Court Opinion

ID: 818065
Source: CourtListenerOpinion
Date Created: 2013-02-01 22:30:16.675467+00
Date Added: 2024-06-11T12:18:58.528082
License: Public Domain

FILED
                                                                DEC 19 2012
 1                                                         SUSAN M SPRAUL, CLERK
                                                              U.S. BKCY. APP. PANEL
                                                              OF THE NINTH CIRCUIT
 2
                       UNITED STATES BANKRUPTCY APPELLATE PANEL
 3
                                 OF THE NINTH CIRCUIT
 4
 5   In re                              )        BAP No. CC-12-1186-HaMkH
                                        )
 6   MAURA SANTANA and                  )        Bk. No. 10-14139-WB
     TEODORO SANTANA,                   )
 7                                      )
                         Debtors.       )
 8                                      )
                                        )
 9   ESPERANZA VENTUS BADA;             )
     LAW OFFICES OF ESPERANZA V. BADA, )
10                                      )
                         Appellants,    )
11                                      )
     v.                                 )        M E M O R A N D U M1
12                                      )
     NANCY K. CURRY, Chapter 13 Trustee;)
13   TEODORO SANTANA; MAURA SANTANA,    )
                                        )
14                       Appellees.     )
                                        )
15
                            Submitted Without Oral Argument
16                               on September 21, 2012
17                             Filed - December 19, 2012
18                  Appeal from the United States Bankruptcy Court
                        for the Central District of California
19
                 Honorable Julia W. Brand, Bankruptcy Judge, Presiding
20
21   Before: HAMMOND2, HOLLOWELL and MARKELL Bankruptcy Judges.
22
             1
23          This disposition is not appropriate for publication.
     Although it may be cited for whatever persuasive value it may have
24   (see Fed. R. App. P. 32.1), it has no precedential value. See 9th
     Cir. BAP Rule 8013-1.
25
             2
            Hon. M. Elaine Hammond, Bankruptcy Judge for the Northern
26   District of California, sitting by designation.

                                           1
 1                                  INTRODUCTION
 2           This appeal arises from the bankruptcy court’s order requiring
 3   debtors’ former attorney, Esperanza V. Bada (“Bada”), to provide an
 4   accounting of fees received by her and/or the Law Offices of
 5   Esperanza V. Bada (“Law Firm”) for debtors’ current chapter 133 case
 6   and their prior chapter 13 case and to disgorge such fees.      For the
 7   reasons explained below, we DISMISS the appeal for lack of
 8   jurisdiction.
 9
10                                     FACTS
11           Teodoro Santana and Maura Santana (“Debtors”) filed a
12   chapter 13, case no. 09-38411 (“First Chapter 13 Case”) on
13   October 16, 2009, through their attorney Bada.    According to the
14   Disclosure of Compensation Bada received $4,000 from debtors for
15   services to be rendered in connection with the First Chapter 13
16   Case.    On January 13, 2010, the case was dismissed.
17           On February 5, 2010, Debtors filed another chapter 13 case,
18   case no. 10-14139 (“Second Chapter 13 Case”).    The Disclosure of
19   Compensation indicates that Debtors’ attorney, Ronald R. Carlson of
20   Law Offices of Esperanza Bada, (“Carlson”) agreed to receive $0.00
21   as compensation for services rendered in connection with the Second
22   Chapter 13 Case.    On June 16, 2010, a new attorney was substituted
23
          3
            Unless specified otherwise, all chapter and section
24   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
25   all “Rule” references are to the Federal Rules of Bankruptcy
     Procedure, Rules 1001-9037. All “Civil Rule” references are to
26   the Federal Rules of Civil Procedure.

