Court Opinion

ID: 9373905
Source: CourtListenerOpinion
Date Created: 2023-02-22 16:10:25.604952+00
Date Added: 2024-06-11T17:16:43.830843
License: Public Domain

FILED
                                                                                   DEC 15 2022
                           NOT FOR PUBLICATION
                                                                               SUSAN M. SPRAUL, CLERK
                                                                                 U.S. BKCY. APP. PANEL
          UNITED STATES BANKRUPTCY APPELLATE PANEL                               OF THE NINTH CIRCUIT

                    OF THE NINTH CIRCUIT

 In re:                                               BAP No. HI-22-1092-BSG
 RILLANERA RUIZ SILLA,
             Debtor.                                  Bk. No. 21-01032

 RILLANERA RUIZ SILLA,
             Appellant,
 v.                                                   MEMORANDUM∗
 NIMA GHAZVINI, Chapter 13 Trustee,
             Appellee.

               Appeal from the United States Bankruptcy Court
                            for the District of Hawaii
               Robert J. Faris, Chief Bankruptcy Judge, Presiding

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

                                   INTRODUCTION

       Appellant Rillanera Ruiz Silla appeals an order denying her motion for

relief from judgment under Civil Rule 60(b).1 In her motion, filed more than

14 days after entry of the bankruptcy court's pertinent order, Silla challenged

what she argued was legal error by the court. She did not provide any reason

      ∗  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.
       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.
                                               1
for not filing a timely appeal of the prior order. Accordingly, there was no

basis upon which the bankruptcy court could grant relief under Civil Rule

60(b). We AFFIRM.

                                        FACTS

      Silla filed a chapter 13 bankruptcy case on November 7, 2021. In her

plan, Silla scheduled her mortgage lender, Bank of America, N.A. ("BOA"), as

a Class 7 creditor. BOA filed a proof of claim listing prepetition arrears of

$2,690.65, which was comprised of $510.03 in principal, $980.62 in interest,

and $1,200 in fees. The chapter 13 trustee objected to Silla's plan because

BOA's claim asserted a prepetition arrearage owed; thus, according to the

form plan for the district, BOA's claim had to be treated as a Class 1 claim.

The trustee also needed clarification on whether any interest should be paid

on the arrearage since Silla's plan was silent on that issue. 2

      On January 26, 2022, the bankruptcy court issued its Memorandum of

Decision Regarding Accrual of Interest on Arrearage Cure Claims in Chapter

13 Case ("Interest Memorandum"). The court held that Silla had to pay

interest on the delinquent prepetition principal of $510.03, but not on any

other portion of the arrearage. To reach that conclusion, it looked to the

mortgage note, which is a standardized form promulgated by Fannie Mae

and Freddie Mac that states: "Interest will be charged on unpaid principal

until the full amount of Principal has been paid." Since the principal amount

      2
        BOA did not appear at the plan confirmation hearing and has not participated in
this matter.
                                            2
of $510.03 was delinquent and not yet paid, then interest on that portion was

due.

       On February 10, 2022, the bankruptcy court entered an order

confirming Silla's plan, which incorporated its decision in the Interest

Memorandum ("Confirmation Order"). Silla did not appeal the Confirmation

Order.

       On March 22, 2022, Silla moved for reconsideration of the Interest

Memorandum under "Rules 9023/9024, [Local Bankruptcy Rule] 9024-1, and

11 U.S.C. § 105." Silla argued that the bankruptcy court erred in ruling that

she had to pay interest on the delinquent prepetition principal. Silla

maintained that the BOA note was a "scheduled loan" as opposed to a "daily

accrual loan" and therefore did not require or authorize the payment of

additional interest on the principal regardless of the timing of the mortgage

payments. Silla requested that the court reconsider its prior ruling and

confirm that scheduled loans which have unpaid prepetition principal cured

through the chapter 13 plan are not subject to additional interest payments.

       After a hearing, the bankruptcy court declined to change its prior ruling

and denied the motion. Silla timely appealed the order denying

reconsideration.

                               JURISDICTION

       The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(L). Subject to our discussion below, we have jurisdiction under 28

U.S.C. § 158.

                                        3
                                      ISSUE

      Did the bankruptcy court abuse its discretion in denying the motion to

reconsider?

                          STANDARDS OF REVIEW

      We review the denial of a motion for relief from order or judgment

under Civil Rule 60(b) for abuse of discretion. Tennant v. Rojas (In re Tennant),

318 B.R. 860, 866 (9th Cir. BAP 2004). 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. United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en

banc).

