PAUL R. GLASSMAN (State Bar No. 76536) FRED NEUFELD...

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STRADLING YOCCA

CARLSON & RAUTH LAWYER S

SAN TA MO N IC A

PAUL R. GLASSMAN (State Bar No. 76536) FRED NEUFELD (State Bar No. 150759) STRADLING YOCCA CARLSON & RAUTH, P.C. 100 Wilshire Blvd., 4th Floor Santa Monica, CA 90401 Telephone: (424) 214-7000 Facsimile: (424) 214-7010 E-mail: [email protected]

[email protected]

GARY D. SAENZ (State Bar No. 79539) CITY ATTORNEY 290 North “D” STREET, Third Floor San Bernardino, CA 92401 Telephone: (909) 384-5355 Facsimile: (909) 384-5238 E-mail: [email protected]

Attorneys for City of San Bernardino, California

UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA

RIVERSIDE DIVISION

In re

CITY OF SAN BERNARDINO, CALIFORNIA,

Debtor.

Case No. 6:12-bk-28006-SC

Chapter 9

CITY OF SAN BERNARDINO’S APPENDIX OF CASE DECISIONS NOT PUBLISHED IN OFFICIAL REPORTERS [City’s Opposition to Claimant’s Motion, Request for Judicial Notice and Evidentiary Objections, Filed Concurrently Herewith]

Hearing: Date: January 22, 2019 Time: 1:30 p.m. Place: Courtroom 5C Reagan Federal Bldg. and Courthouse 411 W. 4th St., Santa Ana, CA 92701 Judge: Honorable Scott C. Clarkson

Case 6:12-bk-28006-SC Doc 2752 Filed 01/08/19 Entered 01/08/19 23:33:35 Desc Main Document Page 1 of 118

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SAN TA MO N IC A

-1- APPENDIX

TO THE HONORABLE SCOTT C. CLARKSON, UNITED STATES BANKRUPTCY

JUDGE, PARTIES IN INTEREST AND THEIR COUNSEL:

The City of San Bernardino hereby submits this appendix of cases not published in the

official reporters in support of its Opposition to Claimant Kathryn Frederick’s Motion For

Reconsideration Of Order Disallowing Claim filed concurrently herewith. The decisions are

attached hereto in the following order:

1. Cadlerock, LLC v. Becas, 2008 U.S. Dist. LEXIS 54751 (E.D. Ca. July 9, 2008).

2. Chatman v. Tyner, 2010 U.S. Dist. Lexis 84635 (E.D. Cal. July 21, 2010)

3. Christiansen v. Weber (In re Christiansen), 2007 Bankr. LEXIS 4823 (BAP 9th

Cir. Nov. 5, 2007).

4. Cobb v. City of Stockton (In re City of Stockton), 2018 U.S. App. LEXIS 34636

(9th Cir. Dec. 10, 2018).

5. Jabali v. Mau, 2009 U.S. Dist. LEXIS 48293 (D. Haw. June 9, 2009).

6. Landis v. Mario M.S.. Feusier (In re Mario M.S.B. Feusier), 2013 Bankr. Lexis

5191 (Bankr. N.D. Cal. December 10, 2013).

7. Legaspi v. Cal. Licensed Vocational Nurses Ass’n, 2008 U.S. Dist. LEXIS 79893

(E.D. Cal. Sep. 3, 2008).

8. Medina v. Wells Fargo Bank, N.A., 2016 U.S. Dist. LEXIS 66856 (C.D. Cal. May

20, 2016).

9. Renter v. City of San Bernardino (In re City of San Bernardino), 2018 U.S. Dist.

LEXIS 2494 (C.D. Cal. January 4, 2018).

10. Sekerke v. Gonzalez, 2018 U.S. Dist. Lexis 3223 (S.D. Cal. January 8, 2018).

11. Spacey v. Burgar, 2002 U.S. Dist. LEXIS 28793 (C.D. Cal. May 16, 2002).


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STRADLING YOCCA


SAN TA MO N IC A

-2- APPENDIX

12. Warkentin v. Federated Life Ins. Co., 2015 U.S. Dist. LEXIS 50366 (E.D. Cal.

Apr. 15, 2015).

Dated: January 8, 2019 STRADLING YOCCA CARLSON & RAUTH, P.C.

By: /s/ Paul R. Glassman Paul R. Glassman Fred Neufeld

Attorneys for the City of San Bernardino, California


EXHIBIT 1


Cadlerock, LLC v. Becas

United States District Court for the Eastern District of California

July 8, 2008, Decided; July 9, 2008, Filed

1:07-CV-01013-OWW

Reporter2008 U.S. Dist. LEXIS 54751 *; 2008 WL 2705021

CADLEROCK, LLC, Plaintiff/Appellant, v. JENNIE MARIE BECAS, Defendant/Appellee.

Prior History: Cadlerock, LLC v. Becas (In re Becas), 2007 Bankr. LEXIS 1936 (Bankr. E.D. Cal., May 31, 2007)

Counsel: [*1] For Cadlerock LLC, Appellant: Lance Alan Brewer, LEAD ATTORNEY, Brewer & Brewer, Costa Mesa, CA.

For Jennie Marie Becas, Appellee: Frank P. Samples, LEAD ATTORNEY, Attorney At Law, Bakersfield, CA.

For U.S. Bankruptcy Trustee Fresno, Trustee: US Trustee - Fresno, LEAD ATTORNEY, Office of the U.S. Trustee, Fresno, CA.

Judges: Oliver W. Wanger, UNITED STATES DISTRICT JUDGE.

Opinion by: Oliver W. Wanger

Opinion

MEMORANDUM AND DECISION RE: DENYING PLAINTIFF/APPELLANT'S MOTION FOR APPEAL OF THE BANKRUPTCY ORDER DENYING LATE-FILED APPEAL

Plaintiff/Appellant Cadlerock, LLC ("Cadlerock") pursuant to 28 U.S.C. § 158(a)(1) appeals the Bankruptcy Court Order of August 31, 2007 ("Aug 31 Order"), which denied Plaintiff's motion to file a late appeal. The Aug 31 Order was entered by the Honorable Whitney Rimel of the United States Bankruptcy Court for the Eastern District of California, in Bankruptcy Case No. 06-11069-A-7, Adversary Proceeding No. 06-1303. See Doc. 1, Notice of Appeal, Filed September 13, 2007. "The district courts of the United States shall have jurisdiction to hear appeals (1) from final judgments, orders, and decrees." 1 28 U.S.C. § 158(a)(1).

Cadlerock also filed, in this Court, an appeal of the Bankruptcy Court Order entered on June 22, 2007 ("June 22 Order") in which judgment was entered in favor of Defendant/Appellee Jennie Marie Becas ("Becas") and against Plaintiff/Appellant Cadlerock, which addresses the merits of the Bankruptcy

1 The appeal of the Bankruptcy Order denying Plaintiff/Appellant leave [*2] to file a late appeal was previously Case No. 1:07-cv-01336-OWW. It was consolidated pursuant to Federal Rule of Civil Procedure 42(a), on June 8, 2008. See Court Order Consolidating Actions and Scheduling Oral Argument ("Order to Consolidate"), Doc. 23, filed in Case No. 1:07-cv-01336-OWW.


Page 2 of 7

proceeding. By order of June 9, 2008, the two appeals were consolidated under Fed. R. Civ. P. 42(a). Oral argument was set for the appeal of the Aug 31 Order, by which the Bankruptcy Court denied Cadlerock's motion for an extension of time to file a late-appeal of the June 22 Order. The appeal on the merits, reviewing the June 22 Order, cannot be heard until it is determined if the District Court has jurisdiction to hear the appeal of the June 22 Order. The Bankruptcy Court denied Plaintiff/Appellant's late-file appeal of the June 22 Order. See Doc. 24, Order to Consolidate.

1. Background

The appeal of the [*3] Aug 31 Order asserts the Bankruptcy Court abused its discretion in denying Plaintiff/Appellants' motion to late-file the appeal, finding no showing of excusable neglect by Plaintiff/Appellant. See In re Warrick, 278 B.R. 182, 184 (9th Cir. 2002). A notice of appeal generally must be filed within ten days. 2 Fed. R. Bankr. P. 8001-02. The ten-day period is jurisdictional and strictly construed. "Failure to file within the time limit divests the appellate court of jurisdiction." Preblich v. Battley, 181 F.3d 1048, 1056 (9th Cir. 1999), citing In re Souza, 795 F.2d 855, 857 (9th Cir. 1986).

The Bankruptcy adversary proceeding was initially filed by Cadlerock pursuant to 11 U.S.C. Section 523. The trial of the adversary proceeding concluded on May 16, 2007. At the conclusion of the trial, the Bankruptcy Court stated that it would decide the case on the June Calendar. Defendant/Appellee's counsel advised that he would be gone during the month of June, which prompted the court to state:

Alright. Well, I may do them in writing. [*4] If not, we'll put them on the record on the July Bakersfield calendar, which would be July 26th. And if you get them in writing, you'll know; and otherwise we'll advise you about the date they'll be put on the record. Thank you.

Doc. 17, Excerpts to Appellant's Opening Brief on Appeal of Denial of Motion: Index of Exhibits ("Excerpts"), Exh. B, 5/16 Bankr. Hr'g Tr., Bankruptcy Case No. 06-11069-A-7, Adversary Proceeding No. 06-1303 (emphasis added).

Two weeks later, on May 31, 2007, the Bankruptcy Court filed its written Findings of Fact and Conclusions of Law with the Clerk. Id., Exh. H, Bankruptcy Court Docket, No. 18. Counsel for Defendant/Appellee Becas was ordered to prepare a judgment, which was prepared. Defendant/Appellee Becas put Plaintiff Cadlerock's counsel on notice as of June 20, 2007 by filing the proposed judgment. The proposed judgment was received by the Bankruptcy Court, corrected, signed by Judge Rimel and filed by the Clerk on June 22, 2007. It was entered by the Clerk on June 25, 2007. Id., Exh. D, Judgment, and Exh. E, Notice of Entry to Order/Judgment In An Adversary Proceeding ("Notice of Entry of Judgment").

On June 28, 2007, three days after the Judgment was [*5] entered, Plaintiff Cadlerock's counsel filed an objection to the proposed judgment, bearing a date of service of June 26, 2007. See Id., Exh. H, Bankruptcy Docket, No. 21, Opposition.

Counsel for Cadlerock, James R. Knoles, claims in his declaration that he left on vacation from June 29 through July 4, and did not see the Notice of Entry of Judgment until July 6, 2007 when he returned. Doc. 17, Excerpts, Exh. C, Decl. Knoles, p. 2:2-4. A notice of appeal was required to be filed within 10 days, the deadline was July 5, 2007, after Plaintiff/Appellant's counsel returned from vacation. Fed. R. Bankr. P.

2 "The notice of appeal shall be filed with the clerk within 10 days of the date of the entry of the judgment, order, or decree appealed from." Fed. R. Bankr. P. 8002(a).

2008 U.S. Dist. LEXIS 54751, *2


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8002(a). Plaintiff's counsel provides no explanation why he filed objections to the proposed judgment on June 28, 2007, three days after the Judgment was entered by the Bankruptcy Clerk (June 25, 2007), he was served with that notice, and failed to check or review the docket to see the filed Judgment. Plaintiff served its objections to the proposed judgment on June 26, 2007, one day after the Judgment was entered by the Bankruptcy Clerk. Plaintiff's counsel provides no explanation for its oversight in not reviewing the filed and served Judgment of the Bankruptcy Court. Plaintiff's counsel [*6] does not explain the failure to check the docket or to review the filed and served Judgment before he left for vacation or upon his return from his vacation on July 5, 2007.

Plaintiff's counsel claims that upon return from vacation on July 5, 2007, "he had a great deal of back paperwork to go through, and he did not look for or expect to see that a Judgment had been entered long before the Court indicated it would so do … Mr. Knoles did not come across the notice that the Judgment had been entered until late the next day, Friday, June 6." Doc. 16, Appellant's Br., p. 5. Mr. Knoles was not able to contact his client until Monday, July 9, 2007, regarding whether to appeal the Judgment, and received consent on July 10, 2007. Mr. Knoles then filed his Notice of Appeal on July 11, 2007, six days late. Doc. 17, Excerpts, Exhibit C, Notice of Appeal. Plaintiff Cadlerock argues that just because it had notice of the proposed judgment (i.e. had been served a copy of the proposed judgment by counsel) and filed an objection, that it "had notice that the 'court was going to change its mind' about not deciding until the July docket."

The Bankruptcy Court did not mislead counsel, despite Plaintiff's [*7] counsel assertion that the Judgment was to be definitively entered on the July Calendar. The Bankruptcy Court explicitly stated, as to timing and delivery of the decision, that either a written decision would be entered before the July Calendar, or it would be announced orally on the July Calendar. Plaintiff's counsel had sufficient notice that the Judgment would either be entered by written order before the July Calendar, or at the July Calendar hearing.

After receiving notice from the Bankruptcy Court that the appeal was filed late, the appeal was forwarded to the District Court and a case file was opened on July 16, 2007, (Doc. 1, Notice of Appeal, Filed July 16, 2007), Plaintiff/Appellant then filed a motion for an extension of time to file a late-appeal on July 25, 2007. 3

Bankruptcy Rule 8002(c) provides that the "bankruptcy judge may extend the time for filing the notice of appeal by any party…" Fed. R. Bankr. P. 8002(c)(1)(emphasis [*8] added). The time to file a motion to extend the time for filing a notice of appeal is "no later than 20 days after the expiration of the time for filing a notice of appeal…" Fed. R. Bankr. P. 8002(c)(2). Plaintiff filed its Motion/Application to Extend Time to Appeal under Rule 8002(c) within the required twenty days. Such an extension to file a late-appeal under Fed. R. Bankr. P. 8002(c) may be granted on a showing of "excusable neglect." Id. The matter was set for hearing on August 29, 2007. At the hearing, the Bankruptcy Court denied Plaintiff/Appellant's motion, finding no excusable neglect, and no basis to extend the time for appeal. A minute order was entered to that effect on August 31, 2007.

2. Standard of Review

3 That the Clerk of the Court accepted Plaintiff Cadlerock's appeal filings is irrelevant. The Clerk of the Court is not charged with the task of determining whether a particular filing is proper or whether a particular court has jurisdiction over a case or appeal.

2008 U.S. Dist. LEXIS 54751, *5


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On appeal, the question is whether the Bankruptcy Court abused its discretion in denying Plaintiff/Appellant's motion for an extension of time to file a late-appeal. Matter of Estate of Butler's Tire & Battery Co., Inc., 592 F.2d 1028, 1032-33 (9th Cir. 1979). This, then depends on whether the Bankruptcy Court was justified in finding that Plaintiff/Appellant failed to show "excusable neglect" in connection with its failure to file its notice of appeal within the normal [*9] 10-day period. Fed. R. Bankr. P. 8002(c); In re Donnell, 639 F.2d 535, 539 (9th Cir. 1981).

The Supreme Court in Pioneer Inv. Services Co. v. Brunswick Associates, 507 U.S. 380, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993), analyzed excusable neglect, expressly adopted in the Ninth Circuit. See In re Warrick, 278 B.R. 182, 185 (9th Cir. 2002). Whether admitted neglect can be excused is an equitable determination that incorporates all relevant factors, including (1) danger of prejudice to the non-movant; (2) length of delay and its potential impact on judicial proceedings; (3) the reason for the delay, including whether it was within the reasonable control of the movant, and (4) whether the movant acted in good faith. Pioneer, 507 U.S. at 395. The factors identified in Pioneer are non-exclusive, and "the court is permitted to take 'account of all relevant circumstances surrounding the party's omission' in making an equitable determination." In re Rebel Rents, Inc., 326 B.R. 791, 803 (C.D. Cal. 2005) (citation omitted). 4

3. Analysis

The Bankruptcy Court's decision, issued on the record at the August 29, 2007 hearing, was followed by a short minute order denying the motion, filed on August 31, 2007, after the court conducted an analysis of the four factors in deciding whether excusable neglect was present. 5 The Bankruptcy Court determined that the second and fourth points, are not applicable here because the length of delay was minimal and there was no indication that Plaintiff was not proceeding in good faith. The first and third factors weighed in favor of the Bankruptcy Court's decision.

a. Danger of Prejudice to the Debtor

The Bankruptcy Court evaluated the prejudice to the nonmoving party, Defendant/Appellee Becas. Becas had litigated a nondischargeability action in which the court found [*11] in her favor. The Bankruptcy case was filed in 2006, two years earlier. Further delay of dischargeability of this debt would be prejudicial. The court found that because of the above, "there is prejudice to the nonmoving party in extending the time to appeal." 8/29 Bankr. Hr'g Tr. 6:17-18. Today, the delay would be extended to more than two years if the Bankruptcy Court's decision is not affirmed.

The Ninth Circuit recognizes that strict enforcement of the 10-day appeal period under Rule 8002(a) "is justified by the 'peculiar demands of a bankruptcy proceeding,' primarily the need for expedient administration of the [b]ankruptcy estate aided by certain finality of orders issued by the [c]ourt in the course of administration." In re Nucorp Energy, Inc., 812 F.2d 582, 584 (9th Cir. 1987), quoting Matter of Thomas, 67 B.R. 61, 62 (Bankr.M.D.Fla. 1986). The abbreviated time constraints for filing a notice of appeal in bankruptcy which are jurisdictional in nature serve to "[assure] prompt appellate review, often important to the administration of a case under the Code." Advisory Committee Note (1983). The timing

4 See also Pincay v. Andrews, 389 F.3d 853, 860 (9th Cir. 2004)(In an appeal case on motion brought under Fed. R. Civ. P. 4(a) stated that "we leave the weighing of Pioneer's equitable factors to the discretion [*10] of the … court in every case".)

5 "Courts have set forth the standards for a finding of excusable neglect in four parts. First, is there a danger of prejudice to the nonmoving party; second, what's the length of delay and the impact on the parties; third, what's the reason for delay, was it in the reasonable control of the moving party; and fourth, was the moving party in good faith." 8/29 Bankr. Hr'g Tr. 5:25-6:1-6.

2008 U.S. Dist. LEXIS 54751, *8


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also provides a definite point, in the absence of a notice of appeal, that [*12] litigation will come to an end. Here, while the delay in filing the appeal was less than a week, the Bankruptcy Court found that the impact of permitting such an appeal of an adversary proceeding that began in 2006, would run contrary to the policy to provide a definite ending point for the debtor in the bankruptcy proceeding. The court noted in conclusion:

the fact that bankruptcy courts are, perhaps, unique in having such a quick and fast time to appeal, ten days, that's not a very long time … the reason for that there is the prejudice of delay, and in this instance, I don't believe the moving party has met his burden of proof to overcome that.

8/29 Bankr. Hr'g Tr. 7:8-14.

b. Length of the Delay and Its Potential Impact on Judicial Proceedings

The delay was six days, which the Bankruptcy Court acknowledged was minimal. But the Bankruptcy Court viewed the policy of providing finality of the discharge decision to weigh more in favor of denying the late-filed appeal.

c. Reason for the Delay, Including Whether It Was Within The Reasonable Control of the Movant

The Bankruptcy Court addressed the third factor and found that this factor was largely determinative of denying the motion to late-file [*13] an appeal. This factor concerns the reason for delay and whether it was within the reasonable control of the moving party. The Bankruptcy Court noted that Cadlerock had notice of the proposed judgment, filed an objection to the proposed judgment, and its attorney had reasonable notice that the Judgment was going to be entered quickly. The Bankruptcy Court did not find Mr. Knoles' vacation excuse persuasive because he was on notice when he received the proposed judgment.

It is undisputed that the sole reason for the delay was the negligence and inattention of Plaintiff Cadlerock's counsel. The delay was squarely within his control. Cadlerock's counsel did not miss the appeal deadline due to ill health or disability, a delay in the mail, a miscommunication or failure to communicate with his client, a misguided instruction from a court clerk or judicial officer, or a "dramatic ambiguity" between relevant procedural rules. Cadlerock's counsel, an attorney with many years of experience, failed to pay attention to the plain, unambiguous language of the Bankruptcy Court's ruling and Rule 8002(a).

d. Whether the Movant Acted in Good Faith

There is no evidence that Mr. Knoles acted with bad faith [*14] in filing his motion. The Bankruptcy Court found the motion was brought in good faith.

But shortness in delay for filing a bankruptcy appeal and the existence of good faith do not trump the prejudice of undue delay of the administration of the bankruptcy proceeding, nor the attorney's unjustified failure to understand the Bankruptcy Court's announcement of the timing of the decision, nor the attorney's obligation to check the docket for the filed decision. While two factors narrowly favor Plaintiff/Appellant Cadlerock (shortness in delay and good faith of Cadlerock), the Bankruptcy Court balanced the totality of the Pioneer factors in favor of Defendant/Appellee Becas and found that Cadlerock did not discharge its burden to establish that its failure to timely file a notice of appeal was the result of excusable neglect.

2008 U.S. Dist. LEXIS 54751, *10


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Before reversal is proper under the abuse of discretion standard, the Court must be definitely and firmly convinced that the bankruptcy court committed a clear error of judgment, AT & T Universal Card Servs. v. Black (In re Black), 222 B.R. 896, 899 (9th Cir. BAP 1998), or relied on an incorrect legal standard. Miller v. Los Angeles County Bd. of Educ., 827 F.2d 617, 619 (9th Cir. 1987); [*15] see also In re Warrick, 278 B.R. 182, 184 (9th Cir. BAP 2002)("A bankruptcy court necessarily abuses its discretion if it bases its decision on an erroneous view of the law or clearly erroneous factual findings.") Neither of these grounds is present here. Notwithstanding Cadlerock counsel's claim that he relied on the Bankruptcy Judge's comments, Mr. Knoles concedes that he filed an objection with a service date of June 26, 2007, which was filed on June 28, 2007. Mr. Knoles provides no explanation why he failed to check the docket on either of these dates nor why he did not check the docket or his mail for the Judgment on July 5, 2008, when he returned from his vacation. If he had done so, he would have seen the filed Judgment.

The Bankruptcy Court found that "plaintiff certainly had notice that there was a form of judgment that had been submitted to the Court that either had been entered or was about to be entered." 8/29 Bankr. Hr'g Tr. 5:4-7. The Judgment was filed on June 22, 2007 and entered on June 26, 2007, it is counsel's responsibility based on the Bankruptcy Judge's statements to be diligent about checking the docket, especially considering the proposed judgment was sent by [*16] Becas' counsel on June 20, 2007 and the Bankruptcy Court indicated that it would issue its decision either in writing before the July Calendar or on the July Calendar date. Mr. Knoles' failure to timely file the notice of appeal was due solely to his failure to follow unambiguous rules, check the docket after the proposed judgment was sent, and his unjustified mistake in not recognizing the Bankruptcy Court's stated intentions of filing either a written decision earlier or entering a judgment on the July Calendar. No explanation is offered how this is excusable and the Bankruptcy Court did not abuse its discretion in denying his motion to extend the time for appeal. Cadlerock's counsel has not presented a legally sufficient justification for his misunderstanding of the Bankruptcy Court's statements on the timing of entering the judgment, nor his failure to check the docket or review his mail in a timely manner upon his return from vacation. Counsel's absence due to vacation is not a legally sufficient justification considering the other Pioneer factors.

CONCLUSION

For the reasons stated above, the Bankruptcy Court's denial of Plaintiff/Appellant's motion to appeal the Aug 31 Order of [*17] the Bankruptcy Court denying late-filed appeal is AFFIRMED. The Court lacks jurisdiction to hear the appeal on the June 22 Order. See In re Joseph C. Souza, 795 F.2d 855, 858 (9th Cir. 1986) (stating that district court does not have jurisdiction over a bankruptcy appeal where the notice of appeal was not timely filed under Federal Rule of Bankruptcy Procedure 8002). The hearing on the appeal of the Bankruptcy Court's June 22 Order, currently set for August 4, 2008 at 10:00 a.m. is vacated. The case is concluded. Counsel for Defendant/Appellee Becas shall prepare and lodge a form of order and judgment consistent with this Memorandum Decision within 5 days following the date of service of this Memorandum Decision.

IT IS SO ORDERED.

Dated: July 8, 2008

/s/ Oliver W. Wanger

2008 U.S. Dist. LEXIS 54751, *14


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UNITED STATES DISTRICT JUDGE

End of Document

2008 U.S. Dist. LEXIS 54751, *17


EXHIBIT 2


Chatman v. Tyner


July 21, 2010, Decided; July 21, 2010, Filed

CASE NO. 1:03-cv-06636-AWI-SMS PC


CHARLES CHATMAN, Plaintiff, v. SERGEANT C. TYNER, et al., Defendants.

Prior History: Chatman v. Tyner, 2010 U.S. Dist. LEXIS 6686 (E.D. Cal., Jan. 8, 2010)

Counsel: [*1] Charles James Chatman, Plaintiff, Pro se, Susanville, CA.

For C Tyner, Sgt., Lt. C Fortson, Defendants: Megan R. O'Carroll, LEAD ATTORNEY, Attorney General's Office of the State of California, Sacramento, CA.

For P Vasquez, D. Winett, J Lundy, Lt. T Traynham, Sgt. J Mack, Sgt. Wells, Jimenez, C/O - Bowman, Cpt. R Johnson, Defendants: Megan R. O'Carroll, LEAD ATTORNEY, Attorney General's Office of the State of California, Sacramento, CA; Misha D Igra, California Department of Justice, Sacramento, CA.

For C/O Duran, Defendant: Dayton Van Vranken Longyear, LEAD ATTORNEY, Longyear O'Dea and Lavra, LLP, Sacramento, CA; Jennifer Marquez, LEAD ATTORNEY, Longyear O'Dea and Lavra, Sacramento, CA.

Judges: Oliver W. Wanger, UNITED STATES DISTRICT JUDGE.

Opinion by: Oliver W. Wanger

Opinion

ORDER DENYING PLAINTIFF'S REQUEST FOR SETTLEMENT CONSENT TO BE DEEMED VOID

(Doc. 200)

I.Relevant Procedural History

This is a civil rights action filed pursuant to 42 U.S.C. § 1983 by Plaintiff Charles Chatman, a state prisoner proceeding pro se and in forma pauperis. This action was set for jury trial to commence May 18, 2010. However, Defendants submitted a notice of disposition based on Plaintiff's acceptance of an offer pursuant to Federal Rule of Civil Procedure 681 [*2] — which resulted in entry of judgment and case closure. (Docs. 194 and 199.) At proceedings held May 13, 2010, Plaintiff expressed his desire to be relieved from the settlement such that a briefing schedule was set for motions for enforcement of acceptance of the Rule 68 offer. (Doc. 195.) Rather than Defendants filing motions to enforce Plaintiff's

1 All references herein to rules are to the Federal Rules of Civil Procedure unless otherwise specified.


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acceptance of the offer, Plaintiff filed the present request that his settlement consent be deemed void. (Doc. 200.) Defendants filed oppositions. (Docs. 201 and 202.) Plaintiff did not file a reply.

Though Plaintiff did not correctly identify his motion, it is construed as, a motion for relief from a judgment or order under Rule 60(b). The matter is deemed submitted. For the reasons discussed below, Plaintiff's request is denied.

II.Plaintiff's Motion

Plaintiff requests that his consent to settlement be voided based on his uncertainty in as much as he was not aware when the payment of settlement monies would be made, where the settlement monies would be deposited, and what, if any, tax ramifications he would encounter (i.e. mistake, inadvertence, [*3] surprise or excusable neglect under Rule 60(b)(1)); that Defendants' counsel were secretive in the process as to how it was presented, in answering his questions, and in discussing Plaintiff's desire to be relieved from the settlement in the May 13, 2010 court proceeding (i.e. fraud and/or misrepresentations under Rule 60(b)(3)); and that he signed the acceptance under duress. (Doc. 200, Plntf. Mot.)

A.Rule 60(b)(1)

Pursuant to Rule 60(b)(1), "[o]n motion and upon such terms as are just, the court may relieve a party . . . from a final judgment, order, or proceeding for . . . mistake, inadvertence, surprise, or excusable neglect . . . ." Misunderstanding an offer's terms is not the same as misunderstanding factors to be weighed in deciding whether to accept the offer. Latshaw v. Trainer Wortham & Co., Inc., 452 F.3d 1097, 1102 (9th Cir. 2006) (the plaintiff understood the unambiguous settlement terms — that she would receive $15,000 in exchange for terminating the litigation — when signing the offer of judgment such that the district court did not abuse its discretion in denying the plaintiff relief under Rule 60(b)(1)).

Plaintiff has shown that when he signed the offer of judgment, he [*4] understood the unambiguous settlement terms — that he would receive $10,000 in exchange for an entry of judgment of dismissal with prejudice in this matter.2 The timing of payment, where settlement monies would be deposited, and possible tax consequences thereof were not part of the settlement terms. Ramifications caused by and/or factors to be weighed in deciding to accept the offer (i.e. when he would receive the settlement monies payment, that the monies would be deposited into his trust account, and whether he would be taxed on the monies) do not equate to a misunderstanding of the terms of settlement offered by Defendants. Plaintiff's subsequent concerns as to the timing of, place of deposit, and possible tax consequences of payment of the settlement monies are collateral matters, insufficient to void his consent to the settlement offer. An offer under Rule 68, "once made, is non-negotiable; it is either accepted, in which case it is automatically entered by the clerk of court, or rejected, in which case it stands as the marker by which the plaintiff's results are ultimately measured." Nusom v. Comh Woodburn, Inc., 122 F.3d 830, 834 (9th Cir. 1997). "[A] party who simply misunderstands [*5] or fails to predict the legal consequences of his deliberate acts

2 None of the parties have requested an evidentiary hearing on this matter. Erdman v. Cochise County, 926 F.2d 877, 879 n. 2 (9th Cir. 1991) (evidentiary hearing neither held nor requested by either side). The terms of the Rule 68 offer, $10,000.00 in exchange for judgment of dismissal with prejudice are articulated in writing, Doc. 194, Def. Offer of Judg. & Plntf Accept., p. 3-5, and are not in dispute so as to necessitate an evidentiary hearing as was required in Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987), noted in Erdman.

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cannot later, once the lesson is learned, turn back the clock to undo those mistakes." Latshaw, 452 F.3d at 1101, quoting Yapp v. Excel Corp., 186 F.3d 1222, 1231 (10th Cir. 1999). Plaintiff's retrospective contemplations of possible settlement ramifications do not equate to his mistake, inadvertence, surprise, or excusable neglect to entitle him to have the settlement voided under Rule 60(b)(1).

B.Rule 60(b)(3)

Plaintiff also seeks to be relieved from his acceptance of Defendants' Rule 68 offer on the basis that Defense counsel did not tell the Court of his requirement that he be paid [*6] within forty-eight (48) hours or he would void the settlement. (Doc. 200, Plntf. Mot., 3:10-15, 20-22.)

Pursuant to Rule 60(b)(3), "[o]n motion and upon such terms as are just, the court may relieve a party . . . from a final judgment, order, or proceeding for . . . fraud . . . , misrepresentation, or misconduct by an opposing party. . . ." "Acts of 'fraud on the court' can sometimes constitute extraordinary circumstances meriting relief under Rule 60(b)(6)." Latshaw, 452 F.3d at 1104, ref. In re Intermagnetics America, Inc., 926 F.2d 912, 916-17 (9th Cir.1991). "Such fraud on the court 'embrace[s] only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication.'" Id. quoting Alexander v. Robertson, 882 F.2d 421, 424 (9th Cir.1989) quoting J. Moore & J. Lucas, Moore's Federal Practice ¶ 60.33, at 515 (2d ed.1978)). "Liberal application is not encouraged, as fraud on the court 'should be read narrowly, in the interest of preserving the finality of judgments.'" Id. quoting Toscano v. Comm'r, 441 F.2d 930, 934 (9th Cir.1971). [*7] The Ninth Circuit "places a high burden on a plaintiff seeking relief from a judgment based on fraud on the court. For example, in order to provide grounds for relief, the fraud must 'involve an "unconscionable plan or scheme which is designed to improperly influence the court in its decision."'" Id. quoting Abatti v. Comm'r, 859 F.2d 115, 118 (9th Cir.1988) quoting Toscano, 441 F.2d at 934. Even a forged signature on a settlement agreement that is submitted to the court was found to fall far short of "defiling the court itself" and did not resemble "an unconscionable plan or scheme which is designed to improperly influence the court in its decision." Id.

Plaintiff's allegation that Defendants did not advise the Court of his forty-eight (48) hour payment requirement — that was not one of the terms of the Rule 68 offer and acceptance, does not even begin to approach "defiling the court itself" and is not "an unconscionable plan or scheme which is designed to improperly influence the court in its decision." Id. Accordingly, Plaintiff is not entitled to have the settlement voided under Rule 60(b)(1).

C.Rule 60(b)(6)

Rule 60(b)(6) allows a court to "relieve a party . . . from a final judgment, [*8] order, or proceeding for . . . any other reason justifying relief from the operation of judgment."

"Judgments are not often set aside under Rule 60(b)(6). Rather, the Rule is "'"used sparingly as an equitable remedy to prevent manifest injustice" and "is to be utilized only where extraordinary circumstances prevented a party from taking timely action to prevent or correct an erroneous judgment."'" Latshaw, 452 F.3d at 1103 quoting United States v. Washington, 394 F.3d 1152, 1157 (9th Cir.2005) (quoting United States v. Alpine Land & Reservoir Co., 984 F.2d 1047, 1049 (9th Cir.1993)).

2010 U.S. Dist. LEXIS 84635, *5


Page 4 of 4

"Accordingly, a party who moves for such relief 'must demonstrate both injury and circumstances beyond his control that prevented him from proceeding with . . . the action in a proper fashion.'" Id, quoting Community Dental Services v. Tani, 282 F.3d 1164, 1168 (9th Cir.2002).

Plaintiff's willing and voluntary signing of acceptance of a Rule 68 offer, which he later regrets and/or seeks to add additional terms to, does not present extraordinary circumstances so as to justify relieving him from a settlement under Rule 68.

D.Duress

Plaintiff also appears to seek relief from his acceptance of the Rule 68 by asserting [*9] that his agreement was secured under duress. (Doc. 200, Plntf. Mot., 3:9.) While Plaintiff uses the word "duress" in his motion, id., he fails to identify any factual basis upon which this assertion is based. Plaintiff's only argument on this point is that "defendants' were secretive in presenting it by failing to answer [his] questions surrounding the process and [his] voice in the matter." Id. Defendants evidence shows that not only did they properly serve Plaintiff with a Offer of Judgment under Rule 68, their offer was accompanied by a letter of explanation which advised Plaintiff of the results in cases similar to his, of the potential negative effects of if he did not accept the offer, and of the time frame within which Plaintiff must accept if he so desired. (Doc. 201, Def. Opp., Attach. A., pp. 10-11.) It is common knowledge in the practice of law that receipt of an offer under Rule 68, and the possible ramifications of nonacceptance, gives even seasoned lawyers some pause. However, requiring a party to assess his chance of success at trial and whether he wants to risk the negative effects of failing to obtain a better result than that made in an offer under Rule 68 is not [*10] duress, but "is the sword which encourages plaintiffs to settle." Hopper v. Euclid Manor Nursing Home, Inc., 867 F.2d 291, 295 (6th Cir. 1989). Indeed, the purpose of Rule 68 is to force plaintiffs to "think very hard before proceeding with their suits." Id. Plaintiff has not shown that he was placed under duress at the time he signed the acceptance of Defendants Rule 68 offer.

III.Conclusion

Plaintiff failed to show: (1) that he was laboring under a mistake, inadvertence, surprise, or excusable neglect at the time he signed the offer of judgment; (2) that Defendants engaged in fraud, made misrepresentations, or engaged in misconduct; (3) that there is any legal basis to justify relieving him from the Rule 68 settlement; and/or (4) that he was under duress at the time he executed the acceptance of Defendants Rule 68 offer For these reasons, Plaintiff's Request for Settlement Consent to Be Deemed Void, filed May 28, 2010, is DENIED WITH PREJUDICE.

IT IS SO ORDERED.