                                         2
 1   for Carlson as Debtor’s counsel.
 2           On June 25, 2010, Appellee Nancy Curry, chapter 13 trustee,
 3   (“Trustee”) filed a motion for an order requiring Carlson to provide
 4   an accounting of attorney fees received and to disgorge such fees
 5   (“Carlson Disgorgement Motion”).    In support of the motion the
 6   Trustee filed the declaration of debtor Maura Santana who stated
 7   that neither Bada nor Carlson advised Debtors regarding their
 8   chapter 13 cases or answered Debtors’ questions.    Debtors never
 9   learned why their First Chapter 13 Case was dismissed.    The Carlson
10   Disgorgement Motion was served upon Carlson at Law Firm on June 25,
11   2010.
12           Debtors’ Second Chapter 13 Case was dismissed on August 5,
13   2010.    However, the court retained jurisdiction “on all issues
14   arising under Bankruptcy Code Sections 110, 329 and 362.”    Order and
15   Notice of Dismissal (Aug. 5, 2010) at p.1.4
16           Carlson did not respond to the Carlson Disgorgement Motion.   At
17   the July 21, 2010 hearing, the court ordered Carlson to provide a
18   detailed accounting of all fees received in both chapter 13 cases
19
20        4
            In order to fully understand the facts underlying this
21   appeal, we have taken judicial notice of documents filed with the
     bankruptcy court on its electronic docket. See O’Rourke v. Seaboard
22   Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d 955, 957-58 (9th Cir.
     1988); Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R.
23   227, 233 n.9 (9th Cir. BAP 2003).
          A further review of the bankruptcy docket shows that the Second
24   Chapter 13 Case was closed on March 2, 2011. With an order entered
25   November 28, 2011, the closing order was set aside due to clerical
     error and the case reopened “for further administration of the
26   motion for an Order to Show Cause filed on 6-27-11.”

                                         3
 1   and to disgorge such fees by August 31, 2010 (“Carlson Disgorgement
 2   Order”).
 3        On June 27, 2011, the Trustee filed a motion for an order to
 4   show cause why Debtors’ former attorneys Carlson and Bada should not
 5   be held in contempt for failure to comply with the Carlson
 6   Disgorgement Order (“Motion for OSC”).   It was served upon Carlson
 7   at Law Firm and at his State Bar address as well as upon Bada at her
 8   State Bar address.
 9        Bada filed an opposition to the Motion for OSC on July 6, 2011,
10   stating that she was not named a party in Trustee’s prior motion as
11   well as the Carlson Disgorgement Order and should therefore not be
12   held in contempt.
13        The Motion for OSC was set for hearing on January 11, 2012.
14   The Notice of Rescheduled Hearing was served upon Carlson and Bada
15   at their respective State Bar addresses.
16        The Trustee filed a response to Bada’s opposition on
17   December 14, 2011, stating that Bada consulted with Debtors prior to
18   filing the petition and was counsel of record for the First
19   Chapter 13 Case, for which she received $4,000 as well as the
20   petition filing fee of $274.
21        Bada filed a reply to Trustee’s response on December 28, 2011,
22   addressing the merits of the Trustee’s disgorgement request.    Bada
23   argued that Debtors are not entitled to disgorgement because: 1) The
24   fees paid were earned because Carlson provided all services
25   necessary and made all appearances. The First Chapter 13 case was
26   dismissed due to Debtors’ failure to cooperate.   2) Bada was not

                                      4
 1   named a party in Trustee’s motion or the Carlson Disgorgement Order
 2   and had no standing to respond to the motion.    By asking the court
 3   to hold Bada in contempt Trustee is denying Bada the constitutional
 4   right to due process.    3) The fees paid were a classic retainer,
 5   earned upon receipt, that never became property of the estate and
 6   that is, thus, not subject to disgorgement.
 7           Again on January 4, 2012, Bada filed a supplemental reply
 8   listing further case law in support of her contention that a classic
 9   retainer is not subject to disgorgement.
10           The Motion for OSC was heard on January 11, 2012.   At the
11   hearing the court stated that it is “an issue” that neither Bada nor
12   Law Firm were identified in the Carlson Disgorgement Motion.     The
13   court further stated that it will “issue a separate order, an
14   initial order, requiring Mrs. Bada to account and disgorge . . .       on
15   [its] own motion.”    Hr’g Tr. January 11, 2012 at p. 1, line 23
16   through p.2, line 1.    Moreover, the court found that the retainer
17   agreement identified Bada and Law Firm as attorneys who received the
18   fees.    Bada confirmed having received the fees as cash payment.
19   Thereupon the court told Bada “[y]ou need to account and disgorge”
20   and reiterated that it will issue a separate order requiring Bada
21   and Law Firm to account and disgorge.    Hr’g Tr. January 11, 2012 at
22   p. 2, line 6.
23           Following the hearing the court granted the Motion for OSC as
24   to Carlson and set a hearing for March 7, 2012, (“Carlson OSC
25   Order”).
26           The court also entered an order on February 10, 2012, requiring

