Opinion
Case No. 11-52415 Adv. Pro. No. 11-2445
03-29-2013
In re: DAVID E. BARLOW and MARIA E. BARLOW, Debtors. HER, Inc., et al., Plaintiff, v. David E. Barlow, Defendant.
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
_______________
John E. Hoffman, Jr.
United States Bankruptcy Judge
Chapter 7
Judge Hoffman
OPINION AND ORDER GRANTING
MOTION TO EXTEND TIME TO APPEAL
This matter is before the Court on the motion ("Motion") (Doc. 29) of David E. Barlow ("Mr. Barlow"), the defendant in this adversary proceeding and the debtor in the associated bankruptcy case, for an order extending the time within which he may file a notice of appeal of the Court's order granting summary judgment against him and in favor of HER, Inc.; Real Living, Inc.; Harley E. Rouda, Jr.; Harley E. Rouda, Sr.; and Kaira Sturdivant Rouda (collectively, "Plaintiffs") on their dischargeability complaint brought under 11 U.S.C. § 523(a)(6). The Plaintiffs filed a response in opposition to the Motion. ("Response") (Doc. 31).
I. Jurisdiction
The Court has jurisdiction to hear and determine this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. This is a core proceeding. 28 U.S.C. § 157(b)(2)(A).
II. Procedural Background
The Plaintiffs filed the complaint initiating this adversary proceeding ("Complaint") (Doc. 1) on October 6, 2011. Mr. Barlow filed an answer, and the parties agreed to submit to the Court, by way of a summary judgment motion, the issue of whether a judgment entered by the United States District Court for the Southern District of Ohio ("District Court"), awarding statutory damages to the Plaintiffs, had preclusive effect under 11 U.S.C. § 523(a)(2) and (a)(6), and whether the District Court judgment contained the findings of fact necessary for this Court to find, as a matter of law, that Mr. Barlow's conduct in violating the Anticybersquatting Consumer Protection Act constituted fraud, misrepresentation or a willful and malicious injury.
The Plaintiffs filed their summary judgment motion, Mr. Barlow responded, and the Plaintiffs filed a reply. On September 26, 2012, the Court entered its memorandum opinion on Plaintiffs' motion for summary judgment (Doc. 17), finding that the District Court's judgment consisting of statutory damages in the amount of $120,000, attorneys' fees in the amount of $172,356, and costs incurred was excepted from discharge under § 523(a)(6). A judgment entry ("Judgment Entry") (Doc. 18) memorializing the Court's ruling was also entered September 26, 2012.
The Court's ruling on the summary judgment motion did not, however, dispose of the entire adversary proceeding. There remained for adjudication Count Two of the Complaint, which sought a denial of Mr. Barlow's discharge under § 727(a)(4) on the basis that he had committed a false oath in preparing and signing his bankruptcy petition. Complaint at 8-9. On November 20, 2012, the Plaintiffs filed a motion to dismiss Count Two of the Complaint. There were no responses filed to the motion and on December 14, 2012 the Court entered an order dismissing Count Two, thus disposing of the adversary proceeding in its entirety.
Federal Rule of Civil Procedure 54(b), made applicable to adversary proceedings by Federal Rule of Bankruptcy Procedure 7054, provides that:
When an action presents more than one claim for relief—whether as a claim, counterclaim, crossclaim, or third-party claim—or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to an of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.
On January 17, 2013, Mr. Barlow filed the Motion, in which he seeks additional time to file an appeal from the Judgment Entry as well as the order of December 14, 2012 disposing of the remaining issues in the adversary proceeding. Mr. Barlow asserts that he is entitled to additional time on the basis of excusable neglect.
According to the Motion, Mr. Barlow lost his home through foreclosure in late 2012, and as a result, he moved from Franklin County to Delaware County, Ohio. When he moved, he failed to notify counsel or the Court of his new address. Although he filed a change of address notification with the post office, it took three weeks or longer for mail to be forwarded to his new address. In addition, in late November 2012, Mr. Barlow's wife suffered a heart attack requiring emergency surgery and hospitalization. Due to his concern over his wife's condition, and through the intervening holidays, Mr. Barlow did not stay in touch with counsel, and was unaware of the Court's ruling. Upon receiving notice from counsel regarding the Court's ruling, Mr. Barlow contacted counsel and expressed his wish to appeal the Court's ruling.
