Court Opinion

ID: 866792
Source: CourtListenerOpinion
Date Created: 2013-05-06 23:36:19.98755+00
Date Added: 2024-06-11T12:39:15.222694
License: Public Domain

FILED
                                                              MAY 06 2013
 1
                                                          SUSAN M SPRAUL, CLERK
                                                            U.S. BKCY. APP. PANEL
 2                                                          OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )        BAP No.   CC-12-1304-TaMoMk
                                   )
 6   MERUELO MADDUX PROPERTIES,    )        Bk. No.   09-13356-VK
     INC.,                         )
 7                                 )
                    Debtor.        )
 8   ______________________________)
                                   )
 9   RICHARD MERUELO, individually )
     and as Trustee of the Richard )
10   Meruelo Living Trustee U/D/T )
     dated September 15, 1989,     )
11                                 )
                    Appellant,     )
12                                 )
     v.                            )        MEMORANDUM*
13                                 )
     MERUELO MADDUX PROPERTIES,    )
14   INC.,                         )
                                   )
15                  Appellee.      )
                                   )
16
               Argued on February 21, 2013 at Pasadena, California
17                       Submitted on February 28, 2013**
18                             Filed - May 6, 2013
19               Appeal from the United States Bankruptcy Court
                     for the Central District of California
20
          Honorable Victoria Kaufman, Bankruptcy Judge, Presiding
21
22
23        *
            This disposition is not appropriate for publication.
24   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
25   See 9th Cir. BAP Rule 8013-1.
26        **
            At oral argument, the parties were given an additional
27   week in which to file supplements that specifically identified
     certain evidence in the record on appeal. Submission of the
28   matter was thus postponed for one week following oral argument.

                                        1
 1   Appearances:     Gregory M. Salvato of Salvato Law Offices on
                      behalf of Appellant; Christopher E. Prince of
 2                    Lesnick Prince & Pappas LLP on behalf of Appellee.
 3
     Before:    TAYLOR, MONTALI,*** and MARKELL, Bankruptcy Judges.
 4
 5                               INTRODUCTION1
 6        Reorganized debtor and Appellee Meruelo Maddux Properties,
 7   Inc. (“MMPI”) and related reorganized debtors (collectively,
 8
 9
10
11
12
13
14
15
16
17        ***
             The Honorable Dennis Montali, Bankruptcy Judge for the
18   Northern District of California, sitting by designation.
          1
19          We exercised our discretion to independently review
     documents electronically filed in the Debtors’ bankruptcy cases.
20   See O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.),
21   887 F.2d 955, 957-58 (9th Cir. 1989); Atwood v. Chase Manhattan
     Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP
22   2003).
          In so doing, we determined that on April 7, 2009, the
23   bankruptcy court ordered the joint administration of MMPI’s
24   bankruptcy case with 53 related bankruptcy cases (“Joint
     Administration Order”), and designated MMPI as the lead
25   bankruptcy case, Case No. 09-13356. Dkt# 30. The Joint
     Administration Order instructed a claimant to file a proof of
26   claim in the bankruptcy case directly subject to the claimant’s
27   claim. The Joint Administration Order also designated the MMPI
     docket as the single docket for all other main case documents in
28   the jointly administered cases.

                                       2
 1   "Debtors")2 objected to proofs of claim3 (collectively, “Claims”)
 2   filed by Appellant Richard Meruelo ("Richard")4 and moved for
 3   disallowance.   In the Claims, Richard sought indemnification for
 4   liabilities that he incurred in defending actions and proceedings
 5   based on guaranties that he executed for the benefit of the
 6   Debtors, for fees he incurred in connection with the Debtors’
 7   bankruptcies, and for payment on a judgment.   The bankruptcy
 8   court granted the Debtors’ motion and Richard appealed.
 9        Here, we address only the issues related to the guaranty
10   liabilities and bankruptcy legal fees.   We decline to address the
11   issue related to the payment on the judgment as it was not
12   addressed by Richard in his statement of issues on appeal, in his
13   opening or reply brief, or in a substantive fashion at oral
14
          2
15          The Notice of Appeal identified the appellee as “Meruelo
     Maddux Properties, Inc., et al. (the Reorganized Debtors)”. For
16   reasons not clear to us, in the present appeal the parties
     interchangeably and inconsistently refer to the appellee as MMPI
17
     (singular) and MMPI, et. al (multiple). We use the term
18   “Debtors” to describe the appellees here. The term “Debtors”
     refers to all debtors who objected to one of the Claims. We also
19   use the term broadly to describe them in their respective
20   pre-confirmation and post-confirmation form as, given the
     context, is appropriate.
21
          3
            Appellant submitted one proof of claim in MMPI’s
22   bankruptcy case and identical proofs of claim in six of the
     jointly administered bankruptcy cases.
23
          4
24          The Notice of Appeal identified the Appellant as Richard
     Meruelo, individually and as Trustee of the Richard Meruelo
25   Living Trust U/D/T dated September 15, 1989. The instant appeal
     was concurrently heard with a separate appeal in which Richard
26   Meruelo’s mother, Belinda Meruelo, was the appellant. See BAP
27   Case No. CC-12-1303. For clarity and ease of reference, and
     without intending any disrespect, we refer to the appellant as
28   “Richard” in this memorandum.

