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FILED

MAR 10 2015

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-13-1606-KiKuD

)

JUDY ANN JENSEN, ) Bk. No. 8:09-14106-CB

)

Debtor. )

 )

)

TIMOTHY P. PEABODY, )

)

Appellant, )

)

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

)

JUDY ANN JENSEN; RICHARD A. )

MARSHACK, Chapter 7 Trustee, )

)

Appellees. )

______________________________)

Submitted without Oral Argument

on February 19, 2015

Filed - March 10, 2015

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Catherine E. Bauer, Bankruptcy Judge, Presiding

 

Appearances: Appellant Timothy P. Peabody pro se on brief;

Michael D. Franco on brief for appellee, Richard A.

Marshack, Chapter 7 Trustee.

 

Before: KIRSCHER, KURTZ and DUNN, Bankruptcy Judges.

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 8024-1.
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Appellant Timothy P. Peabody appeals an order denying his

motion for relief from judgment under Civil Rule 60(b)(1).2

Because the bankruptcy court failed to conduct any analysis under

Pioneer-Briones or to articulate any findings or conclusions in

denying the motion, we VACATE and REMAND.3 

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Debtor Judy Ann Jensen filed a chapter 11 bankruptcy case on

May 4, 2009. The Court converted her case to chapter 7 on

December 7, 2011.

During the pendency of the Chapter 11 case, Debtor filed an

adversary action pro se against her former business partner, a

debtor under chapter 7. Timothy P. Peabody substituted in as

counsel for Debtor in the adversary action on April 4, 2011. 

Debtor paid Peabody a $10,000 retainer for services to be rendered

in the chapter 11 case. Peabody never filed an application for

employment with the bankruptcy court or obtained an order

approving his employment.

1. Trustee's excessive fee motion and the disgorgement

order 

After conversion of the case, chapter 7 trustee Richard A.

Marshack filed a motion to determine whether the fees Debtor paid

to Peabody exceeded a reasonable value under § 329(b) and

Rule 2017 ("Excessive Fee Motion"). Trustee asserted two grounds

2 Unless specified otherwise, all chapter, code 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 “Civil Rules.”

3 The docket reflects that one of the appellees in this case

is debtor Judy A. Jensen. Debtor has not appeared in this appeal.

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for why Peabody should be required to disgorge all or a

substantial portion of the $10,000 retainer: (1) Peabody failed

to seek employment or obtain an order approving his employment in

accordance with § 327(a) and Rule 2014; and (2) in Trustee's

opinion, Peabody failed to perform services worth $10,000. 

Peabody did nothing other than filing an amended complaint and

several status reports. Peabody failed to present contemporaneous

billing records to Debtor or the U.S. Trustee or to file any fee

applications with the bankruptcy court. Debtor claimed in her

declaration in support of the Excessive Fee Motion that Peabody

never served discovery requests on her former business partner in

connection with her adversary action.

Peabody failed to file a response to the Excessive Fee Motion

or appear at the hearing on May 14, 2013. After hearing brief

argument from Trustee, the bankruptcy court ruled that it would

grant the motion and order Peabody to disgorge the entire $10,000

retainer.

The bankruptcy court entered an order granting the Excessive

Fee Motion on June 24, 2013 ("Disgorgement Order") and ordered

Peabody to return the $10,000 retainer to Trustee within 30 days

of entry of the order. The bankruptcy court did not state at the

hearing or in the Disgorgement Order the basis for granting the

Excessive Fee Motion. Peabody failed to remit the funds within

30 days as ordered.

2. Peabody's motion to set aside the Disgorgement Order

Peabody moved to set aside the Disgorgement Order ("Motion to

Set Aside") on October 16, 2013. Although he cited § 105(a) as

the basis for relief, Peabody argued that the Disgorgement Order

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should be set aside due to mistake, inadvertence or excusable

neglect. Peabody admitted to receiving notice of the Excessive

Fee Motion and related hearing, but asserted that his staff

miscalendared the hearing date, thus preventing him from filing a

timely response or appearing at the hearing.

In support of his Motion to Set Aside, Peabody attached a

copy of an invoice to Debtor dated June 13, 2013. The invoice,

which Peabody admitted compiling after Trustee filed the Excessive

Fee Motion, included Peabody's time records for Debtor's case

dating from February 10, 2011 through May 19, 2012, and reflected

107.4 billable hours totaling $34,905.00. Peabody contended that

Debtor, being disgruntled and unhappy with the results of his

representation of her, sought to recover the $10,000 retainer and

to avoid paying the remaining outstanding amounts.

Trustee opposed the Motion to Set Aside, contending Peabody 

failed to establish excusable neglect under Civil Rule 60(b)(1).

In his attached declaration, counsel for Trustee stated that he

faxed letters to Peabody on August 12, 2013, and on September 24,

2013, regarding the Disgorgement Order but received no response. 

Although Trustee’s counsel stated he attached the letters as

Exhibit A, he did not. Counsel had also attempted to call

Peabody's office on August 21, 2013, to no avail. Counsel

contended that only after he threatened to file a motion to show

cause did Peabody respond, stating that he was filing the Motion

to Set Aside.

