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Bankruptcy Filing Prevented Expiration of Appeal Filing Period in Florida State Court Action

clock-1373644964HylA Florida business received permission to pursue an appeal of an injunction in a civil case, despite filing its notice of appeal more than a month after the filing deadline would normally have expired. The 2d District Court of Appeal ruled that the business’ Chapter 11 bankruptcy filing essentially halted the filing period and meant that the business’ notice of appeal was, in fact, timely.

The legal contest between Professional Medical Billing Specialists, LLC and AmMed Surgical began when Professional sued AmMed in state court in Tampa. Professional asked that court to issue a preliminary injunction in the case and, on August 12, 2014, the trial judge agreed and issued the injunction. Ten days later, AmMed filed for bankruptcy.

On October 21, AmMed appealed the state court’s issuance of the injunction in favor of Professional. The Florida appeals court immediately identified two seemingly fatal flaws in AmMed’s appeal. One was AmMed’s Chapter 11 filing and the automatic stay that it triggered. The other problem was that AmMed filed its appeal 70 days after the issuance of the injunction, which was 40 days after the filing deadline for appealing the injunction.

When the appeals court demanded that AmMed offer some basis as to why the court should not throw out the appeal, AmMed disclosed that it sought permission from the federal court handling its bankruptcy to pursue its appeal of the injunction in the case against Professional. The federal court issued an order partially lifting the stay for the explicit purpose of allowing AmMed to filed a notice of appeal of the injunction in the case against Professional. AmMed filed its notice of appeal the same day.

Under these unique circumstances, AmMed’s appeal was permissible. The federal court had specifically given AmMed permission to appeal the state court injunction, so the bankruptcy stay did not prevent the state appeals court from hearing the case. Furthermore, the appeals court ruled that Florida’s rules of court procedure, including the rule of appellate procedure that established the 30-day deadline for filing appeals, must yield to federal law, including Section 108 of the Bankruptcy Code. That section tolled time limits in civil actions like the one between Professional and AmMed. This meant that the “clock” on the 30-day filing period stopped running the moment AmMed filed its Chapter 11 petition and the automatic stay took effect.

Since AmMed’s Chapter 11 filing functionally prevented it from appealing the injunction within 30 days, the appeals court ruled that the notice of appeal was submitted in a timely fashion. The appeal of the injunction remained stayed, however, pending the progress of the bankruptcy case. The state court appeal would only go forward once the federal bankruptcy court lifted the stay in AmMed’s Chapter 11 case.

There are many considerations that go into filing a Chapter 11 petition. One aspect of these considerations is understanding the impact on any other litigation actions in which your business is involved. For reliable advice and representation in your Chapter 11 bankruptcy, talk to the Florida bankruptcy attorneys at Stok Folk + Kon. Our attorneys have the skill and knowledge your business needs as you navigate through the bankruptcy process.

Contact us online or by calling (305) 935-4440 to schedule your consultation.

More blog posts:

Delay Stymies Creditor’s Action; Environmental Claim Against Chapter 11 Debtor Was Discharged, Florida Business Lawyers Blog, Jan. 16, 2015

Bankruptcy Judge Rejects LLC Owners’ Attempt to Use Federal Courts to Defeat State Court Judgment, Florida Business Lawyers Blog, Oct. 24, 2014