CHARLES L. ABRAHAMS, Debtor/Appellant,
MATHIAS HENTZ, Creditor/Appellee.
ORDER GRANTING TRUSTEE'S MOTION TO DISMISS APPEAL AND MOTION TO STRIKE
GONZALO P. CURIEL, District Judge.
Before the Court is Trustee Leslie T. Gladstone's Motion to Dismiss Appellant Charles L. Abrahams Bankruptcy Appeal and Motion to Strike Appellant's Amended Appeal Notices, Designations, and Statements. (Dkt. Nos. 21, 22.) Having considered the parties' submissions and for the reasons set forth below, the Court hereby GRANTS Trustee's Motion to Dismiss and GRANTS Trustee's Motion to Strike.
On January 22, 2010, Debtor/Appellant Charles Abrahams ("Appellant" or "Abrahams") filed his petition for relief under Chapter 11 of the United States Bankruptcy Court for the Southern District of California (the "Bankruptcy Court"). (Bk. Dkt. No. 1, Ch. 11 Voluntary Pet.) Appellant's case was subsequently converted to Chapter 7 at a hearing held on February 16, 2012, pursuant to which Trustee Leslie T. Gladstone ("Trustee") was appointed by the Bankruptcy Court and has, at all times relevant to the matters herein, served as the Chapter 7 Trustee in Appellant's bankruptcy case. (See Bk. Dkt. No. 294, the "Conversion Order")
On August 4, 2010, Creditor/Appellee Mathias Hentz ("Appellee" or "Hentz") filed his Proof of Claim in the Bankruptcy Court in the secured amount of approximately $250, 140.35. (Bk. Claim No. 7-1.) Mr. Hentz amended his claim on February 16, 2012, in the secured amount of approximately $281, 364.43. (Bk. Claim No. 7-2, "Claim No. 7.") Mr. Abrahams filed objections to Claim No. 7 on February 16, 2012 and April 17, 2012. (See Bk. Dkt. Nos. 289-90, 338-39.) Mr. Hentz filed Responses to Appellant's Objections on March 16, 2012 and May 4, 2012. (See Bk. Dkt. Nos. 314, 346). On May 8, 2012, the Trustee filed a Statement of Position in Response to Debtor's Objection to Claim of Creditor Mathias Hentz, asserting that Mr. Abrahams' objections were without merit and should be overruled. (Bk. Dkt. No. 349.)
On May 17, 2012, the Bankruptcy Court convened a fully noticed hearing on Appellant's objections to Claim No. 7, and issued an order overruling Mr. Abrahams' objections. (See Bk. Dkt. No. 365, "Claim Objection Hearing, " Bk. Dkt. Nos. 359, 365, 368.) Mr. Abrahams did not object to the Bankruptcy Court order and on June 21, 2012, the Bankruptcy Court entered its final Order Overruling Debtor's Objections to Claim No. 7 of Creditor Mathias Hentz. (Bk. Dkt. No. 372, "Claim No. 7 Order.")
On June 14, 2012, Appellant filed a Notice of Appeal of the Claim No. 7 Order to the Ninth Circuit Bankruptcy Appellate Panel ("BAP"). (Bk. Dkt. No. 385.) Per Mr. Hentz' timely election, the appeal was transferred to this Court on June 25, 2012. (See Dkt. No. 1.) On June 11, 2012, after commencing the present appeal, Appellant filed additional pleadings in Bankruptcy Court seeking reconsideration of the Claim No. 7 Order. (See Bk. Dkt. No. 380, "Reconsideration Motion.") After further extensive briefing by interested parties, the Bankruptcy Court denied Appellant's Reconsideration Motion on August 23, 2012. (See Bk. Dkt. No. 445, Minute Order re: Debtor's Mot. to Amend and Alter Hentz Judgment.) The Bankruptcy Court entered the final order denying Mr. Abrahams' Reconsideration Motion on September 5, 2012. (Bk. Dkt. No. 467.)
