Court Opinion

ID: 2746070
Source: CourtListenerOpinion
Date Created: 2014-10-28 18:01:11.251258+00
Date Added: 2024-06-11T09:54:28.255104
License: Public Domain

FILED
                                                           OCT 28 2014
 1                         NOT FOR PUBLICATION
                                                       SUSAN M. SPRAUL, CLERK
 2                                                       U.S. BKCY. APP. PANEL
                                                         OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )        BAP No. NV-13-1518-JuHlPa
                                   )
 6   BOBBY JOE WALLACE and         )        Bk. No. NV-10-24125-LBR
     BRIDGET JANINE WALLACE,       )
 7                                 )
                     Debtors.      )
 8   ______________________________)
                                   )
 9   BOBBY JOE WALLACE; BRIDGET    )
     JANINE WALLACE,               )
10                                 )
                     Appellants,   )
11                                 )
     v.                            )        M E M O R A N D U M*
12                                 )
     ABEL ROSALES; ROBERT PIKE;    )
13   GARY AARDEMA; AARDEMA &       )
     LONDON,                       )
14                                 )
                     Appellees.    )
15   ______________________________)
16                 Argued and Submitted on September 18, 2014
                              at Las Vegas, Nevada
17
                            Filed - October 28, 2014
18
                 Appeal from the United States Bankruptcy Court
19                         for the District of Nevada
20           Honorable Linda B. Riegle, Bankruptcy Judge, Presiding
                            _________________________
21
     Appearances:     Christopher Burke, Esq. for appellants Bobby Joe
22                    Wallace and Bridget Janine Wallace; David Mincin,
                      Esq. for appellees Abel Rosales, Robert Pike,
23                    Gary Aardema, and Aardema & London.
                           ________________________
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 8013-1.

                                      -1-
 1   Before:     JURY, HOULE,1 and PAPPAS, Bankruptcy Judges.
 2            Chapter 72 debtors Bobby and Bridget Wallace appeal from
 3   the bankruptcy court’s order denying (1) their motion to reopen
 4   their bankruptcy case and (2) their request for attorney’s fees
 5   and costs incurred in defending the appeal of the bankruptcy
 6   court’s contempt order issued against appellees Abel Rosales,
 7   Robert Pike, Gary Aardema, and Aardema & London (collectively,
 8   Rosales).     Because the bankruptcy court was precluded from
 9   awarding the appellate attorney’s fees requested, we AFFIRM.
10                                 I.   FACTS
11           This appeal marks the third3 occasion in which this case
12   has come before this Panel.     In the most recent previous
13   proceeding, the bankruptcy court found Rosales in contempt for
14   violating the § 524 discharge injunction and awarded sanctions
15   to debtors consisting of $260 for the reopening fee, $1,400 for
16   attorney’s fees and costs, and $3,000 for punitive damages.
17   Rosales appealed that order to this Panel.4    The Panel affirmed
18   the bankruptcy court’s finding of contempt and its award of
19
        1
          The Honorable Mark D. Houle, U.S. Bankruptcy Judge for the
20 Central District of California, sitting by designation.
21       2
          Unless otherwise indicated, all chapter and section
22 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
   “Rule” references are to the Federal Rules of Bankruptcy
23 Procedure.
24       3
          See Rosales v. Wallace (In re Wallace), 490 B.R. 898,
   906–07 (9th Cir. BAP 2013) and Rosales v. Wallace
25 (In re Wallace), 2012 WL 2401871 (9th Cir. BAP 2012).
26      4
          Rosales v. Wallace (In re Wallace), BAP No. NV-11-1681-
27 KiPaD.  Because the material facts leading up to the bankruptcy
   court’s contempt order were set forth in that decision we do not
28 repeat them here.

