Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00046/USCOURTS-caed-1_05-cv-00046-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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1The County argues that this appeal should be dismissed as

untimely. The County’s position is without merit. Pursuant to the

calculation of time set forth in Rule 9006(a), Bankruptcy Rules,

the Notice of Appeal was filed on the tenth day after the entry of

judgment and, therefore, was filed within the ten day period set

forth in Rule 8002(a).

1

IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

GLICERIO D. RAMIREZ, )

)

)

)

Appellant, )

)

vs. )

)

)

COUNTY OF SAN BERNARDINO, )

)

)

Appellee. )

)

)

No. CV-F-05-046 REC

OPINION AFFIRMING BANKRUPTCY

COURT

On January 3, 2005, appellant/debtor/plaintiff Glicerio D.

Ramirez filed a notice of appeal in the Bankruptcy Court,

appealing the Judgment in favor of the County of San Bernardino,

appellee/defendant, in Adversary Proceeding No. 02-1368,

Bankruptcy Case No. 99-11612-B-13, entered on December 23, 2004.1

The parties submit this appeal on their papers and without

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oral argument.

The court hereby affirms the judgment of the Bankruptcy

Court for the reasons set forth herein.

A. Statement of Issues on Appeal and Standard of Review.

Debtor raises the following issues in this appeal:

1. Whether or not the County of San

Bernardino has breached the ‘Settlement

Agreement’.

2. Whether or not the ‘Tax Deed Rescission’

is void and/or unenforceable on the basis

that the Bankruptcy Court has already ruled

and found that the ‘Tax Sale’ of Lot 03 is

void.

3. Whether or not the Bankruptcy Court has

abused its discretion and authority by

creating and enforcing provisions of the

Settlement Agreement other than the written

provisions of the Settlement Agreement agreed

upon and/or contemplated by the parties.

This court reviews the bankruptcy court’s findings of fact

under a clearly erroneous standard and reviews its conclusions of

law de novo. In re Windmill Farms, 841 F.2d 1467, 1469 (9th Cir.

1988). As long as findings are plausible in light of the record

viewed in its entirety, a reviewing court may not reverse even if

convinced it would have reached a different result. Wardley

Int’l Bank, Inc. v. Nasipit Bay Vessel, 841 F.2d 259, 262 n.1

(9th Cir. 1988). The interpretation of a contract and the

determination as to its breach are a mixed question of fact and

law. Libby, McNeill, and Libby v. City Nat’l Bank, 592 F.2d 504,

512 (9th Cir. 1978). In general, factual findings as to what

the parties said or did are reviewed under the clearly erroneous

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standard while principles of contract interpretation applied to

the facts are reviewed de novo. Id. As explained in L.K.

Comstock & Company, Inc. v. United Engineers & Constructors Inc.,

880 F.2d 219, 221 (9th Cir. 1989):

It is clear that when a district court

interprets a contract without using extrinsic

evidence, the standard of review is de novo. 

But:

[w]hen the inquiry focuses on

extrinsic evidence of related

facts, ... the trial court’s

consideration of extrinsic evidence

will not be reversed unless they

are clearly erroneous.

... Thus, if the contract interpretation

includes a review of factual extrinsic

evidence, the findings of fact themselves are

reviewed under the ‘clearly erroneous’

standard ..., but the principles of contract

law applied to those facts are reviewed de

novo. ....

B. Rescission of Tax Deed Void.

Debtor argues that the “Rescission of Tax Deed to Purchaser

of Tax-Defaulted Property” recorded on September 24, 2002 is

void. Debtor contends that, because the Bankruptcy Court had

ruled that the sale of Parcel 03 by the County to Baldy Mesa was

void: 

[T]herefore, it follows that the Tax Deed is

also void; and since the Tax Deed is void,

there was nothing to rescind, and therefore,

the Tax Deed Rescission is a moot and void

document.