Dated: July 21, 2010

/s/ Oliver W. Wanger


End of Document

2010 U.S. Dist. LEXIS 84635, *8


EXHIBIT 3


Christiansen v. Weber (In re Christiansen)

United States Bankruptcy Appellate Panel for the Ninth Circuit

October 26, 2007, Argued and Submitted at Sacramento, California; November 5, 2007, Filed

BAP Nos. EC-07-1120-MoJuNa, EC-07-1121-MoJuNa

Reporter2007 Bankr. LEXIS 4823 *

In re: KAREN CHRISTIANSEN, Debtor. KAREN CHRISTIANSEN, Appellant, v. VERN WEBER, Appellee. KAREN CHRISTIANSEN, Appellant, v. GORDON HUMPHREY and JOHN RIEKE, Appellees.

Notice: THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION. ALTHOUGH IT MAY BE CITED FOR WHATEVER PERSUASIVE VALUE IT MAY HAVE (SEE FED. R. APP. P. 32.1), IT HAS NO PRECEDENTIAL VALUE. SEE 9TH CIR. BAP RULE 8013-1.

Prior History: [*1] Appeal from the United States Bankruptcy Court for the Eastern District of California. Bk. No. 05-20050, Adv. Nos. 05-02152, 05-02187. Honorable Thomas C. Holman, Bankruptcy Judge, Presiding.

Judges: Before: MONTALI, JURY and NAUGLE,2 Bankruptcy Judges.

Opinion

MEMORANDUM

After the time for filing notices of appeal had expired, the debtor filed motions for extension of time to appeal orders in two separate adversary proceedings. The bankruptcy court held that the debtor had not demonstrated "excusable neglect," and denied the motions. We AFFIRM.

I. FACTS

Appellant Karen Christiansen ("Debtor") filed a chapter 133 petition on January 3, 2005; the case was converted to chapter 7 in March 2005. Debtor's counsel in her bankruptcy case was Eric J. Schwab ("Schwab"); the fee agreement between Debtor and Schwab provided that Schwab was not obligated to represent her in any adversary proceedings.

2 Hon. David N. Naugle, United States Bankruptcy Judge for the Central District of California, sitting by designation.

3 Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1330, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9036, as enacted and [*2] promulgated prior to the effective date of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, Apr. 20, 2005, 119 Stat. 23.


Page 2 of 7

On April 19, 2005, Vern Weber ("Weber") filed a complaint for denial of Debtor's discharge (the "Weber Adversary"). Weber served the complaint and summons on Debtor and on Schwab. Debtor filed a pro se answer on May 19, 2005.

Debtor did not attend the Weber Adversary status conference scheduled for June 2, 2005; the court entered a default and struck Debtor's answer. Schwab was present in court for another matter and informed the court at the status conference that he had not been retained to represent Debtor in the Weber Adversary Proceeding. On June 14, Weber filed an application for judgment by default which he served on Debtor. On June 20, 2005, the court entered a default judgment denying Debtor's discharge.

On May 16, 2005, appellee Gordon Humphrey ("Humphrey") and co-plaintiff John Rieke ("Rieke") filed a section 523 nondischargeability complaint (the "Humphrey Adversary") against Debtor. The complaint and summons were served by first class mail on May 19 on Debtor and Schwab. Debtor filed no answer, so Humphrey and Rieke filed [*3] a request for entry of default on June 21 and served it on Debtor and Schwab. The court entered a default in the Humphrey Adversary on July 7, 2005.

Debtor did not appear at a status conference set in the Humphrey Adversary for July 22, 2005; because of the pending default, the court continued the hearing until September 8. Around July 25, 2005, Humphrey's counsel served a notice of the continued status conference on Debtor and Schwab. Appellant's Opening Brief at 10.

On August 8, 2005, Humphrey and Rieke filed an application for a default judgment, which they served (with supporting documentation) on Debtor and Schwab. The court entered a default judgment in the Humphrey Adversary on August 15, 2007.4

On December 9, 2005, Debtor retained William K. Brewer ("Brewer") to represent her in vacating the default judgments. Six months later, and 364 days after entry of the judgment in the Weber Adversary, Debtor filed [*4] a joint petition to set aside the defaults (the "joint petition") in the Weber Adversary and the Humphrey Adversary. Debtor did not disclose in the joint petition that she had retained Brewer in December 2005; rather, she emphasized that she had difficulty retaining counsel after Schwab had "abandoned" her with respect to the adversary proceedings.5

Debtor's counsel did not attempt to set a hearing on the joint petition when it was filed. Instead, almost two months later (on August 16), Debtor filed a notice in the Weber Adversary setting a hearing for September 12, 2006. Debtor's counsel learned on September [*5] 11 "that the matter was inadvertently omitted" from the September 12 calendar, and reset the hearing for October 24, 2006. At the October 24 hearing, the court requested further briefing and the filing of Debtor's employment agreement with Schwab and continued the hearing to December 12, 2006.

4 In her petition to set aside defaults, Debtor stated that "I cannot recall when I actually learned of the default and default judgments, however, it was round the time my mother died." In her Opening Brief (at page 10), Debtor states that her mother died on September 22, 2005.

5 In support of her allegation of "abandonment" by Schwab in representing her in the adversary proceedings, Debtor stated in her joint petition that "Schwab did nothing to answer the complaint, although he was [Debtor's] attorney of record and had contracted in his retainer agreement to represent [Debtor] in the bankruptcy proceedings which included adversary proceedings." After Appellees challenged this assertion and requested a copy of the retainer agreement, Debtor's counsel conceded at a hearing in October that Schwab was not obligated to represent Debtor in any adversary proceeding.

2007 Bankr. LEXIS 4823, *2


Page 3 of 7

At the December 12 hearing, the court announced that it would issue a disposition after oral argument. Two days later, the court entered Civil Minutes in each adversary proceeding indicating that the joint petition would be denied and that a minute order would be entered. On December 19, 2006, the court entered a separate order in each adversary proceeding denying the joint petition; however, each order was designated on the docket of the respective adversary proceedings as an order denying a motion for reconsideration.

On December 21, 2006, Laura Blevins ("Blevins"), a legal secretary/paralegal employed by Brewer, attempted to log in to the court's electronic docket to ascertain the status of any order on the joint petition. The system "indicated something to the effect that there was a high volume of inquiries and to try again later." Blevins did not attempt to check the docket again until December [*6] 27, 2006.6 At that time, she was able to open a docket entry for one of the orders denying a motion for reconsideration7 and determined that the court had entered an order denying Debtor's joint petition on December 19. The docket entry for the order in both adversary proceedings clearly indicated that the order was entered on December 19. Blevins contacted Brewer by telephone on the same day, and he instructed her to get the file ready in the event Debtor wanted to appeal.8

Blevins checked the internet and determined that the filing deadline for the notice of appeal was ten days. Erroneously believing that the ten days meant ten court days and not ten calendar days, she calendared the deadline incorrectly. On January 4, 2007, an attorney at Brewer's firm discovered that ten day filing period had expired on December 29, 2006. On January 8, 2007, Brewer's firm filed motions for extension of time to file notices of appeal in both the Weber Adversary and the Humphrey Adversary. Both Weber and Humphrey opposed the motions for extension of time to file notices of appeal.

The bankruptcy court held two hearings on the motions. At the second hearing on March 6, 2007, Brewer [*8] asserted for the first time that he assumed that the orders had been entered on December 27, 2006, the date that Blevins informed him about the orders. The court queried whether he had asked Blevins about the date of entry, which was set forth on the docket sheet, and he admitted that he had not.9

On March 16, 2007, the bankruptcy court entered civil minute orders in the Weber Adversary and in the Humphrey Adversary denying the motions for orders extending time for filing appeal. The orders referred to the findings of fact and conclusions of law appended to the civil minutes. In these civil minutes, the

6 Brewer's law firm was closed at noon on December 22, 2006, and was to reopen on January 2, 2007. Id.

7 Debtor complains in her Opening Brief that the docket entries in the adversary proceedings referred to a motion for reconsideration instead of the joint petition. In both adversary proceedings, the joint petition (to set aside default judgments) was docketed as a "motion/application to reconsider." The adversary proceedings did not involve multiple defendants, nor did they involve multiple motions to set aside or reconsider judgments. While the docket entries for the joint petition and orders may not have been precise, an attorney for the only party who had moved for relief from a judgment should have been placed [*7] on notice that the order pertained to the petition to set aside defaults.

In fact, Blevins did open this order and did determine on December 27 that the order denied Debtor's joint petition. Thus, Brewer's office had actual knowledge of entry of the order before the deadline for filing an appeal expired.

8 On December 28, 2006 (one day before the deadline for filing a notice of appeal), Brewer's office received by mail a hard copy of the notice of the entry of the orders denying the joint petition.

9 Even though Brewer did not file his own declaration in support of the motions, he contended at oral argument before us that his incorrect assumption about the date of the entry of the orders led to the late filing of the notice of appeals and constituted "excusable neglect." Given his admission on the record that he did not even inquire about the date of the entry of the order, we find no error by the bankruptcy court in disregarding any similar argument before it.

2007 Bankr. LEXIS 4823, *5


Page 4 of 7

bankruptcy court assessed and weighed the factors set forth by the Supreme Court in Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993) [*9] for determining whether excusable neglect existed to justify granting an extension of time to appeal. The court found that Debtor had not demonstrated excusable neglect and denied the motions. On March 20, 2007, Debtor timely appealed the orders denying the motions for extension of time to appeal.10

II. ISSUE

Did the bankruptcy court abuse its discretion in denying the motions for extension of time in which to appeal?

III. STANDARD OF REVIEW

We review for abuse of discretion a bankruptcy court's decision to grant or deny a motion for an extension of time to file a notice of appeal. Pincay v. Andrews, 389 F.3d 853, 858 (9th Cir. 2004). "We must therefore affirm unless we are left with the definite and firm conviction [*10] that the lower court committed a clear error of judgment in the conclusion it reached after weighing the relevant factors." Id.

"Normally, the decision of a trial court is reversed under the abuse of discretion standard only when the appellate court is convinced firmly that the reviewed decision lies beyond the pale of reasonable justification under the circumstances." Harman v. Apfel, 211 F.3d 1172, 1174 (9th Cir. 2000). We cannot simply substitute our judgment for that of the trial court. Barona Group of Capitan Grande Band of Mission Indians v. American Management & Amusement, Inc., 840 F.2d 1394, 1408 (9th Cir. 1987).

IV. DISCUSSION

Rule 8002 states that a notice of appeal "shall be filed with the clerk within 10 days of the date of the entry of the judgment, order, or decree appealed from." Fed. R. Bankr. P. 8002(a). A request to extend the time for filing a notice of appeal must be filed within this ten-day period, "except that such a motion filed not later than 20 days after the expiration of the time for filing a notice of appeal may be granted upon a showing of excusable neglect." Fed. R. Bankr. P. 8002(c)(2). Here, Debtor filed her motions for extension of time ten days after [*11] the expiration of the time for filing the notice of appeal and twenty days after entry of the orders denying the joint petition. Therefore, she had to demonstrate "excusable neglect" to obtain the extension of time.

While "excusable neglect" is not defined in the Bankruptcy Rules, the Supreme Court has held that "the determination is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission." Pioneer, 507 U.S. at 395. The Supreme Court identified four factors relevant to this equitable inquiry: "the danger of prejudice to the [nonmovant], the length of the delay and its potential

10 In addition to filing the motions for extension of time to appeal the denial of the joint petition, Debtor filed untimely notices of appeal of the orders denying the petition as well (EC-07-1018 and EC-07-1020). On April 13, 2007, we entered orders dismissing those appeals, stating that they were "DISMISSED for lack of jurisdiction, without prejudice to reinstatement in the event that a merits panel reverses the bankruptcy court's order denying the motion for extension of time."

2007 Bankr. LEXIS 4823, *7


Page 5 of 7

impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith." Id.

In this case, the bankruptcy court carefully and thoroughly considered each of the factors identified in Pioneer, finding that the first two factors (prejudice to the nonmovants and length of delay) weighed in favor of Debtor while the third and fourth factors (reason for delay and bad/good faith of movant) weighed in favor of Appellees. Debtor argues that the bankruptcy court placed too [*12] much weight on the third and fourth factors and erred by not placing equal weight on each factor. We disagree.

In Pincay, the Ninth Circuit stated that it leaves the weighing of Pioneer's equitable factors to the trial court "in every case." Pincay, 389 F.3d at 860. "[T]he trial court has wide discretion as to whether to excuse the lapse." Id. at 859 (emphasis added). In other words, a trial court should consider these nonexclusive factors but can weigh the importance of each factor as it deems appropriate in each case. "Balancing these factors is not a mathematical test, and the court is not obligated to give equal weight to them." In re Pacific Gas & Elec. Co., 331 B.R. 915, 919 (Bankr. N.D. Cal. 2005) (describing the Pioneer factors as nonexclusive); see also Graves v. Rebel Rents, Inc. (In re Rebel Rents, Inc.), 326 B.R. 791, 803 (Bankr. C.D. Cal. 2005) ("Pioneer mandated a balancing test for divining excusable neglect, but Pioneer did not assign the weight to be accorded by the court to each of its nonexclusive factors in making an equitable determination.") (emphasis added).11 Therefore, to the extent that the bankruptcy court placed greater weight on particular factors, it did [*13] not abuse its discretion.

Debtor further argues that the bankruptcy court abused its discretion in determining that the third (reason for delay) and fourth (bad faith) factors weighed in favor of Humphrey and Weber (collectively, the "Appellees"). We do not agree. The record supports these findings and we are not left with a "definite and firm conviction" that the bankruptcy court "committed a clear error of judgment" in weighing these factors in favor of Appellees. Pincay, 389 F.3d at 858, 859.

A. Reason [*14] for Delay

The bankruptcy court, in its extremely detailed findings and conclusions, found that the actions of Debtor's counsel led to the failure to file a timely notice of appeal, even though the ability to comply with the deadline was within the reasonable control of Brewer's firm. The firm did not check the court's electronic docket for the status of the matter taken under submission on December 12 until December 21.12 The record indicates that after encountering difficulties in accessing the electronic docket on December 21, representatives of Brewer's office did not try again until December 27. On December 27, Brewer and his staff learned about the order that had been entered on December 19. Instead of filing an immediate motion for extension of time or a notice of appeal, Blevins incorrectly calculated the ten-day deadline, assuming that the ten-day period included only court days. No attorney was consulted about the calculation; the attorney delegated the legal task of determining appellate deadlines to the paralegal. In other words, counsel's inability or unwillingness to check the docket diligently and to know and

11 In Pioneer, the Supreme Court itself indicated that some factors may be more important than others (in particular, prejudice to the nonmovant or bad faith) in determining excusable neglect: "To be sure, were there any evidence of prejudice to petitioner or to judicial administration in this case, or any indication at all of bad faith, we could not say that the Bankruptcy Court abused its discretion in declining to find the neglect to be 'excusable.'" Pioneer, 507 U.S. at 398-99. The Eighth Circuit has held that the four Pioneer factors do not carry equal weight and that the nature of the late filing must be given the greatest import. Gibbons v. U.S., 317 F.3d 852, 854 (8th Cir. 2003).

12 The minutes containing the long and detailed findings against Debtor were docketed on December 14. Thus a review of the docket as early as December 14 would have placed Debtor's counsel on notice of the negative ruling.

2007 Bankr. LEXIS 4823, *11


Page 6 of 7

understand the rules regarding the appellate deadline13 led [*15] to the failure to file a timely notice of appeal.

In Pioneer, the Supreme Court stated that "inadvertence, ignorance of the rules, or mistakes construing the rules do not usually constitute 'excusable neglect.'" Pioneer, 507 U.S. at 392. The Ninth Circuit acknowledged in Pincay "that a lawyer's failure to read an applicable rule is one of the least compelling excuses that can be offered . . ." Pincay, 389 at 859. Nonetheless, in Pincay, the Ninth Circuit affirmed the decision of the district [*16] court to grant an extension of time to appeal to an attorney who had delegated to a paralegal the responsibility to calendar an appeal deadline; the paralegal incorrectly calculated the deadline and did not file a timely notice of appeal. Debtor argues that the facts here are similar to those presented in Pincay and thus Pincay dictates reversal here.

We disagree. Pincay teaches us that a trial court has wide discretion in weighing and applying the nonexclusive factors of Pioneer. If the district court in Pincay had denied the motion to extend the appeal deadline, the Ninth Circuit would have likely affirmed. "Had the district court declined to permit the filing of the notice, we would be hard pressed to find any rationale requiring us to reverse." Pincay, 389 F.3d at 859 (emphasis added).

Pincay stands for the proposition that courts should not apply any rigid or per se rule as to the nature of excusable neglect; instead, the trial courts are vested with "wide discretion" in applying the Pioneer factors and in deciding whether to excuse the "lapse." Id. at 859. Rather than creating any rigid rule (such as one that would automatically treat the failure to read a procedural rule correctly [*17] as "excusable neglect"),

the decision whether to grant or deny an extension of time to file a notice of appeal should be entrusted to the discretion of the [bankruptcy] court because the [bankruptcy] court is in a better position than we are to evaluate factors such as whether the lawyer had otherwise been diligent, the propensity of the other side to capitalize on petty mistakes, the quality of representation of the lawyers . . ., and the likelihood of injustice if the appeal was not allowed.

Id. Here, the bankruptcy court found that the conduct of Debtor's counsel led to the lapse in filing a timely appeal. The record supports this finding; it is not clearly erroneous. Given the bankruptcy court's wide discretion in weighing and applying this factor, we — like the Ninth Circuit would have been in Pincay if the district court had denied the extension of time to appeal — are "hard pressed to find any rationale requiring us to reverse" the court's weighing of the third factor. Id.

B. Good Faith of Debtor

The bankruptcy court found that the fourth factor, whether the movant's conduct has been in good faith, weighed against a finding of excusable neglect. In Pincay, the Ninth Circuit emphasized [*18] that the trial court — with its knowledge of the parties, counsel and litigation history — should be vested with the discretion to grant or deny extensions of time to appeal. In particular, the court noted that the trial court was in a better position to evaluate the movant's diligence in other matters and the quality of representation over the history (there, fifteen years) of the litigation. Here, the bankruptcy court

13 Interestingly, Debtor's counsel stated in the memorandum in support of the motions for extension of time to file appeal that "it would not be an understatement that most attorneys, including experienced bankruptcy counsel[,] would scoff at a suggestion that a notice of appeal from a final order of the bankruptcy court is 10 calendar days from the date the order is entered on the court's docket." At oral argument before us, Brewer stated that he was aware of the 10-day deadline.

2007 Bankr. LEXIS 4823, *14


Page 7 of 7

considered the conduct of Debtor and her counsel over the course of both adversary proceedings and concluded that they had been dilatory and not forthcoming about important details in their dealings with the court.14 The court therefore held that Debtor had not acted in good faith. The record supports these findings, and the bankruptcy court did not abuse its discretion in weighing this factor.

V. CONCLUSION

The bankruptcy court did not abuse its "wide" discretion in determining that Debtor had not demonstrated "excusable neglect." The court therefore did not err in denying the motions to extend the time for appeal and we AFFIRM.

End of Document

14 The court made note of Debtor's initial failure to disclose that she had retained counsel six months prior to filing her joint petition which was filed only one day prior to the running of the one-year deadline of Federal Rule of Civil Procedure 60(b). The court alluded to, but did not specify, Debtor's misleading declaration stating that her fee agreement with Schwab required [*19] him to represent her in the adversary proceedings.

2007 Bankr. LEXIS 4823, *18


EXHIBIT 4


Cobb v. City of Stockton (In re City of Stockton)

United States Court of Appeals for the Ninth Circuit

December 10, 2018, Resubmitted, San Francisco, California; December 10, 2018, Filed

No. 14-17269

Reporter2018 U.S. App. LEXIS 34636 *

IN RE CITY OF STOCKTON, CALIFORNIA, Debtor, MICHAEL A. COBB, Objector-Appellant, v. CITY OF STOCKTON, Debtor-Appellee.

Prior History: [*1] Appeal from the United States Bankruptcy Court for the Eastern District of California. D.C. No. 12-32118. Christopher M. Klein, Chief Bankruptcy Judge, Presiding. November 14, 2016, Argued and Submitted.

Disposition: DISMISSED.

Summary:

**

Bankruptcy

The panel dismissed as equitably moot an appeal from the bankruptcy court's order denying an objection to confirmation of the Chapter 9 plan of adjustment of the City of Stockton.

The objector had filed an inverse condemnation claim against the City in state court. The plan classified the claim as a general unsecured claim.

Agreeing with the Sixth Circuit, the panel dismissed the appeal as equitably moot because the objector did not seek a stay of confirmation; the plan had been substantially consummated; the relief of undoing plan confirmation would bear unduly on innocent third parties; and the bankruptcy court could not fashion relief without undoing the confirmed plan.

The panel also affirmed the bankruptcy court's conclusion that the objector's claim—that the Takings Clause exempted his unsecured claim from reorganization—failed on the merits. The panel concluded that the objector's purported property interest was, in reality, a claim for monetary relief.

Dissenting, Judge Friedland [*2] wrote that the objector sought only to have his claim for just compensation under the Takings Clause excepted from discharge, and a claim that falls outside of bankruptcy cannot be subject to the bankruptcy doctrine of equitable mootness. On the merits, Judge Friedland wrote that because the objector maintained a constitutional claim for just compensation, and because that claim should have been excepted from discharge, the statecourt inverse condemnation action should have been allowed to proceed.

** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.


Page 2 of 21

Counsel: Bradford J. Dozier (argued), Atherton & Dozier, Stockton, California, for Objector-Appellant.

Robert Loeb (argued), Orrick Herrington & Sutcliffe LLP, Washington, D.C.; Christopher J. Cariello, Orrick Herrington & Sutcliffe LLP, New York, New York; Lesley M. Durmann, Patrick B. Bocash, and Marc A. Levinson, Orrick Herrington & Sutcliffe LLP, Sacramento, California; for Debtor-Appellee.

Judges: Before: Sidney R. Thomas, Chief Judge, and Ronald M. Gould and Michelle T. Friedland, Circuit Judges.* FRIEDLAND, Circuit Judge, dissenting.

Opinion by: THOMAS

Opinion

THOMAS, Chief Judge:

Michael Cobb appeals the bankruptcy court's order denying his objection to confirmation of a Chapter 9. However, he did not seek a stay of confirmation at any [*3] stage; the plan has been substantially consummated; the relief of undoing plan confirmation would bear unduly on innocent third parties; and the bankruptcy court could not fashion relief without undoing the confirmed plan. Therefore, we dismiss his appeal as equitably moot. His claims also fail on the merits.

I

A

When it filed its Chapter 9 petition, Stockton became the largest city in history to seek municipal bankruptcy protection. The recession had reduced property values by half, and 22% of Stockton's residents were unemployed. Franklin High Yield Tax-Free Income Fund v. City of Stockton (In re City of Stockton), 542 B.R. 261, 265 (B.A.P. 9th Cir. 2015). The City was unable to pay bondholders, it had over-committed to public pensions, and its accounting system was in disarray. Id. Budget cuts left police able to respond only to emergency calls. Id. at 266, 274. Stockton ranked 10th in the nation in its violent crime rate, with homicides at an all-time record. In re City of Stockton, 493 B.R. 772, 780 (Bankr. E.D. Cal. 2013). In a cost-cutting initiative commenced in 2008, the City workforce decreased by 25%. Id. The police force was reduced by 20%; the fire department's workforce by 30%; and the public works employee workforce by 38%. Id.

Despite these cost-cutting measures, the City projected a general fund deficit of almost $9 million as of June 2012 and a deficit of $20 to $30 million [*4] in the next fiscal year. Id.; Franklin, 542 B.R. at 266. The City Council authorized diversion of money from earmarked funds and intentionally defaulted on payments for over $2 million of bonds. In re City of Stockton, 493 B.R. at 781, 789. It also authorized a neutral evaluation process under California Government Code § 53760, a prerequisite to a Chapter 9 bankruptcy filing. Franklin, 542 B.R. at 266.

Unlike other voluntary bankruptcy petitioners, a Chapter 9 debtor must prove that it is eligible for bankruptcy relief. 11 U.S.C. §§ 109(c), 921(c). One of the statutory requirements is that the debtor must

* This case was originally submitted to a panel that included JudgeKozinski. After Judge Kozinski's retirement, Judge Gould was drawn by lot to replace him. Ninth Circuit General Order 3.2.h. Judge Gould has read the briefs, reviewed the record, and listened to oral argument.

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prove that it is insolvent. 11 U.S.C. § 109(c)(3). Here, the City filed a petition for an Order for Relief alleging that it was eligible for bankruptcy and, in fact, was insolvent. After a three-day bench trial, the bankruptcy court issued an extensive order making factual findings and determining that the City was eligible for Chapter 9 relief. As to insolvency, the court examined the City's ability to: (1) pay its debts as they matured (commonly referred to as "cash insolvency"); (2) pay for the costs of providing services required for the health, safety, and welfare of the community (commonly called "service delivery insolvency"); and (3) create a balanced budget (termed "budget insolvency"). After considering the evidence, the court found that:

The [*5] sum of the evidence establishes that the City was insolvent by all available measures when it filed its chapter 9 case. It was cash insolvent, unable to pay its debts as they came due as required by § 101(32)(C) and § 109(c)(3). That it was service delivery insolvent confirms that the cash insolvency was not a mere technical insolvency. That it was budget insolvent for the long term confirms that the insolvency would persist without realignment of revenues and expenses. Hence, the City satisfied the insolvency requirement of § 109(c)(3).

In re City of Stockton, 493 B.R. at 790-91.

The ensuing Chapter 9 proceedings were complex, costly, and contentious. Franklin, 542 B.R. at 266. Pre-petition settlements were reached with a number of creditors, and collective bargaining agreements were renegotiated. Id. Under the guidance of a court-appointed mediator, post-petition settlements were reached with the California Public Employees' Retirement System; the Stockton Police Officers' Association; the Official Committee of Retirees; Assured Guaranty Corporation (which insured the City's pension bonds); the National Public Finance Guarantee Corporation (an insurer of almost $100 million in city bonds); Ambac Assurance Corporation (an insurer of $13.3 million in City certificates of participation); [*6] and Wells Fargo Bank (indenture trustee for a number of the City's bond issues). Id. at 266-67. Eventually, over the objections of some creditors, including Cobb, Stockton's plan of reorganization was confirmed. Id. at 268.

The plan was funded by "a sales tax increase in the greatest amount and for the longest period permitted by California law." Id. at 271 (citation omitted). Under the plan, City employees and retirees "shared the pain" with the capital market and bond creditors, losing the pension and lifetime health benefits around which they had planned their futures. Id. (citation omitted). The plan provided for payment of $1.5 billion in claims distributed among 20 classes of creditors.

The plan became effective in February 2015. Id. at 276. Pursuant to the plan, the City made wire transfers totaling $13.1 million, including a settlement of heath care benefits to retirees and payments to institutional creditors. The City implemented the provisions of the plan, restructuring its obligations to two other major institutional creditors by conveying title to 17 parking lots and garages, assigning leasehold interests, and assigning an option for the purchase of a city office building. The City has continued to make its payments [*7] pursuant to the plan, with secured creditors receiving lower payments on the secured debt and unsecured creditors receiving lesser amounts.

B

So, what was Objector-Appellant Michael Cobb's part in all of this? The background is somewhat procedurally complex. Cobb's father, Andrew Cobb, owned a parcel of land in Stockton. In 1998, the

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Stockton City Council resolved that the public necessity required the condemnation of a strip of land across the parcel for the purpose of building a road.

In California, the power of eminent domain can be exercised through traditional condemnation proceedings, where possession is taken at the time of judgment, or through "quick-take" condemnation where a locality can take possession upon depositing a probable compensation amount determined by a qualified expert appraiser. Cal. Const. art. I, § 19; Cal. Civ. Proc. Code § 1255.010; see also Mt. San Jacinto Cmty. Coll. Dist. v. Superior Court of Riverside Cty., 40 Cal. 4th 648, 54 Cal. Rptr. 3d 752, 151 P.3d 1166, 1168 (Cal. 2007). Following the deposit of funds under the "quick-take" procedure, the government may move the court for an immediate possession order. Cal. Civ. Proc. Code § 1255.410. If the defendant elects to withdraw the proposed compensation amount, he waives all claims and defenses to the condemnation, except a claim for greater compensation. Cal. Civ. Proc. Code § 1255.260.

Stockton elected to use the "quick-take" process. Thus, pursuant to California Civil Procedure Code § 1255.010, the [*8] City had an expert appraise the parcel to determine the amount of just compensation owed to Andrew Cobb. The appraiser valued the parcel at $90,200.00. As required by the "quick-take" provisions, the City deposited that sum with the California State Treasurer Condemnation Deposits Fund. That same day, the City initiated eminent domain proceedings in the Superior Court of California, County of San Joaquin, to acquire a permanent easement over the parcel (the "eminent domain action").

Later that year, the Superior Court determined the City had met the requirements of § 1255.010, concluded it had met the requirements of probable compensation, and issued an Order for Prejudgment Possession in favor of the City. A road was then built on the parcel, and the Stockton City Council passed a resolution in 2000 accepting the improvements.

In the meantime, Andrew Cobb passed away and his son, Michael Cobb, inherited the parcel. After Andrew Cobb's death, Cobb was substituted in the condemnation action. He entered into a stipulation with the City allowing him to withdraw the deposited amount and, in 2000, he withdrew the entire amount of the deposit. At that point, by operation of law, he waived all of his [*9] defenses and claims to the property, except a claim for greater compensation. Cal. Civ. Proc. Code § 1255.260. In other words, Cobb gave up all rights to the property. He did not assert a counterclaim for greater compensation in the condemnation proceeding.

Seven years later, Cobb attempted to return the $90,200.00 to the City—apparently in an attempt to revoke his earlier waiver—but the City would not accept the funds, explaining that the withdrawal of probable compensation was final under California law. Cobb deposited the funds into an interest-bearing trust account.

In 2007, the Superior Court dismissed the City's eminent domain action because it had not been brought to trial within five years of its commencement, as is required by California Civil Procedure Code § 583.310. A year later, Cobb filed a complaint in San Joaquin County Superior Court, seeking relief for inverse condemnation (the "inverse condemnation action"). The complaint alleged that because the City failed to prosecute the eminent domain action, the true market value of the parcel remained undetermined and thus Cobb had not received the just compensation due him under the California Constitution. Over the next several months, Cobb amended his complaint three times, adding claims for [*10] quiet title, ejectment, trespass, and declaratory relief. The City demurred to all the amended complaints. The Superior Court sustained the City's demurrer as to the inverse condemnation claim on the grounds that it was barred by

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the statute of limitations because the taking occurred more than five years before the complaint was filed, and it sustained the City's demurrer as to the other claims on the grounds that they were barred by the doctrine of intervening public use.

Cobb appealed the Superior Court's dismissal of his inverse condemnation claim solely on statute of limitations grounds. He did not appeal the dismissal of the quiet title, ejectment, trespass, or declaratory relief claims. In 2011, the Court of Appeals reversed the dismissal of Cobb's inverse condemnation claim, finding that his claim was timely because it "did not accrue until the City's occupation of the property became wrongful, which did not occur until the eminent domain proceeding was dismissed." Thus, what remained of his state court action was simply an unliquidated and unsecured monetary damage claim. The merits of his inverse condemnation claim remain unadjudicated and unproven. As the bankruptcy court [*11] pointed out, given the various defenses available to the City, "Mr. Cobb has a very steep hill to climb in his action for greater compensation in the California courts."

Thereafter, in 2012, the City petitioned for bankruptcy protection under Chapter 9. In a Chapter 9 bankruptcy, the debtor is not required to file schedules and a statement of financial affairs. Rather, the debtor is required to file a list of creditors. 11 U.S.C. § 924. Any claim on the debtor's list is deemed filed as a proof of claim pursuant to 11 U.S.C. § 501, unless the debt is listed as contingent, disputed or unliquidated. 11 U.S.C. § 925.

When it filed its list of creditors in this case, the City identified Cobb's claim as an unsecured, disputed liability claim of an unknown amount. Subsequently, Cobb filed a proof of claim for $4,200,997.26. Cobb's claim consisted of a principal of $1,540,000.00 for the parcel, $2,282,997.26 in interest on the principal, $350,000.00 in attorney's fees and expenses, $13,000.00 in costs of suit, and $15,000.00 in real estate taxes and maintenance and insurance costs. Cobb did not assert on his proof of claim that his claim was secured.

In 2013, the City filed its first amended plan for adjustment of its debts (the "plan"), [*12] which listed 19 classes of claims. The plan included Cobb's claim in Class 12 as a general unsecured claim. On February 11, 2014, Cobb filed an objection to confirmation of the plan, alleging that his "claims in inverse condemnation are protected by the Fifth and Fourteenth Amendments to the United States Constitution and cannot be impaired by the Plan." He did not contest the listing of his claim as unsecured.

In 2014, the bankruptcy judge overruled Cobb's objection to confirmation of the pending plan of adjustment. The bankruptcy judge explained that Cobb is left with only a claim for more money because the road had long since been built on the parcel and because by withdrawing the probable just compensation, Cobb had waived by operation of law all claims except a claim for greater compensation. In an oral ruling, the bankruptcy judge concluded that "[t]he bankruptcy clause does permit the adjustment of a debt for greater compensation," and "if [the debt] were reduced to judgment, it would be a general unsecured debt at the moment the judgment was issued."

Cobb did not seek a stay of plan confirmation from the bankruptcy court. Cobb timely appealed the bankruptcy court's order overruling his objection to the plan to the district court for the [*13] Eastern District of California. He did not seek a stay of plan confirmation before the district court.

Cobb and the City both stipulated, pursuant to 28 U.S.C. § 158(d)(2)(A), that the appeal warranted proceeding directly to the Court of Appeals for the Ninth Circuit. On August 7, 2014, the district court certified this appeal to this Court, pursuant to 28 U.S.C. § 158(d)(2)(B)(ii). A motions panel of our Court

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granted Cobb's motion to appeal directly to this Court. Cobb did not seek a stay of plan confirmation. The bankruptcy court confirmed the City's plan of adjustment and issued a final judgment. Cobb did not seek a stay following plan confirmation, and the plan became effective on February 25, 2015.

II

A

Finality is essential to the success of bankruptcy reorganization plans. A reorganization plan almost always involves tradeoffs, debt adjustment, partial asset liquidation, and the infusion of new revenue sources. Both creditors and the debtor require certainty so that the debtor can return to economic health, and the creditors can maximize their recovery within the debtor's ability to pay. In the case of a municipal reorganization, the public has an enormous stake in the outcome so that critical government programs, such as law enforcement, [*14] fire protection, and public works, can be restored. Thus, if a creditor wishes to challenge a reorganization plan on appeal, we require the creditor to seek a stay of proceedings before the bankruptcy court. When a stay is requested, all affected parties are on notice that the plan may be subject to appellate review and have an opportunity to present evidence before the bankruptcy court of the consequences of a stay. "A confirmed reorganization plan operates as a final judgment with res judicata effect." Unsecured Creditors Comm. v. Southmark Corp. (In re Robert L. Helms Constr. & Dev. Co.), 139 F.3d 702, 704 (9th Cir. 1998) (en banc).

If the creditor does not seek a stay, then the creditor risks dismissal of the appeal on the grounds of equitable mootness. "An appeal is equitably moot if the case presents transactions that are so complex or difficult to unwind that debtors, creditors, and third parties are entitled to rely on the final bankruptcy court order." JPMCC 2007-C1 Grasslawn Lodging, LLC v. Transwest Resort Props., Inc. (In re Transwest Resort Props., Inc.), 801 F.3d 1161, 1167 (9th Cir. 2015) (quoting Rev Op Grp. v. ML Manager LLC (In re Mortgs. Ltd.), 771 F.3d 1211, 1215 (9th Cir. 2014)). If there is a confirmed bankruptcy plan that deserves finality—for employees, retirees, creditors, taxpayers, and for the future of the City—it is Stockton's.

