IN THE UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORPORATION,

et al.1 Debtors. ) ) ) ) ) ) ) ) ) ) Chapter 11 Case No. 05-55927 (SWR) (Jointly Administered) (Tax Identification #13-3489233) Honorable Steven W. Rhodes

_______________________________________) THE COLLINS & AIKMAN POST-CONSUMMATION TRUSTS RESPONSE IN OPPOSITION TO THE OHIO DEPARTMENT OF TAXATIONS MOTION TO RECONSIDER DEBTORS THIRTYFOURTH OMNIBUS OBJECTION RELATING TO CLAIM 3186 The Collins & Aikman Post-Consummation Trust (the Trust), as successor to the above-captioned Debtors (collectively, the Debtors) pursuant to the First Amended Joint Plan of Reorganization of Collins & Aikman Corporation and its Debtor Subsidiaries (the Plan) as confirmed by order of the Bankruptcy Court, hereby files this Response in Opposition to the Ohio Department of Taxations (the ODT) Motion to Reconsider Debtors Thirty-Fourth

The Debtors in the jointly administered cases include: Collins & Aikman Corporation; Amco Convertible Fabrics, Inc., Case No. 05-55949; Becker Group, LLC (d/b/a/ Collins & Aikman Premier Mold), Case No. 05-55977; Brut Plastics, Inc., Case No. 05-55957; Collins & Aikman (Gibraltar) Limited, Case No. 05-55989; Collins & Aikman Accessory Mats, Inc. (f/k/a the Akro Corporation), Case No. 05-55952; Collins & Aikman Asset Services, Inc., Case No. 05-55959; Collins & Aikman Automotive (Argentina), Inc. (f/k/a Textron Automotive (Argentina), Inc.), Case No. 05-55965; Collins & Aikman Automotive (Asia), Inc. (f/k/a Textron Automotive (Asia), Inc.), Case No. 0555991; Collins & Aikman Automotive Exteriors, Inc. (f/k/a Textron Automotive Exteriors, Inc.), Case No. 05-55958; Collins & Aikman Automotive Interiors, Inc. (f/k/a Textron Automotive Interiors, Inc.), Case No. 05-55956; Collins & Aikman Automotive International, Inc., Case No. 05-55980; Collins & Aikman Automotive International Services, Inc. (f/k/a Textron Automotive International Services, Inc.), Case No. 05-55985; Collins & Aikman Automotive Mats, LLC, Case No. 05-55969; Collins & Aikman Automotive Overseas Investment, Inc. (f/k/a Textron Automotive Overseas Investment, Inc.), Case No. 05-55978; Collins & Aikman Automotive Services, LLC, Case No. 05-55981; Collins & Aikman Canada Domestic Holding Company, Case No. 05-55930; Collins & Aikman Carpet & Acoustics (MI), Inc., Case No. 05-55982; Collins & Aikman Carpet & Acoustics (TN), Inc., Case No. 05-55984; Collins & Aikman Development Company, Case No. 05-55943; Collins & Aikman Europe, Inc., Case No. 05-55971; Collins & Aikman Fabrics, Inc. (d/b/a Joan Automotive Industries, Inc.), Case No. 05-55963; Collins & Aikman Intellimold, Inc. (d/b/a M&C Advanced Processes, Inc.), Case No. 05-55976; Collins & Aikman Interiors, Inc., Case No. 05-55970; Collins & Aikman International Corporation, Case No. 05-55951; Collins & Aikman Plastics, Inc., Case No. 05-55960; Collins & Aikman Products Co., Case No. 05-55932; Collins & Aikman Properties, Inc., Case No. 0555964; Comet Acoustics, Inc., Case No. 05-55972; CW Management Corporation, Case No. 05-55979; Dura Convertible Systems, Inc., Case No. 05-55942; Gamble Development Company, Case No. 05-55974; JPS Automotive, Inc. (d/b/a PACJ, Inc.), Case No. 05-55935; New Baltimore Holdings, LLC, Case No. 05-55992; Owosso Thermal Forming, LLC, Case No. 05-55946; Southwest Laminates, Inc. (d/b/a Southwest Fabric Laminators Inc.), Case No. 05-55948; Wickes Asset Management, Inc., Case No. 05-55962; and Wickes Manufacturing Company, Case No. 05-55968.

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0555927080921000000000001

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Omnibus Objection Relating to Claim 3186 (the Motion). In support of this Response, the Trust states as follows: I. 1. Background The Trust filed its Thirty-Fourth Omnibus Objection to Claims on April 8, 2008

(the Objection). The Objection sought to amend the ODTs claim 3156 (the Claim) from $105,036.45 to $2,414.79. The Objection was served on the ODT. 2. June 12, 2008. 3. On August 29, 2008, the ODT filed the Motion seeking to have the Court The ODT did not file a response to the Objection. The Objection was Ordered on

reconsider its Order granting the Objection. As set forth below, this Motion should be denied because it is futile, it is barred by the doctrine of waiver, it is untimely and the ODT did not demonstrate sufficient excusable neglect. II. 4. The Motion Should Be Denied Because It Is Futile The only support for the Claim is the Claim itself and counsels unsupported, self-

serving assertion that ODT maintains that the full amount of its claim, $105,036.45, remains due and unpaid by Debtor. (Motion at 20.) The ODT provides no other support for its $105,036.45 claim. 5. Presumably, the ODT failed to provide any support for its Claim because no such

support exists. Claim 3186 was broken into three parts. The first part sought 2004 school withholding tax in the amount of $2,414.79, plus penalties and interest. The second portion of Claim 3186 sought recovery for a 2000 withholding tax of $12,606.32, plus penalties and interest. The final portion of Claim 3186 sought recovery for 2003 withholding tax of

$56,308.20, plus penalties and interest. (Ex. A, K. Schweninger Aff. at 4.)

