Court Opinion

ID: 4344995
Source: CourtListenerOpinion
Date Created: 2018-11-28 01:00:52.570095+00
Date Added: 2024-06-11T14:22:00.145859
License: Public Domain

FILED
                                                                             NOV 27 2018
                           NOT FOR PUBLICATION
                                                                        SUSAN M. SPRAUL, CLERK
                                                                           U.S. BKCY. APP. PANEL
                                                                           OF THE NINTH CIRCUIT

             UNITED STATES BANKRUPTCY APPELLATE PANEL
                       OF THE NINTH CIRCUIT

In re:                                             BAP No. WW-18-1127-BKuTa

NORTHWEST TERRITORIAL MINT,                        Bk. No. 16-11767-CMA
LLC,
                                                   Adv. No. 16-1217-CMA
                    Debtor.

DIANE ERDMAN,

                    Appellant,
                                                           MEMORANDUM*
v.

MARK CALVERT, Chapter 11 Trustee,

                    Appellee.

                   Argued and Submitted on October 25, 2018
                            at Seattle, Washington

                            Filed – November 27, 2018

               Appeal from the United States Bankruptcy Court
                   for the Western District of Washington

         *
        This disposition is not appropriate for publication. Although it may be cited
for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no
precedential value, see 9th Cir. BAP Rule 8024-1.
       Honorable Christopher M. Alston, Bankruptcy Judge, Presiding

Appearances:        Allen Lichtenstein argued for Appellant Diane Erdman;
                    David C. Neu of K & L Gates LLP argued for Appellee
                    Mark Calvert, Chapter 11 Trustee.

Before:      BRAND, KURTZ and TAYLOR, Bankruptcy Judges.

                                 INTRODUCTION

      Appellant Diane Erdman appeals an order denying her motion to

extend the time for filing a notice of appeal under Rule 8002(d)(1)(B).1

Because the bankruptcy court misapplied the law and certain findings of

fact are illogical or not supported by the record, we REVERSE.

      I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A.    Events prior to Erdman's motion

      The debtor, Northwest Territorial Mint, LLC ("NWTM"), filed a

chapter 11 bankruptcy case on April 1, 2016. At the time of the filing,

NWTM was the largest private mint in the United States, with 240

employees at facilities in six states. A $12 million judgment against NWTM

for defamation was the catalyst for the bankruptcy filing. Nevada attorney

Allen Lichtenstein is the appellate attorney for the defamation case.

      1
         Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all "Rule" references are to the Federal
Rules of Bankruptcy Procedure.

                                           2
      Ross Hansen is the sole member and 100% owner of NWTM. Hansen

and Erdman met in 1997, when Erdman purchased gold and silver coins

from NWTM. They have lived together since 2000. Erdman worked at

NWTM as a vault manager.

      Shortly after NWTM's bankruptcy filing, Mark Calvert ("Trustee")

was appointed as the chapter 11 trustee. Thereafter, he filed an adversary

complaint against Erdman, seeking to avoid and recover various alleged

fraudulent transfers. Trial was set for January 2018.

      In May 2017, Erdman's counsel, DBS Law, moved to withdraw from

the case due to "irreconcilable differences". With the cut-off date for

discovery not until December 29, 2017, the bankruptcy court granted the

motion. Thereafter, Erdman was represented by Thomas Quinlan. A few

weeks prior to trial, Quinlan moved to withdraw from the case due to non-

payment of fees; the bankruptcy court denied that request.

      On March 28, 2018, the bankruptcy court issued its Memorandum

Decision and Judgment in the Erdman adversary proceeding, finding her

liable for constructive fraudulent transfers totaling $430,462.00. Hence, any

notice of appeal had to be filed by April 11, 2018.

      Shortly after trial and several weeks prior to entry of the Judgment,

Quinlan filed his renewed motion to withdraw from Erdman's case. The

bankruptcy court granted his request on March 28, 2018 — the same day it

entered the Judgment against Erdman.

                                       3
B.    Erdman's motion

      On April 18, 2018, seven days after the appeal time had run for the

Judgment, Erdman, with Lichtenstein as her new attorney, filed a motion to

extend the time to file a notice of appeal, seeking a one week extension to

file an appeal of the Judgment ("Extension Motion"). Erdman argued that

the delay in this case should be considered "excusable neglect" under

Pioneer Investment Services Co. Brunswick Associated Ltd. Partnership, 507 U.S.
390 (1993) ("Pioneer"). She offered the following in support of her argument.

