Court Opinion

ID: 4506145
Source: CourtListenerOpinion
Date Created: 2020-02-10 18:00:31.951225+00
Date Added: 2024-06-11T13:35:13.870850
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

 IN RE CHRISTOPHER MICHAEL                 Nos. 18-60005
 MARINO; VALERIE MARGARET                       18-60006
 MARINO,                                        18-60040
                        Debtors,                18-60041

                                             BAP Nos.
 OCWEN LOAN SERVICING, LLC,                   16-1229
              Appellant/Appellee,             16-1238

                  v.
                                             OPINION
 CHRISTOPHER MICHAEL MARINO;
 VALERIE MARGARET MARINO,
             Appellees/Appellants.

                Appeal from the Ninth Circuit
                 Bankruptcy Appellate Panel
Faris, Lafferty III, and Tighe, Bankruptcy Judges, Presiding

         Argued and Submitted October 22, 2019
               San Francisco, California

                 Filed February 10, 2020
2                          IN RE MARINO

Before: J. Clifford Wallace and Mary H. Murguia, Circuit
      Judges, and Robert S. Lasnik, * District Judge.

                    Opinion by Judge Lasnik

                          SUMMARY **

                           Bankruptcy

    The panel dismissed, for lack of jurisdiction, appeals
from the Bankruptcy Appellate Panel’s decision affirming
the bankruptcy court’s contempt orders issued against a
creditor and reversing and remanding on the issue of
punitive damages; and affirmed the BAP’s denial of debtors’
motion for attorney’s fees.

    Dismissing in part for lack of jurisdiction, the panel held
that the BAP’s decision remanding the matter to the
bankruptcy court was not final and appealable. Considering
the need to avoid piecemeal litigation, judicial efficiency, the
systemic interest in preserving the bankruptcy court’s role as
the finder of fact, and whether delaying review would cause
any party irreparable harm, the panel concluded that all four
of these factors compelled dismissal of the creditor’s
appeals.

    *
     The Honorable Robert S. Lasnik, United States District Judge for
the Western District of Washington, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                        IN RE MARINO                           3

    Affirming in part, the panel held that the BAP did not
abuse its discretion in denying debtors’ motion for attorney’s
fees incurred before the BAP. Debtors were not entitled to
fees on the ground of a frivolous appeal. They also were not
entitled to attorney’s fees under a provision in a deed of trust,
and 11 U.S.C. § 105 does not authorize an award of fees.

                         COUNSEL

Jonathan D. Fink (argued), Wright Finlay & Zak LLP,
Newport Beach, California; Christopher Alan James Swift,
Wright Finlay & Zak LLP, Las Vegas, Nevada; for
Appellant/Appellee.

Christopher P. Burke (argued), Reno, Nevada; Christina L.
Henry, Henry & DeGraaff PS, Seattle, Washington; for
Appellees/Appellants.
4                          IN RE MARINO

                             OPINION

LASNIK, District Judge:

    After the bankruptcy court entered a chapter 7 discharge
injunction in June 2013, Debtors, Christopher and Valerie
Marino, continued to receive letters and telephone calls from
Ocwen Loan Servicing LLC (“Ocwen”) about the home they
had abandoned to foreclosure before filing for bankruptcy.
Following an evidentiary hearing, the bankruptcy court
found Ocwen in contempt of the discharge injunction and
imposed a $119,000 civil contempt sanction.

    Ocwen appeals from that order, as well as from the
bankruptcy court’s order denying its motion for
reconsideration. Ocwen also appeals from the Bankruptcy
Appellate Panel’s (“BAP”) conclusion that it was “error for
the bankruptcy court to preclude itself from considering an
award of punitive damages” under 11 U.S.C. § 105(a). 1 For
their part, the Marinos appeal from the BAP’s denial of their
motion for attorney’s fees incurred on appeal.

    We dismiss Ocwen’s appeals for lack of jurisdiction and
affirm the BAP’s denial of the Marinos’ motion for
attorney’s fees.

