State Bank of S. Utah v. Beal (In re Beal), Bankruptcy Case No. 19-20276

CourtU.S. Bankruptcy Court — District of Utah
Writing for the CourtR. KIMBALL MOSIER, U.S. Bankruptcy Judge
Citation616 B.R. 140
Parties IN RE: Allen BEAL, Debtor. State Bank of Southern Utah, Plaintiff, v. Allen Beal, Defendant.
Decision Date31 March 2020
Docket NumberAdversary Proceeding No. 19-2043,Bankruptcy Case No. 19-20276

616 B.R. 140

IN RE: Allen BEAL, Debtor.

State Bank of Southern Utah, Plaintiff,
v.
Allen Beal, Defendant.

Bankruptcy Case No. 19-20276
Adversary Proceeding No. 19-2043

United States Bankruptcy Court, D. Utah.

Signed March 31, 2020


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Steven W. Call, Justin Michael Kuettel, Ray Quinney & Nebeker, Salt Lake City, UT, for Plaintiff.

William P. Morrison, Morrison Law Office, Inc., Salt Lake City, UT, for Defendant.

MEMORANDUM DECISION

R. KIMBALL MOSIER, U.S. Bankruptcy Judge

Twenty minutes before a midnight deadline, counsel for Plaintiff State Bank of Southern Utah (SBSU) logged in to CM/ECF, the Court's case management and electronic filing system,1 to file a complaint against Defendant Allen Beal. Things did not go as smoothly as anticipated, and by the time he filed the complaint, the clock had already struck twelve. SBSU has laid the blame for this tardy filing on the electronic filing system, arguing that it was malfunctioning at the time counsel sought to file the complaint. SBSU subsequently filed a Verified Motion for Extension of Time for Filing Adversary Proceeding for Non-Dischargeability and Denial of Discharge Pursuant to 11 U.S.C. §§ 523 and 727 (Motion to Extend Time) on that basis.2 In response, Beal filed a motion to dismiss this adversary proceeding as untimely filed.3

The Court conducted an evidentiary hearing on those motions. After thoroughly reviewing the evidence and assessing the credibility of witnesses; and having read the motions, memoranda, and briefs; and having heard the arguments of counsel and conducted its own independent research of applicable law, the Court issues the following Memorandum Decision denying

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SBSU's motion and granting Beal's motion.4

I. JURISDICTION

The Court's jurisdiction over this adversary proceeding is properly invoked pursuant to 28 U.S.C. § 1334 and § 157(b)(1). SBSU's complaint seeks to except a debt from Beal's discharge and to deny that discharge entirely, making this a core proceeding within the definition of 28 U.S.C. § 157(b)(2)(I) and (J), and the Court may enter a final order. Venue is appropriate under 28 U.S.C. § 1409.

II. FINDINGS OF FACT

Beal filed his chapter 7 case, out of which this adversary proceeding arises, on January 15, 2019. His meeting of creditors under 11 U.S.C. § 341(a)5 was scheduled for February 20, 2019, causing the 60-day deadlines to file a complaint objecting to Beal's discharge under Rule 4004(a) and to except debts from his discharge under Rule 4007(c) to fall on April 22, 2019.

Steven Call made his appearance on behalf of SBSU on February 8. After attending Beal's § 341 meeting, he filed a motion on April 5 requesting authorization to conduct a Rule 2004 exam of Beal, which the Court granted that same day. Call then issued a subpoena duces tecum and ad testificandum to Beal, requiring the production of certain documents and scheduling the 2004 exam for April 22 at 9:30 a.m.6 Although there were some negotiations to start the exam later in the day or even move it to a different date, they were unsuccessful.7 The parties held the 2004 exam as scheduled and concluded at approximately 3:00 p.m., which left Call with about nine hours to file the complaint.

Prior to taking Beal's 2004 exam, Call and Justin Kuettel, an attorney working with Call on the case, had begun drafting an adversary complaint against Beal. After the conclusion of the 2004 exam Call revised the complaint. Metadata on the complaint show that Call began working on it at 4:21 p.m. and that he concluded his revisions at 11:24 p.m.8 Call then created PDF files of ten exhibits he intended to attach to the complaint. He finished that task at 11:36 p.m.,9 and logged in to CM/ECF at 11:40 p.m.10 His successful login shows that CM/ECF was functioning properly at that time.

