Restructuring

Contributed by Elisa Lemmer
If you were to ask people on the street to name the first Jewish holiday that comes to mind, chances are a significant percentage would name Yom Kippur. A well-known Jewish holiday, Yom Kippur is considered to be the holiest day of the Jewish year and is observed by fasting, asking for forgiveness, and praying. Those who observe the holiday do not go to work or school on that day, and the day is not generally treated as an “ordinary day.” That was probably why, in the recent case of In re Harth, plaintiff Moshe Tal assumed that, when he requested a continuance of a trial and cited Yom Kippur as his reason, his request for a continuance would be granted. It wasn’t. And the United States Bankruptcy Appellate Panel of the Tenth Circuit upheld the decision. Sound unusual? “It would never happen in the bankruptcy court in my district,” you are thinking? Well, the answer is that it actually could happen, but here’s the reason why.
Background
Prepetition, Fredrick Harth, Jr. (the debtor) and his wall climbing business had agreed to pay Moshe Tal monthly rent in the amount of $1,500 plus 10% of gross monthly income exceeding $15,000. After Harth refused to provide Tal with records of his monthly gross income, Tal sued Harth in state court and won, obtaining a total judgment of approximately $12,000. Shortly thereafter, in 2012, however, Harth filed for chapter 7 protection in the United States Bankruptcy Court for the Western District in Oklahoma, and that’s when things became very heated between the debtor and Tal.
Over the course of the next year, Tal objected to the debtor’s extensions, sought sanctions against the debtor, and filed a complaint to determine the debtor’s dischargeability. In the fall of 2012, the court held a hearing following which it set the trial on the dischargeability action for July 17, 2013, as well as other deadlines relating to the trial. As the trial approached, in March of 2013, Tal filed a motion seeking to modify the scheduling order and requesting that all deadlines be extended by three months. In April 2013, the court held a hearing on the motion. Inexplicably, Tal did not appear at the hearing. Nonetheless, the court granted Tal’s motion and moved the trial date to September 12, 2013, a Thursday. For those of you who aren’t calendar buffs or do not have a photographic memory, in 2013, Yom Kippur began on sundown on September 13, 2013 – a day after the trial. So far, so good, right?
The court further instructed the parties to prepare a scheduling order and specifically noted that “except for compelling reasons” an extension of the trial date would not be granted within the 20 days before the trial date “in the absence of unforeseeable personal reasons.” On August 13, 2013, one month before the trial date, Tal filed an unopposed motion to continue the trial date. In his motion, Tal stated that he had “just realized that the scheduled trial falls during Jewish High Holiday’s [sic] Season…Yom Kippur: September 13-14, 2013” and attached an email that Tal had exchanged with debtor’s counsel in which he described some health issues and his plan to fast on Yom Kippur for 24 hours and spend two days in the synagogue. In the email, Tal stated he did not think the trial could be completed in one day. The court denied Tal’s motion noting that: (1) its docket was already full, (2) Tal had failed to notify the court of the conflict on a timely basis, and (3) the trial date had already been continued once before at Tal’s request. In fairness to Tal, August 13 was more than 20 days before the trial date, though perhaps Yom Kippur was not exactly “unforeseen.”
The debtor’s counsel eventually submitted a proposed pretrial order in which she estimated that the trial would take anywhere from one-half day to two days. Tal did not oppose the order, and the court entered it. That’s when things started to get weirder.
On September 11, 2013, one day before the trial was scheduled to begin, Tal filed a motion for change of venue or alternatively, for leave of court to file an interlocutory appeal.   He claimed, among other things, that the judge was biased against him. He complained that the judge’s refusal to continue the trial violated his constitutional right to practice his religion because he would be forced to appear on September 12, 2013 – the day before Yom Kippur, for what he estimated to be 3-4 days of trial. Attached to his recusal motion was Tal’s affidavit in which he raised various additional issues, including the fact that he suffered from diabetes, and therefore, he needed to prepare for Yom Kippur for one to two days before the holiday. The bankruptcy court denied the motion, reasoning that the trial would be completed before the holiday. That night, at 8:00 p.m., Tal filed another motion for a continuance; this time, he said a hematoma on his leg prevented him from appearing at trial. Tal did not appear at trial the next day. On the day of trial, the court indicated that it was inclined to deny the last motion for a continuance but allowed the debtor to decide what to do. After the court signaled to the debtor that it would grant the judgment in favor of the debtor were the trial to continue, the trial took place – without Tal – and the court entered judgment in the debtor’s favor.
Appeal to the Bankruptcy Appellate Panel
Tal appealed. On appeal, he identified fourteen issues for the BAP’s consideration. Among them was the bankruptcy court’s refusal to continue the trial date. In examining whether the bankruptcy court committed reversible error, the BAP noted that an order denying a continuance is reviewed for abuse of discretion. Courts examine whether a denial of a continuance is considered “arbitrary or unreasonable” by considering: (1) the diligence of the party seeking the continuance, (2) the likelihood the continuance would accomplish the stated purpose, (3) the inconvenience to the opposing party and the court, and (4) the harm to be suffered by the appellant as a result of the denial of the continuance. No individual factor is determinative.
Ultimately, the BAP found the bankruptcy court did not abuse its discretion. In support of its holding, it cited the following reasons:

1. The bankruptcy court had learned that Yom Kippur began on sundown on September 13, which gave the parties two full working days to conduct the trial.
2. Tal had allowed four months to pass from the date the trial was originally scheduled before bringing the holiday to the court’s attention.
3. After Tal’s first motion for a continuance was denied on August 20, Tal waited until September 10 (nearly the eve of trial) to take any additional action with respect to the continuance.
4. Tal waited until the eve of trial to inform the court he believed the trial would take three to four days.
5. The health problems Tal claimed to were brought up too late.

The BAP also observed that if Tal had identified all of the reasons he needed a continuance in his original motion filed on August 13, including the health issues, it was likely the bankruptcy court would have granted the motion, but Tal’s delay coupled with the fact that his last motion contained a “litany of complaints” about the bankruptcy judge’s actions undermined the persuasive value that Tal’s health problems and practices in observance of Yom Kippur would have had.
As a postscript, pouring salt on the wounds, the court observed that Tal had been a pro se litigant and that “most people who choose to pursue bankruptcy litigation without an attorney’s help wind up hurting their interests and failing to present their position in the best possible light, just as Tal did.” Consequently, the BAP affirmed the bankruptcy court’s judgment.
Conclusion
Yom Kippur is a holiday of introspection. Those who observe it examine the past year and the mistakes they made and try to learn from them, so that they can avoid repeating those mistakes the following year. Although the Harth case may not impart the kind of life lessons one may think of when they think of Yom Kippur, the case does also teach some practical lessons when it comes to seeking mercy – even if it’s from the bankruptcy court: if you’re seeking the court’s mercy, casting yourself in the best light before the court will greatly increase the chance that your request is granted. To those who observe the holiday, have a meaningful fast.