      On March 31, 2018, Lichtenstein found his wife of 35 years collapsed

on the bathroom floor not breathing and without pulse. While waiting for

medical help to arrive, Lichtenstein unsuccessfully applied CPR to his wife.

She was eventually revived by medical personnel but never regained

consciousness. Mrs. Lichtenstein was maintained on life support for the

next three days while Lichtenstein, in consultation with physicians, made

the decision whether to take her off life support. Her heart stopped again

on April 3. She was again revived.

      Faced with the reality that Mrs. Lichtenstein had no brain activity

and that her chances of recovery were slight to none, Lichtenstein made the

difficult decision to take his wife off of life support. She passed away on

April 4, 2018. Later that same day, Erdman contacted Lichtenstein about

appealing the Judgment. He knew her from another representation and

told her he was willing to help her but that he was not in any condition to

                                       4
deal with her case at the moment. Lichtenstein was unaware that the

Judgment was from a bankruptcy court. Because of the circumstances,

Lichtenstein said he did not follow his normal course of action of asking

the client pertinent questions about the case upon contact and mistakenly

assumed that the appeal time was 30 days.

      On April 12, three days after Mrs. Lichtenstein's funeral, Erdman sent

Lichtenstein copies of the Memorandum Decision and Judgment.

Lichtenstein said that he planned on drafting the notice of appeal that day.

Only then did he realize that this was a bankruptcy case and the time for

filing a notice of appeal had expired the day before, on April 11. He also

discovered that Quinlan had withdrawn from the case and would not file a

notice of appeal or a motion to extend the time for filing one. Lichtenstein

stated that he spoke with counsel for Trustee on April 13, asking if Trustee

would oppose the Extension Motion.

      Trustee did not file a written opposition to the Extension Motion or

appear at the April 26 hearing. At the start of the hearing, local co-counsel

for Erdman stated that Trustee had informed her and Lichtenstein that he

would not be opposing the Extension Motion. The court expressed surprise

that Trustee did not oppose the motion. The bankruptcy judge was puzzled

as to why Trustee "would beat on Ms. Erdman for as long as [he] did and

then let her file an appeal which will necessarily require [T]rustee and his

lawyers to devote resources, at a minimum, to an appeal going forward . . .

                                       5
." Hr'g Tr. (Apr. 26, 2018) 5:8-10.

      Lichtenstein explained that he worked from home and that several

colleagues had been calling him on his private number to inquire about his

wife. He assumed Erdman's call on April 4 was from one of those

colleagues. Lichtenstein stated that he does not generally do bankruptcy

appeals and had no reason to think Erdman's case was a bankruptcy

appeal or to even ask that question, since he knew that neither she nor

Hansen was in bankruptcy. Lichtenstein conceded that, in hindsight, he

probably should not have taken Erdman's call.

      During the court's questioning, Lichtenstein admitted that he should

have inquired more about the appeal upon Erdman's initial call, but that he

did not have the presence of mind to do so. Lichtenstein admitted that he

did not ask about the nature of the Judgment or who the other party was

for purposes of a conflict check. However, he assumed he had 30 days to

gather that information.

      In response to the court's question of whether he knew that Erdman

had filed two prior appeals in NWTM's bankruptcy case, Lichtenstein

stated that he did not. The court then opined that, based on those appeals,

Erdman knew of the 14-day deadline in bankruptcy cases. Lichtenstein said

he did not know if Erdman knew about the 14-day deadline and that she

may have relied on prior counsel in those appeals. In any case, he believed

the neglect and responsibility was his in terms of advising her that she had

                                      6
30 days to appeal the Judgment. The court then stated:

       THE COURT: Well, I know her most recent attorney. You would
       be her third, by the way, in this case. Her second lawyer, Mr.
       Quinlan, I'm willing to bet a whole lot of money that when he
       withdraw [sic], he sent her a letter saying, 'You have 14 days to
       appeal.' Part of me would be tempted to continue this to give you
       time to get a declaration from Mr. Quinlan saying he didn't do
       that or deposing him. But I think that would only confirm that
       this motion has no merit, because Ms. Erdman is well aware of the
       deadlines to file an appeal. She filed a cross appeal of one order
       that I entered, and has filed a notice of appeal of another order
       entered, both within 14 days of the time to act. So these are facts
       that you're not aware of, but this Court is.

Id. at 13:22-14:9.