Once in CM/ECF, Call proceeded through the steps necessary to file a complaint until he reached a data field that

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requires the filer to input the amount of damages requested. Next to the field is the following text: "Demand ($000)," which Call interpreted to require that he put in the amount of damages with a dollar sign. That interpretation was incorrect; the demand field requires that the filer enter an integer without a dollar sign, comma, or decimal point. The "($000)" notation signifies not that a dollar sign should be used, but that the amount of damages should be entered in thousands of dollars. If a filer inserts a dollar sign, comma, or decimal point in the demand field, CM/ECF will produce an error message that reads, "You have to enter a valid integer number." The filer will not be able to proceed to the next screen until the filer corrects the error by entering a valid integer number.

When Call first attempted to enter the amount of damages, he used a dollar sign and a comma.11 He tried to advance to the next screen, but the CM/ECF program prohibited him—as it was designed to do—and gave him an error message that he recalled as "integer missing."12 This demonstrates again that the CM/ECF system was functioning properly at that time. Call then entered the amount without a comma, but received the same message. He tried entering "random numbers," but to no avail. Crucially, Call never testified that he had removed the dollar sign from the demand field during these attempts. The time was then about 11:45 p.m. Call kept trying, going through "many, many permutations," some with dollar signs and some without, some with commas and some without. Each time, Call received the same error message. After Call employed "different numbers," CM/ECF "eventually advanced" to the next page.13

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Call successfully uploaded the complaint through CM/ECF,14 proceeded past at least one more page,15 then arrived at a page titled Open Adversary Case.16 Below that title is a notation that a $350 fee will be assessed for filing a complaint and, beneath that, are two buttons, one labeled "Next," the other "Clear."17 At the time, Call perceived the title of this page as stating that the fee had to be paid before the Court would open an adversary proceeding. This, too, was a misinterpretation. The title of the page means no such thing; the Court will not refuse to open an adversary proceeding for failure to pay the $350 fee.18 In fact, it is always the case in CM/ECF that if a fee must be charged for filing a document, it will only be charged after the Notice of Electronic Filing (NEF) is finished, which indicates that the filing process has been completed.19 Importantly, the window to pay the filing fee does not appear until several pages after the Open Adversary Case page.

Despite that, Call testified that he attempted to pay the fee, using a credit card from his firm, at this stage of the filing process. But he did not explain clearly how he tried to pay a fee on a page that is not meant to accept payment. He suggested that clicking the "Next" button should have brought up a window where he could pay the fee, but when he did so, no window appeared. Clicking the "Next" button, however, does not create a new window at this stage of the filing process. Call has also suggested that he tried clicking the "Next" button, but the page would not advance. He testified that he made multiple attempts to pay the fee, but because the fee cannot be paid from the Open Adversary Case page, the Court is unsure what he was doing. Critically, Exhibit 3 does not include any screen shots of the pages that came after the Open Adversary Case page.20 Whatever Call was doing, CM/ECF eventually gave him an error

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message that he remembered as "Case opening failed. Writing answer record." Gary Gfeller, the Court's Chief Deputy Clerk,21 testified that he was not familiar with this message but said that it did not make much sense to him because it appears to be a contradiction in terms. In CM/ECF lingo, "writing a record" requires an open case. But if an error message said that the case opening had failed, it would be impossible to write a record.22 The parties offered no additional evidence to elucidate the meaning of this cryptic error message.

Pressed for time and concerned that he would not be able to file the complaint without paying the fee, Call hit the back button on his browser three or four times, eventually returning to the demand page, where he was again prompted to enter the amount of damages. Call was able to advance past that page by entering "random numbers" in the demand field. Call then arrived back at the Open Adversary Case page, where, according to his testimony, he encountered the same difficulty in getting the fee paid. He telephoned Kuettel; Carrie Hurst, his paralegal; and Eliza Tito, his secretary, to seek their assistance. None picked up.23

At this point it appears that Call conceded that he would not be able to file the complaint before midnight, so he emailed a copy of it to Morrison. Call testified that he attempted to do so at about 11:58 p.m., but he ran into problems. He received what he called a "strange message" regarding whether the message...

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