Bryan Netsch, et al v. Daniel Sherman
UNPUBLISHED OPINION FILED. [16-10432 Affirmed] Judge: PEH, Judge: ECP, Judge: CH. Mandate pull date is 01/12/2017 [16-10432]
Date Filed: 12/22/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
December 22, 2016
In the Matter of: PRISM GRAPHICS, INCORPORATED,
Lyle W. Cayce
BRYAN NETSCH; INTENSE PRINTING, INCORPORATED,
DANIEL J. SHERMAN, as Chapter 7 Trustee for PRISM Graphics,
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:15-CV-455
USDC No. 3:15-CV-785
Before HIGGINBOTHAM, PRADO, and HAYNES, Circuit Judges.
Following the entry of final judgment in a Chapter 7 adversary
proceeding, counsel for Appellants Bryan Netsch and Intense Printing, Inc.
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Date Filed: 12/22/2016
filed a notice of appeal after the fourteen-day deadline for filing the notice had
passed. Appellants argued before the bankruptcy court that their counsel’s
error constituted excusable neglect and moved the court to extend the time for
filing. The bankruptcy court denied Appellants’ motion, and the district court
subsequently affirmed. We AFFIRM.
This appeal arises from a Chapter 7 bankruptcy case and subsequent
adversary proceeding initiated by the debtor’s Trustee, Daniel J. Sherman. On
October 27, 2014, the bankruptcy court entered a final judgment against
Appellants. The court later amended its final judgment on November 20, 2014,
to correct a clerical mistake.
Federal Rule of Bankruptcy Procedure 8002(a) states that a notice of
appeal must be filed with the bankruptcy clerk within fourteen days after entry
of the judgment being appealed. In this case, the filing deadline was December
4, 2014; however, Appellants’ counsel mistakenly calendared December 18,
2014, as the deadline for filing a notice of appeal. Appellants concede that
missing the filing deadline was due to their “counsel’s mistaken belief that
Appellants had 28 days to file post-judgment motions, instead of 14 days.”
After realizing the deadline had passed, Appellants filed both a motion
to extend time and an untimely notice of appeal on December 16, 2014, twelve
days after the deadline. Appellants urged the bankruptcy court to extend the
filing deadline for the notice of appeal under Federal Rule of Bankruptcy
Procedure 8002, which permits extensions for excusable neglect. 1 Finding that
Appellants’ mistake did not constitute excusable neglect, the bankruptcy court
Rule 8002(c) permitted extensions for excusable neglect at the time of the final
judgment and is discussed in the parties’ briefs and the opinions below, as well as in
Appellants’ original motion to extend time. However, we note that Rule 8002(d), which
became effective December 1, 2014, contains the current version of the rule regarding
excusable neglect. The 2014 amendment did not change the rule’s substance.
Date Filed: 12/22/2016
denied the motion to extend time, and the district court subsequently affirmed.
This appeal followed.
Under Federal Rule of Bankruptcy Procedure 8002, a bankruptcy court
may extend the deadline for filing a notice of appeal if the movant
demonstrates “excusable neglect.” The term “‘excusable neglect’ is understood
to encompass situations in which the failure to comply with a filing deadline is
attributable to negligence.” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd.
P’ship, 507 U.S. 380, 394 (1993) (discussing the standard for purposes of
Federal Rule of Civil Procedure 60(b)). In Pioneer, the Supreme Court
articulated the following factors that should be considered in determining
whether there is excusable neglect: (1) “whether the movant acted in good
faith”; (2) “the danger of prejudice” to the nonmovant; (3) “the length of the
delay and its potential impact on judicial proceedings”; and (4) “the reason for
the delay, including whether it was within the reasonable control of the
movant.” Id. at 395. This “determination is at bottom an equitable one, taking
account of all relevant circumstances surrounding the party’s” error. Id.
