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FILED

AUG 03 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NOT FOR PUBLICATION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-14-1526-KiBrD

)

DANNY WAYNE PRYOR, ) Bk. No. 09-23842-BR

)

Debtor. ) Adv. No. 09-2291-BR

 )

)

DANNY WAYNE PRYOR, )

)

Appellant, )

)

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

)

RW INVESTMENT COMPANY, INC., )

)

Appellee. )

______________________________)

Argued and Submitted on July 23, 2015, 

at Pasadena, California

Filed - August 3, 2015

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Barry Russell, Bankruptcy Judge, Presiding

 

Appearances: Appellant Danny Wayne Pryor argued pro se; Appellee

RW Investment Company, Inc. did not appear for oral

argument. 

 

Before: KIRSCHER, BRANDT2 and DUNN, Bankruptcy Judges.

1 This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have, it has no precedential value. See 9th Cir. BAP Rule 8024-1.

2 Hon. Philip H. Brandt, Bankruptcy Judge for the Western

District of Washington, sitting by designation.
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Appellant, chapter 73 debtor Danny Wayne Pryor ("Pryor"),

appeals an order denying his motion for relief from judgment under

Civil Rule 60(d)(1) and (3). Previously, the bankruptcy court

determined by way of default judgment that the debt of appellee,

RW Investment Co., Inc. ("RW"), was excepted from discharge under

§ 523(a)(2)(A) and that Pryor's discharge was denied under

§ 727(a)(2), (3), (4) and (5) ("RW Judgment"). On appeal, the

Panel affirmed the bankruptcy court's § 523(a)(2)(A) ruling, but

vacated the § 727 rulings because RW had abandoned those claims at

the prove-up hearing. Pryor appealed the Panel's decision to the

Ninth Circuit, which affirmed. Pryor then sought relief from the

RW Judgment under Civil Rule 60(b), which the bankruptcy court

denied. Pryor's appeal of that order to the Panel was dismissed

as untimely. Presenting the same arguments, Pryor then filed the

instant motion seeking relief from the RW Judgment under Civil

Rule 60(d), which the bankruptcy court denied. We AFFIRM.4 

///

///

///

3 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.” 

4 Despite the over 300 pages Pryor submitted in his excerpts

of the record, he failed to submit the two documents we need for

proper review of this appeal — the motion and related order at

issue. RW did not do much better. In its one-page response

brief, which fails to present any substantive argument, RW quoted

the bankruptcy court's order denying Pryor's motion in its

entirety but failed to submit an excerpt of the record containing

the missing order. Therefore, we had to review these (and other)

documents electronically. See O'Rourke v. Seaboard Sur. Co.

(In re E.R. Fegert, Inc.), 887 F.2d 955, 957-58 (9th Cir. 1989).

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I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY5

RW is engaged in the business of real estate investments,

construction and development. Its sole shareholders are brothers

Ronald and Robert Wilson (collectively, "Wilsons"). Ronald Wilson

is an attorney and has represented RW throughout these

proceedings. 

In 2003, RW purchased a property for the purpose of

constructing six townhomes. To fund the project, RW obtained a

loan from IndyMac Bank in July 2005 for $1.8 million. RW engaged

Pryor in February 2006 as the general contractor for the project. 

The townhouse project suffered several setbacks requiring

extensions on the loan's maturity date from IndyMac Bank. As part

of the second extension agreement, IndyMac required RW to enter

into a new agreement with Pryor to complete work on the

townhouses. RW entered into a written agreement with Pryor known

as the Real Estate Construction and Purchase Agreement on

February 24, 2007 ("RECPA"). Indymac conditioned its approval of

the RECPA by insisting that Pryor take over complete financial,

management and construction control of the townhouse project

pursuant to a written Assumption Agreement dated March 29, 2007. 

Under the RECPA, RW sold the property to 704 Market, LLC, an

entity wholly owned by Pryor. The property was purchased with a

promissory note for $525,000 in favor of RW. Although 704 Market,

LLC assumed responsibility for payment of the IndyMac loan, RW's

promise to repay the loan and the Wilsons' guarantees remained in

5 A more thorough background of this appeal can be found in

the Panel's Memorandum Decision issued on August 12, 2011, in

Case No. 10-1259-PaKiSa.

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effect. The Assumption Agreement provided these same terms.

Ultimately, the townhouse project never came to fruition. 

Pryor and/or his entity failed to pay RW on the $525,000

promissory note and IndyMac foreclosed on the property. RW sued

Pryor, his related entities, IndyMac Bank and others in Los

Angeles Superior Court in April 2008 (BC389267). In July 2008,

IndyMac was closed by the Office of Thrift Supervision and its

assets were transferred to the FDIC as conservator. The FDIC was

appointed receiver of the newly chartered institution, IndyMac

Federal Bank, in March 2009. 

