Robinson v. Zakarin (In re Zakarin)
This text of 602 B.R. 275 (Robinson v. Zakarin (In re Zakarin)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
Andrew B. Altenburg, Jr., United States Bankruptcy Judge
Before the court is a Motion to Extend Time to File Complaint Objecting to Discharge, pursuant to Federal Bankruptcy Rule of Procedure 4007(c) (the "Motion"). Doc. No. 8. The plaintiff, the law firm of Liddle & Robinson, seeks to proceed with its adversary complaint despite filing it three days after the deadline. Eric A. Zakarin, the debtor, objected.
*277The court notes that this adversary proceeding is assigned to the docket of the Hon. Rosemary Gambardella. In her current absence however, and after all briefing and oral argument was complete, the proceeding was assigned to the undersigned for disposition. On March 26, 2019, the court sent a letter to counsel advising them of the same and gave them 14 days in which to object to the court's deciding the matter on the papers. As no objections were received, this matter is ripe for disposition. After review of the extensive briefing and the oral argument of March 5, 2019, this court determines that Rule 4007(c) may not be equitably tolled, and the Motion should be denied.
JURISDICTION AND VENUE
This matter before the court is a core proceeding pursuant to
FINDINGS OF FACT
The facts in this matter are generally undisputed.
On March 2, 2018, the debtor filed a voluntary petition for relief under chapter 7 of title 11 of the United States Code. Bankr. No. 18-14226, Doc. No. 1. On Schedule E/F, he acknowledged his debt to Liddle & Robinson for attorney's fees in the amount of $ 135,000.
On March 3, 2018, the court set June 5, 2018 as the deadline for filing a complaint objecting to discharge or nondischargeability of a debt.
In the evening of June 5, 2018, the last day to timely file an adversary complaint in this bankruptcy case, attorney Matthew McCann of Liddle & Robinson, a New York law firm, finished drafting a complaint asserting the nondischargeability of the debt owed by the debtor to the firm. Doc. No. 8-2, ¶ 4. But when he sought to file the complaint electronically via this court's CM/ECF system, he found he could not do so, as he was not registered for e-filing in New Jersey.
Trying to still make the deadline for filing, Mr. McCann sent an email to Judge Gambardella's chambers and to the court's CM/ECF Help Desk, attaching the summons and complaint and explaining his predicament as being that the registration "has yet to be processed."
The receipt Mr. McCann received from PACER, however, indicated that he had an active registration for "case search" only. The receipt reflected that status on June 6, 2016 of his registration request for the District of New Jersey was "unknown." Doc. No. 8-2, Exh. 1. It explained that there were three possible statuses: pending, processed, and active.
The morning of June 6, 2018, Mr. McCann followed up with the court's CM/ECF Help Desk with the intent of resolving the registration delay and also e-filing and providing payment in connection with the filing of the Adversary Complaint and related documents.
Thus, that same day, Mr. McCann arranged with Keating & Walker Attorney Service, Inc., a legal support service, to file a hard copy of the original Adversary Complaint, the appropriate Summons and Notice, and a cover letter explaining the attempted e-filing of the night of June 5, 2018.
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Andrew B. Altenburg, Jr., United States Bankruptcy Judge
Before the court is a Motion to Extend Time to File Complaint Objecting to Discharge, pursuant to Federal Bankruptcy Rule of Procedure 4007(c) (the "Motion"). Doc. No. 8. The plaintiff, the law firm of Liddle & Robinson, seeks to proceed with its adversary complaint despite filing it three days after the deadline. Eric A. Zakarin, the debtor, objected.
*277The court notes that this adversary proceeding is assigned to the docket of the Hon. Rosemary Gambardella. In her current absence however, and after all briefing and oral argument was complete, the proceeding was assigned to the undersigned for disposition. On March 26, 2019, the court sent a letter to counsel advising them of the same and gave them 14 days in which to object to the court's deciding the matter on the papers. As no objections were received, this matter is ripe for disposition. After review of the extensive briefing and the oral argument of March 5, 2019, this court determines that Rule 4007(c) may not be equitably tolled, and the Motion should be denied.
JURISDICTION AND VENUE
This matter before the court is a core proceeding pursuant to
FINDINGS OF FACT
The facts in this matter are generally undisputed.