6.

The Amendment set forth in the Objection was supported, and continues to be

supported, by the fact that: (1) the Trust requested supporting documents for the entire Claim; (2) the ODT only provided documents supporting the $2,414.79 school withholding tax; and (3) the Trust could not verify the remaining portions of the Claim in its books and records. (Ex. A, K. Schweninger Aff. at 6.) 7. That is, the only support in the books and records of Collins & Aikman

supporting Claim is for the 2004 school withholding tax in the amount of $2,414.79. (Ex. A, K. Schweninger Aff. at 7.) 8. Despite inquiries from the Trust to the ODT, the Trust did not receive documents

from the ODT supporting the remaining portions of the Claim. The Trust initially requested supporting documentation for the Claim as early as mid-March 2008. In the following nine months, the ODT has produced nothing to support the Claim. (Ex. A, K. Schweninger Aff. at 8.) 9. The Ohio Department of Taxations assertion that the full amount of its claim,

$105,036.45, remains due and unpaid by Debtors, is unsupported by the books and records of the company. On both July 22 and July 25, 2008, counsel for the ODT provided the Trust with a schedule that it could claim supports the 2003 withholding tax of $56,308.20. The Trust has not been able to find this claimed amount owing in the books and records of the company. Instead, the books and records suggest that no payment amount is outstanding for this period. This fact was subsequently and separately confirmed by the person responsible for paying those taxes. (Ex. A, K. Schweninger Aff. at 13-14.) 10. Thus, the Motion is futile because the ODT cannot support the Claim as filed.

Instead, the Trust has confirmed that there is no support for the Claim in Debtors books and

records. Granting the ODTs Motion would be futile because the ODT cannot support for the Claim and has not demonstrated in its Motion that it could support the Claim. Therefore, the Trust requests that this Court deny the Motion. III. 11. The ODT Waived the Remaining Claim When It Accepted Payment Consistent with the Courts June 12, 2008 Order Given that the ODT only produced documents supporting the $2,414.79, and the

ODT never responded to the Trusts Objection, it was reasonable for the Trust to believe that the ODT consented to amending the Claim. The ODTs acquiescence in the amendment is further confirmed because the ODT accepted full payment for the Claim, as amended. 12. On June 26, 2008, after the Court entered the Order on the 34th Omnibus

Objection amending the Claim, the Trust mailed a check to the Ohio Department of Taxation for $2,414.79 for payment in full of the Claim, as amended. (Ex. A, K. Schweninger Aff. at 10.) 13. After completing a routine form with the ODT, the ODT accepted the payment of

$2,414.79. The ODT cashed the Trusts check on August 5, 2008. (Ex. A, K. Schweninger Aff. at 11.) 14. The ODT never object to the amount of the check in payment of the Claim, and

the Ohio Department of Taxation has accepted, $2,414.79 in resolution of this Claim.. (Ex. A, K. Schweninger Aff. at 12-13.) 15. The ODTs acceptance of the check without objection constitutes waiver of the

ODTs right of recovery to the remaining portions of the Claim. IV. 16. The Motion for Reconsideration is Untimely Not only would granting the Motion be futile because there is no support for the

Claim, but the Motion for Reconsideration is untimely.

17.

Rule 9024 of the Federal Rules of Bankruptcy Procedure provides that Rule 60(b)

of the Federal Rules of Civil Procedure governs the ODTs Motion for relief from the Order amending the Claim. FED. R. BANKR. P. 9024. Rule 60(c) provides that a Motion must be brought within a reasonable time . . . no more than a year after the entry of judgment or order or the date of the proceeding. FED. R. CIV. P. 60(c)(1). 18. In the context of the fact that there is no support for the Claim, and as set forth

below, the ODT accepted payment for the Claim, the ODTs delay should be considered unreasonable. The Trust sought support for the Claim in March 2008 from the ODT. The only support provided was for the portion of the Claim the Trust paid. No other support has ever been provided. The Trust filed a timely objection which was served on the ODT. The ODT did not respond to the Objection. The Court entered an Order amending the ODTs Claim, and the Trust paid the Claim. The ODT accepted that payment in full for the Claim. Now, nearly a month after payment was accepted, the ODT moved to set aside the Order. Given these circumstances, the Court is vested with the discretion to deem the ODTs delay unreasonable, and the Court therefore deny the Motion. See, e.g., In re The Roman Catholic Church of Diocese of Tucson, No. 06-373, 2008 U.S. Dist. Lexis 17520 (D. Ariz. Feb. 21, 2008) (affirming bankruptcy courts exercise of discretion denying motion for relief from judgment even though the motion was filed within four months of judgment because the movant knew of the grounds for the motion immediately, but did nothing for four months) (Ex. B). 19. Although the ODT may claim that they did not have notice of the Order granting

the objection, they certainly had notice of (1) the Trusts concerns about the sufficiency of the Claim in March of 2008; (2) the Trusts objection in April 2008; and (3) the payment by the trust in June 2008. Moreover, the ODT was advised to file the instant Motion at the July 31, 2008

omnibus hearing. Despite the repeated notice received by the ODT or its counsel, it was not until August 29, 2008 when the ODT filed the instant Motion. Given these repeated notices and absolute inactivity, this Court should conclude that the ODTs delay in seeking relief from the Order granting the Objection was unreasonable. Therefore, the Court should deny the Motion as untimely pursuant to Rule 60(c) of the Federal Rules of Civil Procedure. V. 20. The ODT Did Not Satisfy the Requirements For Relief Under Rule 60 The Sixth Circuit Bankruptcy Appellate Panel has held that the party seeking to