       The court issued an oral ruling denying the Extension Motion,

finding that Erdman failed to establish excusable neglect under Pioneer,

concluding that three of the four factors weighed against granting the

extension. Erdman timely appealed the court's later written order.

                              II. JURISDICTION

       The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(A) & (H). We have jurisdiction under 28 U.S.C. § 158.

                                   III. ISSUE

       Did the bankruptcy court abuse its discretion in denying the

Extension Motion?

////

                                       7
                       IV. STANDARDS OF REVIEW

      We review for abuse of discretion the bankruptcy court's decision to

grant or deny a motion for an extension of time to file a notice of appeal.

Pincay v. Andrews, 389 F.3d 853, 858 (9th Cir. 2004) (en banc). A bankruptcy

court abuses its discretion if it applies the wrong legal standard, misapplies

the correct legal standard, or if its factual findings are clearly erroneous.

TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011). A

bankruptcy court's factual finding is clearly erroneous if it is illogical,

implausible, or without support in the record. Retz v. Samson (In re Retz),

606 F.3d 1189, 1196 (9th Cir. 2010).

                               V. DISCUSSION

      A notice of appeal must be filed within 14 days of entry of the order

appealed from. Rule 8002(a). However, a bankruptcy court may extend the

time for filing the notice of appeal, so long as the party requesting the

extension files the motion prior to the expiration of the 14-day period or

within 21 days after that time, if the party shows excusable neglect. Rule

8002(d)(1)(A) & (B). Because Erdman filed her Extension Motion on the 7th

day of the 21-day extended period, she had to show excusable neglect for

the extension.

A.    The excusable neglect standard under Rule 8002(d)(1)(B).

      In Pioneer, the Supreme Court considered the meaning of excusable

neglect in the context of a motion under Rule 9006(b)(1). But Pioneer also

                                         8
applies to motions to extend the time to file notices of appeal under both

FRAP 4(a)(5) and Rule 8002(d)(1)(B). Marx v. Loral Corp., 87 F.3d 1049, 1054

(9th Cir. 1996), overruled on other grounds by Lacey v. Maricopa Cty., 693 F.3d
896 (9th Cir. 2012) (applying FRAP 4(a)(5)); Warrick v. Birdsell (In re

Warrick), 278 B.R. 182, 185 (9th Cir. BAP 2002) (applying former Rule

8002(c)).

      Excusable neglect "encompass[es] situations in which the failure to

comply with a filing deadline is attributable to negligence," Pioneer, 507
U.S. at 394, and includes "omissions caused by carelessness," id. at 388. The

determination of whether neglect is excusable "is at bottom an equitable

one, taking account of all relevant circumstances surrounding the party's

(or its lawyer's) omission." Id. at 395.

      Under Pioneer, in considering whether the moving party has shown

excusable neglect, the court considers: (1) danger of prejudice to the non-

moving party; (2) length of the delay caused by the neglect, and its

potential impact on judicial proceedings; (3) reason for the delay, including

whether it was within the movant's reasonable control; and (4) whether the

movant acted in good faith. Id. Pioneer indicates that "a district court may

find neglect 'excusable' if it is caught quickly, hurts no one, and is a real

mistake, rather than one feigned for some tactical reason — even if no

decent lawyer would have made that error." Pincay, 389 F.3d at 860

(Berzon, J., concurring).

                                           9
B.    Analysis

      Lichtenstein's failure to ask Erdman questions regarding the nature

of her appeal, his erroneous assumption that she had 30 days to file it and

his telling her so constitute neglect. The question is whether his neglect was

"excusable." Finding that three of the four Pioneer factors weighed against

the extension, the bankruptcy court determined that the neglect was not

excusable. Although the court engaged in the Pioneer analysis to guide its

excusable neglect determination, it erred in its analysis of prejudice, and its

findings as to the movant's good faith (or lack thereof) were illogical or not

supported by the record.

      1.    Danger of prejudice to the non-moving party

      The bankruptcy court found that the expense and delay caused by an

untimely appeal posed a danger of prejudice to Trustee, the estate and

innocent administrative creditors:

      THE COURT: The [non-moving] party in this case is a bankruptcy
      trustee who is in the process of liquidating a Chapter 11 estate.
      Now, maybe they have failed to remember their duty to other
      creditors in this case by simply rolling over on this motion. But
      the Court will note that while it appeared that there was no
      prospect of any distribution to unsecured creditors, there are
      potentially millions of dollars in administrative expense claims,
      including nearly $5 million in professional fees accrued, a
      recently-filed request by the former CEO for over $200,000, a
      potential $700,000 Warren [sic] Act claim that will be asserted by
      terminated employees, and perhaps a million-dollar breach of
      lease claim asserted by the landlord.

