Search by Case Name
Search by Case Number
Search by Keyword

2002

affirmed 3-9-95, Saffels, J.

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS

In Re:

GLENN C. CORKE,

DEBTOR(S)

NO. 92-41233-13

CHAPTER 13

MEMORANDUM OF DECISION

This case is before the Court for the third time to decide whether relief from an order entered after a hearing on the merits at which a creditor and her counsel failed to appear should granted for excusable neglect pursuant to Federal Rule of Civil Procedure 60(b), made applicable here by Federal Rule of Bankruptcy Procedure 9024. Reconsideration of the order was twice denied before the creditor appealed, and the District Court remanded for further reconsideration in light of the Supreme Court's intervening decision in Pioneer Investment Services v. Brunswick Associates, ___ U.S. ___, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993). The debtor is represented by Pantaleon Flores of Topeka, Kansas. Jo Ann Corke, the creditor against whom the order was entered and the debtor's former spouse, is repesented by Eric Kjorlie of Topeka, Kansas.

On February 7, 1994, the parties appeared and presented evidence and arguments on the matter. The Court has considered the evidence, the relevant portions of the file, and the arguments, and is now ready to rule.

FINDINGS OF FACT

1. Glenn C. Corke filed a chapter 13 case on June 26, 1992. He filed a proposed payment plan on August 5.

2. He filed schedules listing his obligation to Jo Ann Corke, his former wife, as an unsecured debt resulting from a property settlement reached in their divorce case.

3. The debtor's plan provided for the full payment of administrative, secured, and two special-class claims, and the discharge of his remaining unsecured debts at the end of thirty-six months.

4. Ms. Corke objected to the plan. Among other things not pertinent here, she sought to have her claim determined to be maintenance that is nondischargeable under 11 U.S.C.A. §§1328(a)(2) and 523(a)(5), and to have the debtor be required to pay her $225 per month.

5. The first hearing on Ms. Corke's objection was held on August 25, 1992. At that time, a pretrial conference was scheduled for September 23.

6. On August 27, the trustee filed a motion to dismiss the case because the the debtor failed to make his first voluntary plan payment. This motion was scheduled for hearing on September 29.

7. On September 4, an order was served on the debtor's employer, directing it to withhold $85 per month from his pay and deliver it to the chapter 13 trustee.

8. On September 21, the debtor filed a response to the trustee's motion to dismiss, explaining that his first voluntary payment to the trustee had been thwarted when the conservator for Sylvia G. Corke (apparently the debtor's mother), despite knowledge of the bankruptcy, seized the proceeds of the September paycheck which the debtor had deposited into a joint bank account.

9. At the pretrial conference on September 23, Ms. Corke's objection to plan confirmation was treated as an adversary proceeding to determine whether the debtor's obligation to her constituted a division of property or an award of maintenance. The parties announced they were prepared to try the property division versus maintenance issue and that the testimony would take two hours or less. They had a separate dispute about a lien Ms. Corke had on the debtor's home, and they agreed that if the trustee's motion to dismiss was not granted on September 29, the debtor's counsel would file a brief within 15 days. If the debtor decided to concede that dispute, counsel were to submit an order to that effect.

10. On September 29, the trustee's motion to dismiss was continued to October 27.

11. On October 7, a notice of the special setting was mailed to the parties and their attorneys, scheduling the property-division-maintenance issue for hearing on November 19, 1992, at 1:30 p.m. Although it identified the hearing as a "SPECIAL SET hearing," the notice also erroneously contained a section which stated that the parties should seek a special setting if they believed the hearing would take more than 15 minutes or should be an evidentiary hearing.

12. On October 27, the trustee's motion to dismiss was continued to December 16, and a notice to that effect was mailed to counsel, the creditors, and the debtor.

13. Upon receiving the October 27 notice, Ms. Corke contacted her counsel, Eric Kjorlie, to determine its effect, if any, on the November 19 hearing.

14. Mr. Kjorlie then assigned to his client the task of determining what effect the continuance of the hearing on the motion to dismiss would have on the November 19 hearing.

15. Before receiving the October 27 notice, both Mr. Kjorlie and Ms. Corke had been preparing to have on November 19 a complete hearing on the dischargeability of her claim.

