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FILED

JUN 30 2015

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL NOT FOR PUBLICATION OF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-14-1387-DTaKu

)

DAVID BRIAN FEE, ) Bk. No. 11-14420-PC

)

Debtor. )

______________________________)

)

DAVID BRIAN FEE, )

)

Appellant, )

)

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

)

JEREMY W. FAITH, Trustee; )

JPMORGAN CHASE BANK, N.A.; )

N&K INVESTMENTS, )

)

Appellees. )

______________________________)

Submitted Without Argument

on June 18, 2015

Filed - June 30, 2015

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Peter H. Carroll, Bankruptcy Judge, Presiding

 

Appearances: Appellant David Brian Fee on brief pro se; Meghann

Ahern Triplett of Margulies Faith, LLP on brief for

Appellee Jeremy W. Faith, Trustee; Anne Claire

Manalili of Levinson Arshonsky & Kurtz, LLP, on brief

for Appellee JPMorgan Chase Bank, N.A.

 

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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Before: DUNN, TAYLOR, and KURTZ, Bankruptcy Judges.

David Brian Fee appealed two orders and a judgment entered in

his pending chapter 72 bankruptcy case and a related adversary

proceeding, including an interim award of attorneys fees (“Interim

Fee Order”) to counsel for the chapter 7 trustee (“Trustee”). Our

motions panel entered an order limiting the scope of the appeal

(“Order Re: Scope of Appeal”) to matters other than the Interim Fee

Order. Notwithstanding service of the Order Re: Scope of Appeal on

Mr. Fee, Mr. Fee addressed his arguments in both his Opening Brief

and his Reply Brief principally to his appeal of the Interim Fee

Order. For the reasons stated below, we AFFIRM the bankruptcy court

with respect to the issues within the scope of the appeal.

I. FACTUAL BACKGROUND

Mr. Fee acquired title to approximately 60 acres of real

property (“Property”) in Ventura, California, which included an

improved parcel and an adjacent vacant lot, in June 2005. To fund

his acquisition of the Property, Mr. Fee obtained a loan (“Purchase

Money Loan”) from Washington Mutual Bank, FA (“WaMu”) in the amount

of $1,420,000, secured by a deed of trust on the Property. 

In June 2006, Mr. Fee refinanced the Purchase Money Loan with a

loan from WaMu (“Refinance Loan”) in the amount of $1,680,000, also

secured by a deed of trust on the Property (“First Refinance Trust

2 Unless specified otherwise, all chapter and section

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

all “Rule” references are to the Federal Rules of Bankruptcy

Procedure, Rules 1001–9037.

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Deed”), which was recorded June 22, 2006. 

Mr. Fee thereafter placed further encumbrances on the Property

as follow: July 11, 2006 deed of trust to secure his debt in the

amount of $120,000 to Joseph Zebrowsky (“Zebrowsky Trust Deed”); and

November 2, 2006 deed of trust with an assignment of rents to secure

his debt in the amount of $125,000 to N & K Investments (“N&K Trust

Deed”). 

In August 2007, Mr. Fee obtained a second refinance loan

(“Second Refinance Loan”) from WaMu in the amount of $1,900,000,

secured by a deed of trust (“Second Refinance Trust Deed”), which

was recorded on August 14, 2007. The proceeds of the Second

Refinance Loan were used to pay off the Refinance Loan secured by

the First Refinance Trust Deed and the debt secured by the Zebrowsky

Trust Deed. The N&K Trust Deed was subordinated by agreement to the

Second Refinance Trust Deed. 

On October 25, 2007, N&K recorded its own second deed of trust

with an assignment of rents (“Second N&K Trust Deed”) to secure Mr.

Fee’s debt to N&K in the amount of $175,000. Also on October 25,

2007, N&K recorded two requests for notice of delinquency under the

Second Refinance Trust Deed. On September 25, 2008, WaMu was closed

by the Office of Thrift Supervision, and the Federal Deposit

Insurance Corporation (“FDIC”) was named receiver. Ultimately,

through an historic Purchase and Assumption Agreement executed on

the same date, JPMorgan Chase Bank, N.A. (“JPMC”) succeeded to

WaMu’s interest in the Second Refinance Trust Deed and its

underlying promissory note. 

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Mr. Fee filed a chapter 11 petition on September 16, 2011. On

October 4, 2012, the bankruptcy court entered its order (“Conversion

Order”) converting Mr. Fee’s bankruptcy case to a chapter 7 case. 

