Court Opinion

ID: 4192717
Source: CourtListenerOpinion
Date Created: 2017-08-03 17:02:21.479648+00
Date Added: 2024-06-11T14:13:50.633884
License: Public Domain

FILED
                                                                 JUL 15 2016
 1                         NOT FOR PUBLICATION
                                                          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-15-1344-FKiKu
                                   )
 6   LYDIA ONG SANDERS,            )      Bk. No.    8:15-bk-14615-TA
                                   )
 7                  Debtor.        )
     _____________________________ )
 8                                 )
     LYDIA ONG SANDERS,            )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )      MEMORANDUM*
11                                 )
     UNITED STATES TRUSTEE,**      )
12                                 )
                    Appellee.      )
13   ______________________________)
14                   Argued and Submitted on June 23, 2016
                           at Pasadena, California***
15
                             Filed – July 15, 2016
16
                Appeal from the United States Bankruptcy Court
17                  for the Central District of California
18       Honorable Theodor C. Albert, Bankruptcy Judge, Presiding
19
     Appearances:     Richard Lawrence Antognini argued for Appellant
20                    Lydia Ong Sanders.
21
22        *
            This disposition is not appropriate for publication.
23   Although it may be cited for whatever persuasive value it may
     have, see Fed. R. App. P. 32.1, it has no precedential value, see
24   9th Cir. BAP Rule 8024-1.
25        **
            The United States Trustee did not file an answering brief
26   or otherwise participate in this appeal.
          ***
27           Oral argument in this matter was consolidated with the
     appeal in Sanders v. Cohen (In re Sanders), BAP No. CC-15-1284-
28   FKiKu.
 1   Before: FARIS, KIRSCHER, and KURTZ, Bankruptcy Judges.
 2                               INTRODUCTION
 3        Appellant/chapter 111 debtor Lydia Ong Sanders appeals the
 4   bankruptcy court’s summary dismissal of her bankruptcy case at
 5   the time she filed the petition.       The court did so without notice
 6   or an opportunity for a hearing, based solely on the fact that
 7   she and her husband had recently filed numerous bankruptcy
 8   petitions.    We find that the bankruptcy court deprived
 9   Mrs. Sanders of due process.    Accordingly, we VACATE the
10   dismissal order and REMAND this case to the bankruptcy court.
11                            FACTUAL BACKGROUND2
12        Mrs. Sanders and her husband, Marshall Samuel Sanders, have
13   initiated a combined total of nine bankruptcy petitions since
14   2010.    Mrs. Sanders has filed four petitions in the Central
15   District of California, including the petition from which this
16   appeal arises.3
17        Prior to the instant appeal, Mrs. Sanders most recently
18   filed a chapter 11 bankruptcy petition on October 29, 2014.      That
19   case was dismissed on November 19, 2014 for failure to file her
20
21        1
            Unless specified otherwise, all chapter and section
22   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
          2
23          We have exercised our discretion to review the bankruptcy
     court’s docket, as appropriate. See Woods & Erickson, LLP v.
24   Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP
     2008).
25
          3
26          Mrs. Sanders filed a chapter 7 case in June 2010 and
     received a discharge in September 2010; she filed a chapter 13
27   case in December 2013, which was dismissed in March 2014 with a
     180-day bar on refiling; and she filed a chapter 11 case in
28   October 2014, which was dismissed in November 2014.

                                        2
 1   schedules, statements, or a plan.    The court did not impose any
 2   bar against refiling a bankruptcy petition.
 3        On September 22, 2015, Mrs. Sanders again attempted to file
 4   a chapter 11 petition.   Mrs. Sanders’ filings included an
 5   Application for Individuals to Pay the Filing Fee in
 6   Installments.   Her husband filed the documents in the clerk’s
 7   office and waited to receive conformed copies.
 8        The clerk returned to Mr. Sanders the Order Approving
 9   Payment of Filing Fee in Installments with a handwritten note by
10   the bankruptcy judge stating, “denied - dismiss w. 180-day bar.
11   This debtor and husband have filed 9 cases in only about 4
12   years.”
13        The court entered the order and notice of dismissal on the
14   same day.   Mrs. Sanders timely appealed.
15                               JURISDICTION
16        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
17   §§ 1334 and 157(b)(1).   We have jurisdiction under 28 U.S.C.
18   § 158.
19                                  ISSUE
20        Whether the bankruptcy court violated due process by
21   dismissing Mrs. Sanders’ petition without notice or a hearing.4
22                            STANDARD OF REVIEW
23        “Whether an appellant’s due process rights were violated is
24   a question of law we review de novo.”      DeLuca v. Seare
25
          4
26          Although Mrs. Sanders’ statement of issues on appeal
     refers to violations of the Federal Rules of Bankruptcy Procedure
27   and the local rules, the argument in her opening brief focuses
     solely on the alleged denial of due process. As such, we only
28   address the due process issues raised therein.