                                      3
 1   argument.   Thus, we VACATE and REMAND in part and AFFIRM in part.
 2                                  FACTS5
 3        On March 26, 2009, Debtors initiated chapter 11 bankruptcy
 4   cases (collectively, “Cases”).    Richard previously served as
 5   MMPI’s Chairman, CEO, and major shareholder.
 6        On September 24, 2009, Richard filed the Claims.     In each of
 7   the Claims, Richard sought reimbursement and indemnification for
 8   incurred or anticipated liabilities.    He based the Claims on two
 9   pre-petition agreements: a Contribution Agreement dated
10   September 19, 2006 and an Indemnification Agreement dated
11   January 30, 2007 (collectively, the “Agreements”).   Richard
12   asserted that he had possible exposure to liability on guaranties
13   that he executed for the benefit of seven different lenders or
14   lessors (“Guaranties”).    He further asserted that the Agreements
15   contractually obligated the Debtors to indemnify him and to
16   reimburse him in connection with any payment under or in
17   connection with the Guaranties.
18        At some point, the parties holding the Guaranties threatened
19   or initiated litigation.   Richard retained Neufeld Marks &
20   Gralnek (“Neufeld”) to represent him in his defense of these
21   claims.   During the course of the Cases, Richard also retained
22   Levene, Neale, Bender, Rankin & Brill (“Levene”) as personal
23   bankruptcy counsel.
24        Meanwhile, the Debtors moved for and obtained an order of
25
          5
            Unless otherwise indicated, all chapter and section
26   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
27   “Rule” references are to the Federal Rules of Bankruptcy
     Procedure and “Civil Rule” references are to the Federal Rules
28   of Civil Procedure.

                                       4
 1   the bankruptcy court that authorized the employment of
 2   professionals.    The order allowing retention required that each
 3   retained professional submit a declaration of disinterestedness.
 4   As required, Neufeld submitted its declaration of
 5   disinterestedness and therein disclosed its concurrent
 6   representation of one or more of the Debtors.   Neufeld, however,
 7   failed to disclose that it represented Richard in connection with
 8   the Guaranties.
 9        The bankruptcy court confirmed a third party’s plan in the
10   Cases on June 24, 2011.   The Debtors subsequently objected to
11   proofs of claim for pre-petition legal services filed by Neufeld
12   to the Debtors and moved for disallowance.   The Debtors also
13   objected to Neufeld’s request for payment of an administrative
14   claim for post-petition fees.   The bankruptcy court heard all
15   Neufeld fee related matters on March 1, 2012.   The bankruptcy
16   court determined, among other things, that Neufeld improperly
17   failed to disclose its simultaneous representation of Richard
18   (and other insiders) in non-bankruptcy proceedings and that, as a
19   result of the concurrent representations, Neufeld was not
20   disinterested for purposes of section 327(a).   The bankruptcy
21   court, thus, ordered Neufeld to disgorge fees previously received
22   and denied its various requests for further payment.6
23        The Debtors also moved to disallow the Claims (“Motion to
24   Disallow”).   They argued that neither of the Agreements formed a
25
          6
            In an order jointly addressing Neufeld’s proofs of claim
26   and administrative claim, the bankruptcy court ordered Neufeld to
27   disgorge a $30,000 payment that it received from MMPI in February
     2010 and a $100,000 payment that it received from Meruelo
28   Maddux – 845 S. Flower Street, LLC in June 2010.

                                       5
 1   basis for Richard’s reimbursement claims and that disallowance
 2   under section 502(e)(1)(B) was warranted because the Claims were
 3   contingent.   In response to the Motion to Disallow, Richard
 4   submitted an amended proof of claim in the MMPI case (“Amended
 5   Proof of Claim”) and filed opposition.    In the Amended Proof of
 6   Claim, Richard reiterated that he was entitled to reimbursement
 7   and indemnification based on the Agreements and listed total
 8   claims in the amount of $316,294.39, consisting of three
 9   different categories of liabilities:
10     (1)    $151,453.53 in attorneys’ fees paid to Neufeld on account
11            of its representation of Richard in proceedings related
12            to the Guaranties and in the Cases (“Neufeld Claim”);
13     (2)    $142,224.48 in attorneys’ fees paid to Levene on account
14            of its representation of Richard in the Cases (“Levene
15            Claim”); and
16     (3)    $22,526.38 on account of Richard’s payment of a state
17            court judgment against Richard and a related entity
18            pursuant to a guarantied lease (“Nemiroff Claim”).
19        Apparently, the Debtors failed to properly serve Richard
20   with the Motion to Disallow.7    Consequently, the parties
21   stipulated to a continuance of the hearing.    Pursuant to a
22   subsequent bankruptcy court order, the Debtors submitted a
23   supplemental memorandum (“Supplemental Brief”) in support of the
24   Motion to Disallow.     They renewed their prior objections and also
25   asserted that Richard waived his indemnity rights under the terms
26
27        7
            At some point, Richard began appearing pro se; the
28   Debtors, however, continued to serve his prior counsel.

