Habbo Fokkena v. Rodney Goodwin ( 2010 )

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
No. 10-6027
In re: *
*
Rodney Nathan Goodwin, *
doing business as Goodwin Family Farms, *
*
Debtor. *
*
Habbo Fokkena, U.S. Trustee, * Appeal from the
* United States
Plaintiff - Appellee, * Bankruptcy Court for the
* Southern District of Iowa
v. *
*
Rodney Nathan Goodwin, *
*
Defendant - Appellant. *
No. 10-6028
In re: *
*
Rodney Nathan Goodwin, *
doing business as Goodwin Family Farms, *
*
Debtor. *
*
St. Ansgar Mills, Inc., * Appeal from the
* United States
Plaintiff - Appellant, * Bankruptcy Court for the
* Southern District of Iowa
v. *
*
Rodney Nathan Goodwin, *
doing business as Goodwin Family Farms, *
*
Defendant - Appellee. *
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No. 10-6049
In re: *
*
Rodney Nathan Goodwin, *
doing business as Goodwin Family Farms, *
*
Debtor. *
*
St. Ansgar Mills, Inc., * Appeal from the
* United States
Plaintiff - Appellee, * Bankruptcy Court for the
* Southern District of Iowa
v. *
*
Rodney Nathan Goodwin, *
doing business as Goodwin Family Farms, *
*
Defendant - Appellant. *
Submitted: September 23, 2010
Filed: October 13, 2010
Before KRESSEL, Chief Judge, SCHERMER and NAIL, Bankruptcy Judges
SCHERMER, Bankruptcy Judge
This matter concerns three appeals related to two adversary proceedings tried
in the bankruptcy court. Two of the appeals (Appeal Nos. 10-6027 and 10-6049) were
filed by Rodney Nathan Goodwin (the “Debtor”). These two appeals concern the
merits of the adversary proceedings filed by the United States Trustee (the “U.S.
Trustee”) and a creditor, St. Ansgar Mills, Inc. (the “Creditor”), against the Debtor.
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After a combined trial on the complaints in the adversary proceedings, the bankruptcy
court denied the Debtor’s discharge. The bankruptcy court also determined that the
specific debt owed to the Creditor would be non-dischargeable. The Creditor filed the
third appeal (Appeal No. 10-6028), seeking reversal of an order of the bankruptcy
court allowing the Debtor to extend the time to appeal the adverse bankruptcy court’s
order in the Creditor’s adversary proceeding.
For the reasons set forth below, we reverse the bankruptcy court’s order
allowing the Debtor an extension of time to file his notice of appeal of the bankruptcy
court’s decision in the Creditor’s adversary proceeding. As a result of our ruling, the
Debtor’s appeal was untimely, and his appeal of the bankruptcy court’s decision
denying his discharge is dismissed. Consequently, we also dismiss the Debtor’s
appeal of the bankruptcy court’s decision in the U.S. Trustee’s adversary proceeding
since the denial of the Debtor’s discharge by the Creditor leaves the Debtor no
effective relief.
ISSUE
The issues on appeal are: (1) whether the bankruptcy court erred when it
entered an order granting the Debtor’s request for an extension of the time to file his
appeal of the bankruptcy court’s decision in the Creditor’s adversary proceeding; and
(2) whether the Debtor’s appeal of the bankruptcy court’s decision in the U.S.
Trustee’s adversary proceeding should be dismissed. We conclude that the
bankruptcy court improperly allowed the Debtor to extend the time to appeal its
decision in the Creditor’s adversary proceeding and, accordingly, the Debtor’s appeals
of the bankruptcy court’s decisions in the Creditor’s and the U.S. Trustee’s adversary
proceedings should be dismissed.
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BACKGROUND
The Debtor filed a voluntary petition for relief under Chapter 7 of the
Bankruptcy Code. Thereafter, the Creditor commenced an adversary proceeding in
the Debtor’s bankruptcy case seeking a denial of the Debtor’s discharge and the
determination of the dischargeability of the debt owed by the Debtor to the Creditor.
The U.S. Trustee commenced a separate adversary proceeding seeking denial of the
Debtor’s discharge. On April 23, 2010, the bankruptcy court held a consolidated trial
on the two adversary proceedings. The bankruptcy judge read findings of facts and
conclusions of law on the record in a bench ruling denying the Debtor’s discharge and
determining that the debt owed from the Debtor to the Creditor was non-
dischargeable. The bench ruling was followed by a written orders entered the same
day in each adversary proceeding denying the Debtor’s discharge and providing that
the court record would constitute the bankruptcy court’s findings and conclusions
pursuant to Federal Rule of Bankruptcy Procedure 7052(a)(1).