On March 2, 2018, the debtor filed a voluntary petition for relief under chapter 7 of title 11 of the United States Code. Bankr. No. 18-14226, Doc. No. 1. On Schedule E/F, he acknowledged his debt to Liddle & Robinson for attorney's fees in the amount of $ 135,000.
On March 3, 2018, the court set June 5, 2018 as the deadline for filing a complaint objecting to discharge or nondischargeability of a debt.
In the evening of June 5, 2018, the last day to timely file an adversary complaint in this bankruptcy case, attorney Matthew McCann of Liddle & Robinson, a New York law firm, finished drafting a complaint asserting the nondischargeability of the debt owed by the debtor to the firm. Doc. No. 8-2, ¶ 4. But when he sought to file the complaint electronically via this court's CM/ECF system, he found he could not do so, as he was not registered for e-filing in New Jersey.
Trying to still make the deadline for filing, Mr. McCann sent an email to Judge Gambardella's chambers and to the court's CM/ECF Help Desk, attaching the summons and complaint and explaining his predicament as being that the registration "has yet to be processed."
The receipt Mr. McCann received from PACER, however, indicated that he had an active registration for "case search" only. The receipt reflected that status on June 6, 2016 of his registration request for the District of New Jersey was "unknown." Doc. No. 8-2, Exh. 1. It explained that there were three possible statuses: pending, processed, and active.
The morning of June 6, 2018, Mr. McCann followed up with the court's CM/ECF Help Desk with the intent of resolving the registration delay and also e-filing and providing payment in connection with the filing of the Adversary Complaint and related documents.
Thus, that same day, Mr. McCann arranged with Keating & Walker Attorney Service, Inc., a legal support service, to file a hard copy of the original Adversary Complaint, the appropriate Summons and Notice, and a cover letter explaining the attempted e-filing of the night of June 5, 2018.
The evening of June 6, 2018, Mr. McCann received from the court's employee, Sharon Purce, an email confirming his registration for access to the court's NextGen CM/ECF system.
Please note: in order to have full electronic filing privileges, you must be an admitted attorney in the U.S. District Court for New Jersey. If you are not admitted to the U.S. District Court for New Jersey, you may only file for limited access to CM/ECF. If this is the case, let me know and I will provide you with a Limited User Registration Form. For more information on this please visit our webpage at www.njb.courts.gov and under Quick Links, select the hyperlink CM/ECF Attorney Online Training.
If you are an attorney admitted to practice in the NJ USDC and you are already an electronic filer in another NextGen court, please email a transaction log so you may bypass the required online training exercises.
Again, Mr. McCann is not admitted to practice in New Jersey, nor is anyone in his firm.
On June 8, 2018, Keating & Walker, on behalf of Liddle & Robinson, filed in person the Adversary Complaint, Summons and Notice, as well as a Motion for an Order Extending the Time Within Which to File the Adversary Complaint. See Doc. Nos. 1, 3. This time Mr. McCann included the filing fee. Doc. No. 8-2, ¶ 10. The debtor filed opposition to Liddle & Robinson's motion. Doc. No. 4.
On June 13, 2018, another attorney of Liddle & Robinson, James Halter, Esq., e-filed on the Claims Register associated with Mr. Zakarin's bankruptcy case as Proof of Claim #1-1 a letter dated June 12, 2018 similar in substance to Mr. McCann's June 7, 2018 Certification filed in connection with his improperly-filed June 8, 2018 Motion to Extend Time and his June 5, 2018 email to chambers.
On July 13, 2018, the court conducted a telephonic hearing during which it directed Liddle & Robinson to retain local counsel and the parties to submit supplemental briefing regarding the request for additional time to file the Adversary Complaint. Liddle & Robinson retained local counsel and filed the instant motion to extend the time to file an adversary complaint.