B

We have identified four factors to determine whether an appeal is equitably moot, namely: (1) whether a stay was sought; (2) whether the plan has been substantially [*15] consummated; (3) the effect of the remedy on third parties not before the court; and (4) "whether the bankruptcy court can fashion effective and equitable relief without completely knocking the props out from under the plan and thereby creating an uncontrollable situation for the bankruptcy court." In re Transwest Resort Props., Inc., 801 F.3d at 1167-68 (quoting Motor Vehicle Cas. Co. v. Thorpe Insulation Co. (In re Thorpe Insulation Co.), 677 F.3d 869, 881 (9th Cir. 2012)).

1

As to the first factor, there is no doubt. Cobb sought no stay whatsoever. He did not seek a stay in the bankruptcy court. He did not seek a stay in the district court. He did not seek a stay in our Court. While he was appealing the rejection of his plan objections, he took no action to stay the plan's implementation, although confirmation proceedings were ongoing. He did nothing.

It is "obligatory" that one seeking relief from plan confirmation "pursue with diligence all available remedies to obtain a stay of execution of the objectionable order." Trone v. Roberts Farms, Inc. (In re Roberts Farms, Inc.), 652 F.2d 793, 798 (9th Cir. 1981). Failure to do so without adequate explanation

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should result in dismissal. Id. Seeking a stay affords the bankruptcy court the opportunity to consider equitable factors, make a reasoned decision, and provide a decision and record which an appellate court can review. On the other hand, excusing a failure to seek a stay before the bankruptcy [*16] court allows a party to play possum, without consequence, while everyone else has materially changed positions in reliance on plan confirmation. The first factor indisputably favors application of equitable mootness.1

2

The second factor is whether the plan has been substantially consummated, and Cobb does not contest the fact that it was. As the Bankruptcy Appellate Panel noted, there is no dispute that this plan was substantially consummated in February 2015. Franklin, 542 B.R. at 276. The City wired payment to institutional creditors, transferred property, and sent checks to former city employees to resolve pension claims. Id. It conveyed title to numerous parcels of real property, assigned leasehold interests, and granted purchase options. The City has now operated under the reorganization plan for years. The second factor also favors application of equitable mootness.

3

The third factor is "whether the relief sought would bear unduly on innocent third parties." In re Transwest Resort Props., Inc., 801 F.3d at 1169. In other words, it must be "possible to [alter the plan] in a way that does not affect third party interests to such an extent that the change is inequitable." Id. (quoting In re Thorpe Insulation Co., 677 F.3d at 882) (alteration in original).

Here, reversal of the Confirmation Order [*17] would undermine the settlements negotiated with the unions, pension plan participants and retirees, bond creditors, and capital market creditors, all of which were built into the reorganization plan. As the Bankruptcy Appellate Panel concluded in Franklin, "[t]o reverse the Confirmation Order at this point would have a potentially devastating impact on creditor constituencies whose settlements with the City were incorporated in the Plan and who are not appearing before us in this appeal." Franklin, 542 B.R. at 278.

In addition to the creditors, reversal of the Confirmation Order would have a substantial effect on the citizens of Stockton, who depend upon the City for the provision of vital services. The City placed ample evidence in the record of the serious impact of reversal of plan confirmation, which impact is confirmed in Franklin.

Cobb argues that his claim is only a monetary one, having little impact on creditors or the City. Leaving aside the fact that the remedy he seeks is to reverse plan confirmation, Cobb is making a multi-million dollar claim which, on its face, would have a considerable impact on the City. He suggests, without proof, that the City has the resources to pay the claim. However, as [*18] the City pointed out in Franklin, allowing such a claim would likely result in revisiting the City's Long Range Financial Plan, which provided the basis for the plan's feasibility, and "consequently calling into question the economic underpinnings of the Plan." 542 B.R. at 276 (internal quotation marks and citation omitted).

In addition, and most importantly, the only adjudication of the City's solvency in the record is the bankruptcy court's findings of facts and conclusions of law holding that the City was insolvent—a finding

1 In Franklin, in which the Bankruptcy Appellate Panel dismissed an appeal in this bankruptcy as equitably moot, the creditor had a much better argument than Cobb because it had actually sought a stay in bankruptcy court. Franklin, 542 B.R. at 275.

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that was adopted and reiterated at the time of plan confirmation.2 Cobb did not challenge the City's claim of insolvency in the bankruptcy court, nor dispute the bankruptcy court's findings. He simply suggests for the first time on appeal, without support in the record, that the City is not insolvent.

In sum, the third factor favors application of equitable mootness.

4

The final factor is whether the bankruptcy court could fashion equitable relief without completely undoing the plan. Of course, undoing the plan is precisely the remedy that Cobb seeks. Cobb argues that he seeks only monetary relief, but his appeal is of the bankruptcy court's order overruling Cobb's objection to [*19] confirmation of the plan of adjustment. His challenge—and his only challenge—is to the confirmation of the plan itself. In his objection to the plan before the bankruptcy court, Cobb argued that the plan could not be confirmed, and "[w]here a Chapter 9 Plan may not be confirmed, the remedy appears to be dismissal of the bankruptcy case." The Notice of Appeal was taken as to the bankruptcy court's order denying his objection to plan confirmation. On appeal, he reiterated his objection to the plan and repeated his claim that where a bankruptcy plan cannot be confirmed, the remedy is dismissal of the bankruptcy case.

Sustaining Cobb's objection would mean dismantling the confirmed reorganization plan, which is the only relief he seeks. Considering this remedy in Franklin, the Bankruptcy Appellate Panel concluded that "[r]eversing the Confirmation Order would 'knock the props out from under' the plan and would leave the bankruptcy court with an unmanageable situation on remand." Franklin, 542 B.R. at 278. The plan provides for 20 different classes of creditors, almost all of which have been deemed impaired—meaning that the legal, equitable, or contractual rights of the creditors are affected by the plan. Plan confirmation [*20] adjusted all of these rights. To reverse the Confirmation Order at this stage would create chaos and undo years of carefully negotiated settlements. The fourth factor favors application of equitable mootness.

5

Thus, as it was for the Sixth Circuit in considering a similar appeal arising out of Detroit's bankruptcy, "[t]his is not a close call." Ochadleus v. City of Detroit (In re City of Detroit), 838 F.3d 792, 799 (6th Cir. 2016). As with the situation posed by the Detroit municipal reorganization, the complex plan has been confirmed, affecting the rights of thousands of creditors and the public.

The reorganization train has left the station. Cobb did not pursue any bankruptcy stay remedies, much less pursue them with the requisite diligence. The plan has long been substantially consummated. He offers too little, too late. None of the factors that we consider in deciding whether to apply the doctrine of equitable mootness favor Cobb. Thus, his appeal must be dismissed.

III

Cobb's underlying theory—that the Takings Clause exempts his unsecured claim from reorganization—is not viable on this record, and the bankruptcy court properly concluded that this claim fails on the merits.

2 Further, even if Cobb could demonstrate the City's ability to fund the claim, the solvent-debtor exception to the stay requirement does not apply where, as here, there has "been such a comprehensive change in circumstances as to render it inequitable for the court to consider the merits of the appeal." Platinum Capital, Inc. v. Sylmar Plaza, L.P. (In re Sylmar Plaza, L.P.), 314 F.3d 1070, 1074 (9th Cir. 2002). This rule makes good sense, as "[b]ankruptcy cases often implicate parties besides the debtor and its creditors." In re Mortgs. Ltd., 771 F.3d at 1216.

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The Takings Clause is only implicated in bankruptcy if the creditor has actual property rights. In other words, the creditor [*21] must have an "in rem right under nonbankruptcy law to look to specific items of property" in order for the debt to be paid ahead of unsecured creditors. 4 Collier on Bankruptcy ¶ 506.03 (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2017). If the purported property interest is, in reality, just a contractual or statutory right for monetary relief, then the debt can be adjusted in bankruptcy.

A

Distilled to its essence, Cobb's argument on appeal is that he has a property interest that cannot be adjusted in bankruptcy. But that is not what his bankruptcy claim is, or even what he asserted that his was. As we have noted, both the City and Cobb classified his claim as an unsecured monetary claim. Cobb has never challenged the categorization of the claim as unsecured; nor has he sought, through 11 U.S.C. § 506 or otherwise, to have his interest adjudicated otherwise. Indeed, prior state court judgments against him would have precluded that.

Even assuming that Cobb had asserted a property-based proof of claim, it failed on the merits to be categorized as such, as the bankruptcy court found. First, he had relinquished his property interest in the land more than 15 years before bankruptcy was filed. As we [*22] have noted, under California's "quick-take" condemnation proceedings, Stockton properly hired a qualified expert appraiser, who valued the property. Following the statutory procedure, Stockton then deposited the funds and moved the superior court for immediate possession of the property, and the superior court granted the City immediate possession of the parcel. Andrew Cobb did not object to the probable just compensation finding or judgment.

As we have noted, under California law, if the property owner elects to withdraw the proposed compensation amount, he waives all claims and defenses to the condemnation, except a claim for greater compensation. Cal. Civ. Proc. Code § 1255.260. Michael Cobb withdrew the deposit, thereby waiving all claims, except as to a claim for greater compensation. In other words, Cobb gave up all rights to the property. He did not assert a counterclaim for greater compensation in the condemnation proceeding.

Seven years later, he tried to return the money, which the City declined. His subsequent suit against the City, in which he sought quiet title and declaratory relief, among other remedies, was dismissed. In sum, the relief he sought to enforce property rights or restoration of his property [*23] interest was rejected. That judgment is final and binding. He did not take an appeal from that decision, except as to the statute of limitations on his inverse condemnation claim. The California Court of Appeal granted him relief on that question. So, what remains of his state court action is simply an unliquidated and unsecured monetary damage claim.

Thus, the bankruptcy court properly concluded that once Cobb withdrew the tendered compensation, he waived by operation of law all claims and defenses in his favor as to the property, except for a claim for greater compensation, which is an unsecured monetary debt claim.

Second, Cobb independently relinquished any property interest he had by allowing the City to construct the road and open the road to public use. Under California law, if a property owner allows the government to complete the taking of the property for public use, he is "denied the right to enjoin the agency." Frustuck v. City of Fairfax, 212 Cal. App. 2d 345, 28 Cal. Rptr. 357, 373 (Cal. Dist. Ct. App. 1963). The fact that formal title has not passed is irrelevant under California law. California ex rel. Dep't of Pub.

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Works v. Peninsula Title Guar. Co., 47 Cal. 2d 29, 301 P.2d 1, 3 (Cal. 1956) (noting that when there has been a prior physical taking the subsequent title transfer "is merely a confirmation of the original taking").

Thus, when the bankruptcy was filed, Cobb did [*24] not possess a right to the property protected by the Fifth Amendment. It had been extinguished. What remained was bare legal title—without any other property rights and subject to defeasance by the prior litigation—and an unsecured statutory monetary claim for greater compensation.

Cobb's theory seems to be that an unliquidated, statutory claim for greater compensation cannot be adjusted in bankruptcy. But it is purely a monetary claim. As the bankruptcy court pointed out, if the inverse condemnation claim had been reduced to a judgment, it would be subject to adjustment in bankruptcy; therefore, it is not logical to say that an unliquidated claim for greater compensation cannot be adjusted in bankruptcy.

Nor does the character of any claim asserting an unconstitutional taking make it immune from evaluation on the merits in bankruptcy. Indeed, we have approved the dismissal of a takings claim in its entirety by a bankruptcy court. George v. City of Morro Bay (In re George), 322 F.3d 586, 590-91 (9th Cir. 2003) (per curiam). Cobb cannot implicate the Takings Clause in order to elevate his claim above other Fifth Amendment-protected property interests—which are adjustable in bankruptcy—and to escape procedural requirements. See Bennett v. Jefferson Cty., 899 F.3d 1240, 2018 WL 3892979, at *7 (11th Cir. 2018) (quoting Henderson v. United States, 568 U.S. 266, 271, 133 S. Ct. 1121, 185 L. Ed. 2d 85 (2013)) ("[T]he mere fact that a potential or actual violation of a constitutional [*25] right exists does not generally excuse a party's failure to comply with procedural rules for assertion of the right. A 'constitutional right, or a right of any other sort, may be forfeited in criminal as well as civil cases by the failure to make timely assertion of the right before a tribunal having jurisdiction to determine it.'").

Cobb had ample opportunities in the bankruptcy court to adjudicate the nature of his claim through a variety of procedural mechanisms. He did not do so. He listed his claim as unsecured and did not file any proceeding to have the court determine its secured status. He did not object to the disclosure statement. He did not seek exemption from discharge. It would be improper not only to excuse all of these failures, but to invent for him an entirely new remedy on appeal. One cannot play possum during bankruptcy proceedings and then claim some new interest after a plan has been confirmed. A contrary holding would emasculate bankruptcy proceedings.

B

Cobb argues that his monetary claim has protected status because it was originally founded as a constitutional claim. However, other constitutionally based lawsuits seeking money damages, such as § 1983 claims, are routinely [*26] adjusted in bankruptcy—and, in fact, were adjusted in this bankruptcy. Cobb cites Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 55 S. Ct. 854, 79 L. Ed. 1593 (1935), for the unremarkable proposition that the bankruptcy power is subject to the Fifth Amendment. However, that "does not mean, of course, that secured creditors are immune from the bankruptcy process." 4 Collier on Bankruptcy ¶ 506.02. Rather, "in a number of contexts the Code expressly permits the adjustment of debts of secured creditors, including lien rights." Id.

Moreover, as the Supreme Court itself suggested in Helvering v. Griffiths, 318 U.S. 371, 400-01, 63 S. Ct. 636, 87 L. Ed. 843, 1943 C.B. 353, 1943-1 C.B. 353 & n.52 (1943), the precedential weight of Radford is uncertain in light of Wright v. Vinton Branch, 300 U.S. 440, 57 S. Ct. 556, 81 L. Ed. 736 (1937), in which

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the Court upheld the same act struck down in Radford following relatively minor amendment. Indeed, the relevant problem addressed in Radford is "the taking of substantive rights in specific property acquired by the bank prior to the act." Radford, 295 U.S. at 590 (emphasis added). This reading of Radford presents an easy synthesis with United States v. Security Industrial Bank, in which the Court held that constitutional infirmity could be avoided by reading a bankruptcy statute as not compromising security interests created before the statute was enacted. 459 U.S. 70, 81, 103 S. Ct. 407, 74 L. Ed. 2d 235 (1982). The Supreme Court has never held that the Takings Clause renders claims that accrued after the Bankruptcy Code was [*27] enacted immune from the Bankruptcy power, or the bankruptcy process.3 In short, Radford does not reach as far as Cobb asserts.

Further, "just compensation" under the Takings Clause is not equivalent to "full compensation." United States v. Norwood, 602 F.3d 830, 834 (7th Cir. 2010). The concept of "just compensation" requires consideration of "all circumstances," including whether the contemplated compensation "would result in manifest injustice to owner or public." United States v. Commodities Trading Corp, 339 U.S. 121, 123, 70 S. Ct. 547, 94 L. Ed. 707, 115 Ct. Cl. 842 (1950) ("[T]he dominant consideration always remains the same: What compensation is 'just' both to an owner whose property is taken and to the public that must pay the bill?").

In sum, when Stockton filed its bankruptcy petition, Cobb did not possess a property interest cognizable as such in bankruptcy, and he never asserted anything but an unsecured proof of claim. His unsecured claim for greater compensation was not tethered to the actual property interest he had when the bankruptcy was filed. Rather, his claim is for the purported rights that were extinguished long before the bankruptcy was filed. What he is left with after bankruptcy is bare property title and an unliquidated unsecured [*28] claim. Given the circumstances of the case, the bankruptcy court correctly determined that Cobb's claim was properly categorized in the reorganization plan and properly overruled his objection to plan confirmation.

IV

Stockton's reorganization plan was confirmed and has been substantially consummated. Undoing the confirmed plan would seriously affect the rights of third parties. Cobb did not take the minimal step of seeking a stay at any level—not before the bankruptcy court, not before the district court, and not before us. On the merits, the bankruptcy court properly rejected his claim. The claim was correctly categorized as unsecured and adjusted as such.

This appeal is not the first time that the question of equitable mootness has arisen in the context of this bankruptcy. In Franklin, the Bankruptcy Appellate Panel carefully reviewed the challenge of a large capital market creditor to Stockton's plan of reorganization. It concluded that the creditor's challenge was equitably moot in consideration of the substantial consummation of the plan, the effect on third parties, and whether relief could be fashioned without destroying the plan. Franklin, 542 B.R. at 264-65. The same considerations apply here, with the [*29] same effect.

DISMISSED.

Dissent by: FRIEDLAND

3 See, e.g., James Steven Rogers, The Impairment of Secured Creditors' Rights in Reorganization: A Study of the Relationship Between the Fifth Amendment and the Bankruptcy Clause, 96 HARV. L. REV. 973, 974 (1983).

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Dissent

FRIEDLAND, Circuit Judge, dissenting:

The Bill of Rights constrains the powers given to Congress by Article I of the Constitution. And, in particular, the Fifth Amendment's requirement that the government provide just compensation for any taking of private property constrains the powers granted to Congress by the Bankruptcy Clause of Article I. Takings claims should therefore be excepted from discharge in bankruptcy.

The majority contends that the judge-made bankruptcy doctrine of equitable mootness is the dominant principle at issue in this appeal, and that it prevents us from even adjudicating the constitutional claim to just compensation asserted by Appellant Michael Cobb ("Cobb") against the City of Stockton ("City"). But equitable mootness has no role to play here. Cobb seeks only to have his claim to just compensation excepted from discharge—that is, to effectively be treated as falling outside the City's bankruptcy adjustment plan ("Plan"). A claim that falls outside of bankruptcy cannot be subject to the bankruptcy doctrine of equitable mootness. I would therefore reach the merits of Cobb's appeal rather than dismissing it.

As to the merits, there is no dispute that the City condemned Cobb's property.1 And, after that happened, Cobb [*30] took all actions necessary under state law to preserve his right to just compensation for the taking of that property. Indeed, his state court action for just compensation would have proceeded if it had not been stayed in response to the City's bankruptcy filing. Because Cobb maintains a constitutional claim for just compensation, and because that claim should have been excepted from discharge, I would hold that Cobb's state-court inverse condemnation action should be allowed to proceed.

I.

The majority concludes that any appeal seeking to unravel the Plan would be equitably moot. Even assuming so, undoing the confirmed Plan is not on the table in this appeal. Cobb has been abundantly clear before our court that he seeks only to except his claim from discharge, and thus to remove his claim from the Plan altogether. Although Cobb originally lodged his complaint as an objection to the Plan, which may have seemed to him the only option given the novelty of the legal issue his situation presented, he has since plainly disclaimed any intent to "unwind" the Plan. Equitable mootness considerations are therefore irrelevant here and should not prevent us from adjudicating Cobb's argument that [*31] his takings claim was entitled to "pass through [the] bankruptcy unaffected." In re Towers, 162 F.3d 952, 953 (7th Cir. 1998).

Equitable mootness "reflects an unwillingness to provide relief" in cases involving bankruptcy "transactions that are so complex or difficult to unwind that debtors, creditors, and third parties are

1 I note that the fee owner of the parcel is the Andrew C. Cobb 1992 Revocable Trust dated July 16, 1992, for which Cobb serves as trustee. In that capacity, Cobb has the authority to "prosecute or defend actions, claims, or proceedings for the protection of trust property." Moeller v. Superior Court, 16 Cal. 4th 1124, 69 Cal. Rptr. 2d 317, 947 P.2d 279, 284 (Cal. 1997) (quoting Cal. Prob. Code § 16249). In such actions, "the trustee, rather than the trust, is the real party in interest." Id. at 283 n.3. I accordingly refer to Cobb as the "owner" of the condemned parcel, and the parties have similarly stipulated that Cobb became the "owner of the [p]arcel by operation of state probate and trust succession following the death of [his father,] Andrew C. Cobb."

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entitled to rely on the final bankruptcy court order." In re Transwest, 801 F.3d 1161, 1167 (9th Cir. 2015) (quoting In re Mortgs. Ltd., 771 F.3d 1211, 1215 (9th Cir. 2014)). I am unaware of any case in which we have applied an equitable mootness analysis to an individual's claim that an asset should have been excepted from discharge and excluded from bankruptcy proceedings altogether. Indeed, it makes no sense to extend this judicially created doctrine to cases like this one. The sole point of this appeal is that Cobb should have been permitted to pursue his claim outside of the Plan because his claim should have been excepted from discharge. See In re Towers, 162 F.3d at 953. Such an appeal could never undo a plan. If an appellant like Cobb prevails, his or her claim will survive totally apart from the plan, and recognition of such survival will in no way change the terms of the plan. If the appellant does not prevail, then it will have been appropriate to have discharged his or her claim as part of the plan, and there will thus be no reason [*32] to change the terms of the plan.2

The majority relies on Franklin High Yield Tax-Free Income Fund v. City of Stockton, 542 B.R. 261, 265 (B.A.P. 9th Cir. 2015), to conclude that we should dismiss this appeal because Cobb's claim might jeopardize the City's financial health. In fact, the Bankruptcy Appellate Panel in Franklin recognized that a claim solely for a monetary remedy—unlike a claim seeking to undo the Plan—would not necessitate disturbing the Plan and so would not be moot. Id. at 277. As a result, the Bankruptcy Appellate Panel concluded that "to the extent [the creditor] s[ought] through its appeal [from confirmation of the Plan] only a greater payment on its unsecured claim . . . an effective remedy [was] theoretically possible, and that claim [was] not equitably moot." Id. at 278.3 Franklin thus did not, as the majority suggests, hold that requiring the City to pay a monetary judgment would threaten the integrity of the Plan.

Because this appeal in no way threatens the finality of the Plan, and in fact seeks to allow Cobb's claim to proceed totally apart from the Plan, I would fulfill our "virtually unflagging obligation . . . to exercise the jurisdiction given" us by ruling on the merits. Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976).

II.

With respect to the substance of Cobb's claim, the majority is persuaded that Cobb [*33] has waived all property rights in the condemned parcel as a matter of California law, including his right to seek just compensation. And, even if he has not, the majority appears to conclude that a claim for just compensation could be reduced in bankruptcy. I disagree on both counts. Starting with the latter point, as a matter of constitutional first principles, I believe municipalities are obligated to provide just compensation for any taking of private property, regardless of the bankruptcy laws. And regarding Cobb's

2 And with respect to the first equitable mootness factor—whether a stay was sought—it would be pointless for parties trying to have their claims excepted from discharge to be required to seek to stay a plan that they believe their claims should not be part of in the first place. Moreover, although Cobb did not seek a stay of the Plan, he was certainly diligent in pursuing his rights. See In re Thorpe Insulation Co., 677 F.3d 869, 881 (9th Cir. 2012) (holding that "where a party has done nothing by its own inaction to encourage or permit developments to proceed without its participation, courts should be cautious about reaching a conclusion of equitable mootness"). Cobb argued in the bankruptcy court that his "claims in inverse condemnation are protected by the Fifth and Fourteenth Amendments to the United States Constitution and cannot be impaired by the Plan," and the bankruptcy court held a hearing and then ruled on this objection. As a result, contrary to the majority's suggestion, it was unnecessary for Cobb to seek a stay to afford the bankruptcy court an opportunity to rule on this issue.

3 And because Cobb, unlike the creditor in Franklin, seeks to proceed entirely outside the Plan, the City would be under no obligation to compensate him within the same timeframe in which it compensates the creditors covered by the Plan. See infra note 14.

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claim in particular, I believe that Cobb has preserved a constitutional claim for just compensation, and that his claim thus should have been excepted from discharge.4

A.

"Congress, in common with all branches of the Government, must exercise its powers subject to the limitations placed by the Constitution on governmental action," including "the relevant limitations of the Bill of Rights." Barenblatt v. United States, 360 U.S. 109, 112, 79 S. Ct. 1081, 3 L. Ed. 2d 1115 (1959). Where, for example, a statute violates the First Amendment, it is no answer that the statute was properly enacted pursuant to Congress's power under the Commerce Clause. See Cal. Bankers Ass'n v. Shultz, 416 U.S. 21, 77, 94 S. Ct. 1494, 39 L. Ed. 2d 812 (1974) (noting that Congress "is of course subject to the strictures of the Bill of Rights, and may not transgress those strictures" when enacting legislation). Accordingly, [*34] although Congress has the authority to enact "uniform Laws on the subject of Bankruptcies," U.S. Const. art. I, § 8, cl. 4, such laws must not take away rights guaranteed by the Bill of Rights. These rights include the Fifth Amendment's proscription, operational against the states under the Fourteenth Amendment, that private property shall not "be taken for public use, without just compensation," U.S. Const. amend. V. See Dolan v. City of Tigard, 512 U.S. 374, 383-84, 114 S. Ct. 2309, 129 L. Ed. 2d 304 (1994).

In addressing the interplay between these clauses of the Constitution, the Supreme Court has confirmed that the Takings Clause of the Fifth Amendment constrains the power conferred by the Bankruptcy Clause of Article I. The Court first discussed this principle in Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 55 S. Ct. 854, 79 L. Ed. 1593 (1935). Radford held that the Frazier-Lemke Act, which effectively permitted a debtor to purchase mortgaged property for less than its fair market value, was unconstitutional. The Court explained that "[t]he bankruptcy power, like the other great substantive powers of Congress, is subject to the Fifth Amendment." Id. at 589. As a result, the Act's impairment of a mortgagee's rights violated the Takings Clause:

[T]he Fifth Amendment commands that, however great the Nation's need, private property shall not be . . . taken even for a wholly public use without just compensation. If the public interest requires, and permits, the taking of property of individual mortgagees in order to relieve the necessities of individual mortgagors, [*35] resort must be had to proceedings by eminent domain.

Id. at 602. In short, Radford teaches that the Takings Clause prohibits the impairment in bankruptcy of "substantive rights in specific property," such as the rights of a mortgagee in real property.5 Id. at 590.

4 I recognize that only a portion of the proof of claim that Cobb submitted in the bankruptcy proceeding is truly a claim for just compensation, and I would hold that Cobb's claim should be excepted from discharge only to the extent that it seeks just compensation for the condemned parcel in excess of what he has already been paid. I do not believe that Cobb is entitled to shield from bankruptcy the portion of his claim that requests other forms of recovery, such as attorney's fees or insurance costs.

5 The Supreme Court later upheld the constitutionality of the amended Frazier-Lemke Act in Wright v. Vinton Branch of Mountain Trust Bank, 300 U.S. 440, 57 S. Ct. 556, 81 L. Ed. 736 (1937). Contrary to the majority's assertion, Wright does not undermine the Court's holding in Radford that the bankruptcy power is subject to the Takings Clause. Rather, Wright turned on the determination that the new Act had no significant impact on property rights at all. 300 U.S. at 457, 470; see also Rodrock v. Sec. Indus. Bank, 642 F.2d 1193, 1197-98 (10th Cir. 1981) (explaining that while subsequent cases "may well refine the rule of Radford, . . . they do not destroy the fundamental teaching of Radford that Congress may not under the bankruptcy power completely take for the benefit of a debtor rights in specific property previously acquired by a creditor"), aff'd sub nom. United States v. Sec. Indus. Bank, 459 U.S. 70, 103 S. Ct. 407, 74 L. Ed. 2d 235 (1982).

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Similarly, in the Regional Rail Reorganization Act Cases, 419 U.S. 102, 95 S. Ct. 335, 42 L. Ed. 2d 320 (1974), the Court expressed concern that a bankruptcy statute might unconstitutionally leave a taking uncompensated, though it concluded that a mechanism existed to provide just compensation, alleviating that concern. Id. at 149, 155. Those cases involved a challenge to the constitutionality of the Regional Rail Reorganization Act, under which railroad creditors would receive securities of then-unknown value to compensate them for the conveyance of the railroads' property. Id. at 117-18. The Court recognized that the reorganization "might raise serious constitutional questions" absent a method to challenge the amount of compensation received, because the properties were to be transferred before it was clear whether the securities would satisfy the requirement of just compensation. Id. at 149, 155. But because the creditors had "recourse to a Tucker Act suit in the Court of Claims for a cash award to cover any constitutional shortfall," [*36] the Court held that the reorganization provided "adequate assurance that any taking w[ould] be compensated." Id. at 155.

The Court subsequently reconfirmed in United States v. Security Industrial Bank, 459 U.S. 70, 103 S. Ct. 407, 74 L. Ed. 2d 235 (1982), that "[t]he bankruptcy power is subject to the Fifth Amendment's prohibition against taking private property without just compensation." Id. at 75. There, the Court considered a Takings Clause challenge to the Bankruptcy Code exemption in 11 U.S.C. § 522(f)(2), which permits individual debtors to avoid liens on certain personal property, such as household goods or appliances, in bankruptcy proceedings. Id. at 71-73. Holders of non-purchase-money, non-possessory liens on such property argued that retroactive application of § 522(f) to their liens would exact a taking. Id. at 73. The Court agreed that retroactive application of the statute would raise serious constitutional questions, because the provision "could be read literally to divest property interests which had been created before it was enacted." Id. at 80. Emphasizing "'the absence of a clear expression of Congress' intent to' apply" the provision to preexisting liens, the Court invoked the doctrine of constitutional avoidance to hold that the statute did not apply retroactively, thus averting the possibility that § 522(f) might result in a taking. Id. at 78-82 (quoting NLRB v. Catholic Bishop of Chi., 440 U.S. 490, 507, 99 S. Ct. 1313, 59 L. Ed. 2d 533 (1979)).6

These decisions underscore that Congress's bankruptcy powers do not allow it to infringe upon rights guaranteed by the Takings Clause. Where a taking has occurred, just compensation is owed and cannot be reduced—bankruptcy notwithstanding. Accordingly, a municipality may not nullify its obligation to pay

6 The majority attempts to limit this line of cases to situations in which the government retroactively divests creditors of their property interests. But, even if it should be so limited, that is exactly the situation facing Cobb. To begin, there is no question that a taking occurred that divested Cobb of his interest in real property. He had an undisputed right to just compensation until the City filed for bankruptcy and attempted to eliminate that right retroactively.

Moreover, the majority fails to recognize the important distinction between the rights of land owners and the rights of secured creditors. Applying § 522(f) prospectively in Security Industrial Bank [*37] did not implicate constitutional concerns because the property interests of secured creditors are themselves "defined by reference to existing law." See James Steven Rogers, The Impairment of Secured Creditors' Rights in Reorganization: A Study of the Relationship Between the Fifth Amendment and the Bankruptcy Clause, 96 Harv. L. Rev. 973, 987 (1983). When a creditor "enter[s] into [a] security arrangement, he kn[ows] . . . that his rights [a]re circumscribed by the federal legislation." Id. By contrast, legislation restricting rights in real property could never be entirely prospective. Id. at 987 n.59. In other words, "there can . . . be new security arrangements," but there "can be no new land." Id. Accordingly, Cobb's claim implicates the same concerns that led the Supreme Court to limit retroactive application of the bankruptcy laws.

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just compensation for seized property through a chapter 9 proceeding. Rather, claims for just compensation should be excepted from discharge, such that they survive any bankruptcy intact.7

B.

Unlike the majority, I believe Cobb took all the steps necessary to preserve his constitutional claim for just compensation. When Cobb's property was condemned by the City, he obtained a constitutional right to just compensation.8 He retained this right by filing an inverse condemnation action and pursuing it in accordance with the appropriate state procedures. That action is still pending in state court, having been stayed when the City filed its bankruptcy petition. As a result, Cobb maintains a claim for just compensation that should now be allowed to proceed.

The majority [*38] instead holds that Cobb has forfeited all property rights in the condemned parcel under California law, and that his pending claim is "simply" a statutory claim for monetary damages. But the statutory character of Cobb's claim does not diminish its constitutionally protected status—indeed, a constitutional claim for just compensation is a statutory claim for monetary damages under California law.

And Cobb did not forfeit his right to just compensation by either withdrawing the probable just compensation funds or permitting the public to use the road. The California Supreme Court has in fact explained that the constitutionality of the state's quick-take scheme rests in part on its allowing a continuing claim for greater compensation after deposited funds are withdrawn. Cf. Mt. San Jacinto Cmty. Coll. Dist. v. Superior Court, 40 Cal. 4th 648, 54 Cal. Rptr. 3d 752, 151 P.3d 1166, 1175 (Cal. 2007). I thus disagree that Cobb has completely relinquished his interest in the property.

1.

The majority's conclusion that Cobb's inverse condemnation action somehow became untethered from the Takings Clause is both inconsistent with California law and fundamentally at odds with the Fifth

7 I note that the majority's contrary approach is at odds with the only other federal court that has addressed this question. The bankruptcy court adjudicating Detroit's municipal bankruptcy held that the Takings Clause prohibits the discharge in bankruptcy of pending claims for just compensation arising from already completed takings. In re City of Detroit, 524 B.R. 147, 270 (Bankr. E.D. Mich. 2014). There, creditors were slated to receive a fraction of their takings claim under Detroit's chapter 9 plan. Id. at 267. Because the proposed plan denied those creditors their constitutionally owed just compensation, the court held that it would violate the Fifth Amendment if confirmed. Id. at 270. The bankruptcy court thus provided in its confirmation order that the takings claims were excepted from discharge. Id.

8 This case presents a separate issue from cases adjudicating whether a taking has in fact occurred. The majority cites In re George, 322 F.3d at 586 (9th Cir. 2003), for the proposition that we have approved a bankruptcy court's dismissal of a takings claim on the merits. There, we considered the application of 11 U.S.C. § 365(d)(4), which requires a bankruptcy trustee to assume or reject an "unexpired lease of nonresidential real property" within a particular timeframe to avoid having to surrender the property. 322 F.3d at 589 n.2 (quoting 11 U.S.C. § 365(d)(4)). We had previously clarified that, because the statute allows the debtor either to assume or to reject the lease, the statute does not itself result in an unconstitutional taking. See In re Ariz. Appetito's Stores, Inc., 893 F.2d 216, 220 (9th Cir. 1990) (explaining that where a debtor does not move to assume a lease, it is the debtor's "own conduct" that results "in the rejection of the lease and the loss of its interest in the building"—not operation of the bankruptcy statute). In In re George, the debtors were required to surrender the leased property after they failed to take action during the relevant timeframe. 322 F.3d at 589. We concluded that there was no cognizable taking because, following the surrender, "the debtors ha[d] no valid right to possess or develop the property." Id. at 590. Accordingly, the debtors had "no right to be compensated at all, let alone justly." Id. at 591. Contrary to the majority's characterization, there was therefore no colorable takings claim for the bankruptcy court to have any impact on one way or the other. Here, by contrast, there is no question that a taking occurred that entitled Cobb to compensation.

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Amendment. To demonstrate why this is so, it is necessary to describe the constitutional nature of Cobb's pending inverse condemnation action under California law. [*39]

Because the Fifth Amendment "proscribes takings without just compensation, no constitutional violation occurs until just compensation has been denied." Williamson Cty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 194 n.13, 105 S. Ct. 3108, 87 L. Ed. 2d 126 (1985). The Fifth Amendment does not require payment of just compensation "in advance of, or contemporaneously with, the taking; all that is required is that a 'reasonable, certain and adequate provision for obtaining compensation' exist at the time of the taking." Id. at 194 (quoting Reg'l Rail Reorg. Act Cases, 419 U.S. at 124-25). Accordingly, "if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation." Id. at 195.

California provides such a process by making available an action for inverse condemnation. See Regency Outdoor Advert., Inc. v. City of Los Angeles, 39 Cal. 4th 507, 46 Cal. Rptr. 3d 742, 139 P.3d 119, 123 (Cal. 2006) ("Inverse condemnation actions provide a vehicle for property owners to obtain 'just compensation.'"); Adam Bros. Farming v. Cty. of Santa Barbara, 604 F.3d 1142, 1147-48 (9th Cir. 2010) (noting that the procedure for seeking just compensation in California is an inverse condemnation action). An inverse condemnation action enables a property owner to enforce his constitutional right to just compensation, Baker v. Burbank-Glendale-Pasadena Airport Auth., 39 Cal. 3d 862, 218 Cal. Rptr. 293, 705 P.2d 866, 868 (Cal. 1985), when a municipality "has taken private property for public use without following the requisite condemnation procedures," Customer Co. v. City of Sacramento, 10 Cal. 4th 368, 41 Cal. Rptr. 2d 658, 895 P.2d 900, 905 (Cal. 1995).

