In Re Consolidated Pioneer Mortgage Entities, A/k/a Pioneerliquidating Corp., Debtor.burk N. Ashford; Theresa T. Ashford, Appellants, v. Naimco, Inc., A/k/a Pioneer Mortgage, N/k/a Consolidatedpioneer Mortgage Entities, A/k/a Pioneerliquidating Corp., Appellees, 91 F.3d 151 (9th Cir. 1996)

MEMORANDUM^** 

Burk and Theresa Ashford appeal pro se the Bankruptcy Appellate Panel's ("BAP") affirmance of the bankruptcy court's decision to disallow the Ashfords' claim in full against Consolidated Pioneer Mortgage Entities' ("Pioneer") estate arising from Pioneer's rejection of a purported executory contract which allegedly gave the Ashfords the right to purchase real property from Pioneer.¹  We have jurisdiction pursuant to 28 U.S.C. § 158(d), and we affirm.

We review the BAP's decision and the bankruptcy court's conclusions of law de novo. See Manufacturers Hanover v. Dewalt (In re Dewalt), 961 F.2d 848, 850 (9th Cir. 1992). We review the bankruptcy court's findings of fact for clear error. See id.

The Ashfords contend the bankruptcy court erred by finding that they failed to present adequate evidence of the existence of an executory sales contract to support their claim of a secured lien pursuant to 11 U.S.C. § 365(j).²  The BAP affirmed the bankruptcy court's findings that the Ashfords failed to provide evidence that: (1) a sales contract existed; (2) their payments were for the purchase rather than the leasing of the property; or, (3) they had a security interest in the property.

The Ashfords argue that the bankruptcy court's October 28, 1991 order granting Pioneer's motion to reject the Ashfords' purported executory sales contract proves a fortiori that there was an executory contract. The bankruptcy court clearly stated, however, that it was not ruling on whether the sale contract existed, but only that, if the contract existed, it was deemed rejected. Accordingly, the bankruptcy court's order granting Pioneer's motion to reject the executory contract does not evidence the existence of the contract.

Moreover, the Ashfords are estopped from contending that the bankruptcy court impermissibly classified their claim as unsecured because they stipulated in the bankruptcy court that they were willing to accept an unsecured proof of claim. See Denco Dev. Co. v. Community Sav. & Loan Ass'n, 376 F.2d 548, 551 (9th Cir. 1967) (noting that voluntary stipulation may estopp party from asserting a claim); see also Cukierman v. Mechanics Bank of Richmond (In re J.F. Hink & Son), 815 F.2d 1314, 1318 (9th Cir. 1987) (applying doctrine of estoppel in bankruptcy case).

Because the Ashfords failed to present evidence of an executory sales contract to purchase the property from Pioneer, the bankruptcy court did not clearly err by disallowing Ashfords' proof of claim.³  See 11 U.S.C. § 365(j); see also Bankr.Rule 3001(c) (requiring that writing on which proof of claim is based must be filed with proof of claim).

The Ashfords contend that PLC's⁴  objection to their proof of claim should have been adjudicated in an adversary proceeding in accordance with Bankr.Rule 3007 and Bankr.Rule 7001. The Ashfords did not object to the form of the proceedings at the time of the bankruptcy court hearings.

Rule 3007 provides that "if an objection to a claim is joined with a demand for relief of the kind specified in Rule 7001, it becomes an adversary proceeding." Rule 7001(2) states that an adversary proceeding is necessary in order to determine the validity of a lien. Objections to claims under Rule 3007 are generally considered contested matters governed by Rule 9014, "unless a counterclaim by the trustee is joined with the objection to the claim ... [which] ordinarily commences an adversary proceeding." Bankr.Rule 3007 advisory committee note (1983).

Here, as evidence of their proof of claim, the Ashfords filed among other documents a notice of lien. Although PLC argued in its objection to Ashfords' claim that the Ashfords' purported lien was extinguished by the first lienholder's foreclosure on the property, PLC did not accompany its objection with a counterclaim or any other kind of demand for relief listed in Rule 7001. Thus, the bankruptcy court was not required to conduct an adversary proceeding to determine the validity of Ashfords' proof of claim.⁵  See Bankr.R. 3007; Bankr.R. 7001.

The Ashfords contend that PLC's objection to their proof of claim was untimely.

Bankruptcy Rule 3007, which governs objections to claims, does not provide any time limits for filing an objection. Here, however, the bankruptcy court directed PLC to file an objection to the proof of claim within 30 days, which it did. Accordingly, PLC's objection was timely under the applicable bankruptcy rule and the bankruptcy court order.⁶ 

The Ashfords' contention that their filing of a "Notice of Intended Action" (Local Form CSD 1180) with their proof of claim triggered a 31-day time limit for PLC to object lacks merit because a proof of claim is not subject to the local bankruptcy rules for intended actions. See Bankr.Ct.S.D.Ca.Local Rule ("BLR") 2002-2 (designating the circumstances when a notice of intended action, local form CSD 1180, should be prepared). Ashfords' contention that the form of PLC's objection did not conform with the local bankruptcy rules also lacks merit. See BLR 3007-4(b).

In its brief Pioneer request sanctions against the Ashfords for filing a frivolous appeal. In a motion filed on October 6, 1995 Pioneer also request reimbursement for its costs in connection with opposing Ashfords numerous motions filed in this court.

We have discretion to impose damages against litigants, even pro se, as a sanction for bringing a frivolous appeal. Fed. R. App. P. 38; Wilcox v. Commissioner, 848 F.2d 1007, 1008-09 (9th Cir. 1988). An appeal is frivolous if the results are obvious, or the arguments of error are wholly without merit. Urban v. Commissioner, 964 F.2d 888, 890 (9th Cir. 1992). Ashfords' appeal and pleadings in this court are meritless. Nevertheless, in exercise of our discretion, we decline to impose sanctions.⁷  See id.

AFFIRMED.