16. On November 10, Ms. Corke called Mr. Kjorlie's office to discuss her findings about the November 19 hearing. Mr. Kjorlie was unavailable and his secretary wrote a note reading:

"Jo Ann Corke

Nov 19th

No Meeting

tx

M"

17. Based upon this message, Mr. Kjorlie concluded that he and Ms. Corke did not need to appear on November 19. Neither he nor his staff personally contacted the Clerk of the Court or Mr. Corke's attorney. Mr. Kjorlie then scheduled a hearing in another court in another county on November 19.

18. On November 19, Mr. Corke and his counsel, Mr. Flores, appeared in court at the scheduled time, prepared to present evidence in support of Mr. Corke's position. Neither Ms. Corke nor Mr. Kjorlie appeared. The Court caused a call to be made to Mr. Kjorlie's office and learned that Mr Kjorlie did not intend to appear at the hearing and in fact was attending to business in another court in another county.

19. The Court presided over the scheduled hearing, took evidence, and entered an order in favor of the debtor, finding his debt to Ms. Corke to be in the nature of property division and dischargeable. Ms. Corke's lien on Mr. Corke's home was determined to be valid and not avoidable.

20. On November 20, Ms. Corke filed a "Motion to Set Aside 11/19/92 Default Order." In an attached affidavit, as the ground for setting aside the order based on excusable neglect, Ms. Corke swore: "That Creditor, Jo Ann Corke, called the Clerk's Office and the a [sic] Deputy Clerk advised that there would not be a Hearing on 11/19/92 since the case was dismissed and had not been reinstated. Whereupon Creditor advised her Counsel and the 11/19/92 matter was not to be calendared."

21. No pleadings were filed in this case between November 3 and November 17, 1992, so no entries were made on the computer docket during that time. The notice of the November 19 trial is the fourth pleading before the November 3 entry. The Court file contains no pleading cancelling or continuing the November 19 trial, dismissing the case, or reinstating it, nor is there any entry on the docket showing such actions.

22. On December 4, the Court denied Ms. Corke's motion to set aside the November 19 ruling. In doing so, the Court concluded that there was no information in the file which could have prompted the information Ms. Corke claimed to have received from the Clerk's Office.

23. At the hearing about her present motion on February 7, 1994, Ms. Corke admitted that the assertions in the affidavit attached to her November 20 motion that a clerk had told her the case had been dismissed and not been reinstated were untrue.

24. On December 17, Ms. Corke filed a motion to reconsider the Court's December 4 denial of her motion to set aside. This motion was supported by two more affidavits, one by Mr. Kjorlie and one by Ms. Corke.

25. Though it is difficult to follow, Mr. Kjorlie's affidavit seems to claim that (1) he understood the case to be "in dismissal status" or "in dismissal," (2) he relied upon the message his secretary took from his client that there would be "no meeting" on November 19, and (3) he was confused about the November 19 hearing because the Court had set the matter for a two-hour hearing but the notice showed only fifteen minutes.

26. At the February 7 hearing on the present motion, though still maintaining he was confused by the October notice, Mr. Kjorlie stated that, before he received his secretary's note, he was preparing for a two-hour hearing on November 19, and admitted that he did not contact the Clerk's Office to clarify the time alloted for that hearing. He also used the terms "dismissed" and "dismissal status" to refer to the motion to dismiss itself rather than the actual entry of an order dismissing the case, and indicated that by using those terms, he did not necessarily mean that he believed the case had actually been dismissed. In addition, he stated that Ms. Corke's first affidavit had appropriately asserted the case had been "dismissed and not reinstated" since he believed the debtor was in default on his plan payments.

27. Ms. Corke's second affidavit adds a basis for excusable neglect not found in her first, namely, the alleged confusion concerning the October notice recited by Mr. Kjorlie. To repeat, as noted above, both Ms. Corke and Mr. Kjorlie stated at the February 7, 1994, hearing that they were preparing to participate in a two-hour hearing on November 19, 1992, until Ms. Corke relayed her November 10 message. In addition, this affidavit contains a different description of her alleged contact with the Clerk's Office. In it, Ms. Corke said she believed that she spoke to a clerk named "Cindy" but has been advised that the only Cindy working in a Topeka federal court clerk's office works for the District Court rather than Bankruptcy Court. As a result, she stated she may not have spoken to a bankruptcy clerk at all, and she could not now say exactly who she spoke with to obtain information about the November 19 hearing. This affidavit, echoing Mr. Kjorlie's, also uses the words "dismissal status" as opposed to the words "dismissed" and "not reinstated" that appeared in her first affidavit.

