In re: William Doyne v. ( 2014 )

ELECTRONIC CITATION: 14 FED App.0009P (6th Cir.)
File Name: 14b0009p.06
BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT
In re: WILLIAM BERT DOYNE; )
LOIS GAIL DOYNE )
)
Debtors. )
) No. 14-8004
_____________________________________ )
Appeal from the United States Bankruptcy Court
for the Eastern District of Kentucky
Case No. 13-51860
Submitted: October 28, 2014
Decided and Filed: December 4, 2014
Before: HARRISON, HUMPHREY and LLOYD, Bankruptcy Appellate Panel Judges.
______
COUNSEL
ON BRIEF: Michael A. Hamilton, HAMILTON & ASSOCIATES, Nicholasville, Kentucky, for
Appellants. Mark T. Miller, Nicholasville, Kentucky, for Appellee.
____________________
OPINION
____________________
JOAN LLOYD, Bankruptcy Appellate Panel Judge. Creditor Steven Ungerbuehler
(“Appellant”) appeals the bankruptcy court’s denial of his Motion to Extend Deadline to Object to
Discharge (the “Extension Motion”). For the reasons set forth below, the panel AFFIRMS the
bankruptcy court’s denial of the Extension Motion.
I. ISSUE ON APPEAL
The issues raised in this appeal are whether the bankruptcy court applied the correct legal
standard in considering the Extension Motion and, if so, whether it abused its discretion in denying
the Extension Motion.
II. JURISDICTION AND STANDARD OF REVIEW
The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal.
The United States District Court for the Eastern District of Kentucky has authorized appeals to the
Panel, and none of the parties has timely elected to have these appeals heard by the district court.
28 U.S.C. § 158(b)(6), (c)(1). A bankruptcy court’s final order may be appealed as of right pursuant
to 28 U.S.C. § 158(a)(1). For purposes of appeal, an order is final if it “ends the litigation on the
merits and leaves nothing for the court to do but execute the judgment.” Midland Asphalt Corp. v.
United States, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989) (citation and quotation marks
omitted). An order denying a motion for extension of time within which to file a discharge
complaint is a final and appealable order. See, e.g. Nardei v. Maughan (In re Maughan), 340 F.3d
337 (6th Cir. 2003).
Conclusions of law are reviewed de novo. Michalski v. Coulson (In re Michalski), 452 F.
App’x. 656 (6th Cir. 2011). Whether the bankruptcy court applied the correct legal standard in
considering the Extension Motion is a question of law. Assuming that the bankruptcy court applied
the correct legal standard, its decision to deny the Extension Motion is reviewed for abuse of
discretion. See In re Maughan, 340 F.3d at 344. “An abuse of discretion occurs where the reviewing
court has ‘a definite and firm conviction that the court below committed a clear error of judgment.’”
B-Line, LLC v. Wingerter (In re Wingerter), 594 F.3d 931, 936 (6th Cir. 2010) (internal citation
omitted). “The question is not how the reviewing court would have ruled, but rather whether a
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reasonable person could agree with the bankruptcy court’s decision; if reasonable persons could
differ as to the issue, then there is no abuse of discretion.” Id.III. FACTS
William Bert Doyne and Lois Gail Doyne (the “Debtors”) filed their bankruptcy petition on
July 30, 2013. The first date set for the meeting of creditors was August 29, 2013. Thus, under 11
U.S.C. § 523(c), the deadline for objecting to discharge was October 28, 2013.
On October 29, 2013, Appellant filed the Extension Motion. The Extension Motion alleged1
that Appellant’s counsel had suffered a disabling brain injury in a car wreck on September 4, 2013,
which caused him to spend “significant time outside the office,” and that he had hired a new
paralegal “on or about” the week of the deadline in question. Appellant asserted that the
combination of these two factors caused Appellant’s counsel to overlook the deadline.
