A federal appellate court has affirmed a decision to dismiss a plaintiff’s complaint objecting to the discharge of the defendant’s debts under Chapter 7 of the Bankruptcy Code. Though the appellate court found that the plaintiff “barely missed the deadline” in filing its complaint a mere 16 minutes after the midnight deadline, it affirmed the dismissal of the complaint. ABA Litigation Section leaders generally agree with the decision, and there is a consensus that this should serve as a wake-up call to litigants to strictly adhere to court deadlines.
In December 2018, a Utah state court entered judgment in favor of the plaintiff’s claim against the defendant for $237,683.01 owed on loans collateralized by cattle and other property. On January 15, 2019, the defendant filed for bankruptcy under Chapter 7 in the Utah bankruptcy court. The plaintiff then filed a complaint seeking to prevent the defendant from discharging his judgment on two grounds: (1) the debt was not a dischargeable debt because the defendant had willfully or maliciously injured the plaintiff when he sold cattle after his default; and (2) the defendant had forfeited his right to a discharge in bankruptcy because he had failed to preserve records of, and had made false statements regarding, cattle sales and other aspects of his finances.
Though the deadline for the plaintiff to file its complaint was April 22, 2019, 60 days after the first meeting of the defendant’s creditors, the plaintiff’s attorney filed the complaint on April 23, 2019 at 12:16 a.m.—16 minutes past the 60-day deadline.
After untimely filing its adversary complaint, the plaintiff filed a motion for an extension of time. In reviewing the plaintiff’s application, the bankruptcy court held a two-day evidentiary hearing. During the hearing, several witnesses testified, including the plaintiff’s attorney and court employees, as to whether the CM/ECF system had malfunctioned or whether the plaintiff’s attorney had made a mistake during the electronic filing process.
The bankruptcy court found that the plaintiff’s attorney’s testimony was “sometimes not credible…marked by notable contradictions, imprecisions, and elisions in important areas,” and directly contradicted by testimony from court employees about the CM/ECF filing process and the functionality of the CM/ECF system. The bankruptcy court denied the plaintiff’s motion and dismissed its complaint. The plaintiff appealed to the district court.
Applying a de novo standard of review to the bankruptcy court’s legal determinations and a clearly erroneous standard to the bankruptcy court’s factual findings, the U.S. District Court for the District of Utah largely agreed with the bankruptcy court and found that it did not err in denying the plaintiff’s motion to extend the deadline and dismissing the complaint. The plaintiff then appealed to the U.S. Court of Appeals for the Tenth Circuit.
Following a clear error standard of review, in State Bank of Southern Utah v. Beal, the Tenth Circuit affirmed the district court’s decision. The Tenth Circuit agreed with both the bankruptcy court and the district court, and found that though the plaintiff contended the CM/ECF system malfunctioned in two respects causing its attorney to miss the deadline, neither of those arguments had merit. The Tenth Circuit held that neither the bankruptcy court nor the district court clearly erred in finding that the plaintiff’s attorney’s problems with filing the complaint were caused by his own errors rather than by any defects in the court’s CM/ECF system.
Litigation Section leaders counsel against waiting to the last minute to submit a filing. “The far better practice is to build in a buffer and treat some time sufficiently before the filing deadline as time for ‘pencils down,’” adds Jeffrey E. Gross, New York, NY, vice-chair of the Content & Communications Subcommittee of the Section’s Trial Practice Committee.
Additionally, practitioners, and specifically litigators, should pay careful attention to electronic filing trainings and updates. “Make sure you are proficient in e-filing procedures,” warns Joseph V. Schaeffer, Pittsburgh, PA, cochair of the Section’s Pretrial Practice & Discovery Committee. “Attorneys often rely on administrative staff to handle matters like filing, but we must also work to stay up to speed with new technologies and new programs that we may have to utilize in the practice of law,” agrees Jarvarus A. Gresham, editor of the Section’s Pretrial Practice & Discovery Committee’s Website Subcommittee.
