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FILED

MAR 21 2016

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NOT FOR PUBLICATION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 Nos. NV-14-1583-KiDJu

) NV-15-1071-KiDJu

PATRICIA ROBERTA LINDSEY, ) (Related appeals)

)

Debtor. ) Bk. No. 14-11448-BTB

 )

) Adv. No. 14-1116-BTB

MICHELLE DARLENE WILSON, )

)

Appellant, )

)

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

)

DESERT REALTY, INC., )

)

Appellee. )

______________________________)

Submitted Without Oral Argument

on February 18, 20162

Filed - March 21, 2016

Appeal from the United States Bankruptcy Court

for the District of Nevada

Honorable Bruce T. Beesley, Chief Bankruptcy Judge, Presiding

 

Appearances: Appellant Michelle Darlene Wilson, pro se, on

brief; John T. Wendlend of Weil & Drage APC on

brief for appellee Desert Realty, Inc.

 

Before: KIRSCHER, DUNN and JURY, Bankruptcy Judges.

FILED

MAR 21 2016

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

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 The Panel entered orders on August 21 and October 14, 2015,

ordering that these related appeals be submitted without oral

argument in accordance with Rule 8019.
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Appellant Michelle Darlene Wilson appeals two orders of the

bankruptcy court: (1) an order dismissing her complaint against

appellee Desert Realty, Inc. ("DRI") for damages concerning DRI's

alleged violation of the codebtor stay under § 1301;3 and (2) an

order awarding DRI its attorney's fees and costs incurred in

defending against Wilson's complaint. We VACATE the order

dismissing the complaint, VACATE the order awarding attorney's

fees and costs, and REMAND these matters to the bankruptcy court

for further proceedings consistent with this decision.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Events leading to Wilson's complaint

On November 15, 2013, Wilson and her sister, debtor Patricia

Roberta Lindsey, entered into a lease agreement with DRI for an

apartment in Las Vegas. When Wilson and Lindsey failed to pay

rent and additional security deposits due on March 1, 2014, DRI

proceeded with eviction proceedings against the sisters. DRI's

efforts were thwarted when Lindsey filed a skeletal chapter 13

bankruptcy petition on March 5, 2014 (the "Lindsey bankruptcy"). 

On March 7, 2014, DRI moved for relief from stay in the

Lindsey bankruptcy to continue with its eviction proceedings in

state court. Although DRI references Wilson and Lindsey as

tenants in its motion, further established by a copy of the lease

attached as an exhibit to the motion, it only seeks relief from

the automatic stay as to Lindsey. DRI did not seek relief from

the co-debtor stay as to Wilson. Lindsey then filed her schedules

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.”

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on March 31, 2014. In her Schedules G and H, Lindsey listed

Wilson as a codebtor on the apartment lease. 

Lindsey opposed DRI's motion for relief from stay. Lindsey

argued that Wilson, as a codebtor on the lease, needed to be named

as a party to the motion and contended that the motion should be

denied because DRI had failed to request relief from the codebtor

stay to proceed with its eviction. 

At the hearing on April 15, 2014, conducted by a bankruptcy

judge not assigned to the case, Lindsey again raised the issue of

Wilson not being named as a party to the motion as a codebtor on

the lease, which the bankruptcy court did not address but appeared

to reject. After further discussion with Lindsey, who said she

intended to pay the March lease arrearage though her chapter 13

plan and to pay her April and May rents directly to DRI, the

bankruptcy court issued a bench order that if Lindsey failed to

pay the April 2014 rent to DRI by April 30, 2014, DRI could submit

an order terminating the automatic stay. 

Lindsey's check for the April rent was returned for

insufficient funds. On June 2, 2014, the bankruptcy judge

assigned to the Lindsey bankruptcy entered an order, prepared by

DRI’s counsel and consistent with the April 15, 2014 bench order,

terminating the automatic stay "as to [Lindsey]" and allowing DRI

to "go forward with all remedies to which it is entitled, to take

possession of [the apartment], using state court proceedings to do

so, if necessary." 

