Court Opinion

ID: 2757158
Source: CourtListenerOpinion
Date Created: 2014-12-03 19:08:36.852368+00
Date Added: 2024-06-11T10:28:19.453165
License: Public Domain

FILED
                                                           FEB 03 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. AZ-11-1137-WiJuKi
                                        )
 6   DARCOMM SUPPLY, INC.,              )     Bk. No. 08-05755-GBN
                                        )
 7                  Debtor.             )
     ___________________________________)
 8                                      )
     GARY COLVIN,                       )
 9                                      )
                    Appellant,          )
10                                      )
     v.                                 )     M E M O R A N D U M*
11                                      )
     DARCOMM SUPPLY, INC.; TRUDY A.     )
12   NOWAK, Chapter 7 Trustee,          )
                                        )
13                  Appellees.          )
     ___________________________________)
14
                    Argued and Submitted on January 19, 2012
15                             at Phoenix, Arizona
16                          Filed - February 3, 2012
17             Appeal from the United States Bankruptcy Court
                         for the District of Arizona
18
        Honorable George B. Nielsen, Jr., Bankruptcy Judge, Presiding
19                        _________________________
20
     Appearances:    Appellant Gary Colvin argued pro se; Lawrence D.
21                   Hirsch, Esq., of Deconcini McDonald Yetwin & Lacey,
                     P.C., argued for Appellee Trudy A. Nowak, Chapter 7
22                   Trustee.
                           _________________________
23
     Before: WILLIAMS,** JURY, and KIRSCHER, Bankruptcy Judges.
24
25
          *
           This disposition is not appropriate for publication.
26   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
27   Cir. BAP Rule 8013-1.
          **
28         Hon. Patricia C. Williams, Bankruptcy Judge for the Eastern
     District of Washington, sitting by designation.

                                      -1-
 1        Creditor Gary Colvin (appellant) appeals the bankruptcy
 2   court’s decision denying appellant’s motion for a new trial and
 3   granting the motion for summary judgment and an award of attorneys’
 4   fees of debtor Darcomm Supply, Inc. (appellee).     The summary
 5   judgment disallowed the proof of claim filed by appellant based
 6   upon ARIZ. REV. STAT. ANN. (“ARS”) § 47-3310, which provides that
 7   if a cashier’s check is taken for an obligation, the obligation is
 8   discharged.    We AFFIRM.1
 9                 I.   FACTUAL BACKGROUND AND PROCEDURAL HISTORY
10        Originally, appellant and appellee were involved in a dispute
11   which was resolved by a settlement agreement which required the
12   appellee to pay $12,000 to appellant in the form of a cashier’s
13   check.   Appellee did so on May 15, 2007.    The issuing bank refused
14   to honor the cashier’s check when presented a few days later.      One
15   year later, the appellee commenced a bankruptcy proceeding and the
16   appellant filed a proof of claim for $46,000 based upon the
17   dishonor of the cashier’s check.     The proof of claim referred to
18   “Breach of Settlement Agreement, fraud, check fraud.”
19        The appellee objected to the proof of claim and an order was
20   entered denying the proof of claim on November 12, 2008.       For some
21   reason not apparent in the record, on March 17, 2009, appellee
22   filed a motion for summary judgment arguing that the damage claim
23   portion of the proof of claim should be denied and that the
24   appellee should be awarded attorneys’ fees.
25        The appellee’s motion for summary judgment was heard on
26
          1
27         Unless specified otherwise, all chapter, code, and rule
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
28   the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The
     Federal Rules of Bankruptcy Procedure are referred to as “FRBP.”

