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#2271 signed 9-16-96

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS



In Re:

AMERICAN FREIGHT SYSTEM, INC.,

DEBTOR(S),

NO. 88-41050-11

CHAPTER 11

AMERICAN FREIGHT SYSTEM, INC.,

PLAINTIFF(S),

v.

PARKER METAL CORPORATION,

DEFENDANT(S)

ADV. NO. 90-7320



ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT,

DENYING PLAINTIFF'S MOTION FOR TRIAL SETTING, AND GIVING

DEFENDANT SIXTY DAYS TO COMMENCE PROCEEDING

BEFORE SURFACE TRANSPORTATION BOARD

This proceeding is before the Court for consideration of various motions filed by the parties. Defendant Parker Metal Corporation (Parker) appears by counsel Joseph M. Weiler of Alderson, Alderson & Montgomery, L.L.C. Plaintiff-debtor American Freight System, Inc. (AFS), appears by counsel Kurt Stohlgren of Hillix, Brewer, Hoffhaus, Whittaker & Wright, L.L.C. The Court has reviewed the relevant pleadings and is now ready to rule.

FACTS

On January 11, 1996, the Court held a pretrial conference in this proceeding. The Court's only notes for that hearing read, "S B - 30, ICC - 60." These notes are explained by an order entered on February 22, prepared by counsel, which gave Parker thirty days to file any dispositive motion concerning the small business defense and added that if the dispositive motion was denied, Parker would have sixty days to commence an action before the Interstate Commerce Commission (now succeeded for such actions by the Surface Transportation Board) concerning its defenses of unreasonable rates and practices. Meanwhile, on February 16, the Court entered an order applicable to all of AFS's pending adversary proceedings, giving any defendant which intended to rely on the small-business defense created by the Negotiated Rates Act of 1993 thirty days to file a properly-supported motion for summary judgment based on the defense.

On May 13, without seeking any extension of the thirty-day deadline set in either order, Parker filed a summary judgment motion based on the small-business defense. On June 5, AFS objected to the motion, but did not complain about its tardiness. It also moved to strike the supporting affidavit submitted with the motion, and to strike the motion itself since the affidavit was allegedly deficient. Two days later, AFS filed a motion for trial setting, stating in this pleading that Parker had not complied with the thirty-day deadline set in the February 22 order. Parker objected to this motion, conceding it had not complied with the February 22 order but stating that AFS had notice "several years ago" of Parker's small business status, that AFS did not object or file any pleadings as a result of Parker's delay in filing its summary judgment motion, and that AFS had not been prejudiced by the delay. At a hearing on June 26, the Court gave Parker fifteen days to submit affidavits showing the tardiness of its summary judgment motion resulted from excusable neglect. That same day, AFS filed a supplemental motion to strike Parker's summary judgment motion because it was filed after the deadline set in the February 16 order.

Parker has now submitted the affidavit of a paralegal employed by its New York co-counsel. The paralegal indicates she was asked in January 1996 to prepare an affidavit supporting Parker's claim to be a small business concern, did so, sent it to Parker to be executed, and received the completed affidavit on March 8. However, she did not forward it to Parker's local counsel until May 8 because she was not aware of the deadline set by the Court. If she had been notified of the deadline, she asserts, she would have ensured the affidavit was timely filed. AFS responds that the paralegal's affidavit does not establish excusable neglect for the late filing of Parker's summary judgment motion.

DISCUSSION AND CONCLUSIONS OF LAW

Federal Rule of Bankruptcy Procedure 9006(b)(1) provides that the Court may allow Parker's late filing of its summary judgment motion if Parker's failure to comply with either deadline set by the Court resulted from "excusable neglect." The Supreme Court explained the meaning of the phrase "excusable neglect" in this Rule in Pioneer Investment Services v. Brunswick Associates, 507 U.S. 380 (1993). The Court first noted the most relevant ordinary meaning of "neglect" is "'to leave undone or unattended to esp[ecially] through carelessness,'" and concluded that Congress clearly intended that the courts, where appropriate, would be permitted to accept late filings caused by inadvertence, mistake, or carelessness as well as intervening circumstances beyond the party's control. Id. at 388 (quoting Webster's Ninth New Collegiate Dictionary 791 (1983) but adding emphasis). Because Congress failed to provide any guidance for determining what types of neglect are "excusable," the Court concluded that the determination is ultimately an equitable one, taking into account all relevant circumstances surrounding the party's omission. Id. at 395. Relevant circumstances include: (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.

Parker has provided insufficient evidence to show that its failure to file its motion for summary judgment timely resulted from excusable neglect. A paralegal in a law firm is responsible for nothing more than counsel delegates to him or her, and counsel remains ultimately responsible for deadlines in a lawsuit no matter what has been delegated to other firm employees. Both of the February orders were served on Parker's local counsel, and either he or New York counsel should have informed the paralegal of the deadline and ensured it was met. The affidavit does not explain how or why counsel failed to notify the paralegal of the deadline, and Parker simply could not show excusable neglect without explaining that failure. The silence of a party's attorneys, those responsible for meeting deadlines in a lawsuit, must be treated as a concession that their failure to meet a deadline was not excusable. Even the Pioneer Court, which adopted a more flexible, lenient standard for excusable neglect than many lower courts had, declared that parties must "be held accountable for the acts and omissions of their chosen counsel." 507 U.S. at 397. Consequently, the Court must conclude Parker has failed to show the late filing of its summary judgment motion resulted from excusable neglect.

However, the Court does not believe the denial of Parker's motion for summary judgment as untimely means AFS's motion for trial setting must be granted. Instead, pursuant to the February 22 order, which reduced to writing the oral ruling made at the January pretrial, Parker will have sixty days from the date of this order to commence a proceeding before the Surface Transportation Board concerning its claims of unreasonable rates and practices. AFS's motions to strike Parker's summary judgment motion are denied as moot.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of September, 1996.













__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

 

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