Cloobeck et al v. Cory et al, No. 2:2010cv01278 - Document 29 (D. Nev. 2011)
Court Description: ORDER Denying without Prejudice 22 Motion to Expand The Record and Denying without Prejudice 24 Motion to Amend/Correct the Answering Brief. Signed by Judge Gloria M. Navarro on 5/19/11. (Copies have been distributed pursuant to the NEF - ASB)
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Cloobeck et al v. Cory et al Doc. 29 1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 4 In re SHELDON H. CLOOBECK, 5 Debtor 6 7 8 RICHARD CLOOBECK and LYNNE CLOOBECK, Appellants, vs. 9 10 11 12 13 TIM CORY and CLOOBECK COMPANIES, LLC, Appellees. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No.: 2:10-cv-01278-GMN-PAL Bankruptcy Case No. BK-S-05-10179-BAM ORDER Before the Court is Appellants Richard Cloobeck and Lynne Cloobeck’s Motion to 14 Expand the Record (ECF No. 22). Appellee Timothy S. Cory, as the Chapter 7 Trustee of the 15 Estate of the Debtor Sheldon H. Cloobeck, filed a Response on December 6, 2010 (ECF No. 16 25). Appellants filed a Reply on December 15, 2010 (ECF No. 27). 17 Also before the Court is Appellee’s Motion to Amend/Correct the Answering Brief 18 (ECF No. 24). Appellants filed a Response on December 15, 2010 (ECF No. 26) and Appellee 19 filed a Reply on December 21, 2010 (ECF No. 28). 20 21 FACTS AND BACKGROUND This case arises as an appeal from a decision by the Bankruptcy Court to allow the 22 Trustee (Timothy S. Cory) to sell claims that the bankruptcy estate held (or may not have held) 23 against Richard Cloobeck. Debtor Sheldon Cloobeck, Richard Cloobeck and Lynne Cloobeck, 24 along with other unnamed parties entered into a settlement agreement in which Sheldon 25 Cloobeck released all known or unknown claims against his son, Richard Cloobeck. Timothy Page 1 of 6 Dockets.Justia.com 1 S. Cory (hereinafter “Trustee”) motioned the Bankruptcy Court to approve the settlement 2 agreement on March 2, 2007 pursuant to the Bankruptcy Court’s authority to approve the 3 compromise of claims under Federal Rule of Bankruptcy Procedure 9019 (Bk. Ct. Dkt. #434, 4 ECF No. 15-8). The Bankruptcy Court approved the settlement agreement at a hearing on the 5 subject on April 19, 2007 (Bk. Ct. Dkt. #464, ECF No. 15-12; Bk. Ct. Dkt. #469, ECF No. 15- 6 13). 7 Nearly three (3) years later, Sheldon Cloobeck (hereinafter “Debtor”) wrote to the 8 Trustee requesting that he abandon the estate’s claims against Richard Cloobeck. The Trustee 9 filed a notice of intent to abandon on April 6, 2010 (Bk. Ct. Dkt. #579, ECF No. 15-14). 10 Concerned that someone might try to pursue the estate claim, Richard Cloobeck and Lynne 11 Cloobeck offered to purchase the claims from the Trustee for $5,000 notwithstanding the 12 settlement agreement. The Trustee withdrew the notice of intent to abandon the claims and 13 moved to sell the claims to Richard Cloobeck and Lynne Cloobeck (Bk. Ct. Dkt. #580, ECF 14 No. 15-15; Bk. Ct. Dkt. #581, ECF No. 15-16). Four (4) hours later, the Trustee amended the 15 motion to reflect an overbid of $100,000 from the Cloobeck Companies, a business managed 16 by Stephen Cloobeck (Bk. Ct. Dkt. # 583, ECF No. 15-17). Richard Cloobeck and Lynne 17 Cloobeck then contested the amended sale motion asserting that (1) the Trustee no longer 18 owned the Debtor’s claims against Richard Cloobeck; (2) the purported claims were already 19 subject to a settlement agreement that already had been approved and reduced to final 20 judgment; (3) the sale of settled claims would result in a multiplication of litigation; and 21 (4) the sale was contrary to the principles of equity (Bk. Ct. Dkt. #592, ECF No. 15-18). 