In Re City of San Bernardino, California, No. 5:2017cv00346 - Document 28 (C.D. Cal. 2018)
Court Description: ORDER GRANTING APPELLEES MOTION TO DISMISS APPEAL by Judge Otis D. Wright, II. (Made JS-6. Case Terminated.) (lc).Modified on 1/5/2018. (lc).
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In Re City of San Bernardino, California Doc. 28 O JS-6 1 2 3 4 5 6 7 8 United States District Court Central District of California 9 10 11 IN RE CITY OF SAN BERNARDINO, 12 Debtor; 13 14 15 Bankruptcy Case No. 6:12-bk-28006 ROVINKSI RENTER; HECTOR BRIONES; ROSALAND HARDING, 16 19 20 21 22 ORDER GRANTING APPELLEE’S MOTION TO DISMISS APPEAL [34] Appellants, 17 18 Case No. 5:17-cv-345-ODW (case consolidated with 5:17-cv-346ODW) v. CITY OF SAN BERNARDINO, a municipal corporation, Appellee. I. INTRODUCTION 23 On February 17, 2017, Appellant Rovinski Renter noticed her appeal of the 24 Order Confirming Third Amended Plan for the Adjustments of Debts of the City of 25 San Bernardino, California, for Bankruptcy Court case number 6:12-bk-28006 MJ. 26 (Not. of Appeal, ECF No. 1.) On August 10, 2017, the Court consolidated this case 27 with another appeal where Appellants Hector Briones and Roseland Harding were 28 challenging the same Bankruptcy Court case. (ECF No. 33.) On August 18, 2017, Dockets.Justia.com 1 Appellee City of San Bernardino (“San Bernardino”) moved to dismiss Appellants’ 2 Appeal. (Mot., ECF No. 34.) For reasons stated below, the Court GRANTS San 3 Bernardino’s Motion to Dismiss. II. FACTUAL BACKGROUND 4 5 On August 1, 2012, San Bernardino filed its chapter 9 bankruptcy case in the 6 United States Bankruptcy Court for the Central District of California. (Appellee’s 7 App. of Excerpts of R. (“AER I”) at 3, ECF No. 15.) Appellants Briones, Harding, 8 and Renter are prepetition unsecured creditors who filed proofs of claim in San 9 Bernardino’s bankruptcy case. (Req. for Judicial Notice (“RJN”), Exs. 2, 3, ECF No. 10 38.) On July 29, 2016, San Bernardino filed its plan of adjustment of debts (the 11 “Plan”) with the Bankruptcy Court and began soliciting votes of creditors to accept 12 the Plan. (Appellee’s App. of Excerpts of R. (“AER II”) at 2, ECF No. 37.) All 13 classes of impaired claims voted to accept the Plan. (Id.) 14 Unsecured Claims, which includes Appellants’ claims, 95% of the votes accepted the 15 Plan. (Id.) For the class of General 16 San Bernardino then served all creditors with a notice of the date of the 17 confirmation hearing of the Plan and the deadline fixed by the Bankruptcy Court for 18 filing objections to the confirmation of the Plan. (Id. at 139.) The notice explained 19 that failure to object to the confirmation of the Plan filed on or before the deadline 20 “may be deemed by the Bankruptcy Court to be (i) a waiver of objections to 21 confirmation of the Plan and/or (ii) consent to confirmation of the Plan.” (Id.) The 22 Bankruptcy Court held plan confirmation hearings on October 14, November 15, and 23 December 6, 2016. (Id. at 203–04.) The December 6 hearing concluded with the 24 Bankruptcy Court stating it would confirm the Plan and ordering San Bernardino to 25 draft a confirmation of the order by January 3, 2017. (Id. at 199.) The Bankruptcy 26 Court set a hearing for January 27, 2017 to consider any objections to the proposed 27 form of the confirmation order. (Id.) 28 2 1 San Bernardino lodged its proposed confirmation order on January 3, 2017 and 2 gave notice of the lodging, the deadline to object, and of the January 27, 2017 hearing 3 date. (Id. at 266.) San Bernardino now asserts that “Appellants did not file any 4 objections to the proposed form of the confirmation order or appear at the January 27 5 hearing to object.” (Mot. 10.) The Bankruptcy Court entered the confirmation order 6 (the “Confirmation Order”) on February 7, 2017, and the Plan was implemented on 7 June 15, 2017. (Decl. of Brent Mason (“Mason Decl.”) ¶¶ 7–9, ECF No. 35.) III. 8 LEGAL STANDARD 9 District courts have appellate jurisdiction over final judgments, orders, and 10 decrees of bankruptcy courts. 