Court Opinion

ID: 9556256
Source: CourtListenerOpinion
Date Created: 2023-08-16 18:01:42.606843+00
Date Added: 2024-06-11T16:42:02.416868
License: Public Domain

FILED
                                                                                AUG 16 2023
                         NOT FOR PUBLICATION                                SUSAN M. SPRAUL, CLERK
                                                                              U.S. BKCY. APP. PANEL
                                                                              OF THE NINTH CIRCUIT

          UNITED STATES BANKRUPTCY APPELLATE PANEL
                    OF THE NINTH CIRCUIT

In re:                                              BAP No. OR-23-1005-LBG
BRENT EVAN WEBSTER,
            Debtor.                                 Bk. No. 19-34090-PCM

BRENT EVAN WEBSTER,
            Appellant.                              MEMORANDUM∗

               Appeal from the United States Bankruptcy Court
                          for the District of Oregon
               Peter C. McKittrick, Bankruptcy Judge, Presiding

Before: LAFFERTY, BRAND, and GAN, Bankruptcy Judges.

                                 INTRODUCTION

      Debtor Brent Evan Webster appeals the bankruptcy court’s denial of

his motion to reopen his chapter 13 1 bankruptcy case. As a dismissed

bankruptcy case cannot be reopened, we see no error and AFFIRM.

      ∗ This disposition is not appropriate for publication. 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 9th Cir. BAP Rule 8024-1.
       1 Unless specified otherwise, all chapter and section references are to the

Bankruptcy Code, 11 U.S.C. §§ 101–1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure.

                                            1
                                       FACTS2

A.    The bankruptcy filing

      Webster filed his chapter 7 case on November 4, 2019. In early

December 2019, the bankruptcy court granted his motion to convert his

case to chapter 13. In his schedules he claimed a disputed 50% ownership

interest in real property valued at $332,840.50 secured by disputed liens of

approximately $420,000. He reported that he is unemployed with income of

$600 per month from work as a handyman with total monthly expenses of

$600 which included no residence rental expense and/or payment of a

mortgage.

B.    The chapter 13 plan and subsequent events

      Webster filed his initial chapter 13 plan proposing to pay $50 per

month for 36 months. Select Portfolio Services (“SPS”) objected to the plan

noting that it did not pay arrearages owed to it of $24,000, nor pay the

regular monthly payment, property taxes or insurance. The chapter 13

trustee objected to the plan noting, among other things, the lack of

feasibility. The Oregon Department of Justice, Division of Child Support

(“DOJ”) also objected to the plan noting that priority claims of $74,048 for

past due child support were not provided for in the plan.

      In response, Webster filed objections to nine proofs of claim

including the DOJ claim, and a one-page response to the various objections

      2
          We exercise our discretion to take judicial notice of documents electronically
filed in the underlying bankruptcy case and adversary proceedings. See Atwood v. Chase
                                           2
to his plan. At the first hearing on confirmation of the plan, the bankruptcy

court denied confirmation and gave Webster time to file an amended plan.

Webster’s first amended plan did not change the plan payment of $50, but

it proposed also to pay creditors “[a]ny non-exempt proceeds from

Aramark Lawsuit listed on Schedule B, line 33[.]”3

      Webster also filed three separate one-page “Notice[s] of an

Adversary Complaint” against SPS, the DOJ and creditors Alex and Connie

Trail. In the notices, Webster demanded a jury trial “to challenge the claim .

. . as invalid and fraudulent.” No separate complaint was filed with the

“notices.” Each of the adversary defendants filed motions to dismiss the

respective adversary proceeding filed against them.

      On April 16, 2020, the bankruptcy court conducted a hearing on the

claims objections as well as the motions to dismiss. After some discussion,

the bankruptcy court denied confirmation of the amended plan giving

Webster the opportunity to file another amended plan and continued the

hearing to April 30, 2020.

      Webster’s second amended plan proposed monthly plan payments of

$0.00 for 60 months; it also proposed to pay into the plan any amounts due

to him from tax refunds. The plan removed the proposal to contribute the

proceeds from the “Aramark Lawsuit” as provided in the previous plan.

Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
       3 Schedule B, line 33, disclosed a claim against a third party without naming the

party. The basis for the claim was “neighbor purposely caused death of family pet and a
annuity dispu (sic).”
                                           3
      The bankruptcy court conducted a continued hearing on April 30,

2020 at which time it explained its rulings on the motions to dismiss the

adversary proceedings and on the claims objections. With respect to the

SPS objection, the court indicated that an evidentiary hearing would be

required. With respect to the DOJ objection, the court requested a

declaration from the DOJ to authenticate certain documents. As to the

remaining issues, the bankruptcy court dismissed each of the adversary

proceedings and overruled the claims objections.

      At the end of the hearing, the bankruptcy court warned Webster that

if it overruled his DOJ claim objection, he would have to pay the priority

claim in full over the life of the plan. The DOJ filed the requested

declarations thereafter and the bankruptcy court entered its order

overruling the objection.

      Webster filed his third amended plan on June 2, 2020 which

continued to provide for no monthly plan payments.