                                   I.

    The Marinos purchased a home in Verdi, California, with
a loan that was later serviced by Ocwen. The Marinos fell
behind on their mortgage payments and decided to leave
their home and allow Ocwen to foreclose on it. The Marinos

    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 Civil Procedure.
                       IN RE MARINO                         5

then filed for chapter 7 bankruptcy and received a discharge
injunction a few months later.

    Despite the discharge injunction, the Marinos continued
to receive letters and telephone calls from Ocwen about their
former home. The Marinos presented evidence at a hearing
showing that they had received letters and calls from Ocwen,
causing them severe emotional distress.

    The bankruptcy court concluded that Ocwen violated the
discharge injunction and imposed a civil contempt sanction
of $1,000 for every violation, totaling $119,000. The
bankruptcy court also concluded that it lacked the inherent
authority to award punitive damages for a violation of a
discharge injunction. Finally, the bankruptcy court denied
Ocwen’s motion for reconsideration.

    The BAP affirmed the bankruptcy court’s contempt and
reconsideration orders but reversed and remanded on the
issue of punitive damages. The BAP also denied the
Marinos’ motion for appellate attorney’s fees.

    Ocwen appeals from the bankruptcy court’s contempt
and reconsideration orders. Ocwen also appeals from the
BAP’s decision reversing the bankruptcy court on the scope
of its inherent authority to award punitive damages for a
discharge injunction violation. The Marinos appeal the
BAP’s decision on attorney’s fees.

                             II.

                             A.

    Under 28 U.S.C. § 158(d)(1), our jurisdiction is limited
to “decisions, judgments, orders, and decrees that are ‘final’
[for] we have no authority . . . to consider interlocutory
6                       IN RE MARINO

orders and decrees.” In re Gugliuzza, 852 F.3d 884, 891 (9th
Cir. 2017) (citing Conn. Nat’l Bank v. Germain, 503 U.S.
249, 252 (1992)). Because bankruptcy cases are often
complex and litigated in various discrete proceedings, BAP
orders may be immediately appealed only if they “finally
dispose of discrete disputes within the larger case.” Id.
at 892 (quoting Bullard v. Blue Hills Bank, 135 S. Ct. 1686,
1692 (2015)). “Correct delineation of the dimensions of a
bankruptcy ‘proceeding is a matter of considerable
importance” for “[a]n erroneous identification of an
interlocutory as a final decision may yield an appeal over
which the appellate forum lacks jurisdiction.” Ritzen Grp.,
Inc. v. Jackson Masonry, LLC, 589 U.S. ___ (slip op. at 3)
(2020). An order in a bankruptcy proceeding is final and
thus appealable if it “alters the status quo and fixes the rights
and obligations of the parties . . . [or] alters the legal
relationships among the parties.” In re Gugliuzza, 852 F.3d
at 893 (quoting Bullard, 135 S. Ct. at 1692, 1695).

    However, an order from the BAP is not final if it
“remands for factual determinations on a central issue[.]” Id.
at 895 (quoting In re Vylene Enters., 968 F.2d 887, 895 (9th
Cir. 1992)). We have departed from this rule only when the
BAP remands for “purely mechanical or computational
task[s] such that the proceedings on remand are highly
unlikely to generate a new appeal.” In re Landmark Fence
Co., Inc., 801 F.3d 1099, 1103 (9th Cir. 2015) (alteration in
original) (quoting In re Saxman, 325 F.3d 1168, 1172 (9th
Cir. 2003)). We limit the exception to our general rule
against exercising appellate jurisdiction when the BAP
remands to the bankruptcy court for good reason. When the
BAP “remands a case to the bankruptcy court, ‘the appellate
process likely will be much shorter if we decline jurisdiction
and await ultimate review on all the combined issues.’” In
re Lakeshore Vill. Resort, Ltd., 81 F.3d 103, 106 (9th Cir.
                         IN RE MARINO                            7

1996) (quoting In re Stanton, 766 F.2d 1283, 1287–88 (9th
Cir. 1985)).

