In United Community Bank v. Harper (In re Harper), Adv. Proc. No. 12-1080, 2013 Bankr. LEXIS 1080 (Bankr. N.D. Ga. January 29, 2013 (Judge Drake) (click here for .pdf of order), the issue was whether Federal Rule of Bankruptcy Procedure 4007(c) created a strict deadline for filing adversary complaints to determine dischargeability of debts under §523(c). Judge Drake held that 11th Circuit precedent controlled the issue, and Rule 4007(c) was intended to create a hard and fast deadline.
In this case, the creditor UCB initiated the electronic filing of the complaint at 11:45 p.m. on the last day of the deadline (which had been previously extended). However, the experienced paralegal uploading the case ran into several difficulties with the computer freezing, leading to the complaint not being filed until 12:02:44 a.m. The following day UCB’s counsel communicated with the Clerk’s office, but the Clerk declined to enter a "Notice of Technical Difficulties" as the Clerk’s computer system was functioning properly. UCB did not take any further steps to obtain an order rectifying the untimely filing due to technical failure or to use the alternative method of sending the document by facsimile before the deadline. See LR, N.D.Ga., Appendix H, Ex. A, § II(H). Based on these facts, the debtor moved to dismiss the untimely complaint.
Judge Drake granted the Motion and dismissed the case.
Plaintiff UCB argued that the Court could stretch the deadline by "equitable tolling," notwithstanding the plain language of Rule 4007(c) that requires requests for extension to be filed prior to the expiration of time. However, the Eleventh Circuit has ruled that Rule 4007(c) is not subject to equitable tolling. See Byrd v. Alton (In re Alton), 837 F.2d 457 (11th Cir. 1988):
The dictates of the Code and Rules are clear. It is not our place to change them. Under Rule 4007(c), any motion to extend the time period for filing a dischargeability complaint must be made before the running of that period. There is almost universal agreement that the provisions of F.R.B.P. 4007(c) are mandatory and do not allow the Court any discretion to grant a late filed motion to extend time to file a dischargeability complaint.
The U.S. Supreme Court’s subsequent ruling in Kontrick v. Ryan, 540 U.S. 443 (2004) did not change the outcome. In that case, the Court, responding to the debtor’s argument that the Bankruptcy Court did not have subject matter jurisdiction over an untimely filed proceeding, held that the applicable Rules did not "create or withdraw federal jurisdiction" and are no more than "claim processing rules that do not delineate what cases bankruptcy courts are competent to adjudicate."
Although other courts have held that Byrd was abrogated by Kontrick, Judge Drake disagreed for three primary reasons.
- "The holding in Byrd is not premised on Rule 4007(c)’s deadline being jurisdictional. As a matter of fact, the word "jurisdiction" makes no appearance in the entire Byrd opinion."
- "The development of Rules 4007 and 9006 provide strong evidence that the deadlines associated with the rules were intended to be as hard and fast as possible."
- "The Kontrick Court specifically declined to address whether its ruling permitted equitable tolling."
Under controlling Eleventh Circuit precedent, when the Supreme Court is not "clearly on point," prior decisions by the Eleventh Circuit that are on point continue as good law. See In re McNeal, 477 Fed.Appx. 562, 564 (11th Cir. 2012) ("Under our prior panel precedent rule, a later panel may depart from an earlier panel’s decision only when the intervening Supreme Court decision is ‘clearly on point.’" … Because Kontrick is not clearly on point, and in fact avoids the question before the Court today, Byrd is still good law and, thus, binding on this Court.
While the Court held that the deadline was firm, Judge Drake also addressed the equitable argument raised by UCB and found that even if equitable tolling was an issue, UCB would not have prevailed even though the complaint was filed only two minutes late.
Plaintiff’s best argument is that computer error resulted in "extraordinary circumstances" beyond its control. This is not very persuasive. The Plaintiff admits that settlement negotiations ended on October 25, 2012, and yet, the Plaintiff waited until the night of November 19, 2012 (25 days later) at 11:45 P.M. to begin uploading the complaint to the CM/ECF system. There is nothing "extraordinary" about computer "freezes." This is an event that happens everyday in both commercial and personal environments, and is the reason that modern computers have automatic file back-ups, and that nearly all commercial and governmental databases are backed up at external locations. Had the Plaintiff been a hair more diligent and prepared for just such an eventuality, this matter would not be at issue today. The Court finds it hard to accommodate a creditor’s request for equitable tolling of a hard and fast deadline when that creditor sat on its hands and waited until the last moment to meet said deadline.
Scott Riddle’s practice focuses on bankruptcy and litigation. Scott has represented Chapter 7 and 11 debtors, creditors, creditor committees, trustees, court-appointed receivers and other interested parties in bankruptcy cases and bankruptcy litigation. For more information, click here.