                                        6
 1   of the Guaranties, which contained Gradsky8 waivers.    The Debtors
 2   also made other new arguments, including that Richard failed to
 3   comply with certain notice provisions in the Contribution
 4   Agreement, that the Indemnification Agreement did not encompass
 5   guaranty obligations, and that Richard was not entitled to
 6   indemnification for fees incurred in the Cases.    The Debtors
 7   further argued that the Nemiroff Claim was unenforceable because
 8   Nemiroff failed to file a proof of claim, and that the Neufeld
 9   Claim should be disallowed based on the disallowance of the law
10   firm’s direct claims against the Debtors.
11        In opposition, Richard argued that based on his execution of
12   new agreements with lenders and the Debtors in the Cases, the
13   waiver argument was inapplicable as the new agreements paid the
14   outstanding debt in full.    He also asserted that the Debtors’
15   other arguments relating to notice, scope of indemnity, and
16   conflicts were irrelevant or lacked a legal basis.
17        The bankruptcy court heard the Motion to Disallow on May 11,
18   2012 and, after argument, granted it in its entirety.    It
19   disallowed the Levene Claim because the fees were not related to
20   an indemnification purpose.    It disallowed the Neufeld claim
21   based on the law firm’s prior disqualification in the Cases.
22   Finally, it disallowed the Nemiroff Claim because the underlying
23   Claim was unenforceable in the bankruptcy case.
24        On May 29, 2012, the bankruptcy court entered an order
25   (“Disallowance Order”) that sustained the Debtors’ objections and
26   disallowed the Claims.    Richard timely filed his appeal.
27
28        8
              Union Bank v. Gradsky, 265 Cal. App. 2d 40 (1968).

                                       7
 1                               JURISDICTION
 2        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
 3   §§ 1334 and 157(b)(2)(B).   We have jurisdiction under 28 U.S.C.
 4   § 158.
 5                                  ISSUE
 6        Did the bankruptcy court err in disallowing the Claims?
 7                          STANDARD OF REVIEW
 8        We review the bankruptcy court's legal conclusions de novo,
 9   and its findings of fact for clear error.      See Allen v. US Bank,
10   N.A. (In re Allen), 472 B.R. 559, 564 (9th Cir. BAP 2012).       The
11   court’s findings of fact are clearly erroneous if illogical,
12   implausible, or lacking support from the record.      Retz v. Sampson
13   (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010).       We review the
14   bankruptcy court’s Disallowance Order de novo.      Continental Ins.
15   Co. v. Thorpe Insulation Co. (In re Thorpe Insulation Co.),
16   671 F.3d 1011, 1020 (9th Cir. 2012), cert. denied, 133 S. Ct. 119
17   (2012); see also Varela v. Dynamic Brokers, Inc. (In re Dynamic
18   Brokers, Inc.), 293 B.R. 489, 493 (9th Cir. BAP 2003) (issues
19   related to disallowance are questions of law reviewed de novo).
20        Contract interpretation and the meaning of contractual
21   provisions are reviewed de novo.       DP Aviation v. Smiths Indus.
22   Aerospace & Def. Sys. Ltd., 268 F.3d 829, 836 (9th Cir. 2001).
23                                DISCUSSION
24        On appeal, Richard argues that the bankruptcy court erred
25   by: (1) failing to articulate the grounds for the disallowance
26   under section 502(b); (2) finding that Richard was not entitled
27   to indemnity under the Agreements; (3) finding that Richard was
28   not entitled to indemnity for legal fees that he individually

                                        8
 1   incurred in the Cases; (4) finding that the Neufeld Claim was
 2   disallowed based on Neufeld’s disqualification in the Cases;
 3   (5) finding that Richard’s rights under the Agreements were
 4   waived by his payment of guarantied obligations; and (6) finding
 5   that the notice provisions in the Agreements barred Richard’s
 6   claims.   We address these issues as follows.
 7        A.    Statutory grounds for disallowance of the Claims.
 8        Richard first argues that the bankruptcy court erred by
 9   failing to identify the statutory basis for disallowance.     In
10   response, the Debtors maintain that the bankruptcy court properly
11   disallowed the claims under California substantive law.
12        Section 502(b) provides that upon an objection to a claim by
13   a party in interest, the bankruptcy court must allow and
14   determine the amount of the claim, unless a statutory exception
15   exists.   11 U.S.C. § 502(b).   It is well-established that
16   section 502(b)(1)-(9) provides the exclusive grounds for the
17   disallowance of claims.   Heath v. Am. Express Travel Related
18   Servs. Co., Inc. (In re Heath), 331 B.R. 424 (9th Cir. BAP 2005).
19   And, there is a general presumption that claims enforceable under
20   applicable state law are allowed in bankruptcy unless expressly
21   disallowed.   Travelers Cas. and Sur. Co. of Am. v.   Pac. Gas and
22   Elec. Co., 549 U.S. 443 (2007) (citing 11 U.S.C. § 502(b)); see
23   also Wells Fargo Fin. Acceptance v. Rodriguez (In re Rodriguez),
24   375 B.R. 535, 545 (9th Cir. BAP 2007) (unless there is a basis
25   under section 502(b) to disallow, the bankruptcy court must allow
26   the claim).
27        Here, the bankruptcy court did not identify the subsection
28   of section 502(b) under which it disallowed the Claims.    The