On August 9, 2012, Trustee filed a Motion to Approve a Compromise pursuant to a negotiated settlement agreement with the bankruptcy estate's two major secured judgment creditors-Appellee Hentz and the creditor group known as the Tunnicliffe Creditors. (Bk. Dkt. Nos. 419-424, "Settlement Motion.") The terms included two central agreements required to achieve the final settlement. First, Trustee proposed to transfer the bankruptcy estate's 4% property interest in 230-248 N. Golden Mall Associates, LLC ("GMA") to Mr. Hentz-who already has a 96% property interest in GMA-in consideration of Mr. Hentz' compromise and release of his remaining claims against the bankruptcy estate under Claim No. 7. (Bk. Dkt. No. 421, Trustee's Memo. in Support of Trustee's Settlement Mot. at 4.) The 4% interest in GMA is approximately equal to the amount claimed under Claim No. 7. (Id.) Second, Trustee proposed to make a partial distribution to the remaining secured creditor in the estate, the Tunnicliffe Creditors, in the amount of $500, 000.00. (Id at 3.)
On September 10, 2012, the Bankruptcy Court entered an order approving Trustee's Settlement Motion. (Bk. Dkt. No. 475, "Settlement Order.") Mr. Abrahams neither opposed Trustee's Settlement Motion nor the Settlement Order, which is now a final order of the Bankruptcy Court. Pursuant to the Settlement Order, Trustee has distributed $500, 000 from the bankruptcy estate to the Tunnicliffe Creditors. (Dkt. No. 422, Decl. of Trustee in Support of Mot. to Approve Compromise at 6.)
On June 14, 2012, Appellant filed a Notice of Appeal of the Bankruptcy Court's Claim No. 7 Order to the Ninth Circuit Bankruptcy Appellate Panel ("BAP"). (Bk. Dkt. No. 385.) Per Mr. Hentz' timely election, the appeal was transferred to this Court on June 25, 2012. (See Dkt. No. 1.) The only issue before this Court on appeal relate to Mr. Abrahams' appeal of Claim No. 7 by Creditor Hentz-this appeal does not include the Bankruptcy Court's orders authorizing the sale of any properties nor does it include other creditors. (See Dkt. No. 33, Order Denying Emergency Mot. and Am. Mot. to Stay Pending Appeal.) Pending before the Court are Trustee's Motion to Dismiss Appeal and Motion to Strike. (Dkt. Nos. 21, 22.)
The district court reviews the bankruptcy court's findings of fact for clear error and its conclusions of law de novo. Havelock v. Taxel (In re Pace) , 67 F.3d 187, 191 (9th Cir. 1995); Fed. Rules Bankr. Proc. Rule 8013. A factual finding is clearly erroneous if the appellate court, after reviewing the record, has a definite conviction that a mistake has been made. Beauchamp v. Hoose (In re Beauchamp) , 236 B.R. 727, 729 (B.A.P. 9th Cir. 1999). Findings of fact based on credibility are given particular deference by reviewing courts. Id. at 730 (internal citation omitted). In applying a "clearly erroneous" standard of review, an appellate court views evidence in light most favorable to party who prevailed. Lozier v. Auto Owners Ins. Co. , 951 F.2d 251, 253 (9th Cir.1991). Mixed questions of fact and law are reviewed de novo. Id . Mootness is a jurisdictional issue which the court reviews de novo. See In re Baker & Drake , 35 F.3d 1348, 1351 (9th Cir. 1994).
Trustee seeks dismissal of Mr. Abrahams' appeal of the Bankruptcy Court's Claim No. 7 Order on three grounds: (1) The appeal is constitutionally and equitably moot; (2) Appellant failed to comply with the procedural requirements of Fed. R. Bank. Proc. 8006 to perfect his appeal; and (3) Appellant failed to timely file opposition pleadings to Trustee's Motion to Dismiss and Motion to Strike. (See Dkt. Nos. 20-21, 38.) Alternatively, Trustee contends that Appellant's late-filed amended Notices of Appeal, Designations of Record, and Statements of Issue should be stricken from the record for noncompliance with Fed. R. Bank. Proc. 8006. (Dkt. No. 20.)
Appellant asserts a number of arguments in opposition to Trustee's motions including, inter alia , the Bankruptcy Court's orders are void; the conversion to Chapter 7 was void for lack of cause; and Trustee should have withdrawn her representation of the estate because she breached her fiduciary duty to the estate and represented the Creditors who admitted to embezzlement. (Dkt. No. 41, Mem. in Opp'n to Trustee's Mot. to Dismiss Appeal at 2.)
The Court GRANTS Trustee's motions and finds the Appeal should be DISMISSED for the following reasons: the appeal is equitably moot, Appellant failed to perfect his appeal, and Appellant failed to comply with local civil rules and Court ...