In their Response, the Plaintiffs argue that Mr. Barlow's neglect of the appeal deadline was not excusable, particularly in view of the fact that Mr. Barlow had been in continuous litigation with the Plaintiffs since 2006. They further argue that his failure to remain in contact with his counsel was negligent and not excusable given that he was aware that matters were pending in his case and that any delay in the Plaintiffs' ability to enforce their judgment would be prejudicial.
III. Legal Analysis
Federal Rule of Bankruptcy Procedure 8002(a) states that a "notice of appeal shall be filed with the clerk within 14 days of the date of the entry of the judgment, order, or decree appealed from." If a party misses that deadline, Rule 8002(c)(2) provides that:
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 21 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 21 days from the expiration of the time for filing a notice of appeal otherwiseFed. R. Bankr. P. 8002(c)(2).
prescribed by this rule or 14 days from the date of entry of the order granting the motion, whichever is later.
Here, the time period for filing a notice of appeal of the Judgment Entry expired on December 28, 2012. Mr. Barlow's Motion was filed on January 17, 2013, within 21 days of that deadline, so the Court must determine whether the reasons for the delay rise to the level of excusable neglect.
The "excusable neglect" standard was addressed by the Supreme Court in Pioneer Investment Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380 (1993). There the neglect claimed to be "excusable" arose in the context of a late filed proof of claim and under an analysis of Federal Rule of Bankruptcy Procedure 9006. The Supreme Court ruled that a court's determination of "excusable neglect" under Rule 9006(b) requires an equitable inquiry, and a "flexible understanding" in accord with the policies underlying the Bankruptcy Code and Rules. Id. at 389. "[B]y empowering the courts to accept late filings 'where the failure to act was the result of excusable neglect,' Rule 9006(b)(1), Congress plainly contemplated that the courts would be permitted, where appropriate, to accept late filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstances beyond the party's control." Id. at 388. The Pioneer court concluded that "neglect" "encompasses both simple, faultless omissions to act and, more commonly, omissions caused by carelessness." Id. at 388. The court also noted that "excusable neglect" is "a somewhat 'elastic concept,'" id. at 392, the determination of which "is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission," including the danger of prejudice, the length of delay and its potential impact on the 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. at 395.
The Sixth Circuit has held that the Pioneer standard of "excusable neglect" also applies to motions to extend the time to file an appeal under Rule 8002(c). See Duncan v. Washington, 25 F.3d 1047 (table), 1994 WL 232397, at *3 (6th Cir. May 27, 1994) ("Although the decision in Pioneer involved Bankruptcy Rule 9006, the Court's reasoning applies to other rules creating an 'excusable neglect' exception to time limits."); Labair v. Mayville Feed & Grain, Inc. (In re Mayville Feed & Grain, Inc.), 996 F.2d 1215 (table), 1993 WL 213684, at *1 (6th Cir. June 17, 1993). The Sixth Circuit's Bankruptcy Appellate Panel ("BAP") has likewise held that Pioneer applies to Rule 8002(c) determinations. See Schmidt v. Boggs (In re Boggs), 246 B.R. 265, 268 (6th Cir. B.A.P. 2000); HML II, Inc. v. Ginley (In re HML II, Inc.), 234 B.R. 67, 71 (6th Cir. B.A.P. 1999); Belfance v. Black River Petroleum, Inc. (In re Hess), 209 B.R. 79, 82 (6th Cir. B.A.P. 1997).
The burden of establishing excusable neglect rests with the movant. See In re Heartland Mem'l Hosp., LLC, 473 B.R. 897, 901 (Bankr. N.D. Ind. 2012). "Inadvertence, ignorance of the rules or mistakes in construing the rules do not usually rise to the level of excusable neglect." Id. (quoting Land O'Lakes Farmland Feed LLC v. Gehl (In re Gehl), 324 B.R. 756, 759 (Bankr. N.D. Iowa 2005)). Situations involving "law office upheaval" of one kind or another are also generally insufficient to meet the excusable neglect standard. Allied Domecq Retailing USA v. Schultz (In re Schultz), 254 B.R. 149, 154 (6th Cir. B.A.P. 2000). In addition, the burden of any delay in the mail is upon the party seeking to show that its neglect is excusable, Mayville, at *2, citing Walker v. Bank of Cadiz (In re LBL Sports Center, Inc.), 684 F.2d 410, 413 (6th Cir. 1982). Further, "a party has an independent duty to keep informed, and a third party's failure to inform a party of entry of final judgment is not grounds for excusable neglect." Id.