                                       9
 1   bankruptcy court did not make findings in this regard, and the
 2   Disallowance Order simply and broadly provides that it is based
 3   on the papers filed by both parties and the hearing in the
 4   matter.   The Debtors briefly refer to section 502(e)(1)(B) in the
 5   Motion to Disallow, but solely in relation to Richard’s then-
 6   contingent claims.   And in the Supplemental Brief, the Debtors
 7   refer to section 502(e)(1)(A), but solely in relation to the
 8   Nemiroff Claim.   Based on the record, however, including
 9   Richard’s own acknowledgment, it appears that the basis for the
10   disallowance lies in section 502(b)(1).   Therefore, we find no
11   error in not identifying the applicable sub-paragraph of
12   section 502(b).
13        Section 502(b)(1) provides that a claim is disallowed if
14   it is unenforceable under an applicable agreement or law.    Thus,
15   our review here focuses on whether the Claims were enforceable
16   under the Agreements and, if so, whether other non-bankruptcy law
17   bars recovery.
18        B.    The record lacks findings necessary for interpretation
                of ambiguities in the Agreements.
19
20        Richard contends that the Contribution Agreement provides
21   indemnification to all contributors, including indemnification of
22   Richard’s obligations under the Guaranties.   The Debtors maintain
23   that the Contribution Agreement makes no reference to
24   indemnification of such obligations.   Instead, they assert that
25   the Contribution Agreement solely indemnified Richard in the
26   event that he was sued by a third party, based on the Debtors’
27   breach of the terms of a particular transaction, and as to the
28   properties that were the subject of that transaction.

                                     10
 1        The Contribution Agreement was entered into between MMPI and
 2   related entities9 and pertained to the consolidation of ownership
 3   of various commercial and residential development and
 4   redevelopment projects.   In relevant part, the Contribution
 5   Agreement provides:
 6        [MMPI] . . . shall indemnify and hold harmless [the
          related entities] and its directors, officers,
 7        employees, agents, representatives, beneficiaries,
          equity interest holders and Affiliates (each of which
 8        is an "Indemnified Contributor Party") from and against
          any and all Losses arising out of or relating to,
 9        asserted against, imposed upon or incurred by the
          Indemnified Contributor Party in connection with:
10        (a) any breach of a representation, warranty or
          covenant of [MMPI] . . . contained in this Agreement .
11        . . (b) [MMPI’s]. . . operation of any Participating
          Entities or the Properties following the Closing, and
12        (c) all of (i) the liabilities and obligations of the
          Participating Entities whether arising before or after
13        the Closing . . . .
14   Contribution Agreement § 3.2.
15        Under its terms, California law governs interpretation of
16   the Contribution Agreement.   Under California law, a contract
17   must be interpreted so as to give effect to the parties’
18   intentions at the time that they entered into the contract.    Cal.
19   Civ. Code § 1636; see also Levy v. Ross, 269 Cal. App. 2d 231,
20   238 (1969).   The Contribution Agreement defined “Participating
21   Entities” as the commercial and residential development and
22   redevelopment projects.   The Claims clearly do not fall under
23   either of the first two grounds for indemnification.    The
24   possibility of indemnity under the last subsection, however,
25
26        9
            Richard, as Trustee of The Richard Meruelo Living Trust
27   U/D/T Dated September 15, 1989; Merco Group - Roosevelt Building,
     LLC; Sunstone Bella Vista, LLC; Meruelo Maddux Properties, L.P.;
28   and Meruelo Maddux Properties, Inc.

                                     11
 1   exists.    The language in subsection 3.2(c)(i), however, may
 2   permit more than one reasonable interpretation and we require an
 3   adequate factual record prior to conducting de novo review.
 4        Richard similarly contends that the Indemnification
 5   Agreement provides a basis for indemnity from the Debtors.      He
 6   maintains that it is now disingenuous for the Debtors to dispute
 7   that the fees and expenses he incurred in defending the
 8   Guaranties were not a result of his prior position with the
 9   Debtors.   The Debtors counter that Richard’s guaranty liabilities
10   arose from agreements with third parties, and not because he was
11   a director or officer of MMPI.
12        In relevant part, the Indemnification Agreement provides:
13        [MMPI] hereby agrees to hold harmless and
          indemnify . . . [Richard], from and against any and all
14        expenses (including attorneys fees), judgments, fines,
          taxes, penalties and amounts paid in settlement
15        actually and reasonably incurred by [Richard] in
          connection with any threatened, pending or completed
16        action, suit or proceeding, whether civil, criminal,
          administrative or investigative, by reason of the fact
17        that he or she is or was a director or officer of
          [MMPI] or is or was serving at the request of [MMPI] as
18        a director, trustee, partner, member, officer, employee
          or agent of another corporation, partnership, limited
19        liability company, joint venture, trust or other
          enterprise and whether or not such action is by or in
20        the right of [MMPI] or that other corporation,
          partnership, limited liability company, joint venture,
21        trust or other enterprise with respect to which
          [Richard] serves or has served . . . .
22
23   Indemnification Agreement § 2(a) (emphasis added).
24        Delaware law governs interpretation of the Indemnification
25   Agreement.   Under Delaware law, contracts must be "interpreted as
26   written, and effect must be given to their clear and unambiguous
27   terms."    Shiftan v. Morgan Joseph Holdings, Inc., 57 A.3d 928,
28   934-35 (Del. Ch. 2012).

