SUSAN D. BARRETT, Bankruptcy Judge.
Thomas J. McFarland ("Debtor") filed a "Motion to Reconsider and Rescind Orders Compelling the Turnover of Assets, Docket No. 271 and Docket No. 351." ("Motion for Reconsideration"). Dckt. No. 356. This Opinion and Order considers the Motion for Reconsideration of this Court's Order Compelling Turnover of Assets entered November 22, 2013 ("2013 Turnover Order"). Dckt. Nos. 271.
The 2013 Turnover Order involves two American General Life Insurance ("AGI") policies, policy numbers XXX373 and XXX343 ("AGI 2013 Policies"). To date, Debtor has amended his exemptions six times, and the Trustee has filed numerous objections to Debtor's claim of exemptions. Dckt. Nos. 10, 47, 126, 141, 256, and 353. Prior to the entry of the 2013 Turnover Order this Court entered an order denying Debtor's claim of exemptions in a different AGI insurance policy, policy number XXX922 ("AGI Policy 922"). Dckt. No. 202. Debtor appealed the order addressing AGI Policy 922 prior to the November 15, 2013 hearing on the AGI 2013 Policies. Dckt. No. 255.
The 2013 hearing was held November 15, 2013 and addressed two matters regarding the AGI 2013 Policies. The first motion addressed the Trustee's objection to Debtor's claim of exemption to the AGI 2013 Policies. Dckt. No. 257. The second motion addressed the Trustee's motion for turnover of the AGI 2013 Policies. Dckt. No. 242. At the 2013 hearing, the parties acknowledged a final order from the appellate courts as to AGI Policy 922 would control Debtor's arguments to exempt the AGI 2013 Policies. As a result, the parties agreed the enforcement of the 2013 Turnover Order would be stayed pending the resolution of the appeal. Dckt. Nos. 271 and 272.
The settlement announcement follows:
Dckt. No. 318, Partial Tr., Hr'g held Nov. 15, 2013, 5:25, 6:1-25, 8:23-25, and 9:1.
Before and after the 2013 hearing, the Trustee and Debtor's counsel exchanged numerous emails generally discussing the settlement. Hr'g held Dec. 4, 2015, Trustee's Ex. 5. Three days after the hearing, the Trustee's last email to Debtor's counsel states "please find the attached orders and let me know if they are acceptable to you." Id. An hour later, Debtor's counsel responds he has "no objection to either of the orders. Please feel free to submit them with my electronic signatures." Id. The parties acknowledge neither can produce copies of the attachments to the 2013 emails.
The next day, the Trustee filed two purported consent orders with the Clerk's Office. A Notice of Electronic Filing was served on Debtor's counsel when the proposed orders were filed with the Court and attached to the original filing. Dckt. Nos. 242 and 257. Upon receipt of the Notice of Filing Debtor's counsel had notice of the filing and access to review the proposed orders.
The 2013 Turnover Order provides:
Dated at Augusta, Georgia this 22nd day of November, 2013.
Dckt.
Then, on November 22, 2013 the Court entered the two proposed consent orders, the 2013 Consent Order and the Consent Order Sustaining Trustee's Objection to the Claim of Exemptions. Dckt. Nos. 271 and 272. These executed orders were served upon Debtor's counsel through the Court's Electronic Filing system on November 22, 2013. Dckt. Nos. 275 and 276. In fact, the Court's Electronic Filing Records indicate that Debtor's counsel and his office received fourteen service copies of the 2013 Turnover Order, seven in his representative capacity as Debtor's counsel and seven in his representative capacity as Debtor's spouse's counsel. Dckt. No. 275.
In 2015, two years after the entry of the 2013 Turnover Order and after the Eleventh Circuit's final order denying Debtor's exemption arguments, the Trustee presented AGI with the 2013 Turnover Order without notifying Debtor, Debtor's counsel or any other potential beneficiary under the terms of the policies. Thereafter, AGI apparently liquidated the AGI 2013 Policies.
