In re Tardugno
| Decision Date | 06 December 1999 |
| Docket Number | BAP No. MW 98-102. |
| Citation | 241 BR 777 |
| Parties | In re Robert A. TARDUGNO and Charlotte K. Tardugno, Debtors. Salem Five Cents Savings Bank, Appellant, v. Robert A. Tardugno and Charlotte K. Tardugno, Appellees. |
| Court | U.S. Bankruptcy Appellate Panel, First Circuit |
Thomas E. Pontes and Wynn & Wynn, P.C., Raynham, MA, on brief, for appellant.
John F. Davis and Boudreau, Mitchell & Davis, Andover, MA, on brief, for appellees.
Before: VOTOLATO, Chief Judge, LAMOUTTE and HAINES, Bankruptcy Judges.
Before the panel is Salem Five Cents Savings Bank's ("Salem Five") appeal of a bankruptcy court order denying its request for: (1) reconsideration; and (2) for leave to file a late response to Debtors' objection to its proof of claim. For the reasons set forth below we vacate the bankruptcy court order denying the motion to reconsider, and remand for further proceedings consistent with this opinion.
On April 29, 1998, Robert and Charlotte Tardugno filed a petition under Chapter 13. Soon thereafter extensive litigation took place between the Debtors and Salem Five, beginning with Salem Five's first motion for relief from stay regarding an unimproved parcel of land in Andover, Massachusetts. That motion was denied, without prejudice. Thereafter, Salem Five filed a secured proof of claim in the amount of $216,124.89 regarding the Andover real estate. Salem Five also objected to the Tardugnos' proposed Chapter 13 plan, and confirmation was denied. After that, Salem Five filed a second motion for relief from stay, which was also denied.
On September 23, 1998, the Debtors filed a notice of intended sale of Salem Five's collateral for $225,000, to which Salem Five filed a limited objection. On the same date, Salem Five filed an objection to confirmation of the Debtors' amended plan. The Debtors subsequently withdrew their notice of intended sale of the Andover property.
The case continued in this highly adversarial mode with the Debtors filing an objection to Salem Five's secured proof of claim,1 and on October 28 the bankruptcy court issued a Notice of Nonevidentiary Hearing and Response Deadline of December 2, 1998. Hearing on the objection to claim was scheduled for December 21, 1998, at 10:00 a.m. The court notice also stated: "If no objection or response is timely filed, the court, in its discretion, may cancel the hearing and rule on the motion without a hearing or further notice." Notice of Nonevidentiary Hearing, Appendix to Appellant's Brief, Exhibit U. True to the parties' desire to litigate everything, when the Debtors filed a second amended Chapter 13 plan and a renewed motion to sell the Andover property, both were objected to by Salem Five.
Salem Five failed to file an objection or response to the Debtors' objection to claim, and on December 4, 1998, the bankruptcy court, by a one-word order, sustained the Debtors' objection to Salem Five's claim and canceled the hearing scheduled for December 21, 1998. On December 14, 1998, Salem Five filed a "Motion for Reconsideration and for Leave of Court to File Late Response to: Debtors' Objection to Claim of Salem Five Cents Savings Bank." In its motion, Salem Five alleged that:
Due to mistake, inadvertence or excusable neglect, the Movant failed to file a response to the Debtors\' aforementioned Objection to Claim. Although the date set for hearing by the Court, December 21, 1998 at 10:00 A.M. was diaried by counsel, the date set forth in said notice for filing a response to the objection was inadvertently not diaried by counsel or his staff. Counsel did not realize that the response deadline had passed.
Salem Five's Motion for Reconsideration, Appendix to Appellant's Brief, Exhibit JJ. Salem Five also argued that the hyperactive and litigious nature of the case consisting of motions, objections, withdrawals, notices of hearing, etc., all served to create confusion, the error, and the resulting excusable neglect.
On December 19, 1998, without hearing, and again by a one-word order, the bankruptcy court denied Salem Five's motion for reconsideration and request for leave to file a late response. Endorsement Order, Appendix to Appellant's Brief, Exhibit KK. It is this order that Salem Five complains of on appeal. On January 7, 1999, the Bankruptcy Appellate Panel issued a temporary stay pending appeal, and on February 16 the Panel extended the stay for the entire pendency of this appeal. See Orders of January 7, 1999, and February 16, 1999, Docket Nos. 4 and 8.
Salem Five argues that under 11 U.S.C. § 502(j) and Fed.R.Bankr.P. 3008, reconsideration of a disallowed claim should be allowed for cause, and that the "for cause" standard is less stringent than the "excusable neglect standard" discussed in Pioneer Inv. Servs. v. Brunswick Assocs. Ltd. Partnership, 507 U.S. 380, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993). Salem Five also points out that even under the excusable neglect standard, relief is appropriate under the five factors set out by the Supreme Court in Pioneer. For these reasons, Salem Five argues, the bankruptcy judge committed reversible error in denying the motion to reconsider.
The bankruptcy court order denying Salem Five's motion to reconsider is reviewed under the abuse of discretion standard. See In re Sun Pipe Line Co., 831 F.2d 22, 25 (1st Cir.1987); Neal Mitchell Assocs. v. Braunstein (In re Lambeth Corp.), 227 B.R. 1, 7 (1st Cir. BAP 1998). As the First Circuit has stated: Independent Oil & Chem. Workers of Quincy, Inc. v. Procter & Gamble Mfg. Co., 864 F.2d 927, 929 (1st Cir.1988). In the instant case, because the bankruptcy court's reasoning for its decisions is not articulated, application of this standard on review is impossible.
In Lambeth, the panel dealt with a similar issue. The Chapter 7 Trustee objected to a creditor's proof of claim and the creditor filed a timely response. Lambeth, 227 B.R. at 2-3. A preliminary hearing was held on the objection, and the creditor was directed to file an amended proof of claim containing specific information. Id. at 3-4. At the close of the preliminary hearing, the bankruptcy judge informed the parties that if the Trustee objected to the amended claim, another hearing would be scheduled. Id. The creditor complied in part by timely filing the amended claim, but failed to include therein all the information required by the Court. Id. at 4. The Trustee objected to the claim as filed and the court issued its notice of "Nonevidentiary Hearing and Response Deadline," id., which contained its standard language: "If no objection or response is timely filed, the court, in its discretion, may cancel the hearing and rule on the motion without a hearing or further notice." Id.2 The creditor, believing (mistakenly) that an answer was not required, let the deadline pass for filing a timely response to the Trustee's objection. Id. at 5. The bankruptcy court, by endorsement order, canceled the hearing, sustained the Trustee's objection, and disallowed the claim. Id. at 4.
On appeal, the Bankruptcy Appellate Panel held that the bankruptcy court...
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