In re Ateco Inc.

529 B.R. 298

In re: Ateco Inc, Debtor(s).

Case No.: 1:10–bk–22623–MT

United States Bankruptcy Court, C.D. California, San Fernando Valley Division .

Signed April 14, 2015

Steven J. Krause, Ananda & Krause, Westlake Village, CA, for Debtor.

Katherine Bunker, Los Angeles, CA, for U.S. Trustee.

MEMORANDUM OF DECISION RE REMAND FROM THE DISTRICT COURT FOR THE LIMITED DETERMINATION OF EXCUSABLE NEGLECT UNDER FED. R. BANKR. P. 8002(d)(1)(B)

[No hearing required]

Maureen A. Tighe, United States Bankruptcy Judge

On April 9, 2014, the Court issued its Memorandum of Decision re Trial on (1) Validity of Lien; and (2) Disallowance of Claim (the “Trial Memorandum”), finding after a full trial on the merits that John Hebb (“Hebb”) was not a creditor of Debtor's bankruptcy estate (bankr.doc. no. 356). An Order Sustaining Debtor's Objection to Hebb's Claim was entered on the bankruptcy docket (no. 357), and a Partial Judgment in favor of Debtor was entered on the adversary docket (no. 115).

On April 25, 2014, at 12:02 a.m., Hebb filed a Motion for New Trial (the “New Trial Motion”). Under Fed. R. Bankr.P. 9023, a motion for a new trial must be filed no later than 14 days after entry of judgment. A timely motion for a new trial will toll the time for appeal until “the entry of the order disposing of the last such motion outstanding.” Fed. R. Bankr.P. 8002(b)(1)(C). Hebb's New Trial Motion was filed 15 days after judgment was entered, and thus did not toll the appeal deadline. Nevertheless, on May 6, 2014, Hebb filed a Notice of Appeal to the U.S. District Court (bankr.doc. no. 380).

On May 7, 2014, Hebb filed a Motion to Deem New Trial Motion Timely Filed (the “Timeliness Motion”), in which he argued that he could not file his New Trial Motion on time using the recommended internet browser due to CM/ECF technical failures (bankr.doc. no. 384). On that same day, Hebb also filed a Motion to Extend Time to Appeal under Rule 8002(c) (the “Motion to Extend”). The Court entered an order granting the Timeliness Motion on May 9, 2014 because the New Trial Motion “was late by solely a few minutes and, as such, there is no prejudice to Debtor.” [bankr. doc. no. 395 at 2.] The Court then denied the Motion to Extend as moot.

Reviewing the appeal, the District Court explained that “a court may not enlarge the time for taking action under Rule[ ] ... 9023 [which governs timing for a new trial motion].” Fed. R. Bankr.P. 9006(b)(2). Accordingly, the District Court found that the Court lacked authority to deem Hebb's New Trial Motion timely filed, even if it found there was sufficient justification for doing so. See In re Se. Bank Corp., 97 F.3d 476, 478 (11th Cir.1996) (citing 9006(b)(2) to conclude that “the bankruptcy court was without jurisdiction to grant [a] motion for rehearing” when the motion was untimely filed under Rule 9023 ); see also In re Harper, 489 B.R. 251, 260 (Bankr.N.D.Ga.2013) (declining to accept late filing barred by rule 9006 even though the filing was “two minutes and forty-four seconds late” due to a computer error). As Hebb's New Trial Motion was untimely, it could not toll the time for appeal, and Hebb's May 6, 2014 Notice of Appeal was also untimely.

Bankruptcy courts have discretion to grant extensions for appeal “within 21 days after” the time for appeal has expired upon a party's motion and showing of excusable neglect. Fed. R. Bankr.P. 8002(d)(1)(B). Hebb's motion for extension of time under Rule 8002(c)(2) is timely in that it was filed within 21 days after expiration of the April 24, 2014 deadline to file a notice of appeal. The District Court remanded the matter for the limited purpose determining whether Hebb has met his burden of establishing “excusable neglect.”

Standard

Fed. R. Bankr.P. 8002(a) provides that, subject to certain exceptions not applicable here, a notice of appeal must be filed with the bankruptcy clerk within fourteen (14) days after the entry of judgment.

Rule 8002(d) provides for an extension of the fourteen (14) day appeal period as follows:

(1) When the Time May be Extended. Except as provided in subdivision (d)(2), the bankruptcy court may extend the time to file a notice of appeal upon a party's motion that is filed:

(A) within the time prescribed by this rule; or

(B) within 21 days after that time, if the party shows excusable neglect.

...

(3) Time Limits on an Extension. No extension of time may exceed 21 days after the time prescribed by this rule, or 14 days after the order granting the motion to extend time is entered, whichever is later.

Fed. R. Bankr.P. 8002 (emphasis added).

Under Rule 8002(d)(1)(B), the Plaintiffs carry the burden of proving that the failure to file a timely appeal was the product of “excusable neglect.” See, e.g., In re Boyce, 2009 WL 4060093, at *1 (Bankr.E.D.Pa. Nov. 18, 2009) ; accord In re AMF Bowling Worldwide, Inc., 520 B.R. 185, 196 (Bankr.E.D.Va.2014).