22 The Bankruptcy Court held a hearing on the motion to sell Debtor’s claims against 23 Richard Cloobeck on June 29, 2010 (Bk. Ct. Dkt. #600, ECF No. 15-20). The Court granted 24 the Trustee’s motion to sell the claims and found that the Trustee’s duty to maximize the estate 25 Page 2 of 6 1 outweighed the public policy with respect to selling assets that may foment or cause litigation 2 elsewhere. (Id.). 3 Appellants filed this appeal on July 29, 2010. The parties submitted their Opening, 4 Answering and Reply briefs (ECF No. 14, 16 and 21). Appellants subsequently filed their 5 Motion to Expand the Record (ECF No. 22). The Trustee then filed the Motion to Amend the 6 Answering Brief (ECF No. 24) partly in response to Appellants’ Motion to Expand. DISCUSSION 7 8 9 10 11 12 13 14 15 A. Motion to Expand the Record Federal Rule of Appellate Procedure 10(e) states in relevant part: (2) If anything material to either party is omitted from or misstated in the record by error or accident, the omission or misstatement may be corrected and a supplemental record may be certified and forwarded: (A) on stipulation of the parties; (B) by the district court before or after the record has been forwarded; or (C) by the court of appeals. (3) All other questions as to the form and content of the record must be presented to the court of appeals. 16 This Court has held that Appellate Rule 10(e) is applicable to it on appeals from bankruptcy 17 court. Grantham v. Cory (In re Flamingo 55, Inc.), Case No. 2:05-cv-01521-RLH-GWF, 2006 18 WL 2432764, *4 (D.Nev. Aug. 21, 2006). “Rule 10(e) cannot be used to add to or enlarge the 19 record on appeal to include material which was not before the district court.” United States v. 20 Walker, 601 F.2d 1051, 1054 (9th Cir.1979). 21 Plaintiff motions this court to “expand the record to include the transcript of the 22 examination of Richard Cloobeck taken in the bankruptcy case but not part of the record 23 below.” (Motion to Expand, 2:1-3, ECF No. 22). Plaintiff argues that this transcript is material 24 to show that the allegations put forth by the Trustee in the Answering Brief are unfounded. 25 Plaintiff asserts that the Court has discretion to review the entire record from below including Page 3 of 6 1 transcripts referenced by the parties. See Brown v. Home Ins. Co., 176 F.3d 1102, 1104 n.2 2 (8th Cir. 1999), citing Fed. R. App. P. 30(a)(2). The introduction of the deposition also may 3 “correct an omission and to permit a more accurate understanding of the material facts” or 4 when “any difference arises as to whether the record truly discloses what occurred in the 5 district court.” Id., citing Fed. R. App. P. 10(e); Hatco Corp. v. WR Grace & Co.-Conn., 859 6 F. Supp. 769, 772 (D.N.J. 1994). Plaintiff explains that this Court has approved 7 supplementation of the record to add documents considered by the bankruptcy court but not 8 fully in the record prior to the appeal. Grantham, 2006 WL 2432764 at *3-5; see also In re 9 Lathrop Mobile Investors, 55 B.R. 766, 767 n.1 (BAP 9th Cir. 1985) (noting appellate court 10 11 can order transcript to supplement record). Contrary to what Appellants assert, Grantham did not allow supplementation of the 12 record to add documents that were not fully in the record prior to the appeal. That court 13 actually found that the document that the appellants were seeking to admit was found within 14 the record before the court entered its order. Furthermore, In re Lathrop Mobile Investors adds 15 nothing to Appellants’ arguments, because all the Court did in that case was order a transcript 16 of a hearing of the lower court. 