                                        -2-
 1   sanctions based on the reopening fee and attorney’s fees and
 2   costs, but the Panel vacated and remanded the matter on the
 3   award of punitive damages because the bankruptcy court did not
 4   make sufficient findings to support the $3,000 award.       On
 5   remand, following an evidentiary hearing, the bankruptcy court
 6   issued its findings of fact and conclusions of law and entered
 7   the order upholding the $3,000 punitive damage award.       Debtors’
 8   bankruptcy case was closed for a second time.
 9           Debtors moved again to reopen their case and requested
10   additional sanctions of $16,714.80 in attorney’s fees and costs
11   incurred in defending the contempt order on appeal.       Relying on
12   Espinosa v. United Student Aid Funds, Inc. (In re Espinosa),
13   2011 WL 2358562, at *5 (Bankr. D. Ariz. 2011), debtors argued
14   that Rosales’ violation of the discharge injunction continued
15   throughout the appeal and remand as Rosales attempted to reverse
16   the bankruptcy court’s decision.       Alternatively, relying on
17   Prandini v. Nat’l Tea Co., 585 F.2d 47, 52-53 (3d Cir. 1978),
18   debtors maintained that their attorney should be compensated for
19   the time spent in defending their fee award.5      Finally, debtors
20   asserted that they had to defend against Rosales’ appeal and at
21
22
23
         5
24          The Ninth Circuit has uniformly held that time spent in
     establishing the entitlement to and amount of the fee is
25   compensable. See Orange Blossom Ltd. P’ship v. S. Cal. Sunbelt
26   Devs., Inc. (In re S. Cal. Sunbelt Devs., Inc.), 608 F.3d 456,
     463 (9th Cir. 2010). “This is so because it would be
27   inconsistent to dilute a fees award by refusing to compensate
     attorneys for the time they reasonably spent in establishing
28   their rightful claim to the fee.” Id.

                                      -3-
 1   remand6 and should be compensated.     Attached to the motion to
 2   reopen was the declaration of debtors’ counsel, Christopher
 3   Burke, and his time sheets documenting that he had expended 36.3
 4   hours in defending the appeal, including the remand, evidentiary
 5   hearing, status conference, and meeting with clients.
 6           In opposition, Rosales referred obliquely to Rule 80207 and
 7   Fed. R. App. P. (FRAP) 38,8 which provide specific vehicles for
 8   recovery of attorney’s fees for appeals to the appellate court
 9   and argued that these rules cannot be bypassed under the holding
10   in Vasseli v. Wells Fargo Bank (In re Vasseli), 5 F.3d 351, 353
11   (9th Cir. 1993).     Rosales also asserted that there was no basis
12   for awarding fees related to the evidentiary hearing on remand
13   when they had made an offer of judgment equal to the $3,000
14
15
         6
          This is the only mention of the fees associated with the
16 evidentiary hearing on remand in debtors’ motion. Throughout
   these proceedings it appears that debtors simply lump the fees
17 associated with the evidentiary hearing with those incurred for
18 defending the appeal.
         7
19           Rule 8020 provides,

20       If a district court or bankruptcy appellate panel
         determines that an appeal from an order, judgment, or
21       decree of a bankruptcy judge is frivolous, it may,
22       after a separately filed motion or notice from the
         district court or bankruptcy appellate panel and
23       reasonable opportunity to respond, award just damages
         and single or double costs to the appellee.
24
         8
             FRAP 38 provides,
25
26       If a court of appeals determines that an appeal is
         frivolous, it may, after a separately filed motion or
27       notice from the court and reasonable opportunity to
         respond, award just damages and single or double costs
28       to appellee.

                                      -4-
 1   punitive sanction.
 2        In reply, debtors argued that the holding and reasoning in
 3   Am. Serv. Co. v. Schwartz-Tallard (In re Schwartz-Tallard),
 4   473 B.R. 340, 349 (9th Cir. BAP 2012), aff’d, 751 F.3d 966 (9th
 5   Cir. 2014) should apply to this case.   There, this Panel
 6   affirmed the award of attorney’s fees to the debtor for
 7   defending a stay violation order on appeal.    Debtors further
 8   asserted that under Rule 7068 an offer of judgment applies only
 9   in an adversary proceeding and thus Rosales’ offer of judgment
10   was irrelevant.   Debtors maintained that they were entitled to
11   all their fees because the remand was a result of the appeal,
12   and as Espinosa points out, the fees for both “litigation” and
13   appeals are actual damages.
14        At the hearing, after a short discussion, the bankruptcy
15   court denied debtors’ motion for the additional fees on the
16   ground that only the appellate court had the authority to award
17   attorney’s fees and costs for an appeal.   The bankruptcy court
18   did not discuss the parties’ arguments regarding the offer of
19   judgment nor did it address whether it lacked authority to award
20   additional fees and costs related to the evidentiary hearing on
21   remand.   The bankruptcy court requested Rosales’ counsel to
22   prepare the proposed findings, conclusions, and an order.
23        On October 7, 2013, the bankruptcy court entered the order
24   which stated simply that debtors’ motion for attorney’s fees and
25   costs for defending the appeal was denied.    The order did not
26
27
28

