Court Opinion

ID: 9689256
Source: CourtListenerOpinion
Date Created: 2023-08-24 18:26:29.743613+00
Date Added: 2024-06-11T18:18:46.502799
License: Public Domain

JONES, Bankruptcy Judge,
dissenting:
The Bankruptcy Appellate Panel issued a clear mandate to the bankruptcy court with “instructions to enter default judgment in favor of American Express, holding the debt of $24,812.84 nondischargeable under Section 523(a)(2)(A).” In my view, the Mandate Rule precludes the bankruptcy court from acting in a manner inconsistent with these instructions. Because this Panel holds to the contrary, I respectfully dissent.
I. LAW OF THE CASE / THE MANDATE RULE
Lawsuits generally result in a single judgment and a single appeal; however an appellate court may remand for further proceedings. See 28 U.S.C. § 2106 (1992). On remand, the decision of an appellate court on an issue of law becomes the “law of the case.”
“The law of the case doctrine states that the decision of an appellate court on a legal issue must be followed in all subsequent proceedings in the same case.” Maag v. Wessler, 993 F.2d 718, 720 n. 2 (9th Cir.1993) (emphasis added, internal citation omitted). This doctrine
is a judicial invention designed to aid in the efficient operation of court affairs. Under the doctrine, a court is generally precluded from reconsidering an issue previously decided by the same court, or *461a higher court in the identical case. For the doctrine to apply, the issue in question must have been decided explicitly or by necessary implication in [the] previous disposition.
Milgard Tempering, Inc. v. Selas Corp. Of America, 902 F.2d 703, 715 (9th Cir.1990) (quoting Liberty Mut. Ins. Co. v. E.E.O.C., 691 F.2d 438, 441 (9th Cir.1982)). Accord, Thomas v. Bible, 983 F.2d 152, 154 (9th Cir.1993).
Although the terminology “law of the case” has been widely adopted, the Supreme Court has stated that the law of the case doctrine “is something of a misnomer. It does not counsel a court to abide by its own prior decision in a given case, but goes rather to an appellate court’s relationship to the court of trial.” United States v. Wells, 519 U.S. 482, 488 n. 4, 117 S.Ct. 921, 926 n. 4, 137 L.Ed.2d 107 (1997). This relationship establishes the discretionary and nondiscretionary aspects of the law of the case doctrine. The nondis-cretionary aspect of the law of the case doctrine is called the “mandate rule.” See United States v. Insurance Co. of N. Am., 131 F.3d 1037 (D.C.Cir.1997) (recognizing that a lower court is bound by the mandate of an appellate court and generally may not reconsider issues decided on a previous appeal).
The mandate rule anticipates that a lower court will obey the mandate of an appellate court and carry it into effect according to its terms. See Vendo Co. v. Lektro-Vend Corp., 434 U.S. 425, 98 S.Ct. 702, 54 L.Ed.2d 659 (1978) (acknowledging that once a case is remanded the lower court is bound by decree); Colorado Interstate Gas Co. v. Natural Gas Pipeline Co. of America, 962 F.2d 1528 (10th Cir.1992) (recognizing that a lower court must comply strictly with the mandate rendered by the reviewing court). The lower court can choose to follow the mandate, or it can be compelled to follow the mandate by a writ of mandamus or second appeal. See Vendo Co. v. Lektro-Vend Corp., 434 U.S. 425, 98 S.Ct. 702, 54 L.Ed.2d 659 (1978) (noting that a court may be compelled to give full effect to mandate by writ of mandamus); In re Ivan F. Boesky Securities Litigation, 957 F.2d 65 (2nd Cir.1992) (recognizing that an appellate court retains the right to control or modify the acts of the lower court where the mandate has not been fully effected).
The scope of the mandate determines what powers remain with the lower court after the decision. If a judgment is affirmed, nothing remains for the lower court to do but carry the judgment into execution. If the judgment is reversed and remanded with instructions to dismiss, the lower court must dismiss it unless the mandate does not preclude amendment.
If an appellate court affirms a judgment in part and reverses in part and remands for further proceedings, the part of the judgment affirmed may not be disturbed. When further proceedings are specified in the mandate, the lower court is limited to holding to the appellate court’s directions. See City Pub. Serv. Bd. v. General Elec. Co., 935 F.2d 78 (5th Cir.1991). When a remand is general, the lower court is free to decide anything not foreclosed by the mandate. See United States v. Cote, 51 F.3d 178 (9th Cir.1995) (holding a lower court may consider any matters left open by a mandate); Avitia v. Metropolitan Club of Chicago, Inc., 49 F.3d 1219 (7th Cir.1995) (holding a lower court is required to adhere to the ruling of a higher court). The mandate constitutes the law of the case on issues of law that were actually considered and decided by the appellate court or can be inferred from the disposition on appeal. See Jones v. Lewis, 957 F.2d 260 (6th Cir.1992) (noting the mandate rule allows a lower court to consider any issues not decided by the appellate court).
