Gruber v. Kaplan (In re Kaplan)

Gruber v. Kaplan (In re Kaplan), No. 11-4022 (3d CIr. May 24, 2012)
The Third Circuit Affirmed the District Court‟s order upholding the decision of the Bankruptcy Court denying Appellant's motion under Fed. R. Bankr. P. 8002(c) to extend the time to appeal and agreed with the District Court's determination that Appellant's due process right to notice had not been violated.
Procedural context:
Appeal of Rebecca Kaplan, proceeding pro se, from the United States District Court for the District of New Jersey reviewing an order of judgment entered by the Bankruptcy Court for the District of New Jersey. The Third Circuit reviewed the Bankruptcy Court‟s findings of fact for clear error and its legal determinations de novo.
In 2008, Kaplan filed a voluntary Chapter 7 petition in the Bankruptcy Court. Appellees commenced an adversary proceeding against Kaplan, seeking a declaration that Kaplan’s debt to Appellees was non-dischargeable. After a trial, the Bankruptcy Court found Kaplan’s obligations to Appellees non-dischargeable. Appellees sought to reopen the evidentiary record and the Bankruptcy Court held a telephonic hearing on the matter, at which Bankruptcy Judge Winfield ruled that she would execute a judgment for Appellees. Appellees submitted a proposed form of judgment to the Bankruptcy Court, which was filed electronically with the Court and emailed to Kaplan. In a letter to the Court, Kaplan commented on the proposed form of judgment. The Bankruptcy Court subsequently entered an order of judgment against Kaplan without responding to Kaplan’s letter. Kaplan failed to file a timely notice of appeal but did file a timely motion to extend the time to appeal pursuant to Fed. R. Bankr. P. 8002(c). In her Rule 8002(c) motion, Kaplan contended that seven factors, viewed in the aggregate, demonstrated excusable neglect, a requirement for relief under Rule 8002(c)(2). These were: (1) the Bankruptcy Court Clerk had erroneously been sending all correspondence to Kaplan’s former counsel, rather than to Kaplan, who was proceeding pro se; (2) opposing counsel breached a long-standing oral agreement to directly furnish Kaplan documents by email; (3) a history of lengthy delays in the Bankruptcy Court’s issuing of opinions, which led Kaplan to expect that a judgment was not immediately forthcoming; (4) an expectation that she would receive a response to her letter to the Bankruptcy Court; (5) Kaplan’s unfamiliarity with the requirement that she monitor the Court’s docket; (6) Kaplan’s pro se status; and (7) the lack of prejudice to the Appellees if Kaplan were permitted to appeal the order of judgment. Kaplan also contended that the Bankruptcy Court’s failure to properly provide her with notice of the order of judgment constituted a deprivation of her right to due process. The Bankruptcy Court held that, notwithstanding the Court’s service errors and Kaplan’s pro se status, she had an obligation to monitor the court docket. Kaplan timely appealed the Bankruptcy Court’s decision. The District Court affirmed and also held that Kaplan’s right to due process was not violated. Kaplan timely appealed the District Court’s order. The Court of Appeals of the Third Circuit affirmed, stating that “the question of excusable neglect under Rule 8002(c) is by its very nature left to the discretion of the bankruptcy court whose decision should not be set aside unless the reviewing court has a definite and firm conviction that the court below committed a clear error of judgment.” (quoting In re Lang, 414 F.3d 1191, 1194 (10th Cir. 2005)). The Court then examined the standard for evaluating claims of excusable neglect, enunciated by the Supreme Court in Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’Ship, 507 U.S. 380 (1993). In Pioneer, the Supreme Court characterized the “excusable neglect” determination as “at bottom an equitable one, taking account of all relevant circumstances surrounding the party’s omission.” 507 U.S. at 395. Factors to be considered in evaluating excusable neglect include [1] the danger of prejudice to the non-movant, [2] the length of the delay and its potential impact on judicial proceedings, [3] the reason for the delay, including whether it was within the reasonable control of the movant, and [4] whether the movant acted in good faith. The Court noted that notwithstanding the four-factor test, courts often focus on the third factor, and “the equities will rarely if ever favor a party who “fail[s] to follow the clear dictates of a court rule‟ and . . . where “the rule is entirely clear, we continue to expect that a party claiming excusable neglect will, in the ordinary course, lose under the Pioneer test.” (quoting Silivanch v. Celebrity Cruises, Inc., 333 F.3d 355, 366-7 (2d Cir. 2003)). The Circuit Court held that the District Court correctly applied the Pioneer factors. The District Court concluded that the first, second, and fourth factors weighed in Kaplan’s favor. But with regard to the third factor – the reason for the delay – the District Court reasoned that Kaplan’s argument essentially was that she failed to receive notice of the Bankruptcy Court’s order from either the Appellees or the Court, and that these problems, viewed in light of her pro se status, warranted a finding of excusable neglect. The Court maintained that when a litigant is aware that the court intends to enter an order, the fact that the litigant does not timely receive that order from the court will not render the litigant’s failure to timely file an appeal excusable. The Circuit Court also upheld the District Court’s holding that because Kaplan received actual notice of the Bankruptcy Court’s decision at the telephonic hearing, as well as from the Appellees’ proposed form of judgment, Kaplan’s right to due process was not violated.
AMBRO, FISHER and GARTH, Circuit Judges

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