(BK) In re: Rodney Andrews; Valerie Andrews, No. 2:2010cv01205 - Document 25 (E.D. Cal. 2011)
Court Description: ORDER signed by Judge John A. Mendez on 3/1/2011 ORDERING For the reasons set forth, the Court AFFIRMS the Bankruptcy Court's Order denying Appellants' discharge under 11:727(a)(4)(A). CASE CLOSED. (Reader, L)
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(BK) In re: Rodney Andrews; Valerie Andrews Doc. 25 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 In Re: 11 RODNEY ANDREWS and VALERIE ANDREWS, 12 Debtors. 13 14 15 RODNEY ANDREWS and VALERIE ANDREWS, Appellants, 16 v. 17 18 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) AUGUST B. LANDIS, Acting United States Trustee, 19 Appellee. Dist. Ct. Case No.: 2:10-CV-1205 JAM Bk. Ct. Case No.: 08-28963 Adv. Proc. Case No.: 09-21543-C Bk. App. Panel Case No.: EC-10-1133 ORDER AFFIRMING THE BANKRUPTCY COURT S ORDER This matter is before the Court on Debtors/Appellants Rodney 20 21 and Valerie Andrews (“Appellants”) Appeal (Doc. #7) from the 22 Bankruptcy Court s Order denying Appellants discharge under 11 23 U.S.C. § 727(a)(4)(A). 24 asks the Court to affirm the Bankruptcy Court s order (Doc. #8). 25 This matter was set for a hearing on January 12, 2011, and ordered 26 submitted on the papers.1 Appellee/Trustee August Landis (“Appellee”) For the reasons set forth below, the 27 1 28 This matter was determined to be suitable for decision without oral argument. E. D. Cal. L. R. 230(g). 1 Dockets.Justia.com 1 Bankruptcy Court s order is AFFIRMED. 2 3 4 I. FACTUAL AND PROCEDURAL BACKGROUND On July 2, 2008, Appellants filed for bankruptcy protection 5 under Chapter 7, in the Bankruptcy Court for the Eastern District 6 of California. 7 Appellants written filings and in the meeting of the creditors, 8 under oath, numerous inconsistencies and omissions were discovered. 9 Appellants did not report one of their businesses, omitted the In the course of the bankruptcy case, in 10 income, accounts and debts related to that business, did not report 11 one bank account, did not disclose their previous Chapter 13 12 bankruptcy, and gave inconsistent answers regarding whether they 13 had reviewed the bankruptcy filings prior to signing them. 14 On March 4, 2009, the United States Trustee filed a complaint 15 to deny Appellants discharge under Section 727(a)(4)(A) of the 16 Bankruptcy Code, for false statements under oath. 17 conducted on March, 9, 2010, and concluded with Bankruptcy Judge 18 David Russell ruling in favor of the United States Trustee. 19 Judgment was entered denying the Appellants discharge pursuant to 20 11 U.S.C. § 727(a)(4)(A). 21 Trial was The issue raised by Appellants on appeal is whether the 22 Bankruptcy Court committed a reversible error in dismissing the 23 Chapter 7 petition under 11 U.S.C. § 727(a)(4)(A), despite 24 25 26 27 28 “the Court s anguish in doing so and clear, accusatory and candid acknowledgement on the transcript of the record of the adversarial trial proceedings and before counsel and Appellants in those proceedings that Appellants bankruptcy counsel (Steele Lamphier, Esquire,) who represented them through and, not including, the adversarial trial proceedings, had committed acts of gross negligence in their „representation, that they „had recourse against that attorney, where such gross negligence directly resulted in injury to them (i.e. the dismissal) which gross negligence 2 1 2 they had no reason to know about or protect themselves against contrary to equity and the remedial principles of FRCP Rule 60(b)(6).” (Appellants Brief, p. 2-3.) 3 Appellants assert that the Bankruptcy Court did not make any 4 errors in its factual findings, but made an error of law by “not 5 applying the equitable remedial principles of Federal Rule of Civil 6 Procedure 60(b)(6).” 7 brought before the Bankruptcy Court, that the Bankruptcy Court did 8 not make the purported findings of gross negligence, and that the 9 Bankruptcy Court properly denied Appellants bankruptcy claim under 10 Appellee argues that no Rule 60 motion was 11 U.S.C. § 727(a)(4)(A). 11 II. 12 OPINION 13 A. Legal Standard 14 The Bankruptcy Court s interpretations of the Bankruptcy Code 15 and conclusions of law are reviewed de novo by this Court. Blausey 16 v. United States Trustee, 552 F.3d 1124, 1132 (9th Cir. 2009) 17 (internal citations omitted). 18 Court s factual findings for clear error. 19 under this standard requires deference to the Bankruptcy Court. 20 McClure v. Thompson, 323 F.3d 1233, 1240 (9th Cir. 2003). 21 under the clearly erroneous standard requires significant deference 22 to the trial court. 23 189 F.3d 1017, 1024 (9th Cir. 1999) (internal citations omitted). 24 The factual findings will only be clearly erroneous if the 25 reviewing court has the “definite and firm conviction that a 26 mistake has been committed.” 27 of Cal., Inc. v. Construction Laborers Pension Trust, 508 U.S. 602, 28 623 (1993)); see also Latman v. Burdette, 366 F.3d 774, 776 (9th This Court reviews the Bankruptcy Id. Factual review Review Ambassador Hotel Co., Ltd. v. Wei-Chuan Inv., Id. (quoting Concrete Pipe & Prods. 