Hartford Casualty v. Food Barn Stores ( 1997 )

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
No. 97-6055
In re: Food Barn Stores, Inc.
*
*
Debtor *
*
Hartford Casualty Insurance Co.
*
* Appeal from the United States
Appellant * Bankruptcy Court for the
* Western District of Missouri
vs. *
*
Food Barn Stores, Inc. *
*
* Appellee
Submitted: September 30, 1997
Filed: November 14, 1997
Before KRESSEL, SCHERMER, and SCOTT
SCOTT, Bankruptcy Judge
I
Hartford Casualty Insurance Company (“Hartford”) appeals
from an order denying a motion to extend the time for filing
a Notice of Appeal. Inasmuch as the bankruptcy court did not
clearly err in its determination that the appellant failed to
show excusable neglect, we affirm.
Food Barn Stores, Inc. (“Food Barn”) filed its Chapter 11
petition in bankruptcy on January 5, 1993. Hartford timely
filed its proof of claim in the case on January 22, 1993. On
the same date, Hartford's counsel filed a Request for Notice
and Entry of Appearance. Hartford thereafter was properly
served with all objections, motions, and notices, at the
address on the Request for Notice.
On August 31, 1994, the debtor filed a Motion to Deny
Claims. This motion contained objections to numerous claims
filed by various creditors, including the Hartford claim. The
Motion included a notice of a hearing date, October 20, 1994,
and advised that a response to the motion should be filed at
least five days prior to the date set for hearing. Hartford's
attorney received the motion but, apparently not realizing
that the motion contained an objection to its claim, took no
action in response to the motion. On October 20, 1994, no
response having been filed, and no one appearing at hearing on
behalf of Hartford, the bankruptcy court entered an order
sustaining the objection to Hartford's proof of claim.
Twenty-seven months later Hartford filed a Motion for
Reconsideration of the October 20, 1994, order disallowing its
claim. Hearing was held and the motion was denied mainly due
to Hartford's failure to show excusable neglect in not
defending its proof of claim. Hartford then moved for
reconsideration of the order denying reconsideration of the
October 20, 1994, order. This motion was also denied by order
entered June 6, 1997. It was not until June 17, 1997, however,
that Hartford submitted a Notice of Appeal of the June 6, 1997,
Order.1 On that same date it also filed a Motion for Leave to
1
Although the Notice of Appeal was submitted to the clerk for filing, it was apparently
later “withdrawn.” The Notice of Appeal in the record has VOID written across the clerk's file
stamp. Thus, it does not appear that there is a valid Notice of Appeal filed in the bankruptcy case.
2
File Notice of Appeal out of Time. That motion was denied in
a brief order entered on June 23, 1997. Hartford timely filed
its Notice of Appeal from this order three days later. It is
the order denying Hartford's Motion for Leave to File Notice
of Appeal Out of Time that is before this Court.
II
3
This Court reviews the bankruptcy court's findings of fact
for clear error and reviews legal conclusions de novo. Fed.
R. Bankr. Proc. 8013; First National Bank of Olathe v. Pontow,
111 F.3d 604, 609 (8th Cir. 1997). While the meaning of
"excusable neglect" is a question of law, whether excusable
neglect exists is a question of fact and thus the trial court's
findings may be reversed only if they are clearly erroneous.
Cf. Belfance v. Black River Petroleum, Inc. (In re Hess), 209
B.R. 79, 80 (BAP 6th Cir. 1997).
III
Rule 8002(a), Federal Rules of Bankruptcy Procedure,
requires that a Notice of Appeal be filed within ten days of
entry of the order from which an appeal is taken. Once the
time for filing an appeal has expired, "an appellate court is
without authority to exercise its jurisdiction." Vogelsang v.
Patterson Dental Co., 904 F.2d 427, 429 (8th Cir. 1990); accord
Crockett v. Lineberger, 205 B.R. 580, 581 (8th Cir. BAP 1997).
However, Rule 8002(c) provides that the bankruptcy court may
enlarge the time for filing a notice of appeal “for a period
not to exceed 20 days from the expiration of the time otherwise
prescribed.” The rule also permits, in most circumstances, an
untimely request--one made after the time for filing the notice
of appeal--upon a showing of excusable neglect.