                                     10
      While one may not have sympathy for the professionals who
      voluntarily took on the risk of not being paid, these other parties
      did not and are involuntary administrative creditors. Allowing a
      tardy appeal to proceed will mean that the trustee will have to
      incur legal fees to defend the appeal, thereby significantly
      increasing the costs of administration. The appeal will also delay
      a final resolution to this adversary proceeding and may delay or
      preclude the trustee from pursuing collection of the judgment
      amount from Ms. Erdman or other potential sources. Allowing
      Ms. Erdman to proceed will result in a demonstrable detriment to
      innocent administrative creditors in this case.

Hr'g Tr. (April 26, 2018) 17:17-18:16.

      Erdman argues that the bankruptcy court misapplied the "prejudice"

prong of Pioneer by finding that the only prejudice suffered would be the

time and expense of Trustee having to defend an appeal. We agree.

      Costs to defend an appeal and delaying resolution of the Erdman

adversary proceeding is the same "prejudice" Trustee (and the estate, if it is

also considered the non-moving party here) would suffer if the appeal had

been timely filed. "Being exposed to an appellate review of the bankruptcy

court's judgment is not the type of prejudice that Pioneer was addressing."

In re Coleman, 2009 WL 2882955, at *2 (Bankr. D.D.C. July 15, 2009). "If it

were, a belated motion for an extension of time could never be granted

because the obvious result of granting such a motion is to put one party to

the burden of defending an appeal that would otherwise not exist." In re

Hall, 259 B.R. 680, 682 (Bankr. N.D. Ind. 2001). Accord Burt v. Nat'l

                                         11
Republican Club of Capitol Hill, 828 F. Supp. 2d 115, 128 (D. D.C. 2011), aff'd,

509 F. App'x 1 (D.C. Cir. 2013) (no neglect would ever be excusable if the

prejudice of having to spend the time, effort and expense to litigate an

appeal was dispositive) (applying FRAP 4(a)(5)); Santacroce v. Funkhouser

(In re Funkhouser), 2014 WL 1419213, at *2 (Bankr. N.D.W.V. April 14, 2014)

("[A]lthough granting the Funkhousers' motion [to extend the time to file a

notice of appeal] may impede the Santacroces' ability to execute upon their

judgment and cost them additional expense and delay in that regard, those

costs are inherent in defending an otherwise timely appeal; thus the

prejudice to the Santacroces is not inordinate."); Sonders v. Mezvinsky (In re

Mezvinsky), 2001 WL 1403525, at *2 (Bankr. E.D. Pa. Oct. 5, 2001) (same).

      The court made no other findings to support its determination that

prejudice weighed against the extension request, and nothing in the record

suggests that Erdman's short delay in filing a notice of appeal — seven

days — would impair Trustee's ability to defend an appeal. In fact,

granting the motion would have involved virtually no delay in the

proceeding. Had the appeal been allowed to proceed, it might have already

been decided by this court or would be before us now as opposed to this

order.

      Erdman also argues that the bankruptcy court erred by not

considering the prejudice she would suffer by losing her appeal right if the

Extension Motion were denied. Erdman does not cite any relevant

                                       12
authority to support her argument that prejudice to the moving party must

be considered. We do not believe it was error for the court to decline to

consider prejudice to Erdman.

      2.    Length of delay and potential impact on judicial proceedings

      Erdman argues that the bankruptcy court erred by failing to analyze

the second Pioneer factor — the length of the delay caused by the neglect,

and its potential impact on judicial proceedings. The relevant delay is the

seven day period between the expiration of the initial appeal period and

Erdman's filing of the Extension Motion.

      While the court did not discuss this factor expressly, it did conclude

that "three of the four factors weigh[ed] against" Erdman's request. Given

the explicit findings against her on prejudice, the reason for the delay and

good faith, the court apparently found this factor weighed in her favor, or

was at least neutral. In any case, this factor weighs in favor of granting the

extension. Lichtenstein had intended to file the notice of appeal on April

12, which was one day past the initial appeal deadline. Once he realized the

situation, he immediately went into action. He called Trustee's counsel on

April 13 asking if he would oppose an extension, got admitted to the court

pro hac vice, filed the Extension Motion on April 18, moved for an order

shortening time, and appeared at the hearing on April 26. Clearly, the

delay here was brief and would not significantly affect any judicial

proceedings.

