Court Opinion

ID: 625220
Source: CourtListenerOpinion
Date Created: 2012-03-13 17:10:37+00
Date Added: 2024-06-11T17:51:10.476702
License: Public Domain

Case: 11-10781        Document: 00511786186              Page: 1    Date Filed: 03/13/2012

            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                                                  FILED
                                                                                March 13, 2012

                                          No. 11-10781                           Lyle W. Cayce
                                        Summary Calendar                              Clerk

In the Matter of: DLH MASTER LAND HOLDING, L.L.C.; ALLEN CAPITAL
PARTNERS, L.L.C.,

                                                          Debtors

----------------------------------------------------------------------

BANK OF AMERICA, N.A.,

                                                          Appellant
v.

ALLEN CAPITAL PARTNERS, L.L.C.; THE OFFICIAL COMMITTEE OF
UNSECURED CREDITORS,

                                                          Appellees

                      Appeal from the United States District Court
                           for the Northern District of Texas
                                 USDC No. 3:11-CV-757

Before KING, JOLLY, and GRAVES, Circuit Judges.
PER CURIAM:*

        *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
   Case: 11-10781        Document: 00511786186         Page: 2     Date Filed: 03/13/2012

                                       No. 11-10781

       On appeal, Bank of America (“BOA”) challenges the district court’s order
affirming the bankruptcy court’s denial of BOA’s motion to permit late filing of
proof of claim. Upon consideration and review of the record before us, we affirm.
                  FACTS AND PROCEDURAL BACKGROUND
       On January 25, 2010, DLH Master Land Holdings, L.L.C. (“DLH”) filed a
voluntary petition for relief under Chapter 11 of the Bankruptcy Code. On
January 26, 2010, the bankruptcy court issued a Notice of Chapter 11
Bankruptcy Case, Meeting of Creditors, & Deadlines.                    This Notice clearly
established, inter alia, the Bar Date1 of June 2, 2010.
       On February 4, 2010, BOA received the Notice, but did not notify Snell &
Wilmer2 of the bankruptcy case until “late May, early June.” On June 1, 2010,
Snell & Wilmer filed its notice of appearance, but was directed by BOA to focus
its attention on the non-debtor affiliates as co-debtors on the obligations owed
to BOA.
       On July 14, 2010, forty-two days after the expiration of the Bar Date, BOA
filed its original proof of claim.3 On November 3, 2010, BOA filed its motion to
permit late filing of proof of claim, arguing that the forty-two day delay in filing
its proof of claim resulted from a miscommunication within the firm of its
outside counsel and that it should not be penalized for its counsel’s mistakes.
BOA also asserts that allowing it to file its late proof of claim would not
prejudice the debtor because the debtor has been aware of BOA’s claim since the
beginning of the bankruptcy proceeding. As representative of the unsecured
creditors, the Official Committee of Unsecured Creditors (“OCUC”) filed its

       1
         The Bar Date is the date by which all creditors must file their proof of claim in order
to be treated as a creditor.
       2
       The California law firm of Snell & Wilmer was hired to represent BOA in the
bankruptcy case.
       3
           BOA later amended its proof of claim reducing the amount of the claim.

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   Case: 11-10781      Document: 00511786186    Page: 3   Date Filed: 03/13/2012

                                  No. 11-10781

objections to BOA’s motion. On January 20, 2011, the bankruptcy court held an
evidentiary hearing to consider BOA’s motion and OCUC’s objections.
      On February 10, 2011, the bankruptcy court issued its order denying
BOA’s motion to permit late filing of proof of claim. The bankruptcy court
stated:
      The facts presented to the Court at the hearing on this motion do
      not represent the typical “client being penalized for counsel’s
      mistake” scenario, but instead show a situation where Bank of
      America received multiple notices of the bar date for filing its proof
      of claim, and failed to inform counsel of this bar date at the time
      that it engaged it to monitor this case. Bank of America had notice
      of the bar date well in advance of the deadline; and therefore, there
      is inadvertence on the part of the bank, not counsel, which acted
      promptly in filing a proof of claim once it discovered the error. As
      stated in the objection filed by the Unsecured Creditors’ Committee,
      Pioneer would suggest that mere inadvertence is not enough to
      meet the excusable neglect standard. Bank of America did not meet
      its burden of proof and its motion must be denied.
      On February 22, 2011, BOA appealed to the district court. See 28 U.S.C.
§ 158(a)(1). The only issue on appeal to the district court was whether the
bankruptcy court abused its discretion in denying BOA’s motion to permit late
filing of proof of claim. After reviewing the evidence, the district court entered
its order affirming the bankruptcy court’s denial of BOA’s motion.
                                 DISCUSSION
      On appeal, BOA claims that the district court erred in affirming the
bankruptcy court’s finding that BOA’s inadvertence did not constitute
“excusable neglect.”
      The district court, sitting as an appellate court, reviews a bankruptcy
court’s denial of a motion to permit late filing of proof of claim for an abuse of
discretion. Pioneer Inv. Serv. Co. v. Brunswick Assoc., L.P., 507 U.S. 380, 395
(1993). “We review the decision of a district court, sitting as an appellate court,

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                                   No. 11-10781

by applying the same standard of review to the bankruptcy court’s findings of
fact and conclusions of law as applied by the district court.” In re Entringer
Bakeries, Inc., 584 F.3d 344, 348 (5th Cir. 2008).
      In order to obtain permission to file a proof of claim after the Bar Date,
the movant has the burden of establishing “excusable neglect” under Federal
Rule of Bankruptcy Procedure 90006(b)(1). When determining whether the
movant has met its burden, we are to consider “all relevant circumstances
surrounding the party’s omission.” Pioneer Inv. Serv. Co., 507 U.S. at 395.
When considering the relevant circumstances surrounding the party’s omission,
the court should look to: (1) the danger of prejudice to the debtor; (2) the length
of the delay and its potential impact on judicial proceedings; (3) the reason for
the delay, including whether it was within the reasonable control of the movant;
and (4) whether the movant acted in good faith. Id. (“Pioneer Test”). In order
to reverse the bankruptcy court’s denial of BOA’s motion to permit late filing of
proof of claim, the bankruptcy court must have based its findings on a clearly
erroneous view of the evidence or the law. Id.
      Under the Pioneer test, the bankruptcy court found that BOA’s
inadvertence did not rise to the level of “excusable neglect.”            While the
bankruptcy court did not provide a detailed or lengthy analysis, it is evident
that BOA did not meet its burden. The district court made this clear in its
August 2, 2011, order affirming the bankruptcy court.
      Because the district court correctly found that BOA failed to show that the
bankruptcy court abused its discretion in denying its motion to permit late filing
of proof of claim BOA is not entitled to relief. Therefore, the district court’s order
affirming the bankruptcy court’s denial of BOA’s motion to permit late filing is
AFFIRMED.

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