Late Appeals and Excusable Neglect: A Curious Case Where a Court Gives an Individual a Break
Persuading a bankruptcy judge to find “excusable neglect” after missing a filing deadline is usually a tough sell. You’d think it would be particularly hard when the party seeking relief was “belligerent and disrespectful to the Court and opposing counsel.”
But in a somewhat unusual case, a court put bad behavior aside and ruled that the party making the request passed the test. Rainsdon v. Grant (In re Shannon Rose Fasano), No. 20-00372, Adv. Pro. No. 21-06005, 2023 WL 2761685 (Bankr. D. Idaho Apr. 3, 2023).
In 2016, Shannon Rose Fasano loaned Kristopher Grant just over $31,000, and the two signed a promissory note. In 2020, Fasano filed for chapter 7. In the interim years, Grant had paid back nothing on the loan.
The funds Grant owed Fasano were listed on the bankruptcy schedules in her chapter 7 case as an asset of the estate, and the bankruptcy Trustee sued Grant to collect. Grant did not challenge the suit, and the court entered a default judgment against him on January 23, 2023.
But, significantly, when the court entered the judgment, the judge had not yet ruled on the Trustee’s request for attorneys’ fees and costs. The court had the parties submit supplemental papers, “after which the Court [would] resolve any objections and enter Judgment against Defendant and in favor of Plaintiff.” 2023 WL 2761685, at *4 (emphasis added). On March 1, 2023, the court entered an amended judgment.
Even though Grant did not contest the suit, he filed a notice of appeal on February 27, 2023, 32 days after the court entered the original judgment.
Under Bankruptcy Rule 8002(a)(1), appeals must be filed within 14 days of entry of “the judgment, order, or decree being appealed.” The court can extend the deadline for 21 more days if the neglect was “excusable.” Rule 8002(d)(1).
Before anything occurred at the appellate level, the appellate court remanded the case for the bankruptcy judge to consider if Grant should be permitted to proceed with a late appeal based on the standard of excusable neglect.
In Fasano, before the judge analyzed excusable neglect, he considered whether the first judgment, entered on January 26, should be considered “final” in light of the subsequent ruling on fees and costs and the entry of the second judgment. Parties may appeal as a matter of right from a judgment if it is “final,” meaning it must be one that “ends the litigation on the merits and leaves nothing for the [lower] court to do but execute the judgment.” Caitlin v. United States, 324 U.S. 229, 233 (1945). Typically, judgments are “final” without regard to an award of fees or costs. But Bankruptcy Rule 7058 allows judges to extend the appeal deadline.
The judge said he might have caused “confusion” when the first judgment was entered. As noted, he told the parties that the court would “enter [j]udgment” after reviewing submissions on fees and costs. In light of this phrasing, the judge concluded that it was the second judgment that was “final,” not the first. Thus, under the analysis, the notice of appeal filed on February 27 was timely.[i]
In the alternative, the court considered – assuming the first judgment was final – if excusable neglect should apply to allow Grant to proceed with a late appeal. The well-known test for excusable neglect is found in Pioneer Inv. Servs. Co. v. Brunswick Associated Ltd. P’ship, 507 U.S. 390 (1993). As the court explained, the relevant factors are (1) danger of prejudice to the non-moving party; (2) length of delays caused by the neglect, and its potential impact on the proceedings; (3) reason for the delay, including whether it was within the movant’s reasonable control; and (4) whether the movant acted in good faith.
Considering the first factor, the court said the appellee, the bankruptcy Trustee, would be prejudiced because he would need to defend the appeal. But absent anything more prejudicial than that, the court decided that the harm to Grant by not being able to pursue the appeal outweighed the prejudice caused to the Trustee by delay.
Next, the court concluded that the minimal length of the delay, less than a month, also favored Grant. The third factor favored the Trustee: the reason for the delay and whether it was within Grant’s control. Grant told the court that when the judgment was entered he was in Asia, and thus he did not receive a copy of the judgment. But, the court noted, Grant knew a judgment would be issued and could have made arrangement to ensure he learned about it.
Finally, even though Grant was “belligerent and disrespectful” in court, the judge ruled that Grant had acted in good faith. Nothing in the record indicted that “the delay [was] for any sort of tactical reason.” 2023 WL 2761685, at *6. According to the court’s analysis, three of the four Pioneer factors favored Grant. As a result, the court allowed him to pursue the appeal.
A fact that evidently worked in Grant’s favor was that he represented himself in the case pro se. There was no attorney to receive the judgment when he was in Asia. And the person who missed the filing deadline was Grant himself, not an attorney representing him.
Therefore, what we have in this curious case is an individual who mistreated the judge and opposing counsel, defaulted on a promissory note, failed to contest liability on the merits, appealed but missed the filing deadline, and then arguably was given a break by the court and allowed to pursue the appeal.
Not all cases where excusable neglect is sought work out this well for those seeking courts’ leniency. It is a safe bet that if a party in Grant’s position was represented by counsel, a court would not rule that the neglect was excusable.
[i] Under Bankruptcy Rule 8002(a)(2), an appeal filed after a decision is issued but before entry is deemed filed on the date of entry of the judgment. Therefore, Grant’s appeal, filed on February 27, was treated as filed when the second judgment was entered on March 1.