Court Opinion

ID: 4162893
Source: CourtListenerOpinion
Date Created: 2017-04-25 00:04:22.317679+00
Date Added: 2024-06-11T14:37:53.049993
License: Public Domain

FILED
                                                            APR 24 2017
 1                         NOT FOR PUBLICATION
 2                                                      SUSAN M. SPRAUL, CLERK
                                                          U.S. BKCY. APP. PANEL

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No.     EC-16-1193-TaBJu
                                   )
 6   VISHAAL VIRK,                 )      Bk. No.     14-25512-C-13C
                                   )
 7                  Debtor.        )
     ______________________________)
 8                                 )
      VISHAAL VIRK,                )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )      MEMORANDUM*
11                                 )
     RONNY DHALIWAL; SUNITA        )
12   DHALIWAL; DAVID CUSICK,       )
     Trustee,                      )
13                                 )
                    Appellees.     )
14   ______________________________)
15                   Argued and Submitted on March 23, 2017
                            at Sacramento, California
16
                             Filed – April 24, 2017
17
               Appeal from the United States Bankruptcy Court
18                 for the Eastern District of California
19       Honorable David E. Russell, Bankruptcy Judge, Presiding
20
     Appearances:     Peter G. Macaluso argued for appellant; Sean
21                    Gavin of Foos Gavin Law Firm, P.C. argued for
                      appellees Ronny Dhaliwal and Sunita Dhaliwal.
22
23   Before:   TAYLOR, BRAND, and JURY, Bankruptcy Judges.
24
25
26        *
             This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8024-1(c)(2).
 1                                  INTRODUCTION
 2          Appellees Ronny and Sunita Dhaliwal filed a proof of claim
 3   for breach of a 2012 settlement agreement in Debtor Vishaal
 4   Virk’s chapter 131 case.      Debtor contends that the Dhaliwals
 5   should be judicially estopped from raising the claim because
 6   Ronny Dhaliwal failed to make appropriate disclosure in his 2007
 7   Arizona bankruptcy case.       The bankruptcy court first allowed the
 8   proof of claim over objection but subject to a potential
 9   redetermination of the claim’s amount in the Dhaliwals’
10   nondischargeability proceeding.         It thereafter disagreed with
11   Debtor’s judicial estoppel theory twice: first, when it
12   determined the claim was dischargeable; and then, when it
13   declined to reconsider the initial claim objection order.
14   Debtor appealed only the latter order.         He fails, however, to
15   provide us with a transcript of the original hearing where the
16   bankruptcy court stated its findings of fact and conclusions of
17   law.       We, thus, summarily AFFIRM.
18                                     FACTS
19          Debtor’s bankruptcy petition and initial proceedings.       In
20   Debtor’s 2014 chapter 13 case, the Dhaliwals filed a proof of
21   claim for $344,568.66, based on Debtor’s breach of a 2012
22   settlement agreement.       The settlement arose from Sunita
23   Dhaliwal’s investment in Debtor’s gas station and Debtor’s
24   employment of Ronny Dhaliwal.       Allegedly, Debtor did not make
25
            1
             Unless otherwise indicated, all chapter and section
26   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
27   All “Rule” references are to the Federal Rules of Bankruptcy
     Procedure. All “Civil Rule” references are to the Federal Rules
28   of Civil Procedure.

                                         2
 1   appropriate payment on his obligations as an employer and
 2   otherwise defaulted in his obligations, and Sunita and Ronny
 3   Dhaliwal separately sued him in state court.     On the eve of
 4   trial in 2012, the three parties entered into a global
 5   settlement under which Debtor was to pay a sum certain over time
 6   to the Dhaliwals.    Debtor failed to make timely settlement
 7   payments.
 8        The Dhaliwals commenced a timely adversary proceeding
 9   seeking to hold their claim nondischargeable.2
10        Debtor took an offensive as well as defensive position in
11   relation to the Dhaliwals’ claim and nondischargeability action.
12   As most relevant here, he objected to their proof of claim,
13   arguing, among other things, that they lacked standing to bring
14   the claim because Ronny Dhaliwal, in his 2007 bankruptcy case,
15   failed to schedule and disclose the money Sunita Dhaliwal
16   invested in Debtor’s gas station.
17        The bankruptcy court, Judge Klein presiding, resolved the
18   claim objection after hearing; it entered an order allowing the
19   claim as a $344,568.66 general unsecured claim, unless a
20   different amount was determined in the adversary proceeding, and
21   provided that $12,475 of the claim was entitled to unsecured
22   priority status.    The order referred back to oral findings at
23   the hearing as it recited that: “Findings of Fact and
24   Conclusions of Law [were] stated orally on the record.”
25
          2
             We exercise our discretion to take judicial notice of
26   documents electronically filed in the underlying bankruptcy case
27   and related adversary proceeding. See Atwood v. Chase Manhattan
     Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP
28   2003).