                                      12
 1        It is unclear in what capacity Richard litigated or
 2   participated in the non-bankruptcy proceedings.10   Neither party
 3   disputes that most, if not all, of the non-bankruptcy proceedings
 4   were based on or in connection with the Guaranties.   We, however,
 5   lack certainty in this regard and, thus, questions of
 6   interpretation arise in relation to the Indemnification
 7   Agreement.
 8        Because of the ambiguities in the Agreements, the bankruptcy
 9   court’s findings are critical to our review.    See Pierce v.
10   Carson (In re Rader), 488 B.R. 406, 412 (9th Cir. BAP 2013) (when
11   language is ambiguous, we look to the record to interpret or
12   determine what the bankruptcy court decided).   In contested
13   matters, such as a motion to disallow a claim, the bankruptcy
14   court must render its findings of fact and conclusions of law as
15
          10
16          The record includes a snippet of the deposition testimony
     of Gaelle Gralnek, a Neufeld partner, taken by Charleston Capital
17   Advisory LLC and Hartland Asset Management Corporation on
18   January 13, 2011. Charleston Capital Advisory LLC eventually
     confirmed a chapter 11 plan that involved all the Cases, with the
19   exception of one debtor entity. The Debtors subsequently used
     Gralnek’s deposition to support the opposition to Neufeld’s
20   request for fees. In the deposition, Gralnek discussed the cases
21   where Neufeld represented Richard personally and who the law firm
     considered as its client in the cases discussed. Gralnek
22   subsequently submitted a declaration in support of the law firm’s
     opposition to the Debtors’ motion to disallow its fees. Gralnek
23   contested the Debtors’ characterization of his testimony and
24   declared that the law firm represented Richard and other insiders
     on behalf of the company in which their interests were aligned.
25        There appears to be correlation between the cases discussed
     at Gralnek’s deposition and the actions listed in Richard’s
26   Amended Proof of Claim. Even so, given the complex record and
27   number of parties involved, and the paucity of findings in the
     record, we cannot be reasonably or confidently sure of which
28   actions and proceedings were litigated and in what context.

                                     13
 1   required by Civil Rule 52(a), incorporated by Rule 7052, and by
 2   Rule 9014.   Even if the bankruptcy court rules without
 3   articulating such findings, there is no reversible error where
 4   the record provides the reviewing court with a full, complete,
 5   and clear view of the issues on appeal.      First Yorkshire Holdings
 6   Inc. v. Pacifica L 22, LLC (In re First Yorkshire Holdings,
 7   Inc.), 470 B.R. 864, 871 (9th Cir. BAP 2012) (internal citation
 8   omitted).    Findings are adequate when the record contains clear
 9   references to the factual basis supporting the bankruptcy court's
10   ultimate conclusions.   Id.   If, however, the record provides no
11   clear basis for the court's ruling or there is an absence of
12   complete findings, we may vacate the bankruptcy court's order and
13   remand for further proceedings.    In re First Yorkshire Holdings,
14   470 B.R. at 871.
15        Here, the record shows that the bankruptcy court made no
16   findings in relation to either the Contribution Agreement or the
17   Indemnification Agreement.    The bankruptcy court broadly
18   discussed indemnification in regards to the Levene Claim, and
19   seemed to decide that indemnification was possible under one or
20   both of the Agreements.   It did not, however, identify which of
21   the Agreements supplied the possible basis for indemnification.
22   The absence of such findings and general inability to glean such
23   information from the record hampers our ability to conduct a
24   proper review of the Agreements.       Therefore, we cannot complete a
25   de novo review of whether one or both of the Agreements
26   established a basis for the Claims.
27        Due to this lack of necessary findings, we hereafter vacate
28   and remand as to two of the specific disallowed claims.      On

