Opinion
No. 13-03-13384 ML
August 8, 2003
R. "Trey" Arvizu, III, Roswell, NM., Attorney for Debtor.
Daniel E. Duncan, Albuquerque, NM., Attorney for Greenpoint.
ORDER DENYING MOTION TO STRIKE OBJECTIONS
THIS MATTER is before the Court on the Debtor's Motion to Strike Objections filed on July 8, 2003 by and through his counsel, Arvizu Law Office, P.C. (R. Trey Arvizu, III) (the "Motion to Strike"). Greenpoint Credit, LLC ("Greenpoint") filed a Response to Motion to Strike Objections on July 9, 2003 by and through its counsel, Duncan Law Offices, P.C. (Daniel E. Duncan) (the "Response"). Also on July 9, 2003, Greenpoint Credit filed an affidavit of Christa Adams, an employee of Daniel Law Offices, P.C. (the "Affidavit"). A hearing was held on July 31, 2003, at which time the Court took the matter under advisement. After considering the pleadings, evidence, and arguments of counsel, the Court will deny the Motion to Strike and in that regard the Court finds the following:
1. The Debtor filed this bankruptcy petition under Chapter 13 of the Bankruptcy Code on April 28, 2003.
2. The Debtor filed his Chapter 13 Combo Plan on May 13, 2003 (the "Plan"). The Debtor's Plan was accompanied included a Motion for Valuation, a Motion to Avoid Certain Liens and A Motion to Assume or Reject Executory Contracts (the "Additional Motions"). On the same day, the Debtor filed a Notice of Deadline for Filing Objections to the Plan and the Additional Motions stating that the date for filing objections was 25 days from the date of mailing of the Notice, which was May 13, 2003.
3. The parties agree that the deadline for filing objections to the Plan and Additional Motions was June 5, 2003.
4. Greenpoint filed its Objection to Confirmation and Valuation Motion on June 17, 2003 (the "Objection"). The parties agree that this is a late filing that will be stricken unless this Court allows an enlargement of time under F.R.Bankr.P. 9006(b)(1) to file the Objection. On July 1, 2003, Greenpoint filed a Supplement to Objection to Confirmation and Valuation Motion and Supplement to Disputed Motion for Relief From Stay (the "Supplement").
5. Greenpoint presented the Affidavit of Christa Adams ("Adams"), secretary to Debtor's counsel, Daniel E. Duncan ("Duncan"). In the Affidavit Adams states that Duncan prepared the Objection along with a Disputed Motion for Relief from Stay ("Stay Motion") and Notice of the Preliminary Hearing on the Stay Motion ("Notice") and sent these three pleadings to Adams via e-mail on May 17, 2003 instructing her to file them electronically. Adams filed the Stay Motion and Notice on May 19, 2003. On May 20, she received a call from the Bankruptcy Court clerk's office advising her of an error causing the office to reject the filing of the Stay Motion. Adams stated that she re-filed the Motion and Notice electronically on May 20, 2003. As for the Objection, Adams stated that she thought she filed it electronically on May 20, 2003 along with the re-filed Stay Motion and Notice. However, she failed to file the Objection on that date stating that she had, ". . . clicked the wrong icon in my forms directory and had inadvertently filed the Notice again, instead of the Objection." Affidavit at p. 2 ¶ 11. It is undisputed that she properly mailed the Objection to opposing counsel and the Chapter 13 Trustee on May 20, 2003.
7. The § 341 meeting of creditors was scheduled for June 26, 2003, but was held on July 2, 2003.
8. A hearing on the Motion for Valuation is set for September 9, 2003.
Discussion
The facts surrounding the late filing are undisputed. Therefore the Court must decide whether to allow the late filed Objection under these circumstances. Late filings of this sort are governed by Rule 9006(b)(1), which states in pertinent part the following:
(b) Enlargement.
(1) In General. . . . when an act is required or allowed to be done at or within a specified period by these rules or by a notice given thereunder or by order of court, the court for cause shown may at any time in its discretion . . . on motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect.
The Court, therefore, must decide whether the failure to timely file the Objection was due to excusable neglect as provided in Rule 9006(b)(1). The U.S. Supreme Court explained the analysis that courts should employ in determining whether an act of neglect is excusable in Pioneer Investment Services Company v. Brunswick Associates Limited Partnership, 507 U.S. 380, 113 S.Ct. 1489 (1993). First the Court explained that the term "neglect" should be given its ordinary meaning. "The word [neglect] therefore encompasses both simple, faultless omissions to act and, more commonly, omissions caused by carelessness." 113 S.Ct. at 1495. The Court further explained that the concept of "excusable neglect" under Rule 9006(b)(1), "is a somewhat `elastic concept' and is not limited strictly to omissions caused by circumstances beyond the control of the movant." Id. at 1496 (footnotes and citations omitted). However, the Court recognized that Congress failed to provide guidance for determining what sorts of neglect are to be considered "excusable" and stated, "we conclude that the determination is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission." Id at 1498.
Courts may use one or more of the following nonexclusive factors in deciding whether a late filing was due to excusable neglect: "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. citing and affirming, In re Pioneer Investment Services Company, 943 F.2d 673, 677 (6th Cir. 1991). See also, In re Limited Gaming of America, Inc., 213 B.R. 369, 377 (Bankr.N.D.Okla. 1997) (listing factors).
In this case the factors favor allowing the late filing. The delay in filing the Objection was 12 days, not an inordinately long time. See Id. at 377 (denying IRS's claim filed 13 months after the claims bar date and comparing time period to the claim filed 20 days late allowed in Pioneer Investment Services). Moreover, the Objection was mailed to the Debtor and the Chapter 13 Trustee well before the June 5th deadline, giving the Debtor ample notice that the valuation was being challenged. Here, the delay was due to inadvertent failure to correct an electronic filing failure, not an inherently flawed procedure as in Limited Gaming. Id. at 376 (denying late filed claim and criticizing IRS procedure not to file estimated claim or seek extension of deadline while conducting an audit of the Debtor); and In re Petroleum Production Management, Inc., 240 B.R. 407, 414 (Bankr.D.Kan. 1999) (holding that movant failed to show that mail receipt procedures were designed so that proper person received notices of bankruptcies). No evidence has been presented showing a lack of good faith on the part of Greenpoint or its counsel, such as indifference to or disregard for the filing deadline. See Taylor v. Louisiana Chemical Equipment, Inc. (In re MAPS Int'l, Inc.), 152 B.R. 989, 992 (Bankr. N.D. Okla. 1993) (finding no lack of good faith in failure to timely file answer to third party complaint). The Debtor argues that Adams had problems in the past with electronic filing and should have followed up on her filings to ensure they were correctly done, especially when contacted by the court regarding the Stay Motion and Notice. While it is true that an additional check would have revealed the problem, Adam's filing of two Notices drew no comment from the clerk's office leaving an impression that the problems with the previous filing had been resolved. Failure to follow through on the correction, though unwise, is excusable in this circumstance. These proceedings are not prejudiced by the late filing because Greenpoint timely filed a Stay Motion, which also raises the issue of valuation. Unless the Debtor's plan is confirmed before the Stay Motion hearing, valuation will be an issue. See Berger v. Buck (In re Buck), 220 B.R. 999, 1004 (10th Cir. BAP 1998) (finding late filed appeal of judgment declaring debt dischargeable did not prejudice debtor).
For the reasons set forth above, the Court finds that the failure to file the Objection was due to excusable neglect and in its discretion, hereby allows the filing and denies the Motion to Strike.
SO ORDERED.