Wisdom v. Gugino et al

Filing 12

MEMORANDUM DECISION AND ORDER. IT IS HEREBY ORDERED as follows: 1. The Appellant's Request for Recusal of this Court is DENIED. 2. The Bankruptcy Court's decisions denying the Motions to Recuse are AFFIRMED. 3. The Bankruptcy Court's d ecision denying the Application for Default Judgment is AFFIRMED. 4. The Bankruptcy Court's decision granting the Motion for Summary Judgment is AFFIRMED. Appellant's Motion for Leave for Enlargement of Opening Brief (Dkt. 8 ) is MOOT. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (km)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

In re:

Bk. Case No. 1:11-01135-JDP

ALLEN L. WISDOM,

Adv. No. 13-06045-TLM

Debtor.
_________________________________
ALLEN L. WISDOM,

MEMORANDUM DECISION
AND ORDER
Case No. 1:16-cv-00251-EJL

Appellant,
v.
JEREMY J. GUGINO and LIBERTY
MUTUAL INSURANCE COMPANY, et
al.,
Appellees.

INTRODUCTION
Pending before the Court in the above-entitled matter is Appellant’s appeal of Chief
Bankruptcy Judge Terry L. Myers’ decision denying his Motions to Recuse and
Application for Default Judgment and granting the Appellees’ Motion for Summary
Judgment. The matter is ripe for the Court’s review. Having fully reviewed the record, the
Court finds that the facts and legal arguments are adequately presented in the briefs and
record. Accordingly, in the interest of avoiding further delay, and because the court
conclusively finds that the decisional process would not be significantly aided by oral
argument, this matter is decided on the record before this Court without oral argument.
MEMORANDUM DECISION AND ORDER - 1

FACTUAL BACKGROUND
1.

The Underlying Bankruptcy Case
On April 19, 2011, Debtor-Appellant Allen L. Wisdom filed a Chapter 7 bankruptcy

petition. (BK Case No. 11-01135-JDP.) Included in the list of claimed exemptions were
certain life insurance policies. The Appellee, the United States Trustee appointed to this
case, Jeremy Gugino (the “Trustee”), objected to the claimed exemptions in the life
insurance policies.1 United States Bankruptcy Court Judge Jim D. Pappas sustained the
Trustee’s objection and ordered that the claimed exemptions in the life insurance policies
be disallowed. The Trustee then liquidated the policies and filed the Trustee’s Final Report
(“TFR”) in the Chapter 7 bankruptcy proceeding. Mr. Wisdom objected to the Final Report
arguing the Trustee fraudulently and unlawfully liquidated the life insurance policies,
breached his fiduciary duties, and engaged in misrepresentations and criminal misconduct.
Judge Pappas overruled those objections and approved the TFR. (Dkt. 156, BK Case No.
11-01135-JDP.) Mr. Wisdom appealed that decision to the United States District Court and
the Ninth Circuit, both of whom affirmed the lower courts’ rulings and, in doing so, found
Mr. Wisdom’s claims lacked merit. (Dkt. 13, DC Case No. 1:12-cv-00530-BLW); (9th Cir.
Case No. 13-35409.)2

1

Also listed as Appellees are: Liberty Mutual Insurance Company, Francis R. Stern, Anthony M.
Pantera, IV, New York Life Insurance Company, Hamilton, Michaelson & Hilty, LLP, Karen
McMurtrie. (Dkt. 1.)
2

See In re Wisdom, 490 B.R. 412 (D. Idaho 2013) and In re Wisdom, 649 Fed. Appx. 583
(9th Cir. 2016).

MEMORANDUM DECISION AND ORDER - 2

2.

