Currently before the Court is an appeal, filed by Debtors John and Mary Elsasser ("Debtors"), from a decision of the Bankruptcy Court of the Northern District of New York granting Creditor Bank of America Corporation's ("Creditor") Motion for summary judgment and dismissing Debtors' Complaint. Dismissal Order (Dkt. No. 1, Attach. 1); Complaint (Dkt. No. 3, Attach. 5). For the reasons described below, the decision of the Bankruptcy Court is affirmed.
On August 15, 2006, Debtors filed an Adversary Complaint against Creditor alleging that a number of Debtors' mortgage payments had not been properly posted to their account and instead had been intentionally misapplied to another account. Complaint at ¶¶ 12, 58-59 (Dkt. No. 3, Attach. 5). Debtors also alleged that Creditor filed a fraudulent proof of claim, and that the actions of Creditor were willful and intentional and caused the Debtors severe emotional and physical distress. Id. at ¶¶ 30, 47, 54.
On August 15, 2007, Debtors filed a Motion for summary judgment in Bankruptcy Court. Bankruptcy Dkt. Rpt. (Dkt. No. 2, Attach. 4 at No. 30). On August 27, 2007, Creditor submitted to the Bankruptcy Court a Motion to dismiss Debtors' Complaint by way of an application for an Order to Show Cause. Order to Show Cause (Dkt. No. 6, Attach. 1). The Bankruptcy Court issued the Order to show cause, and Debtors filed their opposition to Creditor's Motion to dismiss on August 30, 2007. Creditor responded in opposition to Debtors' Motion for summary judgment on August 30, 2007. Bankruptcy Dkt. Rpt. (Dkt. No. 2, Attach. 4 at No. 36). A hearing on both Motions was held on September 4, 2007. The court denied Debtors' Motion and treated Creditor's Motion to dismiss as a Motion for summary judgment, and dismissed Debtors' Complaint. Dismissal Order (Dkt. No. 1, Attach. 1).
Rule 8013 of the Federal Rules of Bankruptcy Procedure provides that district courts "may affirm, modify, or reverse a bankruptcy judge's judgment, order or decree or remand with instructions for further proceedings." Fed. R. Bankr. P. 8013. In reviewing findings of fact of a bankruptcy court, a district court applies a clearly erroneous standard of review. Id. ("Findings of fact . . . shall not be set aside unless clearly erroneous . . . ."); see also In re Adelphia Commc'n Corp., 367 B.R. 84, 90 (S.D.NY. 2007) ("Findings of fact are reviewed for clear error."). Conclusions of law made by a bankruptcy court are reviewed de novo by a district court. See Adelphia, 367 B.R.at 90--91.
1. Bankruptcy Court's Departure from the Local Rules
Debtors argue that the Bankruptcy Court erred in accepting Creditor's response to Debtors' Motion for summary judgment because Creditor's response papers were filed after the date required by Local Rule 9013(f). Plaintiffs claim that the court did not have discretion to deviate from Local Rule 9013(f)(1), which states that
[u]nless otherwise ordered by the court for cause shown, answering papers in opposition shall be filed and served for every written motion other than one which may be considered ex parte or on shortened notice as ordered by the court. Answering papers and any opposing memoranda shall be served and filed so as to be received no later than three business days before the return date of the motion and shall identify the hearing date, time and place at the top of the page.
Notwithstanding Local Rule 9013(f), courts have "inherent power to decide when a departure from its [sic] Local Rules should be excused or overlooked, and their inherent discretion to depart from the letter of the Local Rules extends to every Local Rule regardless of whether a particular Local Rule specifically grants the judge the power to deviate from the Rule." In re Spielfogel, 237 B. R. 555, 561 (E.D.N.Y. 1999). In exercising such discretion, courts are guided by the standard set out by the Second Circuit in Somolyo v. J. Lu-Rob Enter. Inc., 932 F.2d 1043 (2d Cir. 1991), which stated:
[t]he district court should ask whether the application of the letter of Local Rules to a particular case would cause an unjust result. If faced with potential unfairness, the district court should tailor the Local Rules to best achieve a just outcome. . . . [T]he district court's determination of fairness may include, but is not limited to, a consideration of the facts of the case, the content and goal of the Local ...