DRI then served Wilson and Lindsey with a 5-day notice to pay

rent or quit. The sisters responded, contending the March rent

and partial security deposit were being paid through Lindsey's

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chapter 13 plan. The sisters further contended that a codebtor

stay still existed for Wilson, which had not been terminated. 

The sisters and DRI appeared at the hearing on the eviction

matter in state court on June 19, 2014. Although the parties

dispute what was said about the status of the Lindsey bankruptcy

and whether or not any codebtor stay as to Wilson remained in

effect, the state court ruled in favor of DRI and entered the

eviction order. 

On appeal in state court, Wilson and Lindsey contended the

eviction order violated the codebtor stay under § 1301 and was

therefore void. The state court denied the sisters' appeal of the

eviction order on July 8, 2014, on the basis that "[n]o valid

grounds for an appeal have been presented." 

Faced with immediate eviction, Wilson then filed her own

chapter 13 bankruptcy case on July 8, 2014, Case No. 14-14674. 

B. Wilson's adversary proceeding against DRI filed in Lindsey's

bankruptcy

 Wilson filed a complaint against DRI in connection with

Lindsey's bankruptcy, seeking damages under § 362 and § 105 for

DRI's alleged willful violation of the codebtor stay under § 1301

(Adv. No. 14-1116).4 

4 Before DRI responded to the complaint, a hearing was held

in Wilson's bankruptcy case on August 6, 2014, respecting her

30-day certification request under § 362(l). There, Wilson raised

the codebtor stay issue, contending the stay relief order entered

on June 2 applied only to Lindsey. After Wilson said she had

filed two adversary complaints respecting DRI's alleged violation

of the codebtor stay with its eviction order (one in the Lindsey

bankruptcy and the other in her own bankruptcy case, Adv.

No. 14-1120), the bankruptcy court reviewed the June 2 order. The

court noted that the stay had been terminated as to Lindsey on

(continued...)

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1. DRI's motion to dismiss

DRI moved to dismiss Wilson's adversary complaint filed in

the Lindsey bankruptcy under Civil Rule 12(b)(6)("Motion to

Dismiss"). At the start, DRI noted Wilson's many bankruptcy

filings — 12 cases filed in the District of Nevada since 1993. 

DRI contended that her complaint, which sought relief not intended

for her protection or benefit, combined with her demonstrated

abuse of the bankruptcy system as a serial filer, illustrated the

complaint's frivolous nature and the bad faith behind filing it. 

DRI contended that no stay relief was necessary as to Wilson

as codebtor in Lindsey's bankruptcy, because the codebtor stay

under § 1301 is intended to benefit the debtor, not a non-debtor;

any protection of the codebtor is merely incidental. In any

event, the bankruptcy court had already considered Lindsey's

codebtor stay argument, rejected it and entered the stay relief

order against Lindsey on June 2, which DRI argued terminated the

codebtor stay as to Wilson. DRI contended Wilson could not have

any damage claim for a stay violation when DRI had authority to

continue with its eviction proceedings; thus, her complaint should

be dismissed for failure to state a claim for relief. 

Alternatively, in the event the bankruptcy court determined

the codebtor stay was not terminated in the June 2 order, DRI

contended the "balance of the equities" favored retroactive

4(...continued)

June 2, but when Wilson inquired whether the "stay" had been

terminated as to her, the court responded, "[i]t is not currently

terminated as to you." The court then told Wilson that if she

failed to make the rent payments, the automatic stay would

terminate immediately upon DRI submitting an order stating that

the payments were not received.

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annulment of the stay. DRI contended that even if the codebtor

stay remained in effect at the time it obtained the eviction

order, it was not liable for damages, as DRI had a good faith

belief that the June 2 order terminated all stays and allowed it

to proceed with the eviction. 