                                      3
 1        Judgment in the adversary proceeding.       Meanwhile, the
 2   adversary proceeding went to trial.    The bankruptcy court, Judge
 3   Russell presiding, ruled orally from the bench, determined that
 4   the Dhaliwals’ claim was dischargeable, declined to otherwise
 5   alter the amount of their claim, and subsequently entered a
 6   judgment consistent with this oral ruling.
 7        Debtor’s reconsideration motion.       Less than two weeks after
 8   entry of judgment in the adversary proceeding, Debtor filed a
 9   motion to reconsider and vacate the claim objection order.3
10   After one continuance so that Debtor might “better identify the
11   judgments and orders for which the Debtor seeks relief,” the
12   bankruptcy court, Judge Sargis presiding, continued the matter
13   to a different department.    The bankruptcy court, now Judge
14   Klein presiding, then continued the matter to yet another
15   department; the bankruptcy court, Judge Russell again presiding,
16   entertained extensive oral argument and ruled from the bench.
17   The amended civil minute order stated: “Findings of fact and
18   conclusions of law having been stated orally on the record and
19   good cause appearing, IT IS ORDERED that the motion is denied.”
20        Debtor timely appealed.
21                                JURISDICTION
22        The bankruptcy court had jurisdiction under 28 U.S.C.
23   §§ 1334 and 157(b)(2)(B).    We have jurisdiction under 28 U.S.C.
24   § 158.
25
26
27        3
             The chapter 13 trustee opposed but played no further
28   role in the dispute.

                                       4
 1                                   ISSUE
 2        Whether the bankruptcy court abused its discretion in:
 3   (1) denying Debtor’s motion to reconsider or vacate its order on
 4   the claim objection; and (2) declining to apply judicial
 5   estoppel.
 6                          STANDARDS OF REVIEW
 7        We review for an abuse of discretion a bankruptcy court’s
 8   decision on: (1) a reconsideration motion under § 502(j) and
 9   Rule 3008, Heath v. Am. Express Travel Related Servs. Co.
10   (In re Heath), 331 B.R. 424, 429 (9th Cir. BAP 2005); (2) a
11   Civil Rule 59 reconsideration motion, Ybarra v. McDaniel,
12   656 F.3d 984, 998 (9th Cir. 2011); and (3) a Rule 60(b)
13   reconsideration motion, Lal v. California, 610 F.3d 518, 523
14   (9th Cir. 2010); Weiner v. Perry, Settles & Lawson, Inc.
15   (In re Weiner), 161 F.3d 1216, 1217 (9th Cir. 1998).    We also
16   review for abuse of discretion the bankruptcy court’s decision
17   to apply judicial estoppel to the facts of a case.    Hamilton v.
18   State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 2001).
19        A bankruptcy court abuses its discretion if it applies the
20   wrong legal standard, misapplies the correct legal standard, or
21   if it makes factual findings that are illogical, implausible, or
22   without support in inferences that may be drawn from the facts
23   in the record.   See TrafficSchool.com, Inc. v. Edriver Inc.,
24   653 F.3d 820, 832 (9th Cir. 2011) (citing United States v.
25   Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc)).
26                               DISCUSSION
27        The scope of the appeal.    Debtor wants the Dhaliwals’ claim
28   disallowed on judicial estoppel grounds.     His judicial estoppel

                                       5
 1   theory was well ventilated before the bankruptcy court.    In his
 2   original claim objection, he asserted that the claim was
 3   property of Ronny Dhaliwal’s chapter 7 bankruptcy estate.    The
 4   bankruptcy court, however, overruled Debtor’s objection and
 5   allowed the claim; it left open only the possibility that the
 6   amount of the claim could change as part of any decision in the
 7   nondischargeabilty proceeding.
 8        Beyond the bare articulation of the bankruptcy court’s
 9   initial ruling, we know nothing about what happened when the
10   bankruptcy court first considered Debtor’s judicial estoppel
11   defense; Debtor did not provide us with a transcript from that
12   critical hearing.
13        During the adversary proceeding, while the claim objection
14   remained unresolved as to amount and subject to final
15   determination in some regard, Debtor again raised judicial
16   estoppel in his trial brief and re-asserted it at trial.    The
17   bankruptcy court, however, declined to apply judicial estoppel
18   in connection with its determinations at the trial.   We have the
19   transcript of the trial, but it sheds no light on the initial
20   determination by another judge of the bankruptcy court.
21        Finally, in his reconsideration motion and amended
22   reconsideration motion, Debtor again argued judicial estoppel;
23   the bankruptcy court, again, decided not to apply it.   We have
24   the transcript of the reconsideration hearing, but it again
25   fails to explain the initial and most critical determination on
26   the issue.
27        Debtor’s notice of appeal identifies only one order: the
28   order denying his motion to reconsider the order overruling his