Jeremy W. Faith was appointed as the Trustee on October 16, 2012.

On July 23, 2012, while Mr. Fee’s bankruptcy case was still a

chapter 11 case, JPMC filed a motion for relief from the automatic

stay in order to foreclose on the Property. Mr. Fee opposed JPMC’s

motion for relief from stay on the basis that JPMC lacked standing

to bring the motion. The bankruptcy court determined that JPMC had

standing pursuant to Cal. Com. Code § 3301(b)3 and entered an order

(“Stay Relief Order”) on August 24, 2012, granting JPMC relief from

the automatic stay. Mr. Fee did not appeal the Stay Relief Order. 

During the subsequent non-judicial foreclosure process, JPMC

discovered an error in the extensive legal description of the

Property in the Second Refinance Trust Deed. JPMC thereafter

commenced an adversary proceeding in Mr. Fee’s chapter 7 bankruptcy

case on February 13, 2013, pursuant to which JPMC sought reformation

of the Second Refinance Trust Deed, declaratory relief, and the

imposition and foreclosure of an equitable lien against the Property

to the extent any of the defendants named in the complaint, the

3 Cal. Com. Code § 3301(b) provides: 

“Person entitled to enforce” an instrument means . . . a

nonholder in possession of the instrument who has the

rights of a holder . . . . A person may be a person

entitled to enforce the instrument even though the person

is not the owner of the instrument or is in wrongful

possession of the instrument.

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Trustee, Mr. Fee, and N&K, received any benefit from the proceeds of

the Second Refinance Loan. 

The Trustee filed an answer to the complaint, through which he

both denied JPMC’s claims and asserted affirmative defenses. After

Mr. Fee and N&K failed to file timely responsive pleadings to the

complaint, the Clerk of the bankruptcy court entered their defaults

on April 23, 2013. 

The initial Status Conference in the adversary proceeding was

held April 30, 2013. Despite the entry of default against him,

Mr. Fee appeared to advise the bankruptcy court that he would be

seeking counsel or otherwise taking action in response to the

complaint. He did neither. At a further status conference

(“Further Status Conference”) held in the adversary proceeding on

March 25, 2014, Mr. Fee again appeared. When the bankruptcy court

pointed out to Mr. Fee that he had taken no action to set aside the

default that had been entered against him nearly a year before,

Mr. Fee stated that he was aware his default had been entered and

that he would file documents that same day that would address his

position in the matter. 

Immediately after the Further Status Conference, Mr. Fee filed

his “Ex Parte Petition, Motion and Request for Hearing as an

Extraordinary Writ of Mandamus” (“Petition for Writ of Mandamus”) in

the bankruptcy court, which the bankruptcy court denied by its order

entered April 29, 2014. In denying the Petition for Writ of

Mandamus, the bankruptcy court observed that although Mr. Fee never

specified what ruling he was seeking to challenge, he appeared to

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suggest that the bankruptcy court had erred in determining at some

unspecified point that JPMC had standing to assert claims with

respect to the Property.4

At some point after the Further Status Conference, JPMC entered

into a settlement agreement with the Trustee and N&K, the terms of

which provided that JPMC would pay Mr. Fee’s bankruptcy estate the

sum of $65,000 in exchange for a stipulated judgment reforming the

Second Refinance Trust Deed in the manner requested in the

complaint, i.e., by correcting the legal description. 

To facilitate resolution of the entire adversary proceeding in

light of the proposed settlement, on June 19, 2014, JPMC filed a

motion for entry of a default judgment against Mr. Fee. The

adversary proceeding docket reflects that JPMC was directed to

upload a form of judgment without the need to schedule a hearing.

On July 1, 2014, the Trustee filed his motion for an order

approving the settlement (“Compromise Motion”). A hearing was set

for July 29, 2014 for the bankruptcy court to consider the

Compromise Motion. Mr. Fee filed no response or objection to the

Compromise Motion. On July 28, 2014, the bankruptcy court issued

its tentative ruling (“Tentative Ruling”), which approved the

4 Mr. Fee filed in this appeal a Petition for Entry of Default

Judgment Against JPMC (“Petition for Judgment”), decision of which

the motions panel deferred to the merits panel. The pending

Petition for Judgment includes a request that the order denying the

Petition for Writ of Mandamus be reversed. We address disposition

of the Petition for Judgment in the opening paragraph of the

Discussion, infra.

