FEDERMAN, Chief Judge.
Debtor Herman Eugene Paulson appeals from an Order of the Bankruptcy Court
This case stems from a long-running dispute between the Debtor and two of his creditors, People's State Bank and Sunflour Railroad, Inc. The details of that dispute have been recounted in numerous decisions from the South Dakota state courts, the South Dakota Bankruptcy Court, this Bankruptcy Appellate Panel,
To summarize, however, People's State Bank and Sunflour Railroad each have state court judgments against the Debtor. Sunflour's judgment relates to a dispute over the Debtor's grain elevator which encroached on a railroad right of way: When the Debtor refused Sunflour's demand that he remove the grain elevator from its property, Sunflour sued him in state court. That lawsuit resulted in a money judgment in favor of Sunflour the amount of $19,280, which became a lien on the Debtor's property.
The Debtor's debt to People's Bank stems from a loan which was secured by the Debtor's personal property. When the Debtor defaulted on the loan, People's obtained a state court judgment in the amount of about $60,000, as well as possession of the collateral. The Debtor did not appeal this judgment, but instead filed a "writ of prohibition" from the South Dakota Supreme Court, which was denied.
After the Debtor's attempts to challenge the judgments in the state courts proved unsuccessful, he convened a group of individuals which he refers to as "the Peoples Seventh Amendment Jury." The "jury" purported to void the judgments against the Debtor as being fraudulently obtained and also assessed punitive damages against the parties involved in the alleged fraud. In 2013, the Debtor filed the Peoples Seventh Amendment Jury's judgment and other documents containing the heading of "Our One Supreme Court" in the South Dakota state court. The filing of these documents resulted in the Debtor being convicted of the crime of accusing a state court judge of treason and threatening the judge with death. That conviction was affirmed by the South Dakota Supreme Court.
Meanwhile, as People's Bank was attempting to collect its judgment and obtain possession of its collateral, and apparently around the time the Debtor was convening the private jury, the Debtor filed his first Chapter 13 bankruptcy petition on August 22, 2011. Three things relevant to this appeal occurred in that first bankruptcy case:
One, the Debtor filed several pleadings and initiated adversary proceedings seeking the Bankruptcy Court's determination that, inter alia, the state court judgments obtained by Sunflour and People's Bank were void based on fraud, and that the decision of the Peoples Seventh Amendment Jury was valid. Those attempts
Two, the Debtor made five attempts at filing a Chapter 13 plan, each of which drew objections from People's Bank and Sunflour on the grounds that they contained only vague language about selling collateral to pay People's claim, and language indicating Sunflour's claim was invalid and would not be paid. The creditors also asserted that the plans lacked detailed provisions regarding payments, failed to properly account for them as secured creditors, were not feasible, and were not proposed in good faith. None of the proposed plans was confirmed.
And, finally, after the Bankruptcy Court denied confirmation of the Debtor's third proposed plan, the Chapter 13 Trustee filed a motion to dismiss the case.
The Debtor then filed this Chapter 13 bankruptcy case on September 28, 2015.
On March 1, 2016, the Debtor filed an adversary proceeding against more than twenty defendants, including Sunflour and its principals and attorneys, again attacking the validity of the state court judgments. In addition to the arguments which had previously been rejected by the courts, he also now asserts that ConAgra and the political and judicial leaders of South Dakota have conspired to destroy his livelihood as an organic farmer and take over the food industry.
Meanwhile, the Debtor filed two proposed Chapter 13 plans in this case, both of which continue to turn on his claim that People's and Sunflour's liens are not valid. As before, Sunflour and People's Bank objected to confirmation of each of the proposed plans.
After the Bankruptcy Court denied confirmation of the second plan, the United States Trustee (the "UST") filed a motion, on March 30, 2016, to dismiss the bankruptcy case. Sunflour filed a joinder of that motion on April 25, 2016. In essence, the UST's motion asserted that the plans in the current case were substantially similar to the ones rejected in the first case, and were simply continued attempts to retry or void the state court judgments, which the courts have repeatedly said the Bankruptcy Court lacks the authority to do. The UST asserted that the "failure to propose a plan that bears any semblance of conforming to the Court's concerns creates an unjustifiable and unreasonable delay prejudicial to creditors," amounting to cause
The deadline to respond to that motion to dismiss was April 25, 2016, and the Debtor failed to respond by that date. Therefore, the Bankruptcy Court entered an order on April 26, 2016 granting the UST's motion and dismissing the case (the "Dismissal Order"). On April 29, 2016, after the Dismissal Order had been entered, the Debtor filed an objection to the UST's motion to dismiss. He also filed a motion to reinstate the case on May 4, 2016. The UST and Sunflour objected.
