Summary
holding that dismissal was warranted when counsel logged in 10 minutes before deadline and attempted to file complaint in PACER rather than CM/ECF
Summary of this case from State Bank of S. Utah v. BealOpinion
NOT FOR PUBLICATION
Argued and Submitted at Pasadena, California: May 20, 2010
Appeal from the United States Bankruptcy Court for the Central District of California. Bk. No. 09-22372-EMR, Adv. Proc. No. 09-2009-EMR. Honorable Ernest M. Robles, Bankruptcy Judge, Presiding.
Before DUNN, MARKELL and JAROSLOVSKY, [ Bankruptcy Judges.
Hon. Alan Jaroslovsky, U.S. Bankruptcy Judge for the Northern District of California, sitting by designation.
This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. See 9th Cir. BAP Rule 8013-1.
Sep Kamjoo (" Kamjoo") appeals the bankruptcy court's decision to dismiss as untimely his complaint objecting to the discharge of the debtor, Nicole Marie Wright, under § 727(a), and seeking to except the debtor's debt to Kamjoo from discharge under § 523(a)(2) and (a)(6) (" complaint"). We AFFIRM.
Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. § § 101-1532, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
FACTS
The debtor filed her chapter 7 petition on May 20, 2009. She scheduled Kamjoo as a general unsecured creditor. The clerk of the bankruptcy court sent to creditors Official Form 9A, " Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines" (" notice"). The notice listed August 17, 2009 as the deadline to file complaints to determine the dischargeability of debts and to object to the debtor's discharge. The certificate of service for the notice listed Kamjoo among the creditors served with the notice.
Kamjoo's attorney did not file a motion to extend the time to file the complaint prior to the deadline. Ten minutes before midnight on August 17, 2009, Kamjoo's attorney attempted to file the complaint electronically. However, due to technical difficulties, Kamjoo's attorney did not electronically file the complaint until August 18, 2009, at 12:09 a.m.
The debtor moved to dismiss the complaint as untimely under Rules 4004(a) and 4007(c)(" motion"). Kamjoo opposed the motion, contending that a technical failure prevented him from timely filing the complaint. He further argued that, in light of her " dishonesty and unscrupulous acts, " the debtor was not entitled to a discharge of her debts. Given these circumstances, Kamjoo asked that the bankruptcy court use its authority under § 105(a) to apply " equitable principles" to allow the complaint to proceed.
The notice prefacing the motion stated that the motion would be based on, among other things, " such supplemental declarations, affidavits, . . . [and] such oral and documentary evidence as may be presented at the hearing of the application." Notice to the Motion, ii at 10-13. The debtor served the motion, with the notice, on Kamjoo's attorney on September 15, 2009, forty-two days before the hearing.
Section 105(a) provides: " The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process."
Before the October 27, 2009 hearing on the motion, the bankruptcy court issued a tentative ruling in the debtor's favor. Relying on an earlier BAP decision, Schunck v. Santos (In re Santos), 112 B.R. 1001 (9th Cir. BAP 1990), the bankruptcy court determined that neither equitable tolling nor equitable estoppel could be applied to preserve the claims stated in the complaint once the deadline had expired.
The BAP in Santos determined that both doctrines were at odds with the procedural purposes of Rules 4004(a) and 4007(c). Id . at 1006-08. " Any application of equitable doctrines[, ]" the BAP reasoned, " must be consistent with the language and purpose of [Rules 4004(a) and 4007(c)]." Id . at 1009. The BAP noted that both doctrines provide a plaintiff relief from deadlines because certain circumstances prevented him or her from timely initiating an action. See id. at 1006-08. The BAP explained that Rules 4004(a) and 4007(c) plainly establish, however, a specific limitations period and a specific procedure by which to extend the time to file a complaint under § § 523(a) and 727(a). Id . Because equitable tolling was contrary to the plain language of Rules 4004(a) and 4007(c), the BAP concluded, it could not be applied to allow an untimely complaint to proceed. Id . at 1006-07. The BAP also concluded that, under the facts of the case before it, equitable estoppel could not be applied because the creditor could not rely on the debtor's conduct in forbearing from filing a complaint when the rules provided that the creditor must move to extend the deadline before it expires. Id . at 1007.
