General Lending Corporation v. Cancio et al
Filing
18
Opinion and Order Closing Case with Notice of Entry 8016(b). All pending motions are denied as moot. This case is CLOSED. Signed by Judge Kenneth A. Marra on 9/22/2011. (ir)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 10-CV-23903-MARRA
GENERAL LENDING
CORPORATION,
Appellant,
vs.
MELISSA CANCIO and
JESUS CANCIO
___________________/
OPINION & ORDER AFFIRMING THE DECISION OF THE BANKRUPTCY COURT
Appellant General Lending Corporation (“Appellant” or “GLC”) filed this
bankruptcy appeal challenging the order by Hon. Robert A. Mark, in Bankruptcy Case
No. 10–20820-BKC-RAM, conditionally granting Jesus Cancio and Melissa Cancio’s
(“Debtors”) Motion to Reopen and Reinstate Case, and the resulting Order Granting
Motion to Vacate Dismissal and Reinstating Case. Specifically, Appellant asserts that
the bankruptcy court erred when it reinstated the Debtors’ Chapter 13 Case because
the “excusable neglect” proffered was legally insufficient under Fed. R. Civ. P.
60(b)(1). The parties have fully briefed the issues. For the reasons that follow, the
Court shall affirm all appealed orders of the bankruptcy court.
Jurisdiction
District courts have jurisdiction to review appeals from final bankruptcy court
judgments, orders and decrees. 28 U.S.C. § 158(a). Section 158(a)(3) also authorizes
a district court to grant leave to appeal an interlocutory order from a bankruptcy
court, but requires a party to obtain leave prior to proceeding. To appeal a
bankruptcy court's interlocutory order, a party must file a notice of appeal,
accompanied by a motion for leave to appeal. See Fed. R. Bankr. P. 8001(b). Even if
a motion for leave to appeal is not filed, but a notice of appeal is timely filed, “the
district court ... may grant leave to appeal or direct that a motion for leave to appeal
be filed....” Fed. R. Bankr. P. 8003(c). Whether to grant or deny leave to appeal is
within the sound discretion of the district court. Chrysler Financial Corp. v. Powe,
312 F.3d 1241, 1245 (11th Cir. 2002) (Ҥ 1292(b) requirements need not be satisfied
when an interlocutory appeal is taken from the bankruptcy court to the district
court”).
The Bankruptcy Court’s Order Conditionally Granting Debtors’ Motion to
Reopen and Reinstate Case is an interlocutory order. Hampton v. U.S. Dept. of
Housing and Urban Development, 203 B.R. 750, 753 (M.D. Fla. 1996). In this case,
Appellant filed a timely notice of appeal but did not move for leave to appeal. In
accordance with Fed. R. Bankr. P. 8003(c), the Court considers GLC's timely notice of
appeal as a motion for leave to appeal. See, In re Laurent, 149 Fed. Appx. 833,
836-837, 2005 WL 2012725, *4 (11th Cir. 2005). Accordingly, the Court exercises its
discretion to grant leave to appeal.
Standard of Review
Bankruptcy Courts are governed by the Federal Rules of Bankruptcy Procedure.
On appeal, Fed. R. Bankr. P 8013 states that a district court shall review the factual
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findings of a bankruptcy court for clear error. Fed. R. Bankr. P. 8013. The District
Court reviews de novo the conclusions of law of the bankruptcy court and application
of the law to the particular facts of the case. See In re JLJ Inc., 988 F.2d 1112, 1116
(11th Cir. 1993). The abuse-of-discretion standard is applicable to a court's
determination as to the existence of excusable neglect for late filing. In re Alabama
Protein Recycling, L.L.C., 210 Fed. Appx. 876, 877 (11th Cir. 2006) (“We review the
district court's ‘excusable neglect’ determination for abuse of discretion.”) Under
this standard, a bankruptcy court's decision will not be disturbed upon appeal unless
the appellate court has a definite and firm conviction that the bankruptcy court
made a clear error of judgment or exceeded the bounds of permissible choice under
the circumstances.
