In re Auto Specialties Mfg. Co.
| Decision Date | 31 October 1991 |
| Docket Number | Bankruptcy No. SK 88-03095,Adv. No. 88-0527. |
| Parties | In re AUTO SPECIALTIES MANUFACTURING COMPANY, a Michigan Corporation, Debtor. AUTO SPECIALTIES MANUFACTURING COMPANY, a Michigan Corporation, Debtor-in-Possession, Plaintiff, v. Benjamin SACHS and Manufacturers National Bank of Detroit, a National Banking Association, Defendants. |
| Court | U.S. Bankruptcy Court — Western District of Michigan |
Jeffrey R. Hughes, Grand Rapids, Mich., for Manufacturers Nat. Bank of Detroit.
Mark D. Evans, Bloomfield, Hills, Mich., for Benjamin Sachs.
James W. Boyd, trustee.
John E. Anding, Grand Rapids, Mich., Special Counsel, for trustee.
At issue is the interpretation and application of the "excusable neglect" standard of Fed.R.Bankr.P. 9033(c). Necessarily this is a core proceeding falling within the ambit of 28 U.S.C. § 157(b)(2)(A) and thus pursuant to 28 U.S.C. § 157(b)(1) the court may enter a final order subject to appellate review under § 158.
We start with the pertinent facts.
On September 23, 1991 a hearing was held on Auto Specialties Manufacturing Company's ("AUSCO's") motion to file fourth amended complaint. On September 25, 1991 the report and recommendation regarding AUSCO's motion to file fourth amended complaint ("R & R III"), proof of service, and notice were served by first class mail on the following parties and their counsel: John E. Anding, Esq., special counsel for Trustee James W. Boyd; Jeffrey R. Hughes, Esq., counsel for Manufacturers National Bank of Detroit; Mark D. Evans, Esq., counsel for Benjamin Sachs; James W. Boyd, Chapter 7 Trustee; Michael Main, Vice President, Manufacturers National Bank of Detroit; and Benjamin Sachs. The accompanying notice specifically stated in relevant part as follows:
PLEASE TAKE NOTICE that parties to this action have 10 days or longer if an extension is granted pursuant to Fed. R.Bankr.P. 9006(b) and 9033(c) to file written objections which identify these specific proposed findings or conclusions objected to and state the grounds for such objections in compliance with Fed. R.Bankr.P. 9033(b).
Neither objections nor a request for an extension to file written objections having been filed by October 7, 1991, the applicable period provided for by 9033(c), R & R III was forwarded to the district court for filing on October 8, 1991.1 The parties and their counsel were copied in the October 8, 1991 transmittal letter addressed to the district court clerk accompanying R & R III.
AUSCO's objections to R & R III were time stamped as received by the bankruptcy court clerk on October 10, 1991 at 3:31 p.m.. They were not, as asserted by AUSCO in its brief, mailed, but rather were hand-delivered to the court.
On October 11, 1991 Mark Van Allsburg, Clerk of the Bankruptcy Court, forwarded AUSCO's objections to R & R III and brief in support to District Court Clerk C. Duke Hynek. The transmittal letter stated that based on 9033(c) the objections appeared to be untimely. Again, a copy of the transmittal letter was sent to all parties and their counsel previously listed in this opinion.
Our next communique was AUSCO's emergency motion for enlargement of time pursuant to 9006(b)(1), brief in support, and affidavit of Christopher G. Hastings, all filed with the bankruptcy court at 10:41 a.m. on October 15, 1991. The Hastings affidavit states that AUSCO missed the deadline because a member of the firm's clerical staff computed the deadline date pursuant to the wrong rule.
By letter Mr. Van Allsburg advised the clerk of the district court of the receipt of these documents and that upon my determination of the excusable neglect issue, the district court would be advised forthwith so R & R III could be considered, with or without AUSCO's objections. Once more all parties and their counsel were copied on this letter.
On October 17, 1991 Manufacturers National Bank of Detroit ("Bank") filed its objection to AUSCO's emergency motion for enlargement of time pursuant to 9006(b)(1) and brief in support.