Finally, DRI contended that even if Wilson's allegations were

true, she could not prove damages. DRI argued that § 362 is

limited to collection activities against the debtor, not those who

are liable on the debt with the debtor but who have not sought

bankruptcy protection. Therefore, Wilson was not entitled to

damages under § 362. Further, argued DRI, unlike § 362, § 1301

contained no provision for awarding damages. 

The notice DRI filed and served on Wilson on August 27, 2014,

for the Motion to Dismiss indicated a hearing was set for

October 2, 2014, and that any opposition had to be filed and

served not later than fourteen days preceding the hearing per

Local Rule 9014(d)(1). DRI's notice warned that if a written

opposition was not timely filed and served, the court could refuse

to allow Wilson to speak at the hearing or rule against her

without formally calling the matter. 

2. Wilson's opposition to the Motion to Dismiss

Wilson filed her untimely opposition to DRI's Motion to

Dismiss one day before the hearing. Without addressing the merits

of the arguments raised by DRI, Wilson contended the motion should

be denied for DRI's alleged violation of a variety of local rules,

including 5004(a)(b)(c), 7005(a), 7010(a)(b), 7015(a)(b), 7016,

7056 and 9014(b)(1).

/ / /

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3. Hearing and ruling on the Motion to Dismiss

Wilson and DRI appeared for the October 2, 2014 hearing on

the Motion to Dismiss. When the court asked why she had filed her

opposition so late, Wilson responded that it was because she had

received only some of DRI's papers, DRI's statement of

nonopposition contained incorrect dates and DRI had failed to make

its "initial disclosures" required under Local Rule 5004. Wilson

claimed she had not received DRI's notice of the motion and

hearing filed on August 27, 2014, at her residence of record in

Henderson, Nevada. Wilson did admit, however, that she regularly

received mail at the Henderson address. Counsel for DRI confirmed

that the notice was sent to Wilson at the Henderson address based

on a conversation with staff and the filed certificate of service.

Convinced Wilson received DRI's notice, the bankruptcy court

allowed DRI to proceed with its argument. 

DRI's counsel began by noting that on August 13, 2012, in

Wilson's bankruptcy case no. 12-18817, the instant judge had found

Wilson to be a serial filer, engaging in efforts to hinder and

delay an individual's ability to seek eviction and remedies

available in state court. Counsel then proceeded to reiterate the

history of the Lindsey bankruptcy, the stay relief granted on

June 2 and the parties' eviction litigation in state court. 

Counsel contended that based on Lindsey's codebtor argument being

raised and rejected at the April 15, 2014 hearing, and the June 2

order granting DRI relief from stay, Wilson's adversary complaint

should be dismissed; the stay violation issues of which she

complained had already been resolved against her. In addition,

counsel argued that Wilson could not prove any damages.

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Finally, DRI’s counsel noted that Wilson would try to argue

the Motion to Dismiss should be treated as one for summary

judgment. However, counsel contended that because Wilson had

attached over 100 pages of documents to her complaint and

incorporated these documents as part of her factual and legal

averments against DRI, DRI could rely upon those averments to

establish that her claim had no basis and the motion still could

be treated as one under Civil Rule 12(b)(6).

When Wilson tried to speak, the bankruptcy court told her to

"close her binder" and informed Wilson that it was not going to

consider her argument based on her late-filed opposition and its

previous finding in case no. 12-18817 that she had filed documents

for the sole purpose of delaying eviction. The court then gave

its oral ruling in favor of DRI. It found Wilson was engaging in

the same delay tactics to prevent DRI from evicting her from the

property. In addition, the court found that it had already ruled

on Wilson's codebtor status in the June 2 order, noting that the

debtor is the intended beneficiary of the codebtor stay under

§ 1301, not the codebtor. However, to the extent it had not ruled

on the codebtor stay, in the interest of equity the court was

retroactively annulling the stay to the April 15, 2014 hearing in

the Lindsey bankruptcy. 

An order granting DRI's Motion to Dismiss and dismissing

Wilson's adversary complaint filed in the Lindsey bankruptcy was

entered on December 2, 2014 ("Dismissal Order"). The Dismissal

Order did not specify whether it had been decided under Civil

Rule 12(b)(6) or 56. Wilson timely appealed the Dismissal Order.