                                        -2-
 1   May 18, 2009.    According to the minute entry, at that time the
 2   bankruptcy court denied allowance of the damage portion of the
 3   claim, granted the summary judgment motion, reserved the issue of
 4   attorneys’ fees and admonished the parties that each had 10 days to
 5   perfect an appeal with either the District Court or this court.
 6   After further briefing, at the hearing on July 30, 2010, the
 7   bankruptcy court awarded attorneys’ fees and determined the amount.
 8   No transcript of the July 30, 2010 hearing has been provided.      On
 9   September 22, 2010, the court entered the final order granting
10   summary judgment and awarding attorneys’ fees.    Darcomm Supply,
11   Inc. was converted from chapter 11 to chapter 7 on July 8, 2011.
12                               II.   JURISDICTION
13        Appellant filed a motion for a new trial, no copy of which is
14   in the record, but which appears to be related to the court’s
15   July 30, 2010 ruling and September 22, 2010 order.    At the hearing
16   for a new trial on March 10, 2011, the appellant again argued the
17   merits of the summary judgment motion and award of fees.    The
18   appellee has not raised any issue concerning the timeliness of the
19   appeal.   Despite the incomplete record, this appeal appears to be
20   timely.   FRBP 8002(b).
21        The bankruptcy court had jurisdiction under 28 U.S.C.
22   §§ 157(b)(2)(K) and 1334.    This court has jurisdiction under 28
23   U.S.C. § 158.
24                                 III.    ISSUES
25        A.      Have the issues regarding entry of the order denying a
26   new trial been waived by the appellant? In the alternative, did the
27   bankruptcy court abuse its discretion by denying the motion for a
28   new trial?

                                          -3-
 1        B.     Did the bankruptcy court apply the proper legal standard
 2   in granting the summary judgment and awarding attorneys’ fees and
 3   costs?    Did it violate appellant’s due process rights in making
 4   that determination?
 5                           IV.   STANDARD OF REVIEW
 6        A.     The standard of review for an order denying a new trial
 7   is abuse of discretion.   Dixon v. Wallowa Cnty., 336 F.3d 1013,
 8   1022 (9th Cir. 2003).   To determine whether the bankruptcy court
 9   has abused its discretion, we conduct a two-step inquiry: (1) we
10   review de novo whether the bankruptcy court “identified the correct
11   legal rule to apply to the relief requested” and (2) if it did,
12   whether the bankruptcy court’s application of the legal standard
13   was illogical, implausible or “without support in inferences that
14   may be drawn from the facts in the record.”     United States v.
15   Hinkson, 585 F.3d 1247, 1261-62 n. 21 (9th Cir. 2009) (en banc).
16        B.     A grant of summary judgment is reviewed de novo.   Jones
17   v. Union Pac. R.R. Co., 968 F.2d 937, 940 (9th Cir. 1992).     An
18   appellate court must determine, viewing the evidence in the light
19   most favorable to the non-moving party, whether there is any
20   genuine issues of material fact, and whether the bankruptcy court
21   correctly applied the relevant substantive law.    Gizoni v. Sw.
22   Marine, Inc., 909 F.2d 385, 387 (9th Cir. 1990), aff’d, 502 U.S. 81
23   (1991).   The appellate court must not weigh the evidence or
24   determine the truth of the matter, but only determine whether there
25   was a genuine issue of fact requiring trial.
26                                 V.   DISCUSSION
27        A.     The parties failed to address or argue the appeal of the
28   order denying a new trial.     Issues not addressed in a brief may be

                                         -4-
 1   considered waived by the appellate court.    An appellate court in
 2   this circuit “will not review issues which are not argued
 3   specifically and distinctly in a party’s opening brief.”    City of
 4   Emeryville v. Robinson, 621 F.3d 1251, 1261 (9th Cir. 2010).       Even
 5   if we did review the matter, we see no abuse of discretion by the
 6   bankruptcy court in denying it.
 7        The reasoning of the bankruptcy court for its ruling is
 8   referenced in the transcript of the hearing held March 10, 2011,
 9   which related to the appellant’s motion for a new trial.    The
10   transcript reflects that the motion, which is not part of the
11   record on appeal, sought alteration or modification of the order
12   granting summary judgment and awarding attorneys’ fees.2
13        The bankruptcy court treated the motion as a post judgment
14   motion under FRBP 7052(b) and stated that the first ruling in May
15   2010 regarding summary judgment “stands on its own” and that on
16   July 30, 2010, the appellant’s motion to amend that ruling had been
17   denied.
18        The bankruptcy court cited E.E.O.C. v. Sunfire Glass, Inc.,
19   2009 W.L. 2450472 (D. Ariz. Aug. 11, 2009), which states the
20   correct legal standard to be applied to a post judgment motion
21   under FRBP 7052(b) in which a party asks the court to correct on
22   the non-jury record any errors of law, mistakes of fact or
23   oversights that require correction.     The following facts were
24
25
          2
           The record does contain a Motion to Amend Bankruptcy Court
26   Finding filed May 28, 2010 and the response filed June 28, 2010,
     which relates to the May 18, 2010 summary judgment hearing. The
27   record also contains a response to a motion for a new trial filed
     October 25, 2010. It is apparent from the record that the
28   appellant has filed various motions seeking reconsideration and
     repeatedly reargued the merits of the summary judgment.

