In Re: The Great Atlantic & Pacific Tea Company, Inc.

Background

The Great Atlantic & Pacific Tea Company, Inc. was a debtor in a Chapter 11 bankruptcy case, and National Union Fire Insurance Company of Pittsburgh, PA was its insurer. The bankruptcy court created a procedure for allowing personal-injury claimants to pursue claims against the debtor in other courts despite the bankruptcy-law stay that generally pauses such litigation.

Katerene Halkias submitted a claim-related inquiry in November 2015 concerning an injury she allegedly suffered on October 31, 2014. In January 2018, she signed a stipulation to lift the stay. The debtor served notice of the stipulation on the designated reviewing parties, and no objection was filed within seven days. The stay was therefore automatically lifted under the bankruptcy court’s procedure. The district court stated that Halkias conceded that any state-court action had to be filed by March 22, 2018.

Halkias filed her New Jersey state-court action on April 16, 2018. After that case was dismissed, she asked the bankruptcy court to determine that the stay had not been effectively lifted because her lawyer had not received the notice, or alternatively to issue a new order lifting the stay. The bankruptcy court found that Halkias herself had received actual notice and that her claim was time barred under 11 U.S.C. § 108(c)(2). It denied her requested relief.

Motions and Appeal

Halkias appealed the bankruptcy court’s order to the district court. National Union moved to dismiss the appeal because Halkias did not timely file her appellate brief. The deadline was November 8, 2019, but Halkias filed her brief on January 7, 2020—60 days late. Halkias requested an extension, attributing the delay to her lawyer’s health problems, her paralegal’s family problems, staffing difficulties, and the failure to calendar the deadline.

The court applied the standard for excusable neglect, which considers the circumstances of the delay, including prejudice, the length of the delay, the reason for it, and good faith. Judge Seibel concluded that Halkias had not shown excusable neglect. The court emphasized that counsel could have requested an extension before the deadline, after returning to work, or when the deadline became known. It also treated the failure to calendar the deadline and the failure to supervise staff as ordinary law-office errors that did not justify the late filing.

Alternative Merits Analysis

Judge Seibel stated that even if the motion to dismiss were denied, the appeal would fail on the merits. The court rejected Halkias’s argument that the bankruptcy court abused its discretion by not holding an evidentiary hearing about whether the stipulation notice was properly mailed. No hearing was required, Halkias had not requested one, and the bankruptcy court had already held a hearing at which she could raise her arguments.

The district court also upheld the bankruptcy court’s treatment of the mailing evidence. An affidavit showing proper mailing created a presumption that the notice was received. The court held that general statements about mail problems and denials of receipt were not specific enough to overcome that presumption. The bankruptcy court had found that Halkias’s counsel’s mail procedures were not sufficiently standardized and that the evidence did not show specific misdelivery or nondelivery of the notice.

The court further rejected Halkias’s request for equitable relief. The bankruptcy court had considered that request but found no basis for extending the deadline. Judge Seibel agreed that the debtor had not misled Halkias about the deadline and that counsel had not acted diligently to determine the status of the stay. The court also stated that Halkias had not shown that the bankruptcy court had authority to extend the state-law limitations period in these circumstances.

Disposition

The court granted National Union’s motion to dismiss. It denied Halkias’s cross-motion for an extension of time as untimely and moot, directed the Clerk of Court to terminate the pending motion, and closed the case. The court stated that the bankruptcy court’s judgment would be affirmed in all respects if the court reached the merits, but the final order dismissed the appeal rather than affirming it. Judge Seibel also directed counsel to provide Halkias with a translated copy of the opinion and order.