A. The underlying bankruptcy case and prior appeal

Pryor filed his first bankruptcy case under chapter 11 on

March 28, 2008. The court dismissed that case on May 21, 2008,

for cause under § 1112(b) in an order containing a one-year bar

from filing another bankruptcy case. In violation of the order,

Pryor filed a chapter 7 case on March 9, 2009. That case was

promptly dismissed on May 5, 2009. 

On June 7, 2009, Pryor filed yet another chapter 7 case,

which led to the prior appeal before the Panel and this appeal. 

After unsuccessfully moving to have that case dismissed, RW filed

a nondischargeability and denial of discharge complaint against

Pryor seeking relief under §§ 523 and 727 on the grounds of fraud

and embezzlement. Pryor filed his answer pro se. As a sanction

for Pryor's failure to appear at a status conference and comply

with RW's discovery requests, the bankruptcy court struck his

answer and entered a default. 

RW then moved for a default judgment, supported with exhibits

and an extensive declaration from Ronald Wilson. RW sought entry

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of a $997,988.45 nondischargeable fraud judgment against Pryor. 

After a prove-up hearing on June 30, 2010, the bankruptcy court

entered the RW Judgment for the requested amount on July 19, 2010. 

Pryor appealed. The Panel affirmed the RW Judgment on the

§ 523(a)(2)(A) claim, but vacated the § 727 rulings and remanded

the matter to the bankruptcy court to enter an amended judgment.6

Pryor appealed. The Ninth Circuit affirmed on October 23, 2013. 

It denied Pryor's request for rehearing on February 21, 2014, and

issued a mandate on May 5, 2014. 

B. Pryor's motions to set aside the RW Judgment 

Meanwhile, Pryor filed his first motion to set aside the

RW Judgment on March 31, 2014, seeking relief under Civil

Rule 60(b)(1) and (2). The gist of Pryor's motion was that RW had

committed "extrinsic fraud" against him and the bankruptcy court

by not disclosing that RW lacked standing to sue him, because RW

had sold the property and assigned all of its rights to the

townhouse project to 704 Market, LLC pursuant to the RECPA and

Assumption Agreement. Pryor further complained that because RW

lacked standing, its filed "Proof of Claim" was a fraud

perpetrated against him and on the bankruptcy court. Pryor made

such assertions even though RW's promise to repay the loan and the

Wilsons' guarantees remained in effect.

Pryor contended that his newly discovered evidence proving

that RW lacked standing and owed him money was not available at

the time of the prove-up hearing, because "all records" were being

withheld from IndyMac Bank due to its seizure by the FDIC. Had

6 The bankruptcy court entered an amended judgment on

September 13, 2011.

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this evidence been before the bankruptcy court at the prove-up

hearing, argued Pryor, the court would not have entered the

RW Judgment. Pryor's evidence included a February 20, 2006

promissory note for $407,450 executed by RW in favor of Acres,

Inc., another entity owned by Pryor, and the RECPA and the

Assumption Agreement, which showed that RW had sold the property

and its rights to the townhouse project to 704 Market, LLC in

March 2007. 

RW objected to Pryor's motion on the basis that it had not

been filed within one year of the RW Judgment and was therefore

untimely. 

In his reply, Pryor contended the motion was not untimely

based on the Ninth Circuit's mandate dated May 15, 2014. He also

attempted to assert a new claim for relief under Civil

Rule 60(d)(1) and (3) for "fraud upon the court." 

The bankruptcy court denied Pryor's first motion to set aside

the RW Judgment on June 30, 2014. The order (drafted by Ronald

Wilson) fails to state the basis for why the motion was denied,

but according to the transcript from the hearing (which Pryor has

provided), the bankruptcy court denied it because Pryor had not

shown any evidence of "fraud upon the court" and because it was

untimely. The Panel dismissed Pryor's appeal of that order on

July 21, 2014, as untimely. 

In a related adversary proceeding involving another creditor,

ITEC Financial, Inc., Pryor had also sought relief from ITEC's

nondischargeable fraud judgment under Civil Rule 60(b) and (d)

after that judgment had been affirmed by this Panel and the Ninth

Circuit. During the course of that proceeding, the bankruptcy

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court entered two orders on July 7, 2014, declaring Pryor a

vexatious litigant: one in the ITEC adversary, the other in

Pryor's main bankruptcy case. Pryor was ordered to seek court 

permission before filing any further documents. Pryor did not

appeal the vexatious litigant orders. 