The bankruptcy court noted that Kamjoo did not specify which equitable principle it should apply.
Equitable tolling holds that the limitations period does not run while the plaintiff is unaware of his or her claim(s) for relief through no fault of his or her own. See id. at 1006-07. The BAP determined that Rules 4004(a) and 4007(c) clearly state, however, that the 60-day limitations period begins to run on the date of the § 341(a) meeting. Id.
In light of the BAP's holding in Santos, the bankruptcy court summarily declined to apply equitable tolling to relieve Kamjoo from the untimeliness of the complaint. It also declined to apply equitable estoppel because Kamjoo made no assertions that the debtor spoke or acted in a way that caused him to forbear from timely filing the complaint.
The bankruptcy court further determined that Kamjoo was not prevented from timely filing his complaint by a technical failure as defined under § 3-12 of the CM/ECF Procedures (" CM/ECF Procedure § 3-12"). The bankruptcy court observed that the " technical problem" Kamjoo experienced was probably due to his attempt to file the complaint in PACER, the bankruptcy court's electronic docket viewing system, instead of in CM/ECF, the bankruptcy court's electronic filing system. However, the bankruptcy court concluded that the exact reason for Kamjoo's difficulties did not matter, as whatever caused them was not system-wide.
The CM/ECF Procedures are incorporated into the Local Rules of the Central District of California, and thus are binding on Appellant. See Bankr. C.D. Cal. R. 5005-4(a)(" all papers submitted in any case or proceeding must be filed electronically, signed or verified by electronic means in compliance with the court's CM/ECF Procedures contained in the Court Manual available from the clerk and on the court's website."). The Court Manual containing the CM/ECF Procedures is available at http://www.cacb.uscourts.gov/cacb/Publications.nsf/New%20Desk%20R eference%20Manual/2C7241F8300C35C48825752A002B211D/$FILE/CtManual_Sec3.pdf.
CM/ECF is the bankruptcy court's electronic filing system, which allows attorneys to file pleadings and other papers electronically with the bankruptcy court. PACER is the bankruptcy court's electronic docket viewing system, which allows attorneys and other parties to view documents filed with the bankruptcy court electronically.
At the hearing, Kamjoo's attorney asked that the bankruptcy court continue the hearing so that he could obtain records demonstrating that he was logged into CM/ECF and not PACER. The bankruptcy court declined to do so because whether Kamjoo's attorney had been logged into CM/ECF or PACER was immaterial, as the untimeliness of the complaint was not due to a system-wide technical failure. The bankruptcy court adopted its tentative ruling at the hearing and incorporated it in its order entered on November 5, 2009.
Kamjoo timely appealed the bankruptcy court's order.
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. § 1334 and 157(b)(2)(I) and (J). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Whether the bankruptcy court erred in dismissing Kamjoo's complaint as untimely.
STANDARDS OF REVIEW
We review the bankruptcy court's interpretation of the Rules de novo and its factual findings for clear error. Moody v. Bucknum (In re Bucknum), 951 F.2d 204, 206 (9th Cir. 1991). We accept the bankruptcy court's factual findings unless we have a definite and firm conviction that a mistake has been committed. Aalfs v. Wirum (In re Straightline Invs., Inc.), 525 F.3d 870, 876 (9th Cir. 2008).
A motion to dismiss under Fed.R.Civ.P. 12(b)(6) may be treated as a motion for summary judgment if matters outside the pleadings are submitted. Jacobson v. AEG Capital Corp., 50 F.3d 1493, 1496 (9th Cir. 1995). We review de novo summary judgment orders. Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001). Viewing the evidence in the light most favorable to the non-moving party, we must determine whether any genuine issues of material fact exist and whether the bankruptcy court correctly applied the relevant substantive law. Id.
This appeal appears to present mixed questions of law and fact because the primary facts and rules of law are undisputed, but the question is whether the bankruptcy court correctly applied the relevant procedural rules (i.e., Rules 4004(a) and 4007(c)) to the facts, as gleaned from the evidence presented. See, e.g., Murray v. Bammer (In re Bammer), 131 F.3d 788, 792 (9th Cir. 1997). We review de novo mixed questions of law and fact because " they require consideration of legal concepts and the exercise of judgment about the values that animate legal principles." Id.