vacate the default judgment must demonstrate first and foremost that the default did not result from his culpable conduct. In re Sterling Rubber Products Co., No. 04-8090, 2006 Bankr. Lexis 175 (B.A.P. 6th Cir. Feb. 15, 2006) (citing Weiss v. St. Paul Fire & Marine Ins. Co., 283 F.3d 790, 794 (6th Cir. 2002)) (Ex. C). On motions based on Rule 60(b)(1), the burden of demonstrating non-culpable conduct merges with and may be met by establishing the requirements of Rule 60(b)(1), specifically that the default was the product of mistake, inadvertence, surprise or excusable neglect. Id. 21. Failing to read a notice is not non-culpable conduct justifying relief from a

partys failure to comply with the deadline. Id. Similarly, the deadline for responding to an objection to a claim is separately established by local rule and ignorance of the rules does not usually constitute excusable neglect. Id. 22. Counsel for ODT asserts that he simply did not see the ODTs claim on the

Objection. This is a spurious claim given that there were only two claims addressed on the Objection. Counsels claim is simply unbelievable given the few claims addressed by the

Objection, but such inattention to detail is insufficient to justify excusable neglect because he failed to read the notices and exhibits included with the Objection.2 23. The Court cannot consider the absence of prejudice where, as here, the conduct

was culpable. Id. Therefore, the ODTs allegations of absence of prejudice felt by the Trust should not be considered.3 The ODT has failed to establish that the claim was meritorious, the ODT waived its rights to the Claim when it accepted payment for the Claim, the ODTs Motion is untimely, and the ODTs Motion does not satisfy the requirements of Rule 60 by demonstrating excusable neglect. WHEREFORE, the Trust respectfully requests that this Court deny the ODTs Motion. Respectfully submitted, BOYLE BURDETT By:s/H. William Burdett, Jr. Eugene H. Boyle, Jr. (P42023) H. William Burdett, Jr. (P63185) 14950 East Jefferson, Suite 200 Grosse Pointe Park, Michigan 48230 (313) 344-4000 (313) 344-4001 (facsimile) burdett@boyleburdett.com Attorneys for the Collins & Aikman Litigation Trust

Dated: September 21, 2008

2 3

This Court can also conclude that counsel failed to meet its burden of establishing the requirements of Rule 60 were met. Neither the ODT nor counsel for the ODT submitted an affidavit to establish excusable neglect or the merits of the Claim. Of course, the Trust does feel prejudice. The Trust has to spend time and resources regarding a Claim that has been closed for months. The Trust has to spend attorney fees, consultant fees and costs in order to evaluate and respond to this Motion and to evaluate the Claim. The Trust has relied on the fact that this Claim has been resolved. Thus, the ODT simply cannot credibly assert that the Trust feels no prejudice with this Motion.

EXHIBIT A

EXHIBIT B

Page 1

FOCUS - 6 of 37 DOCUMENTS

In re The Roman Catholic Church of Diocese of Tucson aka the Diocese of Tucson, Debtor. Phillip Gregory Speers, Appellant/Plaintiff, vs. The Roman Catholic Church of Diocese of Tucson aka the Diocese of Tucson, Appellee/Defendant. No. CV 06-373-TUC-MHM UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA 2008 U.S. Dist. LEXIS 17520

February 21, 2008, Decided February 22, 2008, Filed PRIOR HISTORY: [*1] Chapter 11 Bankruptcy Case No. 4-04-BK-4721-JMM. Bankruptcy Adversary No. 4-05-AP-00197. decision. The parties have filed their respective briefs and record excerpts for the purposes of this appeal. (Doc. 27, 36, 39, 10-23, 28-29 and 35). This Court's appellate jurisdiction has been invoked pursuant to 28 U.S.C. 158(a). 1 Rule 60(b) of the Federal Rules of Civil Procedure is made applicable to the Bankruptcy proceedings through Rule 9024 of the Bankruptcy Code. I. For Roman Catholic Church, Diocese of Tucson, Appellee: Kasey Cameron Nye, Robert M Ferrier, Susan G Boswell, LEAD ATTORNEYS, Quarles & Brady LLP, Tucson, AZ. JUDGES: Mary H. Murguia, United States District Judge. OPINION BY: Mary H. Murguia OPINION Background According [*2] the record below, the Appellant taught second grade at St. Francis of Assisi School in Yuma, Arizona during the 1999-2000 school year. Toward the end of the school year, five female students accused the Appellant of having molested them. While criminal charges were pending against the Appellant, the parents of his accusers brought suit against, among others, the Diocese of Tucson. The parents alleged that the Diocese was responsible for the Appellant's conduct under the doctrine of respondeat superior. Against the Appellant's urging, the Diocese settled those claims. On September 20, 2004, the Diocese filed for Chapter 11 reorganization. On April 15, 2005, Appellant filed a Proof of Claim 2 in the Bankruptcy Court, attaching a complaint captioned for the Pima County Superior Court. The Appellant filed essentially the same complaint in Pima County Superior Court against the

COUNSEL: Phillip Gregory Speers, Appellant, Pro se, Yuma, AZ. For Phillip Gregory Speers, Appellant: G David DeLozier, LEAD ATTORNEY, J Lawrence Dunlavey, DeLozier & Dutton PLLC, Cave Creek, AZ.

