Court Opinion

ID: 2777354
Source: CourtListenerOpinion
Date Created: 2015-02-06 00:01:03.00578+00
Date Added: 2024-06-11T12:18:12.473186
License: Public Domain

FILED
                                                            FEB 05 2015
 1                         NOT FOR PUBLICATION
                                                        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.      HI-13-1459-KuJuKi
 6                                 )
     GUY R. EUGENIO and LYNN L.    )      Bk. No.      13-00833
 7   MAINAAUPO-EUGENIO,            )
                                   )      Adv. No.     13-90020
 8                  Debtors.       )
     ______________________________)
 9                                 )
     GUY R. EUGENIO; LYNN L.       )
10   MAINAAUPO-EUGENIO,            )
                                   )
11                  Appellants,    )
                                   )
12   v.                            )      MEMORANDUM*
                                   )
13   CONTINENTAL PACIFIC, LLC,     )
                                   )
14                  Appellee.      )
     ______________________________)
15
                    Argued and Submitted on January 22, 2015
16                           at Pasadena, California
17                          Filed – February 5, 2015
18            Appeal from the United States Bankruptcy Court
                        for the District of Hawaii
19
       Honorable Robert J. Faris, Chief Bankruptcy Judge, Presiding
20
21   Appearances:     Anthony Paul Locricchio argued for appellants Guy
                      R. Eugenio and Lynn L. Mainaaupo-Eugenio; Jesse W.
22                    Schiel of Kobayashi Sugita & Goda argued for
                      appellee Continental Pacific, LLC.
23
24   Before: KURTZ, JURY and KIRSCHER, Bankruptcy Judges.
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.
 1                              INTRODUCTION
 2        Continental Pacific, LLC commenced a state court action
 3   against the Eugenios seeking summary possession of the real
 4   property on which the Eugenios resided.   After the state court
 5   denied Continental Pacific’s summary judgment motion and set the
 6   matter for trial, the Eugenios filed their chapter 131 bankruptcy
 7   petition.   Continental Pacific then removed the state court
 8   action to the bankruptcy court and filed a new summary judgment
 9   motion.   The bankruptcy court granted the summary judgment motion
10   and also denied the Eugenios’ motion to set aside that judgment.
11   The Eugenios did not timely appeal either of these rulings.
12        The Eugenios thereafter filed a reconsideration motion in
13   which they argued that Continental Pacific’s removal of the state
14   court action was improper, that the bankruptcy court lacked
15   subject matter jurisdiction, and that the state court’s prior
16   denial of Continental Pacific’s summary judgment motion precluded
17   the bankruptcy court from granting summary judgment.   The
18   bankruptcy court denied the reconsideration motion, and the
19   Eugenios appealed.
20        Because each of the arguments the Eugenios made in their
21   reconsideration motion lack merit, we AFFIRM.
22                                  FACTS
23        The Eugenios leased a parcel of land from Continental
24   Pacific under a written month-to-month lease agreement.   In
25
26        1
           Unless specified otherwise, all chapter and section
27   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     all "Rule" references are to the Federal Rules of Bankruptcy
28   Procedure, Rules 1001-9037.

                                      2
 1   September 2012, Continental Pacific notified the Eugenios in
 2   writing that it was terminating the lease 120 days from the date
 3   of that notice.   Continental Pacific offered several different
 4   justifications for the termination of the lease.   In one notice
 5   sent in February 2012, Continental Pacific stated that it needed
 6   to terminate the lease in furtherance of its redevelopment plans,
 7   which contemplated the conversion of the subject real property
 8   pursuant to Hawaii’s condominium property regime, Haw. Rev.
 9   Stats. § 514B-1, et seq.   At other times, Continental Pacific
10   said that it was terminating the lease because: (1) the Eugenios
11   were delinquent in paying their monthly rent; and (2) the
12   Eugenios denied Continental Pacific’s contractors access to the
13   real property for the purpose of making improvements.
14        When the Eugenios did not move out by the termination date,
15   Continental Pacific filed a complaint for summary possession of
16   the property in the district court for the State of Hawaii.
17   Continental Pacific then filed a motion for summary judgment,
18   which the state court ultimately denied, but the court shortly
19   thereafter set the matter for trial.   On May 20, 2013, a few days
20   before the scheduled trial date, the Eugenios filed their
21   chapter 13 bankruptcy petition, and the automatic stay prevented
22   the state court from moving forward with the trial.   A week
23   later, Continental Pacific removed the state court litigation to
24   the bankruptcy court by filing a notice of removal pursuant to
25   28 U.S.C. 1452(a) and Rule 9027 and then filed a summary judgment
26   motion.   The Eugenios did not initially file any opposition to
27   the summary judgment motion.   Instead, they requested a
28   continuance of the summary judgment proceedings, which request