DISCUSSION
Kamjoo advances two main arguments in support of his appeal. He first asserts that CM/ECF Procedure § 3-12 provides him relief from the deadline when a technical failure delayed the filing of the complaint. He next contends that a bankruptcy court may use its equitable powers under § 105(a) to allow an untimely complaint to proceed when extraordinary circumstances delayed its filing. Based on our review of the applicable law and procedures, we conclude that both arguments lack merit.
A. CM/ECF Procedure § 3-12
The bankruptcy court concluded that Kamjoo did not experience a " technical failure" as defined by CM/ECF Procedure § 3-12 when he attempted to file the complaint. Reviewing e-mails between Kamjoo's attorney and ECF Support Desk representatives, the bankruptcy court determined that Kamjoo's attorney untimely filed the complaint likely because he tried to file it in PACER. On appeal, Kamjoo insists that his attorney experienced a technical failure within the meaning of CM/ECF Procedure § 3-12 when filing the complaint.
Kamjoo provided copies of the e-mails as exhibits to his opposition to the motion (" opposition").
CM/ECF Procedure § 3-12 provides, in relevant part:
An [sic] CM/ECF User whose filing is made untimely as a result of a technical failure may seek appropriate relief from the court.
(a) CM/ECF Outage Procedures. In the event that the Court is unable to accept electronic filings due to a scheduled or unscheduled failure or outage of CM/ECF (an " Outage"), the option of filing papers manually at the filing window always remains available and should be utilized whenever it is essential that a particular document be filed by a particular date.
In a footnote, it is noted that an " outage" refers to
an instance in which CM/ECF is not functional and does not refer to an instance in which your office or your internet service provider is having technical difficulties and you are therefore unable to accomplish an electronic filing. If there is an Outage within the meaning of these guidelines, you will receive an email to this effect from the ECF Help Desk, advising you that the system is unavailable. (Emphasis in original.)
Based on our review of the record, we conclude that the bankruptcy court did not err in determining that Kamjoo did not experience a technical failure as defined by CM/ECF Procedure § 3-12.
In his first e-mail to the ECF Support Desk, Kamjoo claimed that he did not see the option to file a complaint on the screen. A representative from the ECF Support Desk explained that if Kamjoo's attorney did not see the selection, " Bankruptcy and Adversary Events, " at the top menu bar, he was in PACER. Kamjoo's attorney responded that, though he had logged into CM/ECF, the selection did not appear. He followed up with another e-mail to the ECF Support Desk, asking whether the system had a record of an error. Another representative from the ECF Support Desk noted that Kamjoo's attorney did not state that he received an error message. She surmised that, based on his statements, Kamjoo's attorney had been logged into PACER, which explained why he did not see the selection.
The CM/ECF Procedures defines a " technical failure" or an " outage" as an instance in which CM/ECF is not operational. Contrary to Kamjoo's assertion, it does not appear from the record that his attorney was prevented from filing the complaint because CM/ECF was not operational (i.e., experiencing an " outage"). Rather, as the e-mails reveal, the record tends to establish that the complaint was untimely because Kamjoo's attorney tried to file it in the wrong system. As the bankruptcy court noted at the hearing, a " technical failure" occurs when CM/ECF " is down, because of something that the court has done -- we had a situation not too long ago when we were trying to make some upgrades to the system [that] took everything down. So I think that's the type of scenario that we're talking about." Tr. of October 27, 2009 Hr'g, 2:1-4. A " technical failure" does not include " a situation where there's nothing wrong with the program per se . . . ." Tr. of October 27, 2009 Hr'g, 2:6-7. The bankruptcy court determined that the complaint was untimely filed because " [Kamjoo's attorney was] having an inability to log in." Tr. of October 27, 2009 Hr'g, 2:7-8.
We also reviewed General Order No. 08-02 of the United States District Court of the Central District of California. General Order No. 08-02 authorized electronic filing in the Central District of California.