                                       14
 1   remand, the bankruptcy court will need to make findings as to
 2   whether Richard is entitled to indemnity or contribution under
 3   the Agreements if it does not disallow the Claims on the
 4   alternative grounds discussed below.
 5        C.   The record lacks findings as to the bankruptcy court’s
               disallowance of the Levene Claim.
 6
 7        Richard contends that the bankruptcy court erred when it
 8   found that he incurred the Levene attorneys’ fees in furtherance
 9   of his personal interests and not in his capacity as guarantor.
10   He maintains that he obtained separate counsel to assist him with
11   his own legal and financial obligations under the Guaranties,
12   which he executed for the Debtors’ benefit.
13        The Debtors respond that while Richard was entitled to seek
14   separate counsel, it was inappropriate for him to request that
15   the Debtors indemnify him in connection with these fees.    They
16   contend that the Levene time records reflect tasks that
17   exclusively supported Richard’s personal interests in the Cases,
18   rather than his legal and financial obligations under the
19   Guaranties.   Indeed, the Debtors assert that the word “guaranty”
20   is no where to be found in the Levene time records attached to
21   the Amended Proof of Claim.
22        At the hearing, the bankruptcy court found that Richard
23   retained Levene to protect his own interests, which were not
24   subject to indemnification.   It concluded that the Levene Claim
25   did not constitute an “indemnification situation,” because it was
26   not related to guaranty claims against Richard, but rather, was
27   based on Richard’s self-interests as a shareholder and principal
28   of the Debtors.

                                     15
 1        As discussed below, we understand the general logic of the
 2   bankruptcy court’s ruling.   The lack of adequate findings,
 3   however, makes it impossible for us to affirm, as we cannot
 4   obtain a full, complete, and clear view of the issue on appeal as
 5   to the Levene Claim.
 6        We note that the bankruptcy court was free to draw on its
 7   personal experience in presiding over the Cases.   We can assume
 8   that the bankruptcy court did so.    We acknowledge that in
 9   presiding over the Cases, the bankruptcy court became
10   knowledgeable as to the key parties and relevant proceedings
11   involved.   Thus, the bankruptcy court could use its own
12   experience in large measure to determine whether the Levene Claim
13   entailed fees and expenses beyond the scope of the Agreements.
14        A review of the Levene time records also largely supports
15   the bankruptcy court’s determination.   Some entries clearly
16   relate solely to Richard’s personal interests.    Others relate to
17   general bankruptcy activities in the Cases.   What Richard fails
18   to grasp is the distinction between legal representation that he
19   desired because he was an officer or director and legal
20   representation that was required by his prior officer, director,
21   and guarantor status.   In short, Richard was absolutely entitled
22   to obtain personal advice regarding the Debtors’ bankruptcies,
23   but, for the most part, the relationship between his officer and
24   director status and his desire for these fees may be too tenuous
25   for proper inclusion as an indemnified obligation.
26        But a review of the time records also raises questions that
27   cannot be explained in the absence of findings.    One time code
28   titled “Other Litigation,” references litigation that may or may

                                     16
 1   not bear any connection or relevancy to the Guaranties.    Claim
 2   No. 78-2 at 218-220.   There is also at least one time entry,
 3   contrary to the Debtors’ assertion, that relates to a meeting
 4   with Richard to discuss “Actions on Guaranties.”   Id. at 230.
 5   And if there ultimately is an award of any type on the Claims,
 6   the fees incurred in preparing the Claims may be recoverable.
 7        At oral argument, the Debtors asserted that Richard “waived”
 8   remand because he attached numerous time records without
 9   articulating which time records were pertinent to his request for
10   indemnity.   They asserted that the bankruptcy court was not
11   required to sift through the time records to make its
12   determination and, thus, that Richard failed to meet his burden
13   in seeking indemnity as to the fees.
14        Even if this is true, the bankruptcy court did not rule on
15   this basis so far as we can tell.    And if the bankruptcy court
16   reviewed the records and found an entry facially relating to a
17   guaranty to be unrelated to a guaranty, then we require a finding
18   to determine the appropriateness of such a determination.
19        On this record, we cannot conduct an appropriate review as
20   to the entirety of the Levene Claim.   And while those fees
21   subject to indemnity, if any, may not be significant in amount,
22   the lack of sufficiently detailed findings makes it impossible
23   for us to determine whether the bankruptcy court erred in making
24   a blanket finding that all of the Levene fees were based on
25   Richard’s personal interests in the Cases.   Therefore, we vacate
26   the Disallowance Order relating to the Levene Claim and remand
27   with instructions that the bankruptcy court make the required
28   findings supporting its determination pursuant to Civil

                                     17
 1   Rule 52(a).
 2        D.   The record lacks findings as to the bankruptcy court’s
               disallowance of the Neufeld Claim.
 3
 4        Richard also contends that the bankruptcy court erred by
 5   improperly imputing Neufeld’s disqualification to his claim.     He
 6   argues that his request for indemnity implicates completely
 7   different attorneys’ fees than the law firm’s claim for fees that
 8   was disallowed by the bankruptcy court.   He also contests the
 9   argument that as a matter of state law, Neufeld was not entitled
10   to payment from him, and, thus, that he was not entitled to
11   indemnity because his payments to Neufeld were gifts.   Richard
12   finally contends that the bankruptcy court could not properly
13   base disallowance on section 328(c).
14        The Debtors maintain that the bankruptcy court properly
15   barred recovery of the fees under California law and that Neufeld
16   was barred from recovering fees from the Debtors, either directly
17   through Neufeld’s own claims or indirectly through
18   indemnification of Richard.   They assert that under the
19   California Rules of Professional Conduct, incorporated into
20   bankruptcy proceedings by the Local Bankruptcy Rules of the
21   United States Bankruptcy Court for the Central District of
22   California, the bankruptcy court properly and thoroughly
23   determined that Neufeld was not entitled to fees from the Debtors
24   or Richard.   Finally, the Debtors argue that section 328(c) does
25   not supplant the California Rules of Professional Conduct or
26   California law regarding ethical violations by an attorney, and,
27
28