An inverse condemnation action became available to Cobb [*40] when the City failed to prosecute its eminent domain action to final judgment and thus did not complete the condemnation procedures required under California law to compensate Cobb and to secure title for the City.9 See Redev. Agency v. Gilmore, 38 Cal. 3d 790, 214 Cal. Rptr. 904, 700 P.2d 794, 802 (Cal. 1985) (explaining that title to condemned property does not pass until a final order of condemnation has been recorded, including in a quick-take case); accord Cal. Civ. Proc. Code § 1268.030(c). The majority misunderstands the significance under state law of Cobb's retention of title. Where, as here, a municipality takes possession of property using the quick-take process, title to the property does not vest in the municipality until there has been a jury determination of just compensation, the full amount of that compensation has been paid, a final judgment has been entered in the eminent domain action, and a final order of condemnation has been recorded. Cal. Const. Art. 1, § 19; Cal. Civ. Proc. Code § 1268.030(a), (c). Because the City failed to pursue its eminent

9 To the extent the majority faults Cobb for not asserting a counterclaim for greater compensation in the eminent domain proceeding, the majority is mistaken. Because an eminent domain action will necessarily determine the compensation due to the property owner—indeed, that is the purpose of the action—a property owner is not required to separately counterclaim for more than the probable just compensation funds. In fact, the value of the probable just compensation funds "may not be given in evidence or referred to in the trial of the issue of compensation" during an eminent domain proceeding in California court. Cal. Civ. Proc. Code § 1255.060(a). This state procedural rule would make no sense if a property owner had to bring a counterclaim to request compensation in excess of the deposited funds. Moreover, the City has never asserted that Cobb was required to bring a counterclaim for his requested compensation. Even assuming such a requirement existed, then, the City has forfeited any argument that Cobb failed to meet it. Finally, as the California Court of Appeal explained in concluding that Cobb's inverse condemnation action was still timely, a property owner is not required to bring an inverse condemnation action until the dismissal of the eminent domain proceeding. If Cobb had been required to assert a counterclaim for greater compensation, he would not have had a viable inverse condemnation claim that could even potentially have been time barred. The fact that the Court of Appeal held that Cobb's inverse condemnation action could proceed shows that the court implicitly concluded that Cobb was not required to bring a counterclaim in the eminent domain action.

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domain claim to completion, no jury determination of just compensation occurred, Cobb's takings claim was never finally adjudicated, and title to his property never passed to the City. See Redev. Agency, 700 P.2d at 802; Prop. Reserve, Inc. v. Superior Court, 1 Cal. 5th 151, 204 Cal. Rptr. 3d 770, 375 P.3d 887, 907-08 (Cal. 2016) (observing that, under California law, condemnation requires "a jury determination of just compensation"). As [*41] a result, although the majority is correct that Cobb could not now eject users of the road from the land, Cobb's title is meaningful because it demonstrates that he has an outstanding constitutional claim for just compensation. See id.

Cobb's efforts to pursue that claim were halted when the City's bankruptcy filing led to a stay of Cobb's inverse condemnation proceeding. To this day, Cobb remains the legal owner of the property with an outstanding claim for just compensation.10

2.

The majority recasts Cobb's effort to enforce his constitutional right to just compensation as a mere monetary claim that is based on California's statutory scheme rather than the United States Constitution. As a preliminary matter, of course Cobb's claim takes the form of a statutory claim for money. The Fifth Amendment requires that states provide a mechanism for compensating land owners for their condemned property, so such takings claims will generally be brought in accordance with procedures laid out in state statutes. Takings claims arising in California do not somehow lose their constitutional status merely because California's procedures for seeking just compensation [*42] were codified by statute rather than solely through caselaw. And all actions for just compensation could be characterized as claims for money; that is the nature of the claim. Cf. Lucree v. United States, 117 Fed. Cl. 750, 752 (2014) ("A claim for just compensation [under federal law] is a claim for money damages cognizable under the Tucker Act.").11 The fact that Cobb's claim takes the form of a statutory claim for money damages, therefore, does not render it something other than a claim for just compensation arising out of the Fifth Amendment.

Additionally, Cobb's claim for just compensation did not lose its constitutional mooring when Cobb withdrew the probable just compensation funds. Cobb undeniably waived certain rights by withdrawing the funds, including his ability to challenge the City's "right to take" and "any claim as to lack of a public purpose." See Clayton v. Superior Court, 67 Cal. App. 4th 28, 78 Cal. Rptr. 2d 750, 752 (Ct. App. 1998). But the plain language of California Civil Procedure Code § 1255.260 preserves Cobb's right as the owner of the property to seek "greater compensation."

10 People ex rel. Department of Public Works v. Peninsula Title Guaranty Co., 47 Cal. 2d 29, 301 P.2d 1 (Cal. 1956), is not to the contrary. The majority invokes Peninsula Title for the proposition that formal title passage is not required to effect a change of ownership "[w]here there has been a prior physical 'taking.'" Id. at 3. But the question in Peninsula Title was whether a property owner who retains legal title remains liable for certain taxes after a public entity has already taken the property. Id. at 3-4. The California Supreme Court held that, under those circumstances, lack of a formal transfer of title should not operate to impose continued tax liability on a property owner who has already experienced "a divestiture for all practical purposes." Id. at 3. The issue in Peninsula Title was thus whether a property owner should continue to bear the burdens of ownership throughout the lengthy eminent domain process despite having effectively lost the property, not whether a property owner is deprived of the only benefit remaining to him at that point—the constitutional right to seek just compensation. The City has not cited any cases that support the latter proposition, nor has the majority. And, indeed, Cobb has continued to pay taxes on the parcel.

11 For these reasons, and contrary to the majority's assertion, Cobb's inverse condemnation claim should have been exempted from discharge even if it had already been reduced to judgment. Whether someone has an outstanding claim for just compensation or a judgment awarding him just compensation, he has a constitutional right to just compensation that neither a city nor Congress through its bankruptcy powers may extinguish.

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And try as the majority might to reframe a claim for "greater compensation" as some monetary claim unrelated to the property owner's constitutional right to just compensation for taken property, the California Supreme Court has equated a claim for greater compensation following a quick [*43] take procedure with the constitutional right to just compensation. See Mt. San Jacinto Cmty. Coll. Dist., 151 P.3d at 1175 (rejecting a party's argument that California's quick-take procedures deprive property owners of their constitutional right to just compensation on the ground that "section 1255.260 does not require waiving a claim for greater compensation with withdrawal of the deposit"). Under California law, a claim for "greater compensation" comprises Cobb's ability "to litigate the issue of adequate compensation," Clayton, 78 Cal. Rptr. 2d at 753, that is, the "amount of 'just compensation' to which [he] [i]s entitled," Contra Costa Water Dist. v. Vaquero Farms, Inc., 58 Cal. App. 4th 883, 68 Cal. Rptr. 2d 272, 274-75 (Ct. App. 1997) (rejecting the argument that a condemnee waived the ability to argue that just compensation had not yet been paid by withdrawing the probable just compensation deposit under section 1255.260). The amount of just compensation is precisely the matter at issue in Cobb's inverse condemnation action.

Nor did Cobb relinquish his interest in just compensation by, as the majority puts it, "allowing the City to construct a road and open it to public use."12 In support of the contention that he did, the majority cites Frustuck v. City of Fairfax, 212 Cal. App. 2d 345, 28 Cal. Rptr. 357 (Ct. App. 1963), which held that "where a property owner permits the completion by a . . . public agency of the work which results in the taking of private property for a public [*44] use he will be denied the right to enjoin the agency." Id. at 373. But Frustuck speaks to a landowner's right to enjoin, not his ability to seek just compensation, and thus has no applicability here. See id. Indeed, the very next sentence of Frustuck following the passage quoted by the majority states: "[The property owner's] only remedy under such circumstances is a proceeding in inverse condemnation to recover damages." Id. Frustuck thus does not stand for the proposition that intervening public use deprives a condemnee of all property rights. Frustuck merely clarifies that, instead of injunctive relief, the appropriate remedy in such circumstances is to seek just compensation in an inverse condemnation action—the very course Cobb pursued.13

Accordingly, Cobb has not relinquished his right to seek just compensation under California law. Cobb's right to just compensation arose when the City seized his property for public use nearly 20 years ago, and he has adequately pursued that right ever since.

3.

Finally, the majority places great weight on Cobb's failure to contest the unsecured classification of his claim within the Plan. But the Constitution's mandate that takings claims [*45] be excepted from discharge does not depend on whether those claims were initially classified in any bankruptcy proceeding as secured or unsecured; the whole point of nondischargeability is that nondischargeable claims pass

12 I note that the Cobb family permitted the City to build a road only in the sense that they did not challenge the City's action for prejudgment possession. See Cal. Civ. Proc. Code § 1255.410(c). The Cobbs did not otherwise have a choice as to whether the City could proceed with construction.

13 It is irrelevant that Cobb did not appeal the Superior Court's rejection of his quiet title, ejectment, and trespass claims. Those claims seek relief that would essentially prohibit the City from continuing to use the land for a public road; such relief is no longer available to Cobb, see Frustuck, 28 Cal Rptr. at 373, and the Superior Court accordingly held that the doctrine of intervening public use barred those claims. But Frustuck makes clear that Cobb can still pursue just compensation in an inverse condemnation action, see id., and he appealed the Superior Court's dismissal of that claim.

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through bankruptcy unaffected, see In re Grynberg, 986 F.2d 367, 370 (10th Cir. 1993). And the Bankruptcy Code does not require a creditor with a claim that is excepted from discharge to file a proof of claim in the bankruptcy proceeding to preserve that claim in its entirety. Id. (describing how a "holder of a nondischargeable debt" is "free to pursue the debtor outside bankruptcy"); see also In re Kolstad, 928 F.2d 171, 174 (5th Cir. 1991) (recognizing that if a creditor with a nondischargeable claim "elected not to participate in the bankruptcy case and not to file a claim, the debtor would remain burdened by that debt following bankruptcy").14 Instead, the Federal Rules of Bankruptcy Procedure plainly state that a complaint seeking exception from discharge "may be filed at any time."15 Fed. R. Bankr. P. 4007(b). As a result, the classification of Cobb's claim within the Plan is irrelevant here.

Moreover, while Cobb may not have challenged his claim's specific classification, he unequivocally maintained throughout the bankruptcy [*46] proceeding that his claim for just compensation was "protected by the Fifth and Fourteenth Amendments to the United States Constitution and c[ould not] be impaired by the Plan" or treated as a mere "'general unsecured' claim." This line of reasoning plainly encompasses the argument that his claim should have been excepted from discharge. Cobb has now also clearly expressed to our court that the remedy he requests is to preserve his takings claim. Given that the parties had an opportunity to address all of the relevant issues, I see no reason to fault Cobb for failing to challenge the categorization of his claim as unsecured. After all, "the bankruptcy law is not supposed to function merely as a procedural gauntlet that only the most adroit or best represented creditors can overcome." Kolstad, 928 F.2d at 173.

III.

Contrary to the majority's suggestions, the sky will not fall if Cobb is allowed to pursue his claim for just compensation. I am not blind to the City's herculean task of pulling itself out of bankruptcy, but a ruling for Cobb would not topple the Plan, or somehow throw the City back into bankruptcy. The City has presented no evidence that Cobb cannot be compensated for his condemned property while the City carries out its Plan. The City has not, for example, [*47] argued that it would have to claw back distributions under the Plan to pay Cobb. Indeed, the City has not even claimed that it is currently insolvent.16 And, because Cobb seeks to proceed entirely outside of the Plan, the City would be under no

14 Of course, where a creditor with a nondischargeable claim elects to sit out the bankruptcy entirely, the creditor loses the opportunity to participate in voting on or distribution under the plan. Grynberg, 986 F.2d at 370; see also Fed. R. Bankr. P. 3003(c)(2) (explaining that a creditor who does not file a proof of claim in a chapter 9 or chapter 11 proceeding "shall not be treated as a creditor with respect to such claim for the purposes of voting and distribution" (emphasis added)). And "[c]reditors holding nondischargeable debts who do not participate in the distribution of the debtor's estate under the plan take a large risk that the debtor will have nothing left after bankruptcy proceedings are concluded, and that although the debt has not been discharged, meaningful recovery will be postponed indefinitely." Grynberg, 986 F.2d at 370 n.4.

15 The only exception to the lack of a time limit—not applicable here—is for complaints filed under 11 U.S.C. § 523(c), which relates to debt incurred from fraud or willful and malicious injury. In re Coleman, 560 F.3d 1000, 1004 n.6 (9th Cir. 2009); see also 11 U.S.C. § 523(a)(3)(B).

16 To argue otherwise, the majority relies on facts from the Bankruptcy Appellate Panel's decision in a different challenge to the City's bankruptcy, Franklin High Yield Tax-Free Income Fund v. City of Stockton, 542 B.R. 261 (B.A.P. 9th Cir. 2015). There is no basis for incorporating statements—absent from the record here—that were made in a separate litigation in which Cobb was not a party. See United States v. Joyce, 511 F.2d 1127, 1132 (9th Cir. 1974) (explaining that "the facts found in one case are not evidence of those same facts in another case"). That the majority found it necessary to do so demonstrates the lack of evidence presented on the issue in this appeal. And, in fact, the bankruptcy court in the Franklin proceeding noted that with the City's "finances on more stable footing," it was possible that

2018 U.S. App. LEXIS 34636, *45


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obligation to compensate him within the same timeframe in which it compensates creditors under the Plan. See supra note 14.

In addition, as the majority itself notes, just compensation does not necessarily mean full compensation. United States v. Norwood, 602 F.3d 830, 834 (7th Cir. 2010). I agree with the majority that a determination of just compensation requires considering whether the compensation "would result in manifest injustice to owner or public." United States v. Commodities Trading Corp., 339 U.S. 121, 123, 70 S. Ct. 547, 94 L. Ed. 707, 115 Ct. Cl. 842 (1950). But the analysis of what just compensation entails must take place under the Fifth Amendment, rather than through the lens of the Bankruptcy Code.

Moreover, recognizing the protected nature of Cobb's claim would have implications only for other takings claims, and thus would not leave the City vulnerable to a slew of new liabilities arising from other sorts of constitutional claims. The import of Cobb's claim is not merely that he has a constitutional right—it is that he has a constitutional right to just compensation.17 The Takings Clause stands alone among constitutional [*48] provisions in requiring a specific compensatory remedy. By contrast, nothing in the Constitution expressly guarantees compensation for a violation by a city of, for example, the Equal Protection Clause of the Fourteenth Amendment. See In re City of Detroit, 524 B.R. 147, 265 (Bankr. E.D. Mich. 2014) (concluding that, in contrast to the Takings Clause, "the Fourteenth Amendment does not provide a substantive constitutional right to compensation for damages"). The majority's observation that other constitutional claims are routinely reduced during bankruptcy proceedings misses this crucial distinction.

IV.

For the foregoing reasons, I respectfully but adamantly dissent.

End of Document

"additional funds could be made available to [creditors] . . . and that could be done without disturbing in any way the payments to retirees." Franklin, 542 B.R. at 277.

17 Because of this distinction, the majority's reliance on Bennett v. Jefferson Cty., 899 F.3d 1240 (11th Cir. 2018), is unwarranted. In Bennett, the Eleventh Circuit held that equitable mootness may bar consideration on appeal of constitutional challenges to a chapter 9 plan, but the challenges the court considered related to voting rights and procedural due process, not the Takings Clause. Id. at 1243, 1250-51.

2018 U.S. App. LEXIS 34636, *47


EXHIBIT 5


Jabali v. Mau

United States District Court for the District of Hawaii

June 9, 2009, Decided; June 9, 2009, Filed

CIVIL NO. 08-00059 JMS/LEK


ALI JABALI, LOIS MALONZO, LE BOD ENTERPRISES, INC., and MATRIX (individual disable comfort cat), Plaintiffs, vs. WILBERT Y.C. MAU, WILBERT AND BEATRICE APARTMENTS, JOHN DOES 1-10, Defendants.

Prior History: Jabali v. Mau, 2009 U.S. Dist. LEXIS 14288 (D. Haw., Feb. 24, 2009)

Counsel: [*1] Ali Jabali, Plaintiff, Pro se, Aiea, HI.

Lois Malonzo, Plaintiff, Pro se, Aiea, HI.

Le Bod Enterprises, Inc., Plaintiff, Pro se, Aiea, HI.

Matrix, Plaintiff, Pro se, Aiea, HI.

For Wilbert Y.C. Mau, Defendant: Adrian Y. Chang, Brenda Morris Hoernig, Dean E. Ochiai, Randall Y. Kaya, LEAD ATTORNEYS, Law Offices of Dean E. Ochiai, Honolulu, HI.

For Wilbert and Beatrice Apartments, Defendant: Harold Chu, LEAD ATTORNEY, Pacific Tower, Honolulu, HI.

Judges: J. Michael Seabright, United States District Judge.

Opinion by: J. Michael Seabright

Opinion

ORDER DENYING PLAINTIFF ALI E. JABALI'S MOTION FOR RELIEF FROM JUDGMENT AND/OR RECONSIDERATION OF JUDGMENT

Pro se Plaintiff Ali E. Jabali ("Jabali" or "Plaintiff") filed this action against Defendants Wilbert Y.C. Mau and Wilbert and Beatrice Apartments (collectively, "Defendants") alleging violations of the Fair Housing Act. Shortly after attending an August 4, 2008 Rule 16 Scheduling Conference, Jabali failed to comply with court deadlines or participate in this action in any way. Accordingly, on February 25, 2009, the court dismissed this action with prejudice. On May 6, 2009, Jabali filed a Motion titled "Motion for 'Relief from Judgment['] Rule 60. (grds.b., (1) mistaken inadvertence [*2] (server) (2) 'Excusable Neglect!', surprise, unjust equity) to Set Aside Judgment & Reconsideration" ("Jabali's Rule 60(b) Motion"), in which he argues that he is entitled to relief from judgment under Rule 60(b)(1). Because, as explained below, none of Jabali's excuses sanction his failure to participate in this action for over eleven months, the court DENIES Jabali's Rule 60(b) Motion.


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I. BACKGROUND

On February 13, 2008, Jabali filed a Complaint against Defendants for their alleged violations of the Fair Housing Act. On August 4, 2008, Magistrate Judge Kobayashi held a Rule 16 Scheduling Conference ("August Scheduling Conference") in which Jabali and counsel for Defendants attended. Magistrate Judge Kobayashi set forth deadlines for several events, including that the parties submit settlement conference statements by December 29, 2008 and attend a settlement conference before her on January 5, 2009. Also on August 4, 2008, Jabali filed notice of his address at Bougainville Drive in Honolulu (the "Bougainville address") and his new cell phone number with the court. Doc. No. 20. 1

Jabali has not [*3] conducted or participated in discovery since shortly after the August 4, 2008 scheduling conference. Following the August 4, 2008 hearing, Defendants informed Plaintiff of their intention to take his deposition. See Doc. No. 23, Ex. B, Chang Decl. P 2; Pl.'s Rely unmarked pages 6-8. Defendants claim that shortly after the status conference, defense counsel called Plaintiff to schedule a deposition and that, during that conversation, Plaintiff indicated he could not attend a deposition in September or October. See Doc. No. 23, Ex. B, Chang Decl. P 3. Plaintiff disputes that Defendants contacted him and instead asserts that he contacted defense counsel, but concedes that he spoke to defense counsel's receptionist and informed her that he was not available for a deposition in the weeks following the status conference or in the following month because he was "going on a vacation." See Pl.'s Reply unmarked pages 6-8. 2 On August 6, 2008, defense counsel sent Jabali a letter at the Bougainville address requesting that Jabali contact him to set up a mutually agreed upon date and time to conduct his deposition and, if he refused, informing him that Defendants would unilaterally schedule his [*4] deposition. See Doc. No. 23, Ex. A. On September 2, 2008, Defendants filed a Notice of Taking Deposition Upon Oral Examination with the court, setting Jabali's deposition for October 15, 2008; Jabali was served via U.S. mail at the Bougainville address. See Doc. No. 22. Jabali neither attended his October 15, 2008 deposition nor informed defense counsel of his inability to attend. See Doc. 23, Ex. B.

On December 2, 2008, Defendants filed a Motion to Compel Discovery and for Sanctions ("Defendants' Motion to Compel") against Jabali for failure to attend his deposition. 3 Doc. No. 23. Because no Opposition was filed, the court granted Defendants' Motion to Compel on December 31, 2008 and ordered Jabali to appear for a deposition at a date no earlier than January 29, 2009 and awarded Defendants

1 The Rule 16 Scheduling Order was mailed to the Bougainville address. See Doc. Nos. 20-21.

2 Plaintiff's Reply states the following regarding his conversation with defense counsel's receptionist regarding scheduling his deposition:

Pro-se [Plaintiff] DID INDEED CALL ATTY. CHANGS OFFICE . . . days later and talked to his office receptionist.

And respectfully, informed her that Plaintiff would not be available to be 'deposed' on Atty. Changs date or time table.

She then asked Pro-se if Plaintiff would be available a week from that date. Pro-se reply was No or Negative!

She then asked if the following month would Plaintiff be available to be deposed. And again Pro-se stated that No! he would not be available, to be deposed then either.

And that Plaintiff/Pro-se needed time off and was going on a vacation. But would be available to be 'deposed!' at a future date.

Pl.'s Reply unmarked page [*5] 8 (reproduced as filed).

3 Defendants' Motion to Compel and notice from the court regarding Defendants' Motion to Compel were both served via U.S. mail to the Bougainville address. See Doc. Nos. 23-24.

2009 U.S. Dist. LEXIS 48293, *2


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reasonable attorneys' fees and costs incurred in connection with the deposition Jabali failed to attend. Doc. No. 25.

Jabali then failed to file his settlement statement on December 29, 2008 or attend the January 5, 2009 settlement conference. 4 Doc. No. 27. Because Jabali failed to comply with these court ordered deadlines set forth at the August Scheduling Conference, on January 9, 2009, Magistrate Judge Kobayashi issued an Order to Show Cause why sanctions should not be imposed. 5 Id. Jabali did not respond to the Order to Show Cause or appear at the February 2, 2009 hearing on the Order to Show [*6] Cause. See Doc. No. 30. Magistrate Judge Kobayashi therefore entered a finding and recommendation that this case be dismissed with prejudice, which the court adopted on February 24, 2009. 6 See Doc. Nos. 31-32. Judgment was entered on the same day. Doc. No. 33.

On March 4, 2009, the court received the following seven pieces of mail, originally sent to Jabali, which were returned as undeliverable: Rule 16 Scheduling Order, Notice of Hearing on the Motion to Compel, Order to Show Cause, Finding and Recommendation That Case Be Dismissed Without Prejudice, Order Adopting Magistrate's Findings and Recommendation, and the August 4, 2008 Minute Order. See [*7] Doc. Nos. 34-40.

On May 6, 2009, over two months after this action was closed, Jabali filed his Rule 60(b) Motion. 7 Defendants filed an Opposition on May 18, 2009, and Plaintiff filed a Reply on May 29, 2009. 8

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 60(b) provides for relief only upon a showing of (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud; (4) a void judgment; (5) a satisfied or discharged judgment; or (6) for "extraordinary circumstances" that justify relief. Fed. R. Civ. 60(b); Fantasyland Video, Inc. v. County of S.D., 505 F.3d 996, 1005 (9th Cir. 2007).

Plaintiff brings his Motion pursuant to Rule 60(b)(1). Rule 60(b)(1) provides that "[o]n motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for . . . mistake, inadvertence, surprise, or excusable neglect." In examining what constitutes "excusable neglect," the Supreme Court has stated

that [*8] the determination [of what sorts of neglect will be considered "excusable"] is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission. These include . . . the danger of prejudice to the [party opposing the motion], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith.

4 At the January 5, 2009 settlement conference, Magistrate Judge Kobayashi attempted to contact Plaintiff at three different phone numbers that he had provided the court (including the number provided on August 4, 2008), but two were out of service and one did not belong to Plaintiff. See Doc. No. 26.

5 On the same day, the Order to Show Cause was sent to Plaintiff at the Bougainville address via certified mail. Doc. No. 27.

6 Jabali also did not respond to Magistrate Judge Kobayashi's February 3, 2009 finding and recommendation.

7 Jabali's Rule 60(b) Motion provided the court with his new address and telephone number. See Doc. No. 42.

8 Pursuant to Local Rule 7.2(d), the court finds that it can determine this Motion without a hearing.

2009 U.S. Dist. LEXIS 48293, *5


Page 4 of 6

Pioneer Inv. Serv. Co. v. Brunswick Assocs. Ltd. Partnership, 507 U.S. 380, 395, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993) (interpreting "excusable neglect" under bankruptcy rule); Briones v. Riviera Hotel & Casino, 116 F.3d 379, 381 (9th Cir. 1997) (per curiam) (applying Pioneers' definition of "excusable neglect" to "excusable neglect" under Rule 60(b)(1)). "These four enumerated factors, while not an exclusive list, provide a framework with which to determine whether missing a filing deadline constitutes 'excusable' neglect." Briones, 116 F.3d at 381; see also Noah v. Bond Cold Storage, 408 F.3d 1043, 1045 (8th Cir. 2005) ("To be excusable . . . the neglect must be accompanied by a showing of good faith and some reasonable basis for not complying with the rules.").

After [*9] Pioneer, however, mere "inadvertence, ignorance, . . . or mistakes . . . do not usually constitute 'excusable' neglect." Kyle v. Campbell Soup Co., 28 F.3d 928, 931 (9th Cir. 1994) (citing Pioneer, 507 U.S. at 392); see, e.g., Aguiar-Carrasquillo v. Agosto-Alicea, 445 F.3d 19, 28 (1st Cir. 2006) (affirming denial of Rule 60(b)(1) reconsideration where plaintiffs "exercised no diligence to meet the filing deadlines established by the district court"); Noah, 408 F.3d at 1045 (affirming denial of Noah's Rule 60(b)(1) motion because failure to comply with the scheduling and trial order and the order to show cause was not "excusable neglect").

The disposition of a Rule 60(b) motion for relief from judgment is within the sound discretion of the district court. Casey v. Albertson's Inc., 362 F.3d 1254, 1257 (9th Cir. 2004).

III. ANALYSIS

Applying the equitable test of Pioneer and Briones, the balancing of the equities weighs strongly against granting Jabail's Rule 60(b) Motion.

First, Plaintiff's eleven month delay in participating in this action has caused prejudice to Defendant Wilbert Y.C. Mau ("Wilbert"). Wilbert is currently 94 years old and in declining physical health -- therefore, the [*10] extended delay in this action caused by Plaintiff's failure to comply with court deadlines and submit to discovery have adversely affected Wilbert's ability to defend himself. Garton Mau Decl. PP 2-4. Although Plaintiff asserts that his main claims are against Garton Mau, Wilbert's son, see Pl.'s Reply unmarked pages 12-14, that does not remedy the prejudice to Wilbert, and the fact that Wilbert, not Garton, is named as a Defendant. This factor, therefore, weighs against finding that Jabali's actions constituted "excusable neglect" under Rule 60(b)(1).

Second, if Jabali's Rule 60(b) Motion were granted, Plaintiff's failure to meet the various court-imposed deadlines, to respond to any of the motions or orders filed over the last eleven months, and to participate in discovery would necessarily delay the judicial proceedings. Simply, Plaintiff's failure to participate in this action for over eleven months would delay the proceedings for at least that long. This factor cuts against finding in favor of Plaintiff.

Third, Jabali missed court ordered deadlines due to his own carelessness. Namely, he admits that he missed the settlement conference because he confused the date January 5, 2009 [*11] with June 5, 2009. See Pl.'s Mot. unmarked pages 9, 18, Pl.'s Reply unmarked pages 4-5. Additionally, because Jabali does not provide any explanation why he missed the December 29, 2008 settlement conference statement

2009 U.S. Dist. LEXIS 48293, *8


Page 5 of 6

deadline or why he failed to provide the court with updated contact information, 9 at the bare minimum those errors must be attributed to his own negligence. 10 Further, Jabali intentionally delayed this proceeding by refusing to provide opposing counsel with a date to take his deposition. See Pl.'s Reply unmarked pages 8-9; Chang Decl. PP 2-7. Further, the delay -- caused by Plaintiff's negligence and avoidance tactics -- was due to circumstances entirely within his own control. 11 Thus, this factor weighs heavily in favor of finding for Defendants.

Finally, Jabali's refusal to provide defense counsel with a date for his deposition without providing a valid reason for his unavailability indicates that he acted with something less than good faith. Put differently, Plaintiff's assertion that he was not available for a deposition because he was "going on a vacation" coupled with his failure to participate in this action for eleven months indicate that Jabali did not intend to meaningfully participate in discovery. This factor weighs strongly against finding that Jabali's conduct constituted "excusable neglect" under Rule 60(b)(1).

In sum, all of the factors weigh against granting Jabali relief from the judgment pursuant to Rule 60(b)(1). That is, there is prejudice to Wilbert Mau, the delay -- caused by Jabali's negligent failure to comply with court deadlines [*14] and intentional refusal to participate in discovery -- significantly impacted the judicial proceedings, and he acted with bad faith. Accordingly, Jabali's neglect was not "excusable" under Rule 60(b)(1).

While the court recognizes that Plaintiff is appearing pro se, such status does not render him immune from the sound application of the rules of this court. See King v. Atiyeh, 814 F.2d 565, 567 (9th Cir. 1987) ("Pro se litigants must follow the same rules of procedure that govern other litigants."). 12

9 "A party, not the district court, bears the burden of keeping the court apprised of any changes in his mailing address." See Carey v. King, 856 F.2d 1439, 1441 (9th Cir. 1988) (per curiam) (upholding sanction in form of dismissal of action for pro se plaintiff's failure to prosecute where notice of dismissal was returned as undeliverable); see also Soliman v. Johanns, 412 F.3d 920, 922 (8th Cir. 2005) ("[A] litigant who invokes [*12] the processes of the federal courts is responsible for maintaining communication with the court during the pendency of his lawsuit."). Further, it is clear that Jabali was aware of his responsibility to provide the court with his up-to-date contact information because, prior to Jabali missing the deadlines regarding the settlement conference, he notified the court when he could not attend a status conference on April 10, 2008, see Doc. No. 11, and notified the court again when his telephone number changed on August 4, 2008. See Doc. No. 20.

10 While the court recognizes that Jabali's homelessness understandably caused him extreme difficulty and subjected him to substantial hurdles, Jabali does not assert that his homelessness prevented him from meeting court-ordered deadlines, contacting the court, or agreeing on a deposition date.

11 Jabali argues that the "mistake, inadvertence, surprise, or excusable neglect" is actually not on his part, but that of the Clerk's office for failing to email him filings in this action after unsuccessfully trying to reach him via the address and phone number he provided to the court on August 4, 2008. The court, however, finds this argument utterly unavailing. [*13] Jabali was present at the August Scheduling Conference and was therefore informed that he must submit a settlement conference statement by December 29, 2008 and attend a settlement conference before Magistrate Judge Kobayashi on January 5, 2009. Any failure to comply with those deadlines is due to his own carelessness, not due to the Clerk's office's failure to track him down.

12 Liberally construing Jabali's Rule 60(b) Motion, he may also request relief from judgment due to "extraordinary circumstances" pursuant to Rule 60(b)(6). "To receive Rule 60(b)(6) relief, a moving party must show both injury and that circumstances beyond its control prevented timely action to protect its interests." Lehman v. United States, 154 F.3d 1010, 1017 (9th Cir. 1998) (citation and quotation signals omitted); see also Fantasyland Video, Inc., 505 F.3d 996, 1005 (9th Cir. 2007) ("[Rule 60(b)(6)] has been used sparingly as an equitable remedy to prevent manifest injustice and is to be utilized only where extraordinary circumstances prevented a party from taking timely action to [*15] prevent or correct an erroneous judgment." (citation and quotation signals omitted)). Because Jabali was on notice of court imposed deadlines and that defense counsel wished to depose him and because he has not alleged that circumstances beyond his control prevented his compliance with either, Rule 60(b)(6) also provides him no relief.

2009 U.S. Dist. LEXIS 48293, *11


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IV. CONCLUSION

For the reasons above, the court DENIES Jabali's Motion for Relief from Judgment.

IT IS SO ORDERED.

DATED: Honolulu, Hawaii, June 9, 2009.

/s/ J. Michael Seabright

J. Michael Seabright

United States District Judge

End of Document

2009 U.S. Dist. LEXIS 48293, *15


EXHIBIT 6


Landis v. Mario M.S.B. Feusier (In re Mario M.S.B. Feusier)

United States Bankruptcy Court for the Northern District of California, Oakland Division

December 10, 2013, Decided; December 10, 2013, Entered on Docket

Bankruptcy Case No. 12-42005, Chapter 7, Adversary Proceeding No.12-4178

Reporter2013 Bankr. LEXIS 5191 *; 2013 WL 6500223

In re MARIO M.S.B. FEUSIER, Debtor.AUGUST B. LANDIS, Acting, United States Trustee, Plaintiff, v. MARIO M.S.B. FEUSIER, Defendant.

Counsel: [*1] For U.S. Trustee (mp), Plaintiff (12-04178): Barbara A. Matthews, Margaret H. McGee, Office of the U.S.Trustee, Oakland, CA.

For Mario M.S.B Feusier, Defendant (12-04178): Jan E. Van Dusen, Law Office of Jan Van Dusen, Lafayette, CA.

For Mario M.S.B. Feusier, Debtor (12-42005): Jan E. Van Dusen, Law Office of Jan Van Dusen, Lafayette, CA.

For Brian M Fischer, Petitioning Creditor (12-42005): Mark Carton, Law Offices Of Mark Carton, San Francisco, CA.

For Lois I. Brady, Trustee (12-42005): Reidun Stromsheim, Stromsheim and Assoc., San Francisco, CA.

Judges: Roger L. Efremsky, U.S. Bankruptcy Judge.

Opinion by: Roger L. Efremsky

Opinion

MEMORANDUM DECISION ON UNITED STATES TRUSTEE'S MOTION FOR TERMINATING SANCTIONS

I. Introduction

Before the court is the motion by the United States Trustee (the "UST") for terminating sanctions and an award of attorney's fees against defendant Mario M.S.B. Feusier ("Defendant" or "Debtor"). The matter has been fully briefed and argued.

For the reasons explained below, the court now grants the relief requested by the UST.

II. Procedural History


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A. Prior Cases

The court takes judicial notice of the fact that before filing this case, Defendant had filed the following cases:

1. 07-42255 lt 13 - 7/20/07 [*2] - 9/26/07. The case was filed pro se but an attorney later substituted in. The attorney asked for, and was given more time, but the case was dismissed on the chapter 13 trustee's motion for failure to file the documents required by § 521(a)(1) (the "Required Documents") after the extended time had run. Defendant did not appear at the § 341 meeting.1

2. 07-43244 edj 13 - 10/3/07 - 11/28/07. The case was filed pro se. Debtor requested and was given more time to file the Required Documents but the case was dismissed for failure to file them after the extended time had run. Debtor was not examined at the § 341 meeting.

3. 08-40048 edj 13 - 1/4/08 - 3/10/08. This case was also filed pro se. The chapter 13 trustee moved to dismiss "with prejudice" for failure to file Required Documents and for bad faith. Debtor filed an opposition to the chapter 13 trustee's motion, arguing that he was not acting in bad faith, but was the victim of [*3] the general decline in the economy. After the hearing, the case was dismissed "with prejudice" as requested by the chapter 13 trustee. None of the Required Documents were ever filed.

4. 08-42469 lt 13 - 5/19/08 - 7/1/08. This case was also filed pro se, and was dismissed on the chapter 13 trustee's motion before the § 341 meeting was held based on Debtor's failure to file the Required Documents.