The Debtors filed an objection to the Extension Motion on November 4, 2013 and the
bankruptcy court held a hearing on the Extension Motion on December 12, 2013, at which counsel
for Appellant described the car wreck that gave him a “severe concussion that made me miss
approximately ten weeks of work,” leaving him “still under the care of a neurologist.” The parties
made arguments concerning the applicable legal standard and the bankruptcy court gave Appellant
fourteen days to file a reply brief regarding the same. On December 26, 2013, Appellant filed his
reply to the Debtors’ objection in which, in addition to discussing the relevant legal standard, he
further alleged2 that Appellant’s counsel had “missed more than 10 weeks of work” and argued that
Appellant had “only missed the deadline by a few hours.”
On January 3, 2014, the bankruptcy court entered its order denying the Extension Motion (the
“Denial Order”). In the Denial Order, the bankruptcy court “agreed” that it “does not have the
1
The Extension M otion did not attach a supporting affidavit from Debtor’s counsel but did attach
an unsworn letter from counsel’s doctor stating that counsel had suffered a “significant concussion” and
that, as a result, he “has limitations at work and will continue to have these limitations for some time.”
2
Appellant did not attach supporting documentation.
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discretion to grant the requested extension”3 but also cited In re Maughan in holding that “the
deadline governing the filing of dischargeability complaints is not jurisdictional in nature, but rather,
is subject to the court’s equitable authority.” In denying the Extension Motion, it found that there
had been “no allegation that the Debtor engaged in any conduct which prevented the Creditor from
filing a timely motion to extend the time within which to file a dischargeability complaint.”
Appellant timely filed his Notice of Appeal of the Denial Order on January 17, 2014,
initiating the instant appeal. Appellant attempted to file his brief on April 21, 2014, but that brief
failed to comply with Federal Rule of Bankruptcy Procedure 8010. Following a motion to strike
filed by the Debtors on May 7, 2014, the Panel on May 20, 2014 ordered the initial brief stricken and
gave Appellant fourteen days to file a compliant amended brief. In that Order, the Panel also
considered the Debtors’ assertion in their motion to strike that Appellant had cited to facts not in the
record. The Panel concluded that, based on what had been presented to it at that time, it could not
make a determination on that issue. It did, however, admonish Appellant “not to include facts that
are not part of the record” when filing his amended brief. Appellant filed his amended brief on June
3, 2014 and the Debtors filed their Amended Appellee Brief on June 30, 2014.4 Appellant did not
file a reply brief.
IV. DISCUSSION
Appellant asserts that the bankruptcy court applied the wrong legal standard in denying the
Extension Motion–that it treated the deadline as jurisdictional. In the Denial Order, the bankruptcy
court initially appears to agree with the Debtors’ argument that it does not have the discretion to
extend the deadline in question. “The Debtor responds that the Court does not have the discretion
to grant the requested extension. The Court agrees.” On the other hand, the bankruptcy court in the
3
The Debtors essentially argued in their objection to the Extension Motion that the deadline in
question is jurisdictional and that the bankruptcy judge therefore had no discretion to grant the relief
requested.
4
The Debtors had failed to include a statement concerning oral argument. Also, in its May 20,
2014 Order striking Appellant’s brief, the Panel gave the Debtors twenty-eight days from the filing of the
amended Appellant’s brief to file an amended brief, noting that the current Appellee brief relied heavily
upon a case that had been overruled by the Sixth Circuit.
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very next sentence expressly recognizes the precedent set forth in In re Maughan, that the deadline
governing dischargeability complaints is non-jurisdictional and may be extended under the doctrine
of equitable tolling. In denying the Extension Motion, it goes on to compare the facts in In re
Maughan to that of the instant case and find that here there was “no allegation that the Debtor
engaged in any conduct which prevented the Creditor from filing a timely motion to extend the time
within which to file a dischargeability complaint.”
While there is some ambiguity in the Denial Order as to whether the bankruptcy court applied
the correct legal standard, on balance the Panel reads the Denial Order as applying the correct legal
standard (i.e. treating the relevant deadline as non-jurisdictional and subject to equitable tolling).