17 Appellants do not provide any evidence that the transcript of the examination of 18 Richard Cloobeck was in the record before the Bankruptcy Court made its ruling. In fact, 19 Appellants actually state that the transcript was not part of the record below. The Court’s 20 review of the Bankruptcy record does not reveal that the transcript was in the record before the 21 Bankruptcy Court’s ruling on the Motion to Sell. 22 Appellee contends that the transcript is immaterial to the Bankruptcy Court’s decision 23 to grant the Trustee’s motion to sell. Appellee argues that Appellants misperceived their 24 argument in their answering brief and claim that they have made no arguments concerning the 25 merits of any claims against Richard Cloobeck. Appellee states that such an argument is not Page 4 of 6 1 necessary to the Trustee’s position that the Bankruptcy Court properly authorized the sale of 2 whatever claims the bankruptcy estate holds against Richard Cloobeck. In response, Appellee 3 offers to amend their answering brief to clarify any misunderstandings. In the alternative, 4 Appellee moves to expand the record to include documents involving an arbitration award 5 obtained by Richard Cloobeck against Stephen Cloobeck and certain Cloobeck entities and the 6 complaint underlying the judgment. Appellee explains that this is necessary to make the 7 record more complete regarding conflicting testimony of Richard Cloobeck with respect to his 8 assets. However, Appellee has not provided any evidence that these documents were in the 9 record before the Bankruptcy Court made its decision either. Having reviewed the briefs and arguments of the parties, the Court denies Appellants’ 10 11 motion to expand the record. It appears that the Bankruptcy Court did not consider the 12 transcript at the time it made its decision and the Court cannot find the transcript on the 13 Bankruptcy Court’s docket. 1 See Walker, 601 F.2d at 1055 (“We are here concerned only with 14 the record before the trial judge when his decision was made.”). Likewise, the Court cannot 15 grant Appellee’s motion to expand the record to include the arbitration documents if they were 16 not before the Bankruptcy Court. Therefore the Court denies the motions to expand the record 17 without prejudice. The parties are free to file amended motions if they can show that the 18 documents they wish to supplement were before the Bankruptcy Court when it made its 19 decision. 20 B. As explained supra, Appellee offered to amend the answering brief to take out any 21 22 Motion to Amend misperceived allegations of fraud against Richard Cloobeck. However, the Court denies 23 1 24 25 While Appellants have made somewhat persuasive arguments under other circuit’s precedence, this Court is bound by Ninth Circuit precedence to the contrary. Furthermore, the Court does not find that the transcript is material because at the hearing before the Bankruptcy Court, there was no argument that Richard Cloobeck in fact lied in his deposition. Instead, the Appellees argued that there is only an allegation that he lied. The Bankruptcy Court did not base its ruling on the merits of the allegation. Page 5 of 6 1 Appellee’s motion to amend the answering brief. Appellees cite to no authority that would 2 enable them to amend their brief. The Court has been put on notice of the conflicting 3 arguments regarding the ‘allegations of fraud’ through the parties’ various motions. In light of 4 the Court denying Appellants’ motion to expand it also appears unnecessary to amend the 5 Answering Brief because to do so will only delay the litigation because Appellants would then 6 be required to file a new Reply Brief. 7 8 9 10 11 12 CONCLUSION IT IS HEREBY ORDERED that Appellants Richard Cloobeck and Lynne Cloobeck’s Motion to Expand the Record (ECF No. 22) is DENIED without prejudice. IT IS FURTHER ORDERED that Appellee’s Motion to Amend/Correct the Answering Brief (ECF No. 24) is DENIED without prejudice. DATED this 19th day of May, 2011. 13 14 15 16 ________________________________ Gloria M. Navarro United States District Judge 17 18 19 20 21 22 23 24 25 Page 6 of 6
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