Thus, it should be readily apparent that the mandate rule is a “broader” application of the law of the case doctrine. United States v. Cote, 51 F.3d 178, 181 (9th Cir.1995). The mandate rule is broader because a lower court may no more exceed *462the directions of a mandate by retrying the facts or altering its findings than by disregarding the law as decided by the appellate court. See North Miss. Communications, Inc. v. Jones, 951 F.2d 652 (5th Cir.1992) (recognizing that when an appellate court has decided that a prima facie showing has been made, the decision becomes the law of the ease and the lower court is obligated to follow it); Wakefield v. Northern Telecom, Inc., 813 F.2d 535 (2nd Cir.1987) (determining that in a remand for a new trial, the lower court could not dismiss on the ground that plaintiff had not shown that he could establish a prima facie case).
II. DISCUSSION
The Bankruptcy Appellate Panel presented the bankruptcy court with a clear mandate and instructions to enter default judgment in favor of the Appellant. This mandate was final, as it was not appealed, and left no discretion with the bankruptcy court on this issue. The bankruptcy court was obligated to carry out the mandate “whether correct or in error.” Colville Confederated Tribes v. Walton, 752 F.2d 397, 404 (9th Cir.1985). Furthermore, the bankruptcy court could not “give relief beyond the scope of that mandate, but it [could] act on any matter left open by the mandate.” Caldwell v. Puget Sound Elec. Apprenticeship and Training Trust, 824 F.2d 765, 767 (9th Cir.1987). Here, the bankruptcy court erred by failing to execute the Bankruptcy Appellate Panel’s unequivocal mandate.
The Rainbow Magazine decisions cited by the majority accurately apply the mandate rule. However, it is important to note that the mandate in the case at bar is unlike the mandate in Rainbow Magazine. In the Rainbow Magazine dispositive Opinion, the Bankruptcy Appellate Panel provided the following mandate upon remand:
For the reasons set forth above, the bankruptcy court did not abuse its discretion in determining that the filing of the bankruptcy petition was sanctionable conduct under Rule 9011 and in imposing sanctions against the debtor. We AFFIRM the bankruptcy court’s decision in this regard. We find the imposition of sanctions against Caldwell as a result of the filing of the bankruptcy petition, however, an abuse of discretion. We REVERSE the court in this regard and REMAND for a determination of the appropriate sanction, if any, for Caldwell’s signing of the fraudulent statement of affairs. We further REMAND for reconsideration of the amount of the sanction award in a manner consistent with this opinion.
In re Rainbow Magazine, Inc., 136 B.R. 545, 556 (9th Cir. BAP 1992) (emphasis added). The Bankruptcy Appellate Panel in Rainbow Magazine reversed the bankruptcy court because there was “no authority supporting the imposition of sanctions against a non-party” and remanded to the bankruptcy court for determination of an appropriate sanction, if any. In re Rainbow Magazine, Inc., 77 F.3d 278, 282 (9th Cir.1996). Subsequently, on appeal of the bankruptcy court’s reimposition of sanctions, the Ninth Circuit Court of Appeals characterized this ruling as “interlocutory.” Id. In other words, the Bankruptcy Appellate Panel’s mandate provided the bankruptcy court with authority to sanction the non-party if an appropriate basis could be found for the sanction. The intervening Ninth Circuit decision in Lockary v. Kayfetz, 974 F.2d 1166 (9th Cir.1992), provided a basis for the bankruptcy court to appropriately sanction the non-party. Thus, when the bankruptcy court exercised its discretion and imposed the sanction it acted completely within the mandate of the Bankruptcy Appellate Panel.
The Ninth Circuit’s decision in Rainbow Magazine did not turn on an exception to the law of the case doctrine. The Bankruptcy Appellate Panel’s mandate issued to the bankruptcy court left open the possibility of sanctions for the signing of the fraudulent statement of affairs if the bank*463ruptcy court determined them to be appropriate. Indeed, this ruling was interlocutory because it did not finally determine that sanctions were appropriate, rather it decided that sanctions could be imposed if appropriate, which required the bankruptcy court to take further steps. Since the Bankruptcy Appellate Panel’s ruling was “interlocutory,” I must agree with the Ninth Circuit in Rainbow Magazine that “[i]t would be a convoluted procedure not to allow the bankruptcy court to apply subsequent controlling precedent of this circuit in such a circumstance.” Id. Consequently, on remand with instructions to “determine”, a discretionary act, subsequent controlling precedent must be considered. See Hegler v. Borg, 50 F.3d 1472 (9th Cir.1995).
Unfortunately, those are not the circumstances in the instant case. Here, the Bankruptcy Appellate Panel’s dispositive Memorandum provided the following mandate upon remand:
We hold that the bankruptcy court erred in applying Ward as controlling law in this circuit. The record indicates that American Express provided an adequate record to support entry of a default judgment based on actual fraud under Section 528(a)(2)(A). The bankruptcy court’s decision is hereby REVERSED, and the case is remanded to the bankruptcy court with instructions to enter default judgment in favor of American Express, holding the debt of $24,812.84 nondischargeable under Section 523(a)(2)(A).