/ / /

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4. DRI's motion for attorney's fees and costs 

DRI then moved for attorney's fees and costs incurred in

defending against Wilson's adversary complaint filed in the

Lindsey bankruptcy ("Fee Motion"). DRI contended that because

Wilson's complaint was filed in bad faith, as found by the

bankruptcy court, it was entitled to recover its attorney's fees

and costs under Civil Rule 54 and § 105(a). DRI argued that the

bankruptcy court could award fees as a sanction under § 105 based

on the court's finding that Wilson is a vexatious litigant and

serial filer. In addition, DRI contended it was entitled to costs

under Civil Rule 54 as the prevailing party.

As required by Local Rule 54-16, DRI's counsel filed a

statement of fees and supporting declaration. Counsel stated that

52.6 hours were expended in defending against Wilson's frivolous

complaint. However, the normal hourly rate billed for attorneys

had been reduced from $325 and $295/hour to $170 and $150/hour. 

DRI requested that it be awarded what it contended were extremely

reasonable attorney's fees of $8,529 and $86.35 in costs. Counsel

had deducted an additional 14.4 hours that were spent defending

against the adversary complaint Wilson had filed in her own

bankruptcy case against DRI (Adv. No. 14-1120). 

5. Wilson's opposition to the Fee Motion and DRI's reply

Wilson timely opposed the Fee Motion, first contending the

bankruptcy court lacked jurisdiction to decide the matter due to

her appeal of the Dismissal Order. Wilson further contended that

DRI's fee request had already been "asked and answered" at the

hearings on October 2, 2014, and October 14, 2014 (an unrelated

hearing regarding Wilson's adversary complaint filed in her own

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case). Wilson contended the bankruptcy court had previously

denied "fees and sanctions" to DRI, "finding that no bad faith

existed" as to her adversary complaint. Finally, Wilson argued

that DRI had filed the Fee Motion in retaliation for her appeal of

the Dismissal Order. Wilson did not contest the amount of the

fees requested by DRI or contend they were unreasonable. 

DRI disputed Wilson's contention that the bankruptcy court

was divested of jurisdiction over the Fee Motion due to the appeal

of the Dismissal Order. DRI also disputed Wilson's contention

that the issue of DRI's fees and costs had already been decided. 

No findings were issued at the October 2 hearing or in the

Dismissal Order precluding DRI from seeking its attorney's fees

and costs. Finally, DRI contended that Wilson's "retaliation"

argument was nothing more than a personal attack against DRI and

lacked any evidentiary basis. DRI argued it was entitled to

recover attorney's fees and costs under Civil Rule 54 as the

prevailing party and based on its request for sanctions.

6. Hearing and ruling on the Fee Motion

On January 21, 2015, the clerk issued a notice to DRI and

Wilson that the January 22 hearing for the Fee Motion had been

rescheduled for February 3, 2015. 

The hearing on the Fee Motion proceeded on February 3. DRI

appeared but Wilson did not. At the start, counsel for DRI

expressed concern that Wilson was not at the hearing. After

determining Wilson was served with the clerk's notice of the

rescheduled hearing, the court noted for the record that Wilson

did receive notice, that she had filed an opposition to the Fee

Motion and that she was incorrect in arguing the bankruptcy court

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lacked jurisdiction to award attorney's fees and costs based on

the appeal of the Dismissal Order. The court agreed with DRI that

it had not previously determined DRI was precluded from recovering

attorney's fees and costs in connection with Wilson's adversary

complaint filed in the Lindsey bankruptcy. Noting that Wilson had

failed to challenge the reasonableness of DRI's attorney's fees,

the court found the fee request to be "extremely reasonable" and

that DRI's request was "appropriate given the manner in which

Ms. Wilson ha[d] proceeded in the adversary and in other matters

in this court." Hr'g Tr. (Feb. 3, 2015) 11:7-13. Accordingly,

the court granted the Fee Motion and awarded fees and costs in the

amount requested. 

