Follow The Rules: 11th Circuit Holds That District Court Must Follow Federal Rules Of Bankruptcy Procedure On Rule 50(b) Motion

On April 8, 2016, the Eleventh Circuit Court of Appeals held that a district court trying a bankruptcy case arising under title 11 of the United States Code is obliged to follow the Federal Rules of Bankruptcy Procedure, instead of the Federal Rules of Civil Procedure, in computing the deadline for filing post-trial motions.

The story behind this procedural ruling began eight years earlier, when several companies filed an involuntary chapter 7 bankruptcy petition against Maury Rosenberg. The bankruptcy court granted Rosenberg's motion to dismiss the petition with prejudice because the companies were not eligible creditors. The bankruptcy court retained jurisdiction to award Rosenberg his costs, reasonable attorney's fees, and damages under section 303(i) of the Bankruptcy Code. Rosenberg then filed an adversary complaint against the defendants seeking: (1) attorney's fees and costs for defending the involuntary petition, (2) compensatory and punitive damages for filing the petition in bad faith, and (3) attorney's fees incurred in the prosecution of the adversary proceeding. The district court granted the defendants' motion to withdraw the reference because the claims for damages under section 303(i)(2) of the Bankruptcy Code were analogous to common-law claims for malicious prosecution. The damages claims were tried before a jury in district court; Rosenberg's claims for attorney's fees and costs remained in bankruptcy court.

The jury found that the defendants acted in bad faith and awarded Rosenberg compensatory and punitive damages, and on March 14, 2013, the district court entered final judgment. Twenty-eight days later, defendants moved for judgment as a matter of law under Fed. R. Civ. P. 50(b). Rosenberg moved to strike the motion as untimely, arguing that the deadline for filing a Rule 50(b) motion under Fed. R. Bankr. P. 9015(c) was fourteen days after entry of the judgment.

The Eleventh Circuit addressed whether the Federal Rules of Civil Procedure or the Federal Rules of Bankruptcy Procedure supplied the deadline for filing a Rule 50(b) motion for a district court trying a bankruptcy case arising under title 11. First, the court noted that a "plain reading" of the Federal Rules of Bankruptcy Procedure make clear that the Federal Bankruptcy Rules have primacy in cases arising from title 11, and that the Federal Rules of Civil Procedure only apply to the extent that they have been explicitly incorporated by the Bankruptcy Rules...

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