The bankruptcy court’s statement regarding “lack of discretion,” when read in context with its
discussion of In re Maughan beginning in the next sentence, seems more a finding that Appellant
failed to meet the threshold for equitable relief set forth in In re Maughan than a conclusion that the
deadline cannot be extended under any circumstances.
The Panel must next consider whether the bankruptcy court abused its discretion in applying
the facts in the record to that standard. As discussed above, the test for whether the bankruptcy court
abused its discretion is “whether a reasonable person could agree with the bankruptcy court’s
decision.” In re Wingerter, 594 F.3d at 936. According to in In re Maughan, the deadline in
question is “generally subject to the defenses of waiver, estoppel, and equitable tolling.” In re
Maughan, 340 F.3d at 344 (citing United States v. Locke, 471 U.S. 84, 94 n.10 (1985)). Here,
because waiver and estoppel were not at issue, the Panel need only consider whether the bankruptcy
court acted reasonably in considering equitable tolling. Equitable tolling is discussed at some length
in In re Maughan.
In re Maughan similarly involved a tardy motion for extension of time to object to discharge.
There, the moving creditor filed his motion three days after expiration of the deadline, citing the
debtor’s failure to produce documents and excusable neglect as grounds for the granting of the
motion. Id. at 340. The bankruptcy court granted the extension, allowing the subsequently filed
adversary proceeding to go to trial and ultimately finding in favor of the creditor. Id. The debtor
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appealed to the Sixth Circuit BAP, which reversed the bankruptcy court, leading to the appeal by the
creditor to the Sixth Circuit that produced the In re Maughan decision.
In concluding in In re Maughan that the deadline governing the filing of dischargeability
complaints is not jurisdictional, the Sixth Circuit followed another Sixth Circuit decision, In re
Issacman, 26 F.3d 629 (6th Cir. 1994), which also involved an extension of time to file a
dischargeability complaint.5 Noting that the Court in In re Issacman had “cracked open the door of
equity” by concluding that Federal Rule of Bankruptcy Procedure 9006(b)(3)6 “does not prevent a
bankruptcy court from exercising its equitable powers under 11 U.S.C. § 105(a) in accepting an
untimely filed complaint,” the Court in In re Maughan concluded that the deadline in question was
not jurisdictional, “for to hold to the contrary would be to hold that equitable considerations can
excuse jurisdictional defects.” In re Maughan, 340 F.3d at 342-44 (internal quotations and citations
omitted). According to In re Maughan, five factors should be considered when deciding to apply
the doctrine of equitable tolling, as follows: (1) lack of actual notice of filing requirement; (2) lack
of constructive knowledge of filing requirement; (3) diligence in pursuing one’s rights; (4) absence
of prejudice to the defendant; and (5) a plaintiff’s reasonableness in remaining ignorant of the notice
requirement. Id. at 344.
Here, neither Appellant nor the Debtors nor, indeed, the bankruptcy court explicitly applied
the foregoing factors in their respective arguments and decision. Appellant did, and does, make a
brief assertion that there would have been no prejudice to the Debtors had the bankruptcy court
granted the extension. Appellant’s primary argument, however, boils down to an assertion that he
was diligent but that unforseen and extraordinary circumstances arose that prevented him from
meeting the deadline.
5
In that case, the extension was needed because the bankruptcy court itself had inadvertently
misinformed the movant of the deadline date.
6
Federal Rule of Bankruptcy Procedure 9006(b)(3), among other things, limits a bankruptcy
court’s power to enlarge time for filing a complaint for dischargeability to the “extent and under the
conditions stated” in Federal Rule of Bankruptcy Procedure 4007(c), which governs the time for filing such
complaints.
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Before proceeding further with an analysis using the In re Maughan factors, the Panel notes
that at least one District Court sitting within the Sixth Circuit has opined that such five-factor
analysis for equitable tolling was effectively overruled by the U.S. Supreme Court in Pace v.