                                     18
 1   thus, that Richard’s argument in this regard is inappropriate.11
 2          Assuming that Richard had a right to indemnification in
 3   connection with the disputes where Neufeld provided
 4   representation, under one or both of the Agreements, the Debtors
 5   could still defend against payment if the fees were unreasonable.
 6   And the fees could be unreasonable, in whole or in part, if
 7   Richard paid them when he had a complete defense to payment due
 8   to a conflict.   Here, however, the record lacks findings in
 9   critical areas and, thus, we cannot conduct an appropriate
10   appellate review.
11          We know that the bankruptcy court found that Neufeld failed
12   in its disclosure obligations and that this justified
13   disallowance of its request for fees for services rendered
14   directly to the Debtors.   But the record does not show that
15   conflicts existed in relation to all areas where Neufeld
16   represented Richard.   And if conflicts existed, we do not know
17   whether they would have justified Richard’s refusal to pay
18   Neufeld, thus negating any obligation by Debtors to indemnify
19   him.
20          At the Motion to Disallow hearing, the Debtors asserted that
21   they did not “think [they] should be obligated to pay for an
22   attorney that had a conflict that was not disclosed.”   Hr’g Tr.
23
            11
24          The Debtors also argue that the Disallowance Order was
     proper pursuant to the bankruptcy court’s broad grant of power
25   under section 105. That argument was not raised before the
     bankruptcy court, and thus, we do not address it in this appeal.
26   See Samson v. W. Capital Partners, LLC (In re Blixseth), 684 F.3d
27   865, 872 n. 12 (9th Cir. 2012) (appellate court may decline to
     address argument not raised before bankruptcy court) (citation
28   omitted).

                                      19
 1   (May 11, 2012) at 12:19-20.     When Richard then asserted that the
 2   settlements Neufeld represented him on were beneficial, the
 3   bankruptcy court responded, “that doesn’t get around [that
 4   Neufeld] had a conflict.”      Id. at 13:5-6.   In noting that Neufeld
 5   had simultaneously represented Richard, the Debtors, and Belinda
 6   Meruelo, the bankruptcy court further stated that it was
 7   “inappropriate and wrong.      That’s all.   So, yeah, no money for
 8   [Neufeld].”    Id. at 13-14.    After examining the remaining claims,
 9   the bankruptcy court concluded: “Well, I think that’s all of it,
10   so I think I’m granting the motion.”     Id. at 15:20-21.    Thus, the
11   bankruptcy court’s findings as to the conflicts disqualification
12   are non-existent.
13           The record on appeal does little more to assist us in this
14   regard.    At oral argument, the Debtors argued that the record on
15   appeal clearly supported the bankruptcy court’s finding of
16   conflicts as to Neufeld’s representation of Richard.      Indeed,
17   they argued that Richard was “not innocent” and engaged in
18   litigation tactics with the law firm, which supplied an
19   additional basis for the determination of conflicts.      Based on
20   these assertions, we gave the parties an additional week after
21   arguments to file supplements; the parties were instructed to
22   specifically identify where in the record on appeal the
23   bankruptcy court made such findings.
24           The Debtors filed an eight page supplement on February 28,
25   2013.    They provide citations to documents related to Neufeld’s
26   request for fees and the Debtors’ motion to disallow those fees,
27   as well as citations to documents related to a payment
28   inappropriately made to Neufeld by the pre-reorganization Debtors

                                        20
 1   and subject to the bankruptcy court’s disgorgement order.
 2        The Debtors also provided citations to documents relating to
 3   an approved bankruptcy settlement agreement entered into among
 4   the Debtors, Richard, and creditors Wells Fargo Bank and Berkadia
 5   Commercial Mortgage, Inc. (“Wells Fargo/Berkadia”).   The Debtors
 6   noted that Richard moved for and obtained the bankruptcy court’s
 7   approval for an indemnity agreement in connection with that
 8   particular settlement, but that the bankruptcy court did not
 9   approve the portion of the Wells Fargo/Berkadia indemnity
10   agreement relating to payments to Neufeld.
11        It is true that the bankruptcy court’s order approved the
12   indemnity agreement in the Wells Fargo/Berkadia settlement on the
13   condition that the Debtors delete a provision that would have
14   required immediate payment of attorneys’ fees.   The order further
15   provided, however, that nothing in the order itself or in the
16   indemnity agreement, as revised, would prejudice Richard’s rights
17   to seek indemnity for fees incurred in the Wells Fargo/Berkadia
18   litigation.   Moreover, at the Motion to Disallow hearing, the
19   Debtors clarified that the prior bankruptcy judge had “carved
20   out” the indemnity issue in regards to that settlement.   Thus,
21   Debtors’ reliance on the Wells Fargo/Berkadia settlement is not
22   helpful.
23        The other citations in the Debtors’ supplement similarly
24   fail to assist the Panel.   There is much ado about Neufeld and
25   there are many oblique references to improper conduct.    None of
26   the Debtors’ specific citations in their supplement, however,
27   directly support the allegations they advanced at oral argument:
28   that the bankruptcy court specifically found or determined that