                                      6
 1   claim objection.
 2        An allowed or disallowed proof of claim “may be
 3   reconsidered for cause.”    11 U.S.C. § 502(j); Fed. R. Bankr.
 4   P. 3008.    And a “reconsidered claim may be allowed or disallowed
 5   according to the equities of the case.”    11 U.S.C. § 502(j).    If
 6   the time to appeal an order on a claim objection has not
 7   expired, a reconsideration request is governed by Civil Rule 59,
 8   applied in bankruptcy by Rule 9023.    Wall Street Plaza, LLC v.
 9   JSJF Corp. (In re JSJF Corp.), 344 B.R. 94, 103 (9th Cir. BAP
10   2006), aff’d, 277 F. App’x 718 (9th Cir. 2008).    When “the time
11   for appeal has expired, a [§ 502(j)] motion to reconsider should
12   be treated as a motion for relief from judgment under Bankruptcy
13   Rule 9024.”    S.G. Wilson Comp. v. Cleanmaster Indus., Inc.
14   (In re Cleanmaster Indus., Inc.), 106 B.R. 628, 630 (9th Cir.
15   BAP 1989).    Rule 9024 applies Civil Rule 60 in bankruptcy
16   proceedings.
17        We summarily affirm because Debtor provided us with an
18   incomplete record on appeal.    This case is a procedural tangle,
19   and Debtor’s excerpts of record are deficient and unhelpful.      He
20   asks us to review the bankruptcy court’s decision on his motion
21   to reconsider the order on his objection to the Dhaliwals’ proof
22   of claim.    He initially provided us, however, with only limited
23   documents: (1) the bankruptcy court’s minute order denying the
24   reconsideration motion; (2) the original proof of claim;
25   (3) Ronny Dhaliwal’s Arizona bankruptcy petition; (4) the trial
26   transcript from the adversary proceeding; and (5) the Dhaliwals’
27   reply to a set of interrogatories.    After the Panel issued an
28   order directing him to provide the transcript from the

                                      7
 1   reconsideration hearing, Debtor submitted it.    He never
 2   provided:
 3   •    his underlying motion to reconsider or any of the resulting
 4        filings;
 5   •    his original objection to the Dhaliwals’ claim or any of
 6        the accompanying filings; or
 7   •    the bankruptcy court’s original order on his claim
 8        objection.
 9   If this were all that was missing, we could fill in the blanks
10   by exercising our discretion to independently review the docket.
11        But Debtor also did not provide us with the transcript from
12   the hearing on his claim objection, and he now seeks
13   reconsideration of the order resolving that objection.      The
14   order itself does not contain findings and, instead, refers to
15   oral findings at the hearing as it states: “Findings of Fact and
16   Conclusions of Law having been stated orally on the record.”
17        If a bankruptcy court makes its findings of facts and
18   conclusions of law on the record, the appellant must include the
19   transcript as part of the excerpts of record.     McCarthy v.
20   Prince (In re McCarthy), 230 B.R. 414, 416–17 (9th Cir. BAP
21   1999).    Here, Debtor did not.   Nor can we find a copy of the
22   transcript on the bankruptcy court’s docket.     We, thus, cannot
23   meaningfully review either the original claim objection order or
24   the second order denying reconsideration of the claim objection
25   order.4   Ehrenberg v. Cal. State Univ., Fullerton Found.
26
          4
27           Nor did Debtor, in asking for reconsideration of Judge
     Klein’s claim objection order, provide Judge Russell with a
28                                                      (continued...)

                                       8
 1   (In re Beachport Entm’t), 396 F.3d 1083, 1087-88 (9th Cir.
 2   2005); Morrissey v. Stuteville (In re Morrissey), 349 F.3d 1187,
 3   1189 (9th Cir. 2003) (failing to provide a critical transcript
 4   may result in summary affirmance).
 5                              CONCLUSION
 6        Based on the foregoing, we AFFIRM.
 7
 8
 9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
          4
24         (...continued)
     transcript of the claim objection hearing. The reconsideration
25   hearing transcript reflects that Judge Russell was justifiably
     perplexed at what he was being asked to consider. Hr’g Tr.
26   (Feb. 16, 2016) 4:2-5 (“Now, what’s got me a little bit
27   concerned here is apparently the judgments that we’re seeking to
     reconsider were the judgments entered by Judge Klein and not by
28   me; is that right?”).

                                    9