Court Opinion

ID: 4514539
Source: CourtListenerOpinion
Date Created: 2020-03-11 00:00:59.710323+00
Date Added: 2024-06-11T09:44:07.525172
License: Public Domain

FILED
                                                                          DEC 3 2019
                           NOT FOR PUBLICATION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. CC-19-1083-GTaS

SHMUEL ERDE,                                         Bk. No. 2:18-bk-20200

                    Debtor.                          Adv. No. 2:18-ap-01290

SHMUEL ERDE,

                    Appellant,

v.                                                    MEMORANDUM*

DAVID EISENBERG; GEORGE
VETRANO,

                    Appellees.

                 Argued and Submitted on November 21, 2019
                          at Pasadena, California

                              Filed – December 3, 2019

               Appeal from the United States Bankruptcy Court
                    for the Central District of California

         *
        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.
           Honorable Vincent P. Zurzolo, Bankruptcy Judge, Presiding

Appearances:           Appellant Shmuel Erde argued pro se.**

Before: GAN, TAYLOR, and SPRAKER, Bankruptcy Judges.

                                   INTRODUCTION

      Chapter 111 debtor Shmuel Erde appeals from an order denying his

motion pursuant to Rule 9024, to alter or amend the order dismissing his

first amended complaint with prejudice. Mr. Erde did not appeal the order

dismissing his first amended complaint and instead sought relief from the

order on the basis of newly discovered evidence.

      The bankruptcy court denied the motion to alter or amend as moot

because the underlying bankruptcy case was dismissed and Mr. Erde was

determined to be a vexatious litigant. We AFFIRM on the separate basis

that Mr. Erde did not present any newly discovered evidence.

      **
           None of the named appellees actively participated in this appeal.
      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.

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                                  FACTS

     Mr. Erde filed a chapter 11 case, pro se, on August 31, 2018. He

initiated an adversary proceeding against Jaime Mendoza, The Puffy Trust,

David Eisenberg, and George Vetrano seeking $52,000 which Mr. Erde

alleged was payable to him for his efforts in procuring a loan transaction.

     A.    The first complaint

     Mr. Erde alleged that he received a loan request from George Vetrano

for $6,000,000 to be secured by real property in New York, owned by the

Puffy Trust. Mr. Erde alleged that he submitted the loan request to David

Eisenberg, who promised that Mr. Erde would receive one point of the

gross amount of the loan as compensation for arranging the transaction.

After the loan closed for $5,700,000, Mr. Eisenberg deposited $5,000 into

Mr. Erde’s brokers account.

     The trustee of the Puffy Trust, Jaime Mendoza, filed a motion to

dismiss the complaint pursuant to Civil Rule 12(b)(6) on the basis that

Mr. Erde did not allege any facts involving actions taken by Mr. Mendoza

or the Puffy Trust. Mr. Mendoza also argued that Mr. Erde was not entitled

to a commission as a matter of law because the complaint made no

allegations that Mr. Erde was licensed to charge and receive a commission

as required by New York law, or that there was a written commission

agreement as required by California law.

     The bankruptcy court dismissed the complaint without prejudice on

                                      3
October 25, 2018, and set a deadline of November 16, 2018, for Mr. Erde to

file an amended complaint. The court required that any amended

complaint be served according to the rules of bankruptcy procedure and

applicable laws.

      B.    The first amended complaint

      Mr. Erde filed a first amended complaint on November 8, 2018. He

named Mr. Vertrano and Mr. Eisenberg as defendants and made the same

factual allegations about the loan and his claim.

      On December 6, 2018, the court held a hearing on the adversary

proceeding and dismissed the first amended complaint. Mr. Erde did not

provide a transcript of that hearing.

      Mr. Erde filed a request for a written order on December 26, 2018, in

which he stated that the bankruptcy court had dismissed the first amended

complaint at the December 6, 2018 hearing but had not entered a written

order on the docket. The next day, the court entered a separate written

order dismissing the first amended complaint with prejudice because

Mr. Erde failed to serve the first amended complaint in accordance with the

rules of bankruptcy procedure. Mr. Erde did not appeal.