When Debtor's counsel discovered the AGI 2013 Policies had been liquidated, he filed this Motion for Reconsideration of the 2013 Turnover Order. The Motion for Reconsideration was filed two years after the entry of the 2013 Turnover Order and five months after the Eleventh Circuit's final order denying Debtor's appeal. As to the AGI 2013 Policies, Debtor argues the 2013 Turnover Order should be reconsidered and rescinded because:
For the reasons set forth below, Debtor's Motion for Reconsideration and Rescission of the 2013 Turnover Order is denied.
As an initial matter Debtor contends this Court did not have jurisdiction to enter the 2013 Turnover Order because Debtor appealed the Court's denial of his claim of exemptions as to AGI Policy 922 before the 2013 Turnover Order was entered. Dckt. No. 385, Tr., Hr'g held Dec. 4, 2015, 26:6-24-27:1-22. I disagree. At the December 4, 2015 hearing to consider this, motion, the Court asked Debtor's counsel to file a post-hearing brief showing where the AGI 2013 Policies were on appeal when the 2013 Turnover Order was entered. Debtor failed to file a response showing where the matter was on appeal. Furthermore, a review of the record shows the AGI 2013 Policies were not the policies involved in the pending appeal when the 2013 Turnover Order was entered.
The "confusion" arises because Debtor failed to disclose numerous insurance policies when he filed his bankruptcy petition, including the AGI 2013 Policies. When the 2013 Turnover Order was entered, a previous order entered by this Court addressing a different life insurance policy was on appeal, AGI Policy 922. Dckt. No. 255. The 2013 Turnover Order addresses two different AGI policies, policies numbered XX373 and XX343. A review of the transcript from the 2013 hearing supports this conclusion. Dckt. No. 318, Tr Hr'g held Nov. 15, 2013, Ex. Nos. 1 and 2. Debtor's counsel's statements at the 2013 hearing acknowledge that the AGI 2013 Policies were not involved in the appeal, and the last paragraph of the 2013 Turnover Order supports this conclusion as it recognizes the same issue is involved with all these AGI policies and stayed the enforcement of the 2013 Turnover Order pending the outcome of the appeal. Dckt. No. 318, Tr Hr'g held Nov. 15, 2013, 6:2-23; Dckt. No. 271. For these reasons, Debtor's motion that the Court lacked the jurisdiction to enter the 2013 Turnover Order because of the pending appeal is denied.
Debtor's counsel states he has no recollection of consenting to the terms of the 2013 Turnover Order. He argues the order should have no effect because the Trustee is unable to tender evidence of Debtor's counsel's actual physical signature being affixed to the order. However, the Electronic Case Files ("ECF") Rules do not require obtaining actual signatures. ECF Local Rule 8 provides:
ECF Local Rule 8 (emphasis added). "Physical, facsimile, or electronic signatures are permitted." Id.
Furthermore, under the rules of this Court, Debtor's counsel had seven days after entry of the 2013 Turnover Order to raise an objection as to his signature, and he failed to raise an objection for two years. ECF Local Rule 8 ("A non-filing signatory or party who disputes their acceptance of the contents of the document, the authenticity of an electronically-filed document containing multiple signatures, or the authenticity of the signatures themselves must file an objection to the document within seven (7) days of receiving the Notice of Electronic Filing."). For Debtor's failure to timely object to the 2013 Turnover Order, and for the reasons discussed herein, Debtor is barred from objecting to the 2013 Turnover Order at this point.
Furthermore, considering the objection on the merits, Debtor's motion is denied. The Trustee contends he obtained Debtor counsel's consent to affix Debtor's counsel's electronic signature to the 2013 Turnover Order as evidenced by Debtor's email authorization "I have no objection to either of the orders. Please feel free to submit them with my electronic signature." Hr'g. Dec. 4, 2015, Trustee Ex. 5. The Trustee claims he duly affixed Debtor's counsel's signature and submitted them to the Court.
Debtor's counsel contends there are two major flaws with the Trustee's argument. First, the email string reflects attachments that have not been produced. At the hearing, both the Trustee and Debtor's counsel acknowledged they cannot produce the attachments.