                                      3
 1   the bankruptcy court denied.
 2        On July 17, 2013, the bankruptcy court issued an order
 3   granting Continental Pacific’s motion for summary judgment and
 4   also issued a judgment for possession of the property.   Two days
 5   later, the Eugenios filed a motion to set aside the judgment and
 6   to stay enforcement of the judgment.   The court partially granted
 7   that motion.   The court temporarily stayed its prior judgment for
 8   possession and, with the consent of both parties, re-opened
 9   briefing on the summary judgment motion to permit the Eugenios a
10   further opportunity to file a brief and declarations opposing the
11   motion.
12        The Eugenios filed their summary judgment opposition and
13   over a hundred pages of supporting documents and declarations.
14   In their opposition, the Eugenios argued that there were genuine
15   issues of material fact.   According to the Eugenios, there were
16   genuine factual issues concerning whether Continental Pacific was
17   engaging in a retaliatory eviction and concerning whether
18   Continental Pacific had “unclean hands,” which the Eugenios
19   believed would bar Continental Pacific from obtaining any relief
20   from the bankruptcy court.   The Eugenios also argued that
21   Continental Pacific had no entitlement to evict them unless and
22   until Continental Pacific satisfied all prerequisites for
23   converting the subject property in accordance with Hawaii’s
24   community property regime.
25        On August 29, 2013, the bankruptcy court entered an order
26   denying the Eugenios’ motion to set aside.   In that order, the
27   court rejected all of the Eugenios’ arguments, denied them any
28   further relief on account of their motion to set aside, and

                                      4
 1   dissolved the temporary stay of the judgment.   The bankruptcy
 2   court’s grant of summary judgment, its denial of the Eugenios’
 3   motion to set aside, and the issues the Eugenios raised in their
 4   summary judgment opposition are all beyond the scope of this
 5   appeal because the Eugenios did not timely file a notice of
 6   appeal either from the order granting summary judgment or from
 7   the order denying the motion to set aside that judgment.
 8        On September 18, 2013, the Eugenios filed a motion for
 9   reconsideration of the court’s order denying their motion to set
10   aside.   The Eugenios asserted that there were grounds for
11   reconsideration based on Civil Rule 60(b)(3) and (4)
12   (respectively, providing relief from judgments that are void and
13   judgments that were obtained by fraud).   In essence, the Eugenios
14   argued in their reconsideration motion that the removal of the
15   state court lawsuit to the bankruptcy court was improper, that
16   the bankruptcy court lacked jurisdiction over the matter, and
17   that the state court’s order denying summary judgment precluded
18   the bankruptcy court from granting summary judgment.
19        The bankruptcy court entered an order denying the
20   reconsideration motion on September 23, 2013.   The bankruptcy
21   court in relevant part reasoned that none of the allegations set
22   forth in the motion, even if they were found to be true, would
23   support the conclusion that the judgment was either fraudulently
24   obtained or void.   The bankruptcy court further reasoned that all
25   of the arguments set forth in the motion either already were
26   raised, or should have been raised, in the Eugenios’ summary
27   judgment opposition.   That same day, the Eugenios filed their
28   notice of appeal.

                                      5
 1                                JURISDICTION
 2        We address the relevant jurisdictional issues in the
 3   discussion section, below.
 4                                   ISSUES
 5   1.   Is this appeal moot?
 6   2.   Did the bankruptcy court have subject matter jurisdiction
 7        over Continental Pacific’s removed complaint for summary
 8        possession?
 9   3.   Did the state court’s denial of summary judgment preclude
10        the bankruptcy court from granting summary judgment?
11                           STANDARDS OF REVIEW
12        We consider jurisdictional issues under the de novo standard
13   of review.   Mantz v. Cal. State Bd. of Equalization
14   (In re Mantz), 343 F.3d 1207, 1211 (9th Cir. 2003); see also Rev
15   Op Group v. ML Manager LLC (In re Mortgs. Ltd.), 771 F.3d 1211,
16   1214 (9th Cir. 2014).
17        We review the bankruptcy court’s denial of the Eugenios’
18   reconsideration motion for an abuse of discretion.     First Ave. W.
19   Bldg. LLC v. James (In re OneCast Media, Inc.), 439 F.3d 558, 561
20   (9th Cir. 2006).   The bankruptcy court abused its discretion in
21   denying the reconsideration motion if its ruling was based on an
22   erroneous view of the law or a clearly erroneous factual finding.
23   United States v. Loew, 593 F.3d 1136, 1139 (9th Cir. 2010).
24                                 DISCUSSION
25   A.   Mootness Issue
26        One of the threshold issues that we must resolve before we
27   can address the merits of this appeal is whether this appeal is
28   moot.   This issue is jurisdictional and arises from the case or