Trustee asserted the Pioneer factors for relief under Civil

Rule 60(b)(1) had not been met. First, Peabody’s failure to

prepare an adequate fee application, or to provide timely billing

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or to file a timely response to the Excessive Fee Motion

prejudiced the estate, by causing the estate to incur additional

administrative expenses. Second, as for delay, Peabody never

filed an application for employment or explained why he failed to

file one. Only when faced with the Excessive Fee Motion did he

actually compile a billing statement. Third, Peabody completely

controlled the reasons for delay – his staff miscalendared the

hearing date. Finally, Trustee disputed Peabody's good faith,

contending that at no point had he filed an employment application

or provided a fee application for review and approval by the court

prior to taking funds. Even now, the new bill failed to account

for the $10,000 retainer paid. 

The bankruptcy court held a hearing on the Motion to Set

Aside on November 19, 2013. The bankruptcy court expressed its

concern with Peabody waiting until October to seek relief from the

final Disgorgement Order entered in June. When asked what he did

in response to Trustee's letters, Peabody stated that he informed

Trustee of the calendering error and his intention to file the

Motion to Set Aside. He also told Trustee that the Excessive Fee

Motion was inappropriate. Peabody told the court that he signed a

retainer agreement with Debtor years ago to provide work on her

"civil case" as well as the bankruptcy case and that not all of

the funds were for his bankruptcy work. Peabody contended that

Debtor's declaration in support of the Excessive Fee Motion

contained false statements.

After hearing further argument from the parties, the

bankruptcy court announced it would deny the Motion to Set Aside,

and that Peabody had until December 31, 2013, to return the

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$10,000 to Trustee. The bankruptcy court entered an order on

December 17, 2013 ("Order"), consistent with the oral

announcement. The bankruptcy court did not articulate its reasons

for denying the Motion to Set Aside at the hearing or in the

Order. 

Peabody timely filed a notice of appeal of the Order on

December 23, 2013, and filed an amended notice of appeal on

February 15, 2014.

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334

and 157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158. 

III. ISSUE

Did the bankruptcy court abuse its discretion in denying the

Motion to Set Aside? 

IV. STANDARD OF REVIEW

A court's denial of a motion under Civil Rule 60(b) is

reviewed for an abuse of discretion. Lemoge v. United States,

587 F.3d 1188, 1191-92 (9th Cir. 2009); Alonso v. Summerville

(In re Summerville), 361 B.R. 133, 139 (9th Cir. BAP 2007)(citing

Hammer v. Drago (In re Hammer), 112 B.R. 341, 345 (9th Cir. BAP

1990), aff'd, 940 F.2d 524 (9th Cir. 1991)). A bankruptcy court

abuses its discretion if it applied the wrong legal standard or

its findings were illogical, implausible or without support in the

record. TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820,

832 (9th Cir. 2011).

V. DISCUSSION

Peabody contends the bankruptcy court did not apply the

appropriate legal standard under § 105(a) in denying the Motion to

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Set Aside. We agree the bankruptcy court applied an incorrect

legal standard in denying Peabody's motion, but for different

reasons. 

A bankruptcy court has the discretionary power under § 105(a)

to reconsider, modify or vacate its previous orders. See Zurich

Am. Ins. Co. v. Int’l Fibercom, Inc. (In re Int’l Fibercom, Inc.),

503 F.3d 933, 940 (9th Cir. 2007). However, such relief is sought

by motion under Rule 9024, which has incorporated Civil

Rule 60(b). Meyer v. Lenox (In re Lenox), 902 F.2d 737, 739-40

(9th Cir. 1990). 

Although Peabody cited § 105(a) as the basis for relief from

the Disgorgement Order, his motion set forth a claim for relief

from a final judgment under Civil Rule 60(b)(1) based on his

mistake, inadvertence and excusable neglect: his staff had

miscalendared the May 14 hearing date causing him not to file a

response to the Excessive Fee Motion and to miss the hearing. 

Because of this, and because the 14-day appeal time had expired on

the Disgorgement Order when Peabody filed his Motion to Set Aside,

the bankruptcy court should have construed his motion as a motion

for relief from judgment under Civil Rule 60(b). Negrete v. Bleau

(In re Negrete), 183 B.R. 195, 197 (9th Cir. BAP 1995). The court

may have construed it as such; we cannot tell from the record. In

any event, we conclude it abused its discretion by failing to

apply the legal standard required under Civil Rule 60(b)(1).

A. The bankruptcy court failed to apply Pioneer-Briones or to

make specific findings of fact and conclusions of law in

denying the Motion to Set Aside.

Under Civil Rule 60(b)(1), as incorporated by Rule 9024, a

court may relieve a party from a final order upon a finding of

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excusable neglect. In Pioneer Inv. Servs. Co. v. Brunswick

Assocs. Ltd. P'ship, 507 U.S. 380, 395 (1993), the Supreme Court

held that excusable neglect, for purposes of Rule 9006(b)(1),

encompasses an attorney's negligence in complying with a filing

deadline.