The purpose for this argument is unclear. However, when

Parcel 03 was improperly sold by the County to Baldly Mesa, a

deed was recorded transferring title to Parcel 03 to Baldly Mesa. 

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In order to remove that transfer from the chain of title, the

County had to rescind that deed. Therefore, even though the sale

of the property by the County to Baldy Mesa was void and did not

legally transfer title to Baldy Mesa, absent the recording of the

Rescission of Tax Deed to Purchaser of Tax-Defaulted Property,

the record of title would still reflect ownership of Parcel 03 by

Baldy Mesa. 

Consequently, the argument that the Rescission of Tax Deed

“is a moot and void document” is without merit and the Bankruptcy

Court’s ruling is affirmed.

C. Settlement Agreement Void or Unenforceable.

Debtor argues that paragraph 6 of the Settlement Agreement

is void and unenforceable because “Parcel 03 title remains in the

name of the Debtor and spouse after the Bankruptcy Court has

ruled that the Tax Sale is void and that neither the County or

Baldy Mesa Water District never had the title to Parcel 03 to

convey to the Debtor.” 

Paragraph 6 of the Settlement Agreement provided:

San Bernardino agrees to prepare and execute

all necessary documents, within ninety days

(90) so that the title to the Property

remains in the name of the Debtor,

effectively negating the Transfer.

Again, for the reasons set forth above, Debtor’s argument on

appeal is without merit. Because the County had recorded a deed

transferring Parcel 03 to Baldy Mesa, the County had to execute

and record the Rescission of Tax Deed in order to correct the

record of title. Therefore, the fact that the Bankruptcy Court

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previously ruled that the sale of Parcel 03 to Baldy Mesa was

void does not void or make unenforceable Paragraph 6 of the

Settlement Agreement.

Debtor argues that “the Bankruptcy Court has violated its

own Order by ruling that it has jurisdiction to hear the matter

instead of requiring the matter be heard by an appropriate court

in Los Angeles County; and by applying Federal laws instead of

State laws, as per the provisions of Item 18, of the Settlement

Agreement.” 

Paragraph 18 of the Settlement Agreement provides:

This Agreement shall in all respects shall

[sic] be interpreted, enforced and governed

by and under the laws of the State of

California. Any action brought to enforce

the provisions of this Agreement shall be

commenced in Los Angeles County, California,

in the appropriate court of jurisdiction.

This argument was not presented to the Bankruptcy Court. In

fact, the Excerpt of Record submitted by Debtor establishes that

Debtor alleged and argued that jurisdiction of this Adversary

Proceeding was properly in the Bankruptcy Court, a position

accepted by the Bankruptcy Court. Consequently, the court

concludes that Debtor is judicially estopped from now arguing

that the Bankruptcy Court did not have jurisdiction to hear this

Adversary Proceeding because of Paragraph 18 of the Settlement

Agreement. Furthermore, it is clear from the record in this

action that the Bankruptcy Court applied California law to

resolve the issues where appropriate. This ground for appeal is

therefore denied.

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Debtor further argues:

[T]he Settlement Agreement should be treated

as a contract because it is ‘of a nature to

produce a binding result on the mutual

relations of the parties’, therefore, the

aforementioned circumstances together with

the dismissal of the first and third claims

for relief imposed by the Agreement Order

[see ‘EXHIBIT B’ of Tab 2 of TAB Z of

Excerpts] not contemplated by the parties in

the Settlement Agreement or Contract de facto

constitute illegal interference with the

Settlement Agreement or Contract and creation

of provisions of the Settlement Agreement or

Contract by the Bankruptcy Court for the

parties. 

