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In re Shields

August 27, 2010

IN RE: RICHARD J. SHIELDS, DEBTOR.
THE BANKRUPTCY ESTATE OF RICHARD J. SHIELDS, BY AND THROUGH NEIL MCCLEAN'S MICHAEL F. BURKART, CHAPTER 7 TRUSTEE, PLAINTIFF,
v.
NEIL MCLEAN (AKA NEAL MCLEAN) AND RUSSELL LONGAWAY, DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

Bankruptcy Court Case No. 06-22377-C-7

Adv. Proc. No. 08-02352

ORDER DENYING MOTION TO SUPPLEMENT THE RECORD ON APPEAL*fn1

On August 2, 2010, Cross-Appellant Neil McLean filed a motion to "supplement and correct an omission from the record on appeal pursuant to Federal Rule[] of Bankruptcy Procedure 8006 . . . ." (Docket No. 29, Mot. to Suppl. 1:20-23.) Specifically, McLean seeks an order which would include his evidentiary objections to the admission at trial of Kenneth Herold's deposition testimony in the record on appeal. Cross-Appellee Michael Burkart, the chapter 7 trustee of the bankruptcy estate of debtor Richard Shields, opposes McLean's motion, arguing the record may not be supplemented since the bankruptcy court did not consider McLean's evidentiary objections.

Although McLean seeks to supplement the appellate record under Federal Rule of Bankruptcy Procedure 8006, "courts generally apply Rule 10(e) of the Federal Rules of Appellate Procedure" when deciding such motions. In re Flamingo 55, Inc., BK-S-03-19478 BAM, 2006 WL 2432764, at *4 (D. Nev. Aug. 21, 2006) (also stating that "Rule 8006 does not . . . provide a method to correct or modify the record on appeal"); see also In re Khoe, 255 B.R. 581, 585 (E.D. Cal. 2000) (stating that "[s]upplementation of a record on appeal is governed by [Federal Rule of Appellate Procedure] 10(e)(2)"). Federal Rule of Appellate Procedure 10(e)(2) provides:

If anything material to either party is omitted from or misstated in the record by error or accident, the omission or misstatement may be corrected and a supplemental record may be certified and forwarded:

(A) on stipulation of the parties; (B) by the district court before or after the record has been forwarded; or

(C) by the court of appeals.

Fed. R. App. P. 10(e)(2). This rule is construed "narrowly" and "normally the reviewing court will not supplement the record on appeal with material not considered by the lower court." In re Khoe, 255 B.R. at 585 (citing Daly-Murphy v. Winston, 837 F.2d 348, 351 (9th Cir. 1987)).

Debtor Shields filed a chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Eastern District of California and Michael Burkart was appointed to be the chapter 11 trustee of the bankruptcy estate. Shield's bankruptcy case was later converted to a chapter 7 case, and Burkart was appointed to be the chapter 7 trustee.

Burkart initiated an adversary proceeding against McLean on behalf of Shield's bankruptcy estate. In the adversary proceeding complaint, Burkart objected to certain of McLean's claims against the bankruptcy estate under 11 U.S.C. § 502(b); sought subordination of certain of McLean's claims under 11 U.S.C. § 510(c)(1); alleged state claims of interference with prospective economic advantage, interference with contract, breach of fiduciary duty and violation of California Business and Professions Code § 17200; sought declaratory relief under 11 U.S.C. § 723 and California Corporations Code § 16202; and sought a judgment against McLean in the deficiency amount that would be necessary for the bankruptcy estate to pay all claims.

Prior to trial, McLean filed evidentiary objections to the admissibility of Kenneth Herold's deposition testimony. (Fernandez Decl. Ex. A.) McLean argued Herold's deposition was inadmissible at trial because Herold lacked personal knowledge of the negotiations to which he testified and his testimony constituted hearsay. (Id.)

A trial on Burkart's adversary proceeding claims was held on September 9 and 11, 2009 before the bankruptcy court. At the commencement of trial, the bankruptcy court ...


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