      C.    The motion to alter or amend

      On February 5, 2019, Mr. Erde filed a motion to alter or amend the

order dismissing the complaint and the first amended complaint on the

basis of newly discovered evidence. Mr. Erde stated that he had discovered

                                        4
a new claim against all of the defendants based on their allegedly illegal

scheme to pay kickback commissions in violation of the rules of the

Consumer Financial Protection Bureau (“CFPB”). Mr. Erde argued that

Mr. Vetrano and Mr. Eisenberg were not licensed brokers at the time of the

loan transaction and therefore they could not be paid a commission unless

they were listed in the closing statement. Mr. Erde stated that after the loan

closed in 2017, he asked for a closing statement but was told that no closing

statement was issued. Mr. Erde noticed a hearing on his motion for

February 28, 2019.

      On February 7, 2019, Mr. Mendoza filed a motion to continue the

hearing. Mr. Mendoza argued that the court should conduct the hearing on

its order to show cause why the bankruptcy case should not be dismissed

prior to the deadline for responses to the motion to alter or amend. The

court continued the hearing to May 2, 2019.

      On February 21, 2019, the bankruptcy court dismissed the

bankruptcy case and declared Mr. Erde a vexatious litigant. On April 2,

2019, the bankruptcy court entered an order denying Mr. Erde’s motion to

alter or amend as moot because the bankruptcy case was dismissed and

Mr. Erde was determined to be a vexatious litigant. Mr. Erde timely

appealed.

                              JURISDICTION

      The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334

                                      5
and 157(b)(1). We have jurisdiction under 28 U.S.C. § 158.

                                     ISSUE

      Whether the bankruptcy court erred in denying Mr. Erde’s motion to

alter or amend the dismissal order.

                          STANDARD OF REVIEW

      We review decisions regarding relief from judgment under Rule 9024

for abuse of discretion. Heritage Pacific Fin., LLC v. Montano (In re Montano),

501 B.R. 96, 105 (9th Cir. BAP 2013). A bankruptcy court abuses its

discretion if it applies the wrong legal standard, misapplies the correct

legal standard, or if its factual findings are illogical, implausible, or without

support in the record. Traffic School.com, Inc. v. Edriver Inc., 653 F.3d 820, 832

(9th Cir. 2011). We may affirm the decision of the bankruptcy court on any

basis supported by the record. Western Funding Inc. v. Shapiro (In re Western

Funding Inc.), 550 B.R. 841, 849 (9th Cir. BAP 2016).

      We review our own jurisdiction de novo. Silver Sage Partners, Ltd. v.

City of Desert Hot Springs (In re City of Desert Hot Springs), 339 F.3d 782, 787

(9th Cir. 2003). De novo review requires that we consider the matter as if no

decision had been previously rendered. Kashikar v. Turnstile Capital Mgmt.,

LLC (In re Kashikar), 567 B.R. 160, 164 (9th Cir. BAP 2017).

                                        6
                                     DISCUSSION

       A.     We do not have jurisdiction to review the order dismissing
              the first amended complaint.

       Mr. Erde did not include the order dismissing the first amended

complaint in his notice of appeal or attach that order, but his brief focuses

primarily on the dismissal order and not the denial of his Rule 9024

motion. Despite Mr. Erde’s failure to include the dismissal order in his

notice of appeal, it is possible that we could have discretion to review that

order if the notice of appeal was timely. See Mahakian v. William Maxwell

Investments, LLC, (In re Mahakian), 529 B.R. 268 (9th Cir. BAP 2015); Rule

8003(a)(2). However, because Mr. Erde did not timely appeal the dismissal

order, we lack jurisdiction to review it.

       Rule 8002(a) provides that a notice of appeal must be filed within

fourteen days after entry of the judgment, order, or decree being appealed.

This deadline is incorporated into 28 U.S.C. § 158(c)(2) and is a

jurisdictional requirement. Wilkins v. Menchaca (In re Wilkins), 587 B.R. 97,

106 (9th Cir. BAP 2018).

       The bankruptcy court dismissed the first amended complaint at the

December 6, 2018 hearing and entered a separate written order on

December 27, 2018.2 Mr. Erde did not file a notice of appeal within fourteen

       2
       Mr. Erde has not argued that the dismissal order failed to satisfy Rule 7058, but
“when a court enters a short order that clearly constitutes a final decision, that short
                                                                               (continued...)