Nevertheless, a review of the Court's docket reflects the Trustee submitted two consent orders the day after obtaining Debtor's counsel's consent. Dckt. Nos. 242 and 257, with Clerk's notation of file date. The emails and timing of the submission of the proposed orders all evidence Debtor's counsel's consent to the 2013 Turnover Order. Furthermore, Debtor's counsel's language at the hearing announcing the settlement acknowledges that liquidation of the policies was possible if Debtor's appeal was denied. Dckt. No. 381, Partial Tr. Hr'g held Nov. 15, 2013, 5:25; 8:23-25 and 9:1 (Debtor's counsel agreed the AGI 2013 Policies would "not be
In addition, the initial motion filed by the Trustee to compel the turnover of the AGI 2013 Policies alleges Debtor is the record owner of the policies and contends the policies and their cash values are property of the bankruptcy estate that should be liquidated for the benefit of Debtor's creditors. Dckt. No. 242. In the motion, the Trustee prays for an order requiring the turnover of the policies and an order establishing the Trustee's ownership and rights to the policies. Id. The initial proposed order submitted with the motion granted the Trustee the right to cash in or cancel the policies. Dckt. No. 242. As such, Debtor's counsel cannot now claim he was unaware of such potential consequences.
Finally, the Trustee has been a member of this bar for more than forty years and he has an outstanding professional reputation. Even in the unlikely event the Trustee mistakenly submitted the wrong order, Debtor's counsel had numerous opportunities to raise these objections especially in light of the contentious nature of these proceedings. Given these facts, an order will not be overturned two years after its entry because Debtor's counsel does not recall consenting to the terms thereto.
Debtor's Motion for Reconsideration and Rescission of the 2013 Turnover Order fails to recite a statutory basis for the motion, but such motions are generally considered pursuant to the provisions Rule 60 of the Federal Rules of Civil Procedures
Fed. R. Civ. P. 60(b)-(c). Reconsideration of a previously entered judgment is an extraordinary remedy which should be used sparingly, and cannot be used to relitigate a case.
When dealing with a consent order rules of contract interpretation apply.
In this case, for the reasons discussed herein, Debtor has failed to establish grounds for the relief. First, the parties intended to prevent further litigation as to the AGI 2013 Policies. Debtor's counsel stated at the hearing, "we agree that the Court's ruling as to the non-bankruptcy claim of exemption would be the same for these polices [sic] as for the additional policy and there is no need to rehash that. The prior order is on appeal and I think we both concede that there is likely no need to have to have yet another order that would then be appealed." Dckt. No. 318, Partial Tr., Hr'g held Nov. 15, 2013, 5:25, 6:1-25, 8:23-25, and 9:1. By preventing future litigation, the Court is upholding the intent and purpose of the 2013 Turnover Order.
Furthermore, pursuant to Rule 60(c), a 60(b) motion must be made within a reasonable period of time and given these facts and circumstances I do not find Debtor's counsel's motion has been made within a reasonable period of time. Fed. R. Civ. P. 60(c)(1)(requiring motions for reconsideration to be filed within a reasonable time and those based upon Rule 60(b) (1)-(3) grounds (mistake, inadvertence, excusable neglect, newly discovered evidence, or fraud) must be filed within 1 year;
Finally, even considering the Motion for Reconsideration on the merits, it is denied. Debtor has failed to establish any grounds for reconsideration set forth in Rule 60(b). There has been no "mistake, inadvertence, surprise, or excusable neglect." See Fed. R. Civ. P. 60(b)(1). Debtor cannot now contest that he did not realize the AGI 2013 Policies could be liquidated by the Trustee. There is no Rule 60(b)(2) newly discovered evidence. Debtor has failed to establish evidence of the existence of fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party. Fed. R. Civ. P. 60(b)(3). As between the parties the consent order is not void. Fed. R. Civ. P. 60(b)(4). The terms of the 2013 Turnover Order remain equitable. Fed. R. Civ. P. 60(b)(5). Lastly, there are no other grounds justifying reconsideration of the order. Fed. R. Civ. P. 60(b)(6).
