In Re: Jeffrey Brian Johnson

Filing 15

ORDER signed by District Judge Troy L. Nunley on 1/30/2015 ORDERING that the order of the bankruptcy court denying Appellant's motion to set aside his Chapter 7 discharge is VACATED. This case is REMANDED to the bankruptcy court for a determination of whether the bankruptcy court committed a clerical error under FRCP 60(a) and whether Appellant's medical treatment between 2/24/2014 and 3/4/2014 constitutes excusable neglect under FRCP 60(b). CASE CLOSED. (Zignago, K.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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JEFFREY BRIAN JOHNSON,

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Appellant,

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No. 2:14-cv-00889-TLN

v.

ORDER

IRMA C. EDMONDS and OFFICE OF
THE U.S. TRUSTEE (SACRAMENTO),
Appellees.

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This matter is before the Court pursuant to Jeffrey Brian Johnson’s (“Appellant”) appeal

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from the denial of his motion to set aside judgment. (Brief in Supp. of Appeal, ECF No. 11.) For

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the reasons set forth below, the Court vacates the order denying Appellant’s motion to set aside

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judgment and remands to the United States Bankruptcy Court, Eastern District of California

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(“bankruptcy court”) for reconsideration consistent with this opinion.
I.

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PROCEDURAL BACKGROUND
On January 24, 2014, Appellant moved to have his Chapter 7 bankruptcy converted to

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Chapter 13 on the grounds that liens and fines, which made up most of Appellant’s debt, were not

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dischargeable under his pending Chapter 7 bankruptcy. (Statement of Facts (“SOF”), ECF No. 11

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at 10.)1 On February 24, 2014, the motion was denied without prejudice for Appellant’s failure to

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Appellant’s brief (ECF No. 11) includes legal argument and numerous attachments without exhibit designations.

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properly serve creditors, to support the motion with evidence, and for violation of a separate

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notice of hearing. (SOF, ECF No. 11 at 10.) Appellant maintains that he filed a corrected motion

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on March 4, 2014, that was not entered until March 5, 2014. (SOF, ECF No. 11 at 10.) Prior to

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the entry of his corrected motion, the bankruptcy court issued an order discharging Appellant’s

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debt under Chapter 7 on March 4, 2014, making Appellant’s motion moot. (SOF, ECF No. 11 at

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10.) As a result, Appellant moved the bankruptcy court to set aside its order of Chapter 7

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discharge on March 13, 2014. (Mot. to Set Aside, ECF No. 11 at 55.) In his motion, Appellant

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argued that the bankruptcy court should apply Fed. R. Civ. Pro. 60(a) (“FRCP 60(a)”) and 60(b)

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(“FRCP 60(b)”), as required by Fed. R. of Bankruptcy Pro. 9024 (“FRBP 9024”). (Mem. in

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Supp. of Mot. to Set Aside (“Mem.”), ECF No. 11 at 62 and 65.) The bankruptcy court issued

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an order denying his motion on March 24, 2014. (Order, ECF No. 11 at 84.) Appellant filed a

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notice of appeal with this Court contesting the bankruptcy court’s order on April 8, 2014. (ECF

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No. 11 at 11.)

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II.

STANDARD OF REVIEW
District courts have appellate jurisdiction over final judgments, orders, and decrees of

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bankruptcy courts. 28 U.S.C. § 158(a)(1). “When reviewing a bankruptcy court’s decision ..., a

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district court functions as an appellate court and applies the standard of review generally applied

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in federal court appeals.” In re Crystal Properties, Ltd., L.P., 268 F.3d 743, 755 (9th Cir. 2001)

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(quoting In re Webb, 954 F.2d 1102, 1103–04 (5th Cir.1992)). The district court “may affirm,

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modify, or reverse a bankruptcy judge’s judgment, order, or decree or remand with instructions

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for further proceedings.” Fed. R. Bank. P. 8013.

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The Court finds that the instant appeal is based upon a mixed question of law and fact. “A

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mixed question of law and fact occurs when the historical facts are established; the rule of law is

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undisputed … and the issue is whether the facts satisfy the legal rule.” Id. (citing Pullman-

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Standard v. Swint, 456 U.S. 273, 289 n. 19 (1982)). Where a court is presented with a mixed

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question of law and fact, a de novo standard of review applies. In re Bammer, 131 F.3d 788, 792

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For clarity, the Court will refer to the individual titles of each document within the filing when referencing ECF No.
11.

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(9th Cir. 1997).

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III.

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ANALYSIS
In his appeal to this Court, Appellant makes three arguments. First, Appellant alleges that

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the bankruptcy court committed prejudicial error when it failed to address Appellant’s argument

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that a clerical error under FRCP 60(a) provided sufficient cause to set aside the discharge order.

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(Argument, ECF No. 11 at 13.) Second, Appellant argues that the bankruptcy court misapplied

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the law to the facts under FRCP 60(b)(1) when it failed to address Appellant’s argument that his

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circumstances met the “excusable neglect” requirement. (Argument, ECF No. 11 at 14–15.)

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Finally, Appellant alleges that the bankruptcy court erroneously applied the requirements of 11

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U.S.C. § 727 to Appellant’s motion. (SOF, ECF No. 11 at 11–12.)
a. FRCP 60(a)
Pursuant to FRBP 9024, Relief from Judgment or Order, a court should apply FRCP 60

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when a party seeks relief from judgment. FRCP 60(a) states that the “court may correct a clerical

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mistake or a mistake arising from oversight or omission whenever one is found in a judgment,

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order, or other part of the record.” In Appellant’s motion before the bankruptcy court, he argues

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that his motion requesting conversion from Chapter 7 to Chapter 13 was incorrectly marked as

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filed on March 5, 2014, when Appellant actually filed it on March 4, 2014. (Mem., ECF No. 11

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at 63–64.) Appellant further argues that his motion was submitted before the bankruptcy court’s

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discharge was issued, although he provides no evidence to support this contention. (Mem., ECF

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No. 11 at 63–64.) Appellant’s motion argues that the bankruptcy court failed to address this

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issue. (Argument, ECF No. 11 at 13.)