This ground for appeal makes little, if any, sense. The

County asserts in its brief that it “cannot understand what the

illegal interference is”, that the argument “is unintelligible

and without a specific argument on the illegal interference,

appellant cannot respond.” Debtor does revisit this assertion in

his reply brief. It appears that Debtor is contending that the

construction of the Settlement Agreement and the ruling by the

Bankruptcy Court constitutes illegal interference by the

Bankruptcy Court. If that is Debtor’s position, it is without

merit. The Bankruptcy Court was required to resolve the issues

before it in the Adversary Proceeding. That Debtor does not like

the resolution cannot constitute illegal interference by the

Bankruptcy Court. Otherwise, the court agrees with the County

that this ground for appeal is unintelligible and it is denied.

D. Breach of Settlement Agreement.

Debtor argues that the County breached Paragraph 6 of the

Settlement Agreement because the County did not execute the

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Rescission of Tax Deed within 90 days as required by Paragraph 6.

Debtor asserts in his reply brief:

... [T]he County has untimely executed [119

days from the approval [of] the Settlement

Agreement] the ‘unnecessary document’

[Rescission Deed.].

The same provisions do not specify the exact

method of transfer to Debtor but specifically

states ‘Necessary Document’ It has been

established ... that the Rescission Deed is

an unnecessary document; and if this is true,

then what is the necessary document? A grant

deed and a quitclaim deed are also

unnecessary documents because neither the

County or Baldy Mesa Water District has the

title to transfer Parcel 03 to Debtor. The

only remaining viable method of transfer is a

tax deed. The County has the authority to

issue a tax deed to Debtor because it has the

power to sell properties which have tax

liabilities that were delinquent for more

than 5 years; and a owner of a tax delinquent

property may be issued a tax deed on that

property. Due to the fact that the County

failed to timely execute a necessary document

for the transfer of Parcel 03 to Debtor as

manifested above, the County has breached the

Settlement Agreement.

Debtor’s argument is not only inconsistent with the position

taken above but it is incorrect. As Debtor has argued, the

Bankruptcy Court ruled that the sale of Parcel 03 to Baldy Mesa

was void. The County issued the Rescission of Tax Deed pursuant

to the terms of the Settlement Agreement, not to transfer title

from Baldy Mesa back to Debtor, but to negate the transfer of

Parcel 03 to Baldy Mesa, thereby leaving title to Parcel 03 as it

was prior to the tax sale to Baldy Mesa. 

Furthermore, as the Bankruptcy Court ruled, it does not

matter when the Rescission of Tax Deed was recorded so long as

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Debtor was not prejudiced by the timing. As the Bankruptcy Court

further concluded, actual damages are an essential element of a

breach of contract claim and Debtor offered no evidence that he

incurred any actual damages resulting from the delay in recording

the Rescission of Tax Deed. 

Debtor argues that the Bankruptcy Court erred in concluding

that the County did not waive or release its claim for

prepetition property taxes in the amount of $5,018.00.

The Bankruptcy Court ruled in pertinent part:

The waiver and release issue is a little more

problematic. When the County rescinded the

Tax Deed, and refunded the $5,018 to Baldy

Mesa, that effectively reinstated the

County’s prepetition tax assessment against

Parcel 03. The Debtor contends, based on the

release language in paragraphs 4 & 5 of the

Settlement Agreement, that the County waived

and released those taxes. The court

disagrees.

Paragraph 4 of the Settlement Agreement is

ambiguous, it purports to release ‘all claims

... whether by law, equity, statutes or

regulations, relating to the proposed project

[sic] described above.’ The ambiguity lies

in the misstatement ‘proposed project [sic]

described above.’ There is no ‘project’

described in the first three paragraphs of

the Settlement Agreement. To interpret the

meaning of paragraph 4, the court must

therefore look to applicable law and other

provisions of the Settlement Agreement.

The taxation of real property is mandated by

the California Constitution, Art. XIII, § 1. 

Under California law, the County Tax

Collector has a duty to collect real property

taxes when the defaulted taxes have not been

redeemed for five years or more. Cal.Rev.&T.

