Court Opinion

ID: 4371193
Source: CourtListenerOpinion
Date Created: 2019-02-26 18:00:41.397488+00
Date Added: 2024-06-11T14:49:24.310001
License: Public Domain

Case: 18-14248    Date Filed: 02/26/2019   Page: 1 of 8

                                                             [DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT
                          ________________________

                                 No. 18-14248
                             Non-Argument Calendar
                           ________________________

                       D.C. Docket No. 1:17-cv-03018-AT,
                         Bkcy No. 1:09-bkc-90842-CRM

JOSEPHINE GRADDY,

                                                          Plaintiff-Appellant,

                                      versus

EDUCATIONAL CREDIT MANAGEMENT CORPORATION,

                                                          Defendant-Appellee.
                           ________________________

                   Appeal from the United States District Court
                      for the Northern District of Georgia
                         ________________________

                                (February 26, 2019)

Before WILSON, GRANT, and HULL, Circuit Judges.

PER CURIAM:

      A student-loan debtor alleges that a bankruptcy court deprived her of due

process by failing to adhere to the Federal Rules of Civil Procedure and of
               Case: 18-14248     Date Filed: 02/26/2019    Page: 2 of 8

Evidence, but in the district court she faced a jurisdictional hurdle: her notice of

appeal from the bankruptcy court’s final decision was arguably untimely. The

district court dismissed the case for lack of jurisdiction, but we reverse and remand

for further proceedings because we conclude that the notice of appeal was timely.

                                           I.

      Josephine Graddy, an attorney proceeding pro se, filed a complaint in

bankruptcy court seeking to discharge her student loan debt on the basis of “undue

hardship” under 11 U.S.C. § 523(a)(8). She lost that case, and her appeal to the

district court alleged a range of due process violations stemming from the

bankruptcy court’s “refusal to apply the Federal Rules of Civil Procedure, the

Federal Rules of Evidence, and other law.” But the district court dismissed her

appeal as untimely, and that issue—not the due process claims—is the subject of

this appeal.

      The bankruptcy court issued an order on July 24, 2017 stating that Graddy’s

student loans were not dischargeable. On July 25, the bankruptcy court posted a

signed document purporting to enter judgment in favor of the defendant and

against Graddy. It also mailed copies of both the order and the judgment to

Graddy. But in posting the judgment to the docket, the bankruptcy court clerk

erroneously included an incorrect docket notation: “Judgment for plaintiff and

against defendant.” In fact, the judgment—as accurately described in both the July

                                           2
               Case: 18-14248     Date Filed: 02/26/2019    Page: 3 of 8

24 order and the July 25 judgment—was precisely the opposite. On August 8, the

clerk corrected the docket notation to read “[j]udgment in favor of Defendant.”

      Graddy—who had misunderstood the bankruptcy court’s post-trial remarks

and was expecting the court to schedule a call via email before it ruled—was

oblivious to all of this. On August 10, she accessed the bankruptcy court docket

through PACER and discovered the July 24 order and July 25 judgment. That

same day, she filed a notice of appeal. On August 18, she moved the bankruptcy

court for leave to file an out-of-time notice of appeal. The bankruptcy court denied

that motion, Graddy filed another notice of appeal, and both appeals were

consolidated before the district court.

      Regarding the first notice of appeal, the defendant moved the district court to

dismiss for lack of jurisdiction because, assuming the bankruptcy court had entered

judgment on July 25, Graddy’s August 10 notice of appeal was two days too late.

See Fed. R. Bankr. P. 8002(a)(1) (requiring that a notice of appeal be filed within

fourteen days after entry of judgment). Graddy, on the other hand, argued that 1)

judgment was not “entered” for timing purposes until August 8, when the district

court corrected its erroneous docket notation; 2) she lacked actual notice of the

order and judgment until August 10; and 3) even if her notice of appeal was

untimely, that did not deprive the district court of jurisdiction. The district court

rejected Graddy’s arguments and issued an order granting in part the defendant’s

                                           3
              Case: 18-14248     Date Filed: 02/26/2019     Page: 4 of 8

motion to dismiss for lack of jurisdiction on April 13, 2018. It ordered the parties

to submit briefing regarding the second notice of appeal.

      As to the second notice, Graddy argued that the bankruptcy court erred in

denying her motion to file an out-of-time notice of appeal because it failed to

properly apply the four-factor standard from Pioneer Investment Services Co. v.

Brunswick Associates Limited Partnership, 507 U.S. 380 (1993), to assess whether

Graddy had demonstrated excusable neglect. The district court admitted that it

“likely would have arrived at a different conclusion” regarding the reason for delay

than the bankruptcy court did, but concluded that the bankruptcy court’s findings

were “supported by sufficient evidence” and declined to disturb its decision. On

May 24, 2018, the district court entered an order and judgment dismissing the case.

Graddy moved for reconsideration as to both notices of appeal on June 5, the

district court denied that motion on September 27, and Graddy filed a notice of

appeal to this Court on October 5.

                                         II.

      In a bankruptcy appeal from a district court, we sit as a “second court of

review.” In re Optical Techs., Inc., 425 F.3d 1294, 1299–1300 (11th Cir. 2005).

In that role, we review questions of law de novo and review the bankruptcy court’s

factual findings for clear error. In re Fin. Federated Title & Trust, Inc., 309 F.3d
1325, 1328–29 (11th Cir. 2002). We review excusable neglect decisions for abuse

                                          4
                Case: 18-14248        Date Filed: 02/26/2019      Page: 5 of 8

of discretion. Advanced Estimating Sys., Inc. v. Riney, 77 F.3d 1322, 1325 (11th

Cir. 1996).