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The Court has reviewed the bankruptcy court’s order denying Appellant’s motion and

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finds that the bankruptcy court did not address Appellant’s contention that a clerical error resulted

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in improper dismissal of his motion to convert his proceedings. (Order, ECF No. 84–85.) This

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Court further determines that a mistake under FRCP 60(a) could form the basis for vacating the

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Chapter 7 discharge. “Errors correctable under FRCP 60(a) include those where what is written

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or recorded is not what the court intended to write or record.” Blanton v. Anzalone, 813 F.2d

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1574, 1577 (9th Cir. 1987).2 A court has discretion to determine if correction of a clerical error is

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appropriate under FRCP 60(a). Id. Because the bankruptcy court is in the best position to assess

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the possibility of its own clerical error, the Court hereby remands this case to the bankruptcy

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court to determine if clerical error occurred under FRCP 60(a).

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b. FRCP 60(b)
FRCP 60(b)(1) also allows for relief from judgment when a party demonstrates “mistake,

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inadvertence, surprise, or excusable neglect.” Appellant argued in the motion that his late filing

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of his motion for conversion could be considered “excusable neglect” due to a medical

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emergency occurring between the time his first motion for conversion was dismissed without

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prejudice, February 24, 2014, and March 4, 2014. (Mem., ECF No. 11 at 67.) Appellant

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submitted a declaration and documentation of his injury to the bankruptcy court along with his

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motion for relief from judgment. (Decl. of J. Johnson, ECF No. 11 at 71–77.) Appellant argues

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that the bankruptcy court failed to address this issue. (Argument, ECF No. 11 at 13.)

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The Court has reviewed the bankruptcy court’s order denying Appellant’s motion and

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finds that the bankruptcy court did not address Appellant’s contention that his emergency medical

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condition constituted excusable neglect under FRCP 60(b)(1). (Order, ECF No. 84–85.)

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However, the Court notes that relief under FRCP 60(b) is to be “‘used sparingly as an equitable

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remedy to prevent manifest injustice and is to be utilized only where extraordinary circumstances

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prevented a party from taking timely action.’” Harvest v. Castro, 531 F.3d 737, 749 (9th Cir.

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2008) (quoting United States v. Washington, 394 F.3d 1152, 1157 (9th Cir. 2005)). Courts have

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“considerable discretion” in applying FRCP 60(b) as a remedy. Mazalin v. Safeway, Inc., No.

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CIV S-10-1445 KJM, 2012 WL 5387704, at *1 (E.D. Cal. Nov. 1, 2012). Because the

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bankruptcy court is most familiar with the circumstances of this case, the Court hereby remands

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this case to the bankruptcy court to use its discretion to determine if excusable neglect occurred

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under FRCP 60(b)(1).

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///

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Compare Re v. United States, No. C 13-03518 WHA, 2014 WL 296046, at *2 (N.D. Cal. Jan. 27, 2014) (denying
plaintiff’s motion for FRCP 60(a) relief where the alleged mistake was based on substantive legal or factual mistakes
within the order).

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c. 11 U.S.C. § 727

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Finally, in his appeal to this Court, Appellant argues that the bankruptcy court’s

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application of 11 U.S.C. § 727 to his motion for relief from judgment was incorrect. (SOF, ECF

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No. 11 at 11.) This Court agrees. FRBP 9024 specifies the FRCP 60 should apply in cases where

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relief from judgment is sought. FRBP 9024 indicates that, in order to revoke a discharge of a

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Chapter 7 case, the court must apply 11 U.S.C. § 727(e) in determining the timeline in which the

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motion for discharge is filed, providing one year from the entry of discharge. However, the

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bankruptcy court’s order dismissing Appellant’s motion for discharge discusses the four factors

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under 11 U.S.C. § 727(d). (Order, ECF No. 11 at 85.) Rule 9024 gives no indication that 11

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U.S.C. § 727(d) is applicable in this instance and the text of § 727(d) itself indicates that the

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subsection is only appropriate in adversarial proceedings, not a motion of this nature.

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The Court finds that 11 U.S.C. § 727(d) is not the correct standard to apply to Appellant’s

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motion for discharge. However, the Court does not find this error to be prejudicial. The

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bankruptcy court’s order simply indicates that 11 U.S.C § 727(d) does not provide grounds for

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revocation, which is correct. The bankruptcy court’s determination with respect to 11 U.S.C. §

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727(d) should not prevent a determination that revocation is permissible under FRCP 60 if the

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bankruptcy court finds, using its discretion, that revocation is appropriate on the grounds of

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clerical error or excusable neglect.

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IV.

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CONCLUSION
The order of the bankruptcy court denying Appellant’s motion to set aside his Chapter 7

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discharge is vacated. This case is remanded to the bankruptcy court for a determination of

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whether the bankruptcy court committed a clerical error under FRCP 60(a) and whether

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Appellant’s medical treatment between February 24, 2014 and March 4, 2014 constitutes

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excusable neglect under FRCP 60(b).

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IT IS ORDERED.

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Dated: January 30, 2015

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Troy L. Nunley
United States District Judge