Not deterred by the bankruptcy court's previous ruling or the

vexatious litigant orders, Pryor filed his second motion to set

aside the RW Judgment on October 23, 2014, this time seeking

relief under Civil Rule 60(d)(1) and (3). Although titled under a

different subsection of Civil Rule 60, Pryor's second motion

reiterated the same arguments as in the first motion, contending

that RW had committed fraud upon him and the bankruptcy court and

that his newly discovered evidence would prove it. Pryor's motion

indicated that he did not want a hearing.

The next day, the bankruptcy court entered an order denying

Pryor's second motion to set aside the RW Judgment for failure to

show good cause ("Order"). The Order reads as follows: 

This Motion is the latest in a lengthy series of baseless

motions seeking reconsideration of this Court's rulings. 

The Motion is also in direct violation of this Court's

"Order Determining That the Debtor Is a Vexatious

Litigant," entered in this chapter 7 case on July 7,

2014. In addition, the debtor filed the Motion without

first filing a motion and obtaining a court order for

approval to file any additional documents in this case,

in violation of the July 7, 2014 Order.

The Court has considered the Motion and all accompanying

exhibits and will deny the Motion because no good cause

has been shown for the relief sought therein. In

addition, the Court has determined that it would deny the

Motion for this reason even if the debtor had first filed

an application and obtained approval to file it, as

required by the July 7, 2014 Order.

Adv. No. 09-2291, dkt. no. 86. Pryor timely appealed the Order.

///

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II. JURISDICTION

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

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

§ 158(b).

III. ISSUE

Did the bankruptcy court abuse its discretion when it denied

Pryor's second motion to set aside the RW Judgment under Civil

Rule 60(d)(1) and (3)?

IV. STANDARD OF REVIEW

We review denials of motions for relief under Civil Rule 60

for an abuse of discretion. See United States v. Stonehill,

660 F.3d 415, 443 (9th Cir. 2011). Accordingly, we reverse where

the bankruptcy court applied an incorrect legal rule or where its

application of the law to the facts was illogical, implausible or

without support in inferences that may be drawn from the record. 

Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253, 1258 (9th Cir.

2010)(citing United States v. Hinkson, 585 F.3d 1247, 1262 (9th

Cir. 2009)(en banc)).

V. DISCUSSION

The only substantive argument we discern from Pryor's brief

is that: RW committed fraud against him and on the bankruptcy

court; and the bankruptcy court abused its discretion by refusing

to hear the new evidence establishing RW’s lack of standing to

file the dischargeability action and the "Proof of Claim." 

According to the Order, the bankruptcy court considered the

extensive documents Pryor submitted, but determined that he had

failed to show good cause to grant his second motion to set aside

the RW Judgment. In other words, the bankruptcy court determined

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that Pryor had not established fraud on the court. Leaving aside

that this issue had already been decided against Pryor in the

order denying his first motion to set aside the RW Judgment and

that ruling was not timely appealed, we address the merits of this

appeal.

A. The bankruptcy court did not abuse its discretion in denying

Pryor's second motion to set aside the RW Judgment under

Civil Rule 60(d)(1) and (3).

1. No relief was available under Civil Rule 60(d)(1). 

Although Pryor sought relief under Civil Rule 60(d)(1) and

(3), incorporated by Rule 9024, no basis ever existed for relief

under (d)(1). Civil Rule 60(d)(1) provides that the court may

"entertain an independent action to relieve a party from a

judgment, order, or proceeding." 

For a movant to seek equitable relief through independent

actions, the movant must: (1) show that no other remedy is

available or adequate; (2) demonstrate that movants' own fault,

neglect or carelessness did not create the situation for which

they seek equitable relief; and (3) establish a recognized ground

— such as fraud, accident or mistake — for the equitable relief. 

Campaniello Imports, Ltd. v. Saporiti Italia S.p.A., 117 F.3d 655,

662 (2d. Cir. 1997). The movant must also establish that a "grave

miscarriage of justice" will be done if the underlying judgment is

not set aside. United States v. Beggerly, 524 U.S. 38, 47 (1998). 

Pryor failed to meet virtually all of these requirements. 

First, another remedy was available. Pryor had previously moved

for the same relief in his first motion to set aside the

RW Judgment under Civil Rule 60(b), which was denied and

unsuccessfully appealed. His second motion was nothing more than

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a restatement of the same arguments and a "Hail Mary" reference to

Civil Rule 60(d). Furthermore, Pryor's failure to comply with the

rules of discovery and the bankruptcy court's pretrial schedule is

what created the default and, ultimately, the RW Judgment. Thus,

he is not without fault. Finally, Pryor's second motion failed to

establish the "grave miscarriage of justice" that would occur if

he were not allowed to file an independent action against RW for

its alleged fraud committed in the underlying dischargeability

action. 