                                      3
 1   (In re Seare), 515 B.R. 599, 615 (9th Cir. BAP 2014) (citing
 2   Miller v. Cardinale (In re DeVille), 280 B.R. 483, 492 (9th Cir.
 3   BAP 2002), aff’d, 361 F.3d 539 (9th Cir. 2004)); see also HSBC
 4   Bank USA, Nat’l Ass’n v. Blendheim (In re Blendheim), 803 F.3d
 5   477, 497 (9th Cir. 2015) (“Whether adequate notice has been given
 6   for the purposes of due process is a mixed question of law and
 7   fact that we review de novo.”).   “De novo review requires that we
 8   consider a matter anew, as if no decision had been made
 9   previously.”   Francis v. Wallace (In re Francis), 505 B.R. 914,
10   917 (9th Cir. BAP 2014) (citations omitted).
11                               DISCUSSION
12   A.   Due process generally requires notice and an opportunity to
          be heard.
13
14        The sole issue on appeal concerns whether the bankruptcy
15   court violated Mrs. Sanders’ due process rights by dismissing her
16   petition without notice or an opportunity to be heard.
17        Generally speaking, a court must give sufficient notice of
18   its intention to dismiss a case and the opportunity for
19   interested parties to be heard.   See Tennant v. Rojas
20   (In re Tennant), 318 B.R. 860, 870 (9th Cir. BAP 2004) (“the
21   concept of procedural due process requires a notice and an
22   opportunity to be heard” (citing Muessel v. Pappalardo
23   (In re Muessel), 292 B.R. 712, 717 (1st Cir. BAP 2003))).
24   According to the United States Supreme Court:
25             An elementary and fundamental requirement of due
          process in any proceeding which is to be accorded
26        finality is notice reasonably calculated, under all the
          circumstances, to apprise interested parties of the
27        pendency of the action and to afford them an
          opportunity to present their objections. The notice
28        must be of such nature as reasonably to convey the

                                       4
 1        required information, . . . and it must afford a
          reasonable time for those interested to make their
 2        appearance[.]
 3   Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950)
 4   (internal citations omitted).
 5        Section 1112(b) provides that, “after notice and a hearing,”
 6   a court may dismiss a chapter 11 case “for cause.”
 7   Section 102(1) defines the phrase “after notice and a hearing”:
 8        (1) “after notice and a hearing”, or a similar phrase -
 9              (A) means after such notice as is appropriate in
                the particular circumstances, and such opportunity
10              for a hearing as is appropriate in the particular
                circumstances; but
11
                (B) authorizes an act without an actual hearing if
12              such notice is given properly and if -
13                   (i) such a hearing is not requested timely by
                     a party in interest; or
14
                     (ii) there is insufficient time for a hearing
15                   to be commenced before such act must be done,
                     and the court authorizes such act[.]
16
17        “[T]he concept of notice and a hearing is flexible and
18   depends on what is appropriate in the particular circumstance.”
19   In re Tennant, 318 B.R. at 870 (citing Great Pac. Money Markets,
20   Inc. v. Krueger (In re Krueger), 88 B.R. 238, 241 (9th Cir. BAP
21   1988)).   A procedure may be “perfectly appropriate” if it
22   “notifies the debtor of the deficiencies of his petition and
23   dismisses the case sua sponte without further notice and a
24   hearing when the debtor fails to file the required forms within a
25   deadline.”   Id. at 870-71 (citing Minkes v. LaBarge
26   (In re Minkes), 237 B.R. 476, 478–79 (8th Cir. BAP 1999)).
27   However, we have acknowledged that the “flexible” notice and
28   hearing requirement does not allow a bankruptcy court to

                                      5
 1   steamroll over a party’s due process rights.   Id. at 871 (citing
 2   Dinova v. Harris (In re Dinova), 212 B.R. 437, 443-44 (2d Cir.
 3   BAP 1997)).
 4   B.   The court violated due process by failing to afford
          Mrs. Sanders adequate notice and the right to be heard prior
 5        to dismissing her bankruptcy petition.
 6        In the present case, the bankruptcy court dismissed
 7   Mrs. Sanders’ petition at the clerk’s office filing window.    It
 8   did not give her any notice prior to dismissing her petition, nor
 9   did it allow her an opportunity to present arguments to the court
10   or rectify any deficiencies.   This was an error.
11        Section 102(d) requires only such notice and opportunity for
12   hearing as is “appropriate in the particular circumstances.”     But
13   it was not “appropriate” to dismiss Mrs. Sanders’ case (by way of
14   a handwritten note on an unrelated form) without giving
15   Mrs. Sanders any semblance of prior notice or any opportunity for
16   a hearing.
17        This was not a harmless error.   See Rosson v. Fitzgerald
18   (In re Rosson), 545 F.3d 764, 776-77 (9th Cir. 2008) (“Because
19   there is no reason to think that, given appropriate notice and a
20   hearing, Rosson would have said anything that could have made a
21   difference, Rosson was not prejudiced by any procedural
22   deficiency.”).   Mrs. Sanders could have pointed out that the only
23   reason the court gave for dismissing her case is invalid: no rule
24   or statute allows for summary dismissal solely because a debtor
25   and her spouse have filed a particular number of bankruptcy cases
26   in a given time period.   But the bankruptcy court did not give
27   her a chance to say this or anything else.
28        We acknowledge that the dismissal of Mrs. Sanders’

                                      6
 1   chapter 11 case may have been inevitable.   The Sanders family’s
 2   record of filings and dismissals does not bode well.   Further, it
 3   is nearly impossible for an unrepresented debtor to navigate the
 4   complexities of a chapter 11 case.   Nevertheless, a court may not
 5   “cut to the chase” in a manner that deprives a party of due
 6   process.
 7        Accordingly, the bankruptcy court erred when it dismissed
 8   Mrs. Sanders’ petition without giving her notice of its intent to
 9   dismiss the case and affording her an opportunity to be heard on
10   that issue.5
11                              CONCLUSION
12        For the reasons set forth above, we VACATE the bankruptcy
13   court’s dismissal of Mrs. Sanders’ bankruptcy petition and REMAND
14   the case to the bankruptcy court.
15
16
17
18
19
20
21
22
23
24
          5
            Arguably, the present appeal may be moot, since the
25   180-day bar on filing has since expired, and Mrs. Sanders may
26   file a new petition. But the improper dismissal of this case
     might still prejudice Mrs. Sanders because she and her husband
27   would have filed ten bankruptcy cases in six years. In other
     words, if we allow the court’s order to stand, Mrs. Sanders may
28   never be able to get past the filing window.

                                     7