Hartford argues that the bankruptcy court erred in failing
to undertake an equitable analysis as required by Pioneer
Investment Services Company v. Brunswick Associates Limited
Partnership, 113 S. Ct. 1489 (1993), and that excusable neglect
existed. Specifically, it asserts that the failure to timely
file the notice of appeal was due solely to counsel's mistake
in calculating the time under Rule 6(a) of the Federal Rules
4
of Civil Procedure, rather than Rule 9006(a) of the Federal
Rules of Bankruptcy Procedure.2
2
Under the Federal Rules of Civil Procedure holidays and weekends are not taken into
account in calculating a time period less than eleven days. In contrast, under the Federal Rules of
Bankruptcy Procedure holidays and weekends are excluded in calculating any time period of less
than eight days. Since the ten-day period for filing an appeal falls between these two methods of
calculation, whether Rule 6(a) of the Federal Rules of Civil Procedure or Rule 9006 of the Federal
Rules of Bankruptcy Procedure applies makes a difference.
5
In Pioneer Investment Services Company v. Brunswick
Associates Limited Partnership, 113 S. Ct. 1489 (1993), the
Supreme Court addressed the burdens and standards a party must
meet when seeking a determination of excusable neglect. Whether
a party's neglect of a deadline is excusable is an equitable
determination, "taking account of all the relevant
circumstances surrounding the party's omission." Id. at 1498.
Factors for consideration include:
(1) The danger of prejudice to the debtor;
(2) The length of the delay and its potential impact on
judicial proceedings;
(3) The reason for the delay, including whether it was
within the reasonable control of the movant; and
(4) Whether the movant acted in good faith.
Pioneer Investment, 113 S. Ct. at 1498. The proper focus is
upon whether the neglect is excusable. Id. at 1499.
While all of these factors are to be analyzed by the
Court, it is first the movant's burden to demonstrate to the
trial court that excusable neglect exists. McGraw v. Betz (In
re Bell & Beckwith), 112 B.R. 879, 880 (N.D. Ohio 1990).
Hartford's motion before the bankruptcy court, however, stated
only that it was unclear whether Rule 9006, Federal Rules of
Bankruptcy Procedure, or Rule 6(a), Federal Rules of Civil
Procedure, applied,3 and that Hartford's counsel, in
calendaring, relied on Rule 6(a) rather than Rule 9006.
Hartford made no argument raising the equitable factors it now
asserts before this Court. By failing to even argue these
factors before the bankruptcy court, Hartford failed to meets
its burden of demonstrating excusable neglect.
3
Inasmuch as it is well-settled that Rule 9006 applies rather than Rule 6(a), Fed. R. Civ.
Proc. 81(a)("These rules...do not apply to proceedings in bankruptcy..."); e.g., Aycock v. Eaton
(In re Eichelberger), 943 F.2d 536, 538-39 (5th Cir. 1991), Hartford prudently did not pursue this
argument on appeal.
6
Moreover, we find, in examining the Pioneer factors, that
the bankruptcy court did not err in its determination that
excusable neglect did not exist. Like the bankruptcy court's
earlier determination of May 8, 1997, there is no indication
of bad faith on the part of Hartford or a lengthy delay in
filing this motion. However, the remaining factors weigh
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heavily against a finding that the neglect is excusable. Cf.
Pyramid Energy Limited v. Duquoin National Bank (In re Pyramid
Energy Limited), 165 B.R. 249 (Bankr. S.D. Ill 1994)(although
many factors weighed in favor of excusable neglect, where delay
was in control of party, no excusable neglect existed). In
this instance delay was solely within the control of Hartford.
It was Hartford's responsibility to review the rules, ascertain
the correct date for filing the Notice of Appeal, and to timely
file the Notice of Appeal. There was no reason offered other
than neglect for its failure to do these acts. Indeed,
Hartford apparently located the relevant rule regarding time
to file an appeal from a bankruptcy court order in the logical
place, the Federal Rules of Bankruptcy Procedure, but there is
no excuse offered for not locating the procedure to follow
regarding the proper calculation of time for taking an appeal
within the same set of rules.
Courts have long held, both prior to and after Pioneer,
that ignorance or misreading of the law, particularly in the
application of Rule 8002(c), does not constitute excusable
neglect. Silver Oak Homes, Ltd, 169 B.R. 349 (D. Md.
1994)(unfamiliarity with bankruptcy and reliance upon the
Federal Rules of Civil Procedure is not excusable neglect);
Romas v. Callahan (In re Callahan), 211 B.R. 131 (N.D.N.Y.
1997)(confusion over "proper procedure" is not excusable
neglect); Pyramid Energy, Ltd. v. Duquoin National Bank (In re
Pyramid Energy, Ltd.), 165 B.R. 249 (Bankr. S.D. Ill.