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settlement under the standards articulated by the Ninth Circuit in

Woodson v. Fireman’s Fund Ins. Co. (In re Woodson), 839 F.2d 610,

620 (9th Cir. 1988); and Martin v. Kane (In re A&C Props.), 784 F.2d

1377, 1381 (9th Cir. 1986). The Tentative Ruling advised parties

that based on the failure of any party to file a written opposition

to the Compromise Motion, no appearance was necessary at the

scheduled hearing. Nevertheless, Mr. Fee appeared at the hearing

scheduled on the Compromise Motion, at which time the bankruptcy

court advised Mr. Fee that no objection had been filed, with the

consequence that the bankruptcy court had granted the Compromise

Motion, and answered Mr. Fee’s question regarding the time within

which he was required to file his appeal.5

On July 30, 2014, the bankruptcy court (1) entered an order

(“Compromise Order”) in Mr. Fee’s main bankruptcy case approving the

Compromise Motion, and (2) entered a judgment (“Judgment”) in the

5 Mr. Fee’s presentation at the hearing began:

I am David Fee, the debtor. I am here to notify the Court

that this Court lacks the authority jurisdiction. I have

filed a petition in the U.S. – United States District

Court for satisfaction. I feel this Court is out of

order. The conduct of the U.S. Trustee is out of order. 

He’s given legal advice where he’s not here to do so. He

told me not to hire an attorney on an adversary matter,

therefore I lost. He told me I don’t stand a chance

against JPMorgan Chase, I’ll never beat them, and he is

the U.S. Trustee defense and JPMorgan Chase will never be

found – defense [sic]. That’s all I really want to say,

Your Honor, and I look for a fair trial in the United

States District Central Court.

Tr. of July 29, 2014 H’rng at 2:13-25.

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adversary proceeding which included both a default judgment against

Mr. Fee and judgment with respect to the other parties consistent

with the terms of the settlement approved through the Compromise

Motion. 

On August 11, 2014, Mr. Fee filed a timely notice of appeal

with respect to the Compromise Order and the Judgment.

The notice of appeal also purported to appeal from an “Order on

Application for Payment Of Interim Fees and/or Expenses” (“Interim

Fee Order”), which the bankruptcy court had entered on July 23,

2014. After giving Mr. Fee an opportunity to respond to its

proposed action, which he declined, our motions panel entered an

order (“Order Re: Scope of Appeal”) limiting the scope of this

appeal to the Compromise Order and the Judgment on the basis that

the Interim Fee Order was interlocutory. Nevertheless, Mr. Fee

addressed most of his argument in both his opening brief and his

reply brief to the alleged error of the bankruptcy court in entering

the Interim Fee Order. 

II. JURISDICTION

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

and 157(b)(2)(A), (K) and (O). We have jurisdiction under 28 U.S.C.

§ 158.

III. ISSUES

Whether the bankruptcy court abused its discretion when it

granted the Compromise Motion.

Whether the bankruptcy court abused its discretion when it

entered the Judgment to give effect to the Compromise Motion.

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IV. STANDARDS OF REVIEW

A bankruptcy court's decision to approve a compromise

settlement is reviewed for abuse of discretion. Martin v. Kane

(In re A & C Props.), 784 F.2d at 1380; Goodwin v. Mickey Thompson

Entertainment Group, Inc. (In re Mickey Thompson Entertainment

Group, Inc.), 292 B.R. 415, 420 (9th Cir. BAP 2003). A bankruptcy

court abuses its discretion if it applies an incorrect legal

standard or misapplies the correct legal standard, or if its fact

findings are illogical, implausible or without support from evidence

in the record. TrafficSchool.com v. Edriver Inc., 653 F.3d 820, 832

(9th Cir. 2011).

We may affirm the decision of the bankruptcy court on any basis

supported by the record. See ASARCO, LLC v. Union Pac. R. Co.,

765 F.3d 999, 1004 (9th Cir. 2014); Shanks v. Dressel, 540 F.3d

1082, 1086 (9th Cir. 2008).