5. 08-44953 rn 13 - 9/8/08 - 12/11/08. This case was also filed pro se without the Required Documents. Debtor failed to appear at the § 341 meeting and the case was dismissed "with prejudice" and with a two-year bar to refiling on the chapter 13 trustee's motion on grounds of bad faith. Debtor appeared and argued at the hearing on the trustee's motion but did not file an opposition.

6. 09-48645 edj 11 - 9/15/09 - 9/17/09. This case was also filed pro se, and some of the Required Documents were filed. For this case, Debtor used petition preparer Ransome McKissick. The case was dismissed because of the two-year bar ordered in the previous case.

7. 10-47885 lt 11 - Beverly Anne Feusier. 7/13/10 - 12/15/10, converted to chapter 7; discharge entered 7/28/11; closed 1/11/12. While the two-year bar to [*4] refiling prevented Defendant from filing another case, his wife Beverly Anne Feusier, acting pro se, filed a chapter 11 case.

At the initial § 341 meeting, Beverly Feusier admitted that the schedules and statement of financial affairs had been filled out by Defendant and that she had not read them before they were filed. The § 341 meeting was then continued several times and, through counsel, Beverly Feusier filed amended schedules and an amended statement of financial affairs to address omissions brought to light by the UST's questioning. Subsequently, the UST moved to convert the case or appoint a chapter 11 trustee, arguing that cause existed under § 1112(b)(4) because Beverly Feusier had filed the case in bad faith, had grossly mismanaged the estate, had used cash collateral without permission, and had not provided information

1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all "Rule" references are to the Federal Rules of Bankruptcy Procedure. All "Civil Rule" references are to the Federal Rules of Civil Procedure.

2013 Bankr. LEXIS 5191, *1


Page 3 of 13

requested by the UST (i.e., proof of insurance, bank statements, proof of filing tax returns). The court granted the UST's motion.

B. The Present Case

Defendant filed this chapter 7 case on March 5, 2012. This is, in effect, his eighth bankruptcy case since 2007. He is represented by counsel Jan Van Dusen, who signed the petition. However, Van Dusen has admitted [*5] that petition preparer Ransome McKissick actually prepared the schedules and statement of financial affairs and she did not review them with Defendant before they were filed.2 Over the next thirteen months, Defendant amended his schedules and statement of financial affairs multiple times. See docket nos. 18, 53, 86, 89 and 92.

Defendant's original schedule A listed an over-encumbered principal residence in Martinez, an over-encumbered rental property in Berkeley, an over-encumbered rental property in Livermore, unencumbered raw land in Utah valued at $5,000 and unencumbered raw land in Siskiyou County valued at $5,000.3 Defendant did not list ownership of any business interests on schedule B. His original schedules I and J said he was a "real estate consultant" employed for the previous twelve years at "Preferred Real Estate" and described his spouse as retired. He claimed to have combined average projected monthly earnings of $13,950 from various sources including operation of a business, rents, and a pension.

Defendant's schedule J also claimed he was making payments of $7,785 per month for rent or home mortgage plus other installment payments totaling $15,471 per month for taxes, insurance and debt service on the Martinez, Livermore, and Berkeley properties.4

Defendant filed an amended schedule B on July 20, 2012 (four months after [*7] the case was filed). See docket no. 53. In this amended schedule B, he listed for the first time in answer to question no. 35 his interests in the following businesses: (1) Trans Pacific Capital Assets Group, LLC, "directors" are Debtor and David Sandhu ("Trans Pacific"); (2) Nationwide Home Loan Solutions Corp. ("Nationwide")- 50% ownership with son, Debtor is sole director, secretary, treasurer; (3) Preferred Homes & Loans - dba of Nationwide; (4) Preferred Design & Development - dba of Debtor; (5) Preferred Real Estate Services - dba of Debtor; and (6) Lender's Northstar Mortgage Group, Inc. - "closed corporation that was wholly owned by Debtor" (collectively, the "Business Entities").

Defendant filed another amended schedule B on April 3, 2013. See docket no. 86. He and his counsel also filed declarations to explain the amendments. See docket nos. 87-88. These declarations claim that all

2 See docket nos. 87-88. Counsel thus admits to violating her duties under § 707(b)(4)(C) and (D) and § 526(a)(2).

3 These two properties had been valued at $200,000 and $75,000, [*6] respectively, in the Beverly Feusier case. See docket no. 25, p. 3 in 10-47885.

4 Secured creditors contradict this. Relief from stay motions filed by the holders of first deeds of trust on the Martinez and Berkeley properties in June and July 2012 alleged pre-petition defaults of 63 months. See docket nos. 36 and 45. A relief from stay motion by the holder of the first deed of trust on the Berkeley property in the ch. 7 case of Trans Pacific Capital Assets Group LLC - one of defendant's business entities - alleged that on the same day that the ch. 7 case was filed, Defendant recorded a grant deed transferring a 20% interest to Trans Pacific and that there had been no payments for 71 months. See docket no. 23 in 12-49430. Based on a previous schedule I, Defendant had net rental income of $13,500/month from the Berkeley property. See docket no. 1, p. 18 in 09-48645.

2013 Bankr. LEXIS 5191, *4


Page 4 of 13

omissions in the schedules and statement of financial affairs were inadvertent and blamed any inaccuracies on the petition preparer Ransome McKissick, on the "emergency" nature of the filing, and on the fact that Van Dusen was inexperienced as a bankruptcy attorney - this was her first ch. 7 case [*8] - and she was not familiar with the software or the e-filing system and her "criminal matter" was taking up her time. Van Dusen's declaration admits she did "not actually review the paperwork" with Defendant before it was filed because she "was jammed with other work" and had been too busy to file amended schedules since the chapter 7 trustee's Rule 2004 exam - a period the court estimates to have been at least 8 months. Nevertheless, she insists there was no intent to omit anything and claims neither she nor Defendant had been aware of the inaccuracies and omissions in the schedules and statement of financial affairs until the Rule 2004 exam.

Because there have been so many iterations of the schedules and statement of financial affairs, the court has no confidence that they are complete, accurate, or honest. The self-serving declarations filed in April 2013 only serve to further undermine Defendant's credibility and do nothing to excuse counsel's dereliction. See In re Kayne, 453 B.R. 372 (9th Cir. BAP 2011) (debtor's attorney sanctioned pursuant to § 707(b)(4)(D) and Rule 9011 for failing to make objectively reasonable investigation of facts underlying schedules and statement of financial [*9] affairs).

C. The § 727 Adversary Proceeding

On August 27, 2012, the UST filed this adversary proceeding, stating claims under § 727(a)(4), § 727(a)(5), and § 727(a)(7). See docket no. 1.

The § 727(a)(4) false oath claim alleges, inter alia, that Defendant knowingly and fraudulently failed to disclose his interest in the Business Entities on schedule B, failed to list his ownership of 4 cars until the day before the § 341 meeting, failed to list his spouse of forty years on the statement of financial affairs or list her as a co-debtor on schedule H, and failed to list any leases or executory contracts on schedule G even though he identified the Berkeley and Livermore Properties as rental properties.

The § 727(a)(5) claim alleges, inter alia, that Defendant failed to satisfactorily explain what he or the Business Entities did with the $500,000 investment made by U.S. Capital Network, LLC ("U.S. Capital") in Trans Pacific,5 failed to account for his income in this case and in the Beverly Feusier case, and failed to explain the loss of assets or deficiency of assets to meet his or his related entities' liabilities.

The § 727(a)(7) false oath claim alleges Defendant failed to disclose matters and failed to list correct income and expenses on schedules I and J in the Beverly Feusier case.

The UST's complaint also asks the court to dismiss this case with prejudice and impose a five-year bar to refiling. Defendant filed an answer which denies certain allegations and admits others. See docket no. 5.

1. Discovery

5 See AP 12-4122 filed by U.S. Capital alleging non-dischargeability under § 523(a) [*10] regarding $500,000 investment. Trial is scheduled in state court in March 2014.

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a. Interrogatories

The UST's first set of twenty interrogatories contained explicit instructions and definitions. The time-frame for the interrogatories was generally defined as January 1, 2007 to the present which roughly corresponds to the time-frame for the information to be provided in the statement of financial affairs.6 Each of the UST's questions was designed to elicit facts needed to prove the § 727 claims.

The UST also asked Defendant to identify professional licenses held, revoked, or relinquished between 1990 and the present, to identify all facts supporting Defendant's denial of certain paragraphs of the complaint, to identify the bank accounts held in the names of the Business Entities, to identify all entities in which he had an interest, to identify all facts regarding the $500,000 invested by U.S. Capital, to identify facts regarding Defendant's failures to disclose certain facts in the Beverly Feusier case, and facts regarding Defendant's failure to completely and accurately account for his income in this case and the Beverly Feusier case.

Defendant objected to the interrogatories on the grounds [*12] that they were overly broad, burdensome and oppressive, and requested irrelevant information. Taking a more bizarre turn, the objection also stated: "Responding Party further objects that the Propounding Party has knowingly violated Rule 1-120 and other rules of California Rules of Professional Conduct by acting on information provided by Responding Party's former attorneys. Responding Party further objects that the Propounding Party is violating the U.S. Constitution by utilizing resources of the United States Trustee to prosecute this adversary proceeding against Responding Party, a private citizen, on behalf of other private citizens (who have already sued Responding Party civilly which lawsuits have been either tried (Zelis) or settled (U.S Capital Network),7 or are currently pending (Fischer))." The response to many of the interrogatories also claimed that the questions had been asked "for harassment purposes" or had been answered at the Rule 2004 exam. See docket no. 15-2, ex. 2.

b. Request for Production of Documents

The UST's request for production [*13] of documents began with typical clear instructions and, like the interrogatories, defined a relevant time-frame that corresponded to the information required by the statement of financial affairs - January 1, 2007 to the date of production. See docket no. 15-5.

The UST sought documents regarding the incorporation or creation of the Business Entities, documents relating to the Business Entities' bank accounts for only the year prior to filing this case or the last year for which an account existed, tax returns for Defendant and the Business Entities, contracts between Defendant or the Business Entities he controlled regarding the investment by U.S. Capital and its return

6 See definition in statement of financial affairs: an individual debtor is "in business" for purposes of this form, if the debtor is or has been within six years immediately preceding the filing of the case, any of the following: an officer, director, managing executive, or owner of 5% or more of the voting [*11] securities of a corporation, a partner of a partnership; a sole proprietor or self-employed full-time or part-time. An individual debtor also may be [footnote continued] "in business" for the purpose of this form if the debtor engages in a trade, business, or other activity, other than as an employee, to supplement income from the debtor's primary employment. Question no. 1 asks for gross income received during the two years immediately preceding the calendar year in which the case is filed.

7 The U.S. Capital lawsuit is not settled according to the joint status report filed on October 29, 2013. See docket no. 32 in AP 12-4122.

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Page 6 of 13

on investment, documents regarding income received by Defendant and the Business Entities, and Defendant's and the Business Entities's ownership of automobiles.

After meeting and conferring with the UST on May 30, 2013, Defendant provided a first amended response to the request for production of documents but did not produce any documents. The first amended response began with a boilerplate objection similar to the one in the interrogatory response - vague, ambiguous, overly broad and burdensome, irrelevant - and included [*14] the same allegations that the UST was improperly assisting private citizens and thus violating the due process clause of the U.S. Constitution. It also claimed that the documents produced "would almost certainly be turned over to those private individuals on whose behalf the UST appears to be acting." See docket no. 15-2, ex. 1.

Defendant offered to produce corporate or fictitious business name documents filed or updated within one year before March 5, 2012 for the Business Entities.8 He offered to produce his personal bank statements and the Business Entities' bank statements for the one-year time period as requested by the UST. Defendant offered to produce certain excerpts from his tax returns for the same one-year period. His objection also tried to limit the time period for the U.S. Capital documents to this one-year period and again accused the UST of trying to interfere in state court litigation regarding U.S. Capital. No documents were produced.

2. The UST's Motion to Compel

On June 25, 2013, the UST filed and served its motion to compel [*15] responses to its discovery requests. See docket no. 15. The motion explained that the UST had met and conferred in person with Defendant's attorney on May 30, 2013 as a result of which Defendant had agreed to provide an amended response to the request for production of documents, provide documents, and further respond to interrogatories by June 5, 2013. Despite this agreement, no documents had been produced, no amended interrogatory answers had been provided, and the UST had only been given an amended response to the request for production of documents (one day late).

Defendant's counsel did not file any opposition to the motion to compel and did not appear at the hearing on July 24, 2013. Because the UST's discovery requests were appropriate and the Defendant's objections were groundless, the court entered an order granting the motion (the "July 24 Order"). See docket no. 23. Defendant's attorney was served with the July 24 Order which said: "The motion to compel is hereby granted in full. Defendants [sic] shall produce the documents requested, reply to requests for admissions, and answer interrogatories propounded by the U.S. Trustee no later than August 21, 2013. If complete responses [*16] are not received, the Court will entertain a motion by the U.S. Trustee for fees and terminating sanctions."

3. Defendant's Motion to Vacate

On July 31, 2013, Defendant filed and served a motion to set aside the July 24 Order. See docket no. 27. The motion referred to Civil Rules 60(b)(1) and 60(b)(6) as justifying the relief requested but developed no argument regarding application of these Rules. The motion claimed that the July 24 Order "was noticed

8 There is no explanation for the choice of this time period as opposed to the one defined by the UST - January 1, 2007 to the date of production.

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and obtained while counsel for the Defendant was herself either imminently preparing for trial or actually in trial on a criminal matter."9 The motion admitted that counsel had "failed to notice the date of the hearing" on the motion, and missed "responding to oppose [sic] due to the demands of [counsel's own] criminal matter. Counsel would have been unable to appear at the hearing in any case, as it took place during [counsel's own] criminal trial proceedings."

The motion also argued that Defendant should not be penalized and his "valid objections to improper discovery demands" should not be jeopardized because of counsel's "misfortune and inability to respond" to the [*17] motion. Counsel urged the court to find that "the press of [counsel's personal] criminal trial with all of the various substantial threats" constituted "mistake, inadvertence, surprise, or excusable neglect," or "that this situation would justify relief" under Civil Rule 60(b)(6) on "grounds of fairness to the client."

Defendant's motion was set for hearing on September 18, 2013. Defendant did not ask for a stay of the July 24 Order pending the hearing on this motion.10

The UST opposed the motion to vacate, arguing that there were no grounds to set aside the July 24 Order because there was no excusable neglect and an attorney can not abandon clients for personal reasons and make no effort to accommodate litigation the attorney has undertaken. See docket no. 39.

4. The UST's Motion for Terminating Sanctions

On September 5, 2013, the UST filed [*18] the motion for fees and terminating sanctions. See docket no. 32. The UST argued that Defendant's conduct was egregious and warranted terminating sanctions under Civil Rule 37(b) because of his failure to comply with the July 24 Order. The UST also sought an award of $1,117.50 in costs in connection with the motion to compel.

Defendant's opposition argued that terminating sanctions were not appropriate under Civil Rule 37(b) because Defendant had not "failed to comply" with a discovery order because he had filed a motion to set it aside. Defendant also argued that attorney's fees were not warranted under Civil Rule 37(a)(5)(A) because the UST had not negotiated in good faith and Van Dusen's actions were substantially justified. Standing the world on its head, the opposition also claimed that unless the UST could prove that Defendant's conduct fell within one of the exceptions to discharge in § 727, the UST was "not entitled to the discovery demanded." See docket no. 38.

On October 10, 2013, the court heard argument on the motion to vacate and the motion for terminating sanctions and took both matters under submission.

III. Discussion

9 The court assumes counsel here meant on trial rather than in trial.

10 On October 10, 2013, Defendant filed a motion to disqualify the UST, based on the alleged ethics violations raised previously, and an ex parte request to "stay discovery" until the court had ruled on it. The request to stay discovery was denied on October 10, 2013. See docket no. 42. The motion to disqualify the UST was denied on November 14, 2013.

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A. Terminating Sanctions under Civil Rule 37(b)

The UST [*19] seeks terminating sanctions for Defendant's failure to comply with the July 24 Order.

Civil Rule 37(b), applicable here by Bankruptcy Rule 7037, provides in relevant part:If a party ... fails to obey an order to provide or permit discovery, ... the court where the action is pending may issue further just orders. They may include ... striking pleadings in whole or in part [and] rendering a default judgment against the defaulting party.

Fed.R.Civ.P. 37(b)(2)(A)(iii) and (vi).

The court first disposes of Defendant's argument that the July 24 Order could be disregarded with impunity because the discovery was abusive.

This argument is completely without merit. Belief that the July 24 Order was improper does not relieve Defendant of the duty to obey it. Defendant's choices were to appeal from the July 24 Order or comply with it. See Chapman v. Pacific Telephone and Telegraph Co., 613 F.2d 193, 197 (9th Cir. 1979) (citing Maness v. Meyers, 419 U.S. 449, 95 S. Ct. 584, 42 L. Ed. 2d 574 (1975) for the basic proposition that the proper course of action, unless and until a trial court's order is invalidated by an appellate court, is to comply and cite the order as reversible error should an adverse judgment result).

B. Relief under [*20] Civil Rule 60(b)(1) or Civil Rule 60(b)(6)

Defendant also argues that terminating sanctions under Civil Rule 37(b) are not available because Defendant did not "fail to comply" with a discovery order because he had moved to vacate it under Civil Rule 60(b)(1) or 60(b)(6). In concept, a Civil Rule 60(b) motion is a permissible avenue to seek to vacate an order but the record in this case does not support granting relief under either section.

1. Civil Rule 60(b)(1) - Excusable Neglect

Under Civil Rule 60(b)(1), the court may relieve a party or a party's legal representative from a final order for "mistake, inadvertence, surprise, or excusable neglect." Whether neglect is excusable is an equitable determination, taking account of all relevant circumstances surrounding the party's omission including the danger of prejudice, the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the moving party, and whether the moving party acted in good faith. Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993). Pioneer also points out that an attorney's negligence is ordinarily [*21] binding on her client. Id. at 396-97 (noting parties are responsible for the acts and omissions of their chosen counsel); see also Casey v. Albertson's, Inc., 362 F.3d 1254, 1260 (9th Cir. 2004) (inexperienced attorney's malpractice did not constitute excusable neglect); CEP Emery Tech Investors LLC v. JP Morgan Chase Bank, N.A., 2011 U.S. Dist. LEXIS 38107, 2011 WL 1226028 (N.D. Cal. 2011) (distinguishing Casey based on attorney's medical disability).

Applying the Pioneer factors to the record in this case, relief under Civil Rule 60(b)(1) is not appropriate.

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Page 9 of 13

First, while Defendant's counsel claims she forgot to calendar the date and time of the July 24 hearing, she also describes making an intentional decision to focus on dealing with her criminal trial rather than this case. She can not now avoid the consequences of having made that conscious choice.

Second, the court notes that prejudice from delay may be assumed unless the moving party provides a non-frivolous explanation for it. See Laurino, M.D. v. Syringa Gen. Hosp., 279 F.3d 750, 753 (9th Cir. 2002) (presumption of prejudice from unexplained failure to prosecute rebutted by affidavit giving non-frivolous explanation for delay). Defendant's excuse for not [*22] providing complete and timely discovery responses and counsel's excuse for not responding to the UST's motion to compel do not rebut this presumption of prejudice.

The court also notes that while there was not a lengthy delay between the July 24 Order and the motion to vacate, there has been serious delay by this Defendant in this case and in his prior cases which has impacted the UST, the chapter 7 trustee, Defendant's creditors, the court, and the integrity of the system as a whole.11 In this context, Defendant and his counsel's delay is both unreasonable and prejudicial. The UST's discovery was served in April 2013 and the response date was extend to August 21, 2013 by the July 24 Order. As of the date of this decision, no documents have been produced and the amended interrogatory answers have not been served. There is nothing in this record to indicate this sort of delay is justified.

Third, while counsel may not have had control over the scheduling of her criminal trial, she [*23] did have control over calendaring the July 24 hearing and the filing deadlines and could have arranged for an alternative hearing date or alternative counsel to assist her. She could also have simply produced the discovery. See C.K.S. Eng'rs, Inc. v. White Mountain Gypsum Co., 726 F.2d 1202 (7th Cir. 1984) (providing some discovery responses may be seen as measure of good faith in 60(b) context). This good faith effort to comply is utterly lacking here as Defendant's counsel's explanation shows: "Feusier WAS going to provide documents, but his counsel's criminal trial intervened." And when counsel was no longer "captive to her criminal trial," she was "forced to spend time moving to set aside the motion to compel," rather than using this time to finish gathering documents for production. "Plaintiff counsel's own actions actually diverted defense counsel from producing documents, although Plaintiff['s] counsel indignantly proclaims that the documents she rejected still have not been produced." See docket no. 40, p. 2:5-12.12

2. Civil Rule 60(b)(6) - Any Other Reason

Defendant also argued that relief under Civil Rule 60(b)(6) was appropriate in order to be "fair" to Defendant. This argument is also without merit.

Under Civil Rule 60(b)(6), the court may relieve a party or his legal representative from a final order for "any other reason that justifies relief." Relief under Civil Rule 60(b)(6) has to be based on some reason

11 There is also a legitimate concern regarding the preservation of relevant evidence and the passage of time only heightens this concern. The failure or refusal to produce documents is thus a serious matter.

12 There is no evidence in the record that Defendant produced any documents and the UST rejected them. Thus, in claiming that the UST "rejected" offered documents, [*24] the court assumes Van Dusen is referring to the fact that Defendant offered to produce certain documents for a one year period and the UST insisted on receiving documents for the six year period it defined, as explained in UST's counsel's May 20, 2013 email to Van Dusen. See docket no. 40, ex. B-1.

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Page 10 of 13

other than the five reasons preceding it in subsections (1)-(5). Lyon v. Agusta S.P.A., 252 F.3d 1078, 1088 (9th Cir. 2001).

Relief under Civil Rule 60(b)(6) is to be used sparingly and only to prevent manifest injustice. U.S. v. Alpine Land & Reservoir Co., 984 F.2d 1047, 1049 (9th Cir. 1993). The court should not grant relief unless extraordinary circumstances prevent a party from taking timely action to prevent or correct an erroneous judgment. Id.

An attorney's actions are generally chargeable [*25] to her client and ordinarily do not constitute extraordinary circumstances warranting relief under Civil Rule 60(b)(6). Pioneer, at 396-97. There is an exception to this general rule when an "attorney's negligence is so gross that it is inexcusable" such that the client is "virtually abandoned." See Comty. Dental Servs. v. Tani, 282 F.3d 1164 (9th Cir. 2002) (allowing default judgment to be set aside where grossly negligent attorney "virtually abandoned" client and nothing in record showed culpable conduct by client).

None of the factors that supported the outcome in Tani are present here. First, there is culpable conduct by Defendant as the history of his bankruptcy filings, his discovery responses, and his failure to produce a single page of discovery shows. Second, Defendant is not complaining that his counsel abandoned him. On the contrary, she is still vigorously litigating on his behalf.

Based on the record in this case, the court concludes that there is no basis to vacate the July 24 Order under Civil Rule 60(b)(1) or Civil Rule 60(b)(6). Accordingly, the court may proceed to consider the UST's request for terminating sanctions under Civil Rule 37(b).

C. Terminating Sanctions are [*26] Warranted

Civil Rule 37(b)(2) specifically provides for terminating sanctions - by striking pleadings or by rendering a default judgment against the disobedient party. See G-K Properties v. Redevelopment Agency of City of San Jose, 577 F.2d 645, 647 (9th Cir. 1978)(approving trial court's dismissal with prejudice for failure to comply with discovery orders, noting such orders are encouraged because litigants who are willful in halting the discovery process act in opposition to the authority of the court and cause impermissible prejudice to their opponents); Malone v. U.S. Postal Service, 833 F.2d 128 (9th Cir. 1987) (dismissal is harsh penalty to be imposed only in extreme circumstances).

In order to warrant a terminating sanction, the party's violations of the court's orders must be due to willfulness, bad faith, or fault. Fjelstad v. American Honda Motor Co., Inc., 762 F.2d 1334, 1341 (9th Cir. 1985) (litigant acts willfully if it engages in disobedient conduct not shown to be outside its control; disobedient conduct means deliberate malfeasance not mere inadvertence). As the previous discussion shows, Defendant and his counsel have acted willfully and not through mere inadvertence; [*27] nothing indicates responding to discovery was in fact outside of their control.

The Ninth Circuit has identified five factors that a court must consider before dismissing a case or declaring a default as a sanction: (1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the other party; (4) the public policy favoring the disposition of cases on their merits; and (5) the availability of less drastic sanctions." Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990) (citing Malone, 833 F.2d at 130); Dreith v. Nu Image, Inc., 648 F.3d 779, 788 (9th Cir. 2011). These factors are not to be applied in a mechanical

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Page 11 of 13

fashion; they are not a series of conditions precedent before the court can do anything. Valley Eng'rs Inc. v. Elec. Eng'g Co., 158 F.3d 1051, 1057 (9th Cir. 1998).

Applying these factors here, the ineluctable conclusion is that the UST's motion must be granted.

1. Public Interest and Docket Management

The UST argues that the first two factors are met because Defendant's delay has impeded the prompt resolution of the case - contrary to the public interest - and demonstrates a lack of respect [*28] for the court's need to manage its docket. The UST is correct. The public interest in expeditious resolution of litigation and the court's interest in managing its dockets are best served by striking Defendant's answer. Defendant's dilatory conduct in this adversary proceeding and his history of filings demonstrates his lack of respect for the court and the bankruptcy process. Since 2007, Defendant has filed seven cases - none of them have been appropriately handled or actively prosecuted and in none of them did he provide the complete, candid disclosures every debtor is required to make. The court, the chapter 13 trustee, the chapter 7 trustee, the UST, and Defendant's creditors have all struggled to deal with these cases and have received no cooperation from Defendant at any step in the process. This sort of activity also unfairly diverts the court's attention from other pending cases.

2. Prejudice and Decisions on the Merits

The question of prejudice focuses on whether Defendant's actions have interfered with preparation for trial, with the ability to go to trial and reach a decision on the merits. Adriana, 913 F.2d at 1412. The refusal to respond to reasonable discovery - based on [*29] the groundless excuses offered here - has certainly interfered with the UST's ability to prepare for trial, and in the context of this case, is preventing the UST from being able to prove its case.

The UST also argues that it has had to expend its limited resources filing discovery motions because of Defendant's conduct, not because of any substantive issue in the case. This is in itself prejudicial to the UST's office. Malone, 833 F.2d at 131.

The UST acknowledges that the public policy of deciding a case on its merits will not be met here, but that is always the case in the context of terminating sanctions. The court notes that Defendant's conduct has ensured that we will never reach an accurate or fair trial on the merits.

3. Availability of Less Drastic Sanctions

A judgment denying Defendant a discharge is the most drastic sanction available. Accordingly, the court is to consider whether less drastic sanctions are available or appropriate. There are sub-parts to this factor: whether the court has considered lesser sanctions, whether it has tried them, and whether it warned the recalcitrant party about the possibility of case-dispositive sanctions. Conn. Genl. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1096 (9th Cir. 2007).

First, [*30] as explained above, egregious circumstances exist here. In addition, the court has considered whether a less drastic sanction would be appropriate and concludes there is no adequate less drastic

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Page 12 of 13

sanction in the context of this case. Second, the July 24 Order explicitly warned Defendant and his counsel that the court would consider terminating sanctions if Defendant failed to comply with the July 24 Order. See Malone, 833 F.2d at 132 (noting that case law suggests that warning that failure to obey a court order will result in dismissal can suffice to meet the consideration of alternatives requirement, collecting cases).

Third, what is most critical for case-dispositive sanctions, regarding risk of prejudice and availability of less drastic sanctions, is whether the "discovery violations threaten to interfere with the rightful decision of the case." Valley Eng'rs, 158 F.3d at 1057. That is the situation confronting the court in this case and it is what compels the outcome. Defendant's discovery violations make it impossible to trust that the UST or the court will ever have access to the true facts and there is nothing to indicate a lesser sanction would be of any use. In fact, any lesser [*31] sanction would only serve to reward Defendant for his years of abusing the bankruptcy process. Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 352 (9th Cir. 1995) (appropriate to reject lesser sanctions where the court anticipates continued deceptive misconduct). For all of these reasons, terminating sanctions are appropriate.

D. Attorney's Fees are Warranted

Civil Rule 37(a)(5)(A) provides that if a motion to compel discovery is granted,[T]he court must, after giving an opportunity to be heard, require the party ... whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees. But the court must not order payment if:(i) the movant filed the motion before attempting in good faith to obtain the disclosure or discovery without court action;(ii) the opposing party's non-disclosure was substantially justified; or(iii) other circumstances make an award of expenses unjust.

Fed.R.Civ.P. 37(a)(5)(A).

First, Defendant's conduct necessitated the motion to compel and it appears his attorney advised this conduct which means the court must order Defendant [*32] or his attorney to pay the UST's reasonable expenses in making the motion. Defendant contends that the exceptions to this mandate apply here. Defendant is incorrect. The record is clear that the UST negotiated in good faith before filing the motion to compel. See docket no. 40, ex. B-1 (May 20, 2013 email from UST's counsel to Defendant's counsel explaining why the discovery was appropriate and why Defendant needed to respond.) The record also shows that Defendant's response to the discovery was not substantially justified. Finally, Defendant is also incorrect in claiming that other circumstances make an award of expenses unjust. There are no such "other circumstances" here.

The hours spent by the UST are reasonable and the work was done in an efficient fashion. The amount sought by the UST is exceedingly modest because of the low hourly rate the UST used in making its calculation. The court awards the fees as sought payable jointly by Defendant and his counsel.

IV. Conclusion

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Page 13 of 13

For the foregoing reasons, Defendant's answer will be stricken and his default entered. In addition, he will be barred from filing another case for five years. The court requests that the UST submit an order so [*33] providing and providing that the fees requested by the UST are to be paid within 60 days of the entry of such order.

Entered on Docket

December 10, 2013

The following constitutes the Memorandum Decision of the Court.

Signed December 10, 2013

/s/ Roger L. Efremsky

Roger L. Efremsky

U.S. Bankruptcy Judge

End of Document

2013 Bankr. LEXIS 5191, *32


EXHIBIT 7


Legaspi v. Cal. Licensed Voc. Nurses Ass'n


September 3, 2008, Decided; September 3, 2008, Filed

NO. CIV. S-07-0291 FCD GGH


VIRGINIA LEGASPI, Plaintiff, v. CALIFORNIA LICENSED VOCATIONAL NURSES ASSOCIATION, INC., ST. JOSEPH'S MEDICAL CENTER, CATHOLIC HEALTHCARE WEST, INC., and DOES 1-10, Defendants.

Subsequent History: Affirmed by Legaspi v. St. Joseph's Med. Ctr. of Stockton, 2010 U.S. App. LEXIS 6785 (9th Cir., Apr. 1, 2010)

Prior History: Legaspi v. Cal. Licensed Voc. Nurses Ass'n, 2008 U.S. Dist. LEXIS 50838 (E.D. Cal., June 26, 2008)

Counsel: [*1] For Virginia Legaspi, Plaintiff: Herman A. D. Franck, V, LEAD ATTORNEY, Law Offices of Herman Franck, Sacramento, CA.

California Licensed Vocational Nurses Association, Inc., Defendant, Pro se, West Sacramento, CA.

For St. Joseph's Medical Center of Stockton, Catholic Healthcare West, Defendants: Kevin Francis Woodall, LEAD ATTORNEY, Foley and Lardner One Maritime Plaza, San Francisco, CA; Nina Kani, Foley & Lardner LLP One Maritime Plaza, San Francisco, CA.

Judges: FRANK C. DAMRELL, JR., UNITED STATES DISTRICT JUDGE.

Opinion by: FRANK C. DAMRELL, JR.

Opinion

MEMORANDUM AND ORDER

This matter is before the court on plaintiff Virginia Legaspi's ("Legaspi" or "plaintiff") motion for leave to file an untimely opposition to defendant Catholic Healthcare West, Inc., dba St. Joseph's Medical Center's ("St. Joseph's") motion to dismiss for failure to prosecute. St Joseph's opposes the motion. For the reasons set forth below, 1 plaintiff's motion is DENIED.

BACKGROUND

1 Because oral argument will not be of material assistance, the court orders these matters submitted on the briefs. E.D. Cal. Local Rule 78-230(h).


Page 2 of 6

Plaintiff Legaspi filed a complaint in this action on February 13, 2007. (Compl. [Docket # 1], filed Feb. 13, 2007.) [*2] Subsequently, after defendants had filed answers to her complaint and the court issued a pretrial scheduling order, plaintiff's counsel, Jay Dyer ("Dyer") moved to withdraw as attorney of record. (Mot. to Withdraw as Attorney [Docket # 13, filed Jan. 17, 2008.) Attached to his declaration in support of the motion, Dyer provided a letter, dated January 2, 2008, that he received from plaintiff Virginia Legaspi on January 3, 2008, which requested the immediate termination of Dyer's professional services. (Ex. C to Decl. of Jay Dyer ("Dyer Decl."), filed Jan. 17, 2008). Dyer also declared that he spoke to plaintiff on January 7, 2007, to (1) confirm her address; (2) confirm that she had not yet secured new counsel; and (3) inform plaintiff that he would be filing a motion to withdraw as well as a motion to extend the discovery deadline. (Dyer Decl. P 11).

On February 13, 2008, the court granted plaintiff's counsel's motion to withdraw and plaintiff Legaspi was substituted in propria persona. (Order [Docket # 22], filed Feb. 13, 2008.) As such, and pursuant to Local Rule 72-302(c)(21), the case was referred to the assigned Magistrate Judge, Gregory G. Hollows, for case management and recommendation(s) [*3] to the District Court Judge. (Id.) That same day, the court also filed a stipulation and order, extending discovery deadlines, in part because scheduled depositions had not taken place as a result of plaintiff's termination of her counsel. (Stipulation & Order [Docket # 21], filed Feb. 13, 2008.)

On February 22, 2008, Nina Kani ("Kani"), counsel for St. Joseph's, caused plaintiff to be personally served with a Notice of Deposition at her residence, for a deposition set for March 10, 2008. (Decl. of Nina Kani in Supp. of Def.'s Resp. to Pl.'s Objections to Magistrate Judge's Findings & Recommendations ("Kani Decl."), filed July 10, 2008, P 7.) Kani also served plaintiff with a letter explaining the obligation to appear for deposition and the potential consequences for failing to appear. (Id.) On February 25, 2008, Kani sent an additional letter to plaintiff's residence, advising her of the continued obligation to supplement discovery requests and to produce records concerning her new employment at her deposition. (Id. P 8.) Kani attempted to reach plaintiff by telephone; she left two voicemails for Legaspi, requesting information as to whether plaintiff was available on the noticed date [*4] and/or whether plaintiff intended to appear. (Id. P 9.)

On March 10, 2008, Kani appeared for plaintiff's deposition. (Id. P 10.) Prior to going on the record, Kani attempted to reach Legaspi by telephone, but was unable to reach her. (Id.) Kani waited for one hour, but plaintiff did not appear and did not otherwise contact her. (Id.)

On March 17, 2008, Kani telephoned Legaspi at her home and left a voicemail requesting to meet and confer regarding her non-appearance and to schedule a new date for her deposition. (Id. P 12.) Kani advised plaintiff that she would seek relief from the court if plaintiff did not contact her. (Id.) Legaspi did not contact plaintiff that day.

On March 18, 2008, Kani again attempted to contact Legaspi at her home. (Id.) Plaintiff's husband gave her an alternate phone number. (Id.) Kani contacted Legaspi at this number. Legaspi advised Kani that she had retained new counsel, but refused to provide her with the attorney's name and indicated that she could not provide Kani with new dates for the deposition without conferring with her attorney. (Id.) Kani requested that Legaspi's counsel contact her by the close of business. Kani did not hear from plaintiff or plaintiff's [*5] counsel on that date. (Id.)