We also point out that, in his declaration in support of the opposition, Kamjoo's attorney claimed that, when he tried to file the complaint, " PACER was having technical issues and would not allow [him] to go ahead with the filing." (Emphasis added.) Declaration of A. David Youssefyeh, 21:12-13 (Adv. Proc. docket no. 11). We further note that it was stated in the opposition that Kamjoo's attorney " was having technical problems with PACER, " that he had sent an e-mail to the ECF Support Desk regarding " the problems he was having with PACER" and he finally managed to proceed with the filing of the complaint " [a]fter logging in and out of PACER several times[.]" Opposition, 3:27-28, 4:4-5, 4:6 (Adv. Proc. docket no. 11). (Emphasis added.)
Kamjoo moreover did not provide any evidence at the hearing to demonstrate that the untimely filing of the complaint was due to a technical failure, despite having forty-two days notice to do so. He did not raise any genuine issue of material fact to cause the bankruptcy court to reevaluate the evidence and adjust its determinations.
Given these circumstances, we conclude that the bankruptcy court did not err in determining that Kamjoo did not experience a technical failure as defined by CM/ECF Procedure § 3-12.
B. Equitable Powers under Section 105(a)
The bankruptcy court declined to apply equitable principles under its § 105(a) authority to allow Kamjoo's untimely complaint to proceed. On appeal, Kamjoo contends that a bankruptcy court may use its equitable powers under § 105(a) to apply equitable tolling to allow an untimely complaint to proceed when a party has been prevented, by an " extraordinary circumstance, " from asserting his or her rights. Here, Kamjoo claims, the technical problem was an " extraordinary circumstance" that prevented him from timely filing the complaint.
Kamjoo further argues that the bankruptcy court should have considered the debtor's " dishonesty and unscrupulous acts" as an additional justification for using its equitable powers under § 105(a). Given her conduct, Kamjoo asserts, the debtor is not entitled to a " fresh start." To give the debtor her " fresh start, " he claims, would encourage others to use bankruptcy as a " tool to swindle legitimate [c]reditors." Appellant's Appendix [Opening Brief] at 10.
Kamjoo cannot avail himself of any equitable excuse for his failure to timely file his complaint, however, in light of prevailing Ninth Circuit authority. Generally, courts within the Ninth Circuit strictly construe Rules 4004(a) and 4007(c), which impose a 60-day time limit for filing complaints objecting to a debtor's discharge and the dischargeability of particular debts. See Classic Auto Refinishing, Inc. v. Marino (In re Marino), 37 F.3d 1354, 1358 (9th Cir. 1994); Anwiler v. Patchett (In re Anwiler), 958 F.2d 925, 927 (9th Cir. 1992); Jones v. Hill (In re Hill), 811 F.2d 484, 486-87 (9th Cir. 1987); Sam Michael Schreiber, M.D., Inc. v. Halstead (In re Halstead), 158 B.R. 485, 487 (9th Cir. BAP 1993). Courts in the Ninth Circuit have recognized, however, an exception to the 60-day time limit for " unique" or " extraordinary" circumstances. Kennerley, 995 F.2d at 147. The " extraordinary circumstances" exception applies to situations where the bankruptcy court " explicitly misleads a party" into untimely filing its complaint. Kennerley, 995 F.2d at 148 (citation omitted)(emphasis in original). Under such " extraordinary circumstances, " the bankruptcy court may use its equitable powers under § 105(a) to allow an untimely complaint to proceed. See Anwiler, 958 F.2d at 927 n.2, 929. " Absent action by the court that could have misled the creditor, there is no authority for finding 'extraordinary circumstances' that would allow for an untimely complaint to go forward." Classic Auto Refinishing, Inc. v. Marino (In re Marino), 143 B.R. 728, 733 (9th Cir. BAP 1992), aff'd 37 F.3d 1354 (9th Cir. 1994).
Rules 4004(a) provides, in relevant part: " In a chapter 7 liquidation case a complaint objecting to the debtor's discharge under § 727(a) of the Code shall be filed no later than 60 days after the first date set for the meeting of creditors under § 341(a). . . ."
Because the deadlines set by Rules 4004(a) and 4007(c) are identical, cases interpreting Rule 4007(c) apply in interpreting Rule 4004(a). Kontrick v. Ryan, 540 U.S. 443, 449 n.3, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004); Santos, 112 B.R. at 1004 n.2.
Although courts have indicated in dicta that there is an exception to the 60-day time limit for " unique" or " extraordinary" circumstances, " the validity of the doctrine remains doubtful." Allred v. Kennerly (In re Kennerley), 995 F.2d 145, 147 (9th Cir. 1993)(citing Anwiler, 958 F.2d at 926-27 n.2).