V. DISCUSSION

As a preliminary procedural matter, we deny Mr. Fee’s Petition

for Entry of Default Judgment (“Petition for Judgment”) against

JPMC. In the Petition for Judgment, Mr. Fee requests extensive

relief, tantamount to proclaiming him victorious in the overall

litigation, on the ground that JPMC failed to timely file its

opening brief on appeal. However, JPMC timely requested, and was

granted (“Extension Order”), an extension of the deadline for filing

its brief. JPMC thereafter filed its brief timely within the terms

of the Extension Order. Thus, the foundation upon which Mr. Fee

bases the Petition for Judgment fails, with the result that it is

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incapable of supporting any requested relief. Further, to the

extent Mr. Fee seeks relief through the Petition for Judgment from

the bankruptcy court’s order denying his Petition for Writ of

Mandamus, we note only that Mr. Fee never filed an appeal from that

order so that it is not before us for review.

As a second preliminary matter, we deem it necessary in light

of both the Order Re: Scope of Appeal and the wide-ranging issues

raised in Mr. Fee’s Opening Brief to state explicitly that the only

matters we are reviewing in this appeal are the Compromise Order and

the Judgment. To the extent Mr. Fee intends his opening brief as an

invitation to this Panel to review the Conversion Order, the Stay

Relief Order, or the Interim Fee Order, we decline.

A. The Bankruptcy Court Did Not Abuse Its Discretion When It

Granted the Compromise Motion and Entered the Compromise Order.

Rule 9019(a) authorized the bankruptcy court to approve the

Trustee’s Compromise Motion “after notice and a hearing.” “[A]fter

notice and a hearing” does not mean that a hearing must be held,

only that notice of the proposed compromise must be “reasonably

calculated, under all the circumstances, to apprise interested

parties of the pendency of the action and afford them an opportunity

to present their objections.” Mullane v. Central Hanover Bank &

Trust Co., 339 U.S. 306, 314 (1950). The bankruptcy court made

findings in its Tentative Ruling that due process had been satisfied

to support ruling on the Compromise Motion without a hearing.

This motion to approve a compromise pursuant to [Rule]

9019 has been filed by the [Trustee] and set for hearing

on the notice required by [Local Rule] 9013-1(d)(2) and

other applicable rules. The failure of [Mr. Fee] and

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parties in interest to file written opposition at least

14 days prior to the hearing as required by [Local Rule]

9013-1(f) is considered as consent to the granting of the

motion. [Local Rule] 9013-1(h). Cf. Ghazali v. Moran,

46 F.3d 52, 53 (9th Cir. 1995). Further, because the

court is granting the relief requested by the moving party

and for which a prima facie case has been established, an

actual hearing is not necessary. See Boone v. Burk

(In re Eliapo), 468 F.3d 592, 602 (9th Cir. 2006). Their

defaults are entered and the matter will be resolved

without oral argument [Local Rule] 9013-1(j)(3). No

appearance is necessary. (Emphasis in original.)

The bankruptcy court then identified the correct legal standard

for approving a compromise. Specifically, the bankruptcy court

articulated the factors in In re A & C Props.: (a) The probability

of success in the litigation; (b) the difficulties, if any, to be

encountered in the matter of collection; (c) the complexity of the

litigation involved, and the expense, inconvenience and delay

necessarily attending it; and (d) the paramount interest of the

creditors and a proper deference to their reasonable views in the

premises. It then made explicit findings in the Tentative Ruling

with respect to these factors:

Here, the compromise resolves a pending adversary

proceeding (Adv. No. 9:13-ap-01034-PC) initiated by

plaintiff [JPMC] against the bankruptcy estate. The

proposed settlement provides, in pertinent part, that

[JPMC] will pay $65,000.00 to the estate. In return,

[Trustee] will permit entry of judgment against [the]

estate to reform the [Second Refinance Trust Deed] on

debtor’s real property to include, inter alia, an accurate

legal description. Releases will be executed and all

remaining claims of the adversary complaint will be

dismissed without the need for further litigation. The

court agrees that the compromise is fair and equitable,

and in the best interest of the creditors and the estate. 

The defenses asserted by the defendant may result in the

estate recovering nothing. The potential costs in

bringing this proceeding to trial may be high and the

potential recovery may be low. Therefore, it is in the

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estate’s and the creditors’ best interest to approve the

compromise.

Based on the findings contained in the Tentative Ruling, it is

evident that the bankruptcy court applied the correct legal standard

in ruling on the Compromise Motion, and that its findings were not

“illogical, implausible or without support from evidence in the

record.” 

