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1 This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may have

(see Fed. R. App. P. 32.1), it has no precedential value. See 9th

Cir. BAP Rule 8013-1.

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-11-1393-KiMkH

)

HUMBERTO GUZMAN and FIDELIA ) Bk. No. 11-12043-CEB

GUZMAN, )

)

Debtors. ) )

)

HUMBERTO GUZMAN; FIDELIA )

GUZMAN, )

)

Appellants, )

)

v. ) M E M O R A N D U M1

)

RECONTRUST COMPANY, )

)

Appellee. )

______________________________)

Argued and Submitted on February 24, 2012, 

at Pasadena, California

Filed - May 15, 2012

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Catherine E. Bauer, Bankruptcy Judge, Presiding 

Appearances: Humberto and Fidelia Guzman, appellants, argued pro

se; Melissa Robbins Coutts of McCarthy & Holthus,

LLP, argued for appellee, ReconTrust Company. 

Before: KIRSCHER, MARKELL, and HOLLOWELL, Bankruptcy Judges.

FILED

MAY 15 2012

SUSAN M SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT
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2

 Unless specified otherwise, all chapter, section and rule

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The

Federal Rules of Civil Procedure are referred to as “FRCP.”

3

 Appellee, ReconTrust Company (“Recon”), filed a Request

for Judicial Notice, which includes a copy of Bank of America’s

recorded deed of trust (f/k/a Countrywide Home Loans Servicing LP)

dated June 13, 2007, and a copy of the recorded Substitution of

Trustee and Assignment of Deed of Trust. Recon did not file

anything in opposition to Guzmans’ contempt motion or appear at

the hearing. Recon does not deny receiving notice of the contempt

hearing. 

The Panel is free to take judicial notice of matters of

public record. Lee v. City of Los Angeles, 250 F.3d 668, 689-90

(9th Cir. 2009). Recon’s request is apparently an attempt to

enter documents in the record it inexplicably failed to submit in

the bankruptcy court. As such, we DENY Recon’s request. In any

event, the documents at issue are not necessary for our

determination of this appeal.

-2-

Appellants, chapter 72 debtors Humberto and Fidelia Guzman

(“Guzmans”), appeal an order from the bankruptcy court denying

their motion for contempt and an order denying their motion to

reconsider. We AFFIRM.3

I. FACTUAL AND PROCEDURAL BACKGROUND

Guzmans filed a chapter 7 bankruptcy on January 21, 2011. In

their Schedule A, filed on February 3, 2011, Guzmans reported a

fee interest in their residence with a current value of $100,000

and a $380,000 secured claim against it (the “Property”). Guzmans

did not report the secured claim against the Property in their

Schedule D, but rather reported it as an unsecured claim in their

Schedule F. The “unsecured” claim holder was Bank of America. 

The chapter 7 trustee filed a no-asset report on March 7, 2011. 

Guzmans received their discharge on May 12, 2011. 

On May 16, 2011, Guzmans filed a motion for contempt under

§ 105, contending that Recon, “a subsidiary of Bank of America,”
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4 None of the above dialogue with the bankruptcy court is on

the record. This is Guzmans’ account of what happened. In its

order on the motion to reconsider, the bankruptcy court countered

Guzmans’ account of what happened at the June 22 hearing, stating

that the contempt motion was set for hearing, reviewed on the

merits, and denied on the merits.

-3-

violated the discharge injunction by advertising on its website a

non-judicial foreclosure sale of the Property. The sale was

scheduled for May 19, 2011. Guzmans alleged that they viewed

Recon’s website on May 14, 2011, and saw the “illegal” scheduled

sale. Guzmans argued that because they reported the $380,000

claim as unsecured and no one objected, the debt was discharged on

May 12, 2011. Therefore, contended Guzmans, Recon’s advertisement

violated the discharge injunction. In support of the contempt

motion, Guzmans included an undated print-out of the sale

advertisement and a declaration stating that they viewed the Recon

website on May 14, 2011.

Guzmans filed a notice of hearing with their motion but,

according to Guzmans, the matter was not calendared. Guzmans

contend they appeared at the bankruptcy court on June 22, 2011,

for what they thought was a hearing on their contempt motion. At

the end of that day’s calendar, the court asked Guzmans why they

were there. Guzmans explained that their motion was scheduled to

be heard that morning. The court informed Guzmans that it had not

been calendared. In any event, the court reviewed the moving

papers and proceeded to rule on the contempt motion.4

 Recon did

not appear.

At the hearing, Guzmans admitted taking out a loan on the

Property, that they were not making any payments on it, and that

only Recon was trying to foreclose. Guzmans contended that the
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-4-

$380,000 lien against the Property was unsecured because they

scheduled it as such, no one challenged it, and no one filed a

proof of claim asserting otherwise. According to Guzmans, the

$380,000 debt was discharged on May 12, therefore, a sale set for

May 19 violated the injunction. The bankruptcy court explained

that simply listing the debt as unsecured did not make it so and

did not void Bank of America’s deed of trust. 