Finally, on October 18, 1991 AUSCO filed its reply to the Bank's objection.
Having brought current the saga of R & R III we believe a short discourse on the report and recommendation procedure is warranted. Because the Chapter 7 Trustee continues to refuse to consent to this court's entry of final orders or judgments as to non-core matters, 28 U.S.C. § 157(c)(1) requires that in all "such proceedings, the bankruptcy judge shall submit proposed findings of fact and conclusions of law to the district court . . . ".
Fed.R.Bankr.P. 9033, Review of Proposed Findings of Fact and Conclusions of Law in Non-Core Proceedings, sets out the requisite time-frames and procedures to be followed by counsel, the bankruptcy court and the district court in filing and resolving objections to the bankruptcy court's proposed findings of fact and conclusions of law, commonly referred to as the bankruptcy judge's report and recommendation.
9033(b) Objections: Time for Filing, requires that objections be filed within 10 days of service of the report and recommendation — here, October 7, 1991. Rule 9033 does provide some latitude, however. Part (c) Extension of Time states:
The bankruptcy judge may for cause extend the time for filing objections by any party for a period not to exceed 20 days from the expiration of the time otherwise prescribed by this rule. A request to extend the time for filing objections must be made before the time for filing objections has expired, except that a request made no more than 20 days after the expiration of the time for filing objections may be granted upon a showing of excusable neglect. (emphasis added).
Pursuant to the emphasized language of 9033(c), AUSCO's emergency motion for enlargement of time brought pursuant to 9006(b)(1) was timely filed. The parties do not dispute that the computation of any period of time allowed by the bankruptcy rules is governed by 9006(a), not Fed. R.Civ.P. (6)(a). In re Eichelberger, Jr., 943 F.2d 536 (5th Cir.1991).
Turning our attention to the concept of "excusable neglect" we are immediately faced with whether to apply the excusable neglect standard of 9033(c) or that of 9006(b). We also consider whether under these facts it would make a difference which standard we use. AUSCO claims that we examine excusable neglect pursuant to 9006(b) while the Bank directs the court's attention to 9033(c).
The applicable portions of 9006(b)(1) and (3) state:
The plain meaning of 9006(b)(1) and (3) supports the Bank's position.
Our search of the existing case law reveals only one reported decision which addresses excusable neglect within the parameters of 9033(c). In re Sasson Jeans, Inc., 104 B.R. 600 (S.D.N.Y.1989). Sasson Jeans involved the district court's review of the objections to two certifications of contempt by Bankruptcy Judge Burton R. Lifland. District Judge Lasker found excusable neglect with respect to the failure to object to the bankruptcy court's contempt certifications within ten days of service even though the extension of time to file objections was not sought within the twenty days after the time for filing objections had expired. Judge Lasker specifically remarked that this was not a case where the objections were untimely because counsel was busy with other litigation. Rather, contemner Paul Guez, President, Chief Financial Officer, and sole stockholder of Debtor Sasson was unrepresented by counsel when the contempts were certified, having stated under oath that he could not afford counsel. Noting that Mr. Guez had not timely sought an extension, Judge Lasker pointed out that Defendant Guez was not represented by counsel during the twenty day period, but that once appointed, counsel immediately sought a stay to file objections pending the court's decision regarding whether Guez was competent to stand trial. The court concluded that a strict construction of the twenty day limitation would raise constitutional problems if the rule were "used to bar Guez's right to appeal and review by an Article III court, where the defendant was, during the relevant time period, without the counsel to which he is constitutionally entitled." (citations omitted) 104 B.R. at 603. Although the facts, the contempt proceeding, and the perceived constitutional and appeal problems do not exist here, it is significant that in finding excusable neglect, Judge Lasker noted that the trustee had not alleged any resulting prejudice. Id. at 604. Thus Sasson Jeans suggests that prejudice may be a component of finding excusable neglect under 9033(c).
Some guidance is afforded the court by the Advisory Committee Note (1987) following 9033(c).
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