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Federal Judge Gives Debtors Additional Time to Perfect Appeal in California Chapter 7 Bankruptcy Case

By Jonathunder (Own work) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0-2.5-2.0-1.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia CommonsA federal district judge considered a couple’s request to reinstate their appeal in a Chapter 7 case. After several instructions and orders from the court to file additional documents, the court had dismissed the appeal, leading to the debtors’ motion to vacate the dismissal. The court reviewed the debtors’ track record and the general procedure for appealing bankruptcy court orders to the district court in reaching its decision. In re Kincaid (“Kincaid II”), No. 2:13-cv-01032, order (E.D. Cal., Jun. 26, 2014). Despite what the court called “bad faith and a consistent pattern of dilatory behavior” on the part of the debtors, id. at 2, it granted the motion.

According to the district court, the debtors originally filed for Chapter 7 bankruptcy in February 2005. The trustee filed the final report with the bankruptcy court in January 2013, certifying that the administration of the bankruptcy estate was complete. The debtors objected to the trustee’s final account and distribution report, but they did not file a written objection within the 30-day time period set by Rule 5009 of the Federal Rules of Bankruptcy Procedure.

The bankruptcy court denied the debtors’ motion for extension of time to file documents in support of their objections in March 2013, finding that their failure to file the documents on time was not “the result of excusable neglect.” In re Kincaid (“Kincaid I”), No. 05-21390-B-7, order (Bankr. E.D. Cal., Mar. 20, 2013), citing Fed. R. Bankr. P. 9006(b)(1). It also denied their motion for reconsideration in May 2014, after which the debtors filed a pro se appeal with the U.S. District Court for the Eastern District of California on May 24, 2013.

The district court instructed the debtors that they had to file a designation of record, a statement of issues, and other documents within 14 days of filing their appeal. It issued a “notice of incomplete or delayed record” on June 26, 2013, when the debtors still had not filed the required documents. The debtors filed a motion to extend time on July 9, but the court did not receive it until August 1 because of a “clerical error.” Kincaid II, order at 1. They filed a statement of issues on July 25, which raised 14 points of error, some relating to the bankruptcy court’s findings regarding “excusable neglect.”

In September 2013, the district court ordered the debtors to supplement their motion for extension of time within 21 days. When they still had not filed the requested documents, the court dismissed their appeal in March 2014 for “failure to prosecute and failure to comply with court orders.” Id. at 2. The debtors moved to vacate the dismissal in May.

The court granted their motion, allowing them a “final opportunity to perfect the appeal,” id., with several caveats. The court, citing American Ass’n of Naturopathic Physicians v. Hayhurst, 227 F.3d 1104, 1008 (9th Cir. 2000), noted that pro se litigants have the same obligation to follow court orders, rules of procedure, and local rules as any other litigant. It further noted that it does not accept the factual allegations presented by the debtors in their filings and made the remark regarding “dilatory behavior.”

Bankruptcy attorney Devin Sawdayi has represented clients in the Los Angeles area for over 16 years, guiding them through Chapter 7 or Chapter 13 bankruptcies and helping them repair their finances with dignity and respect. Please contact us today online or at (310) 475-9399 to schedule a free and confidential consultation to see how we may can help you.

More Blog Posts:

California Bankruptcy Court Rules on Debtor’s Motion to Withdraw Reference, Which Would Transfer Proceeding to District Court, Los Angeles Bankruptcy Lawyer Blawg, April 22, 2014

Debtor’s Adversary Proceeding in Chapter 7 Bankruptcy Dismissed on Procedural Grounds; Appeal Dismissed as Untimely, Los Angeles Bankruptcy Lawyer Blawg, November 13, 2013

California Appeals Court Allows Involuntary Bankruptcy Case to Proceed Where Creditors’ Claims Are State Court Judgments Under Appeal, Los Angeles Bankruptcy Lawyer Blawg, July 2, 2013

Photo credit: By Jonathunder (Own work) [GFDL or CC-BY-SA-3.0-2.5-2.0-1.0], via Wikimedia Commons.