Vucurevich v. First Midwest Bank

• Decision Date: 13 February 2015
• Docket Number: CIV. 14-4064-KES
• Court: U.S. District Court — District of South Dakota
• Parties: KENT A. VUCUREVICH, Appellant, v. FIRST MIDWEST BANK, Appellee.

KENT A. VUCUREVICH, Appellant, v. FIRST MIDWEST BANK, Appellee.

CIV. 14-4064-KES

UNITED STATES DISTRICT COURT DISTRICT OF SOUTH DAKOTA SOUTHERN DIVISION

February 13, 2015

MEMORANDUM OPINION AND ORDER AFFIRMING BANKRUPTCY COURT'S DECISION

Appellant, Kent A. Vucurevich, appeals from the April 15, 2014, order issued by the United States Bankruptcy Court for the District of South Dakota,¹ denying his motion to set aside and vacate the court's grant of summary judgment in favor of appellee, First Midwest Bank. Bankr. Docket 34.² For the following reasons, the court affirms the bankruptcy court's decision.

BACKGROUND

The pertinent, undisputed facts are as follows:

Vucurevich was placed into bankruptcy by an involuntary petition filed by several creditors on June 27, 2011. See 4:11-bk-40501. The bankruptcy court granted the petition and entered an order for relief under Chapter 7 ofU.S.C. title 11 on August 1, 2011. First Midwest subsequently filed an adversary complaint against Vucurevich on February 2, 2012, objecting to the discharge of certain of Vucurevich's debts. Bankr. Docket 1. The case was held in abeyance pending resolution of other adversary proceedings until the bankruptcy court issued an order on November 7, 2013, which allowed the case to resume. Bankr. Docket 25.

On February 28, 2014, First Midwest moved the bankruptcy court for summary judgment. Bankr. Docket 26. Pursuant to the bankruptcy court's order dated March 3, 2014, Vucurevich's responsive documents were due on or before March 28. Bankr. Docket 27. Vucurevich did not file a response. On March 31, 2014, the bankruptcy court granted First Midwest's unopposed motion for summary judgment, and entered an order denying Vucurevich's request for discharge. Bankr. Docket 29, 30.

On April 11, 2014, Vucurevich moved the bankruptcy court to set aside and vacate its order granting summary judgment in favor of First Midwest. Bankr. Docket 32. Vucurevich argued relief was appropriate under the circumstances due to counsel's excusable neglect. See, e.g., Bankr. Docket 32-2 at 1. On April 15, 2014, the motion was denied. Bankr. Docket 34. Vucurevich seeks review of the bankruptcy court's decision to deny his motion and, pursuant to 28 USC §§ 158(a) and 158(c)(1), filed his appeal in this court.

LEGAL STANDARD

"When a bankruptcy court's judgment is appealed to the district court, the district court acts as an appellate court and reviews the bankruptcy court'slegal determinations de novo and findings of fact for clear error." Knudsen v. I.R.S., 581 F.3d 696, 704 (8th Cir. 2009) (internal citation omitted), abrogated on other grounds by Hall v. United States, 132 S. Ct. 1882 (2012). The bankruptcy court's grant or denial of a motion seeking relief from a judgment or order is reviewed for an abuse of discretion. City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 702 F.3d 1147, 1152 (8th Cir. 2013). Under this standard, the Eighth Circuit has explained that:

A court abuses its discretion when a relevant factor that should have been given significant weight is not considered; when an irrelevant or improper factor is considered and given significant weight; or when all proper factors and no improper ones are considered, but the court commits a clear error of judgment in weighing those factors.

Id. (citing Thatcher v. Hanover Ins. Grp., Inc., 659 F.3d 1212, 1213 (8th Cir. 2011)).

DISCUSSION

Rule 60(b)(1) of the Federal Rules of Civil Procedure allows a court to relieve a party from a final judgment, order, or proceeding due to "mistake, inadvertence, surprise, or excusable neglect[.]" Fed. R. Civ. P. 60(b)(1). Rule 60(b) is made applicable to bankruptcy proceedings by virtue of Bankruptcy Rule 9024. In re Kirwan, 164 F.3d 1175, 1177 (8th Cir. 1999). The rule is grounded in equity and it "is to be given a liberal construction so as to do substantial justice and 'prevent the judgment from becoming a vehicle of injustice.' " MIF Realty L.P. v. Rochester Assocs., 92 F.3d 752, 755 (8th Cir. 1996) (quoting Rosebud Sioux Tribe v. A & P Steel, Inc., 733 F.2d 509, 515 (8th Cir. 1984)). Its purpose "to preserve the delicate balance between the sanctityof final judgments . . . and the incessant command of a court's conscience that justice be done in light of all the facts." Id. At the same time, "[r]elief under Rule 60(b) is an extraordinary remedy that lies within the discretion of the [bankruptcy] court." Hunter v. Underwood, 362 F.3d 468, 475 (8th Cir. 2004) (quoting In re Design Classics, Inc., 788 F.2d 1384, 1386 (8th Cir. 1986)). "Thus, relief will not be granted under Rule 60(b)(1) merely because a party is unhappy with the judgment. The party must make some showing justifying the failure to avoid the mistake or inadvertence." 11 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2858 (3d ed.) (hereinafter Wright & Miller). Consequently, "[r]eversal of a [bankruptcy] court's denial of a Rule 60(b) motion is rare because Rule 60(b) authorizes relief in only the most exceptional of cases.' " Noah v. Bond Cold Storage, 408 F.3d 1043, 1045 (8th Cir. 2005) (quoting Int'l Bhd. of Elec. Workers v. Hope Elec. Corp., 293 F.3d 409, 415 (8th Cir. 2002)).

In Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 382-83 (1993), the Supreme Court addressed whether a bankruptcy creditor's failure to meet a filing deadline constituted "excusable neglect." Although the Court analyzed the "excusable neglect" language contained within Bankruptcy Rule 9006(b)(1), the Court also examined the phrase as it appeared within several of the Federal Rules of Civil Procedure. Id. at 391-92. In the specific context of Rule 60(b), the Court concluded the rule's "neglect" language "encompasses situations in which the failure to comply with a filing deadline is attributable to negligence." Id. at 394. With respect to whether a party'snegligence is ultimately "excusable," the Court identified a number of factors to consider, such as "the danger of prejudice to the [other party], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith." Id. at 395. The Eighth Circuit regularly has applied the factors identified in the Pioneer decision to subsequent "excusable neglect" cases. See, e.g., Union Pac. R. Co. v. Progress Rail Servs. Corp., 256 F.3d 781, 783 (8th Cir. 2001); Feeney v. A T & E, Inc., 472 F.3d 560, 563 (8th Cir. 2006)). Additionally, the Eighth Circuit has "also concluded 'the existence of a meritorious defense continues to be a relevant factor' " in Rule 60(b) cases. Union Pac. R. Co., 256 F.3d at 783 (citing Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 784 (8th Cir. 1998)).

Ruling on Vucurevich's motion, the bankruptcy court identified each of the equitable factors enumerated by the Eighth Circuit, noting that the court "must consider all relevant circumstances." Bankr. Docket 34 at 1 (citing Feeney, 472 F.3d at 562-63). The bankruptcy court did not, however, issue findings and conclusions with respect to each factor. Rather, the bankruptcy court appears to have based its decision primarily on the reason for the delay and whether it was within Vucurevich's reasonable control, and if Vucurevich had demonstrated a meritorious defense. Id. at 1-2. Based on its analysis, the bankruptcy court denied Vucurevich's motion.

Vucurevich argues the bankruptcy court abused its discretion because it did not consider all of the relevant factors and it considered irrelevant factors.Docket 6 at 5. First Midwest contends that the bankruptcy court properly identified and considered each relevant factor. Docket 7 at 5. Although the bankruptcy court did not provide detailed analysis with respect to each of the Pioneer factors, the Eighth Circuit has held that "a court's failure to explicitly balance the Pioneer factors does not mandate an automatic reversal." In re Guidant Corp. Implantable Defibrillators Prods. Liab. Litig., 496 F.3d 863, 866 n.3 (8th Cir. 2007) (citing Gibbons v. United States, 317 F.3d 852, 854 n.4 (8th Cir. 2003)). Rather, because the bankruptcy court did not issue explicit findings on each factor, this court must "consider whether the evidence relating to that factor supports the court's conclusion that the late filing was not due to excusable neglect." In re Jones Truck Lines, 63 F.3d 685, 687 (8th Cir. 1995)).

I. Did the Bankruptcy Court Abuse its Discretion Denying Vucurevich's Motion for Relief under Rule 60(b)(1)?

A. The Pioneer Equitable Factors

i. Reason for the Delay

The Eighth Circuit has stated that the party's reason for their delay is "[t]he most important factor in the analysis[.]" See, e.g., Feeney, 472 F.3d at 563; Gibbons, 317 F.3d at 854 (quoting Lowry v. McDonnell Douglas Corp., 211 F.3d 457, 463 (8th Cir. 2000) (noting the Pioneer factors do not carry equal weight)); but see Union Pac. R. Co., 256 F.3d at 783 (faulting the district court for focusing exclusively on the party's reason for its mistake). "While prejudice, length of delay, and good faith might have more relevance in a closer case, the reason-for-delay factor will always be critical to the inquiry." Gibbons, 317 F.3d at 854 (quoting Lowry, 211 F.3d at 463)). Nonetheless, if a party's reason for itsdelay is not satisfactory, "relief may be required where other equitable considerations weigh strongly in favor of setting aside the default judgment." Feeney, 472 F.3d at 563. Attorney ignorance or carelessness, however, is generally not the type of neglect held to be excusable under Rule 60(b). Noah, 408 F.3d at 1045 (citing cases).

Vucurevich was receiving counsel from several attorneys with respect to this and other bankruptcy proceedings. One of his attorneys, Anker, received First Midwest's motion for summary judgment and its accompanying documentation. Docket 6 at 3; Bankr. Docket 26-5 (certificate of service)....