The Adversary Proceeding
On December 3, 2013, Mr. Wisdom filed an adversary proceeding in the Bankruptcy

Court against the Trustee, his bankruptcy attorneys, and New York Life Insurance
Company (“N.Y. Life”). (Adv. Case No. 13-06045-TLM.) Mr. Wisdom raised claims of
breach of contract, breach of fiduciary duty, negligence, tortious interference with contract,
constructive fraud, legal malpractice, intentional and negligent infliction of emotional
distress, slander per se, and civil conspiracy. The claims allege the Trustee improperly
liquidated the insurance policies in the underlying bankruptcy proceeding and that the
Trustee committed fraud and violated the fiduciary duty he owed to Mr. Wisdom. The
adversary case was ultimately assigned to Chief Bankruptcy Judge Terry L. Myers.
In April of 2014, Mr. Wisdom filed a Motion to Recuse Judge Myers arguing the
Trustee assigned to the underlying bankruptcy matter had been Judge Myers’ law clerk
several years prior. Judge Myers denied the Motion to Recuse. (Dkt. 59, Adv. Case No.
13-06045-TLM.) Mr. Wisdom then filed a Motion for Leave to File an Interlocutory
Appeal of Judge Myers’ decision which Judge Winmill denied. (Dkt. 8, DC Case No. 1:1400279-BLW.) The Ninth Circuit affirmed. (Dkt. 14, 9th Cir. Case No. 15-35013.)
3.

The Turnover Motion and Motions to Recuse in the Bankruptcy Case
In June of 2014, Mr. Wisdom filed a Motion for Order to Turnover Estate Funds

(“Turnover Motion”) in the underlying bankruptcy case which again challenged the
Trustee’s liquidation of the life insurance policies. (Dkt. 199, BK Case No. 11-01135-JDP.)
Since Judge Pappas had recused himself, the Turnover Motion was assigned to Judge
Myers. Mr. Wisdom then filed a second Motion to Recuse Judge Myers based upon the
MEMORANDUM DECISION AND ORDER - 3

same arguments as his first motion. (Dkt. 214, BK Case No. 11-01135-JDP.) On September
26, 2014, Judge Myers issued a decision denying both the second Motion to Recuse and
the Turnover Motion. (Dkt. 217, BK Case No. 11-01135-JDP.) Mr. Wisdom appealed that
ruling to this Court which affirmed the Bankruptcy Court’s decision. (D.C. Case No. 1400497-EJL.)
Mr. Wisdom filed another Motion to Recuse Judge Myers in the bankruptcy case on
August 17, 2016. (Dkt. 251, BK Case No. 11-01135-JDP.) The Bankruptcy Court again
denied the motion. (Dkt. 253, BK Case No. 11-01135-JDP.)
4.

The Motion for Summary Judgement in the Adversary Case
After amending his complaint in the adversary case, Mr. Wisdom filed an

Application for Default Judgment. (Dkt. 89, Adv. Case No. 13-06045-TLM.) Judge Myers
orally denied the Application for Default Judgment on January 26, 2015. (Dkt. 105, Adv.
Case No. 13-06045-TLM.) Thereafter, on March 15, 2016, Judge Myers granted the
Trustee’s Motion for Summary Judgement as to all of the claims in the First Amended
Complaint. (Dkt. 160, Adv. Case No. 13-06045-TLM.)
5.

This Appeal
In this appeal, Mr. Wisdom challenges the Bankruptcy Court’s rulings 1) denying

his Motions to Recuse, 2) denying his Application for Default Judgment, and 3) granting
the Appellees’ Motion for Summary Judgment. (Dkt. 1.)
STANDARD OF REVIEW
In general, this Court applies the “clearly erroneous” standard of review to the
Bankruptcy Court’s factual findings and its legal conclusions are subject to de novo review.
MEMORANDUM DECISION AND ORDER - 4

See Fed. R. Bankr. P. 8013. The Court does not consider an issue raised for the first time
on appeal. United States v. Robinson, 20 F.3d 1030 (9th Cir. 1994).
The Bankruptcy Court’s rulings on the Motions to Recuse and Application for
Default Judgement are reviewed for abuse of discretion. In re Goodwin, 194 B.R. 214, 220
(9th Cir. 1996); In re Beltran, 182 B.R. 820, 823 (9th Cir. BAP 1995). “A bankruptcy court
abuses its discretion if it applies law incorrectly or if it rests its decision on a clearly
erroneous finding of material fact.” In re Brothby, 303 B.R. 177, 184 (9th Cir. BAP 2003)
(citation omitted). The ruling on the Motion for Summary Judgment is reviewed de novo.
Carpenter v. Universal Star Shipping, S.A., 924 F.2d 1539, 1542 (9th Cir. 1991).
ANALYSIS
1.