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St. Joseph's filed a motion to compel plaintiff's deposition and a request for sanctions on March 18, 2008. (Mot. to Compel [Docket # 23], filed Mar. 18, 2008.) Plaintiff did not contact Kani prior to the hearing on the motion. (Kani Decl. P 13.) Legaspi also failed to appear at the hearing on the motion on April 10, 2008. (Id.)

On April 15, 2008, Magistrate Judge Hollows issued an order, granting sanctions in the amount of $ 6,880.00 against plaintiff that were to be paid within 20 days of the order. (Order [Docket # 26], filed Apr. 15, 2008.) At the time of the order, the discovery deadline of April 1, 2008 had passed. (Kani Decl. P 14.) Plaintiff failed to comply with the court's order to pay the sanctions within 20 days and delayed making payment for two months, until she retained counsel on June 16, 2008. (Decl. of Virginia Legaspi in Supp. of Mot. for Leave to File Untimely Opp'n ("Legaspi Decl.") [Docket # 45], filed July 8, 2008, P 25.)

On April 21, 2008, St. Joseph's filed a Motion to Dismiss. (Id. P 16.) Pursuant to the Federal Rules of Civil Procedure and the local rules, plaintiff was required to file her opposition by May 9, 2008. (Id.) Legaspi [*6] failed to file any opposition. (Id.) Neither plaintiff nor any representative of plaintiff attempted to contact St. Joseph's before the hearing. (Id.)

On May 29, 2008, plaintiff failed to appear at the hearing on defendant St. Joseph's motion to dismiss. (Id. P 17.) Following the hearing, the court issued a minute order, stating that the case was recommended fo dismissal for plaintiff's failure to prosecute. (Id.)

On June 16, 2008, Kani received a telephone call from Herman Franck ("Franck"), informing her that he had been retained by Legaspi. (Id. P 18.) Kani advised Franck that a minute order had been issued in the case, recommending dismissal. (Id.)

On June 26, 2008, Magistrate Judge Hollows issued his Findings and Recommendations ("F&Rs") on the Motion to Dismiss. (Findings & Recommendations ("F&Rs") [Docket # 39], filed June 26, 2008.) The Magistrate Judge acknowledged that plaintiff had retained counsel between the time of the hearing and the issuance of the F&Rs, but noted that he found no reason to change its opinion based upon these events because "[d]efendants have had to endure the lack of prosecution and plaintiff's sanctionable conduct for some time now and should not be [*7] penalized further because plaintiff has once again, and finally, retained counsel." (F&Rs at 1 n.1.) Therefore, the Magistrate Judge recommended that the case be dismissed for failure to prosecute. Plaintiff filed objections to the F&Rs, arguing that the case should not be dismissed for the same reasons set forth in the motion before this court. The district court has considered these objections.

On July 7, 2008, plaintiff filed a motion for leave to file an untimely motion to defendants' motion to dismiss based upon excusable neglect.

ANALYSIS

Plaintiff requests leave to file a late opposition to defendants' motion to dismiss on the grounds that her failure to do was the result of excusable neglect. Specifically, in her declaration, Legaspi asserts that there was "a complete failure of communication" between her former counsel, Dyer, and herself, which led to his termination. (Legaspi Decl. PP 10, 17.) She also asserts that Dyer did not inform her of any settlement proceedings or of any pending deposition. (Id. P 14.) Plaintiff acknowledges that she did not respond to a "series of court procedures" and has demonstrated a "lack of participation and diligence in this matter,"

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but asserts [*8] that this will no longer be a problem due to her retention of current counsel. (Id. PP 2, 24.)

Rule 6(b) of the Federal Rules of Civil Procedure providesWhen an act may or must be done within a specified time, the court may, for good cause, extend the time . . . on motion made after the time has expired if the party failed to act because of excusable neglect.

Fed. R. Civ. Proc. 6(b) (West 2008). "[I]nadvertence, ignorance of the rules, or mistakes construing the rules do not usually constitute 'excusable' neglect." Pioneer Inv. Servs. Co. v Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 392, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993). However, it is an "elastic concept" not limited to omission caused by circumstances beyond the movant's control. Id. In determining whether neglect is excusable a court considers (1) prejudice to the opposing party; (2) the length of the delay and its potential impact on the proceedings; (3) the reason for the delay, including whether it was in the reasonable control of the moving party; and (4) the good faith of the moving party. Id.; In re. Veritas Software Corp. Sec. Litig., 496 F.3d 962, 973 (9th Cir. 2007). "[T]he determination is at bottom an equitable one, taking account of all relevant [*9] circumstances surrounding the party's omission." Pioneer, 507 U.S. at 395.

Plaintiff's conduct in litigating this case is neither negligent nor excusable. Rather, since terminating her counsel in January 2008, plaintiff has willfully ignored both communications by defense counsel and orders of the court. Her belated apologies and subsequent retention of counsel, actions taken after suffering the consequences of her conduct, are insufficient to substantiate her claim of excusable neglect.

First, "a presumption of prejudice arises from the plaintiffs' failure to prosecute." Hernandez v. City of El Monte, 138 F.3d 393, 401 (9th Cir. 1998). "The burden of production shifts to the defendant to show at least some actual prejudice" only where a plaintiff has come forth with an excuse for the delay that is anything but frivolous. Nealey v. Transportacion Maritima Mexicana, S.A., 662 F.2d 1275, 1281 (9th Cir. 1980).

Plaintiff filed her complaint in early 2007. Defendants engaged in discussions with plaintiff's former counsel, set forth a discovery schedule, and noticed plaintiff's deposition. Even assuming that Dyer failed to communicate any of this to plaintiff, the parties stipulated to continue [*10] discovery deadlines and postponed the deposition date in light of plaintiff's in propria persona status. Further, after Dyer's withdrawal, defendants made numerous attempts to contact plaintiff regarding her deposition date and other continuing discovery obligations to no avail. 2 Defendants incurred costs in litigating this case prior to Dyer's withdrawal, attending plaintiff's deposition, and filing motions to compel and to dismiss. The discovery deadline of April 1, 2008 and the dispositive motion deadline of June 20, 2008 have long since passed. (See Pretrial Scheduling Order [Docket # 8], filed July 17, 2007, at 3.) Despite defendants' efforts, plaintiff has failed to pursue litigation in this matter for over four months, since February 13, 2008, when Legaspi was substituted in propria persona. As such, defendants have been actually prejudiced by the costs they have incurred in attempting to diligently litigate this case and by the delay caused by plaintiff, including the expiration of all discovery and dispositive motion deadlines. Cf. Bateman v. U.S. Postal Serv., 231 F.3d 1220, 1225 (9th Cir. 2000) (holding that the equities weighed in favor of the movant where the request [*11] to file was made twelve days after the order and discovery had closed only the

2 Plaintiff does not contend that she did not receive the voicemails or other correspondence from defendants.

2008 U.S. Dist. LEXIS 79893, *7


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month before); Laurino v. Syringa Gen. Hosp., 279 F.3d 750, 753 (9th Cir. 2002) (finding excusable neglect where the parties stipulated to extend discovery, the delay was only five weeks, and there was no finding of bad faith or willfulness). 3

Second, plaintiff's conduct has resulted in substantial delay and a waste of judicial resources. Months have passed without any advancement in the litigation. Further, plaintiff failed to oppose or appear at the hearings on either the motion to compel or the motion to dismiss. Plaintiff's opposition to the motion to dismiss at issue by this motion was due on May 9, 2008. [*12] Neither the court nor defense counsel received any response to the motion to dismiss until, at best, June 16, 2008, over a month after the opposition was due and over two weeks after the hearing on the motion. Plaintiff did not file the current motion until July 8, 2008. At the time plaintiff filed this motion, all deadlines set forth in the court's pretrial scheduling order had passed; allowing plaintiff to litigate her claim now would require both the court and defendants to start back at square one.

Third, the cause of plaintiff's delay in responding to the motion to dismiss was solely within her control. Plaintiff terminated her attorney in January 2008. Dyer spoke to plaintiff on January 7, 2008, confirming her address and that she had not yet secured new counsel. (Order [Docket # 22], filed Feb. 13, 2008.) Plaintiff's decision to terminate her counsel before she had sought substitute counsel is a decision she made at her own peril. See Briones v. Riviera Hotel & Casino, 116 F.3d 379, 382 (9th Cir. 1997) ("[P]ro se litigants are not excused from following court rules . . . ."). Moreover, plaintiff does not dispute that she had notice of her scheduled deposition, defendants' motion [*13] to compel, the hearing on the motion to compel, the court's order requiring her to pay sanctions within twenty days, defendants' motion to dismiss, or the hearing on the motion to dismiss. Rather, plaintiff simply ignored them. See Speiser, Krause & Madole P.C. v. Ortiz, 271 F.3d 884, 887 (9th Cir. 2001) (holding that failure of a litigant to property read or understand the applicable rule does not constitute excusable neglect).

Finally, plaintiff's actions were not taken in good faith. Defendants made numerous attempts to contact plaintiff after she terminated her attorney. As set forth above, plaintiff does not dispute that she had knowledge of defendants' actions and the court's hearings and orders in this case. In issuing its order regarding the motion to compel and request for sanctions, the Magistrate Judge noted:

plaintiff's actions are so egregious that if defendants had requested sanctions under 28 U.S.C. § 1927, the court would consider granting them, based on plaintiff's "bad faith in multiplying the proceedings in this case unreasonably and vexatiously."

(Order [Docket # 26], filed Apr. 15, 2008, at 3 n.3. (quoting Wages v. I.R.S., 915 F.2d 1230, 1235-36 (9th Cir. 1990).) [*14] Plaintiff admits that she demonstrated a lack of participation and diligence in knowingly failing to respond to correspondence with counsel and court orders. Such blatant disregard of discovery requests and court proceedings is neither simple negligence, nor excusable conduct. See In re Veritas, 496 F.3d at 974 (affirming the district court's decision that plaintiff's counsel's deliberate choice to postpone the fee application based upon the "awkward" procedural posture of the case "was not neglect" and "certainly not a compelling showing of good cause").

3 Moreover, plaintiff has failed to proffer a non-frivolous explanation for her failure, citing only that it took her a longer than expected to find an attorney after she fired Dyer without substitute counsel in place because she did not know that he had been taking steps in the litigation. This is insufficient to rebut the presumption of prejudice to defendants. See Hernandez, 138 F.3d at 401.

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Plaintiff asserts that retention of counsel justifies a "second chance" at litigating this case. (See Decl. of Herman Franck in Supp. of Mot. for Leave to File Untimely Opp'n ("Franck" Decl.") [Docket # 46], filed July 8, 2008, P 14.) However, lack of representation is no excuse for failure to prosecute one's case, particularly where plaintiff voluntarily chose to terminate counsel without substitute counsel in place and both the court and defendants have given plaintiff ample notice of her obligations. Moreover, plaintiff requests more than a second chance. Plaintiff's failure to file an opposition to defendants' motion to dismiss [*15] is not her first failure to respond in this matter; rather, plaintiff has disregarded the entirety of the court's scheduling order, including all discovery and dispositive motion deadlines.

Therefore, considering the totality of the circumstances, the court holds that plaintiff's failure to file a timely opposition to defendants' motion was not the result of excusable neglect. As such, plaintiff's motion for leave to file an untimely opposition pursuant to Rule 6(b) is DENIED.

With respect to the F&R's filed by Magistrate Judge Hollows on June 26, 2008, this court reviews de novo those portions of the proposed findings of fact to which objection has been made. 28 U.S.C. § 636(b)(1); McDonnell Douglas Corp. v. Commodore Business Machines, 656 F.2d 1309, 1313 (9th Cir. 1981). As to any portion of the proposed findings of fact to which no objection has been made, the court assumes its correctness and decides the motions on the applicable law. See Orand v. United States, 602 F.2d 207, 208 (9th Cir. 1979). The Magistrate Judge's conclusions of law are reviewed de novo. See Britt v. Simi Valley Unified School Dist., 708 F.2d 452, 454 (9th Cir. 1983).

The court has reviewed the applicable legal [*16] standards and, good cause appearing, concludes that it is appropriate to adopt the F&Rs in full. Accordingly,

1. The Findings and Recommendations filed June 26, 2008, are ADOPTED;2. Defendants' amended motion to dismiss, filed April 23, 2008, is GRANTED; and3. This action is dismissed with prejudice pursuant to Federal Rule of Civil Procedure 41(b).

IT IS SO ORDERED.

DATED: September 3, 2008

/s/ Frank C. Damrell, Jr.

FRANK C. DAMRELL, JR.


End of Document

2008 U.S. Dist. LEXIS 79893, *14


EXHIBIT 8


Medina v. Wells Fargo Bank, N.A.

United States District Court for the Central District of California

May 20, 2016, Decided; May 20, 2016, Filed

Case No 2:16-cv-00532-ODW(MRWx)

Reporter2016 U.S. Dist. LEXIS 66856 *

MARIA C. MEDINA, Plaintiff, v. WELLS FARGO BANK, N.A.; and DOES 1-50, inclusive, Defendants.

Counsel: [*1] For Maria C. Medina, Plaintiff: Andrew M Weitz, LEAD ATTORNEY, Law Office of Andrew Weitz, Encino, CA.

For Wells Fargo Bank, NA, Successor by merger with Wells Fargo Bank Southwest, NA, formerly known as Wachovia Mortgage FSB, formerly known as World Savings Bank FSB Wells Fargo, Defendant: O Andrew Wheaton, Anglin Flewelling Rassussen Campbell &Trytten LLP, Pasadena, CA.

Judges: OTIS D. WRIGHT, II, UNITED STATES DISTRICT JUDGE.

Opinion by: OTIS D. WRIGHT, II

Opinion

ORDER DENYING PLAINTIFF'S MOTION FOR RELIEF FROM JUDGMENT [16]

I. INTRODUCTION

On March 8, 2016, this Court granted Defendant Wells Fargo Bank, N.A.'s Motion to Dismiss based on Plaintiff Maria Medina's failure to file a timely opposition. C.D. Cal. L.R. 7-12. Three weeks later, Plaintiff filed the instant Motion for Relief from Judgment, wherein she argues that her failure to oppose Defendant's Motion was due to excusable neglect. (ECF No. 16.) For the reasons discussed below, the Court DENIES Plaintiff's Motion. (ECF No. 16.)1

II. FACTUAL BACKGROUND

In February 2008, Plaintiff Maria Medina took out [*2] a loan from Defendant Wells Fargo Bank, N.A. to purchase property located in West Covina, California. (Not. of Removal, Ex. A ("Compl.") at 1-2.) In October 2013, Defendant recorded a Notice of Default with the Los Angeles County Recorder's office. (Def.'s Req. for Judicial Notice, Ex. E at 31-32, ECF No. 12.) On December 16, 2015, Plaintiff filed this

1 After considering the papers filed in support of and in opposition to the Motion, the Court deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15.


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action in the Los Angeles Superior Court, asserting eight state-law claims. On January 25, 2016, Defendant removed the case to this Court based on diversity jurisdiction. (ECF No. 1.) Four days later, Defendant moved to dismiss Plaintiff's Complaint on myriad grounds, including the failure to state a claim, judicial estoppel, and expiration of the limitations period, and set the matter for hearing on March 21, 2016. (ECF No. 11.) On March 8, 2016, having not received any opposition from Plaintiff, the Court granted the Motion under Local Rule 7-12 and closed the case. (ECF No. 13.)

Three weeks later, Plaintiff moved for relief from the order dismissing her complaint under Federal Rule of Civil Procedure 60(b). (ECF No. 16.) Defendant timely opposed, and Plaintiff timely replied. (ECF Nos. 18, 19.) That Motion is now before the Court for consideration.

III. LEGAL STANDARD

"On motion and just [*3] terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for . . . mistake, inadvertence, surprise, or excusable neglect." Fed. R. Civ. P. 60(b)(1). "To determine when neglect is excusable, we conduct the equitable analysis specified in Pioneer by examining 'at least four factors: (1) the danger of prejudice to the opposing party; (2) the length of the delay and its potential impact on the proceedings; (3) the reason for the delay; and (4) whether the movant acted in good faith.'" Lemoge v. United States, 587 F.3d 1188, 1192 (9th Cir. 2009) (quoting Bateman v. U.S. Postal Serv., 231 F.3d 1220, 1223 (9th Cir. 2000)); see also Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993); Briones v. Riviera Hotel & Casino, 116 F.3d 379, 381-82 (9th Cir. 1997) (per curiam). However, these factors do not constitute "an exclusive list." Briones, 116 F.3d at 381; Bateman, 231 F.3d at 1223. "The determination of whether neglect is excusable 'is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission.'" Lemoge, 587 F.3d at 1192 (quoting Pioneer Inv. Servs. Co., 507 U.S. at 395).

IV. DISCUSSION

Plaintiff's counsel states that he failed to timely oppose Defendant's motion because he did not calendar its due date, and contends that this constitutes excusable neglect. (Decl. Weitz at 2, ECF No. 16-1; Mot. 4, ECF No. 16.) Defendant disagrees that the neglect was excusable. Moreover, Defendant contends that Plaintiff made no arguments in opposition to the merits of Defendant's Motion [*4] to Dismiss, and therefore failed to show that relief from judgment would not be a "futile exercise." (Opp'n 3-4, ECF No. 17.) Plaintiff responds with threadbare arguments in support of three of the eight claims in her Complaint, and states that she will abandon the remaining claims if given relief from judgment. (Reply 2, ECF No. 18.) The Court finds that while the Pioneer factors do not conclusively show that Plaintiff is not entitled to relief, the woefully inadequate arguments advanced in support of her claims do.

A. Pioneer Factors

The Court finds that three of the four Pioneer factors weigh in Plaintiff's favor.

1. Prejudice

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There will be little (if any) prejudice to Defendant if Plaintiff is permitted to move forward with her case. Besides Defendant losing its "quick victory," Bateman, 231 F.3d at 1225, granting Plaintiff relief will leave the parties in the exact same position as if Plaintiff timely opposed the Motion to Dismiss. Moreover, to the extent that prejudice to the movant is a relevant consideration, Lemoge, 587 F.3d at 1195, this also weighs in Plaintiff's favor given that the order from which she seeks relief is one dismissing her complaint in its entirety. As a result, this factor weighs in favor of Plaintiff.

2. Length [*5] of Delay

Nor has Plaintiff's counsel's neglect caused any significant delay in the proceedings. Plaintiff moved for relief only three weeks after the Court granted Defendant's Motion. This is sufficiently prompt under Rule 60(b)(1). Bateman, 231 F.3d at 1225 (filing a Rule 60(b) motion one month after the order in question was "not long enough to justify denying relief"). Thus, this factor also favors Plaintiff.

3. Reason for Delay

This factor, however, favors Defendant. Plaintiff's counsel gives no reason for his failure to timely oppose Defendant's Motion other than that he simply did not calendar its due date. The Court finds this reason insufficient. If counsel's bare, unadorned negligence were enough to grant relief, the word "excusable" would lose all meaning. See, e.g., Negron v. Celebrity Cruises, Inc., 316 F.3d 60, 62 (1st Cir. 2003) ("[R]outine carelessness by counsel leading to a late filing is not enough to constitute excusable neglect." (citing Graphic Commc'ns Int'l Union v. Quebecor Printing Providence, Inc., 270 F.3d 1, 6-7 (1st Cir. 2001); Mirpuri v. ACT Mfg., 212 F.3d 624, 630-31 (1st Cir. 2000))). As the Court in Pioneer noted, the requirement that the neglect be "excusable" is what "will deter creditors or other parties from freely ignoring court-ordered deadlines in the hopes of winning a permissive reprieve." 507 U.S. at 395. Indeed, cases that have granted relief all involved something more than just failing to note the relevant deadline. Pioneer Inv. Servs. Co., 507 U.S. at 398 (counsel failed [*6] to file timely proof of claim because, contrary to usual practice, notice of the claims-filing deadline was placed in an inconspicuous area of the notice sent to creditors); In re Zilog, Inc., 450 F.3d 996, 1007 (9th Cir. 2006) (same); Bateman, 231 F.3d at 1222-23 (counsel was required to travel to Africa due to a family emergency, and unsuccessfully sought an extension of time from defendant's counsel to oppose their motion for summary judgment); Lemoge, 587 F.3d at 1197 (counsel failed to timely serve a complaint in part because he had severe medical complications from a staph infection that required him to undergo "three surgeries, skin grafts, extensive therapy, and a full regimen of medications"); but see Pincay v. Andrews, 389 F.3d 853, 859 (9th Cir. 2004) (affirming district court's finding of excusable neglect for paralegal's misreading of a simple rule governing a filing deadline, but noting that "[h]ad the district court declined to permit the filing of the notice, we would be hard pressed to find any rationale requiring us to reverse"). Consequently, the Court concludes that this factor favors Defendant.

4. Good Faith

Finally, there is no showing that Plaintiff acted in bad faith by not timely opposing Defendant's Motion. Thus, this factor favors Defendant.

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B. Likelihood of Success on Underlying Motion

While inquiry into the movant's [*7] likelihood of success on the underlying motion is not one of the Pioneer factors, the Court concludes that it is an appropriate consideration under the circumstances. See Pincay, 389 F.3d at 859 (noting that the excusable neglect analysis can also include "whether the lawyer had otherwise been diligent, . . . the quality of representation of the lawyers . . . , and the likelihood of injustice" if relief is not granted); Lemoge, 587 F.3d at 1198 (analyzing whether Plaintiff would be entitled to additional time to serve his Complaint under Rule 4(m) in deciding to grant relief under Rule 60(b)(1) for counsel's failure to do so); United States v. Aguilar, 782 F.3d 1101, 1105 (9th Cir. 2015) (considering whether defendant had a "meritorious defense" in deciding whether to set aside a default judgment under Rule 60(b)(1)); Butler v. Boeing Co., 175 F. Supp. 2d 1307, 1310 (D. Kan. 2001) (declining to grant relief under Rule 60(b)(1) because "plaintiff has not produced a response to defendant's [underlying] motion or even intimated what the substance of his 'meritorious' response would be"); Feeney v. AT & E, Inc., 472 F.3d 560, 564 (8th Cir. 2006) (granting relief for failure to timely oppose motion for summary judgment in part because counsel showed "a decisive defense on the merits to the judgment of rescission"); but see Bateman, 231 F.3d at 1225 (not considering merits of underlying motion for summary judgment in granting relief for counsel's failure to timely oppose that motion). [*8]

Here, Plaintiff's moving papers did not address the merits of Defendant's Motion to Dismiss. After Defendant pointed out this deficiency, Plaintiff articulated the following arguments in reply:

The Unlawful Business Practices claim is one with a good probability of success. It alleges specific violative acts of defendant and discovery may lead to more. When plaintiff proves those acts, she will win on that claim.The Breach of Covenant claim is probably a winner for Plaintiff too since there is no dispute as to the existence of the covenant and the only question is was and how was it breached.The Homeowner Bill of Rights Cause of Action looks like a definite probability of plaintiff prevailing here. There's just a few piece of evidence that we'll get through discovery [that] we need to make this a very viable claim.Please note, all other causes of action not mentioned in this brief are waived and will not be pled if given an opportunity to amend.

(Reply 2.)

To describe these statements as a "defense" of Plaintiff's claims is generous. They do nothing to show that Plaintiff has even pleaded a prima facie claim, let alone that the Court should overrule Defendant's affirmative defenses of judicial estoppel [*9] and expiration of the limitations period. If these were the arguments that Plaintiff's counsel intended to assert in opposition to the Motion to Dismiss, the Court would have held that Plaintiff effectively failed to oppose the Motion. See Aguilar, 782 F.3d at 1108 (court need not consider an undeveloped argument that is not supported by citations to authority in deciding whether to grant relief from judgment); Greenwood v. F.A.A., 28 F.3d 971, 977 (9th Cir. 1994) ("We will not manufacture arguments for an appellant, and a bare assertion does not preserve a claim . . . ."); United States v. Ramirez, 448 F. App'x 727, 729 (9th Cir. 2011) (making conclusory arguments without citation to authority is insufficient to preserve the argument); United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) ("A skeletal 'argument', really nothing more than an assertion, does not preserve a claim. . . . Judges are not like pigs, hunting for truffles buried in briefs.").

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Plaintiff's woefully underdeveloped arguments are all the more inexcusable given that it was counsel's lack of diligence that led to the Court dismissing the case in the first place. As a result, the Court sees no reason to allow Plaintiff to further pursue her claims in this case.

V. CONCLUSION

For the reasons discussed above, the Court DENIES Plaintiff's Motion for Relief from Judgment. (ECF No. 58.)

IT IS SO ORDERED.

May 20, 2016 [*10]

/s/ Otis D. Wright, II

OTIS D. WRIGHT, II


End of Document

2016 U.S. Dist. LEXIS 66856, *9


EXHIBIT 9


Renter v. City of San Bernardino (In re City of San Bernardino)


January 4, 2018, Decided; January 4, 2018, Filed

Case No. 5:17-cv-345-ODW; 5:17-cv-346-ODW


IN RE CITY OF SAN BERNARDINO, Debtor; ROVINKSI RENTER; HECTOR BRIONES; ROSALAND HARDING, Appellants, v. CITY OF SAN BERNARDINO, a municipal corporation, Appellee.

Prior History: [*1] Bankruptcy Case No. 6:12-bk-28006.

Counsel: For Rovinski Renter, Appellant (5:17-cv-00345-ODW): Gary Steven Casselman, LEAD ATTORNEY, Law Offices of Gary S Casselman, Los Angeles, CA; Donald Webster Cook, Donald W Cook Law Offices, Los Angeles, CA.

For Hector Briones, (consolidated case 5:17-cv-00346-ODW), Rosaland Harding, (consolidated case 5:17-cv-00346-ODW), Appellants (5:17-cv-00345-ODW): Donald Webster Cook, LEAD ATTORNEY, Donald W Cook Attorney at Law, Los Angeles, CA.

For City of San Bernardino, California (5:17-cv-00345-ODW, 5:17-cv-00346-ODW), Appellee: Gary David Saenz, LEAD ATTORNEY, San Bernardino City Attorneys Office, San Bernardino, CA; Paul Robert Glassman, Fred Neufeld, Stradling Yocca Carlson and Rauth PC, Santa Monica, CA.

For Hector Briones, Rosaland Harding, Appellants (5:17-cv-00346-ODW): Donald Webster Cook, Donald W Cook Law Offices, Los Angeles, CA.

Judges: OTIS D. WRIGHT, II, UNITED STATES DISTRICT JUDGE.

Opinion by: OTIS D. WRIGHT, II

Opinion

ORDER GRANTING APPELLEE'S MOTION TO DISMISS APPEAL [34]

I. INTRODUCTION

On February 17, 2017, Appellant Rovinski Renter noticed her appeal of the Order Confirming Third Amended Plan for the Adjustments of Debts of the City of San Bernardino, California, for Bankruptcy [*2] Court case number 6:12-bk-28006 MJ. (Not. of Appeal, ECF No. 1.) On August 10, 2017, the Court consolidated this case with another appeal where Appellants Hector Briones and Roseland Harding were challenging the same Bankruptcy Court case. (ECF No. 33.) On August 18, 2017, Appellee


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City of San Bernardino ("San Bernardino") moved to dismiss Appellants' Appeal. (Mot., ECF No. 34.) For reasons stated below, the Court GRANTS San Bernardino's Motion to Dismiss.

II. FACTUAL BACKGROUND

On August 1, 2012, San Bernardino filed its chapter 9 bankruptcy case in the United States Bankruptcy Court for the Central District of California. (Appellee's App. of Excerpts of R. ("AER I") at 3, ECF No. 15.) Appellants Briones, Harding, and Renter are prepetition unsecured creditors who filed proofs of claim in San Bernardino's bankruptcy case. (Req. for Judicial Notice ("RJN"), Exs. 2, 3, ECF No. 38.) On July 29, 2016, San Bernardino filed its plan of adjustment of debts (the "Plan") with the Bankruptcy Court and began soliciting votes of creditors to accept the Plan. (Appellee's App. of Excerpts of R. ("AER II") at 2, ECF No. 37.) All classes of impaired claims voted to accept the Plan. (Id.) For the class [*3] of General Unsecured Claims, which includes Appellants' claims, 95% of the votes accepted the Plan. (Id.)

San Bernardino then served all creditors with a notice of the date of the confirmation hearing of the Plan and the deadline fixed by the Bankruptcy Court for filing objections to the confirmation of the Plan. (Id. at 139.) The notice explained that failure to object to the confirmation of the Plan filed on or before the deadline "may be deemed by the Bankruptcy Court to be (i) a waiver of objections to confirmation of the Plan and/or (ii) consent to confirmation of the Plan." (Id.) The Bankruptcy Court held plan confirmation hearings on October 14, November 15, and December 6, 2016. (Id. at 203-04.) The December 6 hearing concluded with the Bankruptcy Court stating it would confirm the Plan and ordering San Bernardino to draft a confirmation of the order by January 3, 2017. (Id. at 199.) The Bankruptcy Court set a hearing for January 27, 2017 to consider any objections to the proposed form of the confirmation order. (Id.)

San Bernardino lodged its proposed confirmation order on January 3, 2017 and gave notice of the lodging, the deadline to object, and of the January 27, 2017 hearing date. (Id. at 266.) San Bernardino now [*4] asserts that "Appellants did not file any objections to the proposed form of the confirmation order or appear at the January 27 hearing to object." (Mot. 10.) The Bankruptcy Court entered the confirmation order (the "Confirmation Order") on February 7, 2017, and the Plan was implemented on June 15, 2017. (Decl. of Brent Mason ("Mason Decl.") ¶¶ 7-9, ECF No. 35.)

III. LEGAL STANDARD

District courts have appellate jurisdiction over final judgments, orders, and decrees of bankruptcy courts. 28 U.S.C. § 158(a)(1). "'When reviewing a bankruptcy court's decision..., a district court functions as [an] appellate court and applies the standard of review generally applied in federal court appeals.'" In re Crystal Properties Ltd., 268 F.3d 743, 755 (9th Cir. 2001) (quoting In re Webb, 954 F.2d 1102, 1103-04 (5th Cir. 1992)). The district court "may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings." Fed. R. Bank. P. 8013.

IV. DISCUSSION

A. Request for Judicial Notice

2018 U.S. Dist. LEXIS 2494, *2


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San Bernardino requests the Court take judicial notice of six documents: (1) Memorandum of Decision re: Issuance of Third Party Injunction in Conjunction with Confirmation of Chapter 9 Plan; (2) proof of claim filed by Appellant Rovinski Renter; (3) proof of claim filed by Appellants Hector Briones and Rosaland Harding; [*5] (4) the content of the "Twelfth Joint Status Report" filed in U.S. District Court Case No. 2:10-cv-07571-CBM-OP; (5) the content of the "Thirteenth Joint Status Report" filed in U.S. District Court Case No. 2:10-cv-07571-CBM-OP; and (6) the content of the "Fourteenth Joint Status Report" filed in U.S. District Court Case No. 2:10-cv-07571-CBM-OP. (RJN 2-3.)

Under Rule 201, a court may judicially notice a fact that is not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201(b). Judicial notice of a filing before another court is limited to recognition that the filing exists—the very fact of the filing and its contents—which is not subject to a reasonable dispute. Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001). But the disputed facts contained within the filing and the factual determinations by a judge in another case "ordinarily are not admissible for their truth in another case through judicial notice." Wyatt v. Terhune, 315 F.3d 1108, 1114 n.5 (9th Cir. 2003); Lee, 250 F.3d at 690.

The Court finds that San Bernardino's requested documents are appropriate for judicial notice; especially given that they are not contested matters [*6] and Appellants do not oppose San Bernardino's request. In light of the foregoing legal standards, the Court takes judicial notice as far as it considers each document in its reasoning as set forth below.

B. Failure to Object: Lack of Standing and Waiver

San Bernardino argues that Appellants' appeal should be dismissed because Appellants waived objections to the Plan and Confirmation Order and, therefore, lack standing to appeal the Confirmation Order. (Mot. 14.) Appellants contend that they maintain standing to appeal, because the proper standard for appellate standing does not require an objection in the Bankruptcy Court. (Opp'n 10-11, ECF No. 40.)

Appellant standing for a bankruptcy order or decision only exists where the "person aggrieved" test has been met. Fondiller v. Robertson (Matter of Fondiller), 707 F.2d 441, 442 (9th Cir. 1983). That is, "[o]nly persons who are directly and adversely affected peculiarly by an order of the bankruptcy court have been held to have standing to appeal that order." Id. Furthermore, "attendance and objection should usually be prerequisites to fulfilling the 'person aggrieved' standard"—except for circumstances where "the objecting party did not receive proper notice of the proceedings below and of his opportunity to object to the [*7] action proposed to be taken." Brady v. Andrew (In re Commercial W. Fin. Corp.), 761 F.2d 1329, 1335 (9th Cir. 1985) (emphasis added).1 Furthermore, 11 U.S.C. § 944 provides that "[t]he provisions of a confirmed plan bind the debtor and any creditor, whether or not. . . such creditor has accepted the plan."

Here, Appellants Briones, Harding, and Renter failed to object to the Plan or the confirmation of the Plan in the Bankruptcy Court. Appellants contend that they "affirmatively showed their non-consent to the

1 Appellants argue that the use of the language "should usually" from Brady implies that standing and objection are not mandatory. The Court disagrees. The Court finds that the Ninth Circuit's use of the word "prerequisites" implies that attendance and objection are mandatory, except where the objecting party has not received proper notice.

2018 U.S. Dist. LEXIS 2494, *4


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Bankruptcy Court deciding the merits of their claim." (Opp'n 8.) Appellants claim to have done so by: (1) Appellants Briones and Harding having sought a modification of the bankruptcy court's stay; (2) Appellants having voted in opposition to the bankruptcy discharge plan; and (3) Appellant Renter having submitted written objections to the proposed discharge plan.2 (Id.) San Bernardino has objected to the notice of motion and motion for relief from the automatic stay, which Briones and Harding filed in the Bankruptcy Court in December 2012, on the grounds that it was not designated in Appellant's Record of Appeal. (Obj. 3-4, ECF No. 44.)3 The Court sustains San Bernardino's objection and therefore declines to consider this filing in its analysis.4 Furthermore, Appellants fail to [*8] demonstrate how objections and a general display of "non-consent" toward the discharge plan establish standing to appeal the Confirmation Order of the Plan.

Appellants also argue that Appellant Renter's joinder of another litigation creditor's objection of the Plan, which was later withdrawn, is sufficient to create standing under Brady. (Opp'n 11.) Appellants do not cite any authority to support this assertion. (See generally id.) The Court finds Appellant Renter's joinder of another creditor's withdrawn opposition is insufficient to create standing to appeal. This finding is further supported by the fact that Renter did not file her own written objections to the Plan, despite the Bankruptcy Court's alerting Renter's counsel that Renter's joinder might not be sufficient, given that the objection had been withdrawn. (AER II at 283-88.)

The proposed form of the Confirmation Order, lodged by San Bernardino to the Bankruptcy Court on January 3, 2017, included the following provision: "all creditors that failed to file objections to confirmation of the Plan are hereby deemed to have waived any objections to the terms of the Plan, confirmation of the Plan, and the terms of this [*9] Confirmation order." (AER II at 243, ¶ 21.2.) San Bernardino "gave notice of the lodging, notice of the Bankruptcy Court fixed deadline to object to the terms of the draft form of the confirmation order, and of the January 27, 2017 hearing to consider objections to the draft form of confirmation order." (Id. at 266.) Appellants had sufficient notice and opportunity to object to the Plan and the proposed Confirmation Order but failed to do so. Appellants received notice that their failure to object may be deemed as waiver of objections to the terms of the Plan—yet failed to submit written objections or attend the January 27, 2017 hearing. (Id.) Because the final Confirmation Order included the waiver provision, and the Confirmation Order is binding on all creditors, Appellants lack of objection is deemed as waiver. See 11 U.S.C. § 944.

Accordingly, the Court finds that Appellants waived any objections to the Plan or to the confirmation of the plan and, therefore, lack standing to appeal.