28. At the hearing on February 7, 1994, Ms. Corke offered yet another story about her attempted phone call to the Clerk's Office. She said she called on or about November 10, 1992, and spoke to someone who she believed to be a court clerk. She believed the clerk was named Cindy and understands now that there is no such person who is a bankruptcy clerk. She does not know who she talked to. She did not explain what question or questions she asked, but said she was told that the computer showed a hearing in December but no "meeting" in November. This was the information she transmitted to Mr. Kjorlie.

29. Both Ms. Corke and Mr. Kjorlie's office received a copy of an order denying the trustee's motion to dismiss on the morning of November 19, 1992.

30. On January 25, 1993, the Court denied Jo Ann Corke's motion to reconsider.

31. Ms. Corke appealed this matter, and the District Court has remanded it for reconsideration in light of the Supreme Court's decision in Pioneer Investment Services v. Brunswick Associates, ___ U.S. ___, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993).

DISCUSSION AND CONCLUSIONS

Although they received the notice scheduling it, Jo Ann Corke and her attorney, Eric Kjorlie, failed to appear at a hearing on November 19, 1992. Their counterparts did appear. In an effort to show their absence resulted from excusable neglect, Ms. Corke and Mr. Kjorlie submitted affidavits containing both false and misleading statements which they hoped the Court would accept as true. The statements were intended to convince the Court to grant equitable relief in their litigation with the debtor. At no time prior to the February 7, 1994, hearing, including the time this matter was on appeal, did either Ms. Corke or Mr. Kjorlie attempt to retract or clarify the false and misleading statements they had sworn to in November and December of 1992. Even at the 1994 hearing, Mr. Kjorlie continued to play fast and loose with the truth, attempting to justify the statements with arguments which changed as each explanation was refuted. He even went so far as to suggest or imply that clerical error might have been the culprit.

In their first motion for relief from the Court's ruling, Ms. Corke and Mr. Kjorlie stated that a bankruptcy clerk had advised Ms. Corke that this case had been dismissed and not reinstated, and the hearing scheduled for November 19, 1992, would not take place. The Court denied relief because the Court's records showed the case had never been dismissed, so such information would never have been given.

After that effort failed, Ms. Corke signed a new affidavit stating that she was uncertain what office she had actually contacted and to whom she spoke when she learned the case was "in dismissal status" (as opposed to "dismissed" and "not reinstated" as previously asserted). The phrase "in dismissal status" means nothing to the Court. A motion to dismiss was pending, but many such motions are filed and later denied in chapter 13 cases. If Mr. Kjorlie had simply contacted the trustee or the debtor's counsel, he could have discovered whether the motion was likely to be granted or denied. Then he could have asked for a continuance of the November 19 hearing if it seemed likely to be premature or a waste of time.

In addition, in these new affidavits, Ms. Corke and Mr. Kjorlie said they were confused by the notice of the November 19 because it indicated the matter was specially set but also said a special setting should be requested if the hearing would take more than fifteen minutes. Despite their alleged confusion, they made no effort to contact the Clerk or the Court for clarification of the time alloted for the hearing, and prepared for the full evidentiary hearing that they expected to (and which later did) take place. This is not surprising since their dispute with the debtor had already been on a docket call which led to a pretrial setting. At the pretrial, the parties announced they were ready for a special setting of two hours or less, and were told that they would receive notice of a special setting. The notice they received did indicate their dispute was specially set for hearing on November 19. Even though boilerplate language in the notice instructed the parties to seek a special setting if the hearing would take more than 15 minutes, Ms. Corke and Mr. Kjorlie correctly concluded they needed to prepare for a full and complete hearing. In any event, uncertainty about the length of a hearing could justify only the failure to be prepared for a complete hearing, not the failure to appear at all.