Next, Debtor argues the relief provided in the 2013 Turnover Order is void because Bankruptcy Rule 7001 requires an "adversary" be filed to provide the relief requested, and it cannot be provided through a "contested" matter. See Fed. R. Bankr. P. 7001 and 9014. Debtor contends an adversary proceeding was required to afford the non-debtor insureds/beneficiaries and the family of any such beneficiaries family with due process. Although it is undisputed that Debtor is the owner of the AGI 2013 Policies, Debtor contends Debtor's wife, son and son's family have ownership rights in the AGI 2013 Policies. Giving these facts and circumstances, I disagree with Debtor's argument that an adversary was required to provide the relief set forth in the 2013 Turnover Order with Debtor's consent.
The Federal Rules of Bankruptcy Procedure distinguish between "adversary proceedings" and "contested matters." See Fed. R. Bankr. P. 7001 and 9014. Adversaries are lawsuits commenced with the filing a complaint and the issuance of a summons. Fed. R. Bankr. P. 7001, 7003 and 7004. Adversary proceedings are enumerated under Rule 7001 and incorporate much of the Federal Rules of Civil Procedure. Fed. R. Bankr. P. 7001, Advisory Committee's Note. Rule 7001 lists ten types of matters which must be brought as adversary proceedings. Fed. R. Bankr. P. 7001. For purposes of this opinion, the focus is on Rule 7001(1) and (2) which provide:
Fed. R. Bankr. Proc. 7001(1)-(2).
Contested matters are not enumerated by the Bankruptcy Code, but the Advisory Committee Note to Bankruptcy Rule 9014 states "[w]henever there is an actual dispute, other than an adversary proceeding, before the bankruptcy court, the litigation to resolve that dispute is a contested matter." Fed. R. Bankr. P. 9014, Advisory Committee Note. "In a contested matter not otherwise governed by these rules, relief shall be requested by motion, and reasonable notice and opportunity for hearing shall be afforded the party against whom relief is sought." Fed. R. Bankr. P. 9014(a);
The 2013 Turnover Order arose out of an objection to exemptions and a motion for the Debtor to turnover property which are contested matters, not adversary proceedings. Dckt. Nos. 242 and3033033412 257. "[T]he filing of an objection to . . . a claim of exemption. . . creates a dispute that is a contested matter. Fed. R. Bankr. P. 9014, Advisory Committee Note. Rule 7001(1) expressly excludes from adversary proceedings "a proceeding to compel the debtor to deliver property to the trustee." Fed. R. Bankr. P. 7001(1). The Advisory Committee Notes make it clear that "[a] trustee may proceed to recover property of the debtor" by motion. Fed. R. Bankr. P. 7001(1), Advisory Committee's Note to 1987 amendment.
Debtor is the undisputable owner of both of the AGI 2013 Policies. The 2013 Turnover Order provides "that the Trustee is vested with all rights of ownership in the policies listed above, including, but not limited to, the right to cash in or cancel the policies and take possession of the cash value accrued on each policy." Dckt. No. 271, at 1. The Trustee is entitled to fulfill his statutory duties by exercising Debtor's contractual rights under the AGI 2013 Policies without filing an adversary. 11 U.S.C. §724 ("The trustee shall collect and reduce to money the property of the estate for which such trustee serves. . . "). Having consented to the entry of the 2013 Turnover Order, Debtor cannot now complain of the nature of the proceedings.
While not reaching the merits of the issue of any contractual rights a third party may have under the AGI 2013 Policies in regards to AGI, the terms of the contract between Debtor and the Trustee are clear and Debtor is bound by those terms. Under the terms of the 2013 Turnover Order, Debtor agreed to the turnover and liquidation of these policies and he cannot now complain about the nature of the proceedings or the terms of the order which are binding upon the Debtor and the Trustee. For these reasons, Debtor's Motion to Reconsider and Rescind the 2013 Turnover Order is ORDERED DENIED.