Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
Oct. 21 — Accidentally relying on an old version of the Bankruptcy Rules is no excuse for filing something late in court, even if the clerk's office gives you bad information.
Judge Charlene Edwards Honeywell said that in the Eleventh Circuit, an attorney's misunderstanding of a rule can't constitute excusable neglect. The court also held that attorneys are responsible for ensuring they use the correct version of the rules and they can't rely on “statements by clerk's office staff regarding deadlines.”
After Reverse Mortgage Solutions Inc. (RMS) filed a notice of appeal when its mortgage lien was avoided in bankruptcy, it went two months without filing an initial brief in the appeal. The court ordered RMS to show cause why the appeal shouldn't be dismissed because RMS had failed to timely file its initial brief.
RMS argued the brief wasn't due yet because the clerk had yet to file the “Notice of Docketing Appeal.” Counsel for RMS claimed he had called the clerk's office and was told that a separate notice would be filed that would trigger a 14-day deadline to file the brief. But the attorney could not remember the date of this phone call or with whom he spoke.
Shortly thereafter, RMS moved for an extension of time to file the brief, and admitted that it had been relying on an outdated version of the Federal Rules of Bankruptcy Procedure for the brief deadline.
Rule 8018 of the current version of the rules stipulates that the appellant must file its initial brief “within 30 days after the docketing of notice that the record has been transmitted or is available electronically,” which in this case the appellant failed to do. However, Rule 9006(b) says that the court has the discretion to extend the deadline if the appellant's failure to file a timely brief was due to “excusable neglect.”
The court relied on the four-factor test for excusable neglect from the Supreme Court's ruling in Pioneer Inv. Servs. Co. v. Brunswick Assocs., 507 U.S. 380 (1993). The four Pioneer factors are: “the danger of prejudice to the [party not seeking the extension], 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.”
The court found no evidence of prejudice to the debtor in this case, and that the impact of the delay on the proceedings was “neutral.”
But the court said that the Eleventh Circuit has held that “as a matter of law, that an attorney's misunderstanding of the plain language of a rule cannot constitute excusable neglect such that a party is relieved of the consequences of failing to comply with a statutory deadline.” The Second, Fifth, Seventh, and Ninth Circuits have all made similar rulings in the wake of the Pioneer decision, according to research conducted by Bloomberg BNA.
The court said this factor “weigh[ed] heavily in favor of denying the extension.”
The court also questioned RMS's good faith because it could provide no specifics on the phone call it allegedly made to the clerk's office. The court also seemed to reject the idea that such a phone call could establish good faith because it said “RMS is responsible for complying with the correct versions of applicable rules and cannot rely on statements by clerk's office staff regarding deadlines.”
“Finally, the movant's good faith is called into question by the fact that RMS also did not file a statement of disputed issues and did not request an extension of time to do so,” the court said. “The rule concerning this statement, Rule 8007, was not changed by the 2014 amendments. Therefore, counsel for RMS should have been aware of the Rule and complied with it.”
Therefore, the court found that the factors weighed in favor of not finding excusable neglect and the court denied the motion for an extension.
Audrey Jayne Dixon and Frederic J. DiSpigna of Robertson, Anschutz & Schneid, PL, Boca Raton, Fla., represented RMS.
Sue-Helen Motley of Bay Area Legal Services, Inc., Tampa, Fla., represented the debtor.
To contact the reporter on this story: Stephanie Cumings in Washington at email@example.com
To contact the editor responsible for this story: Jay Horowitz at firstname.lastname@example.org
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)