                                         5
 1   Bada to provide a detailed accounting of fees received in both
 2   chapter 13 cases and to disgorge such fees5 by March 1, 2012 (“First
 3   Bada Order”).    The First Bada Order was served upon Carlson at Law
 4   Firm on February 12, 2012.    The “Notice of Entered Order and Service
 5   List” attached to the order also shows service to Bada at Law Firm,
 6   but does not indicate a date.
 7        On February 15, 2012, Bada filed a response to the Carlson OSC
 8   Order stating that in case she was required to respond prior to the
 9   March 7, 2012 hearing she submits her arguments as listed in the
10   December 28, 2011 opposition.    She further requested that the court
11   at the March 7, 2012 hearing make a determination as to whether the
12   fees paid were a classic retainer.
13        On March 20, 2012, the court again entered an order requiring
14   Bada to account in detail and disgorge fees received in both
15   chapter 13 cases by April 10, 2012, (“Second Bada Order”).6
16        Bada filed a Notice of Appeal of the Second Bada Order on
17   April 2, 2012.
18        She also filed a response to the Second Bada Order on April 10,
19   2012, essentially stating the same arguments as made in her
20   appellate brief.
21
          5
22          We do not understand   why the bankruptcy court ordered
     accounting and disgorgement   at the same time. Since one follows the
23   other, courts usually order   an accounting first and based on the
     accounting received address   the amount to be disgorged.
24
          6
25          This order is substantially the same order that was entered
     February 10, 2012, aside from expressly naming Bada and Law Firm as
26   recipients of the fees and a new due date.

                                        6
 1                                 JURISDICTION
 2        Appellants argue that the bankruptcy court lacked subject-
 3   matter jurisdiction when it entered the Second Bada Order because
 4   the Second Chapter 13 Case had already been dismissed.
 5        The Debtors’ Second Chapter 13 Case was, in fact, dismissed on
 6   August 5, 2010.   However, the dismissal order stated that “the court
 7   retains jurisdiction on all issues arising under the Bankruptcy Code
 8   Sections 110, 329 and 362.”
 9        Thus, even though Debtors’ Second Chapter 13 Case was
10   dismissed, the court retained jurisdiction to address questions
11   regarding reasonableness of services provided under 11 U.S.C.
12   §329(b).   Hence, the bankruptcy court had subject-matter
13   jurisdiction when it entered the Second Bada Order.
14        We address our jurisdiction below.
15
16                                    ISSUES
17        Do we have jurisdiction over this appeal?
18        Did the bankruptcy court err in entering an order requiring
19   Debtors’ former counsel to disgorge all fees received from Debtors?
20
21                             STANDARD OF REVIEW
22        A bankruptcy court's conclusions of law, including its
23   interpretation of the Bankruptcy Code, are reviewed de novo.
24   In re S. Cal. Sunbelt Developers, Inc., 608 F.3d 456, 461 (9th Cir.
25   2010). A bankruptcy court's findings of fact are reviewed for clear
26   error. Higgins v. Vortex Fishing Sys., Inc., 379 F.3d 701, 705 (9th