                                       6
 1   controversy requirement of Article III of the Constitution.
 2   In re Mortgs. Ltd., 771 F.3d at 1214; Motor Vehicle Cas. Co. v.
 3   Thorpe Insulation Co. (In re Thorpe Insulation Co.), 677 F.3d
4   869, 880 (9th Cir. 2012).   We have an independent duty to assure
 5   ourselves that this appeal is not moot even when the parties do
 6   not raise the issue.   Pilate v. Burrell (In re Burrell), 415 F.3d
7   994, 997 (9th Cir. 2005).
 8        An appeal is moot, and does not present a live case or
 9   controversy, when it would be impossible for us to grant any
10   meaningful relief to the appellants even if they were to prevail.
11   In re Mortgages Ltd., 771 F.3d at 1214.   Here, the Eugenios have
12   admitted that they already have been evicted from their residence
13   and that their residence has been demolished.   See Aplt. Opn. Br.
14   at p. 19 (“It has now since been bulldozed down, despite the fact
15   improper possession of the home owned by the Eugenios was
16   obtained through a defective Writ of Possession.”).
17   Consequently, even if we were to rule in the Eugenios' favor and
18   reverse or vacate the summary judgment ruling granting possession
19   to Continental Pacific, the Eugenios could not be restored to
20   possession of their residence, as it no longer exists.
21        It is obvious from the Eugenios' filings in the bankruptcy
22   court and on appeal that, by opposing Continental Pacific's
23   summary judgment motion, they sought to continue to live in their
24   residence.   Now that possession of their residence no longer can
25   be restored to them, resolving this appeal in their favor would
26   appear to confer upon them little meaningful relief.   See
27   Benavides v. Hous. Auth. of San Antonio, Tex., 238 F.3d 667, 670
28   (5th Cir. 2001) (holding that action seeking to enjoin demolition

                                      7
 1   project was moot where demolition was 55% complete and had
 2   progressed to the point where the plaintiffs' dwellings were no
 3   longer habitable); see also Pres. Pittsburgh v. Conturo, 477 F.
4   App’x 918, 920 (3d Cir. 2012) (holding that action seeking to
 5   enjoin demolition of Pittsburgh's Civic Arena was rendered moot
 6   by the demolition of the Arena); Interior Reg. Hous. Auth. v.
 7   Vill. of Dot Lake, 303 Fed.Appx. 483 (9th Cir. 2008) (dispute
 8   regarding housing authority's legal right to evict tenants
 9   despite passage of tribal ordinance purporting to prohibit those
10   evictions was moot because all of the tenants already had moved
11   out of the subject building, the housing authority had closed
12   down the building, and there was no legal impediment to the
13   housing authority demolishing the building if it chose to do so).
14        The Eugenios suggest that we still might be able to afford
15   them other meaningful relief, that we could order Continental
16   Pacific to replace the demolished residence.    See Aplt. Opn. Br.
17   at pp. 31-32.   We disagree.   The proceedings before the
18   bankruptcy court were limited to Continental Pacific's complaint
19   seeking summary possession of the real property.    As a result,
20   the Eugenios’ attempt now to seek affirmative relief is beyond
21   the scope of this appeal.
22        Even so, we decline to dismiss this appeal as moot.    The
23   lease the Eugenios entered into with Continental Pacific was in
24   essence a ground lease.   If the Eugenios were to prevail, the
25   facts currently before us suggest that we could restore
26   possession of the raw land to the Eugenios pending resolution of
27   the litigation over the parties' respective rights to possession.
28   While this certainly is not the complete relief the Eugenios