On May 20, 2016, the Bankruptcy Court entered an Order denying the Debtor's motion to reinstate the case. On June 2, 2016, the Debtor filed a motion to reconsider the denial of the motion to reinstate. The Bankruptcy Court denied that motion on June 7, 2016.
On June 21, 2016, the Debtor filed a Notice of Appeal of the May 20 Order Denying Reinstatement and the June 7 Order Denying Reconsideration.
This appeal is untimely as it relates to the April 26, 2016 Dismissal Order; rather, as the UST suggests, our review is limited to the Bankruptcy Court's Orders denying the motion to reinstate and denying the motion to reconsider.
Federal Rule of Bankruptcy Procedure 8002(a)(1) provides that, generally, "a notice of appeal must be filed with the bankruptcy clerk within 14 days after entry of the judgment, order, or decree being appealed."
Here, the Dismissal Order — which was a final, appealable order
Instead of filing a notice of appeal of that Order, the Debtor filed the motion to reinstate on May 4, 2016, which the Court analyzed under Rule 60(b)(1), discussed below. The Court denied the motion to reinstate on May 20, 2016.
When a party files a "motion for reconsideration," such as the Debtor's motion to reinstate, the time to appeal the merits of the original order complained of — here the Dismissal Order — begins to run again when the court disposes of that motion.
The Eighth Circuit has held that a second motion for relief from judgment or for reconsideration does not toll the appeal period for a second time.
Therefore, as the UST asserts, the Debtor's June 2 motion for reconsideration — which was a second motion for relief under Rule 59 or 60 — did not toll the time to appeal the Dismissal Order. Therefore, the filing of the June 2 motion for reconsideration preserved only the right to challenge the Orders denying the motion to reinstate and the motion for reconsideration of the Order denying the motion to reinstate; it did not preserve an appeal of the Dismissal Order itself. Our review, therefore, is limited to the Orders denying the motion to reinstate and motion to reconsider.
We review a bankruptcy court's findings of fact for clear error and its conclusions of law de novo.
Because the Debtor had not responded to the UST's motion to dismiss before the dismissal Order was entered, the Bankruptcy Court treated the motion to reinstate as one filed under Rule 55(c), which provides that "[t]he court may set aside an entry of default for good cause, and it may set aside a final default judgment under
The Debtor asserted in his motion to reinstate that his failure to timely respond to the motion to dismiss was that he was being flooded with motions in the pending adversary proceeding and that he had not fully understood that a response deadline as to the motion to dismiss had been set. As a result, the Court properly analyzed the motion under Rule 60(b)(1) for excusable neglect.
The burden under a Rule 60(b) motion is difficult because the rule "provides for extraordinary relief which may be granted only upon an adequate showing of exceptional circumstances."
The Debtor suggests here that his response was in fact timely, if one considers the mailing rules applicable to pro se litigants. He also asserts that his responding to the motion to dismiss "one day" after the deadline was excusable under the circumstances. He also suggests that he was deprived of proper notice and opportunity to respond to the motion to dismiss.
On a motion to dismiss a Chapter 13 case for cause under § 1307(c), the notice need only be "reasonable,"
But more importantly, this case does not turn on the Debtor's failure to timely file a response in any event. As the Bankruptcy Court said, in addition to Pioneer's reason-for and prejudice-from delay factors enumerated above, a court considering a Rule 60(b)(1) motion must also consider whether the party seeking relief has a meritorious defense to present, if the defense was allowed to be presented late.
Thus, even though our review is limited to the Orders denying the motions to reinstate and for reconsideration, the linchpin of those decisions was that the Debtor has no meritorious defense to the UST's motion to dismiss and so the reason for the dismissal itself does require discussion.
In sum, the Bankruptcy Court found that the Debtor's present case is merely a rehash of the very same arguments which have already been repeatedly rejected by the courts, namely, that the state court judgments are void. The record amply supports this finding.
As we said in the Debtor's appeal of the dismissal of his prior case: "The issue underlying the court's findings of cause for dismissal due to unreasonable delay and denial of confirmation is the debtor's unwillingness to accept that the bank and the railroad are secured creditors."
Because the Bankruptcy Court did not clearly err in concluding that the Debtor had no meritorious defense to the UST's Motion to Dismiss, the Bankruptcy Court's Orders denying the Debtor's motion to reinstate the dismissed case and denying his motion to reconsider are AFFIRMED.
