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RE: Saddle River Valley Bank v. David J. Garsia

November 30, 2010

RE: SADDLE RIVER VALLEY BANK
v.
DAVID J. GARSIA



The opinion of the court was delivered by: William J. Martini, U.S.D.J.

MARTIN LUTHER KING JR. FEDERAL BLDG. & U.S. COURTHOUSE 50 WALNUT STREET, P.O. BOX 419 NEWARK, NJ 07101-0419 (973) 645-6340

WILLIAM J. MARTINI JUDGE

LETTER OPINION

Gregg Andrew Ilardi Harwood Lloyd, LLC 130 Main Street Hackensack, NJ 07601 (Attorneys for Appellant Saddle River Valley Bank) Rick A. Steinberg Ciardi Ciardi & Astin 100 Church Street, 8th Floor New York, NY 10007 (Attorneys for Appellee David J. Garsia)

I. BACKGROUND AND PROCEDURAL HISTORY

The material facts of this case are not in dispute. In 2008, Appellee personally guaranteed an $800,000 loan made by Appellant to MetroNorth Construction Group, LLC ("MetroNorth") in connection with a construction project. (Appellant's Brief, hereinafter "App. Br.," at 3). When MetroNorth defaulted, it became Appellee's obligation to make payment on the loan, but Appellee defaulted as well. (Id.). Appellant filed suit against Appellee in New Jersey state court, alleging that Appellee had provided fraudulent financial information to secure the loan. (Id.). Shortly thereafter, Appellee filed for Chapter 7 bankruptcy protection. (Id.). The first creditors' meeting was scheduled for June 18, 2009. Pursuant to Federal Rule of Bankruptcy Procedure ("FRBP") 4007(c), any complaint objecting to the dischargeability of a debt owed by a creditor must be filed within 60 days of the first scheduled creditors' meeting, or here, by August 18, 2009. FRBP 4007(c). On August 17, 2009, one day before the deadline, Appellant finalized its complaint and engaged New Jersey Lawyers Service (NJLS) to hand deliver the document to the Bankruptcy Court that same afternoon.*fn1 (App. Br. at 1, 3). Appellant provided NJLS with an address label bearing the correct address for the Bankruptcy Court, but for unknown reasons, NJLS mis-filed the complaint by delivering it to the Essex County Courthouse several blocks away instead. (Id. at 3). Neither NJLS nor the Essex County Clerk's Office alerted Appellant to the mis-filing or of any delivery problems at all.*fn2 (Id. at 3, 5). However, the Essex County Clerk's Office apparently noticed the mis-filing and forwarded the complaint to the Bankruptcy Court, where it was received and filed on August 21, 2009, three days after the deadline. (Id. at 3). Appellee's counsel was properly served with the complaint before the deadline. (Id.).

Appellant sought permission from Appellee to have the complaint deemed timely filed with the Bankruptcy Court nunc pro tunc, but Appellee refused. (Id. at 6). Shortly thereafter, Appellee filed a motion with the Bankruptcy Court to dismiss the complaint on the grounds that it was time barred. (Id. at 6-7). Appellant filed opposition papers and a cross-motion to have the complaint deemed timely filed nunc pro tunc. (Id. at 7). On October 22, 2009, the Honorable Donald H. Steckroth of the Bankruptcy Court issued an opinion and order granting the motion to dismiss and denying Appellant's cross-motion. (10/22/09 Opinion and Order). The opinion conceded that the mis-filing was not Appellant's fault. (Id.). Nevertheless, Judge Steckroth reasoned that "the Court must apply the Bankruptcy Rules as unambiguously written." (Id.). Given that Appellant's complaint was clearly not filed with the Bankruptcy Court before the expiry of the 60 day deadline, and because FRBP 9006(b)(3) provides that the exclusive means for extending the time to file is by motion within the 60 day period, the opinion concluded that "the lateness of [Saddle River's] filing may not be overlooked for excusable neglect or equitable considerations." (Id.).

Appellant filed a motion for reconsideration on November 9, 2009, which was one day late. (App. Br. at 7; Appellee's Brief, hereinafter "Appellee's Br.," at 8). On January 14, 2010, the Bankruptcy Court denied the motion. On February 12, 2010, Appellant filed a motion for relief from the Bankruptcy Court's order pursuant to Federal Rule of Civil Procedure ("FRCP") 60(b), which was also denied, on March 9, 2010. (App. Br. at 8). Presently before this Court is Saddle River's appeal of the March 9, 2010 decision. (Id. at 9).

II. ANALYSIS

A.Standard of Review

Because this case is an appeal from a decision of the Bankruptcy Court, all findings of fact are reviewed for clear error and conclusions of law are reviewed de novo. In re Old Summit Mfg., LLC, 523 F.3d 134, 137 (3d Cir. 2008); In re Professional Ins. Management, 285 F.3d 268, 282 (3d Cir. 2002).

B.Applicable Law

11 U.S.C. §§ 523(a)(2) and (c)(1) provide in pertinent part that a debt incurred as the result of false pretenses or fraud cannot be discharged in Chapter 7 bankruptcy proceedings if the creditor to whom the debt is owed objects and, after notice and a hearing, the court determines the debt to be excepted from discharge. 11 U.S.C. §§ 523(a)(2), (c)(1). FRBP 4007(c) states that any complaint contesting the dischargeability of a debt pursuant to 11 U.S.C § 523(c) must be filed within 60 days of the first scheduled creditors' meeting. FRBP 4007(c). FRBP 4007(c) allows for extensions of this time period for filing, as long as any such request is made by motion within the 60 day period. Id. Finally, FRBP 9006(b)(3) states that a court may ...


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