                                      13
      3.    The reason for the delay

      Lichtenstein explained that the reason he failed to file a timely notice

of appeal for Erdman was because he mistakenly assumed that the appeal

period was 30 days. This was due to his extreme grief over his wife's

passing just hours before Erdman called him. Because of the exceptional

circumstances, he did not make the normal inquiries he would have to a

prospective client, which would have revealed the shorter appeal time.

Excusable neglect can include sudden death, disability or illness of counsel,

a close family member of counsel (such as a spouse or child) or the party.

See Allied Domecq Retailing USA v. Schultz (In re Schultz), 254 B.R. 149, 154

(6th Cir. BAP 2000) (applying former Rule 8002(c)); In re Mizisin, 165 B.R.
834, 835 (Bankr. N.D. Ohio 1994) (applying former Rule 8002(c)).

      The bankruptcy court determined that Lichtenstein's reason for the

delay was not excusable, commenting that it was an "almost unbelievable

situation." Specifically, the court found:

      THE COURT: Ms. Erdman has found an attorney to handle her
      appeal, apparently unable to find one in the state of Washington,
      and has found the one attorney who agreed to take on the matter,
      but was also too distraught to meet the minimum standard of care
      for a lawyer who claims to regularly handle appeals. The situation
      is not akin to the lawyer in Pincay who relied on a paralegal who
      misread the rule to state that the appeal deadline was 60 days
      rather than 30.

      In this case, we have a lawyer who knows that the appeals have

                                    14
      deadlines and knows in particular that bankruptcy court orders
      must be appealed in 14 days, and yet agreed to file the appeal, but
      didn't inquire as to the nature of the case, didn't ask Ms. Erdman
      what court she was in, didn't ask her to send him any papers or
      even a caption, didn't conduct a Pacer search, didn't even ask who
      the other party was and didn't conduct a conflict check. If he had
      done just one of these things, it would have revealed to him that
      the order to be appealed was entered in bankruptcy court.

      Mr. Lichtenstein did not misread a rule. He failed to ask any
      questions about the time sensitive engagement to find out what
      rules apply. This Court cannot allow Mr. Lichtenstein or any other
      attorney who practices in this court to believe that such conduct
      could ever be excusable. If his mental anguish is so great that he
      was unable to ask basic engagement questions, the Court
      seriously questions why he is even pursuing this appeal now. He
      should take a break from the practice of law.

Hr'g Tr. (April 26, 2018) 16:10-17:13.

      Erdman argues that the court focused on Lichtenstein's admitted

neglectful acts and gave little consideration to whether those acts were

excusable given the intervening circumstances of his wife's death hours

earlier. We read the court's ruling differently. It found that the numerosity

of Lichtenstein's mistakes could never be excusable, notwithstanding the

traumatic circumstance of his wife's sudden and untimely death.

      While we believe that the court could have found Lichtenstein's

neglect excusable, we may not substitute our judgment for that of the trial

judge on this factor. See United States v. Henderson, 241 F.3d 638, 646 (9th

                                         15
Cir. 2000). Nonetheless, equity, the extraordinary circumstances presented

in this case and, as we explain more below, the absence of other factors

supporting denial of the Extension Motion required that it be granted.

     4.    Whether the movant acted in good faith

     Focusing on Erdman's conduct, the bankruptcy court found that

there was an improper motive for the delay in filing the Extension Motion.

In essence, the court did not believe that Erdman relied on Lichtenstein's

advice that she had 30 days to file her appeal of the Judgment, because she

knew the rule was 14 days. Ultimately, the court found that Erdman's

conduct evidenced an intent to set up an attorney for a malpractice claim

rather than to earnestly seek a reversal of the Judgment:

     THE COURT: Finally, this Court has some serious question as to
     Ms. Erdman's conduct and whether or not she is acting in good
     faith. Notably absent is a declaration from her that she did not
     know the deadline for appealing orders in bankruptcy cases. That
     is because this Court finds she could not truthfully make that
     statement. Notwithstanding Mr. Lichtenstein's admission that he
     told her he believed that they had 30 days, she has had experience
     in this case. She filed a cross appeal of one order, and filed that
     within 14 days of the initial appeal. Then she filed a notice of
     appeal of another order within 14 days of its entry by this Court.
     See Docket number 726 and 767.

     Ms. Erdman knew that she would have two weeks after entry of
     the order in the adversary proceeding to file an appeal. The Court
     took the matter under advisement on February 6th. Her trial
     lawyer filed and served a motion to withdraw on February 21.