Preliminary Issue: Recusal of This Court
Mr. Wisdom has again raised a preliminary issue in his opening brief arguing this

Court should recuse itself in this matter because it has a conflict based on its “stake in the
outcome of the appeal,” the Trustee being a former co-employee of the Court, and the facts
surrounding the Trustee’s appointment. (Dkt. 9 at 3-7.) Appellees assert this argument is
not properly before the Court as it was not raised in the underlying proceeding, the same
issues were previously raised and denied, and the argument lacks merit. (Dkt. 10 at 12-17.)
Motions to recuse are governed by 28 U.S.C. § 455 which provides, in relevant part:
(a)

Any justice, judge, or magistrate judge of the United States shall disqualify
himself in any proceeding in which his impartiality might reasonably be
questioned.

(b)

He shall also disqualify himself in the following circumstances:

MEMORANDUM DECISION AND ORDER - 5

(1)

Where he has a personal bias or prejudice concerning a party, or
personal knowledge of disputed evidentiary facts concerning the
proceeding;

Recusal may be justified either by actual bias or the appearance of bias/impartiality.
Preston v. United States, 923 F.2d 731, 734 (9th Cir. 1991). “Section 455 requires not only
that a judge be subjectively confident of his ability to be evenhanded, but also that an
informed, rational, objective observer would not doubt his impartiality.” In re Bernard, 31
F.3d 842, 844 (9th Cir. 1994). The test for evaluating bias or prejudice under § 455 is an
objective one asking “whether a reasonable person with knowledge of all the facts would
conclude that the judge's impartiality might reasonably be questioned.” In re Goodwin, 194
B.R. at 222 (internal quotation marks omitted); Liteky v. United States, 510 U.S. 540, 548
(1994) (The recusal of a judge is warranted in only the rarest of circumstances where a
judge's actions “display a clear inability to render a fair judgment.”). This determination
must be made by this Court whose impartiality is being questioned. In re Bernard, 31 F.3d
at 843.
This issue was previously decided in the prior appeal. Having again considered Mr.
Wisdom’s arguments concerning any potential bias, either actual or the appearance of the
same, the Court concludes no bias exists. The Trustee was not an employee of this Court
nor has this Court had any personal or professional contacts with the Trustee. Further, there
is no evidence to support Mr. Wisdom’s arguments concerning this Court’s “stake” in the
outcome of this case, any involvement in the Trustee’s appointment, and/or any
responsibility concerning the integrity of the bankruptcy system in this District. This Court
has no involvement with appointments of trustees to the panel, which are made by the
MEMORANDUM DECISION AND ORDER - 6

United States Trustee, and the assignment of this Trustee to this case was done at random.
Further, this Court’s own examination of its conscience reveals a lack of any actual or
apparent bias either in favor or against the Trustee and/or Mr. Wisdom. The Court has no
bias in this case nor is there any basis upon which to reasonably question this Court’s
impartiality. The request for recusal of this Court is denied.
2.

Appeal of the Bankruptcy Court’s Denials of the Motions to Recuse
Mr. Wisdom argues the Bankruptcy Court abused its discretion in denying the

Motions to Recuse because Judge Myers has multiple irreconcilable conflicts, his bias
towards the Trustee, and refused to address certain issues. (Dkt. 9 at 20-31.) Appellees
maintain Judge Myers did not abuse his discretion in denying the Motions to Recuse but,
instead, cited the correct legal standard and appropriately applied the same to the facts in
this case. (Dkt. 10 at 17-21.)
Orders on motions to recuse are reviewed under the abuse of discretion standard. In
re Goodwin, 194 B.R. at 220 (citations omitted). This Court has considered the arguments
of the parties as well as the record contained herein, including Judge Myers’ decisions on
the Motions to Recuse. Having done so, this Court finds Judge Myers did not abuse his
discretion in denying the Motions to Recuse.
As stated above, the standard for recusal under § 455 is an objective one asking
“whether a reasonable person with knowledge of all the facts would conclude that the
judge’s impartiality might reasonably be questioned.” In re Goodwin, 194 B.R. at 222.
Judge Myers’ decision explains the reasons for his denial of the Motion to Recuse and
demonstrates without question that there is no basis for his recusal in this case, let alone
MEMORANDUM DECISION AND ORDER - 7