The bankruptcy court entered an order granting the Fee Motion

on February 12, 2015 ("Fee Order"). The Fee Order did not

articulate under what legal authority the court was awarding DRI

its fees and costs. Wilson timely appealed the Fee Order. 

II. JURISDICTION

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

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

III. ISSUES

1. Did the bankruptcy court err in granting the Motion to 

Dismiss?

2. Did the bankruptcy court abuse its discretion in granting the 

Fee Motion? 

IV. STANDARDS OF REVIEW

The bankruptcy court's application of the rules of procedure

is reviewed de novo. Ruvacalba v. Munoz (In re Munoz), 287 B.R.

546, 550 (9th Cir. BAP 2002). Likewise, whether a party's due

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process rights were violated is a question of law we review de

novo. Miller v. Cardinale (In re Deville), 280 B.R. 483, 492 (9th

Cir. BAP 2002). We review the bankruptcy court's assessment of

sanctions for an abuse of discretion. Id. 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

A. The bankruptcy court erred in granting the Motion to Dismiss.

1. The motion should have been converted to one for summary

judgment. 

Among other arguments, Wilson contends the bankruptcy court

committed reversible error when it considered evidence raised by

DRI for the first time at the hearing on the Motion to Dismiss and

relied on that evidence without giving her an opportunity to

dispute it, thereby denying her due process rights. We agree. 

DRI requested relief under Civil Rule 12(b)(6), made

applicable here by Rule 7012. In opposition to the Motion to

Dismiss, Wilson raised the argument that DRI's motion had failed

to comply with summary judgment notice requirements under Local

Rule 7056. Counsel for DRI at the October 2 hearing stated that

Wilson's position was that the Motion to Dismiss should be treated

as a motion for summary judgment. However, counsel contended that

because Wilson had attached over 100 pages of documents to her

complaint and relied on these documents for her claim against DRI,

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he could rely on those same documents to establish that Wilson's

claim had no basis and yet the motion could still be treated as

one under Civil Rule 12(b)(6). 

"A federal court must convert a Civil Rule 12(b)(6) motion to

one for summary judgment when the parties submit, and the court

does not reject, material beyond the pleadings." Fernandez v. GE

Capital Mortg. Servs., Inc. (In re Fernandez), 227 B.R. 174, 179

(9th Cir. BAP 1998)(citing Parrino v. FHP, Inc., 146 F.3d 699, 706

n.4 (9th Cir. 1998); Cunningham v. Rothery (In re Rothery),

143 F.3d 546 (9th Cir. 1998)); Civil Rule 12(d).5 "Material

outside the pleadings includes affidavits, affirmative defenses,

and judicial notice of the record or transcripts from prior court

proceedings." Id. at 179-80 (citing Tanner v. Heise, 879 F.2d

572, 577 (9th Cir. 1989)(affidavits); United Parcel Serv., Inc. v.

Cal. Public Util. Comm'n, 839 F. Supp. 702 (N.D. Cal. 1993), rev'd

on other grounds, 77 F.3d 1178 (9th Cir. 1996)(affirmative

defense);6 Jacobson v. AEG Capital Corp., 50 F.3d 1493, 1496 (9th

Cir. 1995) (judicial notice of defendant's prior bankruptcy

case)["In considering AEG's motion to dismiss, the district court

5 Civil Rule 12(d) provides:

If, on a motion under Rule 12(b)(6) or 12(c), matters outside

the pleadings are presented to and not excluded by the court,

the motion must be treated as one for summary judgment under

Rule 56. All parties must be given a reasonable opportunity

to present all the material that is pertinent to the motion.

6 We note that when an affirmative defense "is obvious on the

face of a complaint" the defendant can raise that defense in a

motion to dismiss without the motion being converted to summary

judgment. Rivera v. Peri & Sons Farms, Inc., 735 F.3d 892, 902

(9th Cir. 2013). However, that rule is generally reserved for

defenses such as statute of limitations. Id.