As the decisions cited above make clear, the burden of demonstrating excusable neglect can be "quite onerous." Heartland Mem'l Hosp., 473 B.R. at 901 (quoting Land O'Lakes Farmland Feed LLC v. Gehl (In re Gehl), 324 B.R. 756, 759 (Bankr. N.D. Iowa 2005)). That said, there is also case law within this circuit holding that serious illness of a party or counsel may constitute excusable neglect. In Bavely v. Powell (In re Baskett), 219 B.R. 754 (6th Cir. B.A.P. 1998), default judgment was entered against the defendant, who then moved to set aside the judgment and file an answer out of time. In his motion, counsel for the defendant asserted that he was recovering from heart by-pass surgery at the time the papers were received in his office and that his assistant had turned them over to another lawyer who never informed the movant of the deadlines. The bankruptcy court denied the motion. On appeal, the BAP concluded that, under the circumstances, counsel's failures, occasioned because he "had been hospitalized and was recovering from major surgery during the time he was required to respond to the complaint," id. at 760, did not rise to the level of culpable conduct and that counsel had not displayed either an intent to thwart judicial proceedings or a reckless disregard for the effect of his conduct on the proceedings. See id. Finding that excusable neglect existed, the BAP reversed the bankruptcy court.
In Schultz, the debtor moved for an extension of time to file an appeal of an order denying his discharge. The bankruptcy court denied the request for an extension and the debtor appealed. Counsel argued that his failure to meet the initial appeal deadline was the result of excusable neglect caused by the fact that his wife had been diagnosed for the second time with ovarian cancer, was undergoing chemotherapy and was hospitalized several times between February and May 2000, including a hospitalization beginning the day before entry of the discharge judgment was entered. As sole caregiver for his wife, counsel accompanied her to medical appointments and chemotherapy treatments and administered her medications. Due to the amount of care required for his wife, he devoted less than full-time hours to his law practice. The BAP distinguished those cases where failure to meet a deadline resulted from the illness of a lawyer's employee, or with the lawyer's preoccupation with other cases, or other cases dealing with issues relating to the lawyer's practice. See Schultz, 254 B.R. at 154. In concluding that counsel's circumstances constituted excusable neglect, the BAP reasoned:
This Debtor's attorney does not allege that his untimely filing of the motion for an extension was due to a misunderstanding of the Rules, lack of office support staff, or any other problems inherent in the running of his law office. Instead he maintains that he was suddenly and unexpectedly preoccupied with the physical and psychological care of his extremely ill wife during the period in question. Other courts have determined that excusable neglect includes sudden death, disability or illness of counsel or the party. See, e.g., In re Mizisin, 165 B.R. at 835 (citing Evans v. Jones, 366 F.2d 772 (4th Cir. 1966)). Because of the severity of the illness at issue and the close familial relationship between a husband and wife, the facts of this case are analogous to a situation in which the attorney is the one who is seriously ill.Id. The BAP also faulted the bankruptcy court because it "did not consider the impact of the recent trauma of the spouse's illness upon the attorney's ability to focus upon this appeal[.]" Id. at 155.
Here, the Court is presented with circumstances akin to those described in Schultz. While it is clear that Mr. Barlow had an obligation to keep the Court and counsel apprised of his whereabouts, and that he was also charged with knowledge of his case, those responsibilities do not outweigh the fact that during the critical period when he should have been in touch with counsel to discuss filing a notice of appeal, he was instead engaged in dealing with his wife's serious illness. The Court finds that this circumstance was not "within the reasonable control of the movant," Pioneer, 507 U.S. at 395, and that it constitutes excusable neglect for purposes of Rule 8002(c). Finally the Court finds that the delay resulting from Mr. Barlow's failure to file a timely notice of appeal did not result in undue prejudice to the Plaintiffs.
IV. Conclusion
Accordingly, the Motion is GRANTED. Pursuant to Federal Rule Bankruptcy Procedure 8002(c)(2), Mr. Barlow shall have 14 days from the date of entry of this order within which to file a notice of appeal.
IT IS SO ORDERED. Copies to: Bradley K. Baker, Attorney for Plaintiffs
Michael T. Gunner, Attorney for Defendant