ORDER Plaintiff/Appellant Phillip Gregory Speers appeals from the Order entered by the Honorable James M. Marlar, Judge, United States Bankruptcy Court, District of Arizona, entered on June 14, 2006. (Doc. 35-28). That Order denied the Appellant's Rule 60(b) Motion for Relief 1 from the Bankruptcy Court's January 30, 2006

Page 2 2008 U.S. Dist. LEXIS 17520, *2

Diocese and several other entities on June 23, 2005. Both complaints alleged employment discrimination, retaliatory conduct, harassment in violation of public policy, breach of contract, professional negligence, fraud and conspiracy to commit fraud, slander per se, libel per se, abuse of process, conspiracy to commit [*3] violation of civil rights, breach of non-delegable duty, fault, obstruction of justice - destruction of evidence, obstruction of justice - secretion of evidence, witness tampering, intentional infliction of emotional distress, unlawful imprisonment, malicious prosecution, respondeat superior/vicarious liability and outrageous conduct. The Pima County action was removed by the Defendants to the Bankruptcy Court. Appellant subsequently succeeded on his Motion to Remand the claims against the non-debtor Defendants, and that action is pending in the Pima County Superior Court (Doc. 35-25). 2 A Proof of Claim is a creditor's submission to a bankruptcy court that is required in order to make a claim against a debtor's bankruptcy estate. It is the mechanism that allows a creditor to be included in the debtor's reorganization plan. The Diocese objected to the Appellant's claim and filed a Motion to Dismiss on October 18, 2005. After briefing and a hearing on the issue, the Bankruptcy Court denied the Motion to Dismiss, but ordered the Appellant to file an amended complaint that complied with Rules 8 and 10 of the Federal Rules of Civil Procedure, which require a short and plain statement of the [*4] claim, captioned with the names of the parties and the title of the action, and in the form of limited, numbered paragraphs. 3 If the appellant failed to do so within twenty days, his complaint would be dismissed with prejudice. 3 Several additional filings were made with the Bankruptcy Court in this same time period by both Appellant and the various defendants; they are not relevant to the disposition here and are thus not addressed. The Appellant filed his amended complaint on January 9, 2006, twenty-five days after the Bankruptcy Court's order. The Bankruptcy Court dismissed the Complaint with prejudice and disallowed the claim against the Diocese's bankruptcy estate, finding the Appellant's filing untimely. Four months later, on May 31, 2006, the Appellant

filed a Motion for Relief from Judgment under Rule 60(b) of the Federal Rules of Civil Procedure. Citing Rule 6(e) of the Federal Rules of Civil Procedure, the Appellant argued that the Bankruptcy Court had erred in dismissing the amended complaint as untimely. According to the Appellant, the Bankruptcy Court should have computed the due date for the amended complaint by adding three days to the prescribed period. Because that would [*5] have resulted in the amended complaint falling due on a Saturday, the Appellant urged that Rule 6(a) allowed for the filing to occur on the next day that was not a Saturday, Sunday or legal holiday. The Appellant argued that his filing on January 9, 2006 was therefore timely and thus the Bankruptcy Court should not have dismissed the complaint and denied his claim. The Appellant offered several additional arguments that his claims should not have been dismissed. In its June 14, 2006 memorandum decision, the Bankruptcy Court denied the Motion for Relief on the basis that the Appellant had not brought it within a reasonable time. Judge Marlar noted that Rule 60(b) motions should be liberally construed, but cited the court's compelling interest in finality of judgments. In his denial, Judge Marlar pointed to the fact that the Appellant did not file an appeal, despite the fact that the main issue involved a simple computation of time that did not require extensive research or writing. Judge Marlar indicated that the Appellant could have sought an extension of the ten-day appeal period instead of waiting four months to seek relief from the judgment. The Appellant timely appealed the decision [*6] to this Court. II. Discussion In an appeal from the Bankruptcy Court, this Court reviews the denial of a Rule 60(b) motion for abuse of discretion. Backlund v. Barnhart, 778 F.2d 1386, 1388 (9th Cir. 1985); Casey v. Albertson's Inc., 362 F.3d 1254, 1257 (9th Cir. 2004). This Court will not consider the merits of the underlying decision; the review is limited to the merits of the denial of the Motion for Relief from the judgment. Maraziti v. Thorpe, 52 F.3d 252, 254 (9th Cir. 1995). A. Abuse of Discretion In applying the abuse of discretion standard, this

Page 3 2008 U.S. Dist. LEXIS 17520, *6

Court is not empowered to substitute its judgment for that of the Bankruptcy Court. United States v. Henderson, 241 F.3d 638, 646 (9th Cir. 2000). Unless the Bankruptcy Court made an error of law, relied on a clearly erroneous finding of material fact or ruled in an irrational manner, it is entitled to wide latitude in its decision. Id. This Court finds that the Bankruptcy Court did not abuse its discretion in denying the Appellant relief under Rule 60(b). The parties appear to agree that the Bankruptcy Court applied the correct law. (Doc. 27, pp. 9-11; 36, pp. 11-12). Rule 60(b) provides that a court may relieve a party from a final judgment [*7] or order for (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud, misrepresentation, or misconduct by the opposing party; (4) void judgments; (5) judgments that have been satisfied, released or discharged; or (6) any other reason justifying relief. Judge Marlar considered the appropriate factors and determined that it was unreasonable for the Appellant to have waited 120 days to file the Motion for Relief. (Doc. 29-10, pp. 4-5). Such a determination is supported by the facts in the record. The Appellant immediately knew of the grounds for seeking relief but did not appeal the order (in ten days or otherwise), nor did he advise the Court that he needed an extension of time to properly research and brief the issues. (Doc. 29-9, p. 3). The Bankruptcy Court correctly noted that there is a compelling interest in finality of judgments. (Id.) Under the circumstances, it was not an abuse of discretion to deny the Appellant's Motion for Relief from the judgment made four months later. 4 4 Although the merits of the underlying decision are not before the Court, this Court disagrees with the Appellant's characterization that the Bankruptcy Court "admitted [*8] its prior error." This Court finds that the Bankruptcy Court merely recited the Appellant's arguments regarding the computation of time, rather than addressing whether Rule 6 of the Federal Rules of

