Court Opinion

ID: 818071
Source: CourtListenerOpinion
Date Created: 2013-02-01 22:30:18.187978+00
Date Added: 2024-06-11T11:06:49.978965
License: Public Domain

FILED
                                                              DEC 14 2012
 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.   SC-12-1062-JuMkPa
                                   )
 6   PASCAL JEAN-FRANCOIS BESSET, )           Bk. No.   10-17726
                                   )
 7                  Debtor.        )
     ______________________________)
 8   PAULA BESSET,                 )
                                   )
 9                  Appellant,     )
                                   )
10   v.                            )          M E M O R A N D U M*
                                   )
11   RONALD STADTMUELLER, Chapter 7)
     Trustee; R. DEAN JOHNSON; PYLE)
12   SIMS DUNCAN & STEVENSON APC, )
                                   )
13                  Appellees.     )
     ______________________________)
14
               Submitted Without Oral Argument on November 15, 2012**
15
                             Filed - December 14, 2012
16
                  Appeal from the United States Bankruptcy Court
17                    for the Southern District of California
18      Honorable Louise DeCarl Adler, Bankruptcy Judge, Presiding
                   _____________________________________
19
     Appearances:       Appellant Paula A. Besset on brief pro se;
20                      Michael Y. MacKinnon, Esq. and Kathleen A.
                        Cashman-Kramer, Esq. of Pyle Sims Duncan &
21                      Stevenson APC on brief for appellees Ronald
                        E. Stadtmueller, Chapter 7 Trustee, Pyle Sims
22                      Duncan & Stevenson APC, and R. Dean Johnson.
                       _____________________________________
23
24        *
            This disposition is not appropriate for publication.
     Although it may be cited for whatever persuasive value it may
25
     have (see Fed. R. App. P. 32.1), it has no precedential value.
26   See 9th Cir. BAP Rule 8013-1.
          **
27          Pursuant to Rule 8012, after notice to the parties, the
     Panel unanimously determined that oral argument was not needed by
28   order entered on October 3, 2012.

                                        -1-
 1   Before:     JURY, MARKELL, and PAPPAS Bankruptcy Judges.
 2
 3            Appellant, Paula A. Besset, appeals from the bankruptcy
 4   court’s orders approving the final fee applications of
 5   appellees:     (1) Ronald E. Stadtmueller, chapter 71 trustee;
 6   (2) Pyle Sims Duncan & Stevenson APC (PSDS), the trustee’s
 7   counsel; and (3) R. Dean Johnson (Johnson), accountant to the
 8   trustee.2     We AFFIRM.
 9                                   I. FACTS
10            Appellant and Pascal Besset commenced proceedings for the
11   dissolution of their marriage in the Superior Court of
12   California, County of San Diego in 2007.     On September 28, 2010,
13   the California family court entered a judgment of dissolution
14   terminating the marriage.     An attachment to the dissolution
15   judgment gave appellant the right to purchase Pascal’s equity in
16   the family home by a date in September 2010, or the property was
17   to be sold.     If the property was listed for sale, appellant, who
18   was living in the home with the couple’s two children, was
19   responsible for all delinquent mortgage payments.     Appellant
20   never purchased Pascal’s equity or made any mortgage payments on
21
          1
22          Unless otherwise indicated, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
23   “Rule” references are to the Federal Rules of Bankruptcy
     Procedure.
24
          2
            Appellant filed one Notice of Appeal (NOA) for the three
25   separate orders. Under Rules 8001(a) and 8002(a), a separate NOA
26   is normally required for the appeal of each distinct order. The
     Panel exercised its discretion to disregard this procedural error
27   and consider the appeal of the three orders as one appeal because
     the issues on all three orders are identical and the parties have
28   briefed them jointly.

                                       -2-
 1   the home.
 2          On October 1, 2010, Pascal filed his chapter 7 petition and
 3   Stadmueller was appointed trustee.    In December 2010, the
 4   bankruptcy court approved PSDS’s employment as trustee’s
 5   counsel.    In July 2011, the bankruptcy court approved Johnson’s
 6   employment as accountant for the trustee.
 7          The primary asset of the estate was the family home.   In
 8   Schedule D, debtor valued the home at $960,000, encumbered by a
 9   first lien for $673,000 in favor of Deutsche Bank (Bank), four
10   liens totaling over $200,000 which were recorded against the
11   property by attorneys who had represented debtor or appellant in
12   their marital dissolution proceeding, and a lien for $3,105.35
13   filed by the State of California Employment Development
14   Department.
15          On November 30, 2010, the Bank filed a motion for relief
16   from the automatic stay (RFS) to foreclose on the property.
17   With the possibility of their liens being wiped out in a
18   foreclosure sale, the attorney lien creditors approached the
19   trustee to have him conduct a sale of the property.   On
20   December 10, 2010, the trustee and the Bank agreed to extend the
21   time for the trustee to file an opposition to the motion for
22   RFS.
23          On December 17, 2010, the bankruptcy court entered an order
24   granting the Bank’s motion for RFS after the Bank inadvertently
25   submitted the order in contravention of the agreement it had
26
27
28