Liddle & Robinson asks the court to apply the doctrine of equitable tolling to extend the deadline to file its complaint despite the limits expressed in the Bankruptcy Rules. It argues that it was filing pro se and thus had no reason to believe it needed to engage local counsel. It further argues that it exercised due diligence in attempting to file the complaint, sending a copy to chambers and filing a hard copy with the court. It argues that the filing deadline under Bankruptcy Rule 4007(c) is not jurisdictional, and thus the court should apply principles of equitable tolling to deem its complaint timely filed. It points out that the Supreme Court has held that Federal Rule of Bankruptcy Procedure 4004, an analogous rule addressing the deadline to object to discharge, is not jurisdictional. See Kontrick v. Ryan ,
The debtor replies that the Third Circuit has not recognized equitable tolling in connection with Rule 4007(c). It further asserts that, even if this Circuit did recognize the doctrine, Liddle & Robinson's motion must be denied because its failure to timely file was entirely its fault. He argues that attorney negligence-the late filing was not out of the control of the law firm-does not rise to the extraordinary level needed for the court to excuse missing the deadline. The debtor asserts that Liddle & Robinson failed to act with due diligence to preserve its claim because it chose to wait until the evening of the deadline to attempt to register and electronically file its complaint in an unfamiliar system to it, and chose not to retain local counsel to file the complaint despite the fact that the attorney signing the complaint is not admitted to practice in this court. As a result, the debtor submits that the plaintiff cannot meet the burden necessary for the extraordinary relief it requested, which the debtor claims is to be applied only sparingly.
DISCUSSION
The parties agree that the application of equitable tolling is Liddle & Robinson's only means for deeming its complaint timely filed. Liddle & Robinson seeks a finding of nondischargeability of its claim pursuant to section 523(a)(2)(A) of the Bankruptcy Code. Section 523(c) of the Code provides that a debtor shall be discharged from a debt of a kind specified in paragraph (2), (4) or (6) of section 523(a) unless the creditor requests that the court determine that such debt be excepted from discharge under paragraph (2), (4) or (6) of section 523(a).
Courts considering allowing equitable tolling of the Rule 4007 deadline invariably turn to the Supreme Court's decision in Kontrick v. Ryan ,
Courts indeed are divided. See, e.g., Anwar v. Johnson ,
There is no binding case law in the Third Circuit. In re Mazik , at 611-12. As in Kontrick, the creditor in In re Weinberg ,
After Kontrick , courts focused on whether the jurisdictional versus non-jurisdictional distinction meant that Rules 4004 and 4007 were subject to equitable tolling. For example, the court in In re Rychalsky ,
A number of courts that determined the Rules were not jurisdictional also held the deadlines were subject to equitable principles, including tolling. Nardei v. Maughan (In re Maughan ),340 F.3d 337 , 344 (6th Cir. 2003) ; In re Kontrick,295 F.3d 724 , 733 (7th Cir. 2002) ; Benedict,90 F.3d at 54 ; Farouki, 14 F.3d at 248. The two circuit cases that held these deadlines could not be extended, did so because they held these Rules were jurisdictional in nature. Alton,837 F.2d at 459 ; Neeley v. Murchison,815 F.2d 345 , 346 (5th Cir. 1987).
Some lower courts in the Third Circuit avoided deciding the issue, finding that if equitable tolling could extend the deadline, such retroactive extension was not merited in their case. In re Mazik , at 612 ("I need not reach the issue here. Even if equitable tolling may be applied under Rule 4007(c), I decline to apply the doctrine because Chicago Title has an adequate remedy at law."); Re Canonico , 16-34088 (MBK),
But on February 26, 2019, the Supreme Court issued its decision in Nutraceutical Corp. v. Lambert , --- U.S. ----,
Here, Rule 4007(c) permits filing of a complaint "no later than 60 days after the first date set for the meeting of creditors" and only allows extensions of that time period on motion made before the time has expired. Fed. R. Bankr. P. 4007(c). In addition, the court may only grant that motion on the showing of cause.
In addition to being contrary to the language of the rules, the application of equitable tolling could do significant harm to the purposes underlying the rules. The fresh start, prompt administration, finality and certainty purposes of the bar dates would be significantly impaired by allowing the application of a doctrine, such as equitable tolling, which could feasibly allow a creditor to bring a dischargeability action years after the time period should have passed even though the debtor's affirmative conduct might not contribute to the creditor's lack of knowledge of the facts underlying the dischargeability complaint. A less onerous means for protecting the creditor's rights in this regard is to liberally grant timely filed requests for extensions to the bar date where, as in this case, the creditor has a valid and explainable suspicion regarding the existence of facts giving rise to a dischargeability cause of action. Where the creditor does not learn of the fraud until later, the creditor may be able to seek revocation of the discharge under section 727(d).
In re Santos , at 1006-07.