1994)(confusion as to whether to exclude holidays and weekends
is not excusable neglect); In re Auto Specialties MFG Co., 133
B.R. 384, 391-392 (Bankr. W.D. Mich. 1991); Thistlethwaite v.
Federal Deposit Insurance Corp. (In re Pernie Bailey Drilling
Co.), 111 B.R. 561 (Bankr. W.D. La. 1989); Federal Land Bank
of Columbia v. Fisher (In re Fisher), 65 B.R. 261 (Bankr. N.D.
Ga. 1986); Speciner v. Miller (In re Miller), 59 B.R. 5728
(Bankr. E.D.N.Y. 1986); Tyler v. Capitol Chemical Industries,
Inc. (In re Metro Paper Co.), 18 B.R. 831 (Bankr. D.D.C. 1982).
Moreover, as noted by the court in Duquoin, 165 B.R. 249,
Pioneer does not, in fact, furnish relief for the error of
applying an incorrect rule: "The Pioneer court, in assessing
the culpability of counsel's actions, gave ``little weight' to
the fact that counsel was experiencing upheaval in his law
practice at the time of the bar date....Further, the court
indicated that ignorance of the rules or a mistake in
construing the rules does not constitute 'excusable
9
neglect' even under the liberal standard there espoused. 113
S. Ct. at 1496." See also Harlow Fay, Inc. F. Federal land
Bank of St. Louis (In re Harlow Fay, Inc.), 993 F.2d 1351 (8th
Cir. 1993), cert. denied, 510 U.S. 825 (1993).
As to the remaining factor Hartford merely offers its
legal conclusion that no prejudice results, but fails to offer
any specific, factual argument regarding this element. The
record is not silent, however, on this point inasmuch as the
bankruptcy court, in its earlier order of May 8, 1997,
addressed the prejudice to the debtor if the litigation on the
now almost three year old objection to Hartford's proof of
claim were to go forward. In light of the passage of time in
this case and litigation which would remain before the ultimate
conclusion of this matter, the prejudice not only to the
debtor, but to other creditors, as well as to the
administration of the case, is obvious. Since the time of the
disallowance of the claim in October of 1994, the debtor has
liquidated its assets and destroyed its books and records,
including documents relating to the claims resolution process
and documents relating to Hartford's proof of claim. The
debtor would be thus severely limited in its ability, at this
late date, to prosecute the objection to claim. Moreover,
distribution under the plan of reorganization commenced and has
progressed such that it appears that the plan may be
substantially consummated. Since there is no indication that
Hartford obtained a stay of the reorganization process, it is
even questionable whether, by the time Hartford is able to
obtain a hearing on the objection its claim, there would exist
any funds for distribution to it.
Second, we do not believe the bankruptcy court "erred in
failing to undertake an equitable analysis." Although the
bankruptcy court's order is brief, the record reveals that the
bankruptcy court undertook the appropriate analysis. In its
10
order of May 8, 1997, decided less than two months prior to the
order at issue, the bankruptcy court thoroughly analyzed the
Pioneer standard. Thus, the record demonstrates that the trial
court was well aware of the required analysis. A reading of
the bankruptcy court's citation to authority in the order of
June 23, 1997, also indicates that it not only considered the
facts of this case and the relevant law, but also undertook the
appropriate analysis.
Lastly, although not an issue raised by the appellee, we
note that this appeal may be moot. The Federal Rules of
Bankruptcy Procedure, as currently written, provide:
11
The bankruptcy judge may extend the time for filing
the notice of appeal by any party for a period not to
exceed 20 days from the expiration of the time
otherwise prescribed by this rule.
Fed. R. Bankr. P. 8002(c). Even if we were to agree with the
appellant and reverse the decision of the bankruptcy court, the
maximum relief that the bankruptcy court could grant under the
rule would be to extend the time to timely file a notice of
appeal to July 7, 1997. Since that time has long passed,
neither this court nor the bankruptcy court can issue an order
providing meaningful relief such that this appeal is moot.4
IV
The bankruptcy court's determination that Hartford failed
to show excusable neglect with regard to Hartford's motion to
extend the time for filing a Notice of Appeal under Rule 8002,
Federal Rules of Bankruptcy Procedure was not clearly
erroneous. Accordingly, we affirm.
A true copy.
Attest:
CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR THE
EIGHTH CIRCUIT
4
This result will be obviated by amendment to Rule 8002(c) which will be effective
December 1, 1997. Under this amendment, the bankruptcy judge will have the authority to
extend the time for filing a notice of appeal for up to ten days following the order granting the
motion.
12