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took judicial notice of the extensive records and transcripts from

the prior bankruptcy proceedings. We therefore review the

district court's dismissal as an order granting summary

judgment."]). 

Although the Dismissal Order, drafted by counsel for DRI and

adopted wholesale by the bankruptcy court, is silent at to what

rule the court relied upon to dismiss Wilson's complaint, it

appears to have done so under Civil Rule 12(b)(6). This ruling

under Civil Rule 12(b)(6) constituted error. 

Two factors suggest that conversion to Civil Rule 56,

applicable here via Rule 7056, was appropriate in this case. 

First, affirmative defenses were raised by DRI and relied upon by

the bankruptcy court to decide the motion. DRI argued it had not

violated the codebtor stay as to Wilson because that legal issue

had already been decided against her in the June 2 stay relief

order. The bankruptcy court agreed and found in the Dismissal

Order that the codebtor stay was in fact terminated in the June 2

order. The legal effect of the stay relief order "is a conclusion

of law, not fact, and a 12(b)(6) motion does not ask the court to

find law, but rather to find if, as a matter of law, 'it appears

beyond doubt that the plaintiff can prove no set of facts in

support of his claim which would entitle him to relief.'" 

In re Fernandez, 227 B.R. at 179 (citations omitted). 

Second, the bankruptcy court took judicial notice of the

record in one of Wilson's prior bankruptcy cases and relied

heavily on a finding made in that case for its decision to

dismiss. In addition to considering the number of bankruptcy

cases Wilson has filed, the bankruptcy court took judicial notice

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of an in rem order it had entered in case no. 12-18817, where it

found Wilson to be a serial filer, engaging in efforts to hinder

and delay a former landlord's ability to evict her.

Thus, despite Wilson's many documents attached to her

complaint, which the bankruptcy court could consider without

converting the Motion to Dismiss, the court additionally

considered and relied upon DRI's affirmative defenses and took

judicial notice of matters from prior bankruptcy proceedings,

which should have converted the Motion to Dismiss to one for

summary judgment. Lucas v. Dep't of Corrs., 66 F.3d 245, 248 (9th

Cir. 1995); Gibb v. Scott, 958 F.2d 814, 816-17 (8th Cir. 1992)

(if matters outside the complaint are presented, and the court

relies on those evidentiary materials to decide the motion, it

must resolve the motion according to the summary judgment standard

of Civil Rule 56); In re Fernandez, 227 B.R. at 180.7 The

consideration of materials beyond the pleadings and reliance on

those materials for a decision to dismiss raises the issue of

whether Wilson received proper notice under Civil Rule 12(d) of

the conversion from a Civil Rule 12(b)(6) motion to a Civil

Rule 56 motion. 

2. The bankruptcy court failed to provide Wilson with

proper notice of the conversion or a full and fair

opportunity to defend.

The Ninth Circuit does not require strict adherence to formal

7 Even if the bankruptcy court was not required to convert

the Motion to Dismiss into one for summary judgment, the scope of

its determination was limited to the face of the complaint and the

attached documents whose authenticity was not in question. It

erred by engaging in fact finding and not excluding but, instead,

weighing evidence extrinsic to the complaint and drawing

inferences against Wilson.

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notice requirements when converting a Civil Rule 12(b)(6) motion

into a motion for summary judgment. In re Rothery, 143 F.3d at

549; In re Fernandez, 227 B.R. at 180. It will suffice if the

nonmovant "is 'fairly apprised' before the hearing that the court

will look beyond the pleadings." In re Rothery, 143 F.3d at 549

(citing Mayer v. Wedgewood Neighborhood Coal., 707 F.2d 1020, 1021

(9th Cir. 1983)). In other words, the court "need only apprise

the parties that it will look beyond the pleadings to extrinsic

evidence and give them an opportunity to supplement the record." 

San Pedro Hotel Co. v. City of L.A., 159 F.3d 470, 477 (9th Cir.