                                       -5-
 1   articulated as the basis for the court’s ruling: “I’ll repeat my
 2   early–the essentials of my earlier ruling, although the reality is
 3   that that ruling in last May is–stands on its own, but I’ll repeat
 4   a brief summary.”   After reciting its prior analysis, the court
 5   concluded “I believed in May and I believe now in March that the
 6   debtor was entitled to summary judgment.   The debtor’s obligation
 7   to Mr. Colvin was discharged when the debtor purchased the
 8   cashier’s check.”
 9        The bankruptcy court applied the correct legal standard and
10   its decision is not illogical, implausible or without support in
11   inferences that may be drawn from the facts in the record.3
12        B.     The basis for the court’s grant of summary judgment is
13   contained in the oral ruling of May 18, 2010.   The court correctly
14   stated the standard for entry of a summary judgment.   The movant
15   bears the initial responsibility of providing evidence.   Once that
16   burden is met, the responding party has the burden of producing
17   evidence to the contrary, with the moving party bearing the
18   ultimate responsibility to establish the absence of a genuine issue
19   of material fact.   In this case, the evidence presented by the
20   appellee as moving party was in the form of declarations of the
21   issuing bank and of the appellee and included bank records of the
22   appellee.   The evidence presented by the appellant was his
23
          3
24         In his brief, appellant discusses at length issues regarding
     the bankruptcy court’s denial of the appellant’s motion to dismiss
25   the bankruptcy proceeding which was also heard on March 10, 2011,
     and the appellee has responded to those arguments. No appeal was
26   taken from the order denying the motion to dismiss. The appellant
     argues that since the hearing on the motion to dismiss and the
27   hearing on the motion for a new trial occurred on the same day, the
     court’s denial of the motion to dismiss should also be part of this
28   appeal. The issues concerning that motion and order are irrelevant
     to this appeal and will not be considered.

                                       -6-
 1   declaration stating that the issuing bank had refused to honor the
 2   check.   A copy of the cashier’s check was part of the record before
 3   the bankruptcy court.    The cashier’s check was drawn, not from the
 4   account of the appellee, but from an account of the issuing bank.
 5        ARS § 47-3104(G) defines a cashier’s check as a draft with
 6   respect to which the drawer and the drawee are the same bank or
 7   branches of the same bank.   The court determined that the
 8   instrument constituted a cashier’s check drawn upon the account of
 9   the issuing bank and the evidence supports that conclusion.    ARS
10   § 47-3104(G).   ARS §§ 47-1101, et seq., contains Arizona’s
11   enactment of the Uniform Commercial Code.    ARS § 47-3310
12   establishes the relationship between checks and the underlying
13   obligations for which the check is issued.   Subpart (A) of that
14   statute reads in part:
15        A. Unless otherwise agreed, if a certified check,
          cashier's check or teller's check is taken for an
16        obligation, the obligation is discharged to the same
          extent discharge would result if an amount of money equal
17        to the amount of the instrument were taken in payment of
          the obligation. . . .
18
19        The statute is not ambiguous. Appellee’s obligation to pay
20   appellant $12,000 was discharged when the cashier’s check for that
21   amount was delivered to the appellant in May of 2007.   Upon
22   delivery of the cashier’s check, the appellant had no further claim
23   against the appellee.    The appellant did not produce any evidence
24   which created a material issue of fact.   The proof of claim filed
25   by appellant was properly disallowed.
26        Appellant also based the proof of claim upon ARS § 12-671
27   which provides:
28        A person who, for himself or for another, with intent to
          defraud, makes, draws, utters or delivers to another