any abuse of discretion in denying those Motions. (Dkt. 253, BK Case No. 11-01135-JDP);
see also (Dkt. 59, Adv. Case No. 13-06045-TLM) and (Dkt. 217, BK Case No. 11-01135JDP.) This Court finds the clear reasoning and analysis in Judge Myers’ opinion more than
satisfies the applicable standards for recusal. Moreover, this issue was previously raised
and decided by this Court in the prior appeal and, therefore, is precluded. For these reasons,
the decision denying the Motion to Recuse is affirmed.
3.

Appeal of the Bankruptcy Court’s denial of Application for Default Judgment
Mr. Wisdom appeals the Bankruptcy Court’s January 26, 2015 oral decision

denying his Application for Default Judgment arguing Judge Myers abused his discretion
in denying the request because the Trustee failed to timely file an Answer before Mr.
Wisdom filed a request for entry of clerk’s default. (Dkt. 9 at 31-34.) The Court finds Judge
Myers did not abuse his discretion.
On November 17, 2014, Mr. Wisdom filed a Motion Entry of Default. (Dkt. 86,
Adv. Case No. 13-06045-TLM.) The next day, the Trustee filed an Answer before any
default was entered. Three days later, on November 21, 2014, Mr. Wisdom filed his
Application for Default Judgment. Because the Trustee’s Answer was filed before any
default was entered, the Bankruptcy Court denied the Application in accordance with Rule
55 which requires that default be entered before a default judgment can be entered. (Dkt.
105, Adv. Case No. 13-06045-TLM); see Fed. R. Civ. P. 55(b) and Eitel v. McCool, 782
F.2d 1470, 1471 (9th Cir. 1986) (noting the “two-step process” required by Rule 55: (1)
request for clerk's entry of default under Rule 55(a); and (2) subsequent motion for default
judgment under Rule 55(b)).
MEMORANDUM DECISION AND ORDER - 8

Even if default had been entered prior to the Trustee filing its Answer, Judge Myers
would not have abused his discretion in declining to enter default judgment. A defendant’s
default does not automatically entitle a plaintiff to a court-ordered judgment. Aldabe v.
Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Rather, entry of default judgment is left to
the court's sound discretion, guided by the following factors: (1) potential prejudice to the
plaintiff; (2) the merits of plaintiff's substantive claim; (3) the sufficiency of the Complaint;
(4) the amount at stake in the action; (5) the possibility of a dispute concerning material
facts; (6) whether the default was due to excusable neglect; and (7) the strong policy
underlying the Federal Rules favoring a decision on the merits. Eitel, 782 F.2d at 1471–72.
As Judge Myers noted, the Trustee filed an Answer the very next day after the Motion for
Entry of Default had been filed. The strong policy favoring decisions on the merits alone
justifies denying the Application for Default Judgment. Id. at (Default judgments are
“ordinarily disfavored” and should not be administered lightly.).
For these reasons, the Bankruptcy Court’s decision is affirmed.
4.

Appeal of the Bankruptcy Court’s granting of Summary Judgment
On March 15, 2016, the Bankruptcy Court granted the Trustee’s Motion for

Summary Judgment as to all claims. (Dkt. 160, Adv. Case No. 13-06045-TLM.) In doing
so, Judge Myers concluded all of the claims were defeated by the de facto trustee doctrine.
Additionally, Judge Myers found that certain claims failed on their merits and/or should be
dismissed based on the doctrines of immunity, privilege, and preclusion. Mr. Wisdom
appeals this decision arguing the Bankruptcy Court erred in granting summary judgment
because the Trustee lacked authority to take any official acts. (Dkt. 9 at 41.) Mr. Wisdom
MEMORANDUM DECISION AND ORDER - 9

asserts the de facto trustee doctrine does not apply and, therefore, the Trustee does not have
immunity. (Dkt. 9 at 35-42, 51-60.) Further, Mr. Wisdom contests the Bankruptcy Court’s
rulings as to the Trustee’s fiduciary duty, res judicata, constructive fraud, slander per se,
and other claims. (Dkt. 9 at 42-43, 60-63.) The Court finds Judge Myers’ ruling is correct
and consistent with this Court’s own de novo review.
A.