28 U.S.C. § 158(a)(1). “‘When reviewing a bankruptcy 11 court’s decision..., a district court functions as [an] appellate court and applies the 12 standard of review generally applied in federal court appeals.’” 13 Properties Ltd., 268 F.3d 743, 755 (9th Cir. 2001) (quoting In re Webb, 954 F.2d 14 1102, 1103–04 (5th Cir. 1992)). The district court “may affirm, modify, or reverse a 15 bankruptcy judge’s judgment, order, or decree or remand with instructions for further 16 proceedings.” Fed. R. Bank. P. 8013. IV. 17 18 A. In re Crystal DISCUSSION Request for Judicial Notice 19 San Bernardino requests the Court take judicial notice of six documents: (1) 20 Memorandum of Decision re: Issuance of Third Party Injunction in Conjunction with 21 Confirmation of Chapter 9 Plan; (2) proof of claim filed by Appellant Rovinski 22 Renter; (3) proof of claim filed by Appellants Hector Briones and Rosaland Harding; 23 (4) the content of the “Twelfth Joint Status Report” filed in U.S. District Court Case 24 No. 2:10-cv-07571-CBM-OP; (5) the content of the “Thirteenth Joint Status Report” 25 filed in U.S. District Court Case No. 2:10-cv-07571-CBM-OP; and (6) the content of 26 the “Fourteenth Joint Status Report” filed in U.S. District Court Case No. 2:10-cv- 27 07571-CBM-OP. (RJN 2–3.) 28 3 1 Under Rule 201, a court may judicially notice a fact that is not subject to 2 reasonable dispute in that it is either (1) generally known within the territorial 3 jurisdiction of the trial court or (2) capable of accurate and ready determination by 4 resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 5 201(b). Judicial notice of a filing before another court is limited to recognition that 6 the filing exists—the very fact of the filing and its contents—which is not subject to a 7 reasonable dispute. Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001). 8 But the disputed facts contained within the filing and the factual determinations by a 9 judge in another case “ordinarily are not admissible for their truth in another case 10 through judicial notice.” Wyatt v. Terhune, 315 F.3d 1108, 1114 n.5 (9th Cir. 2003); 11 Lee, 250 F.3d at 690. 12 The Court finds that San Bernardino’s requested documents are appropriate for 13 judicial notice; especially given that they are not contested matters and Appellants do 14 not oppose San Bernardino’s request. In light of the foregoing legal standards, the 15 Court takes judicial notice as far as it considers each document in its reasoning as set 16 forth below. 17 B. Failure to Object: Lack of Standing and Waiver 18 San Bernardino argues that Appellants’ appeal should be dismissed because 19 Appellants waived objections to the Plan and Confirmation Order and, therefore, lack 20 standing to appeal the Confirmation Order. (Mot. 14.) Appellants contend that they 21 maintain standing to appeal, because the proper standard for appellate standing does 22 not require an objection in the Bankruptcy Court. (Opp’n 10–11, ECF No. 40.) 23 Appellant standing for a bankruptcy order or decision only exists where the 24 “person aggrieved” test has been met. Fondiller v. Robertson (Matter of Fondiller), 25 707 F.2d 441, 442 (9th Cir. 1983). That is, “[o]nly persons who are directly and 26 adversely affected peculiarly by an order of the bankruptcy court have been held to 27 have standing to appeal that order.” Id. Furthermore, “attendance and objection 28 should usually be prerequisites to fulfilling the ‘person aggrieved’ standard”—except 4 1 for circumstances where “the objecting party did not receive proper notice of the 2 proceedings below and of his opportunity to object to the action proposed to be 3 taken.” Brady v. Andrew (In re Commercial W. Fin. Corp.), 761 F.2d 1329, 1335 (9th 4 Cir. 1985) (emphasis added). 1 Furthermore, 11 U.S.C. § 944 provides that “[t]he 5 provisions of a confirmed plan bind the debtor and any creditor, whether or not. . . 