Civil Procedure actually applies to judges' orders. The Appellant also asserts several reasons to reverse the decision of the Bankruptcy Court that are not properly before this Court. He urges this Court to consider the nature of the bankruptcy proceedings below, including the fact that the Bankruptcy Court "misconstrued the nature of the attachment" to the Proof of Claim form. (Doc. 27, p. 11). This Court may not properly make such an inquiry; it is limited to the question of whether the Bankruptcy Court abused its discretion in denying the Motion for Relief. Maraziti, 52 F.3d at 254. B. Excusable Neglect The Appellant argues that the four-month delay in filing his Motion for Relief was reasonable under the circumstances, and therefore should be considered excusable neglect. The Appellant did not, however, raise his excusable neglect claim with the Bankruptcy Court in his Motion for Relief; it appears for the first time in his appeal to this Court. Ordinarily, an appellate court will not [*9] consider arguments raised for the first time on appeal. Dream Palace v. County of Maricopa, 384 F.3d 990, 1005 (9th Cir. 2004). The Bankruptcy Court appropriately considered the Appellant's Motion, applied the correct legal standard, and denied relief. This Court's role is only to determine whether that constitutes an abuse of discretion. This Court finds that it does not. Accordingly, IT IS ORDERED that the Bankruptcy Court's Order filed June 14, 2006 is affirmed. DATED this 21st day of February, 2008. /s/ Mary H. Murguia Mary H. Murguia United States District Judge

EXHIBIT C

Page 1

LEXSEE 2006 BANKR LEXIS 175

Analysis As of: Sep 21, 2008 In re: STERLING RUBBER PRODUCTS COMPANY, Debtor. SPENCER CENTRAL DEVELOPERS, LLC, Appellant, v. STERLING RUBBER PRODUCTS COMPANY, Appellee. No. 04-8090 UNITED STATES BANKRUPTCY APPELLATE PANEL FOR THE SIXTH CIRCUIT 2006 Bankr. LEXIS 175; 46 Bankr. Ct. Dec. 5 November 9, 2005, Submitted February 15, 2006, Decided February 15, 2006, Filed PRIOR HISTORY: [*1] Appeal from the United States Bankruptcy Court for the Southern District of Ohio, Western Division. Chapter 11, Case No. 03-40549. Spencer Cent. Developers, LLC v. Sterling Rubber Prods. Co. (In re Sterling Rubber Prods. Co.), 337 B.R. 729, 2006 Bankr. LEXIS 671 (B.A.P. 6th Cir., 2006) claim be deemed timely filed. For the reasons that follow, we conclude that the orders on appeal should be AFFIRMED. I. ISSUES ON APPEAL The issues presented are whether the bankruptcy court erred in (1) sustaining the Debtor's objection to the allowance of SCD's claim, (2) denying SCD relief from the order disallowing its claim, and (3) denying SCD's motion for an order deeming its proof of claim to have been timely filed. II. [*2] JURISDICTION AND STANDARD OF REVIEW An order disallowing a claim is a final order, e.g., Beneke Co. v. Economy Lodging Sys., Inc. (In re Economy Lodging Sys., Inc.), 234 B.R. 691, 693 (B.A.P. 6th Cir. 1999); see Stearns Salt & Lumber Co. v. Hammond, 217 F. 559, 564 (6th Cir. 1914), as is an order denying relief from a prior order, e.g., Patterson Dental Supply, Inc. v. Hochhauser (In re Hochhauser), No. 03-8024, slip op. at 2 (B.A.P. 6th Cir. Dec. 30, 2003) (citing Peake v. First Nat'l Bank & Trust Co., 717 F.2d 1016, 1020 (6th Cir. 1983)); In re White Motor Corp., 65 B.R. 383, 390 (N.D. Ohio 1986), aff'd, 886 F.2d 1462

COUNSEL: ON BRIEF: Timothy R. Dodd, Evansville, Indiana, for Appellant. Lawrence T. Burick, Jennifer L. Maffett, THOMPSON HINE, Dayton, Ohio, for Appellee. JUDGES: Before: GREGG, LATTA, and WHIPPLE, Bankruptcy Appellate Panel Judges. OPINION BY: MARY ANN WHIPPLE OPINION MARY ANN WHIPPLE, Bankruptcy Appellate Panel Judge. Creditor Spencer Central Developers, LLC ("SCD"), appeals an order disallowing its claim because it failed to respond to the objection filed by Debtor Sterling Rubber Products Corp. ("Debtor"). SCD also appeals another order denying its motion for relief from the earlier order and denying a request that its proof of

