Business Law

Trinity Financial Services, LLC v. Treadwell, 2023 WL 7107283 (N.D. Cal. Oct. 27, 2023)

The following is a case update written by Hale Andrew Antico, Chief Counsel of Antico Law Firm, analyzing Trinity Financial Services, LLC v. Treadwell, 2023 WL 7107283 (N.D. Cal. Oct. 27, 2023), a recent case of interest:


In Trinity Financial Services, LLC v. Treadwell, 2023 WL 7107283 (N.D. Cal. Oct. 27, 2023), the United States District Court for the Northern District of California (“District Court”) held that the Chapter 13 creditor’s actions, after it learned of its avoided lien, did not meet the standard for seeking relief under Rule 60 for excusable neglect.

To view the opinion, click here.


Joshua Treadwell (“Debtor”) filed Chapter 13 bankruptcy and included a rental property with two deeds of trust. The first deed of trust was held by Wilmington Mortgage which filed a secured claim for approximately $275,000. The property was also encumbered by a junior mortgage held by Trinity Financial Services, LLC (“Trinity”), which filed a secured claim for just over $150,000.

Debtor filed a Motion to Value his property at $270,000. Because the first lienholder’s claim exceeded the value of the property, the Debtor requested that Trinity’s junior claim be deemed wholly unsecured.

Debtor served his motion on Trinity at two addresses, including the one it listed in its filed proof of claim. The bankruptcy court denied the motion since it was not addressed to the notice of an authorized agent or officer. Debtor served his motion a second time, this time properly addressed. After the applicable period passed with no objection or response, the bankruptcy court granted the motion, eliminating Trinity’s lien.

As one can predict, Trinity eventually learned of the motion and sought to undo the result with a motion for relief from judgment under Federal Rule of Civil Procedure 60(b), incorporated into bankruptcy cases by Federal Rule of Bankruptcy Procedure 9024. While Trinity invoked several provisions under Rule 60(b), the focus of its request for relief was for excusable neglect under Rule 60(b)(1).

Trinity’s main argument was that it never received notice of the Debtor’s motion to value and that it was completely unaware of the attempt to remove its lien. The bankruptcy court denied Trinity’s request, but opened the door at oral argument that an additional subsection, Rule 60(b)(4), which allows for relief from a judgment that is void, might apply. After briefing and extended discovery on the applicability of Rule 60(b)(4), the bankruptcy court denied Trinity relief. Furthermore, the bankruptcy court sanctioned Trinity for its “incredibly sloppy” or “bad faith” behavior during the discovery process in the amount of $13,265 in attorneys’ fees under Rule 37(b).

Trinity appealed the “excusable neglect’ ruling under Rule 60(b)(1) to the District Court, which if successful, would have also reversed the sanctions award. The District Court affirmed.


When analyzing whether excusable neglect applied under Rule 60(b)(1), the District Court held that the bankruptcy court did not err it its application of – or its failure to apply — the four factors identified in Pioneer Investment Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380 (1993). 

Rule 60(b)(1) provides in pertinent part that: “On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect…”

The Supreme Court specified what behavior qualifies as “excusable neglect” by enumerating four factors to be assessed by a court equitably:

  1. The danger of prejudice to the movant;
  2. The length of the delay and its impact on judicial proceedings;
  3. Whether the movant acted in good faith; and
  4. The reason for the delay, including whether it was in the reasonable control of the movant.

Pioneer, 507 U.S. at 395.

The bankruptcy court did not apply the Pioneer factors when denying Trinity relief. Seizing upon this, Trinity argued that had the Pioneer factors been explicitly applied to its facts, the judgment avoiding its lien could be reversed, given that it learned of the avoidance ruling just weeks after it was made. 

The District Court disagreed, emphasizing the reason Trinity gave for its failure to respond: it never received notice. That is, Trinity never alleged that its failure to respond to the motion to value was the result of its own excusable neglect. Rather, Trinity placed blame elsewhere without discussing its own neglect or explaining, with evidence, why it had not received the mailed notices. Simply, Trinity’s general disclaimer of responsibility was insufficient to carry the day.

The District Court noted that while Rule 60 does not require a movant to allege its own neglect to obtain relief, the Supreme Court did provide that the four factors were to apply for “determining whether a party’s neglect … [was] excusable.” Pioneer, 507 U.S. at 395. As Trinity did not allege the neglect of any party, and certainly not its own, the Pioneer factors did not come into play.

Further, the District Court remarked that Pioneer requires a broader “equitable inquiry” of “all relevant circumstances.”  Id. at 396. In looking at the record, there was evidence that Trinity’s approach was “characterized by cageyness, lack of candor, and contradiction” and was “[a]t best … incredibly sloppy” and “[a]t worst … bad faith.”  Meanwhile, the District Court commended the bankruptcy court for going out of its way to protect Trinity’s interests. 

Weighing all the equities, the District Court found no reason to reverse the bankruptcy court’s findings on Rule 60(b)(1). It further found that sanctions were not dependent on the Rule 60(b)(1) ruling but were a result of Trinity’s “completely unwarranted” behavior that “prejudiced and harmed” the Debtor. As a result, the sanctions order was also affirmed. 


It is commonly known that everybody makes mistakes. It goes along with human nature, and if one practices long enough, chances are there will be a misstep or two. Thankfully, the Federal Rules of Civil Procedure anticipate this with Rule 60, which can provide relief for mistakes, including excusable neglect.

In the case at hand, the creditor missed a key deadline. Like anyone in this situation, it then had a choice on how to respond: admit its error and seek relief for excusable neglect, or to go on the offensive and leave a wake of dizzying disaster.

Unfortunately, Trinity too cleverly chose the latter while seeking relief for the former. It engaged in cageyness, dragged its feet in discovery to the point of getting sanctioned, and potentially engaged in bad faith behavior, at the same time asking for a do-over due to excusable neglect without admitting to any mistake or neglect.

However, when seeking relief for excusable neglect under Rule 60(b)(1), it is helpful to actually allege neglect. Only then can a court apply the Pioneer factors and assess the reason given, and, ultimately decide whether it is excusable. Trinity, for whatever reason, chose to skip the part of alleging its neglect, but then asked for a ruling based on an equitable inquiry.

An equitable inquiry is exactly what Trinity obtained. Both the bankruptcy court and the district court examined all the facts, the unclean hands of the creditor, combined with the extraordinary steps the bankruptcy court took to protect the creditor. A ruling based upon an equitable inquiry was ultimately entered against the creditor, the district court affirmed it, and it appears both courts got it right based upon these facts.

The lesson in all this appears to be: falling on one’s sword and obtaining relief from a court requires something more than saying “mistakes were made” without specifying what those mistakes were, while taking the high road and avoiding sanctionable conduct.

These materials were written by Hale Andrew Antico, Chief Counsel of Antico Law Firm, representing consumer debtors in the Central District of California, and President of the Central District Consumer Bankruptcy Attorneys Association. 

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