Facts Below
Mr. And Mrs. Cancio filed for relief under Chapter 13 of the Bankruptcy Code
on April 23, 2010. Rather than file all required schedules and supporting documents,
Debtors began the case with the filing of only the petition and a list of creditors. The
Bankruptcy Court issued a Notice of Deficiency providing the Debtors with notice that
the remaining schedules and other required documents were due to be filed by May 7,
2010. The Debtors were warned by the Notice of Deficiency that if all documents
identified in the Notice of Deficiency were not filed by May 7, 2010, the case would
be dismissed without further notice. The Debtors moved and were granted several
extensions within which to file the remaining schedules and supporting documents up
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to and including June 11, 2010. Debtors timely filed all required documents on the
June 11, 2010 deadline except for a one page form entitled Chapter 13 Plan. Because
of this omission, GLC moved to dismiss the case. The Bankruptcy Court issued an
Order Dismissing Case with prejudice on June 16, 2010.
On July 27, 2010, Debtors moved to reopen and reinstate the case, which
motion was opposed by GLC. On August 19, 2010, the bankruptcy court heard
argument on the motion and concluded, “[a]fter considering the record, including the
Motion and Objection, and considering the arguments of counsel for the Debtors and
General Lending, the Court announced its ruling granting the Motion subject to
payment of reasonable attorneys fees incurred by General Lending after the case was
dismissed.” See Order Conditionally Granting Debtors’ Motion to Reopen and
Reinstate Case at 1-2. The Court conditioned the reinstatement of Debtors’ Chapter
13 case upon the timely payment of $1,800.00 in fees and costs to GLC. Id. at 2.
Discussion
GLC argues that the bankruptcy court erred in conditionally granting the
motion to reopen because it did not hold an evidentiary hearing, and did not
therefore make any findings of fact.1 GLC posits that the bankruptcy court erred by
relying on proffers made by Appellees’ counsel regarding excusable neglect because
1
With no findings of fact to review, GLC argues, the appropriate standard of
review converts to de novo. No case law is presented for this proposition, however,
and this argument is rejected by the Court.
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no legal or factual basis was given for the extraordinary relief of reinstating a
dismissed Chapter 13 Case with prejudice after the appeal period had expired.
Under 11 U.S.C. § 350(b), “[a] case may be reopened in the court in which such
case was closed to administer assets, to accord relief to the debtor, or for other
cause.” Moreover,
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.
Fed. R. Bankr. P. 9006(b)(1).
“Excusable neglect is generally an ‘equitable inquiry’ based upon the
particular circumstances of the case.” Conn. State Dental Ass'n v. Anthem Health
Plans, Inc., 591 F.3d 1337, 1355 (11th Cir. 2009) (quoting Pioneer Inv. Servs. Co. v.
Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 389 (1993)).2 Whether Appellee’s neglect
was excusable is a fact-based issue entrusted to the bankruptcy judge's broad
discretion. In exercising its equitable powers, the bankruptcy court accepted the
representations made by counsel regarding why the Plan was not timely filed and
crafted relief that it deemed was fair to both the Debtors and the objecting creditor.
2
In Pioneer, the Court held that an attorney's inadvertent failure to timely file
a proof of claim can constitute excusable neglect under Bankruptcy Rule 9006(b)(1).
Looking to other rules for guidance on the meaning of “excusable neglect,” the Court
considered Rule 60(b)(1) and observed that “for purposes of Rule 60(b), ‘excusable
neglect’ is understood to encompass situations in which the failure to comply with a
filing deadline is attributable to negligence.” Id. at 394.
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The bankruptcy court conditioned reinstatement on the payment of all fees incurred
by GLC during the hiatus between the dismissal of the bankruptcy case and its
reinstatement. The fees were required as a condition of the reinstatement and
despite the request by counsel for the Debtors that their portion of the fees be paid
over time, the bankruptcy court conditioned reinstatement on immediate payment of
all fees to GLC. Upon certification of payment of the fees, the Chapter 13 Case was
reinstated.
The bankruptcy court judge accepted Appellees’ explanation as sufficient
justification for finding the late filing excusable. This Court concludes that it was
within the bankruptcy court’s discretion to rely upon a proffer as opposed to
requiring sworn testimony. The Debtors’ counsel is an officer of the court, and
deference should be given to the bankruptcy judge who is the trier of fact on the
issue of excusable neglect, whether in an evidentiary hearing or not. The bankruptcy
judge had the opportunity to observe the performance of the attorneys during the
course of the bankruptcy proceedings, and was able to weigh the equities versus the
harm of basically granting a default to the creditor. In light of the foregoing, it is
hereby
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ORDERED AND ADJUDGED that all appealed Orders of the Bankruptcy Court are
AFFIRMED. This case is CLOSED. All pending motions are DENIED as moot.
DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County,
Florida, this 22nd day of September, 2011.
_________________________
KENNETH A. MARRA
United States District Judge
copies to:
All counsel of record
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