The bankruptcy court orally denied the contempt motion. It

determined that Recon was entitled to foreclose and that it had

not violated the discharge injunction based on the evidence

submitted by Guzmans. The court was to prepare the order. 

On July 5, 2011, Guzmans filed a motion to reconsider the

“contempt order,” which had not yet been entered. The next day on

July 6, 2011, the bankruptcy court entered the contempt order. It

did not address the pending motion to reconsider. On July 18,

2011, Guzmans filed their notice of appeal of the contempt order. 

The appeal was ineffective because no order had yet been entered

on their timely motion to reconsider. See Rule 8002(b). In

response to our February 1, 2012 order, on February 14, 2012, the

bankruptcy court entered an order denying the motion to reconsider

for Guzmans’ failure to establish any grounds to grant it. As a

result, Guzmans’ premature notice of appeal was deemed timely, and

we now have jurisdiction over this matter.

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C.

§§ 157(b)(2)(O) and 1334. We have jurisdiction under 28 U.S.C.

§ 158.
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-5-

III. ISSUES

1. Did the bankruptcy court abuse its discretion when it denied

the motion for contempt? 

2. Did the bankruptcy court abuse its discretion when it denied 

the motion to reconsider? 

IV. STANDARD OF REVIEW

The bankruptcy court’s ruling on a motion for contempt is

reviewed for an abuse of discretion. FTC v. Affordable Media,

179 F.3d 1228, 1239 (9th Cir. 1999). Denial of a motion for

reconsideration is also reviewed for an abuse of discretion. 

Ta Chong Bank Ltd. v. Hitachi High Techs. Am., Inc., 610 F.3d

1063, 1066 (9th Cir. 2010). To determine whether the bankruptcy

court abused its discretion, we conduct a two-step inquiry: (1) we

review de novo whether the bankruptcy court “identified the

correct legal rule to apply to the relief requested” and (2) if it

did, whether the bankruptcy court’s application of the legal

standard was illogical, implausible or “without support in

inferences that may be drawn from the facts in the record.” 

United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009)

(en banc). The Panel may affirm on any ground fairly supported by

the record. In re Warren, 568 F.3d 1113, 1116 (9th Cir. 2009). 

V. DISCUSSION

A. Governing law.

Section 524(a)(2) provides that a discharge “operates as an

injunction against the commencement or continuation of an action

. . . to collect, recover or offset any such debt as a personal

liability of the debtor, whether or not discharge of such debt is

waived[.]”
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5 Section 105(a) describes the power of courts and states:

The court may issue any order, process, or judgment that

is necessary or appropriate to carry out the provisions

of this title. No provision of this title providing for

the raising of an issue by a party in interest shall be

construed to preclude the court from, sua sponte, taking

any action or making any determination necessary or

appropriate to enforce or implement court orders or

rules, or to prevent an abuse of process.

-6-

Procedurally, an alleged violation of the discharge

injunction is pursued, as in this case, by a motion invoking the

contempt remedies allowed for in § 105(a).5 See Walls v. Wells

Fargo Bank, N.A., 276 F.3d 502, 509-10 (9th Cir. 2002). In order

to be subject to sanctions for violating the discharge injunction,

a party’s violation must be “willful.” The Ninth Circuit applies

a two-part test to determine whether the willfulness standard has

been met: (1) did the alleged offending party know that the

discharge injunction applied; and (2) did such party intend the

actions that violated the discharge injunction? Zilog, Inc. v.

Corning (In re Zilog, Inc.), 450 F.3d 996, 1007 (9th Cir. 2006);

Hardy v. United States (In re Hardy), 97 F.3d 1384, 1390 (9th Cir.

1996). The moving party must prove by clear and convincing

evidence that the creditor violated the order. In re Zilog, Inc.,

450 F.3d at 1007; In re Bennett, 298 F.3d 1059, 1069 (9th Cir.

2002).

Notably, and what is important here, the bankruptcy discharge

“extinguishes only one mode of enforcing a claim - namely, an

action against the debtor in personam - while leaving intact

another - namely, an action against the debtor in rem.” Johnson

v. Home State Bank, 501 U.S. 78, 84 (1991). In other words, a
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creditor may not take any actions to collect from the debtor

personally following the discharge, but the discharge does not

prevent the creditor from proceeding against the property securing

the debt. See id. at 83.

B. Analysis.

1. The bankruptcy court did not abuse its discretion in

denying the contempt motion.

At the hearing on the motion for contempt, Guzmans contended

that Recon could not foreclose on the Property because their loan

was not with Recon. Hr’g Tr. (June 22, 2011) 2:4-12. Guzmans

admitted to taking out a purchase money loan on the Property, that

they had not been paying on the loan, and that no one other than

Recon was trying to foreclose. Id. at 2:13-19. Guzmans further

admitted owing approximately $400,000 on the loan, but claimed the

Property’s value is now worth less than $100,000. Id. at 3:13-24. 