Mr. Kjorlie, an experienced attorney, was aware that he had a hearing scheduled in bankruptcy court for November 19, 1992, at 1:30 p.m.. At no time did he contact anyone to see if the hearing would be anything but a full and complete hearing on the dischargeability of the debtor's obligations to his client or to seek a continuance of the hearing. After receiving a later notice that a motion to dismiss and objections thereto were scheduled for hearing on December 16, Mr. Kjorlie and his client met, and he assigned to Ms. Corke the duty of determining what effect, if any, the notice had on the hearing scheduled for November 19. Nine days before the hearing date, Mr. Kjorlie received a note from his secretary reporting her understanding of a conversation she had with Ms. Corke about Ms. Corke's understanding of a conversation she had had with an unnamed clerk. Based upon this triple hearsay and without confirming with the Clerk, the Court or opposing counsel the information Ms. Corke thought she received, Mr. Kjorlie deleted the hearing from his calendar and substituted another court appearance. Neither he nor any of his staff, presumably more likely to know the right questions to ask and to understand correctly the answers receieved, contacted the Clerk's Office to verify the cancellation of the November 19 hearing.

On the day Ms. Corke said she called and spoke to the Bankruptcy Clerk's Office, none of the four pleadings that had been entered on the docket after the notice that set the November 19 hearing cancelled or postponed it. Even assuming Ms. Corke did contact the Bankruptcy Clerk and not some other office, without knowing exactly what questions she might have asked and exactly what answers she received, the Court has no way to know what might have caused her mistaken understanding. The Court is convinced no one in the Bankruptcy Clerk's Office would have checked for the status of the November 19 hearing and told Ms. Corke it had been cancelled.

In Pioneer Investment, the Supreme Court considered the meaning of "excusable neglect" in Federal Rule of Bankruptcy Procedure 9006(b)(1). The Court quoted an ordinary meaning of "neglect" from Webster's Ninth New Collegiate Dictionary 791 (1983): "'to leave undone or unattended to, esp[ecially] through carelessness.'" 123 L.Ed.2d at 85. Thus, the Court explained, "neglect" encompasses both faultless omissions to act and omissions caused by carelessness. 123 L.Ed.2d at 85. Certainly, situations where neglect is caused by an accident, ill health, incarceration, or an act of God will usually, if not always, be held to be excusable. This leaves the more difficult question of what omissions caused by carelessness are excusable. In these situations, the Supreme Court held that the determination is an equitable one, taking into account all relevant circumstances surrounding the omission. Relevant circumstances include "the danger of prejudice to the debtor, the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith." 123 L.Ed.2d at 89-90. However, the neglect of both the movant and the movant's counsel must be excusable, because the client is accountable for the acts and omissions of chosen counsel. 123 L.Ed.2d at 90-91.

Applying these principles to the facts of this case, the Court concludes that Ms. Corke and Mr. Kjorlie have failed to establish that their neglect in failing to appear for the hearing on November 19, 1992, is the kind that should be excused. Certainly, Mr. Kjorlie's actions are not excusable. He received notice of a hearing on Ms. Corke's objection to confirmation of the debtor's plan. He has claimed the notice confused him about the length of hearing that was to be held, not about the date or time the hearing was to start. Neither he nor his staff contacted the Court or the Court Clerk for clarification. Despite his alleged confusion, he began to prepare himself and his client for a full hearing, exactly the kind that was held at the appointed time. Upon receiving notice of a different hearing, he delegated to Ms. Corke the responsibility of determining whether they were still obliged to appear at the hearing on her objection to confirmation. Through his secretary, he received a message from Ms. Corke that there would be "no meeting" on November 19. He did nothing to verify this information; again neither he nor his staff contacted the Court or the Court Clerk. Although Ms. Corke's message appeared on November 10, nine days before the scheduled hearing date, Mr. Kjorlie received from the Court no order continuing or postponing the hearing and no order dismissing the bankruptcy case. Instead, on the morning of the day of the 1:30 hearing, both his office and Ms. Corke received a copy of an order denying the motion to dismiss that had been set for hearing in December. Because of Mr. Kjorlie's manner of dealing with this matter, a scheduled hearing was held without his and his client's participation.