The Supreme Court definitively construed Rule 9006(b)(1) in Pioneer Inv. Servs. Co. v. Brunswick Associates Ltd. P'ship, 507 U.S. 380, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993). Pioneer informs the application of excusable neglect in every court rule in which that term is used. The Ninth Circuit specifically has held that the Pioneer standard for Rule 9006(b)(1) is used in applying Rule 8002(d)(1)(B). See Pi n cay v. Andrews, 389 F.3d 853 (9th Cir.2004) (en banc); In re Zilog, 450 F.3d 996 (9th Cir.2006).

To determine whether a party's failure to meet a deadline constitutes “excusable neglect,” courts must apply a four-factor equitable test, examining: (1) the danger of prejudice to the opposing party; (2) the length of the delay and its potential impact on the proceedings; (3) the reason for the delay; and (4) whether the movant acted in good faith. Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253, 1261 (9th Cir.2010)citing, Pioneer, 507 U.S. at 395, 113 S.Ct. 1489. See also Briones v. Riviera Hotel & Casino, 116 F.3d 379, 381 (9th Cir.1997) (adopting the Pioneer test for consideration of Rule 60(b) motions).

Pioneer requires that the issue of excusable neglect be determined in the context of the particular case. Pincay, 389 F.3d at 859 (stating that the “question is whether there [is] enough in the context of [the] case to bring a determination of excusable neglect within the ... court's discretion”). The burden of presenting facts demonstrating excusable neglect is on the movant. Key Bar Investments v. Cahn, 188 B.R. 627, 631 (9th Cir. BAP 1995) ; In re Pac. Gas & Elec. Co., 311 B.R. 84, 89 (Bankr.N.D.Cal.2004).

Because Pioneer's four factors are non-exclusive, the court is permitted to take “account of all relevant circumstances surrounding the party's omission” in making an equitable determination. Pioneer, 507 U.S. at 395, 113 S.Ct. 1489 ; see Briones, 116 F.3d at 382 n. 2 (noting that “we will ordinarily examine all of the circumstances involved rather than holding that any single circumstance in isolation compels a particular result regardless of other factors”). Pioneer mandated a balancing test for divining excusable neglect, but Pioneer did not assign the weight to be accorded by the court to each of its non-exclusive factors in making an equitable determination. See Pincay, 389 F.3d at 860 (stating that “we leave the weighing of Pioneer's equitable factors to the discretion of the ... court in every case”); Lowry v. McDonnell Douglas Corp., 211 F.3d 457, 463 (8th Cir.2000) (stating that “[t]he four Pioneer factors do not carry equal weight”), cert. denied, 531 U.S. 929, 121 S.Ct. 309, 148 L.Ed.2d 248 (2000).

Given the policy favoring finality of bankruptcy orders, acceleration of appeals, and the like, which underlies the time periods and requirements of Rule 8002, however, the equitable standard adopted by Pioneer should, in this context, be rigorously applied so that excusable neglect is only infrequently found. 10–8002 Collier on Bankruptcy ¶ 8002.13 (16th Ed.).

Analysis

The danger of prejudice to the opposing party

According to Hebb, there is no perceivable prejudice to Debtor. Hebb bases this contention on the Court proceeding with the bankruptcy case i.e. setting dates for approval of the disclosure statement and plan confirmation, and the appeal of this Court's ruling that, among other things, Hebb waived whatever right to arbitration he may have had though his delays in this and the state court case. See Memorandum re Whether This Case Should be Dismissed, bankr. doc. no. 175. Hebb believes that there is no prejudice to Debtor because “the bankruptcy court ... will no doubt continue to so proceed despite this appeal as well.”

In examining the totality of the circumstances, Hebb's argument focuses on a tree while ignoring the thick, procedural forest in which he is standing. Debtor's reorganization was delayed for years due to Hebb's inability (or unwillingness) to follow directions from the Court or the procedures required by the Rules. The Court has described the details of Hebb's lack of attention to deadlines and procedural rules in the six memoranda issued in this case and the related adversary proceeding. While Hebb cannot be faulted for the initial delay caused by Debtor's bankruptcy, Hebb is responsible for his post-petition dilatory conduct. Relevant circumstances to be taken into consideration in the context of a Motion to Extend “may include the procedural context in which the extension is sought.” Dix v. Johnson (In re Dix), 95 B.R. 134, 137 (9th Cir. BAP 1988). Thus, a detailed recitation of the delays caused by Hebb in this case is warranted.¹

Hebb began his involvement with this bankruptcy by asserting a claim against Debtor and insisting that he had an enforceable pre-petition right to have the dispute resolved in arbitration. Hebb did not, however, file his Motion for Relief from Stay to proceed with the arbitration in state court until March 2, 2011, five months after the bankruptcy commenced. Although Debtor filed an objection to his claim, Hebb failed to respond to the objection....