Page 2 2006 Bankr. LEXIS 175, *2; 46 Bankr. Ct. Dec. 5

(6th Cir. 1989). Thus, the orders in question may both be appealed as of right. 28 U.S.C. 158(a)(1). The United States District Court for the Southern District of Ohio has authorized appeals to the Bankruptcy Appellate Panel, and neither party has timely elected to have this appeal heard by the district court. 28 U.S.C. 158(b)(6), (c)(1). Accordingly, the Panel has jurisdiction to decide this appeal. Insofar as the appellant [*3] asserts that the order disallowing its claim represents an error of law, the order is reviewed de novo. E.g., Corzin v. Fordu (In re Fordu), 201 F.3d 693, 696 n.1 (6th Cir. 1999). "De novo means that the appellate court determines the law independently of the trial court's determination." Treinish v. Norwest Bank Minn., N.A. (In re Periandri), 266 B.R. 651, 653 (B.A.P. 6th Cir. 2001) (quoting Myers v. IRS (In re Myers), 216 B.R. 402, 403 (B.A.P. 6th Cir. 1998) (quoting Corzin v. Fordu (In re Fordu), 209 B.R. 854, 857 (B.A.P. 6th Cir. 1997), aff'd, 201 F.3d 693 (6th Cir. 1999)), aff'd, 196 F.3d 622 (6th Cir. 1999)). Insofar as the appellant challenges the order disallowing its claim on the basis of an error of fact, the order is reviewed for clear error. Fed. R. Bankr. P. 8013 & 7052; Fed. R. Civ. P. 52(a). "A finding of fact is clearly erroneous 'when although there is evidence to support it, the reviewing court, on the entire evidence, is left with the definite and firm [*4] conviction that a mistake has been committed.'" United States v. Mathews (In re Mathews), 209 B.R. 218, 219 (B.A.P. 6th Cir. 1997) (quoting Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S. Ct. 1504, 1511, 84 L. Ed. 2d 518 (1985)). The denial of a Rule 60(b) motion is reviewed for abuse of discretion. E.g., Burrell v. Henderson, 434 F.3d 826, 2006 U.S. App. LEXIS 666, 2006 WL 59815 (6th Cir. Jan. 12, 2006); Eglinton v. Loyer (In re G.A.D., Inc.), 340 F.3d 331, 334 (6th Cir. 2003) (citing Smith v. Kincaid, 249 F.2d 243, 245 (6th Cir. 1957)). An abuse of discretion occurs when the Panel is left with "a definite and firm conviction that the court below committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors." Taylor v. United States Parole Comm'n, 734 F.2d 1152, 1155 (6th Cir. 1984). III. FACTS The Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Ohio,

Western Division, at Dayton. The Debtor's schedule of creditors holding [*5] unsecured nonpriority claims listed a debt to SCD in the amount of $ 219,155.25 and indicated that the debt was disputed. The bankruptcy court entered an order setting April 14, 2004, as the last day for filing proofs of claim and, on January 24, 2004, the court issued a notice of that deadline. SCD does not dispute that it received a copy of that notice in due course. SCD contends that, on April 13, 2004, it sent a proof of claim to the clerk by Express Mail, anticipating that the package would be delivered the next day. However, the proof of claim was not delivered or filed until April 15, 2004. On May 3, 2004, the Debtor filed an objection to SCD's claim, seeking its disallowance because, among other reasons, the proof of claim was untimely. At the end of the objection, below the certificate of service, the Debtor inserted the following box: NOTICE OF OBJECTION TO CLAIM Debtor and Debtor in Possession, The Sterling Rubber Products Company ("SRP"), has filed an objection to your claim in this bankruptcy case. Your claim may be reduced, modified or eliminated. You should read these papers carefully and discuss them with your attorney, if you have one. [*6] If you do not want the court to eliminate or change your claim, then on or before June 2, 2004, you or your lawyer must file with the court a written response to the objections [sic], explaining your position, at the Clerk's Office, United State [sic] Bankruptcy Court for the Southern District of Ohio, Dayton Office, 120 W. Third Street, Dayton, Ohio 45402. If you mail your response to the court for filing, you must mail it early enough so that the court will receive it on or before the date stated above. You must also mail a copy to Lawrence T. Burick, Esq., Thompson

Page 3 2006 Bankr. LEXIS 175, *6; 46 Bankr. Ct. Dec. 5

Hine LLP, 2000 Courthouse Plaza, N.E., Dayton, Ohio 45402. If you or your attorney do not take these steps, the court may decide that you do not oppose the objection to your claim.

A. Order Disallowing Claim The bankruptcy court's order disallowing SCD's claim was based solely on its failure to respond to the Debtor's objection. The court found that the notice of the objection complied with Rule 3007 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") and Rule 3007-1 of the Local Rules of the Bankruptcy Court for the Southern District of Ohio (the "Local Rules"), that the objection was properly served, that SCD did not timely respond, and that under Local Rule 3007-1 "SCD is deemed to have waived any objection to the relief sought in Debtor's Objection." SCD asserts, first, that the notice did not comply with Official Form 20B. 2 2 SCD also contends that the caption does not comply with Bankruptcy Rule 1005. However, that rule by its own terms applies only to petitions and, although Rule 2002(n) makes Rule 1005 applicable to "every notice given under this rule," a notice of an objection to allowance of a claim is not one of the types of notice governed by Rule 2002. Fed. R. Bankr. P. 2002(a), (b), (e), (f). [*9] Bankruptcy Rule 9009 provides that "the Official Forms prescribed by the Judicial Conference of the United States shall be observed and used with alterations as may be appropriate. Forms may be combined and their contents rearranged to permit economies in their use." Official Form 20B is the form for notices of objections to claims. Comparison of the official form to the notice appearing on the Debtor's objection reveals that the title and text of the two are substantially identical, except that the Debtor's notice does not include the time and location of a hearing on the objection. That omission is consistent with the Local Rules, which provide for a hearing only if a response is timely filed: "The objection shall also include or be accompanied by the mandatory notice set forth in Official Form 20B (Notice of Objection to Claim) except that no hearing date need be set." Bankr. S.D. Ohio R. 3007-1(b). The committee note to Official Form 20B makes clear that this is the very sort of "appropriate alteration" authorized by Rule 9009: "These forms are not intended to dictate the specific procedures to be used by different bankruptcy courts. The forms contain optional language that can [*10] be used or adapted, depending on local procedures." Section 502(b) of the Bankruptcy Code provides for the disallowance of claims "after notice and a hearing,"

