Golden v. Medical Office Properties, Inc. (In re Lenox Healthcare, Inc.)

311 B.R. 404, 2004 Bankr. LEXIS 924, 43 Bankr. Ct. Dec. (CRR) 72
United States Bankruptcy Court, D. Delaware·Decided July 12, 2004·No. Bankruptcy No. 01-2288 (MFW); Adversary No. 03-54329 (MFW)·Published·Cited by 1 cases

Opinion

[406] MEMORANDUM OPINION1

MARY F. WALRATH, Bankruptcy Judge.

Before the Court is the Second Motion of Charles M. Golden, as Chapter 11 Trustee, seeking an Order Extending Time to Effect Service of Original Process on Medical Office Properties, Inc., f/k/a Healthcare Financial Partners REIT, Inc., (“MOP”) and Jack Easterday pursuant to Rule 4(m) of the Federal Rules of Civil Procedure (“the Second Motion”).2 For the following reasons, we deny the Second Motion with respect to MOP.3

I.FACTUAL BACKGROUND

On July 10, 2001, Lenox Healthcare, Inc., and its affiliates (“the Debtors”) filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. On July 30, 2001, the United States Trustee appointed Charles M. Golden as the chapter 11 trustee (“the Trustee”).

On or about July 8, 2003, the Trustee filed approximately 100 complaints seeking, inter alia, to avoid alleged preferential and fraudulent transfers pursuant to sections 547 and 550 of the Bankruptcy Code.

On October 31, 2003, the Trustee filed his First Motion to Extend Time to Effect Service on MOP. The Court granted the First Motion and entered an order giving the Trustee an additional 90 days (until February 5, 2004) to serve MOP. The Trustee did not perfect service of the complaint on MOP (“the Complaint”) during the first extension. On January 26, 2004, the Trustee filed the Second Motion seeking a further extension of time to serve MOP. On February 19, 2004, MOP objected to the Second Motion and a hearing was held on February 23, 2004.

II. JURISDICTION

This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 1334(b) & 157(b)(2)(A), (E), (F), & (O).

III. DISCUSSION

The Trustee requests an additional extension of time to effect service on MOP. The Trustee contends that a second extension of time is warranted under Rule 4(m) of the Federal Rules of Civil Procedure, as incorporated by Rule 7004 of the Federal Rules of Bankruptcy Procedure.

Rule 4(m) provides the time limit for serving a defendant with notice of a complaint filed against it. Fed R. Civ. P. 4(m). Specifically, this Rule provides that

if service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint, the court, upon motion or its own initiative after notice to the plaintiff, shall dismiss the action without prejudice as to that defendant or direct that service be effected within a specified time; provided that if the plaintiff shows good cause for the failure, the court shall extend the time for service for an appropriate period.

Id.

The Third Circuit interpreted Rule 4(m) “to require a court to extend time if good cause is shown and to allow a court discre[407] tion to dismiss or extend time absent a showing of good cause.” Petrucelli v. Bohringer and Ratzinger, 46 F.3d 1298, 1305 (3d Cir.1995).

First, the [court] should determine whether good cause exists for an extension of time. If good cause is present, the [court] must extend the time for service and the inquiry is ended. If, however, good cause does not exist, the court may in its discretion decide whether to dismiss the case without prejudice or extend the time for service.

Id.

A. Good Cause

Good cause requires at least a showing of excusable neglect. Braxton v. United States, 817 F.2d 238, 241 (3d Cir.1987) (noting that inadvertence of counsel and half-hearted efforts at service fail to meet the standard.) Courts should permit late filings caused by inadvertence, mistake, carelessness, or intervening circumstances beyond the party’s control. See Pioneer Inv. Servs. Co. v. Brunswick Assocs., L.P., 507 U.S. 380, 387-88, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993); Goldstein v. Illinois Security Agency (In re Just for Feet, Inc.), 299 B.R. 343, 347-48 (Bankr.D.Del.2003). Determining whether excusable neglect exists is an equitable exercise that takes into account all relevant circumstances surrounding the omission. Id. at 348. Where counsel exhibits substantial diligence, professional competence and good faith, but fails to comply with the rule as a result of some minor neglect, the Court is required to find good cause. Consolidated Freightways Corp. v. Larson, 827 F.2d 916, 919-20 (3d Cir.1987).

The Trustee contends good cause is present in this case, because he filed a large number of adversary proceedings. We find this insufficient. In this case, the Trustee filed only 100 complaints. This is not a significant number4 and does not excuse service within the original 120 day period, let alone the additional 90 day extension already granted.

The Trustee also asserts that the poor condition of the Debtors’ books and records and the lack of any employees of the Debtors to assist him prevented him from obtaining a valid and current address for MOP. He further states that his independent efforts to obtain a valid mailing address, during the first extension of time, were unsuccessful. In support of this assertion the Trustee attached his time records and an affidavit from a support staff member detailing her efforts. We conclude that these efforts do not satisfy the good cause standard. Rather than establishing that the Trustee diligently attempted to serve MOP, the time records establish the opposite. They show that the Trustee spent only .5 hours addressing all service issues, only six minutes specifically addressing MOP, and that a staff member spent additional time using Internet search engines.

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Golden v. Medical Office Properties, Inc. (In re Lenox Healthcare, Inc.), 311 B.R. 404, 2004 Bankr. LEXIS 924, 43 Bankr. Ct. Dec. (CRR) 72 (Del. 2004).

311 B.R. 404 (Golden v. Medical Office Properties, Inc. (In re Lenox Healthcare, Inc.)) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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