Code § 1391(a). The Debtor offers no

authority for the proposition that the County

can waive its statutory duty, even if it had

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intended to do so in the settlement

negotiations.

Turning now to the Settlement Agreement

itself, the preamble paragraph states, ‘This

settlement agreement solely deals with the

transfer of the [Parcel 03] real property

described below.’ (Emphasis added). 

Paragraph 5 of the Settlement Agreement is

consistent with the preamble in its

limitation of the scope of the Agreement: ‘It

is the intention of each of the parties to

fully, finally and forever release all such

matters, and all claims relating to the

transfer of the real property, described

above.’ (Emphasis added). Based on a

reading of the whole Settlement Agreement,

the court concludes that the release term

only applies to claims related to the

improper Tax Sale. The court notes again,

that the Tax Sale was always a void act. The

underlying property taxes were assessed long

before the Tax Sale, they were not caused by

the Tax Sale and they were not affected by

the Tax Sale.

The court must also construe the Settlement

Agreement in the context of the Prior

Litigation in which the Baldy Mesa Settlement

originated. In the Prior Litigation, the

Debtor alleged that the Tax Sale was a

willful and malicious violation of the

automatic stay justifying an award of

punitive damages (first claim for relief) and

that he was entitled to reimbursement for

postpetition taxes paid on Parcel 03 after

the Tax Sale (third claim for relief). The

Baldy Mesa Settlement resolved only those

issues. The Debtor has never before disputed

the underlying property taxes for Parcel 03. 

The Prior Litigation was not about the

underlying taxes, it was about the Tax Sale

and the County’s Claim for penalties and

interest. But the Debtor does not seek an

interpretation of the Settlement Agreement

with regard to only penalties and interest,

he demands an order of this court which

effectively cancels all of the underlying

prepetition taxes and the associated tax lien

against Parcel 03. Such a ruling would far

exceed any reasonable interpretation of the

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Settlement Agreement.

Based on the foregoing, the court finds that

the Baldy Mesa Settlement only released

claims relating to and arising from the

erroneous Tax Sale of Parcel 03. It did not

waive or release the underlying property tax

assessment, the penalties or the interest. 

The County having properly rescinded the Tax

Deed to Baldy Mesa, and having refunded Baldy

Mesa’s money, may now recover the prepetition

taxes for Parcel 03 through the Debtor’s

chapter 13 plan.

Debtor contends that this construction of the Settlement

Agreement is erroneous:

The $5,018.00 is claim related to the

transfer of Parcel 03. As a result of the

transfer of Parcel 03 to Baldy Mesa Water

District, the County required Baldly Mesa

Water District to pay the $5,018.00 real

estate tax liability. When the $5,018.00 was

returned to the County by Baldy Mesa ..., it

became a claim against Debtor, therefore,

said claim must be released by the County for

compliance with Item 5 of the Settlement

Agreement.

Because it does not appear that the Bankruptcy Court

construed this aspect of the Settlement Agreement with reference

to any extrinsic evidence, the court’s review of the Bankruptcy

Court’s ruling is de novo.

Utilizing de novo review, the Bankruptcy Court is affirmed. 

Nothing in the language of the Settlement Agreement purports to

release any claim that the County has against Debtor for

prepetition property taxes owed on Parcel 03. The Settlement

Agreement only releases all claims resulting from the improper

transfer by the County of Parcel 03 to Baldy Mesa. The

prepetition real property taxes are not a claim resulting from

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that transfer. As the Bankruptcy Court noted, those property

taxes predated by several years the improper transfer of Parcel

03 and did not result from that transfer. Consequently, Debtor’s

argument that the County has breached the Settlement Agreement by

continuing to seek the prepetition property taxes on Parcel 03 is

without merit and the Bankruptcy Court’s conclusion is affirmed.

IT IS SO ORDERED.

Dated: May 4, 2005 /s/ Robert E. Coyle 

668554 UNITED STATES DISTRICT JUDGE

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