All of this points to the conclusion that Rule 4007 does not permit equitable tolling. Just as with Appellate Rule 23(f), the Bankruptcy Rules "express a clear intent to compel rigorous enforcement" of Rule 4007(c)'s deadline "even where good cause for equitable tolling might otherwise exist." Nutraceutical Corp. v. Lambert , --- U.S. ----,
Though it need not now consider it, because the parties briefed it this court finds that even if equitable tolling applied, Liddle & Robinson does not come close to meeting the necessary elements. The Third Circuit has explained equitable tolling as applying
*284when a plaintiff has "been prevented from filing in a timely manner due to sufficiently inequitable circumstances." Seitzinger v. Reading Hosp. & Med. Ctr.,165 F.3d 236 , 240 (3d Cir. 1999). This occurs "(1) where the defendant has actively misled the plaintiff respecting the plaintiff's cause of action; (2) where the plaintiff in some extraordinary way has been prevented from asserting his or her rights; or (3) where the plaintiff has timely asserted his or her rights mistakenly in the wrong forum."
Hedges v. United States ,
Liddle & Robinson does not allege that Mr. Zakarin prevented him from recognizing the validity of its claim within the limitations period or misrepresented any material fact. The claim was disclosed on Mr. Zakarin's schedules, and Liddle & Robinson sent a representative of the firm to the section 341(a) meeting. Liddle & Robinson in fact alleges nothing about Mr. Zakarin (or his attorney) in connection with its efforts to file the complaint and provides no excuse for not attempting to file the complaint until the deadline's evening. See In re Pendergrass ,
Liddle & Robinson cites cases applying Federal Rule of Civil Procedure 60(b)(6) to allow a late filing. This rule, made applicable in bankruptcy proceedings by Federal Rule of Bankruptcy Procedure 9024, provides for relief from a final judgment, order or proceeding for "any other reason that justifies relief." Courts have added a requirement of "extraordinary circumstances" to this relief. Saddle River Valley Bank v. Garsia , CIV.A. 10-1922 WJM,
Ignoring that Liddle & Robinson is not seeking relief from a judgment-this is not an appeal or motion for reconsideration-the cases it cites applying Rule 60(b)(6) do not support its argument. In Saddle River Valley Bank v. Garsia , CIV.A. 10-1922 WJM,
Both parties cited In re Begue ,
In both Saddle River and Begue , the fault lay in other people, not the attorney. The delay in filing was caused by third parties outside the control of the attorneys.
*285That is not the case here. Even if the courier it sent had been able to file the complaint the first time it arrived at the court, that arrival was the day after the deadline. Its inability to file the complaint then was entirely Liddle & Robinson's fault for not including the filing fee.
Liddle & Robinson cites DeMaria v. Peters , AP 14-01002 (MBK),
This court is further persuaded by the Canonico case, supra . There the plaintiffs failed to file either a complaint or a motion to extend before the deadline expired on March 21, 2017. Canonico ,
Finally, a note about Liddle & Robinson's assertion that it was acting pro se during Mr. McCann's attempts to file the complaint. By the authority of federal statute, parties may appear in court pro se.
That Mr. McCann is a licensed attorney does not change the result, because he is not licensed in New Jersey. Section 1654 states that appearance must comply with "the rules of such courts." This court's rules require that attorneys appearing before it be admitted to practice before the United States District Court for the District of New Jersey. D.N.J. LBR 9010-1. Thus Liddle & Robinson could have appeared through one of its own attorneys only if that attorney was admitted to practice in the District of New Jersey. But that would not be a pro se appearance. See Ross v. Panteris & Panteris, LLP , CIV. 12-6096 FSH,
CONCLUSION
Because Liddle & Robinson filed its complaint through unlicensed counsel, the complaint on the docket is of no effect. Its properly-filed Motion to Extend Time was filed August 17, 2018, more than two months past the deadline. Even if this court considered the unlicensed filing, courts faced with filings even closer to the deadline have denied pleas for extensions. Liddle & Robinson knew of its cause of action and of the deadline for filing a complaint from the beginning of Mr. Zakarin's bankruptcy case.
Accordingly, Liddle & Robinson's Motion to Extend the Time to File an Adversary Complaint is denied, and the adversary complaint is dismissed with prejudice.
An appropriate order has been entered consistent with this decision.
The court reserves the right to revise its findings of fact and conclusions of law.
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