3 1 Cir. 2004). “Clear error is not demonstrated by pointing to 2 conflicting evidence in the record.” 3 Marine Fisheries Serv., 422 F.3d 782, 795 (9th Cir. 2005) (quoting 4 United States v. Frank, 956 F.2d 872, 875 (9th Cir. 1991)). 5 Instead, if the trial court s account of the evidence is plausible 6 in light of the record viewed in its entirety, the reviewing court 7 may not reverse it even though convinced that, had it been sitting 8 as the trier of fact, it would have weighed the evidence 9 differently. Nat l Wildlife Fed n v. Nat l Id. (citations omitted). 10 B. 11 Federal Rule of Civil Procedure 60(b)(6)provides that on 12 motion and just terms, the court may relieve a party or its legal 13 representative from a final judgment, order or proceeding for “any 14 other reason that justifies relief.” 15 However, Rule 60 motions must be directed in the first instance to 16 the trial court. 17 Crown Cola Co., 612 F.2d 1164, 1172 (9th Cir. 1980). 18 role as to a Rule 60 motion is limited to reviewing the propriety 19 of the trial court s decision on the motion, if one is filed in the 20 trial court. 21 Rule 60(b)(6) Fed. R. Civ. Proc. 60(b)(6). See First Beverages, Inc. of Las Vegas v. Royal This Court s Id. Appellants did not avail themselves of their right to present 22 a Rule 60 motion to the Bankruptcy Court following the entry of the 23 adverse judgment, but nonetheless argue that the Bankruptcy Judge 24 should have given them Rule 60(b)(6) relief from judgment. 25 Appellants argue that the Bankruptcy Judge should have given them 26 relief because he found them guilty of no wrongdoing, and only 27 denied the discharge under Section 727(a)(4)(A) because he felt 28 compelled to impute their attorney s negligence to them. 4 1 Appellants do not offer citations to the record of where such 2 statements were allegedly made by the Bankruptcy Judge. 3 Appellants only challenge to the Bankruptcy Court s 4 conclusions of law is to question, “was he [the Bankruptcy Judge] 5 „handcuffed as it were and forced to visit the gross negligence of 6 the attorney on the hapless client?” 7 Appellants assert that the Bankruptcy Judge was not “handcuffed” 8 because he could have utilized Rule 60(b)(6) to set aside or 9 overturn the judgement. (Appellants Brief, p. 11.) Not only does Rule 60(b) relief require 10 Appellants to have brought a formal motion before the Bankruptcy 11 Court, which was not done, but a review of the record reveals that 12 Appellants assertions of what was said by the Bankruptcy Judge are 13 not supported by the transcript of the hearing. 14 finding of gross negligence on the part of their attorney, nor were 15 Appellants cleared of all wrongdoing. 16 motion was not made before the Bankruptcy Court, nor could the 17 Bankruptcy Court could grant Rule 60(b)(6) relief sua sponte. 18 Accordingly, Appellants arguments are without merit. 19 There was not a Moreover, a Rule 60(b)(6) Appellee also argues that Appellants cannot seek Rule 60(b)(6) 20 relief directly from this Court, noting that the cases relied upon 21 by Appellants were cases in which the Rule 60(b) motion was brought 22 in the first instance in the trial court. 23 Appellants brief was intended as a Rule 60(b) motion before this 24 Court, such relief is unavailable. To the extent See First Beverages, supra. 25 C. Denial of Discharge Under 11 U.S.C. § 727(a)(4)(A) 26 11 U.S.C. § 727(a)(4)(A) provides that the court shall grant 27 the debtor a discharge unless the debtor knowingly and 28 fraudulently, in or in connection with the case, made a false oath 5 1 or account. Here, the Bankruptcy Court found Appellants to be 2 honest people. 3 Judge also found that while perhaps not acting with fraudulent 4 intent, Appellants filed documents that were essentially very 5 misleading and full of misstatements and omissions. 6 129). 7 getting bad advice (Ex. 17, p. 128), and that if so, their current 8 attorney could explain to them that there are other potential 9 rights. (Exhibit 17, p. 126.) However, the Bankruptcy (Ex. 17, p. The Bankruptcy Judge noted that Appellants could have been (Ex. 17, p. 130). Appellants testified that they had not 10 read the Bankruptcy Schedules prior to signing them, however, the 11 Bankruptcy Judge, citing law from the Eastern District of 12 California, noted that “failure to read the schedules is not a 13 defense in action to Bankruptcy Code Section 727(a)(4)(A).” 14 17, p. 128.) Accordingly, the Bankruptcy Court denied Appellants 15 discharge under section 727(a)(4)(A), for making a false oath or 16 account. 17 Bankruptcy Court s findings. (Ex. Having reviewed the record, this Court affirms the 18 19 20 III. ORDER For the reasons set forth above, the Court AFFIRMS the 21 Bankruptcy Court s Order denying Appellants discharge under 11 22 U.S.C. § 727(a)(4)(A). 23 IT IS SO ORDERED. 24 Dated: March 1, 2011 ____________________________ JOHN A. MENDEZ, UNITED STATES DISTRICT JUDGE 25 26 27 28 6
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