Discover Bank v. Shreck (In re Shreck)
Docket: Bankruptcy No. 05-1278; Adversary Nos. 05-115, 05-114
Court: United States Bankruptcy Court, N.D. West Virginia; September 18, 2006; Us Bankruptcy; United States Bankruptcy Court
The court dismissed the adversary complaints by Discover Bank and Chase Manhattan Bank against Jeffery W. Shreck (the Debtor) on February 16, 2006, due to the Plaintiffs' failure to prosecute their actions under 11 U.S.C. 523(a)(2), which relates to debts incurred with intent to defraud. Following the dismissal, the Plaintiffs sought to vacate the order and submit a consent order that had not been filed prior to the dismissal. A telephonic hearing occurred on April 13, 2006, where the Debtor opposed the vacating of the dismissal. The Plaintiffs argued for the dismissal to be set aside based on local custom and practice and claimed excusable neglect for their failure to timely file the consent order, citing Fed. R. Civ. P. 60(b). However, the court noted that the Plaintiffs' history of unopposed motions under similar circumstances did not apply here, as the Debtor actively opposed the motion. The court ultimately denied the Plaintiffs’ motions to set aside the dismissal order. The Plaintiffs argued that the court's dismissal order should be set aside under the excusable neglect standard of Fed. R. Civ. P. 60(b)(1) due to their counsel being overwhelmed with a backlog of cases related to the Bankruptcy Abuse Prevention and Consumer Protection Act. However, the court found that this claim did not meet the criteria for excusable neglect as established in Pioneer Inv. Serv. Co. v. Brunswick Assocs. Ltd. P’ship and applied in Fluharty v. Household Automotive Finance. The Debtor had signed the stipulations on November 10, 2005, and the Plaintiffs’ local counsel signed on November 28, 2005, but the necessary filing of the agreed orders was delayed until 23 days after the dismissal, which the court deemed unacceptable. The court rejected the notion that a backlog could excuse the failure to file a prepared document. Consequently, it concluded that no excusable neglect existed and denied the Plaintiffs’ motions to set aside the dismissal of the adversary proceedings. Additionally, the Plaintiffs mentioned delays were due to negotiations between out-of-state and local counsel, but significant inaction persisted until March 10, 2006, when the stipulations were finally filed.