2. Pryor failed to establish fraud on the court. 

Civil Rule 60(d)(3) allows a court to "set aside a judgment

for fraud on the court." Such fraud "embraces only that species

of fraud which does or attempts to, defile the court itself, or is

a fraud perpetrated by officers of the court so that the judicial

machinery can not perform in the usual manner its impartial task

of adjudging cases that are presented for adjudication." Latshaw

v. Trainer Wortham & Co., 452 F.3d 1097, 1104 (9th Cir. 2006)

(quotations and citations omitted)(applying Civil Rule 60(b)). 

"Fraud on the court 'should be read narrowly, in the interest of

preserving the finality of judgments.'" Id. (quoting Toscano v.

Comm'r, 441 F.2d 930, 934 (9th Cir. 1971)). 

The Ninth Circuit places a high burden on a plaintiff seeking

relief from a judgment based on fraud on the court. Id. See

Stonehill, 660 F.3d at 443 (burden of proof is a "clear and

convincing" standard). The type of fraud asserted here must

involve egregious conduct, such as an unconscionable plan or

scheme designed to improperly influence the court in its decision. 

Latshaw, 452 F.3d at 1104 (citing Abatti v. Comm'r, 859 F.2d 115,

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118 (9th Cir. 1988); Toscano, 441 F.2d at 934)). "Mere

nondisclosure of evidence is typically not enough to constitute

fraud on the court, and 'perjury by a party or witness, by itself,

is not normally fraud on the court.'" Stonehill, 660 F.3d at 444

(quoting Levander v. Prober (In re Levander), 180 F.3d 1114, 1119

(9th Cir. 1999)).

Pryor argued that RW had committed fraud on the court by

failing to disclose that it lacked standing to bring any claims

against him in the nondischargeability action, based on the fact

that RW had sold the property and its rights to the townhouse

project to 704 Market, LLC, Pryor's wholly-owned entity. Pryor

argued that his newly discovered evidence of the February 20, 2006

promissory note from RW to Acres, Inc. and the RECPA and

Assumption Agreement, which were not available at the time of the

prove-up hearing, proved RW's lack of standing. Given RW's

promise to repay the loan and that the Wilsons' guarantees

remained in effect, Pryor’s argument is without merit. 

We agree with the bankruptcy court that Pryor did not meet

his high burden here. RW's failure to disclose its alleged lack

of standing, even if true, is not enough to constitute fraud on

the court. Further, two of the documents Pryor complains of — the

RECPA and the Assumption Agreement — were submitted by RW in

support of its motion for default judgment. As for the

February 20, 2006 promissory note, it is not clear if that

document was presented to the bankruptcy court prior to the RW

Judgment. However, it defies logic that IndyMac Bank, who was not

a party to the 2006 note, was in sole control of that document and

prevented Pryor from obtaining it for his defense at the prove-up

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hearing in June 2010. Pryor never presented any evidence that he

subpoenaed IndyMac to produce this (or any other) document he

claims IndyMac controlled but was refused. Moreover, considering

that the 2006 note was executed four years before the prove-up

hearing in 2010, it was certainly evidence available to Pryor at

the time. 

We also reject Pryor's argument that only he, not RW, could

file the "Proof of Claim." In support, Pryor cites to

Rule 3001(e), which governs proofs of claim involving transferred

claims. RW never filed a proof of claim in Pryor's chapter 7

bankruptcy case. Further, Pryor's case was a "no asset" case, so

nothing would have been paid on any such claim had one been filed. 

We also correct Pryor's contention that the bankruptcy

court's vexatious litigant order was entered only in the ITEC

adversary proceeding, thereby not prohibiting him from filing the

second motion to set aside the RW Judgment. On July 7, 2014, the

bankruptcy court also entered an identical vexatious litigant

order in Pryor's main bankruptcy case, which prohibited him from

filing any documents without first obtaining court approval. 

Nonetheless, Pryor was not prejudiced; the bankruptcy court

considered the merits of his second motion to set aside the RW

Judgment despite the order and his failure to obtain prior

approval. 

With his motions to set aside the RW Judgment, Pryor has

repeatedly attempted to litigate RW's claims against him, which he

failed to litigate in the first instance, contending that he

complied with the parties' agreement(s) and that RW and the

Wilsons defrauded him. We see no abuse of discretion by the

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bankruptcy court in denying his second motion to set aside the RW

Judgment. 

VI. CONCLUSION

For the foregoing reasons, we AFFIRM.

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