                                       8
 1   would have preferred, it is sufficient effective relief to
 2   prevent this appeal from being declared moot.2
 3   B.   Merits Analysis
 4        The only issues properly within the scope of this appeal are
 5   the Eugenios’ jurisdiction argument and their preclusion
 6   argument.   Those were the only two arguments the Eugenios raised
 7   in their reconsideration motion, and the Eugenios’ appeal was
 8   only timely as to the order denying that reconsideration motion.
 9   We will address each of these arguments in turn.     However, before
10   we do so, we will set forth the standards generally governing
11   reconsideration motions.
12        1.   General Reconsideration Motion Standards
13        Depending on the timing of the motion, a motion generically
14   named as a reconsideration motion may seek relief under either
15   Civil Rule 59 or Civil Rule 60 (as made applicable in bankruptcy
16   cases by Rules 9023 and 9024).   See United Student Funds, Inc. v.
17   Wylie (In re Wylie), 349 B.R. 204, 209 (9th Cir. BAP 2006);
18   Captain Blythers, Inc. v. Thompson (In re Captain Blythers,
19   Inc.), 311 B.R. 530, 539 (9th Cir. BAP 2004).
20        When a party files a reconsideration motion within fourteen
21   days of entry of the judgment or order, the court may treat the
22
          2
23         At oral argument, counsel for Continental Pacific asserted
     that the Eugenios leased their dwelling from Continental Pacific.
24   The record does not support Continental Pacific’s assertion. The
     lease Continental Pacific presented to the court in support of
25   its summary judgment motion plainly stated that Continental
26   Pacific was leasing the land to the Eugenios and specifically
     excluded from the lease any improvements built on the land. In
27   fact, the lease also contained an acknowledgment stating that
     Continental Pacific did not own the improvements built on the
28   land.

                                      9
 1   motion as a motion for new trial or to alter or amend the
 2   judgment under Civil Rule 59(e).      See Rule 9023; In re Wylie,
 3 349 B.R. at 209.    On the other hand, when (as here) the
 4   reconsideration motion is filed more than fourteen days after
 5   entry of the judgment or order, a motion for reconsideration must
 6   be construed as a motion for relief from judgment under Civil
 7   Rule 60(b).   See Rule 9024; In re Captain Blythers, Inc.,
 8 311 B.R. at 539; Negrete v. Bleau (In re Negrete), 183 B.R. 195,
 9   197 (9th Cir. BAP 1995).
10        When a party seeks Civil Rule 60(b) relief after the time
11   period for filing an appeal has expired, that party may not
12   revisit the underlying merits of the judgment or otherwise attack
13   the court’s rulings leading up to that judgment.      In re Wylie,
14 349 B.R. at 209.    Consequently, the moving party generally cannot
15   use his or her 60(b) motion to reargue points already made, or
16   that could have been made, when the dispute originally was
17   presented to the bankruptcy court.      Branam v. Crowder
18   (In re Branam), 226 B.R. 45, 55 (9th Cir. BAP 1998); aff'd,
19   205 F.3d 1350 (table) (9th Cir. 1999).
20        Consistent with these general principles, the bankruptcy
21   court here determined that the Eugenios’ reconsideration motion
22   should be denied because the Eugenios only offered in support of
23   their motion factual and legal points that they did offer or
24   could have offered in their response to Continental Pacific’s
25   summary judgment motion or in their prior motion to set aside the
26   summary judgment.    In any event, each of the arguments the
27   Eugenios attempted to make in their reconsideration motion was
28   meritless, as explained below.

                                      10
 1        2.   Jurisdiction Argument
 2        Citing no legal authority, the Eugenios claimed that
 3   Continental Pacific’s removal of its complaint to the bankruptcy
 4   court was improper and that the bankruptcy court lacked
 5   jurisdiction over the subject matter of the complaint.    We
 6   disagree.   At the time the Eugenios filed their bankruptcy case,
 7   they had at least a possessory interest in the land they were
 8   leasing, and Continental Pacific’s complaint sought to divest
 9   them of that interest.   At a minimum, these undisputed facts were
10   sufficient to confer upon the bankruptcy court subject matter
11   jurisdiction under the broad scope of the bankruptcy court’s
12   “related to” jurisdiction, as set forth in 28 U.S.C. § 1334(b).
13   See Sasson v. Sokoloff (In re Sasson), 424 F.3d 864, 868–69 (9th
14   Cir. 2005) (stating that bankruptcy court “related to”
15   jurisdiction is very broad, “including nearly every matter
16   directly or indirectly related to the bankruptcy”); Feitz v.
17   Great W. Sav. (In re Feitz), 852 F.2d 455, 457 (9th Cir. 1988)
18   (stating that an action is “related to” the debtor’s bankruptcy
19   case if the action’s disposition “could alter the debtor's
20   rights, liabilities, options, or freedom of action (either
21   positively or negatively) and which in any way impacts upon the
22   handling and administration of the bankrupt estate.”).    Thus, the
23   bankruptcy court had subject matter jurisdiction over Continental
24   Pacific’s action sufficient to support Continental Pacific’s
25   removal of that action under 28 U.S.C. § 1452(a).
26        If the Eugenios truly believed that the removal was
27   improper, 28 U.S.C. §§ 1334(c) and 1452(b) set forth procedures
28   that they could have invoked by filing a motion for abstention