                                  16
      This Court did not enter its ruling and judgment in the adversary
      proceeding until March 28th. Thus, Ms. Erdman had a month to
      find another attorney to handle any appeal, yet she did not find
      an attorney, apparently, until April 4th and did not send him any
      information until April 12th, one day after the expiration of the
      14-day deadline to file an appeal.

      Because Ms. Erdman has had recent experience with appeals in
      this court and knows the time sensitivity of filing an appeal, she
      should have immediately sent all papers to Mr. Lichtenstein. Her
      decision to wait and delay providing basic information to her
      attorney in a timely manner indicates that she does not have a
      good faith intent to pursue an appeal. In reality, it appears to this
      Court that her actions evidence an intent, perhaps, to set up other
      lawyers for a malpractice claim rather than seek a reversal of this
      Court's order.

Hr'g Tr. (April 26, 2018) 18:17-19:24.

      Erdman argues that the bankruptcy court erred by ignoring the

question of whether Lichtenstein — the attorney claiming excusable neglect

— acted in bad faith and instead focusing on unverified assumptions about

what she knew or did not know about applicable deadlines. Lichtenstein's

conduct was under scrutiny here as well, because "the proper focus is upon

whether the neglect of respondents and their counsel was excusable." Pioneer,
507 U.S. at 397 (emphasis in original). The court seemed to find that even if

Lichtenstein's neglect was excusable, it was negated by Erdman's

intentionally bad conduct.

      Regardless, we agree with Erdman that the court's findings on this

                                         17
factor are illogical or are unsupported by the record. We first take issue

with the finding that Erdman "knew" the appeal time was 14 days given

her experience with two prior appeals and Quinlan's "probable" departing

advice that she had 14 days to appeal the Judgment. The record does not

support the court's finding that Erdman knew of the 14-day rule. Counsel

filed the two prior appeals, not Erdman, and there was no evidence in the

record that appeal deadlines were ever discussed with her. Any purported

legal advice from Quinlan about a 14-day appeal time was pure

speculation. The record established that Lichtenstein told Erdman she had

30 days to file her appeal, nothing else.

      The court also made much of the fact that Erdman waited what it

believed was an unreasonable amount of time to find an appeal attorney,

and that she sent the relevant documents to Lichtenstein one day after the

appeal deadline. These facts apparently evidenced her grand scheme to sue

Lichtenstein (or some other poor attorney) for malpractice, because she

knew that it was too late to appeal the Judgment. Nothing in the record

supports these inferences. The court chastised Erdman for waiting "a

month" to find an appeal attorney. Quinlan filed his renewed motion to

withdraw on February 21; the order granting that request was entered

March 28, the same day as the Memorandum Decision and Judgment. It is

possible that Erdman thought the court might deny Quinlan's withdrawal

request like it had before. However, and more importantly, as of March 27

                                      18
there was no adverse judgment requiring the need for an appeal. Thus,

Erdman had no real reason prior to March 28 to start looking for another

attorney. Contacting Lichtenstein seven days later, on April 4, was not

unreasonable. And the record is devoid of any evidence that Erdman failed

to take any action before then.

      As for Erdman waiting until April 12 to send him the Memorandum

Decision and Judgment, Lichtenstein had no answer. However, the court's

finding that she did so to set him up for a malpractice claim is illogical and

unsupported. It would mean that Erdman deliberately sabotaged her own

appeal by not sending the documents sooner in hopes of a favorable

malpractice suit against Lichtenstein. A malpractice claim would be far

more difficult to prosecute (and win) than an appeal of the Judgment.

Furthermore, to suggest that Erdman had no intent to file an appeal of the

Judgment defies all logic. It makes no sense that she would appeal other

relatively minor matters in NWTM's bankruptcy case but not a $430,000

adversary judgment against her. In short, the court's finding that the reason

for the delay for filing the Extension Motion was not a real mistake and

feigned for some tactical reason is not supported by the record.

                             VI. CONCLUSION

      We conclude that the bankruptcy court abused its discretion in

determining that Erdman's failure to timely file the Extension Motion was

not attributable to excusable neglect. It applied an incorrect standard of law

                                      19
for the prejudice factor of Pioneer, and its findings with respect to good

faith were either illogical or unsupported by the record. These errors

tainted its ultimate finding that Lichtenstein's neglect was not excusable.

Accordingly, we REVERSE.

                                      20