                                     21
 1   Richard was a bad actor or engaged in nefarious conduct as a
 2   guarantor or former director/officer of MMPI.
 3        We also emphasize that even if we assume that the bankruptcy
 4   court properly found disqualifying conflicts under the California
 5   Rules of Professional Conduct, another concern arises: nothing in
 6   the record shows that the bankruptcy court considered the
 7   appropriate remedy for the law firm’s violation or whether the
 8   violation provided Richard with a defense to payment of fees.
 9        California case law establishes that violation of an
10   attorney’s ethical obligations may lead to forfeiture of fees for
11   services rendered.   See   Pringle v. La Chapelle, 73 Cal. App. 4th
12   1000, 1006 (1999); Cal Pak Delivery, Inc. v. United Parcel
13   Service, Inc., 52 Cal. App. 4th 1, 14-16 (1997); Jeffry v.
14   Pounds, 67 Cal. App. 3d 6, 11 (1977); see also Rodriguez v.
15   Disner, 688 F.3d 645, 655 (9th Cir. 2012) (courts have “broad
16   discretion to deny fees to an attorney who commits an ethical
17   violation.”).   But such violations are not a per se bar to all
18   recovery of fees.    See Pringle, 73 Cal. App. 4th at 1006; Cal
19   Pak, 52 Cal. App. 4th at 16; Jeffry, 67 Cal. App. 3d at 11.
20        Here, there are insufficient factual findings to support the
21   bankruptcy court’s disallowance of the Neufeld Claim.   We cannot
22   determine what the conflict was as to Richard.   As such, we
23   cannot determine whether the violation was so serious that it
24   provided Richard with a defense to a Neufeld payment claim that
25   negated the Debtors’ indemnification obligations.
26        We extended our review beyond the record on appeal, but were
27   unable to construct an adequate record capable of review.    While
28   we may draw inferences from the record, the paucity of necessary

                                      22
 1   findings here requires us to make an inferential leap of
 2   inappropriate length.   Therefore, we vacate the Disallowance
 3   Order relating to the Neufeld Claim and remand with instructions
 4   that the bankruptcy court make the required findings supporting
 5   its determination pursuant to Civil Rule 52(a).
 6        E.     Richard waived all his arguments as to the Nemiroff
                 Claim.
 7
 8        Richard appeals the entirety of the Disallowance Order, but
 9   did not address the Nemiroff Claim in his opening brief.   In his
10   Statement of Issues on Appeal, Richard identified the sole issue
11   as whether the bankruptcy court erred in granting the Motion to
12   Disallow.   At oral argument, however, Richard requested that we
13   remand to the bankruptcy court so that he could, among other
14   things, address issues including the Nemiroff Claim.   He did not
15   advance any substantive argument as to the Nemiroff Claim at any
16   point on appeal.
17        Given that Richard did not address the Nemiroff Claim in his
18   opening brief, his reply brief, or at oral argument, we deem his
19   arguments as to that particular claim waived.   See Res. Funding,
20   Inc. v. Pac. Cont’l Bank (In re Wash. Coast I, LLC), 485 B.R.
21   393, 402 n.8 (9th Cir. BAP 2012) (issues not specifically and
22   expressly argued in opening brief are waived); see also Diener v.
23   McBeth (In re Diener), 483 B.R. 196, 202 n.7 (9th Cir. BAP 2012)
24   (same).   While the bankruptcy court may or may not have rendered
25   sufficient findings on the Nemiroff Claim, we cannot and do not
26   suppose Richard’s arguments on appeal with respect to that
27   particular claim.   He bears the burden of articulating a basis
28   for reversal as the appellant and simply appealing the

                                      23
 1   Disallowance Order in its entirety is insufficient to support his
 2   challenge to the Nemiroff Claim.      Therefore, we do not consider
 3   the Nemiroff Claim on appeal.
 4                                CONCLUSION
 5        For the reasons stated above, we VACATE the Disallowance
 6   Order with respect to the Levene and Neufeld Claims and REMAND to
 7   the bankruptcy court so that it may make the required findings
 8   regarding those claims.12   We AFFIRM the Disallowance Order as to
 9   the Nemiroff Claim.
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25        12
            Based on the foregoing, we decline to address Richard’s
     remaining arguments relating to waiver and notice under the
26   Agreements. There is no evidence in the record that they
27   provided any basis for the bankruptcy court’s determinations, and
     we cannot reach any independent conclusions regarding these
28   issues on this record.

                                      24