C. Equitable Mootness

2 Appellants have cited to the objection as "Docket entry 1925 in 6:12-bk-28006-MJ" but have failed to designate that document as a part of the record in this case and have not requested the Court take judicial notice of the objection.

3 The Court also SUSTAINS Appellee's remaining objections Cook's and Casselman's declarations. (See Obj.; see also Decl. of Donald W. Cook, ECF No. 40; Decl of Gary S. Casselman, ECF No. 40.)

4 Even if the Court were to consider Appellants Briones and Harding's request to modify the stay of their civil case on appeal, such request would be not sufficient to constitute a proper objection for the purpose of standing. The request for relief was made well before the Plan was even filed and it cannot be inferred that request for stay modification is sufficient to create standing to appeal the Plan or confirmation of the Plan.

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"Equitable mootness occurs when a comprehensive change of circumstances has occurred so as to render it inequitable for this court to consider the merits of the appeal." In re Thorpe Insulation Co., 677 F.3d 869, 880 (9th Cir. 2012) (internal quotations and citations omitted). The [*10] Ninth Circuit has implemented the following test for determining whether an appeal is equitably moot:

We will look first at whether a stay was sought, for absent that a party has not fully pursued its rights. If a stay was sought and not gained, we then will look to whether substantial consummation of the plan has occurred. Next, we will look to the effect a remedy may have on third parties not before the court. Finally, we will look at whether the bankruptcy court can fashion effective and equitable relief without completely knocking the props out from under the plan and thereby creating an uncontrollable situation for the bankruptcy court.

Id. Here, Appellants did not seek a stay. (Mot. 25.) As San Bernardino notes, Appellants filed their appeal of the Plan in February 2017. (Id.; ECF Nos. 1, 23.) The Plan, however, did not go into effect until June 15, 2017. (Mason Decl. ¶¶ 7-9.) Appellants could have sought a stay prior to the Plan going into effect, but failed to do so. Therefore, Appellants have "not fully pursued [their] rights," and their appeal is equitable moot. See In re Thorpe Insulation Co., 677 F.3d at 880.

V. CONCLUSION

For the reasons stated above, the Court GRANTS Appellee's Motion to Dismiss Appeal. (ECF No. 34). [*11] The Clerk of the Court shall close the case.

IT IS SO ORDERED.

January 4, 2018

/s/ Otis D. Wright, II

OTIS D. WRIGHT, II


End of Document

2018 U.S. Dist. LEXIS 2494, *9


EXHIBIT 10


Sekerke v. Gonzalez

United States District Court for the Southern District of California

January 8, 2018, Decided; January 8, 2018, Filed

Case No.: 15-CV-0573-JLS (WVG)


KEITH WAYNE SEKERKE, Plaintiff, v. JOHN DOE GONZALEZ, et al., Defendant.

Subsequent History: Adopted by, Motion denied by Sekerke v. Gonzalez, 2018 U.S. Dist. LEXIS 28049 (S.D. Cal., Feb. 20, 2018)

Prior History: Sekerke v. Gonzalez, 2017 U.S. Dist. LEXIS 53940 (S.D. Cal., Apr. 7, 2017)

Counsel: [*1] Keith Wayne Sekerke, Plaintiff, Pro se, Delano, CA.

For John Doe Gonzalez, County Sheriff's Deputy, Defendant: Morris G Hill, Ronald Lenert, LEAD ATTORNEYS, County of San Diego Office of County Counsel, San Diego, CA.

For Jose Gonzalez, Deputy Sheriff, Defendant: Ronald Lenert, LEAD ATTORNEY, Morris G Hill, County of San Diego Office of County Counsel, San Diego, CA.

Judges: Hon. William V. Gallo, United States Magistrate Judge.

Opinion by: William V. Gallo

Opinion

REPORT AND RECOMMENDATION DENYING PLAINTIFF'S MOTION TO REINSTATE DISMISSED DEFENDANT [ECF NO. 88]

I. INTRODUCTION

Pending before the Court is Plaintiff Keith Wayne Sekerke's ("Plaintiff") Motion to Reinstate Dismissed Defendant Lisa Stark pursuant to Federal Rule of Civil Procedure ("Rule") 60(b). (Mot., ECF No. 88.)1,2 For the reasons that follow, the Court RECOMMENDS Plaintiff's motion be DENIED WITH PREJUDICE.

II. BACKGROUND

1 Citations refer to document numbers assigned by the Court's ECF system.

2 Plaintiff brought the motion pursuant to Rules 59(e) and 60(b). (Mot. at 2.) However, Rule 59(e) pertains to relief from final judgment, which has not been reached in this matter. Therefore, it is not applicable.


Page 2 of 4

On March 12, 2015, Plaintiff, proceeding pro se and in forma pauperis, filed a Civil Rights Complaint pursuant to 42 U.S.C. Section 1983. (ECF No. 1.) On July 31, 2015, Stark filed a Motion to Dismiss the Complaint pursuant to Rule 12(b)(6). (ECF No. 11.) This Court filed a Report and Recommendation ("R&R") recommending Stark be dismissed from the case. (ECF No. 21.) Plaintiff did not file an objection to this R&R. [*2] On March 18, 2016, The Honorable Janis L. Sammartino adopted the R&R and dismissed Stark without prejudice. (ECF No. 32.)

On July 19, 2016, Plaintiff filed a First Amended Complaint and again named Stark as a defendant. (ECF No. 42.) On August 2, 2016, Stark filed another Motion to Dismiss pursuant to Rule 12(b)(6). (ECF No. 44.) On December 1, 2016, the parties filed a Joint Motion to Dismiss Stark pursuant to Rule 41(a). (ECF No. 58.) On December 2, 2016, Judge Sammartino dismissed Stark without prejudice. (ECF No. 59.)

On May 30, 2017, Plaintiff filed the instant Motion, requesting the court reinstate Stark as a defendant. On June 30, 2017, Stark, in a special appearance, filed an Opposition to Plaintiff's Motion. (Opp'n ECF No. 92.) On July 25, 2017, Plaintiff filed a reply to Stark's Response. (Pl.'s Resp., ECF No. 96.)

III. STANDARD OF REVIEW

Pursuant to Rule 60(b), a district court may relieve a party from a final judgment, order, or proceeding for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;(2) newly discovered evidence that, with reasonable diligengce, could not have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether previously called intrinsic or extrinsic), [*3] misrepresentation, or misconduct by an opposing party;(4) the judgment is void;(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or(6) any other reason that justifies relief.

Fed. R. Civ. P. 60(b)(1) - (6).3

Rule 60(b)(1) relief is unavailable to parties who simply misunderstand the legal consequences of their deliberate acts. The Ninth Circuit has explained that "Rule 60(b)(1) is not intended to remedy the effects of a litigation decision that a party later comes to regret through subsequently-gained knowledge [ ]." Latshaw v. Trainer Wortham & Co., Inc., 452 F.3d 1097, 1101 (9th Cir. 2006). Further, "parties should be bound by and accountable for the deliberate actions of themselves [ ]." Id. "[A] party will not be released from a poor litigation decision made because of inaccurate information or advice, even if provided by an attorney." Id.

Rule 60(b)(6) "is used sparingly [ ]." Id. at 1103. "Accordingly, a party who moves for such relief must demonstrate both injury and circumstances beyond his control that prevented him from proceeding with the action in a proper fashion." Id.

3 Plaintiff did not specify which specific subsection of Rule 60(b) he wished to use for relief. However, a thorough reading of the motion makes clear that subsections (2) - (5) are inapplicable. Thus, the Court construes the motion is seeking relief pursuant to Rule 60(b)(1) and (b)(6).

2018 U.S. Dist. LEXIS 3223, *1


Page 3 of 4

IV. DISCUSSION

Plaintiff asserts two arguments in support of his motion: (1) he mistakenly believed he could compel discovery from [*4] Stark after her dismissal from the case; and (2) that he was mentally incompetent at the time he agreed to file the joint motion to dismiss Stark. Neither of these arguments is persuasive.

A. Rule 60(b)(1) Relief

Plaintiff claims that "through [his] mistake," he thought he could compel discovery from Stark even after having dismissed her from the action. (Mot. at 4:27 - 5:7.) However, the Ninth Circuit has made clear that a "poor litigation decision" made due to "inaccurate information" is not sufficient reason for relief pursuant to Rule 60(b)(1). Latshaw, 452 F.3d at 1101. The Court finds that Plaintiff's mistaken action due to incomplete or incorrect information amounts to nothing more than a poor litigation decision and relief pursuant to Rule 60(b)(1) is not warranted.

B. Rule 60(b)(6) Relief

Plaintiff then goes on to argue that he was not mentally competent at the time he signed the joint motion to dismiss Stark, and was in an "Extensive Outpatient Program" from October, 2016 through March, 2017. (Mot. at 5:9-15.) Plaintiff attached 79 pages of documents in support of this contention. However, the documents attached are insufficient to show that Plaintiff was mentally incompetent at the time he signed the joint motion requesting Stark's dismissal. Even assuming [*5] Plaintiff was mentally incompetent until March, 2017, Plaintiff has provided no explanation for his delay beyond March, 2017.

Moreover, Plaintiff's claims of mental incompetence are belied by the record. As Stark points out, Plaintiff made numerous filings during the time in which he claims he was mentally incompetent. (Opp'n at 4:8 - 18.) Indeed, Plaintiff filed seven different documents during the time he is now claiming he suffered from mental incompetence, all of which are cogent, well written documents that demonstrate an understanding of the proceedings. (See ECF Nos. 51, 53, 56, 61, 64, and 68.) Moreover, Plaintiff appeared before this Court in a Mandatory Settlement Conference on October 25, 2016. (ECF No. 54.) At that appearance, Plaintiff was able to articulate the facts of the case, his claims, and his desired remedy. At no time did it appear to the Court that Plaintiff suffered from a diminished mental capacity.

Lastly, Plaintiff has not shown he will suffer an injury as a result of Stark remaining a dismissed party.

Since Plaintiff has failed to demonstrate both injury and a circumstance beyond his control, Plaintiff is not entitled to relief pursuant to Rule 60(b)(6).

C. Denial With Prejudice [*6]

The Court finds that the present motion is nothing more than a thinly veiled attempt to reopen discovery. Plaintiff requests the Court rescind its order dismissing Stark in order to compel Stark to reply to requests for admissions and interrogatories. (Mot. at 3:4-7.) Plaintiff now claims he was unaware that dismissing Stark would foreclose his ability to serve any discovery on her. However, on December 12, 2016, after

2018 U.S. Dist. LEXIS 3223, *3


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dismissing Stark and after the deadline by which to complete discovery, Plaintiff requested an extension of discovery deadlines and indicated he intended to "subpoena" Stark. (ECF No. 61 at 2:17-20.) This request demonstrates to the Court that Plaintiff was aware he could subpoena Stark during the discovery process. The Court granted Plaintiff's motion and allowed him until April 13, 2017 to complete fact discovery. (ECF No. 62.) After again complaining he was confused as to the discovery deadlines and missing yet another fact discovery deadline, Plaintiff submitted another request to continue discovery deadlines on April 17, 2017. (ECF No. 80.) The Court denied this request. (ECF No. 81.)

Given Plaintiff's continued failures to complete discovery by clearly stated deadlines [*7] and Plaintiff's present relief being sought on the basis of discovery, the Court RECOMMENDS the motion be DENIED WITH PREJUDICE

V. CONCLUSION

For the reasons set forth herein, it is RECOMMENDED that Plaintiff's Motion be DENIED WITH PREJUDICE. This Report and Recommendation will be submitted to the United States District Judge assigned to this case, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(1988) and Federal Rule of Civil Procedure 72(b).

IT IS ORDERED that no later than February 9, 2018, any party to this action may file written objections with the Court and serve a copy on all parties. The document shall be captioned "Objections to Report and Recommendation."

IT IS FURTHER ORDERED that any reply to the objections shall be filed with the Court and served on all parties no later than February 16, 2018. The parties are advised that failure to file objections within the specified time may waive the right to raise those objections on appeal of the Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

IT IS SO ORDERED.

Dated: January 8, 2018

/s/ William V. Gallo

Hon. William V. Gallo

United States Magistrate Judge

End of Document

2018 U.S. Dist. LEXIS 3223, *6


EXHIBIT 11


Spacey v. Burgar


May 16, 2002, Decided; May 16, 2002, Filed; May 17, 2002, Entered

Case No. CV 01-3848-GAF


KEVIN SPACEY, an individual, and M. PROFITT PRODUCTIONS, INC., a California Corporation, Plaintiffs, v. JEFFREY BURGAR, an individual, and the KEVIN SPACEY CLUB, Defendants.

Prior History: Spacey v. Burgar, 207 F. Supp. 2d 1037, 2001 U.S. Dist. LEXIS 24555 (C.D. Cal., 2001)

Counsel: [*1] For Kevin Spacey, an individual, M Profitt Productions Inc, a California corporation, Plaintiffs: Jennifer S Fryhling, LEAD ATTORNEY, Manatt Phelps & Phillips, Palo Alto, CA; Seth A Gold, LEAD ATTORNEY, Manatt Phelps and Phillips LLP, Los Angeles, CA; Susan E Hollander, LEAD ATTORNEY, Manatt Phelps and Phillips LLP, Palo Alto, CA.

For Jeff Burgar, an individual, Kevin Spacey Club, an unknown entity, Defendants: Eric Christopher Grimm, LEAD ATTORNEY, CyberBrief, Ann Arbor, MI; Jeff Call Katofsky, LEAD ATTORNEY, Jeff Katofsky Law Offices, Sherman Oaks, CA.

Judges: Gary Allen Feess, United States District Judge.

Opinion by: Gary Allen Feess

Opinion

ORDER RE: PLAINTIFFS' MOTION FOR RECONSIDERATION OR RELIEF FROM JUDGMENT

I.

INTRODUCTION AND SUMMARY

In the present lawsuit, Plaintiffs Kevin Spacey and his loan out corporation, M. Profitt Productions, Inc. (jointly referenced as "Spacey"), sue Jeffrey Burgar, a Canadian citizen, and the Kevin Spacey Club, a Canadian corporation, for allegedly misappropriating Spacey's name. Spacey contends that Defendants created an internet domain name <kevinspacey.com> and used that domain name to funnel internet traffic to Defendants' Celebrity 1000 website, a site whose files are physically [*2] located on computers in Canada. Defendants responded to the suit by moving to dismiss for lack of personal jurisdiction. On November 15, 2001, the Court granted that motion, concluding that Spacey had not shown either that Defendants had purposefully availed themselves of the privilege of doing business in California, or that


Page 2 of 9

jurisdiction could be exercised over the Defendants under the Calder "effects" variant of the purposeful availment doctrine. See Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998); Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir. 1997).

Now Spacey seeks reconsideration of the Court's ruling. Spacey claims that the Court should have determined only whether he presented a prima facie case of personal jurisdiction. Because he believes he met that standard, at least with respect to the so-called "effects" test, Spacey contends that the Court erred in its ruling and should deny the motion to dismiss upon reconsideration. In short, Spacey claims that he presented enough evidence to establish a prima facie case that Defendants intentionally directed conduct at a California resident with the effects being felt in California. In addition, Spacey [*3] supports his motion to reconsider with new evidence and legal authority - most of which was, or could have been, known when the Court considered the original motion.

After reviewing the moving, opposing and reply papers, in addition to the supplemental declarations submitted on behalf of both parties, the Court concludes that Spacey is not entitled to the relief sought in this reconsideration motion. Spacey fails to satisfy the requirements under Rule 60(b) or Local Rule 7-18 relating to this Court's consideration of new facts or law. Moreover, even assuming that the Court's November 15, 2001 Order stated an incorrect legal standard, application of the "prima facie case" standard, on which Spacey relies, fails to change the result in this case. Accordingly, the Court DENIES Spacey's Motion.

II.

DISCUSSION

A. THE LEGAL STANDARD UNDER FEDERAL RULE 60(b)(6)

Federal Rule of Civil Procedure 60(b) provides a procedure whereby a party may move for relief of a court's final judgment or order. Fed. R. Civ. P. 60(b)(1)-(6); Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863, 108 S. Ct. 2194, 100 L. Ed. 2d 855 (1988). Rule 60(b)(6) serves as the catch-all provision, conferring on the court broad discretion to "relieve a [*4] party from final judgment 'upon such terms as are just,' provided that the motion is made within a reasonable time and is not premised on one of the grounds for relief enumerated in clauses (b)(1) through (b)(5)." Liljeberg, 486 U.S. at 863 (emphasis added); see also Lafarge Conseils et Etudes, S.A. v. Kaiser Cement & Gypsum Corp., 791 F.2d 1334, 1337-38 (9th Cir. 1986)(quoting Corex Corp. v. United States, 638 F.2d 119, 121 (9th Cir. 1981)). While courts have never defined what is meant by "just terms," case law teaches that this section should be applied only in extraordinary circumstances. Liljeberg, 486 U.S. at 865 (citing Klapprott v. United States, 335 U.S. 601, 614-15, 69 S. Ct. 384, 93 L. Ed. 266 (1949); Ackermann v. United States, 340 U.S. 193, 200, 71 S. Ct. 209, 95 L. Ed. 207 (1950)); see also United States v. Alpine Land & Reservoir Co., 984 F.2d 1047, 1049 (9th Cir. 1993). "Extraordinary circumstances" do not include situations in which "a litigant who has let the normal appeals channels lapse seeks to have a second bite at the apple." Pacific Far East Lines, Inc. v. United States, 889 F.2d 242, 250 (9th Cir. 1989).

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Page 3 of 9

Under this provision, the Court concludes that it may, and should, consider whether or not it applied an incorrect [*5] legal standard to the analysis of the facts presented at the time of the prior motion. Accordingly, the Court will reconsider that aspect of its prior ruling.

B. SPACEY'S REQUEST FOR RECONSIDERATION OF THE APPLICABLE STANDARD FOR ESTABLISHING

PERSONAL JURISDICTION OVER NON-RESIDENT DEFENDANTS

Spacey argues that, had the Court required only that he make a prima facie case for the exercise of personal jurisdiction over Defendants, the Court would have concluded, at the very least, that Defendants were subject to this Court's jurisdiction under the "effects" test established in Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984). Defendants, on the other hand, take the position that no matter the label used by this Court in articulating the applicable legal standard, Spacey fails to establish the requisite jurisdictional facts to support this Court's exercise of personal jurisdiction over either Defendant.

Spacey's argument amounts to a claim that, under the prima facie case test, this Court must accept the truth of every allegation plaintiff makes regardless of whatever other information is found in the record. That position finds no support in the case law. While the November 15, 2001 Order may have [*6] incorrectly articulated the applicable standard, the Court believes it correctly analyzed the record and properly granted Defendants' Motion to Dismiss.

1. The Legal Standard for Motion to Dismiss Under Rule 12(b)(2)

The party seeking to invoke federal court jurisdiction has the burden of proving that the court may properly assert jurisdiction over each defendant. Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001)(citation omitted); Data Disc, Inc. v. Systems Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977)(citation omitted). "Yet the quantum of proof required to meet that burden may vary, depending upon the nature of the proceeding and the type of evidence which the plaintiff is permitted to present." Data Disc, 557 F.2d at 1285. Where a court looks only to the pleadings and other written materials submitted by the parties, a plaintiff need only make a prima facie showing of facts that support a finding of jurisdiction. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)(citing Data Disc, 557 F.2d at 1285).

In determining whether a plaintiff has satisfied this burden, the plaintiff's version of the facts are taken as true when not directly controverted, and conflicts in [*7] the allegations contained in the parties' affidavits are also resolved in plaintiff's favor. Unocal Corp., 248 F.3d at 922 (citing AT & T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996)). "Except in those rare cases where the facts alleged in an affidavit are inherently incredible, and can be so characterized solely by a reading of the affidavit, the district judge has no basis for a determination of credibility." Data Disc, 557 F.2d at 1284. However, conclusory statements are not enough to satisfy a prima facie showing of jurisdiction without supporting evidence contained in the record. GTE New Media Servs. Inc. v. Bellsouth Corp., 199 F.3d 1343, 1349, 339 U.S. App. D.C. 332 (D.D.C. 2000). As the Court noted in GTE New Media, to assume or infer the existence of "effects" sufficient to give rise to jurisdiction on the basis of conclusory assertions to that end "would be to assume or infer the answer to the very question that is before us." Id.

Thus, the Court must examine the entirety of the record before it, determine what facts are not in dispute, resolve genuine fact disputes in plaintiff's favor, and then decide whether a proper basis for personal

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Page 4 of 9

jurisdiction has been shown. The Court [*8] conducted such an analysis once and concluded that Spacey had not shown a proper basis for the exercise of personal jurisdiction. On reconsideration, the Court reaches the same conclusion.

2. The Court's Reconsideration of the Evidence

In resolving Defendants' Motion to Dismiss, the Court identified the material factual allegations in dispute, determined whether any of these allegations were conclusory in nature and without support, and afforded the allegations proper weight in light of these determinations and relevant authority. (See Order at 7-8). The Court considered whether Defendants Burgar and Kevin Spacey Club had purposefully availed themselves of the privilege of conducting activities in the forum under both the traditional test and the variant Calder "effects" test, and concluded Spacey failed to meet his burden in establishing the requisite jurisdictional facts under either test. (See Order at 9-15).

Spacey does not challenge the traditional purposeful availment analysis of the prior order; rather he argues that he established a prima facie case for jurisdiction under the Calder "effects" test. What Spacey fails to consider in framing these arguments, however, are the Ninth [*9] Circuit decisions in Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir. 1997) and Panavision Int'l, LP v. Toeppen, 141 F.3d 1316, 1322 (9th Cir. 1998), which this Court addressed in great detail in assessing Spacey's "effects" argument.

In Cybersell, the plaintiff, who operated in Arizona under the same name as the Florida defendant, brought suit in Arizona for damages allegedly resulting from defendant's trademark infringement. Even though the "effects" of the Florida defendant's conduct were allegedly felt in Arizona, the court found the website operator's conduct was not expressly aimed at the forum state. Moreover, given the nature of the internet, the Court held that the effects of the Florida defendant's conduct could not be said to be primarily felt in that state, even though the alleged infringer operated a website that solicited business from internet users, and advertised an e-mail address through which the website owners could be contacted. 130 F.3d at 415-20. Thus, the court concluded "something more" was needed to warrant the exercise of personal jurisdiction. Id. Here, the Court compared Spacey's allegations regarding Defendants' cyberspace activities, including [*10] those relating to the Celebrity 1000 Website's alleged forum-related advertisements, and Spacey's presence in the forum, and concluded the arguments were similar to those rejected by the court in Cybersell. (Order at 15). The Court also found significance in the fact that, unlike the website at issue in Cybersell, the Celebrity 1000 Website is not competing with, or even related to, a website operated by Spacey and that the Celebrity 1000 Website expressly disclaims any endorsement of the celebrities listed on the site. (Id.)

In Panavision, the court affirmed the exercise of personal jurisdiction over a non-resident defendant because the court found that defendant, an alleged trademark infringer, registered the domain name at issue with the intent to extort money from the trademark owner. 141 F.3d at 1321-22. Thus, the court concluded that the "something more" needed to satisfy the "effects" test existed under the facts presented. Id. at 1322. Here, the Court pointed out that unlike the defendants in Panavision, it is undisputed that Defendants Burger and the Kevin Spacey Club made no attempt to obtain money from Spacey in exchange for the transfer of the registered internet domain [*11] name <kevinspacey.com>. (Order at 14). Thus, the Court found the "something more" needed to satisfy the test did not exist in the present action, as the facts here are more in line with those in Cybersell. (Id. at 13-14).

2002 U.S. Dist. LEXIS 28793, *7


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Since the motion to reconsider was filed, Spacey filed a Notice of Recent Decision on April 25, 2002, noting the Ninth Circuit's recently published decision in Rio Properties, Inc. v. Rio Intel Interlink, 284 F.3d 1007 (9th Cir. 2002). Even assuming that Rule 7-18 and Federal Rule of Civil Procedure 60(b) permit consideration of this decision, Rio requires no change in the Court's analysis or application of the "effects" test.

In Rio, plaintiff Rio Properties, a hotel and casino operator, sued defendant Rio International Interlink, operator of an internet gambling website, for infringement of its "RIO" trademarks. Rio Interlink claimed that it did nothing more than operate a passive website, in the manner of the defendant in Cybersell. But the trial court found that Rio Interlink not only operated a website that offered the opportunity to Nevada residents to gamble on line, but it also allegedly ran print and radio advertisements in Nevada, the center of the gaming [*12] industry, specifically aimed at Nevada residents for the purpose of inducing them to do their gambling on line. Id. at 1020. Thus, the court concluded that the exercise of personal jurisdiction was proper because the non-resident defendant had "contacts with the forum . . . attributable to (1) intentional acts; (2) expressly aimed at the forum; (3) causing harm, the brunt of which is suffered—and which the defendant knows is likely to be suffered—in the forum." Id. at 1019-1020 (citations omitted.) Thus, both the trial court and the Ninth Circuit found the "something more" required under the Cybersell analysis to justify the exercise of personal jurisdiction over an out-of-state website operator. But that "something more" is not present here.

In this case, Spacey cannot allege that the website operator specifically directed its activities toward the state of California. Rather, the operator sought to satisfy the national and, indeed, international appetite for trivia regarding the lives of "celebrities." Defendants, or their related corporations, sold advertising space to brokers who then placed ads on the site. But the ads did not solicit business for the web operator - they sought [*13] business for the advertisers themselves, none of whom are alleged to have engaged in any wrongdoing toward Spacey. Likewise, Spacey, who has acknowledged that he is a resident of New York, has failed to present evidence that the effects of Defendants' activities would be felt primarily in California, as opposed to New York or some other state.

Overall, regardless of the designation given to the standard of proof, the Court held that Spacey failed to establish jurisdiction under the "effects" test in light of Ninth Circuit precedent. This Court's reconsideration of the applicable legal standard does not change the Court's ultimate conclusion that, based upon the jurisdictional facts before this Court, Defendants' cyberspace activities were not aimed at the forum, and the brunt of any harm to Spacey's name and goodwill caused by Defendants' alleged wrongdoing would not necessarily be felt here. In short, Spacey has not presented a prima facie case for the exercise of personal jurisdiction over Defendants.

C. SPACEY'S ALLEGED NEW FACTS

In addition to arguing that the Court applied the wrong standard in deciding the present motion, Spacey asks the Court to consider new facts that supposedly [*14] clarify his relationship with M. Profitt, and new evidence relating to advertisements displayed on the Celebrity 1000 Website. While Spacey seeks this relief under Rule 60(b)(6), the Court must analyze the request under Rule 60(b)(2), as the latter governs requests for relief based on newly discovered evidence. After reviewing Spacey's papers, the Court concludes he has failed to present any new facts that justify a reconsideration of the Court's November 15, 2001 Order.

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Rule 60(b)(2) permits relief from judgment on the basis of "newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b)." Fed. R. Civ. P. 60(b)(2); see also Jones v. Aero/Chem Corp., 921 F.2d 875, 878 (9th Cir. 1990). This provision finds its counterpart in Local Rule 7-18, which limits the grounds for reconsideration motions, and includes as one of those grounds "a material difference in fact... from that presented to the Court before such decision that in the exercise of reasonable diligence could not have been known to the party moving for reconsideration at the time of such decision." Local Rule 7-18; see also McMichael v. United States Filter Corp., No. 99-182VAP, 2001 U.S. Dist. LEXIS 3918, 2001 WL 418981, at *17 (C.D. Cal. Feb. 23, 2001) [*15] .

To prevail on a motion for reconsideration on the basis of newly discovered evidence, the moving party must demonstrate that while the evidence existed at the time the court initially addressed the issue, it could not have been discovered through due diligence. Jones v. Aero/Chem Corp., 921 F.2d at 878; Coastal Transfer Co. v. Toyota Motor Sales, 833 F.2d 208, 211-12 (9th Cir. 1987). Moreover, the moving party must also show that the evidence is "of such magnitude that production of it earlier would have been likely to change the disposition of the case." Aero/Chem, 921 F.2d at 878 (quoting Coastal Transfer Co., 833 F.2d at 211-12). Spacey has failed to do either.

1. Spacey's Relationship with M. Profitt

Spacey postulates that the Court misunderstood his relationship with M. Profitt, and therefore failed to consider this relationship in the Court's jurisdictional analysis under the Calder "effects" test. According to Spacey:

[w]hen M. Profitt Productions was formed, I granted it the exclusive right in the United States to use my name, trademarks, identity and persona for purposes of entering into agreements with third [*16] party film, television and stage producers to provide my personal acting and related publicity services.

(Nov. Spacey Decl. ¶ 1). Thus, Spacey seems to argue that since M. Profitt held those rights, and since M. Profitt is a California corporation, the "effects" of Defendants' conduct was felt most directly in California even though Spacey is domiciled in New York.

First, the Court notes that there can be no dispute that this information, which purports to clarify M. Profitt's rights to the use of Spacey's intellectual property, was actually known to Spacey at the time this Court initially addressed Defendants' Motion to Dismiss. Spacey presents no explanation for his failure to present this information to the Court at that time, particularly where the Court even addressed the matter during the hearing on Defendants' Motion. See Barber v. Hawaii, 42 F.3d 1185, 1198 (9th Cir. 1994)(holding a district court did not abuse its discretion in denying a request for reconsideration of a summery judgment motion because the moving party presented no reason why the newly proffered affidavits could not have been obtained prior to the court's hearing on the summary judgment motion).

Moreover, notwithstanding [*17] the existence of this information, Spacey's effort to clarify his relationship with M. Profitt consists of a conclusion - that he transferred his rights of publicity to M. Profitt - which is contradicted by the evidence he offered in support of the proposition. When queried by the Court, Spacey was unable to produce any documentation evidencing this "conveyance," arguing instead that it was an "oral" transaction. (Notice of Compliance with Court's March 4, 2002 Minute Order

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("Notice") at 2). However, the inducement letters and contracts between Plaintiffs and various movie studios, offered by Spacey as evidence to support the existence of this oral conveyance, actually suggest Spacey has not conveyed his rights of publicity to M. Profitt.

In one case, Spacey alone conveys his rights of publicity in connection with the anticipated creation of documentaries about the development and production of the motion picture entitled "American Beauty." (Notice Ex. D at 53). In other instances, Spacey alone holds the right of approval with respect to photographs used in connection with the advertisement and exploitation of a respective motion picture. (Notice Ex. D at 51-52; Ex. E at 113-14; Ex. [*18] G at 151). And in those contracts where M. Profitt conveys whatever rights it owns, Spacey also joins in the conveyance of those rights. (Notice Ex. E at 110-11; Ex. F at 144; Ex. G at 172). In short, the only party who appears in all of these documents is Spacey himself. In no instance does any company accept a conveyance by M. Profitt without a conveyance by Spacey. Thus, the evidence presented fails to support the conclusion that Spacey "conveyed" his rights of publicity to M. Profitt in an undocumented oral transaction.

2. Celebrity 1000 Website Advertisements

Spacey also presents evidence - alleged to be "newly discovered" - of additional advertisements displayed on the Celebrity 1000 Website, where such advertisements apparently relate to companies incorporated and/or doing business in California. Spacey presents this evidence to support his allegation that Defendants derive revenue from advertisements displayed on the Celebrity 1000 Website, and thus, that Defendants receive a financial benefit from the forum. After reviewing Spacey's papers, however, the Court concludes that even if Local Rule 7-18 allows for the Court's consideration of a portion of this new evidence, its content [*19] does not alter the Court's earlier jurisdictional analysis.

With respect to the ad information that preceded the Court's resolution of Defendants' Motion to Dismiss, Spacey fails to explain why this evidence, easily uncovered through the use of the internet, could not have been obtained through reasonable diligence at the time of the original resolution of Defendants' Motion. (See Declaration of Kristin R. Allen ("Allen Decl.") ¶¶ 6-7; Exs. F-H). Accordingly, the Court concludes this portion of the new evidence fails to satisfy the requirements under Rule 60(b)(2) or Local Rule 7-18.

Some of the evidence presented did not exist at the time of this Court's original consideration of the jurisdiction issue, however, and relates to advertisements that were displayed on the Celebrity 1000 Website after the Court entered its November 15, 2001 Order. (See Allen Decl. ¶¶ 2-5; Exs. C-E). Specifically, Spacey presents evidence of one banner advertisement displayed on the Celebrity 1000 Website on November 29, 2001, and two banner ads displayed on the site on November 30, 2001. (See Allen Decl. ¶ 2-5; Ex. C-E). After researching the domain name owners for these three banner advertisements, Spacey [*20] represents that two of the owners are California corporations, and the third corporate owner is qualified to do business in California. (Id.) Thus, Spacey asserts this evidence supports a showing of purposeful availment under both the traditional test and the variant Calder "effects" test.

Local Rule 7-18(b) provides for the reconsideration of a motion on the basis of the "emergence of new material facts ... occurring after the time of such decision," which may include this new evidence relating to the relevant advertisements displayed on the Website after the Court's November 15, 2001 Order. After reviewing the evidence, however, the Court finds it does not support Spacey's contention that the named Defendants in this action purposefully availed themselves of the privilege of conducting business in

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California, because the information is not materially different than the evidence previously considered by this Court in its November 2001 Order. Unlike the evidence relating to LAInsider.com and ocnow.com, this new evidence does provide the name and domicile of the business owners for these three advertisements. However, Spacey fails to address the concerns previously raised by the Court [*21] regarding the lack of any connection between the placement of the ads and any conduct by Defendants, and fails to address how these facts change this Court's Cybersell and Panavision analysis.

Therefore, the Court concludes that a reconsideration of the Court's jurisdictional analysis on the basis of Spacey's newly presented evidence would not support a showing of purposeful availment under the traditional test.

D. SPACEY'S NEW LEGAL BASIS FOR PERSONAL JURISDICTION

Spacey also moves this Court to consider an alternative legal basis for personal jurisdiction under Rule 60(b)(6), asserting Federal Rule of Civil Procedure 4(k)(2) provides a basis for general jurisdiction. Defendants counter Spacey's newly proffered basis for jurisdiction should not be considered by this Court, because Spacey made a deliberate choice not to include the argument in his initial opposition to Defendants' Motion to Dismiss. The Court agrees.

Again, Spacey's request is more appropriately analyzed under Rule 60(b)(2) because the relief sought calls for this Court's consideration of newly presented evidence relating to Defendants' total national contacts with the United States. The evidence includes factual allegations [*22] contained in declarations submitted by Mr. Burgar in support of Defendants' Motion to Dismiss, and citations to a decision in an earlier case brought against Mr. Burgar. (See Mot. at 13-14). In light of the nature of this evidence, and its availability during the original resolution of Defendants' Motion to Dismiss, the Court questions the propriety of any argument that attempts to explain why it was not presented to the Court at an earlier time. Therefore, neither Rule 60(b)(2) nor Local Rule 7-18 justifies this Court's reconsideration of Defendants' Motion in light of this new legal basis for jurisdiction.

Nonetheless, even if the Court were to consider Spacey's request under Rule 60(b)(6), the conclusion remains unchanged. Spacey did not raise the Rule 4(k)(2) basis for personal jurisdiction in his opposition to Defendants' Motion to Dismiss, and this Court need not address an issue raised for the first time in a reconsideration motion. Novato Fire Protection Dist. v. United States, 181 F.3d 1135, 1141, n. 6 (9th Cir. 1999)(citation omitted)("A district court has discretion to decline to consider an issue raised for the first time in a motion for reconsideration."); Pacific Far East Lines, Inc., 889 F.2d at 250 [*23] (stating Rule 60(b)(6) motions are not a mechanism for obtaining a "second bite at the apple" when the first litigation strategy did not yield success). Therefore, the Court declines to consider Spacey's new legal basis for personal jurisdiction at this stage in the litigation.

E. SPACEY'S REQUEST FOR JURISDICTIONAL DISCOVERY

As a final alternative for relief, Spacey moves this Court to reconsider the earlier oral request for jurisdictional discovery made during the Court's October 15, 2001 hearing on Defendants' Motion to Dismiss. Defendants respond that Spacey has not made a showing that jurisdictional discovery is warranted, because it would not change the end result that personal jurisdiction does not exist in the present forum.