                                       -7-
 1        person or persons a check or draft on a bank or
          depositary for payment of money, knowing at the time of
 2        such making, drawing, uttering or delivery, that he or
          his principal does not have an account or does not have
 3        sufficient funds in, or credit with, such bank or
          depositary to meet the check or draft in full upon
 4        presentation, shall be liable to the holder of such check
          or draft for twice the amount of such check or draft or
 5        fifty dollars, whichever is greater, together with costs
          and reasonable attorney's fees as allowed by the court on
 6        the basis of time and effort expended by such attorney on
          behalf of plaintiff.
 7
 8   The bankruptcy court found the statute inapplicable to appellee as
 9   the cashier’s check was drawn upon the account of the issuing bank.
10   Further, the appellant was unable to establish that at the time of
11   presentment, the appellee lacked sufficient funds in its account.
12   Moreover, the bank records indicated Darcomm Supply, Inc. had
13   sufficient funds in its account at the time the check was drawn.
14   Even assuming that mere delivery of the cashier’s check by appellee
15   to appellant could give rise to a claim under ARS § 12-671, the
16   bankruptcy court held that the evidence failed to establish the
17   elements required by that statute.
18        The appellant also argues that he was deprived of his due
19   process rights as the appellee did not commence an adversary
20   proceeding to determine that the obligation was not subject to
21   discharge.   Firstly, the bankruptcy court held due process had not
22   been denied as appellant had an opportunity to and did respond to
23   the objection to the proof of claim, which objection was filed on
24   August 13, 2008.   Further, the appellant had been given ample
25   opportunity to argue the merits of his claim, including an
26   opportunity to depose bank representatives and conduct other
27   discovery.   Secondly, the appellant cited 11 U.S.C. § 523(a) for
28   the proposition that the claim was not subject to discharge.     That

                                      -8-
 1   provision is only applicable in cases involving an “individual
 2   debtor” and thus inapplicable to the appellee.     The failure of the
 3   appellee to commence an adversary proceeding to determine that the
 4   claim was not subject to discharge did not deprive the appellant
 5   of his due process rights.    Lastly, an objection to a proof of
 6   claim is a contested matter under FRBP 9014.     In re Garvida,
 7   347 B.R. 697, 704 (9th Cir. BAP 2006).     Appellee also moved for
 8   summary judgment as to the damage claim and sought an award of
 9   attorneys’ fees.    The bankruptcy court concluded that no claim
10   existed against appellee pursuant to state law.     No adversary
11   proceeding was necessary, as the court concluded that no claim
12   existed, not that an existing claim was or was not subject to
13   discharge.
14           Regarding appellant’s objections to the award and amount of
15   attorneys’ fees, appellant did not include in the record a
16   transcript of the July 30, 2010 hearing at which time the award was
17   made.    The order states that fees and costs are awarded based upon
18   the original settlement agreement between the parties and pursuant
19   to ARS § 12-341 as appellee was the prevailing party.     This court
20   generally limits its review to examination of the record on appeal
21   and appellant has the duty to provide an adequate record.
22   Appellant has not done so regarding the award of attorneys’ fees
23   and their calculation.    Failure to provide a trial transcript
24   precludes review of alleged errors.      Syncom Capital Corp. v. Wade,
25   924 F.2d 167, 169 (9th Cir. 1991).
26                                VI.   CONCLUSION
27           A.   The order denying a new trial is AFFIRMED as the parties
28   failed to argue the merits of the entry of that order and thus

                                        -9-
 1   waived issues relating to that motion.   Alternatively, the record
 2   shows that the bankruptcy court applied the correct legal standard
 3   and based its ruling on facts which adequately supported its
 4   decision.   Therefore, the bankruptcy court did not abuse its
 5   discretion in denying a new trial.
 6        B.     The granting of the appellee’s motion for summary
 7   judgment is AFFIRMED.   The bankruptcy court applied the correct
 8   legal standard for consideration of summary judgment motions.   The
 9   appellant was not denied due process and the undisputed facts
10   support the bankruptcy court’s conclusions.   Arizona law discharged
11   the appellee from any obligation to appellant upon issuance and
12   delivery of the cashier’s check.
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