Memorandum at 6. Clearly, the Bankruptcy Appellate Panel’s mandate left nothing to be determined. In fact, this was a final judgment with directions to enter default judgment for the Appellant. It was not further appealed. The Bankruptcy Appellate Panel decision viewed the factual allegations in the complaint as adequate to warrant entry of the default judgment so the bankruptcy court was obligated to follow the mandate “whether correct or in error.” Colville Confederated Tribes v. Walton, 752 F.2d 397, 404 (9th Cir.1985). “[U]pon receiving a mandate from an appellate court, the [bankruptcy] court ‘cannot vary it or examine it for any other purpose than execution.’ ” United States v. Cote, 51 F.3d 178, 181 (9th Cir.1995). The unequivocal mandate in this case foreclosed any further consideration by the bankruptcy court.
A prior Bankruptcy Appellate Panel reached the same conclusion in In re Black, 222 B.R. 896 (9th Cir. BAP 1998), even though the Bankruptcy Appellate Panel’s dispositive Memorandum contained an arguably more ambiguous mandate. The mandate stated:
Despite the debtor’s default and total non-participation, the trial court denied AT & T a default judgment. The trial court applied an incorrect legal standard and, therefore, erred when it denied AT & T a default judgment because AT & T did not show reliance. AT & T has provided adequate evidence to show that it is entitled to a default judgment. Therefore, we REVERSE the trial court’s default judgment and REMAND for entry of judgment in accordance herewith.
In re Black at 898.
In In re Black, the bankruptcy court determined that this mandate encompassed only the issue of whether AT & T had to prove reliance upon Black’s alleged fraud. Therefore, the bankruptcy court concluded that it had discretion to rule on other required elements under Section 523(a)(2)(A) and scheduled a prove-up hearing. The bankruptcy court then entered default judgment in favor of Black for “failure to prosecute” because AT & T did not present any witnesses. Again, AT & T appealed.
In reversing the bankruptcy court on second appeal, the Bankruptcy Appellate Panel determined that the prior Panel’s memorandum made it clear that the Panel: (1) reviewed the issues necessary to enter a default judgment in favor of AT & T; (2) *464held that default judgment be entered in favor of AT & T; and (3) remanded the case to the bankruptcy court for the purpose of entering a default judgment in favor of AT & T. Furthermore, because the bankruptcy court had already denied AT & T’s motion for default judgment on the pleadings, it did not have discretion to ignore the Bankruptcy Appellate Panel’s review of the pleading and hold a prove-up hearing after the fact by interpreting the mandate as being limited to the reliance issue.
The majority attempts to distinguish In re Black from the instant case on the grounds that Eashai and Anastas were already the controlling law of the circuit when In re Black was decided and thus not intervening law. Indeed, this is true. However, this distinguishing characteristic fails to recognize that this appeal does not stem from the application of Eashai and Anastas, but rather from the failure of the bankruptcy court to follow the mandate. Consequently, under these circumstances, we are to review the bankruptcy court’s actions in relation to the issued mandate, not in its application of intervening law. Arguments in support of departure from the mandate must be addressed to the appellate court, but the lower court must still carry out the mandate. See Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989); Donohoe v. Consolidated Operating and Prod. Corp., 30 F.3d 907 (7th Cir.1994).
The majority also attempts to distinguish In re Black from the instant case on the grounds that the record in In re Black already contained evidence establishing the Dougherty factors while the instant case did not. Again, the majority fails to recognize that the correctness of the prior Bankruptcy Appellate Panel’s decision is not an issue in this appeal. It was final. The bankruptcy court was obligated to carry out the mandate “whether correct or in error.” Colville Confederated Tribes v. Walton, 752 F.2d 397, 404 (9th Cir.1985). Nevertheless, a review of the prior Panel’s memorandum in this case makes it clear that the Panel: (1) reviewed the issues necessary to enter a default judgment in favor of American Express; (2) held that default judgment be entered in favor of American Express holding the debt of $24,812.84 nondischargeable under Section 523(a)(2)(A); and (3) remanded the case to the bankruptcy court for the purpose of entering a default judgment in favor of American Express.
In sum, the mandate here was a final order because it finally determined the cause of action and was not further appealed. It left no discretion to the trial court nor did it call for further proceedings. All that remained was for the lower court to carry the judgment into execution. To reach a different conclusion would imply that a mandate can never be final, regardless of its wording, leaving a writ of mandamus as the only tool of enforcement for the appellate court. I am not prepared to reach that conclusion.
III. CONCLUSION
The Bankruptcy Appellate Panel reversed and remanded the matter to the bankruptcy court with express direction for entry of default judgment in favor of American Express. The bankruptcy court’s refusal to comply with the disposi-tive Memorandum and mandate was in direct conflict with the decision of the Panel. The bankruptcy court exceeded the mandate by requiring American Express to produce competent witnesses and admissible evidence to support a prima facie case, and by entering a default judgment in favor of Frasehilla. Therefore, I would reverse the bankruptcy court’s judgment in favor of Frasehilla and remand with instructions to enter default judgment in favor of American Express.