Gruber v. Kaplan (In Re Kaplan)

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________

No. 11-4022
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In re: REBECCA ANN KAPLAN,
Debtor

KENNETH GRUBER, MURRAY GRUBER

REBECCA ANN KAPLAN,
Appellant
____________________________________

On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 11-cv-03572)
District Judge: Honorable Dennis M. Cavanaugh
____________________________________

Submitted Pursuant to Third Circuit LAR 34.1(a)
May 22, 2012

Before: AMBRO, FISHER and GARTH, Circuit Judges

(Filed: May 24, 2012)
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OPINION
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PER CURIAM

Appellant Rebecca Kaplan, proceeding pro se, appeals from the District Court‟s

order upholding the decision of the Bankruptcy Court denying her motion under Fed. R.
Bankr. P. 8002(c) to extend the time to appeal the Bankruptcy Court‟s March 17, 2011

order of judgment. For the reasons that follow, we will affirm the District Court‟s order.

Appellant‟s husband, Alan Kaplan, was sued in New Jersey in 2007 by the

Appellees in this case, who alleged that he had defrauded them into investing in his

corporation. In 2008, Appellant filed a voluntary Chapter 7 petition in the Bankruptcy

Court. Thereafter, the Appellees commenced an adversary proceeding against her,

alleging that she participated in her husband‟s misconduct, and seeking a declaration that

her debt to the Appellees was non-dischargeable.

After a trial, the Bankruptcy Court found Appellant‟s obligations to the Appellees

non-dischargeable. While the parties submitted further briefing on the issue of damages,

the Appellees sought to reopen the evidentiary record so as to include the New Jersey

state court‟s ruling against Appellant‟s husband. The Bankruptcy Court held a hearing on

February 7, 2011, at which Bankruptcy Judge Winfield appeared by telephone. Judge

Winfield ruled from the bench in favor of the Appellees, and explained that she would

execute a judgment for the Appellees upon receiving a judgment form from Appellees‟

counsel. Immediately after Judge Winfield‟s ruling, Appellant complained that she did

not understand what the judge had said; Judge Winfield explained that Appellant could

review the transcripts of the proceeding for clarification.

On March 8, 2011, Appellees submitted a proposed form of judgment to the

Bankruptcy Court; it was filed electronically with the Court and emailed to the Appellant.

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Counsel for the appellees included in the submission, for the Bankruptcy Court‟s

convenience, a copy of the New Jersey court decision against Alan Kaplan. By letter

dated March 14, Appellant explained to the Court that she did not object to the judgment

form itself, but she expressed concern that the state court order would be incorporated

into the Bankruptcy Court‟s judgment. Thereafter, on March 17, 2011, the Bankruptcy

Court entered an order of judgment against Appellant. Pursuant to Fed. R. Bankr. P.

8002(a), Appellant then had 14 days, i.e., until March 31, 2011, to file a notice of appeal

from that order. Appellant did not file a notice of appeal within that time frame, but on

April 8, 2011, she did file a timely motion under Fed. R. Bankr. P. 8002(c) to extend the

time to appeal.

In her Rule 8002(c) motion, Appellant 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 erroneously sent all

correspondences during the adversary proceeding to Appellant‟s former counsel from her

bankruptcy proceeding, rather than to Appellant, who was proceeding pro se;

(2) opposing counsel breached a long-standing oral agreement to directly furnish

Appellant by email with documents from the adversary proceeding; (3) a history of

lengthy delays in the Bankruptcy Court‟s issuing of opinions, which led Appellant to

expect that a judgment in the adversary proceeding was not immediately forthcoming;

(4) an expectation that she would receive a response to her March 14 letter to the

Bankruptcy Court; (5) Appellant‟s unfamiliarity with the requirement that she monitor

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the Court‟s docket; (6) Appellant‟s pro se status; and (7) the lack of prejudice to the

Appellees if Appellant were permitted to appeal the order of judgment. Further,

Appellant claimed 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.

Following a May 9, 2011 hearing on the motion, the Bankruptcy Court held that,

notwithstanding the Court‟s service errors and Appellant‟s pro se status, she had an

obligation to monitor the Bankruptcy Court‟s docket, and her failure to do so – knowing

that a decision was imminent based on the February 7 hearing – belied her claim of

excusable neglect. Kaplan then appealed the Bankruptcy Court‟s decision to the District

Court.

The District Court affirmed the Bankruptcy Court‟s order and also held that

Appellant‟s right to due process was not violated. Kaplan timely appealed the District

Court‟s order.

II.