                                             7
days of the entry of the order as required by Rule 8002(a), and did not file

any other motion sufficient to toll the time to appeal under Rule 8002(b). As

a result, we lack jurisdiction to review the order dismissing the first

amended complaint, and this appeal is limited to the order denying the

motion to alter or amend.

      B.     The bankruptcy court did not err in denying the motion to
             alter or amend.

      Although the court denied the motion to alter or amend as moot,

relief under Civil Rule 60(b) was unavailable because Mr. Erde did not

present any newly discovered evidence.

      Civil Rule 60(b), made applicable by Rule 9024, allows the court to set

aside a judgment or order for the following reasons:

             (1) mistake, inadvertence, surprise, or excusable
             neglect;

             (2) newly discovered evidence that, with reasonable
             diligence, could not have been discovered in time to

                    2
                        (...continued)
order meets the separate judgment rule.” Unites States v. Schimmels (In re Schimmels), 85
F.3d 416, 421 (9th Cir. 1996). The dismissal order references the findings and
conclusions made at the December 6, 2018 hearing and was entered after Mr. Erde’s
request for a separate written order. The dismissal order clearly states “IT IS ORDERED
that the First Amended Complaint is DISMISSED WITHOUT LEAVE TO AMEND.”
However, even if the order did not satisfy Rule 7058, Mr. Erde waived any objection by
moving to abandon the claims in the main case and by filing a Civil Rule 60(b) motion.
See Casey v. Albertson’s Inc., 362 F.3d 1254, 1259 (9th Cir. 2004) (“[A] party’s actions
indicating its belief that a final judgment was entered can be sufficient to waive any
Rule 58 objections.”).

                                            8
            move for a new trial under Rule 59(b);

            (3) fraud (whether previously called intrinsic or
            extrinsic), misrepresentation, or misconduct by an
            opposing party;

            (4) the judgment is void;

            (5) the judgment has been satisfied, released, or
            discharged; it is based on an earlier judgment that
            has been reversed or vacated; or applying it
            prospectively is no longer equitable; or

            (6) any other reason that justifies relief.

      Mr. Erde’s sole basis for relief was newly discovered evidence that,

with reasonable diligence, could not have been discovered in time to move

for a new trial. To constitute newly discovered evidence under Civil Rule

60(b)(2), the evidence (1) must have existed at the time the order was

entered; (2) could not have been discovered through due diligence; and (3)

was “of such magnitude that production of it earlier would have been

likely to change the disposition of the case.” Jones v. Aero/Chem Corp., 921

F.2d 875, 878 (9th Cir. 1990).

      Mr. Erde’s “newly discovered evidence” is that Mr. Vetrano and

Mr. Eisenberg engaged in an allegedly illegal kickback scheme in violation

of CFPB regulations. All of the facts surrounding the loan transaction were

                                        9
known to Mr. Erde at the time of filing the first amended complaint.3

Mr. Erde offered no new evidence, only a new theory based on existing

facts. However, “learning of a new legal theory is not the discovery of new

evidence” required for relief under Civil Rule 60(b)(2). FDIC v. Arciero, 741

F.3d 1111, 1118 (10th Cir. 2013).

      Even if the new legal theory could constitute newly discovered

evidence, it was not of such a magnitude that it was likely to change the

outcome of the case. The bankruptcy court dismissed the first amended

complaint because Mr. Erde failed to serve the first amended complaint in

accordance with the rules of bankruptcy procedure. Additional factual

allegations or new legal theories would not have changed the result. Relief

under Rule 60(b)(2) was not warranted and the bankruptcy court did not

abuse its discretion in denying the motion.

                                  CONCLUSION

      For the reasons set forth above, we AFFIRM the bankruptcy court's

order denying Mr. Erde’s motion to amend the order dismissing the first

amended complaint.

      3
         It is possible that the new legal theory was also known to Mr. Erde at the time
of the first amended complaint. The declaration attached to his motion to alter or amend
states that it was executed on November 1, 2019, before the dismissal order was entered.
Facts known to Mr. Erde before the dismissal order was entered cannot be newly
discovered evidence sufficient to alter or amend under Civil Rule 60(b)(2). See Coastal
Transfer Co. v. Toyota Motor Sales, U.S.A., Inc., 833 F.2d 208, 212 (9th Cir. 1987).

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