    We apply a four-part test to determine if we have
jurisdiction over an appeal from a BAP decision that
remands to the bankruptcy court. We consider “(1) the need
to avoid piecemeal litigation; (2) judicial efficiency; (3) the
systemic interest in preserving the bankruptcy court’s role as
the finder of fact; and (4) whether delaying review would
cause either party irreparable harm.” In re Gugliuzza,
852 F.3d at 894 (quoting In re Perl, 811 F.3d 1120, 1126
(9th Cir. 2016)). We conclude that all four factors compel
dismissal of Ocwen’s appeals.

    As to the first two factors, dismissal serves judicial
efficiency and avoids piecemeal litigation by allowing the
bankruptcy court to make additional findings of fact and
conclusions of law before we exercise our jurisdiction. If we
were to resolve Ocwen’s appeals now, the parties would
almost certainly climb back up the appellate ladder, asking
us to consider the bankruptcy court’s decision on punitive
damages. The Supreme Court has discouraged this type of
piecemeal litigation for its inefficiency. See Bullard, 135
S. Ct. at 1693 (explaining that the “rule of finality” exists to
avoid “climb[s] up the appellate ladder and slide[s] down the
chute” and the “delays and inefficiencies” that result).

    As to the third factor, the BAP’s decision expressly left
open the possibility for the bankruptcy court to engage in
additional fact-finding after remand. Although the BAP did
not “hold that the bankruptcy court must award a fine or
punitive damages,” it remanded the case for the bankruptcy
court to “consider whether to do so.” The BAP explained
that the bankruptcy court “might choose to issue proposed
findings and a recommended judgment on punitive damages
to the district court or refer the matter to the district court for
8                      IN RE MARINO

criminal contempt proceedings.” (emphasis added).
Dismissal preserves the bankruptcy court’s fact-finding role
where, as here, the BAP’s decision remands to the
bankruptcy court to determine whether punitive damages are
appropriate.

     Finally, as to the fourth factor, other than protracted
litigation costs, neither party would be irreparably harmed if
we declined jurisdiction over Ocwen’s appeals. Litigation
costs generally do not qualify as irreparable harm. Cf. In re
Excel Innovations, Inc., 502 F.3d 1086, 1099 (9th Cir. 2007).

    In short, the BAP remanded to the bankruptcy court for
more factual findings on punitive damages. The bankruptcy
court’s decision whether punitive damages are appropriate is
not a “ministerial task[.]” In re Gugliuzza, 852 F.3d at 897
(stating that “[a] decision that remands a case for further
fact-finding will rarely have this degree of finality, unless
the remand order is limited to ministerial tasks” (citation
omitted)).

    In addition, the bankruptcy court’s punitive damages
calculus was part of the same “discrete proceeding” in which
the bankruptcy court imposed sanctions against Ocwen for
violating the discharge injunction. Id. at 899 (quoting
Bullard, 135 S. Ct. at 1692). The BAP’s decision did not
“terminate[] a procedural unit separate from the remaining
case” or “conclusively resolve[] the [Marinos’] entitlement
to the requested relief.” Ritzen Grp., Inc., 589 U.S. at ___
(slip op. at 6). The relevant “procedural unit” in Ocwen’s
appeals is the contempt proceedings, in which the Marinos
sought both monetary sanctions and punitive damages. The
BAP remanded to the bankruptcy court to assess whether to
award the Marinos punitive damages, relief that the Marinos
diligently pursued. This is therefore not a case in which the
BAP’s decision “ended the [contempt proceeding]
                           IN RE MARINO                              9

adjudication and left nothing more for the Bankruptcy Court
to do in that proceeding.” Id. at ___ (slip op. at 12). We
dismiss Ocwen’s appeals for lack of appellate jurisdiction.

                                  B.

