3.20.2013.SecondOrderDenyingReconsideration

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UNITED STATES BANKRUPTCY COURTFOR THE EASTERN DISTRICT OF WISCONSIN

In re Chapter 13Roger Peter Rinaldi and Case No. 11-35689-svkDesa Lilly Rinaldi,

Debtors.

ORDER DENYING SECONDMOTION TO RECONSIDER

On March 19, 2013, the Debtors filed a motion to reconsider the Courts order denying

reconsideration of an order allowing a claim. They raise two arguments. First, the Debtors insist

they were entitled to an evidentiary hearing on their claim objection. Second, they contend that

despite the fact that they filed their motion to reconsider 15 days1 after entry of the order

allowing the claim, their motion should be measured under a relaxed standard for reconsideration

under 11 U.S.C. 502(j) rather than under the strict requirements of Rule 60.

1 As explained in the Courts order denying the first motion for reconsideration, the Debtors attorney

started the electronic filing process prior to midnight on the fourteenth day, but the Court did not transmit

its Notice of Electronic Filing until the fifteenth day. Under the Courts CM/ECF Administrative

Procedures (available on the Courts website and provided to all attorneys when they receive their

electronic filing password) and cases cited in the Courts prior order, the motion was not deemed filed

until transmission of the Courts Notice of Electronic Filing, which occurred on the fifteenth day.

Honorable Susan V. Kelley

United States Bankruptcy Judge

THE FOLLOWING ORDER

IS APPROVED AND ENTERED

AS THE ORDER OF THIS COURT:

DATED: March 20, 2013

Case 11-35689-svk Doc 134 Filed 03/20/13 Page 1 of 4


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In denying the first motion for reconsideration, the Court already ruled that the Debtors

were not entitled to an evidentiary hearing on their claim objection. With respect to their new

argument that claim objections are to be determined after notice and a hearing, Bankruptcy Code

102(1)(A) provides that after notice and a hearing means such opportunity for a hearing as

is appropriate in the particular circumstances. The Courts docket reveals that when the

Debtors filed their claim objection, the Court scheduled an evidentiary hearing for July 24, 2012.

(Notice of Hearing, Docket No. 84). The hearing was adjourned and the claim objection was

considered on August 7, 2012, along with other matters, including the Debtors adversary

proceeding. The Debtors were present in court, along with their attorney. At the conclusion of

the hearing, the Court stated: If the adversary proceeding is dismissed, it will take care of the

claim objection. If it is not dismissed, then well have further scheduling on the Complaint, the

claim objection. . . . (Audio Recording, 2:33:43 p.m., Docket No. 110). The Debtors did not

object to the Courts proposed disposition or suggest that the claim objection would continue in

the face of dismissal of the adversary proceeding. All parties at the hearing, including the

Debtors, understood that the claim objection and the adversary proceeding involved the same

legal arguments, and that dismissal of the adversary proceeding would necessarily dispose of the

claim objection. On February 22, 2013, after thorough consideration of the numerous pleadings,

various documents and extensive briefs, the Court dismissed the Debtors adversary proceeding.

As predicted at the August 7, 2012 hearing, the Court then overruled the Debtors claim

objection. Under these circumstances, no evidentiary hearing on the claim objection was

required.

On the second point, given the timing of the Debtors first motion for reconsideration, the

standards of Rule 60 apply even if the Debtors couch their motion under 502(j) or its



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companion rule, Bankruptcy Rule 3008. In In re Gonzalez, 372 B.R. 837 (Bankr. W.D. Tex.

2007), the bankruptcy court analyzed this issue, applying the rules in effect prior to the 2009

amendment of the relevant time periods from 10-day periods to 14-day periods. InGonzalez, the

court disallowed a creditors claim, and 13 days later, the creditor filed a motion for

reconsideration. The court held that because the creditor filed the reconsideration motion more

than 10 days after entry of the order, the motion should be analyzed under Bankruptcy Rule 9024

incorporating Federal Rule of Civil Procedure 60:

The analysis turns upon when the motion for reconsideration was filed. Rule8002(a) provides a ten-day period for filing an appeal of the order appealed from.

Fed. R. Bankr. P. 8002(a). If the motion to reconsider is filed prior to theexpiration of this ten-day period, the motion is properly treated as a Rule 9023motion to alter or amend judgment. Matter of Aguilar, 861 F.2d 873, 875 (5th Cir.1988); see alsoFed. R. Bankr. P. 9023 (incorporating Fed. R. Civ. P. 59). If,however, the motion to reconsider is filed after the expiration of the ten-dayperiod, it must be treated as a Rule 9024 motion for relief from judgment or order.Matter of Colley, 814 F.2d 1008, 1010 (5th Cir. 1987); see also Fed. R. Bankr. P.9024 (incorporating Fed. R. Civ. P. 60). Because CitiMortgage filed its motion forreconsideration more than ten days after the court entered its order of partialallowance and partial disallowance of its claims, the motion is properly analyzedunder the standards of Rule 9024.

Gonzalez, 372 B.R. at 840 (emphasis supplied).

Courts in the Seventh Circuit recognize this rule. In In re Opelika Mfg. Corp., 94 B.R.

484, 487 n.7 (N.D. Ill. 1988), the court confirmed that a motion for reconsideration under

Bankruptcy Code 502(j) and Bankruptcy Rule 3008, will not terminate the time for filing an

appeal if it is not timely filed within the meaning of Rule 9023. The advisory committee note to

Rule 3008 states that the practitioner should not be lulled by Rule 3008 into loss of the right to

appeal an unfavorable order by failure to file a notice of appeal within the ten days or extended

time prescribed by Rule 8002. The note thus recognizes that one can lose the right to appeal

from a final order even though one still has a right to file a Rule 3008 motion for



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reconsideration. Following theOpelikacourts logic, a motion for reconsideration under Rule

3008 and Bankruptcy Code 502(j) must be timely filed within 14 days of entry of the order

allowing or disallowing the claim or the movant is relegated to a motion under Rule 60.2

In this case, the Debtors filed their motion for reconsideration 15 days after the Courts

order allowing HSBCs proof of claim. This motion was not timely under Bankruptcy Rule

9023, which contains a 14-day deadline. Therefore, the Debtors motion is governed by

Bankruptcy Rule 9024, incorporating Federal Rule of Civil Procedure 60. The Court correctly

applied Rule 60 in denying the Debtors first motion for reconsideration. Even if a less strict

standard for reconsideration applies, the Court made the correct call in allowing the claim and

will not reconsider the decision.

IT IS THEREFORE ORDERED: the Debtors motion for reconsideration filed March

19, 2013 is denied.

#####

2Even if the Court applies a less stringent standard than the exceptional relief rule announced inKarraker v. Rent-A-Center, Inc., 411 F.3d 831, 837 (7th Cir. 2005), the Court would not reconsider anddisallow the claim. As explained in the prior order on reconsideration, the Debtors did not dispute or

contest Mr. Rinaldis signature on a promissory note that stated it was transferable by the payee. Under

Wisconsin law, the Debtors lacked standing to challenge the note payees endorsement in blank, and the

claim was therefore allowable. There is no cause to reconsider this decision as required by Bankruptcy

Code 502(j).


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