Anwiler first set forth the " exceptional circumstances" exception. In Anwiler, the bankruptcy court issued to creditors two notices that listed conflicting deadlines to file complaints under § 523(c) and § 727(a). The Ninth Circuit determined that if a party reasonably relied to its detriment on the bankruptcy court's conflicting notices, the bankruptcy court could use its equitable powers under § 105(a) to allow an untimely complaint to proceed. Id . at 926-29.
Here, nothing in the record shows that the bankruptcy court acted in a way that misled Kamjoo into filing his complaint the day after the deadline. The notice clearly set forth the deadline to file complaints under § § 523(c) and 727(a). Kamjoo has not alleged that the bankruptcy court or its clerk's office confused him; he simply did not timely file his complaint. Because Kamjoo fails to demonstrate that the " extraordinary circumstances" exception applies, we conclude that the bankruptcy court did not err in declining to use its § 105(a) authority to apply equitable principles to allow the untimely complaint to proceed.
Moreover, as the bankruptcy court pointed out, the debtor's alleged " dishonesty and unscrupulous acts" were unproven and could not provide a basis for excusing the untimely filing of Kamjoo's complaint. In addition, equitable principles, such as equitable tolling, do not apply to relieve Kamjoo from the untimeliness of the complaint. As the BAP determined in Santos, equitable tolling cannot be applied to allow an untimely complaint to proceed as it is contrary to the procedural purposes plainly stated in Rules 4004(a) and 4007(c). The bankruptcy court did not err in declining to use its § 105(a) authority to relieve Kamjoo from the consequences of failing to file his complaint timely.
CONCLUSION
We sympathize with the frustration of Kamjoo's counsel when he encountered technical difficulties in filing the complaint. We believe, however, that Kamjoo's attorney acted unwisely in attempting to file the complaint ten minutes before the deadline. By waiting until the last minute to file the complaint, Kamjoo ran the risk of encountering technical problems that might prevent his timely filing the complaint. " Deadlines may lead to unwelcome results, but they prompt parties to act and they produce finality." Taylor v. Freeland & Kronz, 503 U.S. 638, 643, 112 S.Ct. 1644, 118 L.Ed.2d 280 (1992). See also Merenda v. Brown (In re Brown), 102 B.R. 187, 190 (9th Cir. BAP 1989)(" While application of the relatively short 60 day time limitation for filing nondischargeability complaints may lead to harsh results, there is a well recognized purpose and need to allow both debtors and creditors to know which debts may be excepted from discharge, and thereby allow all participants within the bankruptcy proceedings to make better informed decisions early in the proceedings.")(citation and quotation marks omitted). Because we conclude that the bankruptcy court did not err in dismissing the complaint as untimely, we AFFIRM.
The bankruptcy court treated the motion, in effect, as a motion for summary judgment on the affirmative defense of Kamjoo's failure to file the complaint timely.
Equitable estoppel provides the plaintiff relief from the deadline when he or she reasonably relied on the defendant's words or conduct in refraining from timely filing suit. The BAP determined that Rules 4004(a), 4007(c) and 9006(b)(3) clearly provide, however, that only the court may provide relief from the deadline upon a motion filed before the deadline. Id . at 1007-08.
We note that, under Section II, Subsection S, " Notice of CM/ECF Unavailability, " a " Notice of CM/ECF Unavailability" is defined as " a Public Notice from the clerk of the court regarding scheduled maintenance or other issues that make the CM/ECF system unavailable to CM/ECF Users." Under Section IV, Subsection M, " Technical Failures, " if a CM/ECF User is unable to file a document electronically, he or she immediately must contact the ECF Support Desk if a " Notice of CM/ECF Unavailability" has not been posted on the CM/ECF website. We believe that General Order No. 08-02 further reinforces the definition of a " technical failure" as set forth under CM/ECF Procedure § 3-12.
Rule 4007(c) provides, in relevant part: " Except as provided in subdivision (d), a complaint to determine the dischargeability of a debt under § 523(c) shall be filed no later than 60 days after the first date set for the meeting of creditors under § 341(a). . . ."