                                        7
 1   Cir. 2004).   A factual finding is clearly erroneous if, after
 2   reviewing the record, the appellate court has a definite conviction
 3   an error has been made.    In re Beauchamp, 236 B.R. 727, 729–730 (9th
 4   Cir. BAP 1999).   A bankruptcy court's determination of attorneys'
 5   fees will not be disturbed on review “unless the bankruptcy court
 6   abused its discretion or erroneously applied the law.”    In re
 7   Strand, 375 F.3d 854, 856–57 (9th Cir. 2004); see also Sunbelt
 8   Developers, 608 F.3d at 461.
 9
10                                  DISCUSSION
11             Finality and Appealability of Second Bada Order
12        Before addressing the issues raised in the parties’ briefs, we
13   turn to the peculiar history of the order on appeal.
14        In this case the bankruptcy court entered three disgorgement
15   orders and one order to show cause.
16        The Carlson Disgorgement Order was entered on June 25, 2010;
17   the Carlson OSC Order on February 10, 2012.
18        The court also issued two disgorgement orders with
19   substantially the same content addressed to Bada.   The First Bada
20   Order was entered on February 10, 2012, and served by BNC upon
21   Carlson at Law Firm on February 12, 2012.   The “Notice of Entered
22   Order and Service List” attached to the order also shows service to
23   Bada at Law Firm, but does not indicate a date.   The Second Bada
24   Order was entered on March 20, 2012, and served exactly as the prior
25   order on March 22, 2012.
26        Bada filed a Notice of Appeal regarding the Second Bada Order.

                                        8
 1   In her brief she claims not having received service of the First
 2   Bada Order, but acknowledges service of the Second Bada Order that
 3   was served the same way as the prior order.   The bankruptcy docket
 4   is completely silent as to the bankruptcy court’s reasons for
 5   entering the Second Bada Order.
 6        We review the appellate record to determine if the First Bada
 7   Order is a final order.   “A disposition is final if it contains ‘a
 8   complete act of adjudication,’ that is, a full adjudication of the
 9   issues at bar, and clearly evidences the judge’s intention that it
10   be the court’s final act in the matter.”    Slimick v. Silva
11   (In re Slimick), 928 F.2d 304, 307 (9th Cir. 1990).
12        At the Janaury 11, 2012 hearing on the Motion for OSC, the
13   court stated that as a result of due process concerns, it would
14   issue an “initial order” to Bada requiring Bada to account and
15   disgorge by February 1.   Hr’g Tr. January 11, 2012 at p. 1, line 23
16   through p. 2, line 20.    The First Bada Order was then entered on
17   February 10, 2012.   At the next hearing, on March 7, 2012, the court
18   stated that she had entered on February 10, 2012 the First Bada
19   Order requiring Bada to account and disgorge. Hr’g Tr. March 7, 2012
20   at p. 3, lines 5-10.   Thus, the court’s statements at both hearings
21   support a finding that the court intended the First Bada Order to be
22   a final order.   Further, the language of the First Bada Order and
23   Second Bada Order is virtually identical.   This strong identity
24   between the two orders and the court’s statements on the record show
25   that the First Bada Order was a complete adjudication and the
26   court’s final act in the matter of disgorgement.   Entry of the

                                        9
 1   Second Bada Order could not extend the deadline to file a timely
 2   appeal.
 3        Once such a final order is docketed, irregularities in its
 4   service do not automatically extend the appeal period.   See Fed. R.
 5   Bankr. P. 9022 ("lack of notice of the entry does not affect the
 6   time to appeal or relieve or authorize the court to relieve a party
 7   for failure to appeal within the time allowed, except as permitted
 8   in Rule 8002."); Warrick v. Birdsell (In re Warrick), 278 B.R. 182,
 9   187 (B.A.P. 9th Cir. 2002) ("‘It is well-settled that failure to
10   receive notice of entry of judgment or order is not an excuse for an
11   untimely appeal because it is the party's affirmative duty to
12   monitor the dockets.    Therefore, the failure of a court clerk to
13   give notice of entry of an order is not a ground, by itself, to
14   warrant finding an otherwise untimely appeal timely.'") (quoting Key
15   Bar Invs., Inc. v. Cahn (In re Cahn), 188 B.R. 627, 632 (B.A.P. 9th
16   Cir. 1995)).
17        We are persuaded that this Panel lacks jurisdiction.    Bada’s
18   appeal is untimely.    Therefore, we do not address the merits of the
19   disgorgement order.
20
21                                  CONCLUSION
22        For the reasons set forth above, we DISMISS this appeal for
23   lack of jurisdiction.
24
25
26

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