                                    -5-
 1   contain findings or conclusions.9            Debtors filed a timely notice
 2   of appeal from that order.
 3                                II.    JURISDICTION
 4           The bankruptcy court had jurisdiction under 28 U.S.C.
 5   §§ 1334 and 157(b)(2)(A).          We have jurisdiction under 28 U.S.C.
 6   § 158.
 7                                   III.    ISSUE
 8           Whether the bankruptcy court erred in finding that it did
 9   not have authority to award debtors’ attorney’s fees and costs
10   incurred in defending the contempt order on appeal and on
11   remand.
12                          IV.    STANDARD OF REVIEW
13           The bankruptcy court’s denial of an award of attorney’s
14   fees is reviewed for an abuse of discretion or an erroneous
15   application of the law.       State of Cal. Emp. Dev. Dep’t v. Taxel
16   (In re Del Mission Ltd.), 98 F.3d 1147, 1153 (9th Cir. 1996).
17                                 V.     DISCUSSION
18           It is well settled that if a bankruptcy court finds that a
19   party has willfully violated the discharge injunction, the court
20   may award actual damages, punitive damages and attorney’s fees
21   to the debtor.     Espinosa v. United Student Aid Funds, Inc.,
22   553 F.3d 1193, 1205 n.7 (9th Cir. 2008), aff’d 559 U.S. 260
23   (2010); Knupfer v. Lindblade (In re Dyer), 322 F.3d 1178, 1195
24   (9th Cir. 2003) (actual damages, including attorney’s fees,
25   incurred as a result of the noncompliant conduct can be
26
         9
27        The hearing was conducted by the Honorable Lloyd King and
   the order was signed by the Honorable Linda B. Riegle. Debtors
28 did not move to amend the order.

                                            -6-
 1   recovered as part of a compensatory civil contempt sanctions
 2   award).
 3        In Del Mission the Ninth Circuit addressed the issue of
 4   whether the bankruptcy court has authority under § 105(a) to
 5   award fees to the movant incurred in defending the court’s
 6   contempt order on appeal.    In re Del Mission Ltd., 98 F.3d at
 7   1152-54.    There, the bankruptcy court earlier ordered the
 8   California Employment Development Department and the State Board
 9   of Equalization (collectively, the “State”) to repay the
10   chapter 7 bankruptcy estate certain taxes, as the State had
11   violated the automatic stay.    The State failed to comply while
12   the underlying bankruptcy order was on appeal.     Id. at 1149-50.
13        The chapter 7 trustee filed a motion requesting the
14   bankruptcy court to hold the State in civil contempt under
15   § 105(a) and to impose sanctions in the form of his attorney’s
16   fees and costs for enforcing the automatic stay on appeal.       Id.
17   at 1150.    The bankruptcy court denied the chapter 7 trustee’s
18   request to impose sanctions, determining that it had no legal
19   authority to award fees incurred on prior appeals.     This Panel
20   reversed the bankruptcy court, awarding the chapter 7 trustee
21   the fees and costs he incurred in the prior appeals.     Id. at
22   1152-53.
23        The Ninth Circuit reversed this Panel, holding that
24   § 105(a) did not authorize bankruptcy courts to award previously
25   incurred appellate fees.    In doing so, it relied on the prior
26   Ninth Circuit decision in Vasseli which held that bankruptcy
27   courts lacked authority to award appellate attorney’s fees under
28   § 523(d).    In re Vasseli, 5 F.3d at 352.   In that case, the