Nothing in Mr. Fee’s arguments on appeal suggests a different

result is appropriate. The majority of the arguments Mr. Fee raised

in his Opening Brief are outside the scope of this appeal. The two

arguments that do relate to the Compromise Motion were waived

because Mr. Fee failed to raise them in the bankruptcy court in the

first instance. 

Generally, we do not consider arguments not “properly raise[d]”

in the bankruptcy court. O'Rourke v. Seaboard Sur. Co. (In re E.R.

Fegert, Inc.), 887 F.2d 955, 957 (9th Cir. 1989); see also

In re Cybernetic Serv., Inc., 252 F.3d 1039, 1045 n.3 (9th Cir.

2001)(appellate court will not explore ramifications of argument

because it was not raised in the bankruptcy court and, therefore,

was waived); Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 984

(9th Cir. 2001)(stating that court will not consider issue raised

for first time on appeal absent exceptional circumstances); 

Concrete Equip. Co., Inc. v. Fox (In re Vigil Bros. Constr., Inc.),

193 B.R. 513, 520 (9th Cir. BAP 1996). An argument is “properly

raised” if it was raised sufficiently for the trial court to make a

ruling. In re E.R. Fegert, Inc., 887 F.2d at 957. Notwithstanding

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the general rule, 

A reviewing court may consider an issue raised for the

first time on appeal if (1) there are exceptional

circumstances why the issue was not raised in the trial

court, (2) the new issue arises while the appeal is

pending because of a change in the law, or (3) the issue

presented is purely one of law and the opposing party will

suffer no prejudice as a result of the failure to raise

the issue in the trial court. 

Franchise Tax Bd. v. Roberts (In re Roberts), 175 B.R. 339, 345 (9th

Cir. BAP 1994)(internal quotation marks omitted)(citing United

States v. Carlson, 900 F.2d 1346, 1349 (9th Cir. 1990)). None of

these conditions for considering an issue not raised in the

bankruptcy court are satisfied in the instant appeal.

In his Opening Brief, Mr. Fee asserted that the bankruptcy

court erred in approving the Compromise Motion because, as a factual

matter, WaMu had two weeks to examine the Second Refinance Trust

Deed before it was recorded. Further, JPMC, assuming it had

“standing,” had more than ample time to compel Mr. Fee to execute a

replacement trust deed, but it never did.

We note that Mr. Fee never filed an opposition to the

Compromise Motion. While he did appear at the time the hearing on

the Compromise Motion had been scheduled, his only “argument” was to

assert the bankruptcy court had no authority over the matter. 

Thus, Mr. Fee has waived the argument made to us, which appears to

be based on an estoppel theory, because he never presented it to the

bankruptcy court in the first instance. Further, Mr. Fee expressly

waived any issue regarding the bankruptcy court’s lack of authority

over the Compromise Motion. Mr. Fee stated in his Opening Brief: 

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“The Bankruptcy Court had jurisdiction to enter the final Judgment

and Orders referenced above pursuant to 28 U.S.C. §§ 157(a),

157(b)(1) and 1334.” Opening Brief at 1:15-17. 

The only other argument Mr. Fee asserts in his Opening Brief

that relates even tangentially to the Compromise Motion is that the

bankruptcy court erred when it denied the Petition for Writ of

Mandamus. Mr. Fee asserts that in denying the Petition for Writ of

Mandamus the bankruptcy court improperly granted standing to JPMC to

which it was not entitled. Again, we note that Mr. Fee never

presented this argument in opposition to the Compromise Motion. Nor

did he appeal the order denying the Petition for Writ of Mandamus. 

Mr. Fee therefore has waived this argument as well.

B. The Bankruptcy Court Did Not Abuse Its Discretion When It

Entered the Judgment.

Except to the extent the Judgment is a default judgment against

Mr. Fee, it constitutes a consent judgment as to the remaining

parties. We already have determined that the bankruptcy court did

not abuse its discretion when it approved the Compromise Motion. 

The consent judgment is merely another iteration of the approval of

the Compromise Motion, the form being dictated by the existence of

the adversary proceeding. Accordingly, no additional issue exists

in this appeal in connection with the entry of the Judgment, as

distinct from the entry of the Compromise Motion.

VI. CONCLUSION

Mr. Fee did not oppose the Compromise Motion. Accordingly, he

waived for purposes of this appeal any issue he might otherwise have

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had with respect to the entry of the Compromise Order or the

Judgment. We therefore AFFIRM.

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