On May 10, 2010, after the applicable appeal period had expired, the Debtor
filed identical motions in each adversary proceeding (the “Motion”) asking the court
to extend the time to file his notice of appeal. In the Motion, the Debtor asked for an
extension of twenty days to file his notice of appeal. As the basis for his request, the
Debtor asserted that because the bankruptcy court’s ruling was oral, he needed a trial
transcript to determine whether an appeal would be appropriate. He also explained
that he wanted to review the bankruptcy court’s “written decision with potential new
appellate counsel.” According to the Debtor’s Motion, he requested a copy of the
transcript on April 29, 2010. The Motion did not mention that the appeal period had
expired before the Debtor requested an extension of it. The Creditor objected to the
Debtor’s request to extend the time to appeal. The U.S. Trustee did not object.
On May 11, 2010, the bankruptcy court held a hearing on the Debtor’s request
for an extension of time to appeal. The Debtor’s counsel acknowledged that he was
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inexperienced in adversary proceedings and that he had been mistaken about the law
regarding the deadline to appeal the bankruptcy court’s decision. He explained that
he advised his client that he had 30 days to appeal since that is the “standard for
federal civil cases.” The Creditor argued that the Debtor should not be allowed an
extension of time to appeal because he had failed to request the extension of time
before the original deadline had passed. In addition, the Creditor explained that the
grant of an extension of time to appeal after expiration of the original appeal period
would require a showing of excusable neglect. According the Creditor, the Debtor
had not alleged excusable neglect and the facts did not demonstrate that it existed.
The bankruptcy court determined that the Debtor should be granted an
extension of time to file the notices of appeal until May 21, 2010 because the
bankruptcy court’s decision had been oral. Also on May 11, 2010, bankruptcy court
entered docket text orders in each adversary proceeding extending the deadline for the
Debtor to appeal. The Debtor’s appeals of the bankruptcy court’s decisions on the
merits of the two adversary proceedings followed on May 21, 2010. The Creditor
filed a timely notice of appeal of the bankruptcy court’s May11, 2010 order allowing
the Debtor an extension of time to appeal the bankruptcy court’s denial of its
discharge and the dischargeability of the debt to the Creditor.
STANDARD OF REVIEW
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DISCUSSION
Appeals Concerning Creditor’s Adversary Proceeding
The Creditor’s appeal asserts that the bankruptcy court improperly extended the
deadline for the Debtor to appeal its decision in the Creditor’s adversary proceeding.
Federal Rule of Bankruptcy Procedure 8002 governs the time for filing a notice of
appeal. Fed. R. Bankr. P. 8002. Subsection (a) of Rule 8002 provides that “[t]he
notice of appeal shall be filed with the clerk within 14 days of the date of entry of the
judgment, order, or decree appealed from.” Fed. R. Bankr. P. 8002(a). Subsection (c)
of Rule 8002 explains the procedure for obtaining an extension of the time for appeal.
Fed. R. Bankr. P. 8002(c). It provides, in pertinent part, that the request must be made
in writing “filed before the time for filing a notice of appeal has expired, except that
such a motion filed not later than 21 days after the expiration of the time for filing a
notice of appeal may be granted upon a showing of excusable neglect.” Fed. R.
Bankr. P. 8002(c)(emphasis added).
The parties agree that the Debtor did not request an extension of the time to file
a notice of appeal until after the original appeal period had expired. Therefore, we
address whether the bankruptcy court abused its discretion by granting the Debtor an
extension to file his notice of appeal.1
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The Creditor asked the bankruptcy court to summarily deny the Debtor’s
request for extension of time without examining whether excusable neglect existed
because the Debtor did not file his motion until after the original appeal period
expired and he did not cite to the excusable neglect standard. It also argued on
appeal that Rule 8002(c)’s excusable neglect standard “is not available or
applicable to the Debtor.” We do not think that the bankruptcy court acted
improperly by considering whether the Debtor could obtain an extension of the
deadline to appeal.
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The Supreme Court set forth the standard for determining whether excusable
neglect exists for the purposes of Fed. R. Bankr. P. 9006(b)(1). Pioneer Inv. Servs.
Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380 (1993). The Supreme Court’s
standard has been applied to determinations of excusable neglect under rules other
than Rule 9006(b)(1), such as decisions about extending the time to file a notice of
appeal. See Van Houweling, 258 B.R. at 175-76 (collecting cases). The determination
regarding whether failure to comply with a deadline is excusable “is at bottom an
equitable one, taking account of all relevant circumstances surrounding the party’s
omission.” Pioneer, 507 U.S. at 395. The factors considered “include . . . the danger
of prejudice to the [nonmovant], 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.”
Gibbons v. U.S., 317 F.3d 852, 854 (8th Cir. 2003)(quoting Pioneer, 507 U.S. at 395).
“In cases where ‘the judicial disfavor for default dispositions is not implicated,’ courts
may focus primarily on the reason for the movant’s delay. Chorosevic, 600 F.3d at
947 (quoting Gibbons, 317 F.3d 852).