      "We may affirm on any ground supported by the record, regardless of

whether the bankruptcy court relied upon, rejected or even considered that

ground." Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125

(9th Cir. 2014) (cleaned up).

                                 DISCUSSION

A.    Motions to reconsider generally

      Motions to reconsider are not specifically mentioned in the Federal

Rules of Civil or Bankruptcy Procedure. But the rules allow a litigant subject

to an adverse judgment to file either a motion to alter or amend the judgment

under Civil Rule 59(e) or a motion for relief from judgment under Civil Rule

60(b). Civil Rules 59(e) and 60(b) are made applicable to bankruptcy by Rules

9023 and 9024, respectively. Although they may overlap, these two rules are

                                         4
distinct.

         Ordinarily, if a motion to reconsider is filed within 14 days of the order

or judgment, it is treated as a motion under Civil Rule 59(e)(Rule 9023); if it is

filed more than fourteen days after entry of the order or judgment, it is

treated as a motion under Civil Rule 60(b) (Rule 9024). Rule 8002(b) tolls the

time for filing an appeal if a party files a motion to alter or amend the order

or judgment under Civil Rule 59(e) or a motion for relief under Civil Rule

60(b) within fourteen days after the order or judgment is entered. Rule

8002(b)(1)(B), (D). An untimely motion for reconsideration, one filed after the

14-day appeal period, will not extend the time to file a notice of appeal.

Preblich v. Battley, 181 F.3d 1048, 1057 (9th Cir. 1999) (applying former 10-day

rule).

         An appeal from the denial of a motion to reconsider construed as a

Civil Rule 59(e) motion allows the appellate court to consider the merits of

the underlying order or judgment, while an appeal from the denial of a Civil

Rule 60(b) motion "does not bring up the underlying judgment for review."

Browder v. Dir., Dep't of Corr. of Ill., 434 U.S. 257, 263 n.7 (1978); see Molloy v.

Wilson, 878 F.2d 313, 315 (9th Cir. 1989); Atkins v. Fiberglass Representatives, Inc.

(In re Atkins), 134 B.R. 936, 939 (9th Cir. BAP 1992). Put another way, when a

motion to reconsider is filed within 14 days of entry of the underlying order

or judgment, we have jurisdiction to review both the underlying order or

judgment and the order denying reconsideration. Wall St. Plaza, LLC v. JSJF

Corp. (In re JSJF Corp.), 344 B.R. 94, 99 (9th Cir. BAP 2006) (applying former

                                           5
10-day rule); Rule 8002(b). But when a motion to reconsider is filed after the

14-day appeal period has run, we lack jurisdiction to review the merits of the

underlying order or judgment and have jurisdiction only over the order

denying reconsideration. Preblich, 181 F.3d at 1057; In re Atkins, 134 B.R. at

938; see Pryor v. B Squared, Inc. (In re B Squared, Inc.), 654 Fed. App'x 268, 269

(9th Cir. 2016) ("To the extent that [debtor] challenges the underlying

dismissal order, we lack jurisdiction over that decision because [debtor] did

not timely appeal from it, and the late-filed motion for reconsideration did

not toll the time for filing the appeal.") (citations omitted).

B.    The bankruptcy court did not abuse its discretion in denying the
      motion to reconsider.

      While Silla's argument that the bankruptcy court erred in ruling that

she was required to pay interest on the delinquent prepetition principal has

some appeal, we are unable to review the merits of the court's decision on

that issue. As an initial matter, the Interest Memorandum was not a final

decision until the bankruptcy court entered the Confirmation Order on

February 10, 2022. The time to appeal the Confirmation Order and the

bankruptcy court's decision with respect to the interest matter expired on

February 24, 2022. Silla then sought reconsideration of the "Interest

Memorandum" on March 22, 2022, under Rules 9023 and 9024, after that

interlocutory decision had merged into the final Confirmation Order. While

Silla should have moved for reconsideration of the Confirmation Order, relief

under Rule 9023 was not available in any event because Silla's motion was

                                         6
filed nearly six weeks after the expiration of the appeal period for the

Confirmation Order.

       Thus, Silla's motion to reconsider could only be construed as a motion

for relief from judgment under Civil Rule 60(b). Alexander v. Bleau (In re

Negrete), 183 B.R. 195, 197 (9th Cir. BAP 1995), aff'd, 103 F.3d 139 (9th Cir.

1996). As such, we have jurisdiction only over the reconsideration order, and

our review is limited to the correctness of the bankruptcy court's denial of

Silla's motion.