                                     -7-
 1   Ninth Circuit relied on FRAP 38 in support of its holding.     Id.
 2   at 353.    The court determined that FRAP 38 authorizes only
 3   appellate courts, not bankruptcy courts, to award attorney’s
 4   fees and other expenses incurred by an appellee in response to a
 5   frivolous appeal.    Id.   The Ninth Circuit held that while
 6   § 523(d) authorized attorney’s fees for the debtor, “it [did]
 7   not grant the bankruptcy court authority to award attorney’s
 8   fees to the debtor for appellate representation. . . .”     Id.   In
 9   addition, the Ninth Circuit determined that appellate courts
10   lacked authority “to delegate this power” to bankruptcy courts.
11   Id.
12         Applying the holding of Vasseli, the Ninth Circuit in
13   Del Mission concluded that a bankruptcy court’s express
14   discretionary authority under § 105(a) to award fees at the
15   trial level did not extend to allow it to award fees at the
16   appellate level.    In re Del Mission, Ltd., 98 F.3d at 1153–54.
17   The Ninth Circuit further reasoned that using § 105(a) as a
18   device to award appellate fees would impermissibly overlap with
19   FRAP 38.   Id. at 1154.    The court noted that its holding was
20   “limited to awards of discretionary appellate fees in bankruptcy
21   proceedings.”    Id. at 1154 n.7.
22         Del Mission is controlling authority on the question before
23   us — whether the bankruptcy court has discretionary authority to
24   award appellate fees under § 105(a).     This Panel’s decision in
25   Schwartz–Tallard, affirmed by the Ninth Circuit, does not compel
26   a different result because that decision dealt with an award of
27   appellate fees under § 362(k)(1) while Del Mission specifically
28   analyzed the bankruptcy court’s discretionary authority to award

                                      -8-
 1   appellate fees under § 105(a).    Indeed, the bankruptcy court
 2   noted at the hearing on this matter that the case law debtors
 3   relied upon involved § 362 rather than § 105(a) and that their
 4   request was under § 105(a).   Contrary to debtors’ assertion,
 5   there is a distinction between the bankruptcy court’s statutory
 6   mandate to award attorney’s fees under § 362(k)(1) and its
 7   discretionary authority under § 105(a).    Because § 105(a)
 8   directly applies to this matter, we are bound to follow
 9   Del Mission’s broad holding that bankruptcy courts have
10   discretionary authority to award fees at the trial level under
11   § 105(a) and not on appeal.   See Hart v. Massanari, 266 F.3d
12   1155, 1171 (9th Cir. 2001) (circuit law “binds all courts within
13   a particular circuit.”).   The bankruptcy court thus did not err
14   in declining to award debtors’ attorney’s fees and costs
15   incurred in defending the contempt order on appeal.10
16         Debtors also requested as an additional sanction the fees
17   they incurred in the evidentiary hearing on remand.     In their
18   second statement of issue on appeal, debtors argue that an
19   attorney is entitled to fees incurred for defending against
20   Rosales’ appeal of an order imposing sanctions for violating the
21
22        10
            Debtors’ attorney suggested at oral argument that this
23   Panel had the authority to award the fees for defending the
     appeal if the bankruptcy court did not. First, such motion for
24   appellate fees generally must be made by separate motion,
     something that was not done here. See Rule 8020. Moreover, to
25   the extent it is proper, any such fee request should be made to
26   the Panel that upheld the bankruptcy court’s decision to award
     the reopening fee and attorney’s fees, but remanded on the
27   punitive damage award. We express no opinion as to whether
     debtors would be entitled to such fees in the event they filed a
28   motion before that Panel.

                                      -9-
 1   discharge injunction.     Debtors then state they incurred such
 2   fees and ask the question “shouldn’t the attorney[’]s fees
 3   incurred defending against the appeal be awarded to the
 4   Wallaces?”   Debtors’ brief contains arguments relating only to
 5   this issue and the fees for defending the appeal.      It does not
 6   contain any arguments as to why the bankruptcy court erred by
 7   denying the fees related to the evidentiary hearing conducted in
 8   the bankruptcy court.11    We “will not ordinarily consider matters
 9   on appeal that are not specifically and distinctly argued in
10   appellant’s opening brief.”      Miller v. Fairchild Indus.,
11   797 F.2d 727, 738 (9th Cir. 1986); see also Meehan v. Cnty. of
12   L.A., 856 F.2d 102, 105 n.1 (9th Cir. 1988) (issue not briefed
13   by a party is deemed waived).      Because of debtors’ waiver, we
14   decline to consider this issue on appeal.
15                              VI.   CONCLUSION
16        For the reasons stated, we AFFIRM.
17
18
19
20
21
22
23
24
         11
25        In their motion before the bankruptcy court, debtors make
   a like argument, asserting only that they may recover fees for
26 “defending the appeal.” However, the billing statements which
   support the requested fees include the time related to the
27 evidentiary hearing on remand.
28                                     -10-