The Debtor did not cite to the excusable neglect standard or offer any evidence
to show excusable neglect and the bankruptcy court made no findings to support its
extension of the appeal deadline. See Hartford Casualty Ins. Co. v. Food Barn Stores,
Inc. (In re Food Barn Stores, Inc.), 214 B.R. 197, 200 (B.A.P. 8th Cir. 1997))(movant
has burden to demonstrate excusable neglect).
With respect to the primary focus of an excusable neglect determination, the
reasons given by the Debtor for his delay, the Debtor simply did not provide support
for a determination of excusable neglect. The only reasons given to the bankruptcy
court for the failure to file a timely notice of appeal were that the Debtor wanted a
copy of the transcript or “written decision” to give to potential appellate counsel and
to review himself before deciding whether to appeal, and that the Debtor’s counsel
was mistaken about the law regarding the applicable appeal period.
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The Debtor’s argument that he was waiting for a copy of the transcript is of no
consequence. He did not need to wait until he had a copy of the transcript before he
filed a motion to extend the time to appeal. Rather, he could have filed his motion to
extend time before the appeal period had expired. Finally, any argument by the
Debtor that he was waiting for a written decision by the court is similarly
unpersuasive.
“Although inadvertance, ignorance of the rules, or mistakes concerning rules
do not usually constitute ‘excusable’ neglect, it is clear that ‘excusable neglect’ . . .
is a somewhat ‘elastic concept’ and is not limited strictly to omissions caused by
circumstances beyond the control of the movant.” Pioneer, 507 U.S. at 392. The
Debtor’s reliance on his attorney’s application of the incorrect law regarding the
applicable appeal period did not provided a basis for a finding of excusable neglect.
See Ceridian Corp., 212 F.3d at 404 (mistakes of law do not constitute excusable
neglect); Lowry v. McDonnell Douglas Corp., 211 F.3d 457, 463-464 (8th Cir.
2000)(citation omitted)(counsel’s misapplication of clear procedural rule was not
excusable neglect), cert. denied, 531 U.S. 929 (2000); Food Barn, 214 B.R. at 200-
201 (counsel’s mistake in calculating time for appeal under non-bankruptcy rules was
not excusable neglect); Van Houweling, 258 B.R. at 176 n.4 (in dicta)(even if
misapplication of inapplicable rule could be accredited with late appeal, party still
would not have established excusable neglect). Rule 8002(a) clearly provides that the
deadline for filing a notice of appeal runs from “the entry of the judgment, order, or
decree” being appealed. Fed. R. Bankr. P. 8002(a). It makes no specific reference to
or exception for the time required to obtain a transcript of a court’s oral findings of
fact and conclusions of law. Even if the Debtor’s counsel did not have prior
experience with adversary proceedings or bankruptcy appeals, he certainly could have
calculated the proper deadline to appeal.
Neither the Debtor nor the bankruptcy court specifically addressed the
remaining three Pioneer factors, but we gather the following from the record: (1) it
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seems that the length of the Debtor’s delay was minimal and would likely have little
impact on the proceedings; (2) the Debtor appears to have acted in good faith; and (3)
the prejudice to the Creditor is uncertain since the Debtor did not address the
Creditor’s argument that it would be prejudiced by the delay because it could not
move forward with its proceedings against the Debtor in state court until this matter
is resolved. The Debtor did not provide any evidence to prove excusable neglect and
the bankruptcy court abused its discretion by extending the Debtor’s deadline to file
his notices of appeal without making findings.
Appeal of the U.S. Trustee’s Adversary Proceeding
Because we reverse the bankruptcy court’s order extending the time for the
Debtor to appeal the ruling in favor of the Creditor, the Debtor’s appeal is dismissed
as untimely. This leaves us with the Debtor’s appeal of the bankruptcy court’s
decision in favor of the U.S. Trustee, denying the Debtor’s discharge. Prosecution of
the Debtor’s appeal will not achieve the result the Debtor desires. The effect of our
decision to dismiss the Debtor’s appeal of the Creditor’s ruling is that such ruling by
the bankruptcy court stands: the Debtor’s discharge is denied. The Debtor does not
have an effective remedy by appealing the bankruptcy court’s ruling in favor of the
U.S. Trustee. If the Debtor was successful in his appeal of the U.S. Trustee’s ruling,
the denial of his discharge in favor of the Creditor still stands.
CONCLUSION
For the foregoing reasons, the bankruptcy court’s grant of an extension of
time for the Debtor to file a notice of appeal of the decision in the Creditor’s
adversary proceeding is reversed (Appeal No. 10-6028). The Debtor’s appeals of
the bankruptcy court’s decisions in the U.S. Trustee’s and the Creditor’s adversary
proceedings are dismissed (Appeal Nos. 10-6027 and 10-6049).
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