The District Court had jurisdiction pursuant to 28 U.S.C. § 158(a). We have

jurisdiction pursuant to 28 U.S.C. §§ 1291 and 158(d). We exercise the same standard of

review as the District Court when it reviewed the original appeal from the Bankruptcy

Court. See In re Handel, 570 F.3d 140, 141 (3d Cir. 2009). “Thus, we review the

Bankruptcy Court‟s findings of fact for clear error and exercise plenary review over the

Bankruptcy Court‟s legal determinations.” Id. “„The question of excusable neglect

[under Rule 8002(c)] is by its very nature left to the discretion of the bankruptcy court

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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.‟” In re Lang,

414 F.3d 1191, 1194 (10th Cir. 2005) (quoting In re Power Recovery Sys., Inc., 950 F.2d

798, 801 (1st Cir. 1991)); see also In re Vertientes, Ltd., 845 F.2d 57, 59 (3d Cir. 1988)

(applying abuse of discretion standard to Bankruptcy Court determination regarding

excusable neglect for purposes of Fed. R. Bankr. P. 9006(b)).

In Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P‟Ship, 507 U.S. 380 (1993),

the Supreme Court set forth the standard for evaluating claims of excusable neglect, and

that standard applies in the context of a motion under Rule 8002(c). See S‟holders v.

Sound Radio, Inc., 109 F.3d 873, 879 (3d Cir. 1997). 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.‟”

Silivanch v. Celebrity Cruises, Inc., 333 F.3d 355, 366 (2d Cir. 2003) (quoting Pioneer,

507 U.S. at 395). As the Second Circuit noted in Silivanch, 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

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ordinary course, lose under the Pioneer test.‟” Id. at 366-67 (quoting Canfield v. Van

Atta Buick/GMC Truck, Inc., 127 F.3d 248, 250-51 (2d Cir. 1997)); see also In re Am.

Classic Voyages Co., 405 F.3d 127, 133-34 (3d Cir. 2005) (noting that “[a]ll factors must

be considered and balanced; no one factor trumps the others,” but relying “primarily on

the third Pioneer factor . . . [because] the delay in this case was entirely avoidable and

within [the movant‟s] control”).

In reviewing the Bankruptcy Court‟s decision, the District Court evaluated

Appellant‟s Rule 8002(c) motion under the Pioneer factors. The District Court concluded

that the first, second, and fourth factors weighed in Appellant‟s favor, although these

factors were not viewed as particularly compelling, and the parties do not meaningfully

challenge those conclusions on appeal. With regard to the third factor – the reason for

the delay – the District Court reasoned that Appellant‟s argument was, at base, 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. However, when a litigant is aware that the Bankruptcy Court intends

to enter an order, the fact that the litigant does not timely receive that order from the

Bankruptcy Court will not render the litigant‟s failure to timely file an appeal excusable.

See In re: Investors & Lenders, Ltd., 169 B.R. 546, 550-51 (Bankr. D.N.J. 1994). The

District Court reasoned that, like the appellants in Investors & Lenders, Kaplan was

aware of the Bankruptcy Court‟s impending judgment given that she was present for the

February 7 hearing, when Judge Winfield announced her decision.

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Kaplan argues that she expressed confusion about the Bankruptcy Court‟s ruling

during the hearing, and should not be held responsible for “knowing” of the decision,

given that the Bankruptcy Court refused to clarify its ruling for her. However, her

argument is undercut in light of her receipt of, and qualified assent to, the Appellees‟

March 8, 2011 submission to the Bankruptcy Court of a proposed judgment. See

Appellees‟ Appendix at 28. Indeed, the March 8 letter expressly cites the Bankruptcy

Court‟s August 18, 2010, and February 7, 2011 rulings “finding [Kaplan‟s] obligations to

the Plaintiffs non-dischargeable . . . ,” and it includes “for Your Honor‟s approval [] a

proposed form of Judgment.” Id. In short, Appellant‟s purported misunderstanding, like

her other explanations for failing to monitor the docket – i.e., the Bankruptcy Court‟s

previous delays, the Appellees‟ practice of sending courtesy copies of court documents,1

and the expectation of an answer to her March 14 objection – did not absolve her of that

responsibility. We agree with the District Court that, in light of all of these

considerations, the Bankruptcy Court‟s determination that Appellant did not demonstrate

excusable neglect was not an abuse of discretion.

Finally, Appellant argued before the District Court that the Bankruptcy Court‟s

failure to provide her with the order of judgment amounted to a violation of her due

1
The Appellees note in their brief that there was no oral agreement to furnish
Kaplan with court documents, and that the only documents they provided to her were
their own filings in the Bankruptcy Court, as required by the Bankruptcy Rules. The
Appellant has presented no evidence of an oral agreement, and the Appellees‟ argument
significantly undercuts her contention.

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process right to notice. The Fifth Amendment requires that a party be provided with

notice and an opportunity to be heard before being deprived of a protected property

interest. See In re Longardner & Assocs., Inc., 855 F.2d 455, 465 (7th Cir. 1988) (citing

Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 313-14 (1950)). As the

District Court reasoned, notwithstanding the Bankruptcy Court‟s error in providing

Appellant with court documents, she received actual notice of the Bankruptcy Court‟s

decision at the February 7 hearing, as well as from the Appellees‟ proposed form of

judgment. We perceive no error in the District Court‟s determination that this actual

notice comported with due process.

Accordingly, we will affirm. Judge Ambro would have ruled in favor of

excusable neglect.