Bryant v. Smith ( 1998 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
In Re: DEBRA BRYANT GANTT; In
Re: WILLIAM A. BRYANT,
Debtors.
WILLIAM A. BRYANT, Debtor,
No. 96-1721
Plaintiff-Appellant,
v.
W. ALAN SMITH, JR., Trustee,
CRESTAR BANK,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Virginia, at Lynchburg.
Samuel G. Wilson, Chief District Judge.
(CA-95-60-L, BK-92-1914-WA1-7)
Argued: June 3, 1998
Decided: July 22, 1998
Before MURNAGHAN and ERVIN, Circuit Judges, and
PHILLIPS, Senior Circuit Judge.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: Sidney Harold Kirstein, Lynchburg, Virginia, for Appel-
lant. Alexander Wayne Bell, Lynchburg, Virginia, for Appellees. ON
BRIEF: Mary V. Barney, Lynchburg, Virginia; Leighton S. Houck,
CASKIE & FROST, Lynchburg, Virginia, for Appellees.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
William Bryant appeals the district court's order affirming the
bankruptcy court's decision to bar him from claiming debtor exemp-
tions because he failed to file required schedules in a timely manner.
Finding no abuse of discretion, we affirm.
I.
On October 21, 1992, Bryant and his wife* filed an emergency
Chapter 7 bankruptcy petition without attaching schedules of assets
and liabilities. The petition stayed a collection suit initiated by Crestar
Bank against the Bryants that was scheduled to commence on October
22.
Under Rule 1007(c) of the Federal Rules of Bankruptcy Procedure,
the required schedules were due November 5, fifteen days after the
filing of the petition. On November 16, eleven days after the due date,
Bryant's counsel informed the Trustee that the schedules would be
filed late because of the necessity of obtaining appraisals for certain
property. As a result, the Trustee was forced to adjourn the first credi-
tors' meeting, rescheduling it for December 1. On November 30, Bry-
ant submitted the necessary schedules, including Schedule C that
listed property claimed as exempt under the "poor debtor" exemption
provided by Va. Code Ann. § 34-26 (Michie 1996).
_________________________________________________________________
*The Bryants have since divorced and William Bryant brings this
appeal on behalf of himself only.
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The Trustee was subsequently forced to continue the December 1
meeting when a representative from Crestar failed to attend. On
December 15 and 16, respectively, the Trustee and Crestar filed
objections to Bryant's claimed exemptions because the schedules
were not timely submitted. In response, on December 21, Bryant filed
a motion to extend retroactively the time to file the schedules or,
alternatively, to have the petition dismissed because of the untimely
filing.
In February 1993, a hearing was conducted and Bryant's counsel
explained that the schedules were initially delayed because of the
complexity of the financial issues. In particular, Bryant's counsel
awaited a complicated appraisal involving a car wash recently sold by
Bryant and the retention by Bryant of a potential, reversionary interest
in the business. Bryant's first appraiser actually completed an esti-
mate of the value of Bryant's interest in October 1992. Bryant dis-
carded this appraisal, however, because, by the appraiser's admission,
the estimate failed to consider the contingent nature of his interest.
Bryant's second appraiser was then unable to provide a verbal esti-
mate until late November 1992. Bryant immediately filed the sched-
ules upon receipt of this verbal estimate. When the written appraisal
was finally completed on December 15, Bryant amended the schedule
to reflect the new estimate.
In March 1993, the bankruptcy court found that the late filings
were not supported by excusable neglect or good cause. Accordingly,
the court refused to permit the late filings under either Bankruptcy
Rule 1007(c) or Bankruptcy Rule 9006(b)(1). The court also rejected
Bryant's motion to dismiss the bankruptcy petition in its entirety. The
court then concluded, however, that the Trustee and Crestar should
not be permitted to avail themselves of the benefits of Bryant's sub-
mitted schedules while at the same time barring Bryant from claiming
any exemptions. On that basis, because the case was not dismissed,
all of Bryant's schedules, including Schedule C, were treated as filed
and given effect.
On appeal, the district court reversed, holding that"untimely filed
schedules waive a debtor's exemption unless the untimely filing is
permitted by the bankruptcy judge in his discretion for cause shown
or excusable neglect." The court remanded to the bankruptcy court to
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evaluate the late filing in the context of the Supreme Court's interven-
ing opinion in Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd., 507
U.S. 380 (1993). Bryant timely appealed the district court's decision
to this court.
While that appeal was pending, the bankruptcy court held another
hearing on the matter. Relying on the testimony presented during the
initial hearing, neither party offered evidence at this time. In June
1994, the bankruptcy court ruled that, under Pioneer, the late filing
was not excused. In this ruling, the court found that the appraisals in
question were not necessary to prepare the schedules nor was the
untimely filing caused by the delay in obtaining the second apprais-
er's appraisal. The court concluded that the missed deadline was not
caused by inadvertence, mistake, or carelessness but, instead, because
Bryant "simply chose to ignore it."
In November 1994, the district court sua sponte vacated the bank-
ruptcy court's order because the bankruptcy court lacked jurisdiction
over the matter while the appeal was pending before this court. Fol-
lowing the appeal's later dismissal by this court as interlocutory, the
bankruptcy court held a second remand hearing.
At this hearing in July 1995, the bankruptcy court reinstated its
order from June 1994. The district court upheld the bankruptcy
court's ruling commenting that "[s]ince this court cannot conclude
from the record that th[e] findings are clearly erroneous, it is con-
strained to affirm."
Bryant now challenges the lower courts' findings on the excusable
neglect issue and the district court's refusal to apply the doctrine of
equitable estoppel. We review these rulings for an abuse of discretion.