De Facto Trustee Doctrine

Mr. Wisdom’s claims allege the Trustee was not properly qualified to serve as
trustee under § 322(a) because his surety bond was not filed prior to his appointment. (Dkt.
137 at 2, Adv. Case No. 13-06045-TLM.) The Bankruptcy Court concluded that the de
facto trustee doctrine applies to this case resulting in dismissal of all claims relying upon
the argument that the Trustee was not qualified, which is nearly all of Mr. Wisdom’s
claims. (Dkt. 160 at 23-27, Adv. Case No. 13-06045-TLM.) The Court finds the
Bankruptcy Court properly stated the law and applied the law to the facts of this case in
determining that the de facto trustee doctrine applies.
The de facto trustee doctrine provides that even where there may be a technical
defect in a trustee’s qualifications, the trustee’s legitimate activities are still valid when
“such person has, since being appointed trustee, acted as trustee,...held [him/herself] out to
be trustee, and...[has] been treated as trustee by the Court, creditors and employees of the
estate and all other interested parties.” In re Granderson, 252 B.R. 1, 5 (1st Cir. BAP 2000)
(holding § 322 is not jurisdictional and an untimely filing of trustee’s bond did not
invalidate trustee's actions in chapter 7 case) (citations and quotations omitted). The Ninth
Circuit has applied this doctrine. In re Hunt, 2014 WL 1229647, at *5 (9th Cir. BAP 2014).
MEMORANDUM DECISION AND ORDER - 10

As determined by the Bankruptcy Court, this Court too finds that the record shows
the Trustee in this case held himself out as the trustee and was treated as such by the Court,
creditors, and all interested parties - including Mr. Wisdom. (Dkt. 160 at 26, Adv. Case
No. 13-06045-TLM.) The Bankruptcy Court correctly granted summary judgment on Mr.
Wisdom’s claims that were based on the argument that the Trustee lacked the legal
authority to conduct official duties; which is essentially all of the claims.
B.

Immunity Doctrine and Privilege Defense

The Bankruptcy Court went on to also conclude that the Trustee has immunity from
Mr. Wisdom’s claims of breach of contract, breach of fiduciary duty, negligence, and
intentional and negligent infliction of emotional distress. (Dkt. 160 at 28-32, Adv. Case
No. 13-06045-TLM.) Those claims are based on the argument that the Trustee’s actions
were improper and/or his handling of the bankruptcy estate’s property was wrongful with
regard to the Trustee’s settlement of the litigation and request to inspect the property.
Similarly, the Bankruptcy Court found the claims based on defamation and/or slander per
se relating to the request to inspect the property should also be dismissed because the
Trustee has both immunity and a privilege defense for those claims. (Dkt. 160 at 32-33,
Adv. Case No. 13-06045-TLM.) The Court finds the Bankruptcy Court applied the correct
law to the facts in this case and its ruling is consistent with this Court’s own view of the
record.
Bankruptcy Trustees have “broad immunity from suit.” Bennett v. Williams, 892
F.2d 823 (9th Cir. 1989). “A trustee is entitled to such immunity only if the trustee is acting
within the scope of authority conferred upon the trustee by the appropriate statute(s) or the
MEMORANDUM DECISION AND ORDER - 11

court.” In re Kashani, 190 B.R. 875, 883 (9th Cir. BAP 1995) (citation omitted). Mr.
Wisdom’s claims challenge the Trustee’s actions in settling the lawsuits owned by the
bankruptcy estate and requesting inspection of the property. This Court agrees with Judge
Myers’ ruling that those actions by the Trustee were within the scope of his authority and
pursuant to a court order and, therefore, entitle the Trustee to immunity on the claims that
are based on those allegations.
The Court also finds Mr. Wisdom’s claims of defamation and/or slander were
properly dismissed. The Trustee’s request to inspect the property was made in the course
of, and reasonably related to, a judicial proceeding. As such, the Trustee has an absolute
privilege against any such claim. See Weitz v. Green, 230 P.3d 743, 754 (Idaho 2010); Kurz
v. Zahn, Case No. 1:11-cv-00342-EJL, 2012 WL 4458128, *5 (D. Idaho Apr. 13, 2012)
(concluding that statements made in the course of judicial proceedings cannot give rise to
civil liability for defamation).
C.