    The Marinos appeal from the BAP’s denial of their
motion for attorney’s fees incurred defending against the
appeal before the BAP. Unlike Ocwen’s appeals, the
Marinos’ appeal only raises the frivolousness of Ocwen’s
appeal to the BAP, an issue that is both final and discrete.
We have jurisdiction over the Marinos’ appeal and review it
for abuse of discretion. See Shapiro ex rel. Shapiro v.
Paradise Valley Unified Sch. Dist. No. 69, 374 F.3d 857, 861
(9th Cir. 2004) (citing Fischel v. Equitable Life Assurance
Soc’y of the U.S., 307 F.3d 997, 1005 (9th Cir. 2002)).

    The Marinos point to three sources that they believe
entitle them to attorney’s fees: (1) Federal Rule of Appellate
Procedure 38, 2 (2) the attorney’s fees provision in the deed
of trust with Ocwen, and (3) section 105(a) of the
Bankruptcy Code. We address each purported basis for an
award of attorney’s fees in turn.

    First, under Federal Rule of Appellate Procedure 38, we
may award damages and single or double costs to an appellee
if we determine that an appeal is frivolous. See Fed. R. App.
P. 38. “An appeal is frivolous if the results are obvious, or
the arguments of error are wholly without merit.” Maisano
v. United States, 908 F.2d 408, 411 (9th Cir. 1990) (per

    2
      More precisely, the BAP may award just damages and single or
double costs to an appellee as a sanction for a frivolous appeal from a
bankruptcy court’s judgment under Federal Rule of Bankruptcy
Procedure 8020(a). The standard applied is the same as under Federal
Rule of Appellate Procedure 38.
10                      IN RE MARINO

curiam) (citing Wilcox v. C.I.R., 848 F.2d 1007, 1009 (9th
Cir. 1988)). The BAP did not clearly err in finding that the
appeal was not frivolous and did not abuse its discretion by
declining to sanction Ocwen under Rule 38. The Marinos
are not entitled to attorney’s fees under Rule 38.

    Second, the attorney’s fees provision in the Marino’s
deed of trust with Ocwen only allows Ocwen to receive
attorney’s fees for “a legal proceeding that might
significantly affect [its] interest in the Property and/or rights
under [the deed],” including bankruptcy. That provision is
reciprocal pursuant to California Civil Code Section 1717(a)
when either party seeks to enforce or avoid enforcement of
the deed. See In re Penrod, 802 F.3d 1084, 1088 (9th Cir.
2015) (citations omitted).

    The BAP did not err in concluding that the deed of trust
did not entitle the Marinos to appellate attorney’s fees. The
Marinos seek to enforce the discharge injunction, not the
deed of trust. Accordingly, we will not award fees under the
deed of trust.

    Third, and finally, the Marinos argue that they should be
awarded attorney’s fees under section 105(a) of the
Bankruptcy Code. But that would require us to overturn our
decision, In re Del Mission Ltd., 98 F.3d 1147 (9th Cir.
1996), in which we held that section 105(a) does not
authorize an award of attorney’s fees. See id. at 1153–54.
We cannot do so. See United States v. Belgarde, 300 F.3d
1177, 1181 (9th Cir. 2002) (“[A] panel not sitting en banc
has no authority to overturn Ninth Circuit precedent[.]”).
The Marinos are not entitled to appellate attorney’s fees
under section 105(a).
                        IN RE MARINO                          11

                              III.

    We dismiss Ocwen’s appeals for lack of appellate
jurisdiction. 3 However, we have jurisdiction over the
Marinos’ appeal and affirm the BAP’s conclusion that they
were not entitled to attorney’s fees for their appeal to the
BAP.

  AFFIRMED IN PART, DISMISSED FOR LACK OF
JURISDICTION IN PART.

    3
     The Marinos filed motions to strike and supplements to these
motions in each of Ocwen’s pending appeals. Because we dismiss
Ocwen’s appeals for lack of jurisdiction, we decline to reach the
Marinos’ motions to strike and deny them without prejudice.