                                     -3-
 1   reached with the trustee.3
 2            Meanwhile, the trustee and attorney lien creditors
 3   negotiated a settlement for payment of the attorney liens in
 4   contemplation of selling the property to a third party for
 5   $850,000.     The trustee estimated that after paying the Bank,
 6   costs of sale and taxes, there would be approximately $56,000
 7   remaining from the sales price.     Under the terms of the
 8   settlement, the attorney lien creditors would receive the sum of
 9   $20,000 to be divided equally among them in exchange for
10   subordinating the balance of their secured claims to all costs
11   of administration of the bankruptcy estate and claims of
12   unsecured creditors.
13            On June 16, 2011, the trustee filed a motion to sell the
14   property for $850,000 free and clear of liens under § 363(f).
15   The trustee opined that the sale of the property free and clear
16   of appellant’s interest was proper because there was no equity
17   in the property for appellant to receive.
18            On the same date, the trustee filed a motion for approval
19   of the stipulation between the trustee and the attorney lien
20   creditors under Rule 9019 which reflected the payment of $20,000
21   to the lien creditors and their agreement to carve out proceeds
22   for the payment of administrative fees.
23            Appellant opposed the proposed sale and settlement,
24   arguing, among other things, that due to the dissolution
25
26        3
            Although it is not entirely clear from the record, it
27   appears that, despite inadvertently obtaining an order
     terminating the stay, the Bank honored its agreement and did not
28   immediately foreclose.

                                       -4-
 1   judgment, her interest in the property was one as a co-tenant,
 2   making the sale subject to § 363(h).   On this basis, she
 3   contended not only was an adversary proceeding needed, but also
 4   the carve out for the payment of administrative fees contained
 5   in the settlement agreement between the attorney lien creditors
 6   and the trustee was contrary to § 363(j).   Appellant further
 7   asserted that an adversary proceeding would only cause further
 8   delay and urged the bankruptcy court to order the trustee to
 9   abandon the property so that she could go back into state court
10   to assert her rights to the property before a foreclosure sale
11   took place.   At the July 14, 2011 hearing on the trustee’s
12   motions, the bankruptcy court approved the sale of the property
13   and the settlement over appellant’s objections.
14        During the course of the proceedings, the trustee learned
15   that during the foreclosure process, appellant twice attempted
16   to convey her interest in the property to the Paula Aileen
17   Besset Revocable Trust (Trust) — to herself as a co-trustee of
18   the Trust and to other individuals as co-trustees of the Trust.
19   The other individuals had filed chapter 13 petitions in several
20   different divisions of the United States Bankruptcy Court for
21   the Central District of California and had never met appellant,
22   obtained a copy of the Trust nor agreed to be co-trustees.
23   These transfers may have delayed the Bank’s foreclosure sale.
24        On July 16, 2011, the trustee commenced an adversary
25   proceeding against appellant and the transferees seeking the
26   avoidance and recovery of fraudulent transfers and to sell the
27   property under § 363(h).   On September   23, 2011, the bankruptcy
28   court entered a default judgment against all defendants.

                                    -5-
 1            On July 22, 2011, the bankruptcy court entered the order
 2   approving the sale of the property.      On July 29, 2011, the court
 3   entered the order approving the settlement.      Appellant did not
 4   appeal these orders.
 5            The record shows that appellant did all she could to
 6   prevent the sale of the property.       She thwarted the real estate
 7   agent’s efforts to show the property.      When appellant allowed
 8   the real estate agent to show the property, she stayed on the
 9   premises and pointed out the defects in the home to the
10   prospective purchasers.     She also failed to maintain the
11   property.     Then, when the trustee was ready to close escrow,
12   appellant refused to cooperate by vacating the property.        As a
13   consequence, the trustee sought and obtained an emergency order
14   from the bankruptcy court to aid in the sale4 and a writ of
15   possession.     Eventually, a U.S. Marshal forcibly removed
16   appellant from the property.     Escrow closed on August 5, 2011.
17            On December 12, 2011, Johnson filed his first and final fee
18   application, requesting $1,132 in fees and $104.85 in costs.
19            On December 16, 2011, the trustee filed his first and final
20   fee application, requesting $20,000 in fees and $242.66 in
21   costs.     The trustee voluntarily reduced his fees from $22,355 to
22   $20,000.
23            On December 20, 2011, PSDS filed its first and final fee
24   application, requesting $30,000 in fees and $479 in costs.       PSDS
25   voluntarily reduced its fees from $48,029.50 to $30,000.
26
27
          4
            Appellant moved to reconsider that order. The bankruptcy
28   court denied her request on August 1, 2011.