Guzmans argued that the debt to Bank of America was discharged

because they had scheduled it as unsecured and no one had

challenged it. Based upon the evidence, the bankruptcy court

denied the motion determining that Guzmans had failed to prove any

violation of the discharge injunction. Id. at 5:7-12.

Recon is the trustee of the deed of trust in favor of Bank of

America on Guzmans’ Property. Guzmans have not denied that Bank

of America holds a first deed of trust on the Property. What they

do contend is that the debt owed to Bank of America was unsecured

and discharged by court order on May 12, 2011. Therefore, argue

Guzmans, the bankruptcy court should have granted the contempt

motion. We disagree. 

A secured lien passes through bankruptcy unaffected unless
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affirmative action is taken to avoid it. Long v. Bullard,

117 U.S. 617, 620-21 (1886); Dewsnup v. Timm, 502 U.S. 410, 418

(1992); In re Brawders, 503 F.3d 856, 867 (9th Cir. 2007);

§ 506(d)(2). Guzmans’ attempt to turn a secured lien into an

unsecured one by listing it as unsecured and disputed in their

Schedule F had no effect. Merely scheduling a claim as unsecured

does not “avoid” the lien. In any event, as chapter 7 debtors,

Guzmans have no ability to avoid or “strip off” Bank of America’s

lien, which is what appears they were trying to do. Therefore,

Bank of America’s lien remained secured despite Guzmans’ efforts. 

Furthermore, contrary to Guzmans’ contention, no proof of

claim had to be filed to preserve Bank of America’s secured lien

against the Property. In re Brawders, 503 F.3d at 872 (unlike

unsecured creditors, secured creditors may ignore the bankruptcy

proceedings and look to the lien for satisfaction of the debt);

Cen-Pen Corp. v. Hanson, 58 F.3d 89, 93 (4th Cir. 1995)

(interpreting § 506(d)(2) to conclude that failure of secured

creditor to file a proof of claim is not a basis for avoiding its

lien); In re Meadowbrook Estates, 246 B.R. 898, 902 (Bankr. E.D.

Cal. 2000)(“A secured creditor is not required to file a proof of

claim. And if it chooses to not file a claim, its lien will pass

through the bankruptcy and remain in place.”). Therefore, despite

not filing a proof of claim or challenging Guzmans’ scheduling of

the debt as unsecured, Recon’s right to foreclose on the Property

(on behalf Bank of America) survived the bankruptcy. 

Because the discharge injunction did not apply to Recon with

respect to foreclosing on the Property, Recon’s actions to

foreclose could not have violated it. Guzmans offered nothing to
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show that Recon’s actions were an attempt to collect on a debt

against them personally. As a result, Guzmans could not prove by

clear and convincing evidence that Recon violated the discharge

injunction. Accordingly, the bankruptcy court did not abuse its

discretion in denying the contempt motion.

2. The bankruptcy court did not abuse its discretion in

denying the motion to reconsider.

Due to the procedural irregularities in this case, Guzmans

did not address in their opening brief how the bankruptcy court

abused its discretion by denying their motion to reconsider. 

Because of the irregularities and Guzmans’ pro se status, we

review the record to see if it supports the bankruptcy court’s

denial of the motion. See Balistreri v. Pacifica Police Dep’t,

901 F.2d 696, 699 (9th Cir. 1988)(we generally construe pro se

appellant’s briefs liberally). We agree with the bankruptcy court

that Guzmans’ motion to reconsider fell under Rule 9023, which

incorporates FRCP 59(e). A motion under FRCP 59(e) should not be

granted, absent highly unusual circumstances, unless the court is

presented with newly discovered evidence, committed clear error,

or if there is an intervening change in the controlling law. 

389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir.

1999). A motion for reconsideration is not for rehashing the same

arguments made the first time, or to assert new legal theories or

new facts that could have been raised at the initial hearing. 

In re Greco, 113 B.R. 658, 664 (D. Haw. 1990), aff’d and remanded,

Greco v. Troy Corp., 952 F.2d 406 (9th Cir. 1991). 

Much of what Guzmans raised in the motion to reconsider was

merely a rehashing of the same arguments raised in the contempt
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motion. Guzmans again asserted that a proof of claim had to be

filed, that the debt was discharged, and that Recon’s foreclosure

actions violated the discharge injunction. These arguments were

improper and, as we have already stated above, they also lack

merit. Guzmans also attempted to contest Recon’s standing as the

real party in interest to foreclose on the Property. Not only was

this a new legal theory that could have been raised before, it

goes beyond the scope of the motion for contempt. Accordingly,

because Guzmans failed to establish grounds for reconsideration,

the bankruptcy court did not abuse its discretion in denying the

motion to reconsider. 

VI. CONCLUSION 

Based on the foregoing reasons, we AFFIRM.