                                               III.

       We conclude that Graddy’s first notice of appeal was timely because the

clock did not begin to run until the bankruptcy court clerk corrected the docket-

notation error on August 8. In light of that conclusion, we need not and do not

reach Graddy’s argument that her motion to file an out-of-time notice of appeal

should have been granted.

       Rule 58 of the Federal Rules of Civil Procedure governs the time of entry for

judgments. 1 Subject to a few exceptions, the general rule is that judgments “must

be set out in a separate document.” Fed. R. Civ. P. 58(a). And under Rule

58(c)(2), “judgment is entered . . . when the judgment is entered in the civil docket

under Rule 79(a) and the earlier of these events occurs: (A) it is set out in a

separate document; or (B) 150 days have run from the entry in the civil docket.”

Neither party disputes that the bankruptcy court set out its judgment in this case in

a separate document. At issue, then, is when that judgment was “entered in the

civil docket under Rule 79(a).”

1
  Rule 58 “applies in adversary proceedings” in bankruptcy court, and in such proceedings Rule
58’s reference to the civil docket “shall be read as a reference to the docket maintained by the
clerk under [Bankruptcy] Rule 5003(a).” Fed. R. Bankr. P. 7058.

                                                5
              Case: 18-14248     Date Filed: 02/26/2019     Page: 6 of 8

      Rule 79(a) describes the contents of a civil docket. It states that each docket

entry “must briefly show . . . the substance and date of entry of each order and

judgment.” Fed. R. Civ. P. 79(a)(3). So the question here: at what point did the

bankruptcy court’s docket “briefly show” the “substance” of the court’s judgment,

such that the judgment was “entered in the civil docket”?

      We conclude that judgment was entered on August 8, when the bankruptcy

court clerk corrected the docket. The clerk’s erroneous docket notation on July

25—denoting “[j]udgment for plaintiff and against defendant”—did not “briefly

show . . . the substance” of the court’s judgment, which was for defendant and

against plaintiff. And although the signed judgment (and the order from the day

before) made clear that the docket notation was an error, Rule 58 clearly

contemplates two independent events necessary for “judgment” to be “entered”: a

separate document must set out the judgment, and the judgment must be “entered

in the civil docket under Rule 79(a).” See Caperton v. Beatrice Pocahontas Coal

Co., 585 F.2d 683, 688 (4th Cir. 1978) (describing Rule 58’s “dual requirement”

for entry of judgment, such that entry “occurs only when the essentials of a

judgment or order are set forth in a written document separate from the court’s

opinion or memorandum and when the substance of this separate document is

reflected in an appropriate notation on the docket sheet”). The fact that the court’s

signed judgment satisfied the first condition does not bear on whether the clerk’s

                                          6
               Case: 18-14248     Date Filed: 02/26/2019    Page: 7 of 8

mistaken entry satisfied the second one. Under a plain reading of Rules 58 and 79,

it did not: a notation stating the converse of a judicial action does not “briefly show

. . . the substance” of that action, and a docket entry that fails to comply with this

show-the-substance requirement has not been “entered in the civil docket under

Rule 79(a).” As a result, Graddy’s first notice of appeal—filed two days after the

clerk corrected the docket—was timely.

      Cases from the Supreme Court and our sister circuits further support this

plain reading of the Rules. In United States v. F. & M. Schaefer Brewing Co., 356
U.S. 227 (1958), the Supreme Court suggested in dicta that a substantive docket

entry is necessary to start the clock for filing a notice of appeal. See id. at 232–33

(mentioning, among other things, the requirement that the clerk make a docket

notation showing the substance of the judgment and stating that “[w]hen all of

these elements clearly appear final judgment has been both pronounced and

entered, and the time to appeal starts to run”). One court, in discussing “how poor

an entry can be and still be a judgment,” concluded that a “docket entry that

doesn’t even say who won, surely cannot qualify.” Reynolds v. Wade, 241 F.2d
208, 210 (9th Cir. 1957). Another has held that a case was “not appealable”

because judgment had “never been entered” and had “never become effective”

where the clerk “did not make a notation of the substance of the court’s judgment,

but distorted it by indicating a ruling directly contrary to that which had actually

                                           7
              Case: 18-14248     Date Filed: 02/26/2019    Page: 8 of 8

been made on the claim for declaratory relief.” O’Brien v. Harrington, 233 F.2d
17, 19–20 (D.C. Cir. 1956).

      The defendant’s (and the district court’s) arguments to the contrary are

unconvincing because they lack textual support. The defendant argues, and the

district court accepted, that the erroneous docket entry is forgivable because 1) the

order and judgment themselves were mailed to Graddy, and 2) Graddy never saw

(and thus could not have relied upon) the docket notation before it was corrected.

But neither of these arguments—sounding in actual notice and prejudice—is

supported by the rules, which state that the clock does not start ticking until

judgment has been “entered in the civil docket under Rule 79(a).” Similarly, the

argument that “[c]lerical errors happen from time to time and do not, without more,

violate Rule 79(a)” does not explain how an error that so thoroughly misrepresents

the court’s judgment—indeed, describes the opposite of the court’s judgment—can

be said to “show . . . the substance” of that judgment. Whatever commonsense

wisdom these arguments reflect, they were not encoded into the Federal Rules.

                                    *      *     *

      Because we conclude that Graddy’s first notice of appeal was timely filed,

we REVERSE and REMAND to the district court for further proceedings.

                                           8