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Although this alternative request for relief is also made pursuant to Rule 60(b)(6), Spacey fails to explain why such a request is based on circumstances of the extraordinary nature that are contemplated by this catch-all provision. Moreover, under Local Rule 7-18, Spacey is not entitled to repeat any written or oral argument made in opposition to the original motion to dismiss. Accordingly, the Court concludes Spacey is not entitled to a reconsideration of [*24] the decision that Defendants' Motion was capable of resolution without the granting of time for jurisdictional discovery. See America West Airlines, Inc. v. GPA Group Ltd., 877 F.2d 793, 800-01 (9th Cir. 1989)(holding the district court did not abuse its discretion in deciding the jurisdictional issue without allowing time for discovery, as the information sought would not likely be relevant).

III.

CONCLUSION

For the reasons set forth above, the Court DENIES Plaintiffs' Motion for Reconsideration or Relief from Judgment.

IT IS SO ORDERED.

DATED: May 16, 2002

/s/ Gary Allen Feess

Gary Allen Feess

United States District Judge

End of Document

2002 U.S. Dist. LEXIS 28793, *23


EXHIBIT 12


Warkentin v. Federated Life Ins. Co.


April 15, 2015, Decided; April 15, 2015, Filed

Case No. 1:10-cv-00221-SAB


KEITH WARKENTIN, Plaintiff, v. FEDERATED LIFE INSURANCE COMPANY, Defendant. AND RELATED COUNTERCLAIMS

Subsequent History: Summary judgment granted by Warkentin v. Federated Life Ins. Co., 2015 U.S. Dist. LEXIS 64108 (E.D. Cal., May 15, 2015)

Prior History: Warkentin v. Federated Life Ins. Co., 594 Fed. Appx. 900, 2014 U.S. App. LEXIS 22609 (9th Cir. Cal., 2014)

Counsel: [*1] For Keith Warkentin, Plaintiff: Wade M Hansard, LEAD ATTORNEY, Geni Karen Krogstad, McCormick Barstow Sheppard Wayte & Carruth LLP, Fresno, CA.

For Federated Life Insurance Company, a Minnesota Corporation registered to do business in California, Defendant: Daniel Paul Costa, LEAD ATTORNEY, Costa Law Firm, Gold River, CA.

For Federated Life Insurance Company, a Minnesota Corporation registered to do business in California, Counter Claimant: Daniel Paul Costa, LEAD ATTORNEY, Costa Law Firm, Gold River, CA.

Judges: STANLEY A. BOONE, UNITED STATES MAGISTRATE JUDGE.

Opinion by: STANLEY A. BOONE

Opinion

ORDER RE EXCUSABLE NEGLECT

(ECF Nos. 57, 59, 121, 129, 131, 134)

FOURTEEN DAY DEADLINE

On December 2, 2014, the Ninth Circuit remanded this case to this Court to address three issues. (ECF No. 121.) First, the Court is to address if the Court should exercise its discretion as to whether Plaintiff Keith Warkentin ("Plaintiff") established excusable neglect for his late-filed opposition. Second, if the first issue is answered in the negative, the Court is to address if it should exercise its discretion as to whether to deem Defendant Federated Life Insurance Company's ("Defendant") proposed undisputed facts as admitted or take [*2] other action, such as allowing the entry of late-submitted factual material while providing Defendant with time to respond. Third, the Court is to decide whether Defendant is entitled to summary judgment on its rescission claim.


Page 2 of 8

Oral argument on the matter was held on April 8, 2015. (ECF No. 138.) Counsel Geni Krogstad and Wade Hansard appeared for Plaintiff and counsel Daniel Costa appeared for Defendant. (Id.) Having considered the moving, opposition and reply papers, the declarations and exhibits attached thereto, arguments presented at the April 8, 2015 hearing, as well as the Court's file, the Court issues the following order regarding the first two issues.

I.

BACKGROUND

The operative complaint in this action is the First Amended Complaint filed on January 18, 2012. (ECF No. 39.) Plaintiff alleges that he purchased a disability insurance policy from Defendant on or around September 28, 2005. (First Am. Compl. ¶ 23.) Plaintiff began experiencing back pain and numbness in his left leg and foot around September 2007. (First Am. Compl. ¶ 5.) Plaintiff was placed on a modified work schedule in November 2007. (First Am. Compl. ¶ 6.) Plaintiff filed a claim with Defendant for disability [*3] benefits on or around December 31, 2007. (First Am. Compl. ¶ 8.) Defendant initially approved Plaintiff's claim on or around April 30, 2008. (First Am. Compl. ¶ 10.)

On or around February 12, 2009, Defendant ceased payments on Plaintiff's claim and notified Plaintiff that the claim was denied. (First Am. Compl. ¶ 28.) Plaintiff raises six causes of action against Defendant: 1) for breach of the insurance agreement; 2) for breach of the implied covenant of good faith and fair dealing; 3) for unfair business practices under California Business & Professions Code § 17200; 4) for unfair business practices under California Business & Professions Code § 17500; 5) for negligent misrepresentation; and 6) for fraud.

On February 14, 2012, Defendant filed a motion for summary judgment. (ECF No. 45.) The hearing on the motion for summary judgment was set for March 23, 2012. Under Local Rule 230(c), Plaintiff's opposition to the motion was due on March 9, 2012. Plaintiff did not file a timely opposition, which Defendant noted in its March 16, 2012 reply. (ECF No. 56.) On March 22, 2012, Plaintiff filed an opposition, which stated that he was misinformed by a legal research website, "www.jurisearch.com" regarding the due date for his opposition. (ECF Nos. 57-59.)

The hearing on Defendant's motion for summary [*4] judgment took place on March 23, 2012. On March 28, 2012, the Court issued its written order granting summary judgment in favor of Defendant on all claims. (ECF No. 62.)

II.

LEGAL STANDARD

The Ninth Circuit construed Plaintiff's late filed opposition as a motion to extend the time for filing an opposition pursuant to Federal Rule of Civil Procedure 6(b). By this order, the Court shall address the first two issues on remand, whether Plaintiff demonstrated excusable neglect for his late filed opposition, and if not, whether the Court should exercise its discretion to consider Plaintiff's opposition.

Federal Rule of Civil Procedure 6(b)(1)(B) governs extensions of time after the relevant deadline has expired and states, in pertinent part:

(b) Extending Time.

2015 U.S. Dist. LEXIS 50366, *2


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(1) In General. When an act may or must be done within a specified time, the court may, for good cause, extend the time:...

(B) on motion made after the time has expired if the party failed to act because of excusable neglect.

"This rule ... '[is] to be liberally construed to effectuate the general purpose of seeing that cases are tried on the merits.'" Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253, 1258-59 (9th Cir. 2010) (quoting Rodgers v. Watt, 722 F.2d 456, 459 (9th Cir. 1983)).

Courts have recognized that the excusable neglect standard in Rule 6(b) extends to inadvertent delays. Pioneer Inv. Services Co. v. Brunswick Associates Ltd. Partnership (Pioneer), 507 U.S. 380, 391, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993). To determine whether a party's failure to meet a deadline [*5] constitutes "excusable neglect", the Court considers four factors: 1) the danger of prejudice to the opposing party; 2) the length of the delay and its potential impact on the proceedings; 3) the reason for the delay, including whether it was in the reasonable control of the movant; and 4) whether the movant acted in good faith. Pioneer, 507 U.S. at 395.

"[A] lawyer's failure to read an applicable rule is one of the least compelling excuses that can be offered." Pincay v. Andrews, 389 F.3d 853, 859 (9th Cir. 2004). Similarly, "a lawyer's mistake of law in reading a rule of procedure is not a compelling excuse." Id. at 860. At the same time, there are no "per se" rules regarding what constitutes excusable neglect and what does not, and the Court must apply an "elastic concept" that is equitable in nature. Id. at 860 ("...under Pioneer, the correction approach is to avoid any per se rule.").

III.

DISCUSSION

A. Whether Plaintiff Established Excusable Negligence for his Late-Filed Opposition

This proceeding was remanded to this Court to determine whether Plaintiff's failure to file a time opposition to the motion for summary judgment was the product of excusable neglect. The Ninth Circuit found that this Court erred by failing to address the "excusable neglect" factors in evaluating [*6] Plaintiff's request to file an untimely opposition to the pending motion for summary judgment in March 2012. Accordingly, the Court revisits Plaintiff's March 22, 2012 request to file a late opposition and continue the summary judgment hearing date. In so doing, the Court evaluates the excusable neglect factors as they existed at the time of Plaintiff's request.

Notably, Plaintiff is no longer represented by the same counsel who represented him when the motion for summary judgment was filed, briefed, and argued. At the time of the conduct at issue, Plaintiff was represented by David Hollingsworth. Plaintiff is now represented by Wade M. Hansard and Geni Karen Krogstad from the Law Offices of McCormick Barstow Sheppard Wayte & Carruth LLP.

1. Danger of Prejudice

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There is little evidence of substantial prejudice to Defendant in this instance. Although Defendant argues that, theoretically, prejudice can result from delay which causes the loss of evidence or greater opportunity for fraud or collusion, Defendant fails to demonstrate any tangible harm suffered in this action.

Defendant argues that Plaintiff actually caused a ten month delay, when factoring in the multiple motions for reconsideration [*7] filed by Plaintiff. However, as discussed above, in determining whether Plaintiff established excusable neglect with respect to the late-filed opposition, the Court only considers the facts as they existed when the request to file the late opposition was made on March 22.

At that time, Defendant had suffered minor prejudice as a result of Plaintiff's actions. First, the Court notes that Plaintiff filed his opposition and requested a continuance the day before the hearing on the motion for summary judgment, which was scheduled to be heard in March 23, 2012. The Court further notes that the Court's records indicate that Plaintiff's opposition and request for a continuance was filed on 7:38 p.m. Therefore, Defendant was placed in the rather unpleasant position of having to address Plaintiff's arguments, raised after business hours on the day before the hearing, assuming that he received notice of the filing prior to the hearing.

Defendant argues that Plaintiff did not suffer any prejudice because the Magistrate Judge considered his opposition. While this Court found that Plaintiff's opposition had been considered in granting the motion for summary judgment, the appellate court found that [*8] the record did not clearly indicate whether he suffered prejudice. (Memorandum 3, ECF No. 121.) The appellate court found that the record is inconsistent and ambiguous regarding whether the opposition was considered since the judge stated that Plaintiff was not entitled to be heard on the motion and the order considered the facts undisputed for the purposes of the motion. (Id. at 4.)

Accordingly, this factor weighs in favor of a finding of excusable neglect.

2. The Length of the Delay and Its Potential Impact on the Proceedings

While Defendant argues that the delay in this action stretched to ten months, as discussed above, the period considered by the Court is the two week delay requested to allow Defendant to file a reply to the opposition. Plaintiff requested a fourteen day continuance of the motion for summary judgment hearing, pushing it from March 23, 2012 to April 6, 2012. This could have caused a minor domino effect with respect to the pretrial conference and trial dates, which at the time were set for April 13, 2012 and May 29, 2012. However, the Court finds that the length of this delay is relatively minimal. See Bateman v. United States Postal Service, 231 F.3d 1220, 1225 (9th Cir. 2000) (losing a quick victory on a motion for summary judgment and having to [*9] reschedule the trial date is insufficient to justify relief). Therefore, this factor does not weigh substantially against a finding of excusable neglect.

3. The Reason for the Delay

The Court finds the reason for the delay to be the strongest factor weighing against a finding of excusable neglect. At the time the motion for summary judgment was filed, Plaintiff was represented by David Hollingsworth. Mr. Hollingsworth indicated his staff researched the briefing deadlines for the motion for summary judgment using the website www.JuriSearch.com. Plaintiff provided a copy of the webpage which states that the affidavits in opposition to the motion for summary judgment may be served before the hearing day. (Rule 56, ECF No. 59-3.)

2015 U.S. Dist. LEXIS 50366, *6


Page 5 of 8

Defendant filed a reply on March 16, 2012, indicating that Plaintiff had not filed an opposition. It was at this time that Mr. Hollingsworth realized that Plaintiff had failed to timely respond to the motion for summary judgment. (Transcript of Proceedings 8:6-12, ECF No. 99.) Mr. Hollingsworth then contacted counsel for Defendant in an attempt to stipulate to a continuance of the hearing to allow Plaintiff to file an opposition. The record is devoid of any indication of [*10] when this occurred or what occurred during this time, however, the parties agree that Defendant refused to stipulate to a continuance. Mr. Hollingsworth filed an opposition to the motion for summary judgment on March 22, 2012, the day before the hearing, at 7:38 p.m.

Attorneys who practice in the federal courts are expected to become familiar with rule changes on or shortly after their effective date. Graham v. Pennsylvania Railroad, 342 F.2d 914, 916, 119 U.S. App. D.C. 335 (D.C. 1964) (affirming lack of excusable neglect where attorney was unaware of rule change); see also Kyle v. Campbell Soup Co., 28 F.3d 928, 930 (9th Cir. 1994) as amended on denial of reh'g (Apr. 8, 1994) (even given greater deference to criminal court's finding of excusable neglect in criminal cases, mistaken belief as to time of filing appeal does not constitute excusable neglect). "[I]nadvertence, ignorance of the rules, or mistakes construing the rules do not usually constitute 'excusable' neglect." Kyle, 28 F.3d at 931 (quoting Pioneer, 507 U.S. at 392); Briones v. Riviera Hotel & Casino, 116 F.3d 379, 381 (9th Cir. 1997) (ignorance of Rules does not constitute excusable neglect).

Rule 56 was revised in 2010 and the motion at issue here was filed in February 2012. Given the amount of time between the revision of the Rule and the date of the motion at issue here, it would be reasonable to expect an attorney to be familiar with the Rule change. Further, Local Rule 230 provides that opposition to [*11] a motion must be filed fourteen days prior to the hearing date. Simply checking the current copy of the Federal Rules of Civil Procedure or the Local Rules, both of which are readily available on the Court's website, would have informed Plaintiff of the filing requirements for opposing the motion for summary judgment. Further, a pragmatic approach questions why any court would have system in which the parties were not required to file their pleadings in sufficient time for the Court to receive and review them prior to the hearing. This simply misses the point of oral argument. The purpose of the pleadings is to inform the Court of the position of the parties in deciding the issue before it. The Court holds oral argument to address issues or concerns the Court has after review of the parties' pleadings. Filing an opposition after the close of business on the day prior to oral argument does not fulfill that purpose.

Additionally, Plaintiff was aware as early as six days prior to the hearing that the opposition deadline had been missed. While Plaintiff did request a stipulated continuance after discovering that the deadline was missed, Plaintiff did not file a motion for an extension of [*12] time when Defendant would not stipulate to the request. Rather, Plaintiff waited to make his request to the Court in the opposition filed after 5:00 on the day prior to the hearing. The facts here weigh heavily against finding excusable neglect.

4. Good Faith

Plaintiff argues that there is no evidence of bad faith on the part of Plaintiff or his counsel. Defendant counters that Mr. Hollingsworth acted in bad faith in filing the opposition after 5:00 the night prior to the hearing to obtain a tactical advantage and sets forth eight examples of counsel's conduct in support. Plaintiff contends that the examples cited by Defendant to demonstrate bad faith do not contain an element of willfulness.

In determining whether a party acts in bad faith, courts consider whether the error was due to negligence and carelessness rather than deviousness or willfulness. Bateman, 231 F.3d at 1225; Laurino v. Syringa

2015 U.S. Dist. LEXIS 50366, *9


Page 6 of 8

General Hospital, 279 F.3d 750, 755 (9th Cir. 2002). "The good faith consideration goes to the absence of tactical or strategic motives, not to the degree of negligence." Pincay, 389 F.3d at 861 (concurring opinion).

Defendant points to counsel not familiarizing himself with the filing deadlines and not advising his client until the night prior to the hearing that a motion for summary judgment had been filed [*13] as evidence of bad faith. It is difficult to see how these incidents would be willful conduct intended to give Plaintiff a tactical advantage as Defendant contends. Additionally, Defendant requests that the Court consider counsel's conduct after the motion for summary judgment was decided. Even assuming that there was some indication that action after the motion for summary judgment was taken in bad faith, the Court could not find evidence of bad faith in filing the opposition on the eve of the motion hearing due to these later incidents.

Defendant also requests the Court find bad faith because Mr. Hollingsworth knew for six days that the opposition was late and he did not file anything until the night prior to the hearing. The Court is particularly disturbed by Mr. Hollingsworth lack of professional courtesy by filing his request in the eleventh hour, approximately thirteen hours before the hearing on the motion for summary judgment. Mr. Hollingsworth was on-notice of his failure to file a timely opposition as early as March 16, 2012, when Defendant filed its reply which expressly pointed out Plaintiff's failure to file a timely opposition.

While Plaintiff was on notice that he did [*14] not file a timely opposition, he did not file a motion for an extension of time to file his opposition and to continue the hearing on the motion to allow Defendant to file a reply. Rather, after being informed that Defendant would not stipulate to an extension of time, Plaintiff waited until after close of business the night before the hearing to file his opposition.

Plaintiff argues that this demonstrates that counsel did not act in bad faith. In his opposition, Plaintiff requested a continuance of the hearing on the motion to allow Defendants to file a reply, with no discussion of excusable neglect. The motion was supported solely by a two page declaration of counsel and a copy of the Rule as printed on the legal website relied upon. (ECF No. 59-3.) However, failing to request a continuance and filing the opposition on the eve of the hearing created a real possibility that Defendant would appear at the hearing without the opportunity to review the opposition. Similarly, it is apparent from the record that the Court was unaware that an opposition had been filed. There is at least an inference that the delay in filing the opposition was for the purpose of gaining a strategic advantage [*15] during the hearing as Defendant was unprepared to address any issues raised in Plaintiff's opposition.

Accordingly, this factor weighs against finding excusable neglect.

5. Plaintiff has Not Demonstrated Excusable Neglect for the Late Filed Opposition

Based upon the analysis of the four factors, the Court finds that Plaintiff has not demonstrated excusable neglect. While the delay and prejudice to Defendant are minimal, the reason for the delay weighs heavily against excusable neglect; and the Court does find that filing the opposition to the motion on the eve of the hearing creates at least the inference of bad faith. Plaintiff's motion for a continuance could properly be denied.

B. Opposition to Motion for Summary Judgment

2015 U.S. Dist. LEXIS 50366, *12


Page 7 of 8

Plaintiff requests to be allowed to file a new opposition to the motion for summary judgment or for the Court to use its discretion to consider the opposition filed on March 22, 2012. To the extent that Plaintiff argues that his counsel did not adequately oppose the motion for summary judgment and he should be granted the opportunity to file a new opposition, clients must be held accountable for the acts and omissions of their attorneys." Pioneer Inv. Services Co., 507 U.S. at 396. In Pioneer, the Supreme Court [*16] rejected the argument "that it would be inappropriate to penalize respondents for the omissions of their attorney." Id.

Here, Plaintiff filed an opposition to the motion for summary judgment and if timely all that remained was for Defendant to file a reply. Plaintiff provides no authority to allow him to file a new opposition based upon facts that were available to him at the time his current opposition was filed. The Court does not find good cause to allow Plaintiff the opportunity to file a new opposition.

In order to avoid any prejudice to Plaintiff, this Court will exercise its discretion to consider the opposition filed March 22, 2012.1 However, the Court will not allow Plaintiff to file a new opposition to present additional facts and argument that were available at the time the original opposition was filed. See Harrison v. Hedgpeth, No. C 12-0963 YGR (PR), 2014 U.S. Dist. LEXIS 1114, 2014 WL 46701, at *4 (N.D. Cal. Jan. 6, 2014) (denying request to file new opposition — no good cause for relitigating fully-briefed motions for summary judgment).

At the time that the motion for summary [*17] judgment was denied, Defendant had not filed a reply to Plaintiff's opposition. After remand from the Ninth Circuit, the parties were ordered to brief whether Defendant is entitled to summary judgment on its rescission claim. Defendant has filed a brief and Plaintiff filed a reply. At the April 8, 2015 hearing, the parties indicated that the record is complete and agreed that the record to be considered in deciding the motion to dismiss is the record that existed on the date that Judge Beck ruled on the motion for summary judgment.2

In the parties briefing filed after remand, they both argue facts that were placed in the record after the motion for summary judgment was decided by Judge Beck. For that reason, the briefing on issue three shall be disregarded as they address evidence that did not exist on the date that the motion was submitted. Since the Court is considering the late filed opposition filed by Plaintiff on March 22, 2012, Defendant shall be provided the opportunity to file a reply to the opposition. [*18] Defendant is advised that as discussed herein the reply must be complete in and of itself and no documents filed after March 22, 2012 will be considered in deciding the motion for summary judgment. Once Defendant files a reply, the matter will be considered submitted.

IV.

CONCLUSION AND ORDER

1 At the April 8, 2015 hearing, Defendant agreed that, based upon the remand order from the Ninth Circuit, the Court should consider the opposition in deciding the motion for summary judgment.

2 Additionally, as discussed above, Plaintiff has not demonstrated good cause to entitle him to file a new opposition or supplement his opposition to the motion for summary judgment.

2015 U.S. Dist. LEXIS 50366, *15


Page 8 of 8

Plaintiff has not demonstrated excusable neglect for his late filed opposition. However, the Court shall exercise its discretion to consider the late filed opposition.

Accordingly, IT IS HEREBY ORDERED that:1. Within fourteen days from the date of service of this order, Defendant shall file a reply in compliance with this order; and2. The matter will be deemed submitted once the reply is filed.

IT IS SO ORDERED.

Dated: April 15, 2015

/s/ Stanley A. Boone

UNITED STATES MAGISTRATE JUDGE

End of Document

2015 U.S. Dist. LEXIS 50366, *18


This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012 F 9013-3.1.PROOF.SERVICE

PROOF OF SERVICE OF DOCUMENT I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is:

100 Wilshire Blvd., 4th Floor, Santa Monica, CA 90401.

A true and correct copy of the foregoing document CITY OF SAN BERNARDINO’S APPENDIX OF CASE DECISIONS NOT PUBLISHED IN OFFICIAL REPORTERS will be served or was served (a) on the judge in chambers in the form and manner required by LBR 5005-2(d); and (b) in the manner stated below: 1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling General Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On January 8, 2019, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that the following persons are on the Electronic Mail Notice List to receive NEF transmission at the email addresses stated below:

The United States trustee will be served electronically by the court to: United States Trustee (RS) [email protected] ATTORNEYS FOR DEBTOR CITY OF SAN BERNARDINO Paul R. Glassman [email protected] Fred Neufeld [email protected], [email protected] Laura L. Buchanan [email protected] Franklin C Adams on behalf of Interested Party Courtesy NEF [email protected], [email protected];[email protected]

Andrew K Alper on behalf of Interested Party Courtesy NEF [email protected], [email protected] Christian U Anyiam on behalf of Claimant Gustavo Arzola [email protected], [email protected] Thomas V Askounis on behalf of Interested Party Courtesy NEF [email protected] Moises A Aviles on behalf of Creditors Arcadio Bucio, and Guadalupe Garfias [email protected] Lorie A Ball on behalf of Creditors Dr. Robert & Claudia Treuherz [email protected], [email protected] Marjorie Barrios on behalf of Raymond Newberry, Patricia Mendoza, Maria Aboytia, Juana Pulido, Jesus Pulido, Jonathan Pulido, Richard Gonzalez Lozada, Melinda McNeal, Bertha Lozada, Mildred Lytwynec, Nicholas Lytwynec, Gloria Basua, and Others Similarly Situated [email protected], [email protected] Marjorie Barrios on behalf of The Estate of Fernando Melgoza [email protected], [email protected] James Cornell Behrens for Interested Party Ambac Assurance Corporation [email protected], [email protected];[email protected];[email protected]; [email protected];[email protected];[email protected] Julie A Belezzuoli on behalf of Defendant California Department of Finance [email protected] Julie A Belezzuoli on behalf of Defendant Office of State Controller, State of California [email protected]




Julie A Belezzuoli on behalf of Defendant Ana J Matosantos [email protected] Julie A Belezzuoli on behalf of Defendant John Chiang [email protected] Anthony Bisconti on behalf of Creditor Certain Retired Employees of the City of San Bernardino [email protected], [email protected] Joseph N Bolander on behalf of Creditor Edward Andrade [email protected], [email protected] Jeffrey E Bjork on behalf of Interested Party Courtesy NEF [email protected], [email protected] Michael D Boutell on behalf of Creditor Comerica Bank [email protected] J Scott Bovitz on behalf of Creditor U.S. TelePacific Corp. [email protected] John A Boyd on behalf of Interested Party Thompson & Colegate LLP [email protected] Jeffrey W Broker on behalf of Creditor The Glen Aire Mobilehome Park Corporation [email protected] Laura L Buchanan on behalf of Debtor City of San Bernardino, California [email protected] Michael J Bujold on behalf of U.S. Trustee United States Trustee (RS) [email protected] Gary S Casselman on behalf of Creditor Rovinski Renter [email protected], [email protected] Christopher Celentino on behalf of Interested Party Courtesy NEF [email protected], [email protected], [email protected] Lisa W Chao on behalf of California Infrastructure and Economic Development Bank [email protected] Shirley Cho on behalf of Interested Party National Public Finance Guarantee Corp. [email protected] Carol Chow on behalf of Interested Parties CMB INFRASTRUCTURE INVESTMENT GROUP III, LP, CMB INFRASTRUCTURE INVESTMENT GROUP V, LP AND CMB INFRASTRUCTURE INVESTMENT GROUP VI-C, LP [email protected] Alicia Clough on behalf of Defendant California Department of Finance [email protected], [email protected], [email protected] Alicia Clough on behalf of Defendant Office of State Controller, State of California [email protected], [email protected], [email protected] Alicia Clough on behalf of Defendant State of California [email protected], [email protected], [email protected]




Alicia Clough on behalf of Defendant Ana J Matosantos [email protected], [email protected], [email protected] Alicia Clough on behalf of Defendant John Chiang [email protected], [email protected], [email protected] Marc S Cohen on behalf of Defendant California Department of Finance [email protected], [email protected] Marc S Cohen on behalf of Defendant Office of State Controller, State of California [email protected], [email protected] Marc S Cohen on behalf of Defendant State of California [email protected], [email protected] Marc S Cohen on behalf of Defendant Ana J Matosantos [email protected], [email protected] Marc S Cohen on behalf of Defendant John Chiang [email protected], [email protected] Christopher J Cox on behalf of Interested Party National Public Finance Guarantee Corp. [email protected], [email protected] Christina M Craige on behalf of Interested Party Courtesy NEF [email protected] Alex Darcy on behalf of Creditor Marquette Bank [email protected], [email protected] Susan S Davis on behalf of Interested Party Courtesy NEF [email protected] Robert H Dewberry on behalf of Creditor Allison Mechanical, Inc. [email protected] Donn A Dimichele on behalf of Debtor City of San Bernardino [email protected], [email protected] Todd J Dressel on behalf of Creditor Pinnacle Public Finance, Inc. [email protected], [email protected] Warren M Ellis on behalf of Claimant Jesus Castaneda [email protected], [email protected] Scott Ewing on behalf of Interested Party Rust Consulting/Omni Bankruptcy [email protected], [email protected];[email protected];[email protected] John A Farmer on behalf of Creditor County of San Bernardino, California [email protected] John C Feely on behalf of Claimant Broadway Capital LLC [email protected], [email protected] Lazaro E Fernandez on behalf of Creditor Lori Tillery, Michael Wade, Michael Anthony Rey, Terrel Markham, et al., Attornwy fo J.A. et al., Cedric may Sr., et al., Sheryl Jackson [email protected], [email protected];[email protected];[email protected];[email protected]




M Douglas Flahaut on behalf of Interested Party Wells Fargo Bank, N.A. [email protected] Duane R Folke on behalf of Creditor Paul Triplett [email protected] Dale K Galipo on behalf of Attorney Dale K Galipo [email protected], [email protected];[email protected];[email protected] Dale K Galipo on behalf of Michael Wade, Michael Anthony Rey, Terrel Markham, et al., Attornwy fo J.A. et al., Cedric may Sr., et al., Sheryl Jackson [email protected], [email protected];[email protected];[email protected] Victoria C Geary on behalf of Defendant California State Board Of Equalization [email protected] Victoria C Geary on behalf of Defendant Cynthia Bridges [email protected] Paul R. Glassman on behalf of Debtor City of San Bernardino, California [email protected] Paul R. Glassman on behalf of Plaintiff City of San Bernardino, California [email protected] Richard H Golubow on behalf of Glen Aire Mobilehome Park Corporation, Pacific Palms Mobilehome Park Corporation, Friendly Village Mobilehome Park Corporation, Orangewood Mobilehome Park Corporation and Affordable Community Living Corporation fka California Mobilehome Park Corporation fka San Bernardino Mobilehome Park Corporation [email protected], [email protected]; [email protected];[email protected] David M Goodrich on behalf of Creditor San Bernardino City Professional Firefighters Local 891 [email protected], [email protected];[email protected] Morton J Grabel on behalf of Claimant Lorrie Pauly [email protected], [email protected] Christian Graham on behalf of Creditor Miramontes Const. Co., Inc. [email protected] Everett L Green on behalf of U.S. Trustee United States Trustee (RS) [email protected] Asa S Hami on behalf of Creditor San Bernardino City Professional Firefighters Local 891 [email protected], [email protected];[email protected];[email protected] James A Hayes on behalf of Interested Party Courtesy NEF [email protected] Eric M Heller on behalf of Interested Party Internal Revenue Service [email protected] Richard P Herman on behalf of Creditor Javier Banuelos [email protected] Jeffery D Hermann on behalf of Creditor and Defendant County of San Bernardino, California [email protected]




Whitman L Holt on behalf of Interested Party Courtesy NEF [email protected] Michelle C Hribar on behalf of Interested Party San Bernardino Public Employees Association [email protected], [email protected] Chijioke O Ikonte on behalf of Claimant Gustavo Arzola [email protected] Steven J. Katzman on behalf of Creditor Certain Retired Employees of the City of San Bernardino [email protected], [email protected];[email protected]; [email protected] Steven J. Katzman on behalf of Official Committee Of Retired Employees [email protected], [email protected];[email protected]; [email protected] Jane Kespradit on behalf of Interested Party Courtesy NEF [email protected], [email protected] Chris D. Kuhner on behalf of Creditors Matthew Sharkey, Kathleen Cryder, Timothy Williamson and Joshua Guitierrez [email protected] Mette H Kurth on behalf of Interested Party Courtesy NEF [email protected], ;[email protected] Sandra W Lavigna on behalf of Interested Party U. S. Securities and Exchange Commission [email protected] Michael B Lubic on behalf of Interested Party California Public Employees' Retirement System [email protected], [email protected] Michael C Maddux on behalf of Creditor Asinia Johnson [email protected], [email protected] Vincent J Marriott on behalf of Commerzbank Finance & Covered Bond S.A., formerly known as Erste Europäische Pfandbriefund Kommunalkreditbank AG in Luxemburg [email protected], [email protected] Reed M Mercado on behalf of Interested Party M. Reed Mercado [email protected] Dawn A Messick on behalf of Commerzbank Finance & Covered Bond S.A., formerly known as Erste Europäische Pfandbriefund Kommunalkreditbank AG in Luxemburg [email protected] Michael K Murray on behalf of Creditor California Professional Engineering [email protected], [email protected] Fred Neufeld on behalf of Debtor City of San Bernardino, California [email protected], [email protected] Aron M Oliner on behalf of Interested Party San Bernardino Police Officers Association [email protected] Scott H Olson on behalf of Creditor Kohl's Department Stores, Inc.




[email protected], [email protected],[email protected],[email protected];[email protected] Allan S Ono on behalf of Interested Party Courtesy NEF [email protected], [email protected] James F Penman [former City Attorney of the City of San Bernardino] Mark D Potter on behalf of Creditor Creditor Timothy Crowley [email protected], [email protected];[email protected] Gilbert Quinones on behalf of Creditors Joseph Bennett, Guadalupe Sanchez [email protected] Dean G Rallis, Jr on behalf of Interested Party Courtesy NEF [email protected], [email protected];[email protected];[email protected]; [email protected] Manoj D Ramia on behalf of Creditor California Public Employees' Retirement System [email protected], [email protected] Jason E Rios on behalf of Creditor California Public Employees' Retirement System [email protected], [email protected] Esperanza Rojo on behalf of Interested Party Rust Consulting/Omni Bankruptcy [email protected], [email protected] Kenneth N Russak on behalf of Interested Party Courtesy NEF [email protected], [email protected] Vicki I Sarmiento on behalf of Claimants X.J.G., as minor by and through guardian ad litem Angelina Saenz, C.A. as minor Gonzalez by and through guardian ad litem Rosalsela Avalos, Brunilda Gonzalez, Angelina Cesar, Zochilt Gutierrez, Sasha Gonzalez [email protected], [email protected] Mark C Schnitzer on behalf of Attorney Mark C. Schnitzer [email protected], [email protected] John R Setlich on behalf of Claimant Francisca Zina Gomez John R Setlich [email protected] Diane S Shaw on behalf of Interested Party Courtesy NEF [email protected] Ariella T Simonds on behalf of Interested Party Courtesy NEF [email protected] Jason D Strabo on behalf of Creditor U.S. Bank National Association, not individually, but as Indenture Trustee [email protected], [email protected];[email protected] Cathy Ta on behalf of Big Independent Cities Excess Pool Joint Powers Authority ("BICEP") [email protected] Mohammad Tehrani on behalf of U.S. Trustee United States Trustee (RS) [email protected] David A Tilem on behalf of Creditor Rovinski Renter [email protected], [email protected];[email protected]; [email protected];[email protected];[email protected]; [email protected]; [email protected]




Sheila Totorp on behalf of Creditor Landmark American Insurance Company [email protected], [email protected] Benjamin R Trachtman on behalf of Interested Party Courtesy NEF [email protected], [email protected] Matthew J Troy on behalf of Creditor United States of America [email protected] United States Trustee (RS) [email protected] Anne A Uyeda on behalf of Official Committee Of Retired Employees [email protected]; [email protected];[email protected] Annie Verdries on behalf of Interested Party Courtesy NEF [email protected], Averdries@gmail Brian D Wesley on behalf of Interested Party Courtesy NEF [email protected] Arnold H. Wuhrman on behalf of Creditor Serenity Legal Services, P.C. [email protected] Clarisse Young on behalf of Interested Party Courtesy NEF [email protected], [email protected]

Service information continued on attached page 2. SERVED BY UNITED STATES MAIL: On January 8, 2019, I served the following persons and/or entities at the last known addresses in this bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United States mail, first class, postage prepaid, and addressed as follows. Listing the judge here constitutes a declaration that mailing to the judge will be completed no later than 24 hours after the document is filed.

PRESIDING JUDGE’S COPY Honorable Scott C. Clarkson U.S. Bankruptcy Court, Ronald Reagan Federal Building 411 West Fourth Street Suite 5130 Santa Ana, CA 92701-4593

Service information continued on attached page

3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL (state method for each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on January 8, 2019, I served the following persons and/or entities by personal delivery, overnight mail service, or (for those who consented in writing to such service method), by facsimile transmission and/or email as follows. Listing the judge here constitutes a declaration that personal delivery on, or overnight mail to, the judge will be completed no later than 24 hours after the document is filed.

ATTORNEYS FOR BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY (Via Email) Caroline R. Djang [email protected] ATTORNEYS FOR CREDITOR SAN BERNARDINO ASSOCIATED GOVERNMENTS (Via Email) Caroline R. Djang [email protected] ATTORNEYS FOR CREDITOR SAN BERNARDINO LOCAL AGENCY FORMATION COMMISSION (Via Email)




Caroline R. Djang [email protected] ATTORNEYS FOR UNITED PACIFIC RAILROAD COMPANY (Via Email) Tanya W. Conley; Lila L. Howe [email protected]

Service information continued on attached page

I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.

January 8, 2019 Christine Pesis /s/ Christine Pesis Date Printed Name Signature


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