       Civil Rule 60(b) permits a bankruptcy court to grant relief from a final

order or judgment on six separate grounds. See Civil Rule 60(b)(1)-(6).3

Other than a passing reference to Rule 9024, Silla did not discuss Civil Rule

60(b) or articulate under which clause she was seeking relief. Further, the

bankruptcy court did not articulate what rule or clause it applied to deny the

motion. Notwithstanding, since Silla asserted legal error by the court, it

appears that she was seeking relief under Civil Rule 60(b)(1) – "mistake,

       3
        Civil Rule 60(b) provides: Grounds for Relief from a Final Judgment, Order, or
Proceeding. On motion and just terms, the court may relieve a party or its legal
representative from a final judgment, order, or proceeding 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 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.
                                                7
inadvertence, surprise, or excusable neglect."

      Recently, the U.S. Supreme Court held that a judge's errors of law are

"mistakes" that can provide a basis for relief under Civil Rule 60(b)(1). See

Kemp v. United States, 142 S. Ct. 1856, 1860 (2022). However, the Court noted

that litigants must file Civil Rule 60(b) motions "within a reasonable time,"

and that circuit courts have found Civil Rule 60(b)(1) motions to be untimely

when the movant should have challenged the alleged legal error sooner "(e.g.,

in a timely appeal)." Id. at 1864 (citing Mendez v. Republic Bank, 725 F.3d 651,

660 (7th Cir. 2013)).

      The Supreme Court's holding in Kemp has long been the law in the

Ninth Circuit. See Gila River Ranch v. United States, 368 F.2d 354, 357 (9th Cir.

1966) (when a Civil Rule 60(b)(1) motion is based on the court's error, the

motion must be made before the expiration of the time for appeal); accord

Sattler v. Russell (In re Sattler), 840 F. App'x 214, 215-15 (9th Cir. 2021) (Mem)

("Granting motions to vacate orders involving alleged legal errors on the

merits, 'after a deliberate choice has been made not to appeal, would allow

litigants to circumvent the appeals process and would undermine greatly the

policies supporting finality of judgments.'" (quoting Plotkin v. Pac. Tel. & Tel.

Co., 688 F.2d 1291, 1293 (9th Cir. 1982))).

      One exception to the rule that a Civil Rule 60(b)(1) motion alleging legal

error on the merits must be filed before the appeal time has run is "when the

movant can 'establish the existence of extraordinary circumstances which

prevented or rendered him unable to prosecute an appeal.'" In re Sattler, 840

                                         8
F. App'x at 215 (quoting Plotkin, 688 F.2d at 1293); see also id. at 215 n.2

(explaining that Civil Rule 60(b)(1) motions require a showing of

extraordinary circumstances when they are based on alleged legal errors that

go to the merits and are brought after the deadline to appeal).

      Here, the bankruptcy court's alleged legal error on the merits was the

sole basis for Silla's untimely motion to reconsider. As such, her motion

amounted to an attempt to circumvent the appeals process after her failure to

timely appeal the Confirmation Order. Civil Rule 60(b) motions are not a

substitute for an appeal. Twentieth Century-Fox Film Corp. v. Dunnahoo, 637

F.2d 1338, 1341 (9th Cir. 1981) (Civil Rule 60 is "not intended to benefit the

unsuccessful litigant who long after the time during which an appeal from a

final judgment could have been perfected first seeks to express his

dissatisfaction.") (citation omitted); In re Atkins, 134 B.R. at 938-39 (movant

could not use Civil Rule 60(b) as an alternative to an appeal to obtain a

reconsideration of the merits). And Silla did not provide any reason for why

she was unable to file a timely appeal of the Confirmation Order much less an

"extraordinary" one.

      Therefore, the bankruptcy court had no basis upon which it could grant

relief. Although the bankruptcy court did not deny Silla's motion for the

reasons we have stated above, the record supports its decision to deny it.

      The only arguments Silla asserts on appeal are those that would have

been appropriate in an appeal of the Confirmation Order – i.e., that the

bankruptcy court erred in ruling that she had to pay interest on the

                                         9
delinquent prepetition principal. She does not cite Civil Rule 60(b) in her brief

(or 59(e) for that matter), or discuss the proper standard of review, or present

any argument that bears on the bankruptcy court's exercise of discretion in

denying the motion to reconsider. And, again, she has not provided any

explanation for why she did not bring a timely appeal of the Confirmation

Order.

      On this record, we conclude that the bankruptcy court did not abuse its

discretion in denying Silla's motion to reconsider.

                                CONCLUSION

      For the reasons stated above, we AFFIRM.

                                       10