6 such creditor has accepted the plan.” 7 Here, Appellants Briones, Harding, and Renter failed to object to the Plan or the 8 confirmation of the Plan in the Bankruptcy Court. Appellants contend that they 9 “affirmatively showed their non-consent to the Bankruptcy Court deciding the merits 10 of their claim.” (Opp’n 8.) Appellants claim to have done so by: (1) Appellants 11 Briones and Harding having sought a modification of the bankruptcy court’s stay; (2) 12 Appellants having voted in opposition to the bankruptcy discharge plan; and (3) 13 Appellant Renter having submitted written objections to the proposed discharge plan.2 14 (Id.) San Bernardino has objected to the notice of motion and motion for relief from 15 the automatic stay, which Briones and Harding filed in the Bankruptcy Court in 16 December 2012, on the grounds that it was not designated in Appellant’s Record of 17 Appeal. (Obj. 3–4, ECF No. 44.)3 The Court sustains San Bernardino’s objection and 18 therefore declines to consider this filing in its analysis.4 Furthermore, Appellants fail 19 20 21 22 23 24 25 26 27 28 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. 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. 5 1 to demonstrate how objections and a general display of “non-consent” toward the 2 discharge plan establish standing to appeal the Confirmation Order of the Plan. 3 Appellants also argue that Appellant Renter’s joinder of another litigation 4 creditor’s objection of the Plan, which was later withdrawn, is sufficient to create 5 standing under Brady. (Opp’n 11.) Appellants do not cite any authority to support 6 this assertion. (See generally id.) The Court finds Appellant Renter’s joinder of 7 another creditor’s withdrawn opposition is insufficient to create standing to appeal. 8 This finding is further supported by the fact that Renter did not file her own written 9 objections to the Plan, despite the Bankruptcy Court’s alerting Renter’s counsel that 10 Renter’s joinder might not be sufficient, given that the objection had been withdrawn. 11 (AER II at 283–88.) 12 The proposed form of the Confirmation Order, lodged by San Bernardino to the 13 Bankruptcy Court on January 3, 2017, included the following provision: “all creditors 14 that failed to file objections to confirmation of the Plan are hereby deemed to have 15 waived any objections to the terms of the Plan, confirmation of the Plan, and the terms 16 of this Confirmation order.” (AER II at 243, ¶ 21.2.) San Bernardino “gave notice of 17 the lodging, notice of the Bankruptcy Court fixed deadline to object to the terms of the 18 draft form of the confirmation order, and of the January 27, 2017 hearing to consider 19 objections to the draft form of confirmation order.” (Id. at 266.) Appellants had 20 sufficient notice and opportunity to object to the Plan and the proposed Confirmation 21 Order but failed to do so. Appellants received notice that their failure to object may 22 be deemed as waiver of objections to the terms of the Plan—yet failed to submit 23 written objections or attend the January 27, 2017 hearing. (Id.) Because the final 24 Confirmation Order included the waiver provision, and the Confirmation Order is 25 binding on all creditors, Appellants lack of objection is deemed as waiver. See 11 26 U.S.C. § 944. 27 28 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. 6 1 C. Equitable Mootness 2 “Equitable mootness occurs when a comprehensive change of circumstances 3 has occurred so as to render it inequitable for this court to consider the merits of the 4 appeal.” In re Thorpe Insulation Co., 677 F.3d 869, 880 (9th Cir. 2012) (internal 5 quotations and citations omitted). The Ninth Circuit has implemented the following 6 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. 7 8 9 10 11 12 13 14 15 16 17 18 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. 19 20 21 V. CONCLUSION For the reasons stated above, the Court GRANTS Appellee’s Motion to Dismiss Appeal. (ECF No. 34). The Clerk of the Court shall close the case. 22 23 24 IT IS SO ORDERED. January 4, 2018 25 26 27 28 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 7
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