Civil Rule 60(b)(1) evaluated and no “excusable neglect” found because Debtor delayed for 7 months without explanation

In re Aeschbacker
U.S. Bankruptcy Court District of Idaho
Justice Jim D. Pappas
Case No. 09-40713-JDP
Decision Date: 2/15/2011
Chapter 7
Full Text HERE

Debtor filed a chapter 7 petition and did not list any interest in a Ford Escape. Debtor’s SOFA indicated a recent transfer of this vehicle to her mother and that Debtor’s mother paid off the auto loan and was now the sole owner. Debtor further indicated that she was in possession of the Escape, but that it was held for her mother. Trustee conducted a vehicle title search and found Debtor’s name listed on the Escape and commenced an adversary proceeding against Debtor’s mother to recover the vehicle. Debtor’s mother did not answer or respond to the motion. January 2010, a default judgment was entered directing the turn over of the Escape.

Debtor filed amended schedules claiming to be the co-owner of the Escape along with her mother and further claimed the vehicle as exempt. Trustee objected the exemption and neither Debtor nor her attorney responded. Subsequently the Court entered an order sustaining Trustee’s objection to the claim of exemption on February 2010.

December 2010, Debtor filed a Motion to Set Aside Default Judgment based on Civil Rule 60(b)(1) where a court may set aside an order for excusable neglect. The Trustee opposed this motion. In deciding whether a party has demonstrated excusable neglect the court employed factors listed in Pioneer: 1) the danger of prejudice to the debtor; 2) the length of delay and its potential impact on judicial proceedings; 3) the reason for the delay; and 4) whether the movant acted in food faith.

The Court found the first factor to weigh in favor of the Debtor because if the motion was denied the Escape would be sold and its proceeds distributed to creditors. The second factor weighed against the Debtor as the Court found as significant a seven month delay resulting from Debtor’s and counsel’s inaction. The Third factor also weighed against Debtor because the Debtor and counsel had no adequate explanation for the delay. The final factor the court gave Debtor and her attorney the benefit of the doubt that the delay was not a result of bad faith conduct. As a result of these Pioneer factors the court found for the Trustee and denied Debtor’s motion to set aside.

© 2011 Hyrum M. Zeyer some rights reserved.

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