Buckskin Realty Inc. v. Greenberg
552 B.R. 40
E.D.N.Y2016Background
- Buckskin Realty sued its former counsel, Mark D. Greenberg (and his firm), in a bankruptcy-court adversary proceeding for legal malpractice after failing to vacate a preexisting foreclosure default judgment.
- Buckskin filed for Chapter 11 and commenced the adversary on Dec. 26, 2015; summons return date was Jan. 27, 2016.
- Greenberg’s new counsel requested extensions to answer; the bankruptcy court granted an extension on Feb. 11, 2016.
- Buckskin moved for a default judgment on Feb. 10, 2016; the bankruptcy court denied the default orally on Feb. 24 and entered a written denial on Mar. 18, 2016.
- Buckskin moved for leave to appeal the interlocutory denial of the default judgment under 28 U.S.C. § 158(a)(3) and FRBP 8004; the district court denied leave on the ground that Buckskin failed to satisfy the standards for interlocutory appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether leave to bring an interlocutory appeal should be granted under standards analogous to 28 U.S.C. § 1292(b) | Buckskin: bankruptcy court erred in extending time without a showing of "excusable neglect" under FRBP 9006(b), so denial of default is appealable | Greenberg: bankruptcy court properly exercised discretion; excusable-neglect inquiry is flexible and counsel needed time to investigate after recent retention | Denied — Buckskin did not show a controlling pure question of law or substantial ground for difference of opinion; interlocutory appeal not warranted |
| Whether the bankruptcy court abused discretion in (a) extending time to answer and (b) denying default judgment | Buckskin: extension lacked the required showing of excusable neglect; failure to answer should have led to default judgment | Greenberg: circumstances (recent retention, negotiations, and need to investigate) justify extension and denial of default; court has broad equitable discretion | Court: review requires fact-intensive abuse-of-discretion analysis (not a pure legal question); bankruptcy court’s discretionary denial stands; interlocutory review inappropriate |
Key Cases Cited
- Enron Oil Corp. v. Diakuhara, 10 F.3d 90 (2d Cir. 1993) (motions for default judgment rest in the trial court’s broad discretion)
- In re Chalasani, 92 F.3d 1300 (2d Cir. 1996) (bankruptcy-court discretionary decisions, including reopening defaults, are reviewed for abuse of discretion)
- Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380 (U.S. 1993) (excusable neglect inquiry is an equitable, multi-factor analysis)
- Klinghoffer v. S.N.C. Achille Lauro Ed Altri, 921 F.2d 21 (2d Cir. 1990) (a controlling question of law for interlocutory appeal includes issues whose reversal would terminate the action)
- In re Lynch, 430 F.3d 600 (2d Cir. 2005) (courts must consider multiple factors in assessing whether a late filing resulted from excusable neglect)