United States District Court, C.D. California
PRESENT: THE HONORABLE R. GARY KLAUSNER, UNITED STATES
DISTRICT JUDGE
CIVIL MINUTES - GENERAL
Proceedings:
(IN CHAMBERS) Order re: Bankruptcy Appeal re: Order
Denying Labor Commissioner, State of
California's Motion to Reconsider Under FRCP 60 (DE
1)
I.
INTRODUCTION
This
matter comes before the Court on appeal from the United
States Bankruptcy Court for the Central District of
California. Appellant California State Labor Commissioner
("Appellant" or "Labor Commissioner")
filed its opening brief on March 29, 2019 appealing the Order
of the Bankruptcy Court denying Appellant's Motion to
Reconsider Under FRCP 60 the partus' voluntary dismissal
of the matter (DE 18). For the following reasons, the Court
AFFIRMS the Order of the Bankruptcy Court.
II.
FACTUAL BACKGROUND
On
December 7, 2016, Appellee Monique Johnson
("Johnson") filed a Chapter 7 bankruptcy petition.
Included in the debts that Johnson sought to discharge
through the bankruptcy was a debt owed to her former
employee, Brittany Banuelos ("Banuelos"). Banuelos
previously received a judgment against Johnson in a
retaliation action. On March 20, 2017, the Labor Commissioner
filed an Adversary Proceeding against the Debtor and
Appellee, Monique Johnson, on behalf of Banuelos. In the
Adversary Proceeding, the Labor Commissioner sought to
establish that damages awarded to Banuelos in the retaliation
action are non-dischargeable.
On
August 29, 2017, the Labor Commissioner and Johnson executed
a Stipulation of Dismissal ("Dismissal") of the
Adversary Proceeding, pursuant to Federal Rule of Civil
Procedure 41(a), which was filed and entered by the
Bankruptcy Court on August 30, 2017. The Dismissal was
without prejudice as to the rights of Banuelos. The Labor
Commissioner's alleged reason for the Dismissal was their
counsel, David Lawrence Bell's ("Bell")
mistaken belief that Banuelos was unavailable. Bell claims
that he sent Banuelos emails regarding the proceedings, to
which she did not respond because she was in Mexico for a
family emergency and Id. not have access to emails
for several months. At the time of the Dismissal, Bell was
unaware of this. However, contrary to Bell's belief,
Banuelos allegedly assures that she could have been reached
via telephone during that time.
The
Labor Commissioner alleges that on or about August 29, 2017,
the same day the Dismissal was executed by the parties,
Banuelos resurfaced and contacted Bell to protest the
Dismissal. On December 4, 2017, the Labor Commissioner filed
a Rule 60(b) Motion seeking to vacate the Dismissal. The
Labor Commissioner's primary basis for the Rule 60(b)
Motion was that Bell only agreed to dismiss the matter as a
result of his mistaken belief that Banuelos could not be
contacted, and therefore, the decision to dismiss was the
result of excusable neglect and Rule 60(b) warrants vacating
the Dismissal.
On
October 10, 2018, the Bankruptcy Court held a hearing on the
Labor Commissioner's Rule 60(b) Motion and denied the
Motion on the ground that the Labor Commissioner had failed
to offer any admissible evidence to support its contentions.
The sole evidence that the Labor Commissioner provided in
support of the Rule 60(b) Motion was a declaration from Bell
setting forth his mistaken belief that Banuelos was
unavailable. Banuelos did not provide a declaration in
support of the Motion. The Bankruptcy Court found that
Bell's claims in his declaration regarding Banuelos were
inadmissible hearsay evidence and that the failure to provide
a declaration of Banuelos was fatal to the Motion. Thus, on
October 22, 2018, the Bankruptcy Court filed and entered its
Order denying the Motion. The Labor Commissioner now appeals
this decision.
III.
JUDICIAL STANDARD
Federal
district courts have jurisdiction to hear appeals from final
judgments, orders, and decrees of bankruptcy judges. 28
U.S.C. § 158(a)(1); In re Frontier Props.,
Inc., 979 F.2d 1358, 1362 (9th Cir. 1992). This Court
reviews for abuse of discretion a bankruptcy court's
ruling on a motion for relief from judgment pursuant to Rule
60(b). Casey v. Albertson's Inc., 362 F.3d 1254,
1257 (9th Cir. 2004). Failure to exercise discretion is an
abuse of discretion. Central Valley Typographical Union,
No. 46 v. McClatchy Newspapers, 762 F.2d 741, 749 (9th
Cir. 1985).
"[A]ttorney
error is insufficient grounds for relief under both Rule
60(b)(1) and (6) . . . ." Allmerica Fin. Line Ins.
& Annuity Co. 139 F.3d. 664, 666 (9th Cir, 1997).
"As a general rule, parties are bound by the actions of
their lawyers, and alleged attorney malpractice does not
usually provide a basis to set aside a judgment pursuant to
Rule 60(b)(1)." Pioneer Inv. Services v. Brunswick
Assocs. Ltd. P'ship, 507 U.S. 380, 396 (1993).
IV.
DISCUSSION
Appellant
argues that the Bankruptcy Court abused its discretion by
failing to explicitly address the Pioneer-Briones
factors for determining whether the error of a party or its
counsel qualifies as "excusable neglect,"
determining that the Rule 60(b) motion was supported by
"no ...