In re Hillard Development Corp.
| Decision Date | 04 August 1999 |
| Docket Number | Bankruptcy No. 90-27588-BKC-AJC,98-25061-BKC-AJC. Adversary No. 99-2008-BKC-AJC-A.,98-25060-BKC-AJC |
| Citation | 238 BR 857 |
| Parties | In re The HILLARD DEVELOPMENT CORPORATION, etc., Debtor. In re Richmond Health Care, Inc., d/b/a Sunrise Health and Rehabilitation Center, Debtor. In re Hillard Development Corporation, d/b/a Pilgrim Manor Nursing Home, d/b/a Provident Nursing Home, Debtor. Simonetti Development, LTD., Plaintiff, v. Hillard Development Corporation, Defendant. |
| Court | U.S. Bankruptcy Court — Southern District of Florida |
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Gregory A. Martin, Miami, Florida, for plaintiff.
James B. Boone, Fort Lauderdale, Florida, for defendant.
Although this opinion addresses a variety of issues, the principal question is whether a statute of limitations defense may defeat a creditor's rights under a previously confirmed chapter 11 plan.
The court has subject matter jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 1334 and 157. The proceeding is a core proceeding under 28 U.S.C. § 157(b)(2)(K) ().2
Debtor-defendant Hillard Development Corporation ("Hillard") and a related corporation filed voluntary chapter 11 cases on July 20, 1998.3 The current case, Hillard's second this decade, occurred approximately six years after the confirmation of its amended plan of reorganization in the first chapter 11 proceeding (hereinafter "First Plan"). The First Plan restructured Hillard's obligations to its pre-petition creditors including the Resolution Trust Corporation ("RTC"), as receiver for the Home Federal Savings Association of Kansas City, F.A. Plaintiff Simonetti Development, Ltd. ("Simonetti") is the successor in interest to the RTC's rights under the First Plan. No plan of reorganization has been confirmed in the present chapter 11 proceeding.
Complaining that Hillard failed to take various actions required under the First Plan, such as executing a new promissory note and mortgage modification agreements, Simonetti commenced this adversary proceeding on January 13, 1999 to compel Hillard to comply with the First Plan. Simonetti also seeks a determination concerning the validity and extent of certain liens it claims on property of Hillard's current bankruptcy estate by virtue of the First Plan. See Complaint (Court Paper No.1) (hereinafter "C.P. ___").
Presently before the court are three motions: Hillard's Motion to Dismiss, Hillard's Motion for Summary Judgment (hereinafter "Summary Judgment Motion"), and Simonetti's Motion for Nunc Pro Tunc Extension of Time to File Exhibits in Opposition to Motion for Summary Judgment (hereinafter "Nunc Pro Tunc Motion"). On May 25, 1999, the court heard lengthy oral argument regarding the Motion to Dismiss and Summary Judgment Motion. Because, in moving to dismiss, Hillard relied on matters outside the pleadings (which requires the court to treat the motion as one for summary judgment), and because Hillard also moved for summary judgment under Fed.R.Civ.P. 56 on the same grounds, the court regards the Summary Judgment Motion as subsuming and incorporating the Motion to Dismiss. Accordingly, the court will deny the Motion to Dismiss as moot, and will address the Summary Judgment Motion in this opinion.
At the outset, the court will resolve one procedural problem arising from Simonetti's service of an amended complaint following the oral argument. The court granted Simonetti permission to serve an amended complaint in an order dated June 7, 1999. See C.P. No. 35.
Prior to permitting the amendment, in an effort to discern any related prejudice, the court made several inquiries of Simonetti's counsel. At the oral argument, Simonetti's counsel informed the court that the amended complaint merely added a claim for relief in the form of an equitable lien. See Transcript of Oral Argument on Defendant's Motion to Dismiss and Defendant's Motion for Summary Judgment at 5-7 (hereinafter "Tr. at ___"). The supporting allegations set forth in the original complaint are substantially unchanged.
Hillard's counsel did not articulate any prejudice arising from the proposed amendment, and later acknowledged that the dispositive motions apply equally to the original and amended complaints. See Letter from James B. Boone to the undersigned judge, dated July 7, 1999. In short, because the issues presented in the Summary Judgment Motion apply equally to Simonetti's original and amended complaints, the court and the parties treated the Motion to Dismiss and Summary Judgment Motion as if both were directed at the amended complaint. See Tr. at 174; cf. Reflectone, Inc. v. Farrand Optical Co., 862 F.2d 841, 845-46 (11th Cir.1989) (). The court, of course, will not deprive Hillard of an opportunity to address any new issues raised in the amended complaint.
