document. CONCLUSION Plaintiff’s motion for an extension of time within which to file a notice of appeal is denied. In order to grant the motion, the Court must find that plaintiff’s failure to file a timely notice of appeal constitutes excusable neglect. In Pioneer, the Supreme Court identified the factors to be considered in determining excusable neglect. Having considered those factors under the facts of this case, the Court finds the plaintiff’s late filing inexcusable. The reason for the delay is simply inadequate and was fully within the plaintiff’s control. The debtor was prejudiced as a result of the delay but a postponement of her bankruptcy “fresh start.” Moreover, plaintiff has exhibited a pattern of slipshod practice in connection with this adversary proceeding that this Court is unwilling to condone by granting its motion. Counsel for defendant is directed to submit a proposed form of order in accordance with this decision.Dated: September 30, 1998 _______________________________ United States Bankruptcy Judge CANB DocumentsNorthern District of California |
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