1998). Additionally, a bankruptcy court may grant summary

judgment without advance notice "if the losing party has had a

'full and fair opportunity to ventilate the issues involved in the

motion.'" In re Rothery, 143 F.3d at 549 (citing Maitland v.

Mitchell (In re Harris Pine Mills), 44 F.3d 1431, 1439 (9th Cir.

1995)). 

The notice requirement that a motion to dismiss is being

treated as one for summary judgment, however, is heightened for

pro se plaintiffs. A court "must inform a plaintiff who is

proceeding pro se that it is considering more than the pleadings,

and must give the plaintiff 'a reasonable opportunity to present

all material made pertinent to such a motion by [Civil] Rule 56.'" 

Allen v. Figueroa, 1995 WL 314704, at *6 (9th Cir. 1995)(quoting

Garaux v. Pulley, 739 F.2d 437, 438-39 (9th Cir. 1984)). 

Here, Wilson was not fairly apprised before the hearing that

the bankruptcy court might dispose of her complaint by summary

judgment, nor did she have a full and fair opportunity to

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ventilate the issues.8 Although DRI raised the issue of Wilson's

many bankruptcy filings in the Motion to Dismiss, it did not raise

the issue of the court's "serial filer" finding made in case

no. 12-18817 until the hearing on October 2. Because her

opposition had been filed late and because the bankruptcy court

had previously found Wilson to be a serial filer who had engaged

in delay tactics with another landlord trying to evict her, the

court refused to let Wilson speak at the hearing. 

We realize that because her opposition to the Motion to

Dismiss was filed late, the court was authorized to not consider

it and not allow her to speak at the hearing. However, because

DRI had introduced new evidence at the hearing, the bankruptcy

court erred by not giving Wilson any opportunity to defend against

it before ruling. The court clearly relied upon this evidence to

find that Wilson was engaging in the same delay tactics as she had

before, to therefore conclude, in part, that her claims against

DRI lacked any merit. Perhaps Wilson has no defense to the prior

order. Nonetheless, procedural requirements and due process must

be observed.

B. The bankruptcy court abused its discretion in granting the

Fee Motion.

 

Wilson raises a variety of arguments for why the bankruptcy

court abused its discretion in awarding DRI its attorney's fees

and costs, which we address in turn. 

Wilson is incorrect in arguing the bankruptcy court lacked

8 We further note that for a summary judgment motion, DRI was

required to provide Wilson with 42 days notice prior to the

hearing. Local Rule 7056(f). Wilson received only 36 days

notice.

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jurisdiction to enter the Fee Order in light of her appeal of the

Dismissal Order. Even when a notice of appeal has been filed, the

trial court retains jurisdiction to rule upon a request for

attorney's fees. League of Woman Voters of Cal. v. F.C.C.,

751 F.2d 986, 990 (9th Cir. 1985) (citing Masalosalo v. Stonewall

Ins. Co., 718 F.2d 955, 956-57 (9th Cir. 1983)); Hill & Sandford,

LLP v. Mirzai (In re Mirzai), 236 B.R. 8, 10 (9th Cir. BAP 1999)

(despite the filing of a notice of appeal, the bankruptcy court

can "correct clerical errors, take steps to maintain the status

quo, take steps that aid in the appeal, award attorney's fees,

impose sanctions, and proceed with matters not involved in the

appeal"). 

We also reject Wilson's argument that the bankruptcy court

abused its discretion in awarding attorney's fees to DRI because

it had previously ruled that her complaint was not filed in bad

faith and had denied DRI's request for fees and costs. The

"complaint" Wilson is referring to is the one she filed in her own

bankruptcy case (Adv. No. 14-1120), and the related hearing where

the bankruptcy court made its "no bad faith" finding was held on

October 14, 2014. Neither that complaint nor that hearing is

relevant to her complaint at issue in this appeal. Further, the

bankruptcy court stated at the hearing on the Fee Motion and in

the Fee Order that it had made no prior ruling denying DRI its

fees and costs respecting Wilson's complaint filed in the Lindsey

bankruptcy. 