Simonetti's failure to serve and file a response to the Summary Judgment Motion prior to the date of the hearing, and its efforts to correct this misstep by invoking the mandatory judicial notice provisions of Fed.R.Evid. 201(d) and by filing the Nunc Pro Tunc Motion, require the court to address another cloudy procedural matter before reaching the merits of Hillard's dispositive motion.
Two days after the May 25, 1999 oral argument on the Summary Judgment Motion, Simonetti filed and served its Nunc Pro Tunc Motion, the stated purpose of which is to persuade the court that it should consider the documents that Simonetti served on Hillard's counsel on May 25, 1999—the date of the hearing on the Summary Judgment Motion. Although mistakenly contending that the documents were timely served and filed, Simonetti alternatively argues that, under the "excusable neglect" standard of Fed. R.Bankr.P. 9006(b)(1), the court should consider its untimely submitted opposition.
The court begins its analysis with reference to the text of Fed.R.Civ.P. 56 () which mandates procedures relating to motions for summary judgment:
The motion shall be served at least 10 days before the time fixed for the hearing. The adverse party prior to the day of hearing may serve opposing affidavits.
See Fed.R.Civ.P. 56(c). Under Rule 56(c), therefore, the issue is whether Simonetti served opposing affidavits prior to the date of the hearing.
There is no dispute that the exhibits in opposition to the motion for summary judgment were not served "prior to the day of hearing": the transcript reveals that Simonetti's counsel handed Hillard's counsel the responsive papers on the afternoon of the hearing and Simonetti's counsel's own certificate of service indicates that the response was served, by mail, on the date of the hearing. See Affidavit of Gregory A. Martin at ¶ 13 and Exh. E attached thereto (C.P.30). To justify its tardiness, Simonetti contends that "Rule 56(c) does not by its terms require filing of exhibits at least one (1) day prior to the hearing, nor does it impose any requirement that the opposing party serve and file a memorandum of law." See Nunc Pro Tunc Motion at ¶ 2 (C.P.28). Instead, according to Simonetti, the rule simply permits the responding party to serve "opposing affidavits." Id. (original emphasis). In short, Simonetti would have the court draw two distinctions: (1) a distinction between "service" and "filing"; and (2) a distinction between "affidavits" and "exhibits." The court accepts the first distinction, but rejects the second.
Under Fed.R.Civ.P. 5(d), made applicable to adversary proceedings by Fed.R.Bankr.P. 7005, all papers after the complaint that are required to be served upon a party must be filed with the court within a reasonable time. See Fed. R.Civ.P. 5(d). Both the Federal Rules of Civil Procedure and the Federal Rules of Bankruptcy Procedure thus distinguish between service and filing of papers. The filing, however, must be accomplished within a reasonable time, and this court concludes that filing on the date of hearing, because it deprives the court of the opportunity to review the papers in advance of the argument, is not reasonable under Fed.R.Civ.P. 5(d).5 Thus, Simonetti's distinction between service and filing is fruitless.
Simonetti's other counterfeit distinction —between "affidavits" and "exhibits" —is equally unavailing because an affidavit is the usual conduit through which a litigant presents documents or exhibits to the court on a motion for summary judgment. Indeed, Fed.R.Civ.P. 56 requires that papers and other documents submitted to the court on a motion for summary judgment be "sworn or certified"—a requirement usually satisfied by attaching documents to an affidavit. See Fed. R.Civ.P. 56(e). Moreover, a meaningful hearing on a motion for summary judgment requires an adverse party to have advance notice of the written materials to be considered at the hearing. To permit otherwise may result in extreme prejudice or inexcusable surprise. For this reason, Rule 56(c) requires service of opposing affidavits, if any, prior to the day of the hearing. There is no just reason to construe Fed.R.Civ.P. 56(c) as (1) requiring the opponent of a summary judgment motion to serve affidavits prior to the hearing, but (2) allowing the opponent to spring its documentary opposition upon the moving party at the hearing. See Fed. R.Bankr.P. 1001 & Fed.R.Civ.P. 1 (). The...
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