                                       -6-
 1           On January 18, 2012, the bankruptcy court issued its
 2   tentative ruling, approving the fees and costs in full for all
 3   applicants and excusing their appearances at the scheduled
 4   hearing because the applications were unopposed.     On the same
 5   day, appellant filed a declaration in opposition to the fee
 6   applications.    Appellant requested an extension to oppose the
 7   fee applications because she needed to hire a new attorney after
 8   her prior attorney filed an application to withdraw.     She also
 9   opposed the fee applications on the ground that she was losing
10   her right to obtain the funds due to her from the equity in her
11   home.
12           On January 19, 2012, the bankruptcy court held a hearing on
13   the fee applications.    Although appellant’s opposition was
14   untimely, the court allowed her to present her arguments.
15   Apparently PSDS received appellant’s late opposition because it
16   attended the hearing.    PSDS reiterated that appellant had no
17   equity in the property.    The bankruptcy court overruled
18   appellant’s objections on the grounds that her opposition was
19   late, her actions increased the costs of administering the
20   estate, and there was no equity in the property for her to
21   receive.    The court noted that the attorney lien creditors
22   agreed that the trustee and his professionals could be paid from
23   their part of the sales proceeds.      Finally, the court pointed
24   out to appellant that she would owe $10,000 more to her attorney
25   creditors but for the settlement.      The bankruptcy court approved
26   the fees for appellees in the amounts requested by orders
27   entered on February 1, 2012.    Appellant timely appealed the
28   orders.

                                      -7-
 1                            II. JURISDICTION
 2        The bankruptcy court had jurisdiction over this proceeding
 3   under 28 U.S.C. §§ 1334 and 157(b)(2)(A).     We have jurisdiction
 4   under 28 U.S.C. § 158.
 5                                III. ISSUE
 6        Whether the bankruptcy court abused its discretion in
 7   awarding appellees their requested fees and costs.
 8                        IV. STANDARD OF REVIEW
 9        We review for an abuse of discretion the bankruptcy court’s
10   approval of administrative expenses.      In re Nucorp Energy, Inc.,
11   764 F.2d 655, 657 (9th Cir. 1985).     A court abuses its
12   discretion when it fails to identify and apply “the correct
13   legal rule to the relief requested,” United States v. Hinkson,
14   585 F.3d 1247, 1263 (9th Cir.2009)(en banc), or if its
15   application of the correct legal standard was “(1) ‘illogical,’
16   (2) ‘implausible,’ or (3) without ‘support in inferences that
17   may be drawn from the facts in the record.’”     Id. at 1262.
18                               V. DISCUSSION
19        We first consider sua sponte whether appellant has standing
20   to appeal the fee orders.    Palmdale Hills Prop., LLC v. Lehman
21   Commercial Paper, Inc. (In re Palmdale Hills Prop., LLC),
22   654 F.3d 868, 873 (9th Cir. 2011) (standing is a necessary
23   component of subject matter jurisdiction).     As noted, appellant
24   had no equity in the property and the attorney lien creditors
25   agreed that a portion of the proceeds belonging to them could be
26   paid to the trustee and his professionals.     With no economic
27   stake in the matter appellant was not “directly and adversely
28   affected pecuniarily” by the bankruptcy court’s decision to

                                      -8-
 1   award the fees and hence does not qualify as a “person
 2   aggrieved”.     Duckor Spradling & Metzger v. Baum Trust
 3   (In re P.R.T.C., Inc.), 177 F.3d 774, 777 (9th Cir. 1999).
 4   Accordingly, appellant’s appeal of the orders should be
 5   dismissed.
 6            Even assuming appellant does have standing to appeal the
 7   fee orders, we affirm on the merits.     In essence, appellant is
 8   unhappy that the carve out5 from the attorney lien creditors’
 9   share of the sale proceeds was paid to the trustee and his
10   professionals rather than to her even though there was no equity
11   in the property.     Appellant raises six issues on appeal which
12   all relate, in one way or another, to the bankruptcy court’s
13   approval of the sale and settlement agreement.     However, her
14   arguments regarding the propriety of the sale and the legality
15   of the carve out have already been adjudicated.
16            At the hearing on the trustee’s motion to approve the sale
17   and the settlement agreement, appellant appeared and argued
18   then, as she does now, that:     (1) the carve out for payment of
19   administrative fees in the settlement agreement violated the
20   distribution scheme under §§ 363 and 726; (2) as co-owner of the
21   property she was entitled to the excess proceeds from the
22   “equity” of the property; and (3) the bankruptcy court should
23   have ordered the trustee to abandon the property so that she
24
25        5
            “[A] ‘carve-out agreement’ is generally understood to be
26   ‘an agreement by a party secured by all or some of the assets of
     the estate to allow some portion of its lien proceeds to be paid
27   to others, i.e., to carve out of its lien position.’” See
     In re U.S. Flow Corp., 332 B.R. 792, 796 (Bankr. W.D. Mich.
28   2005).