SCD did not timely file a response to the objection by June 2, 2004. On June 8, 2004, without holding a hearing, the bankruptcy court entered an order disallowing SCD's claim based solely on the failure to respond. Counsel for SCD later admitted that they did not timely read the notice reproduced above, averring that the oversight occurred because the notice was placed at the end of the objection after the certificate [*7] of service. The attorney stated that the "notice was initially missed by our office" and acknowledged: "We have been lazy." (Appellant's App., at 314, 317.) An attorney in the office first saw the notice "seven days out" (id. at 342), after the deadline set in the notice for responding to the claim. Asserting that the language of the notice led them to conclude that the court would nevertheless hold a hearing on the objection whether or not a response was filed, counsel was surprised that the next event was receipt of the June 8 order disallowing SCD's claim instead of a notice of hearing on the Debtor's objection. On June 14, 2004, SCD filed a motion seeking an order deeming its proof of claim to have been timely filed and responding to the Debtor's objection. On June 17, 2004, SCD filed a separate response to the objection, and a motion for relief from the order disallowing its claim. On October 25, 2004, the bankruptcy judge entered an order denying both of SCD's motions. In re Sterling Rubber Prods. Co., 316 B.R. 485 (Bankr. S.D. Ohio 2004). SCD timely filed a notice of appeal on November 2, 2004. 1 1 The appeal was timely with respect to the June 8 order disallowing the claim, as well as the October 25 order, because Rule 8002(b)(4) of the Federal Rules of Bankruptcy Procedure provides that the time for appeal runs from the entry of an order disposing of a motion under Rule 9024 for relief from an earlier order if the motion was filed within 10 days after the entry of the earlier order and, in this case, the motion was filed within that 10-day period. [*8] IV. DISCUSSION

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and that phrase is defined as follows: "after notice and a hearing", or a similar phrase-(A) means after such notice as is appropriate in the particular circumstances, and such opportunity for a hearing as is appropriate in the particular circumstances; but (B) authorizes an act without an actual hearing if such notice is given properly and if-(i) such a hearing is not requested timely by a party in interest; or (ii) there is insufficient time for a hearing to be commenced before such act must be done, and the court authorizes such act. . . .

requisite notice. 3 For the same reason, SCD's complaint that the Debtor's attorney's signature does not appear immediately below the notice is not well taken. SCD [*12] also contends that, even if the notice was sufficient (and even if its attorneys had read it when they received it), they would have concluded that a response was not required, because the notice indicated that the "claim may be reduced, modified or eliminated" and that, if the creditor or its attorney did not timely file a response, "the court may decide that you do not oppose the objection to your claim" (emphasis added). 4 This language comports with Official Form 20B. However, the notice also made it clear that, "if you do not want the court to eliminate or change your claim, then on or before June 2, 2004, you or your lawyer must file with the court a written response to the objections" (emphasis added). Moreover, subdivisions (c) and (d) of Local Rule 3007-1 explicitly state that "the claimant whose claim is the subject of a filed objection shall file a response to the objection and serve a copy thereof as directed by the notice not later than thirty (30) days after service of the objection" and that, "if a claimant fails to file a timely response to an objection, the claimant shall be deemed to have waived any objection to the relief sought" (emphasis [*13] added). Lawyers are charged with knowledge of the applicable procedural rules and statutes. See PDS Eng'g & Constr., Inc. v. Link Corp. (In re Lyman), 254 B.R. 517, 520 (Bankr. D. Conn. 2000). Particularly given Local Rule 3007-1, the consequences of failing to timely respond to the Debtor's objection should have been obvious to SCD's attorneys if they had read the notice. In the context of the entire notice and the Local Rule, use of the word "may" does not make the notice vague or misleading in any respect. 4 As the bankruptcy judge pointed out, the use of the word "may" signifies only that the court has the discretion to overrule the objection. The notice makes clear, however, that, if the creditor fails to timely respond, the court may also exercise its discretion to sustain the objection. The notice gives no indication that a hearing will be scheduled whether or not a response is filed. Indeed, Local Rule 3007-1 specifically provides that the hearing time and location is to be omitted from Official Form 20B, which should have made it even clearer to SCD that no hearing would be

11 U.S.C. 102(1). The bankruptcy court was well within its authority in promulgating a local rule that provides for a hearing on objections to claims only if timely requested. Indeed, SCD does not suggest that the bankruptcy court was required to conduct a hearing or that the local rule mandates an improper deviation from Official Form 20B. Nor does SCD suggest that the title or text of the Debtor's notice is [*11] not otherwise substantially identical to the official form. Rather, it complains only that the Debtor's notice was not, unlike the official form, placed directly below the caption of the case. In other words, it is SCD's position that the notice must appear on a document separate from the objection or, at least, on a separate page with its own caption. However, Bankruptcy Rule 9009 explicitly provides that "forms may be combined and their contents rearranged to permit economies in their use." That is precisely what the Debtor did: it combined the notice with the objection and rearranged the official form's contents by moving the body of the notice from directly below the caption to the end of the document. 3 Moreover, the sentence of Local Rule 3007-1 quoted above expressly provides that the objection must either "include or be accompanied by" the