Having missed the hearing, Mr. Kjorlie proceeded to compound his inexcusable behavior. In an effort to get relief from the ruling made at the hearing, he drafted an affidavit containing statements that, at best, misstated what Ms. Corke told him had happened and, at worst, were manufactured out of whole cloth, directed or allowed Ms. Corke to swear to and sign it, and submitted it in support of a motion to set aside. He incorrectly called the ruling a default order when in fact it resulted from the Court's consideration of the evidence presented, after notice and hearing, in his absence. Because it did not believe the assertions in Ms. Corke's affidavit could be true, the Court denied the motion to set aside. At the hearing on the present motion, through Ms. Corke's admissions or the evidence presented, the statements in the affidavit were shown to be untrue.

When the first motion failed, Mr. Kjorlie submitted a motion to reconsider, attaching two new affidavits. In his own affidavit, he stated the case was "in dismissal status" or "in dismissal," by which, he later explained, he meant merely that a motion to dismiss had been filed. Ms. Corke's new affidavit recites some more information about her contact with some person in some clerk's office but, like Mr. Kjorlie's, refers to the case being in "dismissal status." Both affidavits claim the signers were confused about the length of the scheduled hearing, but, as indicated above, such confusion cannot justify a complete failure to appear. The Court denied this second motion because it had raised no relevant points that were significantly different than those raised by the first motion. Ultimately, Ms. Corke testified in court that the person she talked to only told her that their computer showed a hearing in December but not in November. Even if she did speak with the right office and this latest statement accurately reflects the conversation, the Court cannot determine the significance of the information given without knowing what questions Ms. Corke asked.

While Ms. Corke obtained some relief from the District Court on appeal, that Court remanded the matter only because the Supreme Court's Pioneer Investment decision had changed the law regarding "excusable neglect" after she filed her appeal. At no time during these proceedings have Mr. Kjorlie or Ms. Corke voluntarily corrected the untruths or misstatements in their sworn affidavits that were filed in November and December of 1992. Mr. Kjorlie's actions have caused unnecessary delays and adversely impacted and protracted these judicial proceedings. The debtor and his counsel have been forced to make unnecessary appearances and incur unnecessary expenses in defense of the ruling made in November 1992. In addition, the debtor's plan has been confirmed, and rehearing Ms. Corke's objection at this time could necessitate a modification and renoticing of the plan as confirmed, and adversely affect the debtor's other creditors.

In sum, Mr. Kjorlie allowed his client to provide him information concerning the possible cancellation of a hearing at which he was obliged to appear. He failed to take any steps to verify what Ms. Corke told him. Later, he misrepresented what she told him, and caused or allowed her to sign affidavits which contained untrue statements, in an attempt to gain advantage before the Court. For these reasons, the Court is forced to conclude Ms. Corke has not satisfied the criteria set forth in Pioneer Investment for proving excusable neglect. Her request for relief from the Court's November 19, 1992, ruling will be denied.

The foregoing constitutes Findings of Fact and Conclusions of Law under Rule 7052 of the Federal Rules of Bankruptcy Procedure and Rule 52(a) of the Federal Rules of Civil Procedure. A judgment based on this ruling will be entered on a separate document as required by FRBP 9021 and FRCP 58.

Dated at Topeka, Kansas, this ____ day of April, 1994.













_________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE





IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS









In Re: )

)

GLENN C. CORKE, ) NO. 92-41233-13

) CHAPTER 13

DEBTOR(S). )

JUDGMENT ON DECISION

This case was before the Court for the third time to decide whether relief from an order entered after a hearing on the merits at which a creditor and her counsel failed to appear should granted for excusable neglect pursuant to Federal Rule of Civil Procedure 60(b), made applicable here by Federal Rule of Bankruptcy Procedure 9024. Reconsideration of the order was twice denied before the creditor appealed, and the District Court remanded for further reconsideration in light of the Supreme Court's intervening decision in Pioneer Investment Services v. Brunswick Associates, ___ U.S. ___, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993). The debtor was represented by Pantaleon Flores of Topeka, Kansas. Jo Ann Corke, the creditor against whom the order was entered and the debtor's former spouse, was repesented by Eric Kjorlie of Topeka, Kansas.

On February 7, 1994, the parties appeared and presented evidence and arguments on the matter. The Court considered the evidence, the relevant portions of the file, and the arguments, and issued its Memorandum of Decision. For the reasons stated therein, Jo Ann Corke's request for relief from the Court's November 19, 1992, ruling is hereby denied.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of April, 1994.













__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

Search by Case Name
Search by Case Number
Search by Keyword