                                       11
 1   and/or remand.     But the Eugenios never filed such a motion or
 2   otherwise requested such relief from the bankruptcy court.     We
 3   know of no authority that compelled the bankruptcy court to sua
 4   sponte remand the matter to the state court, nor have the
 5   Eugenios cited us to any such authority.
 6        Under these circumstances, the bankruptcy court correctly
 7   exercised jurisdiction over Continental Pacific’s removed state
 8   court complaint.3
 9        3.    Preclusion Argument
10        Alternately, the Eugenios argued that the state court’s
11   order denying Continental Pacific’s summary judgment motion
12   precluded the bankruptcy court from later granting summary
13   judgment in favor of Continental Pacific.     At the outset, we note
14   that the Eugenios did not specify or cite any authority
15   indicating whether they were relying upon issue preclusion
16   doctrine or claim preclusion doctrine.     Either way, the Eugenios’
17   preclusion argument would fail.     We acknowledge that, under the
18   full faith and credit doctrine, the bankruptcy court and this
19   Panel must give the same preclusive effect to the Hawaii state
20   court’s rulings that the Hawaii courts themselves would give
21   them.     See Ormsby v. First Am. Title Co. of Nev. (In re Ormsby),
22
          3
23         Per Rule 9027(a)(1), Continental Pacific alleged in its
     notice of removal that its complaint constituted a “core”
24   proceeding governed by 28 U.S.C. § 157(b)(1). The Eugenios never
     challenged the alleged “core” nature of the proceeding, nor did
25   they ever dispute the bankruptcy court’s authority under
26   28 U.S.C. § 157(b)(1) to render a final decision. As a result,
     the Eugenios forfeited these issues. See Exec. Benefits Ins.
27   Agency v. Arkison (In re Bellingham Ins. Agency, Inc.), 702 F.3d
553, 566-70 (9th Cir. 2012), aff'd on other grounds, 134 S. Ct.
28   2165 (2014).

                                       12
 1   591 F.3d 1199, 1205 n.3 (9th Cir. 2010).   Nonetheless, Hawaii law
 2   requires a final judgment on the merits for the application of
 3   either claim preclusion or issue preclusion.   See E. Sav. Bank,
 4   FSB v. Estaban, 296 P.3d 1062, 1067 (Haw. 2013); Exotics
 5   Hawaii-Kona, Inc. v. E.I. Dupont De Nemours & Co., 90 P.3d 250,
 6   257 (Haw. 2004).    Here, the state court’s order denying summary
 7   judgment was not a final judgment on the merits in any sense.
 8   Continental Pacific’s action unequivocally was still pending in
 9   the state court when Continental Pacific removed it to the
10   bankruptcy court.
11        Moreover, even if there were some validity to the Eugenios’
12   preclusion argument (which there is not), the so-called
13   preclusive effect of the state court’s order denying summary
14   judgment would not be sufficient by itself to establish that the
15   Eugenios were entitled to relief under either Civil Rule 60(b)(3)
16   or (4), as asserted in their reconsideration motion.   In other
17   words, the so-called preclusive effect of the state court’s order
18   denying summary judgment would not establish that the bankruptcy
19   court’s summary judgment was fraudulent or void.   See generally
20   Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 293
21   (2005) (stating that the principles of res judicata – claim
22   preclusion and issue preclusion – are not jurisdictional and must
23   be pled as an affirmative defense under Civil Rule 8(c)(1));
24   In re Sasson, 424 F.3d at 872 (same).
25                                CONCLUSION
26        For the reasons set forth above, we AFFIRM the bankruptcy
27   court’s order denying the Eugenios’ reconsideration motion.
28

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