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scheduled absent a timely response. [*14] Moreover, as the bankruptcy court pointed out, the caption of the objection included a reference to the notice appearing at the end thereof, so the attorneys had no excuse for not reading the notice. The Debtor's notice complied with applicable rules of procedure and was reasonably calculated to apprise SCD of the objection and afford it a reasonable opportunity to respond and be heard. For those reasons and because SCD's claim was disallowed on the basis of its failure to respond to the objection, the bankruptcy court's order disallowing the claim does not represent error. B. Order Denying Relief From Order Disallowing Claim SCD's motion for relief from the order disallowing its claim was based on Bankruptcy Rule 9024, which makes Rule 60 of the Federal Rules of Civil Procedure applicable in bankruptcy cases. Where Rule 60(b) is invoked to set aside a default judgment, a trial court is directed to consider three equitable factors derived from Federal Rule of Civil Procedure 55 jurisprudence as to "good cause" for setting aside default entries: (1) whether plaintiff will be prejudiced if the [*15] judgment is vacated; (2) whether the defendant had a meritorious defense; and (3) whether culpable conduct of the defendant led to the default. United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839, 845 (6th Cir. 1983). In addition to considering the equitable factors enumerated in United Coin Meter, the court must also find that one of the specific requirements of Rule 60(b) is met. Thompson v. Am. Home Assur. Co., 95 F.3d 429, 433 (6th Cir. 1996). SCD apparently relied on subdivision (b)(1) of Rule 60 for relief, which provides that, "on motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for . . . mistake, inadvertence, surprise, or excusable neglect." In Waifersong, Ltd. v. Classic Music Vending, 976 F.2d 290, 292 (6th Cir. 1992), the Sixth Circuit clarified application of the three United Coin Meter factors where a party seeks to vacate a default judgment under Rule 60(b)(1). Contrary to SCD's arguments emphasizing a lack of prejudice and a balancing of the equities, the three factors are not to be balanced. Rather, [*16] the party seeking to vacate the default judgment "must demonstrate first and foremost that the default did not result from his culpable conduct."

Weiss v. St. Paul Fire & Marine Ins. Co., 283 F.3d 790, 794 (6th Cir. 2002). The court must consider the other two United Coin Meter factors only if the moving party makes this showing. Id. (citing Waifersong, 976 F.2d at 292). On motions based on Rule 60(b)(1), the burden of demonstrating non-culpable conduct merges with and may be met by establishing the requirements of Rule 60(b)(1), specifically that the default was the product of mistake, inadvertence, surprise or excusable neglect. Id.; Mfrs.' Indus. Relations Ass'n v. E. Akron Casting Co., 58 F.3d 204, 209 (6th Cir. 1995) (citing Waifersong, 976 F.2d at 292). SCD's motion for relief from the order reiterated the same arguments regarding the notice made in its belated response to the Debtor's objection to its claim. As explained above, the notice complied with applicable rules of procedure and therefore does not provide a basis for finding non-culpable conduct in failing to respond timely to the objection. [*17] Beyond SCD's arguments about the content and placement of the notice, the only other arguable basis for finding mistake or excusable neglect is counsel's acknowledged failure to timely read the notice. But failing to read a notice setting a deadline is not non-culpable conduct justifying relief from a party's failure to comply with the deadline. E.g., In re D'Amico, 1993 U.S. Dist. LEXIS 10635, Civ. A. No. 93-1429, 1993 WL 293293, at **2 (E.D. La. July 26, 1993), aff'd, 19 F.3d 15 (5th Cir. 1994). Moreover, the deadline for responding to an objection to a claim is separately established by local rule and "ignorance of the rules . . . does not usually constitute 'excusable' neglect." Pioneer Inv. Serv. Co. v. Brunswick Assocs. Ltd. Partnership, 507 U.S. 380, 392, 113 S. Ct. 1489, 1496, 123 L. Ed. 2d 74 (1993); see Marks Mgmt. Corp. v. Reliant Mfg. Inc., 268 B.R. 505, 514-15 (E.D. Mich. 2001), aff'd, 74 Fed. Appx. 493, 2003 WL 21995438 (6th Cir. 2003) (failure to respond to a motion for summary judgment by the deadline set by the local bankruptcy rules, leading the court to grant the unopposed motion, did not constitute excusable neglect). SCD has not established [*18] that the default in responding to the Debtor's claim objection resulted from non-culpable conduct, making it unnecessary to analyze the other two United Coin Meter factors. The bankruptcy court did not abuse its discretion in denying SCD's motion for relief from the order disallowing its claim. C. Order Denying Motion to Deem Claim Timely Filed

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SCD argues that the bankruptcy court also erred in denying its motion to deem its claim timely filed because this case is similar to Pioneer, where the Supreme Court applied a balancing test and held that a late filed claim should be deemed timely filed under Bankruptcy Rule 9006(b)(1). But this case is different from Pioneer. SCD filed its claim late and then compounded that procedural problem by failing to respond timely to Debtor's objection. In contrast to Pioneer, the Debtor in this case had already filed an objection to SCD's claim and the objection had already been properly granted because of the failure to respond by the time SCD finally filed its motion to deem its claim timely filed under Bankruptcy Rule 9006(b)(1). Because SCD was not entitled to relief

from the order disallowing its claim, the bankruptcy [*19] court correctly held as a matter of law that whether SCD's proof of claim should be deemed timely under Rule 9006(b)(1) was moot. SCD's motion seeking that relief was thus also properly denied by the bankruptcy court. V. CONCLUSION For the foregoing reasons, the bankruptcy court's order disallowing SCD's claim and its later order denying SCD's motion for relief from that order and SCD's motion to deem its claim timely filed are hereby AFFIRMED.