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In re Carol Engen

Summarizing by Bradley Pearce

In re Nations First Capital, LLC

Case Type:
Case Status:
BAP No. EC-19-1201-GLB (9th Circuit, Jun 05,2020) Not Published
The bankruptcy court abused its discretion by reconsidering a claim disallowance under section 502(j) and FRCP 60(b)(6)) despite finding that the claimant lacked a cogent excuse for failing to respond to the claim objection. Relief under Rule 60(b)(1) based on excusable neglect was not warranted because the claimant did not overcome the presumption that mail properly addressed is presumed received by the addressee. There were no extraordinary circumstances warranting relief under Rule 60(b)(6) because the bankruptcy court had reviewed the merits of the claim when it was disallowed.
Procedural context:
A claimant objected to a motion for a final decree and requested that the court reconsider its prior order disallowing the claimant's claim after the claimant failed to respond to the claim objection. The bankruptcy court granted the request for reconsideration and then abstained from hearing the merits of the claim objection. The debtor moved for reconsideration of the order reconsidering the disallowance of the claim. The bankruptcy court denied that motion for reconsideration and the debtor appealed to the BAP.
The debtor objected to a proof of claim. The proof of service showed service on the claimant and its attorney. The claimant did not respond to the objection or appear at the hearing and the bankruptcy court sustained the objection. Several months later the claimant objected to the debtor's motion for a final decree and requested reconsideration of the claim disallowance. The court continued the hearing and permitted briefing. The claimant's attorney submitted declarations that to the best of his knowledge his office did not receive notice of the claim objection and that he never saw the claim objection. The court held reconsideration under section 502(j) is evaluated under the same criteria as a Rule 60(b) motion, and reconsideration was appropriate under Rule 60(b)(6) to permit the dispute to be decided on the merits notwithstanding the lack of a cogent excuse for not having responded to the claim objection.

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