Heyman v. M.L. Marketing Co., 116 F.3d 91, 96 (4th Cir. 1997); In
re Power Recovery Sys., Inc., 950 F.2d 798, 891 (1st Cir. 1991).
II.
Preliminarily the Trustee asserts that this case is moot because all
of the relevant assets have either been administered for the benefit of
the creditors or will be abandoned. By his own admission, however,
4
the Trustee only intends to abandon the assets and had not, at the time
of oral argument, abandoned them because of the operation of general
bankruptcy laws. Under these circumstances, we decline to treat the
case as moot, and will address the merits of Bryant's appeal.
Bankruptcy Rule 9006(b)(1) authorizes a bankruptcy court to per-
mit a late filing, even when the moving party does not request an
extension until after the deadline has passed, if the delay "was the
result of excusable neglect." In Pioneer, the Supreme Court consid-
ered whether "an attorney's inadvertent failure to file a proof of claim
within the deadline set by the court can constitute`excusable neglect'
within the meaning of the Rule." 507 U.S. at 383. The attorney in that
case had failed to file in a timely manner for, among other reasons,
the "peculiar and inconspicuous placement of the bar date" that left
a "dramatic ambiguity" in the notification letter. Id. at 398 (quotations
omitted).
In finding that these circumstances constituted excusable neglect
under the relevant Rule, the Court first instructed that the term "[ne-
glect] encompasses both simple, faultless omissions to act and, more
commonly, omissions caused by carelessness." Id. at 388. Addressing
the term "excusable," the Court explained that"the determination is
at bottom an equitable one, taking account of all relevant circum-
stances surrounding the party's omission." Id. at 395. These include
"the danger of prejudice to the [non-moving party], 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." Id.In this case, the bankruptcy court, relying on Pioneer, found that
the delay was not caused by inadvertence, mistake, or carelessness but
that Bryant's "counsel simply chose to ignore[the deadline]." In
reaching this conclusion, the bankruptcy court noted that the sched-
ules could have been timely filed without obtaining the allegedly
delayed appraisal and then amended as a matter of course if neces-
sary. See Fed. R. Bankr. P. 1009(a) ("A . . . schedule . . . may be
amended by the debtor as a matter of course at any time before the
case is closed."). Inclusion of the appraisal was not required or neces-
sary in order for Bryant to have submitted adequate schedules by the
November 5th deadline.
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In addition, Bryant never claimed that he was unaware of or missed
the deadline inadvertently, carelessly, or as a result of a miscommuni-
cation. See Pioneer, 507 U.S. at 398 (finding excusable neglect where
attorney was provided deficient notice of bar date); Cheney v. Anchor
Glass Container Corp., 71 F.3d 848, 849 (11th Cir. 1996) (finding
excusable neglect where both of plaintiff's attorneys erroneously
assumed that the new trial demand had been filed by the other).
Instead, Bryant admitted that he deliberately chose to miss the dead-
line because he was awaiting the delayed appraisal and believed local
custom allowed such late filings with the implicit consent of the
Trustee. Reduced to its essence, Bryant's counsel knew the rule but
simply thought it was not binding. He consciously chose to disregard
the November 5th deadline apparently because of a basic mispercep-
tion about the flexibility of procedural time limits and the manner in
which a party can secure an extension of time.
Such calculated and deliberate action is rarely deemed to be excus-
able neglect. See Matter of LAN Assocs. XIV, 193 B.R. 730, 737
(Bankr. D.N.J. 1996) (finding that creditor's conscious decision not
to file because of perceived futility was a "choice" not to file and,
thus, not excusable neglect); Agribank v. Green , 188 B.R. 982, 989
(C.D. Ill. 1995) (refusing to find excusable neglect where creditor
acknowledged that it had waited to file so that"its claim did not have
to be amended"); In the Matter of Mother Hubbard, 152 B.R. 189,
193-94 (Bankr. W.D. Mich. 1993) (finding no excusable neglect
where creditor consciously decided not to file a claim in hopes of
increasing chances for a successful reorganization). To treat Bryant's
counsel's conduct as excusable neglect under these facts would risk
opening a door that should not be opened in fair and efficient bank-
ruptcy administration; it generally is not excusable to act on an
assumption that courts will not enforce their procedural rules. See
Advanced Estimating Sys., Inc. v. Riney, 130 F.3d 996, 999 (11th Cir.
1997) (holding that a failure to review or to appreciate the relevant
rules is simply a misunderstanding of the law that does not constitute
excusable neglect); Weinstock v. Cleary, Gottlieb, Steen & Hamilton,
16 F.3d 501, 503 (2d Cir. 1994) (explaining that the excusable neglect
standard is not met by showing a lack of familiarity with federal pro-
cedure or the operation of federal rules). Under these circumstances,
the bankruptcy court did not abuse its discretion in refusing to find
excusable neglect.
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Finally, Bryant proposes that "common law notions of estoppel"
require that his claimed exemptions be treated as timely filed. In mak-
ing this argument, however, Bryant does not cite any supporting case
or statutory law. He merely contends that fundamental fairness obli-
gates the bankruptcy court to consider the exemptions in Schedule C
on the merits. We disagree.
To the extent that common law principles of equity are not already
reflected in the excusable neglect standard, we reject Bryant's sugges-
tion that equitable estoppel demands a reversal in this case. "Equitable
estoppel applies against a party who has taken active steps to prevent
an opponent from acting in time to protect a claim." In re
Gardenshire, 220 B.R. 376 (B.A.P. 9th Cir. 1998) (citing Holmberg
v. Armbrecht, 327 U.S. 392, 396-97 (1945)). Bryant has not offered
any evidence that even approaches such a showing and, thus, his
claim cannot succeed.
For the above reasons, we affirm the district court's judgment.
SO ORDERED
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