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In re Lebbos

March 23, 2009

IN RE: BETSEY WARREN LEBBOS, DEBTOR,
BETSEY WARREN LEBBOS, JASON P. GOLD, AND THOMAS CARTER, APPELLANTS,
v.
LINDA SCHUETTE, APPELLEE.



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

MEMORANDUM AND ORDER

This matter is before the court on pro se appellant Betsey Warren Lebbos' ("Lebbos") appeal*fn1 of the bankruptcy court's award of attorneys' fees and costs in favor of appellee Linda Schuette ("appellee"). (Docket #10.) Said attorneys' fees and costs were awarded in conjunction with the bankruptcy court's entry of default judgment against Lebbos as a terminating sanction for discovery abuses. Pursuant to 28 U.S.C. § 158(a), Lebbos elected appeal to this court.

The court has reviewed the parties' briefs and the underlying record, as contained within the excerpts of record submitted by Lebbos, and by this order, issues its decision AFFIRMING the bankruptcy court's award of attorneys' fees and costs to appellee. This court cannot find that the bankruptcy court abused its discretion in making these awards.*fn2

BACKGROUND

On January 3, 2007, appellee filed an adversary complaint against Lebbos, among others. The complaint sought avoidance of two alleged fraudulent transfers of a condominium located in Long Beach, California, recovery of that condominium, turnover of estate property and related declaratory relief. The first of the subject transfers was from Lebbos, as an individual, to Lebbos as Trustee of the Aida Madeline Lebbos No. 2 Trust. The second transfer was from Lebbos as Trustree of the Aida Madeline Lebbos Trust II to Gold and Carter as Trustees of the Aida Madeline Lebbos Trust II.

After being served with the adversary complaint, Lebbos engaged in a litany of actions and activities designed to avoid substantive participation in the litigation, including numerous motions to dismiss, motions to transfer venue, motions to disqualify appellee as the Chapter 7 trustee in Lebbos' parent bankruptcy case, motions to disqualify the bankruptcy judge, and the refusal to participate in discovery. Many of these actions and activities were also engaged in by Lebbos in her parent bankruptcy case both before and after the filing of appellee's adversary complaint.

On November 28, 2007, appellee filed a motion in the adversary matter against Lebbos seeking sanctions pursuant to Federal Rule of Civil Procedure 37.*fn3 Appellee argued that sanctions were warranted based on Lebbos' failure to appear at her properly noticed deposition, her repeated failure to produce documents and based on the court's prior warning that terminating sanctions may be entered if Lebbos continued her conduct. Appellee requested either monetary or terminating sanctions.

The sanctions motion was heard on January 16, 2008, and by a memorandum decision of February 13, 2008, the bankruptcy court granted appellee's motion, striking Lebbos' answer and entering default against Lebbos as a terminating sanction pursuant to Rule 37. (Excerpts of Record ["ER"], filed Oct. 17, 2008, at N-63-64.) Pursuant to that decision, the court issued a separate order on February 13, 2008, awarding appellee $5,388.80 in attorneys' fees ($4,400.00) and costs ($988.80), pursuant to Rule 37(d) (as incorporated by Federal Rule of Bankruptcy Procedure 7037). The court directed that of the total sum of $5,388.80, the sum of $2,609.40 was the joint and several responsibility of Lebbos, Gold and Carter. As to the balance of $2,779.40, the court directed that amount payable solely by Lebbos. (Id.)

Appellee subsequently filed an application for entry of default judgment, and the bankruptcy court entered judgment against Lebbos by order of April 17, 2008. The court's judgment permitted appellee to file a motion, within 30 days, seeking an award of costs, to the extent such costs were not previously awarded.

The bankruptcy court heard appellee's costs motion on June 18, 2008, and later that same day, issued its memorandum decision awarding appellee $1,133.40 in costs, pursuant to Federal Rule of Bankruptcy Procedure 7054(b). (ER at D-22-25.) Said amount was awarded as the joint and several responsibility of Lebbos, Gold and Carter. (ER at C-21.)

STANDARD OF REVIEW

An award of attorneys' fees and costs entered pursuant to Rule 37(d) and/or Federal Rule of Bankruptcy Procedure 7054 is reviewed for abuse of discretion, as under both Rules the court is given discretion as to whether to award fees and costs to a prevailing party in a contested matter. Sigliano v. Mendoza, 642 F.2d 309, 310 (9th Cir. 1981); In re Aviva Gelato, Inc., 94 B.R. 622, 624 (9th Cir. 1988).

ANALYSIS

First, as to the bankruptcy court's award of $5,388.80 in attorneys' fees and costs to appellee, this court previously affirmed the bankruptcy court's decision to strike Lebbos' answer and enter her default as a terminating sanction for Lebbos' discovery abuses. This court found that under "the rare and extreme circumstances of this case, the bankruptcy court acted well within its discretion" in entering default against Lebbos, and ultimately default judgment, as a ...


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