Appellants’ main contention is that the bankruptcy and district courts
improperly applied the factors articulated in Pioneer by placing undue
emphasis on a single factor. In other words, Appellants argue that the lower
courts treated one factor—the reason for the delay—as dispositive and thereby
converted Pioneer’s balancing test into an all-or-nothing test. Appellants also
contend that, in addition to the factors specifically mentioned in Pioneer, courts
should consider whether the appeal is meritorious in determining whether
there is excusable neglect.
We review excusable neglect determinations for abuse of discretion.
Stotter v. Univ. of Tex. at San Antonio, 508 F.3d 812, 820 (5th Cir. 2007);
Latham v. Wells Fargo Bank, 987 F.2d 1199, 1202 (5th Cir. 1993) (per curiam).
Date Filed: 12/22/2016
Merits of the Appeal
As an initial matter, we address Appellants’ argument that courts should
consider whether the party seeking the extension has a meritorious appeal.
Although courts must “tak[e] account of all relevant circumstances
surrounding the party’s” error, the merits of the underlying appeal are not
relevant to the question of whether “the failure to comply with a filing deadline
is attributable to negligence.” Pioneer, 507 U.S. at 394–95; see also United
States v. Nix, 250 F.3d 738 (5th Cir. 2001) (unpublished table decision)
(refusing “to review the merits of the underlying appeal in order to determine
whether excusable neglect exists”). Accordingly, we instead focus on the lower
courts’ application of the factors articulated in Pioneer.
The bankruptcy court’s order discussed each Pioneer factor in turn and
explained why the court ruled as it did. First, the court stated that Appellants’
counsel acted in good faith and that counsel was candid as to the reasons for
filing late. Second, the court indicated that the Trustee was probably not
prejudiced by the late filing given that the Trustee already expected an appeal
to follow. Third, the court noted that a twelve-day delay was long, but it
reasoned that such delay was consistent with counsel’s mistaken belief that
Appellants had twenty-eight days within which to file an appeal. At this point
in its analysis, the bankruptcy court stated “it might be inclined to find
excusable neglect” if these were the only three factors.
However, the bankruptcy court concluded that the reason for the delay
weighed strongly against finding excusable neglect. In its analysis of this
factor, the bankruptcy court emphasized that the parties had been subject to
the Federal Rules of Bankruptcy Procedure throughout the adversary
proceeding, these rules were unambiguous, and Appellants’ counsel confused
the Federal Rules of Bankruptcy Procedure with the Federal Rules of Civil
Date Filed: 12/22/2016
Procedure. The bankruptcy court also indicated that confusing bankruptcy
procedure with civil procedure does not constitute excusable neglect.
Consequently, the court held that the reason for the delay should be given
greater weight than other factors.
The Pioneer Court made clear that “inadvertence, ignorance of the rules,
or mistakes construing the rules do not usually constitute ‘excusable’ neglect.”
507 U.S. at 392; see also Halicki v. La. Casino Cruises, Inc., 151 F.3d 465, 469
(5th Cir. 1998) (“[A] misconstruction of the rules—especially when their
language is plain—will rarely satisfy the ‘excusable neglect’ standard.”).
Therefore, the bankruptcy court properly applied Supreme Court precedent
when it concluded that Appellants’ confusing bankruptcy procedure with civil
procedure did not constitute excusable neglect.
Appellants are correct that, in determining whether there was excusable
neglect, courts must consider “all relevant circumstances surrounding the
party’s” mistake. Pioneer, 507 U.S. at 395. However, that is precisely what the
lower courts did in this case. The bankruptcy and district courts’ opinions
devote several pages to the Pioneer factors and explain their reasoning in
detail. The courts “considered all evidence [Appellants] proffered in support of
[their] claim and made an equitable determination that an extension was
unwarranted.” Halicki, 151 F.3d at 469. “[N]o more is required.” Id.
Accordingly, we hold that the district court did not abuse its discretion in
affirming the bankruptcy court’s denial of the motion to extend time.
For the foregoing reasons, we AFFIRM.
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