DiGulielmo, 544 U.S. 408 (2005), when it held that “[g]enerally, a litigant seeking equitable tolling
bears the burden of establishing two elements: (1) that he has been pursuing his rights diligently, and
(2) that some extraordinary circumstance stood in his way.” Thomas v. Webb, 2007 WL 628136, at
*2 (W.D. Ky. Feb. 23, 2007) (citing DiGulielmo, 544 U.S. at 418 (internal quotations omitted)).
For the present purposes, however, the analysis is essentially the same whether one looks to In re
Maughan or DiGulielmo because Appellant’s argument primarily focuses on the factor in the In re
Maughan test that overlaps the two factor test of DiGulielmo, the movant’s diligence in pursuing his
rights.
Through his initial motion, statements of counsel at hearing and supplemental memorandum
in support of the Extension Motion, Appellant had the opportunity to place before the bankruptcy
court the circumstances of Appellant’s failure to meet the deadline in question. Appellant told the
bankruptcy court, without providing a great deal of details or attaching detailed supplemental
documentation, that Appellant’s counsel had experienced a serious automobile wreck that, among
other things, left him with a brain injury, which required counsel to be away from his office for
significant periods of time around the time of the deadline, “resulting in the deadline being missed.”
Appellant also told the bankruptcy court that counsel’s newly hired paralegal started work during
the week of the deadline, and that this “transition in staff contributed to the overlooking of the
deadline.”
Having such narrative before it, the bankruptcy court denied the Extension Motion. In doing
so, the bankruptcy court did not expressly address Appellant’s story, but rather noted that, in contrast
to the circumstances in In re Maughan, Appellant had not alleged that the Debtors’ conduct had
prevented Appellant from meeting the deadline. Appellant argues that the bankruptcy court’s silence
concerning the Appellant’s proffered excuse shows that the bankruptcy court either applied the
incorrect legal standard or did not give the excuse adequate consideration.
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As discussed above, the Panel does not believe that the bankruptcy court applied the wrong
legal standard. And, although it is perhaps unfortunate7 that the bankruptcy court did not expressly
address Appellant’s story, the Panel does not believe that the bankruptcy court’s silence necessarily
indicates that it did not consider it or that its decision to deny the Extension Motion was
unreasonable. The bankruptcy court could have determined that Appellant simply failed to complete
the record when provided an opportunity to do so. Or, the bankruptcy court could have found the
story so unpersuasive as to not even warrant discussion, preferring instead to exemplify the kind of
extraordinary circumstances–egregious conduct by an opposing party as in In re Maughan–that
would warrant equitable tolling.
In any event, Appellant’s story certainly lacks persuasive detail.8 For example, Appellant did
not provide details of its counsel’s daily activity during the period leading up to the deadline. Was
counsel out of the office the entire time or did counsel go in to the office periodically? He seems to
have found time to interview and hire a new paralegal at some point. When did that happen? Was
he unable to do legal work at all or did he work on some matters and not others? Was his office
managed in such a way that his absence prevented any work from being done there? Could someone
else have taken over his cases temporarily and did he even make an attempt to get such help? These
and other questions immediately spring to mind and should have been anticipated and addressed by
Appellant, who bore the burden of persuasion. Given Appellant’s failure to supplement the record
with, at a minimum, a sworn statement, the Panel finds it reasonable for the bankruptcy court to have
deemed Appellant’s assertions insufficient to warrant equitable relief.
7
In this regard, although decided in a different procedural context, there is precedent, including
an unpublished decision by the Sixth Circuit B.A.P., to the effect that a tribunal’s opinion need not
expressly address every point raised by a party. See In re Burrage, 464 B.R. 61 (B.A.P. 6th Cir. 2011) (“A
bankruptcy court’s decision not to address a specific argument is not an abuse of discretion, although
depending on the facts of the particular case, it may make appellate review more difficult.”)
8
Indeed, the Panel wonders what the bankruptcy court could even have specified as grounds for
approving the Extension Motion. Had it granted the Extension Motion, the Debtors would certainly have
appealed, and the lack of a detailed record would have given them a strong argument that the bankruptcy
court had abused its discretion.
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V. CONCLUSION
For the reasons stated above, the Panel affirms the decision of the bankruptcy court.
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