Phillips et al v. Deutsche National Trust et al

OCR transcription for search; preserved printed pages are authoritative

The court incorporates by reference in this paragraph and adopts as the findings and orders
of this court the document set forth below.

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Russ Kendig
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO

EASTERN DIVISION
In re: )
) CHAPTER 13
TIMOTHY N. PHILLIPS, SR. & )
) CASE NO. 02-66299
CINDY L. PHILLIPS )
) ADV. NO. 09-6109
Debtors. )
) JUDGE RUSS KENDIG
)
TIMOTHY N. PHILLIPS, SR. & )
)
CINDY L. PHILLIPS )
)
Plaintiffs, )
)
V. )
)
DEUTSCHE NATIONAL TRUST, etal., )
) MEMORANDUM OF OPINION
Defendants. ) (NOT FOR PUBLICATION)
)

On March 1, 2010, defendants Deutsche Bank National Trust and Ocwen Loan Servicing
(“defendants”) filed a motion for leave to answer. This motion is now before the Court.

The Court has jurisdiction over this case pursuant to 28 U.S.C. § 1334 and the general
order of reference entered in this district on July 16, 1984. This proceeding is a core proceeding

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under 28 U.S.C. § 157(b)(2)(A) and (O).

This opinion is not intended for publication or citation. The availability of this opinion, in
electronic or printed form, is not the result of a direct submission by the Court.

BACKGROUND

On October 5, 2009, plaintiffs Timothy N. Phillips and Cindy L. Phillips (“plaintiffs”)
filed this adversary proceeding. On October 13, 2009, the Court entered an order finding the
plaintiffs’ complaint to be non-complaint with Federal Rule of Bankruptcy Procedure 7008(a),
which requires that a complaint specify whether a proceeding is core or non-core and whether the
pleader consents to entry of final orders of judgment by the bankruptcy judge. The plaintiff filed
an amended complaint on October 22, 2009.

On October 13, 2009, the Court issued summons on the defendants. On October 26, 2009,
the plaintiffs filed notice that summons service had been executed. However, on November 18,
2009, the Clerk’s office observed that the summons served by the defendant were not the
summons issued by the Court. On December 17, 2009, the defendant filed notice that service of

the correct summons had been executed.

On February 2, 2010, the plaintiffs filed an application for default under Federal Rule of
Civil Procedure 55(a) as incorporated by Federal Rule of Bankruptcy Procedure 7055. The
Clerk’s office did not enter a default because of an administrative error. The plaintiffs did not
follow up with the Clerk’s office or file a motion for default judgment.

On March 1, 2010, defendants filed a motion for leave to answer, and, on March 8,
2010, the plaintiffs filed a memorandum in opposition. On April 8, 2010, defendants’ counsel
contacted the Court to advise that a settlement was imminent, and on June 3, 2010, plaintiffs’
counsel contacted the Court to advise that settlement negotiations had broken down and
requested that the Court rule on defendants’ motion.

LAW AND ANALYSIS

Federal Rule of Bankruptcy Procedure 7012 provides that “[i]f a complaint is duly served,
the defendant shall serve an answer within 30 days after the issuance of the summons, except
when a different time is prescribed by the court.” However, Federal Rule of Bankruptcy
Procedure 9006 provides that the Court may extend filing deadlines after their expiration where
there is a showing of “excusable neglect.”

In Pioneer Inv. Serv. Co. v. Brunswick Assocs. P’ship, 507 U.S. 380 (1993), the Supreme
Court adopted a liberal interpretation of “excusable neglect.” Id. at 388 (“Congress plainly
contemplated that the courts would be permitted, where appropriate, to accept late filings caused
by inadvertence, mistake, or careless, as well as by intervening circumstances beyond the party’s
control.”). In determining whether neglect is excusable the Court should consider all relevant
circumstances including the danger of prejudice, the length of the delay, the reason for the delay,

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and whether the movant acted in good faith. Id. at 395. An extension might be warranted because
of a delay due to settlement discussions. Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986).

The Court will grant the defendants’ motion for two reasons. First, it is unlikely that the
plaintiffs will be prejudiced by allowing the defendants to respond. This is evidenced by the
plaintiffs’ reluctance to prosecute their case. If the plaintiffs had filed their complaint and
executed summons service properly the first time, they could have received a default judgment in
November of 2009. The fact that the plaintiffs first filed an application for default in February of
2010 and failed to follow up on it suggests that the plaintiffs’ cause is not very urgent. Second,
the parties were involved in settlement discussions and, at one time, believed that the case would

settle.

The plaintiffs point out that the defendants’ motion merely consists of conclusive
assertions of “reasonable diligence” and “irreparable harm.” The Court agrees that the
defendants’ motion is poorly drafted. However, the Court finds that the record as a whole is

sufficient to grant the relief requested.

An order will be issued simultaneously with this opinion.

# # #
Service List:

Timothy N. Phillips, Sr.
244 Frederick St
Lexington, OH 44904

Cindy L. Phillips
244 Frederick St
Lexington, OH 44904

Robert Goldberger

13 Park Ave W

#300

Mansfield, OH 44902

Deutsche National Trust

c/o Christian Niklas

Shapiro Van Ess, Phillips & Barragate
485 Montgomery Rd, Ste 320
Norwood, OH 45212

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Christian E. Niklas

Shapiro, Van Ess, Phillips & Barragate
4805 Montgomery Road

Suite 320

Norwood, OH 45212

Ocwen Loan Servicing LLC
c/o Martha Spaner

Shapiro & Felty LLP

1500 W Third St, Ste 400
Cleveland, OH 44113

MTGLQ Investors LP
Attn Lloyd Blankfein
85 Broad St

New York, NY 10004

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