                                       -9-
 1   could pursue her remedies in the state court.     The bankruptcy
 2   court rejected these arguments and later entered orders
 3   approving the sale and settlement.
 4            Appellant did not appeal the sale and settlement orders.
 5   Therefore, those orders became final and we do not have
 6   jurisdiction to review them in this appeal.     See Wiersma v. Bank
 7   of the W. (In re Wiersma), 483 F.3d 933, 938 (9th Cir. 2007)
 8   (stating that the provisions for timely filing of an appeal
 9   under Rule 8002 are jurisdictional).
10            The doctrine of issue preclusion also bars appellant from
11   questioning the validity of the sale and settlement orders in
12   this appeal.     See Thomas v. Namba (In re Thomas), 2007 WL
13   7751299 (9th Cir. BAP 2009) aff’d 474 Fed. Appx. 500 (9th Cir.
14   2012).6     Under this doctrine, “when an issue of ultimate fact
15   has once been determined by a valid and final judgment, that
16   issue cannot again be litigated between the same parties in any
17   future lawsuit.”     U.S. v. Bhatia, 545 F.3d 757, 759 (9th Cir.
18   2008) (quoting Ashe v. Swenson, 397 U.S. 436, 443, 90 S.Ct.
19   1189, 25 L.Ed.2d 469 (1970)).     “A party invoking issue
20   preclusion must show:     (1) the issue at stake is identical to an
21
          6
            In Thomas, the debtor challenged the bankruptcy court’s
22
     award of fees to the trustee and his attorney on the basis that
23   the sale of her property was unnecessary. Because the sale order
     was final, the bankruptcy court reasoned that Thomas could not
24   again raise issues about the sale as a basis for objecting to the
     fees. This Panel interpreted the bankruptcy court’s ruling to be
25   based on issue preclusion and found all elements for the doctrine
26   were met. In re Thomas, 2007 WL 7751299, at *8-9. The Ninth
     Circuit affirmed, finding that issue preclusion barred Thomas
27   from relitigating the propriety of the sale order under the guise
     of challenging the bankruptcy court’s allowance of fees related
28   to the sale. 474 Fed. Appx. at 502-03.

                                       -10-
 1   issue raised in the prior litigation; (2) the issue was actually
 2   litigated in the prior litigation; and (3) the determination of
 3   the issue in the prior litigation must have been a critical and
 4   necessary part of the judgment in the earlier action.”
 5   Littlejohn v. United States, 321 F.3d 915, 923 (9th Cir. 2003).
 6            Appellees have shown that these elements are satisfied
 7   here.     Appellant’s challenges to the fee orders in this appeal
 8   are directly related to, or the same as, the issues she raised
 9   in opposition to the trustee’s sale and settlement motions.
10   Those issues were actually litigated and a critical and
11   necessary part of the orders approving the sale and the
12   settlement.     Further, appellant had a full and fair opportunity
13   to litigate the issues at the July 14, 2011 hearing on those
14   matters.     There is no question that the parties are the same.
15   Accordingly, we exercise our discretion to apply the doctrine in
16   this appeal.7
17            In short, appellant is bound by the bankruptcy court’s
18   earlier findings of fact and conclusions of law with respect to
19   the sale and settlement orders.     Appellant assigns no other
20
21        7
            Appellees also assert that because appellant did not
     appeal the sale or settlement orders, the bankruptcy court’s
22
     findings and conclusions with respect to those orders constitute
23   the “law of the case” as between appellant and appellees and
     should not be reopened in this appeal. Under the “law of the
24   case doctrine,” a court is ordinarily precluded from reexamining
     an issue previously decided by the same court, or a higher court,
25   in the same case. In re Wiersma, 483 F.3d at 941. Although the
26   sale and settlement orders may constitute the “law of the case”
     as between the parties and at the bankruptcy court, the doctrine
27   is inapplicable in this appeal. We have not previously decided
     any issue in this appeal nor has a higher court, so the law of
28   the case does not apply to the Panel.

                                       -11-
 1   errors to the bankruptcy court’s decision to approve the fee
 2   orders in her opening brief.   Issues which are not argued
 3   specifically and distinctly in a party’s opening brief are
 4   waived.   City of Emeryville v. Robinson, 621 F.3d 1251, 1261
 5   (9th Cir. 2010).
 6                            VI.   CONCLUSION
 7        For the reasons stated, we AFFIRM.
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                                    -12-