C.    The evidentiary hearing and resulting dismissal of the chapter 13
      case
      On July 2, 2020, the bankruptcy court conducted a lengthy telephonic

hearing on Webster’s objection to the SPS claim, a motion to dismiss the

case filed by creditor Azonia Haney, and confirmation of the most recent

chapter 13 plan. The bankruptcy court permitted direct and cross-

examination of Webster and four other individuals.

      After additional argument, the bankruptcy court overruled the

                                       4
objection to SPS’s claim, denied confirmation of Webster’s plan, and

granted the motion to dismiss the bankruptcy case, finding that Webster

was unable to fund a plan and that his plan was proposed in bad faith. The

court indicated that dismissal would be without a bar on refiling.

D.    The motion to reopen the chapter 13 case

      On December 28, 2022, approximately two years and five months

after dismissal, Webster filed a motion to reopen his chapter 13 case. The

motion largely repeated Webster’s prior arguments and asserted “mistake,

inadvertence, surprise of excusable neglect” with no facts or evidence

supporting those allegations.

      The bankruptcy court denied the motion one week later without a

hearing. In its order, the court noted that, under § 350(b), the case could not

be reopened as a matter of law since the case had been dismissed and not

“closed.” The court also explained that even if it considered the motion to

reopen as a motion to vacate the dismissal of the case, there was no cause

shown to vacate the dismissal. Finally, the court considered the motion

under Civil Rule 60(b), made applicable to this matter by Rule 9024, and

ruled that the request was not made within a reasonable amount of time

nor did Webster offer any reason why the court should reconsider its prior

ruling that the plan was proposed in bad faith and was not feasible.

      Webster appealed.

                                JURISDICTION

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

                                       5
157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158.

                                    ISSUE

      Did the bankruptcy court err in denying Webster’s motion to reopen

his chapter 13 case?

                         STANDARD OF REVIEW

      We review a refusal to reopen a bankruptcy case for an abuse of

discretion. McGhan v. Rutz, (In re McGhan), 288 F.3d 1172, 1178 (9th Cir.

2002) (citations omitted). To determine whether the bankruptcy court has

abused its discretion, we conduct a two-step inquiry: (1) we review de

novo whether the bankruptcy court “identified the correct legal rule to

apply to the relief requested” and (2) if it did, we consider whether the

bankruptcy court’s application of the legal standard was illogical,

implausible, or without support in inferences that may be drawn from the

facts in the record. United States v. Hinkson, 585 F.3d 1247, 1263 (9th Cir.

2009) (en banc).

                                DISCUSSION

A.    The bankruptcy court did not abuse its discretion in denying the
      motion to reopen the chapter 13 case.
      1.    Only a closed case may be reopened.
      Section 350(a) provides: “[a]fter an estate is fully administered and

the court has discharged the trustee, the court shall close the case.” Section

350(b) provides: “[a] case may be reopened in the court in which such case

was closed to administer assets, to accord relief to the debtor, or for other

                                       6
cause.” As we noted in Landress v. Cambridge Land Co. II, LLC (In re

Cambridge Land Co. II, LLC), 626 B.R. 319, 324 (9th Cir. BAP 2021), only a

case “closed” under § 350(a) can be “reopened” under § 350(b) (citing

cases). A case that is dismissed is not closed under § 350(a) and therefore

cannot be reopened.

      It is beyond cavil that the chapter 13 case with no confirmed plan was

not fully administered and therefore could not be closed pursuant to

§ 350(a). It was not closed and cannot be reopened. And Webster offers no

argument or authority otherwise in his brief.

      2.    The motion provided no evidence to establish a basis to
            reopen the case.
      Section 350(b) requires a showing that reopening a bankruptcy case

will “accord relief to the debtor,” or that there is other cause. Webster

provided no basis for relief or other cause either in the motion to reopen or

in his appellate brief. His chapter 13 case was dismissed largely based on

his third amended chapter 13 plan which proposed no monthly payments

to creditors. His motion to reopen made no offer to change his proposed

plan and therefore reopening his case will provide him no relief.

      Moreover, as Webster’s objection to the DOJ claim had been

overruled, he was required to pay the priority claim of $74,048 over 60

months. The bankruptcy court found (and his schedules make obvious)

that the payment of that claim in full through the plan, required under

§ 1322(a)(2), was not possible. Webster offered no evidence or even

                                       7
argument in his motion to reopen nor on appeal as to how he would be

able to pay that claim through a chapter 13 plan.

      As the bankruptcy court also noted, even if the case could have been

reopened under § 350(b), the request was made well beyond what might be

deemed a “reasonable period” of time. Fanning v. Alta Gold Co. (In re Alta

Gold Co.), 236 F.App’x. 266, 267 (9th Cir. 2007) (“Given the length of time

the case was closed and the opportunities that [the party] had to raise the

concerns [it now raises], the bankruptcy court did not abuse its discretion

in refusing to reopen the case after three years.”) (citing Vasquez v. Adair (In

re Adair), 253 B.R. 85, 89 (9th Cir. BAP 2000) (“[I]t is appropriate to consider

the length of time between closure of the case and the request to reopen.”)).

      The bankruptcy court did not abuse its discretion in denying the

motion to reopen.

                               CONCLUSION

      For the reasons set forth above, we AFFIRM.

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