To determine whether a party's neglect is excusable, courts

must apply a four-factor equitable test, examining: (1) the

danger of prejudice to the opposing party; (2) the length of the

delay and its potential impact on the proceedings; (3) the reason

for the delay; and (4) whether the movant acted in good faith. 

Id.

The Ninth Circuit adopted the Pioneer test for Civil

Rule 60(b)(1) cases in Briones v. Riviera Hotel & Casino, 116 F.3d

379, 381 (9th Cir. 1997). Through subsequent decisions, including

Bateman v. U.S. Postal Service, 231 F.3d 1220, 1224-25 (9th Cir.

2000), and Pincay v. Andrews, 389 F.3d 853, 860 (9th Cir. 2004)

(en banc), the Ninth Circuit has further clarified how courts

should apply this test. In Bateman, the Circuit concluded that

when considering a Civil Rule 60(b) motion, a trial court abuses

its discretion by failing to engage in the four-factor PioneerBriones equitable balancing test. 231 F.3d at 1223-24. Bateman

had moved to set aside a summary judgment which had been entered

due to his counsel's failure to file a timely opposition. Id. at

1223. The district court, without mentioning the Pioneer-Briones

test, denied the motion after considering only facts relating to

the reason for Bateman's delay — the third Pioneer-Briones factor. 

Id. at 1224. The Circuit concluded that the district court had

failed to engage in the equitable analysis mandated by Pioneer and

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Briones and, by not considering the other three Pioneer-Briones

factors, had abused its discretion in denying Bateman's motion.

Courts must "explicitly use the Pioneer-Briones framework for

analysis of excusable neglect under [Civil] Rule 60(b)(1)[.]" 

Lemoge, 587 F.3d at 1192 (district court abused its discretion for

not citing to Pioneer or Briones and for considering only three

factors relating to the four factors identified in PioneerBriones)(citing Bateman, 231 F.3d at 1224). See also Ahanchian v.

Xenon Pictures, Inc., 624 F.3d 1253, 1261-62 (district court

abused its discretion for failing to cite or apply the equitable

test under Pioneer-Briones and basing its decision solely on

whether the reason for delay – the third Pioneer-Briones factor —

could establish excusable neglect). A court's mere failure to

cite the Pioneer-Briones test will generally not require reversal,

but the court must have actually engaged in the equitable analysis

those cases mandate. Lemoge, 587 F.3d at 1193; Bateman, 231 F.3d

at 1224.

Here, the bankruptcy court did not cite to either Pioneer or

Briones or expressly enumerate any of the Pioneer-Briones factors. 

Although one could argue that it considered Peabody's delay in

filing his Motion to Set Aside, considering only one PioneerBriones factor is clearly insufficient. The extent of the court's

oral ruling was "I'm going to deny the motion to set aside and

vacate the order." Hr’g Tr. 7:5-6, November 19, 2013. The Order

simply stated "IT IS ORDERED THAT the Motion is DENIED." The

above authority required the bankruptcy court to specifically

address the Pioneer-Briones factors in the course of making its

decision; it did not do so. Accordingly, it abused its discretion

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by applying an incorrect legal standard.

We acknowledge that Peabody did not specifically refer to

Pioneer or to Briones in his moving papers and did not mention the

cases during the hearing on the Motion to Set Aside. He failed

even to cite the correct rule for relief. Trustee, however, did

articulate the Pioneer-Briones factors and provided reasons for

why he believed Peabody had failed to establish them. 

Nevertheless, Peabody's failure to cite the correct rule or

relevant authorities did not relieve the bankruptcy court of its

duty to apply the correct legal standard. See Bateman, 231 F.3d

at 1224 (party's failure to cite Pioneer or Briones or discuss any

of the factors under the equitable test did not relieve district

court of its duty to apply the correct legal standard). 

Our decision to vacate is further supported by the fact the

bankruptcy court failed to articulate any findings of fact or

conclusions of law. A motion for relief from judgment under

Rule 9024 is a contested matter under Rule 9014, subject to Civil

Rule 52(a) by incorporation under Rule 7052, which requires the

bankruptcy court to find the facts specifically and state its

conclusions of law separately. In the absence of complete

findings, we may vacate a judgment and remand the case to the

bankruptcy court to make the required findings or develop further

evidence. First Yorkshire Holdings, Inc. v. Pacifica L 22, LLC

(In re First Yorkshire Holdings, Inc.), 470 B.R. 864, 871 (9th

Cir. BAP 2012) (citing United States v. Ameline, 409 F.3d 1073,

1079 (9th Cir. 2005)). 

VI. CONCLUSION

Because the bankruptcy court failed to engage in the Pioneer-

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Briones analysis required for evaluating Civil Rule 60(b)(1)

excusable neglect cases or to make any findings and conclusions

sufficient for review, we VACATE the Order and REMAND to the

bankruptcy court for findings and conclusions consistent with this

decision.

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