Wilson next contends the bankruptcy court abused its

discretion by holding the Fee Motion hearing on February 3 despite

being notified she was ill and unable to attend. Wilson contends

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she informed the court the morning of the hearing that she was

unable to appear due to illness. Nothing in the record

corroborates Wilson's story. Accordingly, she has not established

the bankruptcy court abused its discretion by conducting the

hearing despite her absence. Wilson fails to note the court did

consider her opposition and addressed her arguments on the record.

Finally, Wilson argues that the award of attorney's fees and

costs are not recoverable as a sanction because the bankruptcy

court did not make any ruling as to her bad faith in the Fee

Order. DRI contends that as the "prevailing party" the bankruptcy

court could award fees and costs to it under Rule 7054 or that,

alternatively, the court was allowed under Rule 7054 to award fees

as a sanction for Wilson's bad faith, and a finding that she is a

serial filer falls within that definition. 

The Fee Order fails to articulate what legal authority the

bankruptcy court relied upon for its award of attorney's fees and

costs to DRI. In the Fee Motion, DRI had requested fees and costs

under Civil Rule 54, Rule 7054 and § 105(a). Civil Rule 54 deals

with judgments, costs and attorney's fees. Civil Rule 54(a)-(c)

concern the form and content of judgments; Civil Rule 54(d)(1) and

(2) concern claims for costs and attorney's fees. Rule 7054,

applicable in adversary proceedings in bankruptcy, provides in

section (a) that "[Civil] Rule 54(a)-(c) . . . applies in

adversary proceedings." Rule 7054(b) addresses the allowance of

costs in adversary proceedings. 

DRI is incorrect that the bankruptcy court could award

attorney's fees under Civil Rule 54 or Rule 7054 because DRI was

the prevailing party or that the court had authority under

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Rule 7054 to award fees as a sanction for Wilson's bad faith. 

"[Civil] Rule 54(d)(2) creates a procedure but not a right to

recover attorney's fees . . . . [T]here must be another source of

authority for such an award." MRO Commc'ns, Inc. v. Am. Tel. &

Tel. Co., 197 F.3d 1276, 1280-81 (9th Cir. 1999). "The

requirement under [Civil] Rule 54(d)(2) of an independent source

of authority for an award of attorneys' fees gives effect to the

'American Rule' that each party must bear its own attorneys' fees

in the absence of a rule, statute or contract authorizing such an

award." Id. at 1281 (citation omitted). 

The only other statutory basis on which the bankruptcy court

could have awarded attorney's fees, which DRI raised in its Fee

Motion, is § 105(a). In any event, to award fees the bankruptcy

court relied strictly on its finding in the Dismissal Order that

Wilson was a serial filer who was again engaging in delay tactics

to avoid eviction to support its award for attorney's fees as a

sanction against Wilson. That finding never should have been made

for the reasons we discussed above. Therefore, without this

finding to support the fee award to DRI, the Fee Order cannot

stand with respect to the award of attorney's fees under § 105(a). 

The same would be true if the court relied on its inherent power

to sanction Wilson. However, as noted, we cannot determine on

what legal basis the bankruptcy court awarded fees as a sanction

against Wilson.

As for costs, DRI is correct that as the prevailing party it

could recover costs under Rule 7054(b). However, since DRI should

not have been the prevailing party for procedural reasons, the

cost award cannot stand on that basis either. To the extent costs

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were awarded under § 105(a), that award also fails because of the

lack of any finding to support it due to our vacatur of the

Dismissal Order. 

VI. CONCLUSION

Because the bankruptcy court did not provide Wilson with any

notice it was converting the Motion to Dismiss to one for summary

judgment or give her any meaningful opportunity to address new

evidence presented by DRI at the hearing before ruling against

her, we VACATE the Dismissal Order. We also VACATE the Fee Order

because the sanction of attorney's fees and costs is not supported

due to our vacatur of the Dismissal Order. We REMAND these

matters to the bankruptcy court for further proceedings consistent

with this decision.

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