Issue and Claim Preclusion

The Bankruptcy Court held that Mr. Wisdom was precluded from relitigating issues
in his claims that had already been decided; i.e., issues relating to Mr. Wisdom’s objections
to the TFR, liquidation of the life insurance policies, and those premised on the
inappropriateness of the Trustee’s actions. (Dkt. 160 at 34-36, Adv. Case No. 13-06045TLM.) Similarly, the Bankruptcy Court concluded that claim preclusion applied to any
arguments regarding the liquidation of the insurance policies that Mr. Wisdom could have
made in his objection to the TFR but did not. (Dkt. 160 at 37-38, Adv. Case No. 13-06045TLM.) This Court agrees.
MEMORANDUM DECISION AND ORDER - 12

The Bankruptcy Court’s ruling upholding the TFR decided the issues relating to
whether the Trustee acted properly with regard to Mr. Wisdom’s Idaho Code § 11-605(10)
exception claim and whether the Trustee had a duty to honor a property exemption the
debtor failed to claim. (BK Case No. 11-01135-JDP, Dkt. 156.) As such, the claims raising
those same issues in this case are precluded. See In re Cogliano, 355 B.R. 792, 802 (9th
Cir. BAP 2006) (Issue preclusion, in contrast, “[P]revents relitigation of all ‘issues of fact
or law that were actually litigated and necessarily decided’ in a prior proceeding.... The
issue must have been ‘actually decided’ after a ‘full and fair opportunity’ for litigation.”).
Likewise, any arguments made regarding the liquidation of the insurance policies
that Mr. Wisdom could have made in his objection to the TFR but did not are barred from
being raised in this action by claim preclusion. See In re Jensen–Edwards, 535 B.R. 336,
344 (Bankr. D. Idaho 2015) (citation omitted). The TFR decision forecloses Mr. Wisdom’s
from bring the same claims concerning the Trustee’s actions made in connection to the
liquidation of the life insurance policies in this successive litigation.
D.

Constructive Fraud and Tortious Interference Claims

As to the claims for constructive fraud and tortious interference with contract, the
Bankruptcy Court dismissed those claims on their merits finding Mr. Wisdom had failed,
as a matter of law, to produce or establish facts which support the elements of his claims
upon which he would bear the burden of proof at trial. (Dkt. 160 at 39-41, Adv. Case No.
13-06045-TLM.) Having conducted a de novo review of these claims, the factual
allegations, the parties’ arguments, and the entire record herein, this Court finds the
Bankruptcy Court’s dismissal was correct.
MEMORANDUM DECISION AND ORDER - 13

Mr. Wisdom has failed to point to facts which establish the elements of these two
claims. The constructive fraud claim is based on the Trustee’s breach of a fiduciary duty.
The Trustee does not, however, owe a fiduciary duty to Mr. Wisdom, the debtor, but is
instead the fiduciary of the estate. In re Wisdom, 490 B.R. 412, 417 (D. Idaho 2013).
Moreover, the allegations are that the Trustee’s failure to disclose was as to a third party,
not to Mr. Wisdom. Therefore, the facts alleged to support the claim fail to show any
constructive fraud as to Mr. Wisdom.
As to the tortious interference with a contract claim, the factual allegations in the
Complaint fail to support the elements of the claim. Specifically, there are no facts alleged
that go to establish that the Trustee intentionally interfered with either of the contracts Mr.
Wisdom had with his attorneys or with N.Y. Life. Because this is an element of the claim
Mr. Wisdom bears the burden of proving at trial, his failure to allege facts going to establish
that element in his Complaint warrant dismissal of the claim as a matter of law. See Idaho
First Nat'l Bank v. Bliss Valley Foods, Inc., 824 P.2d 841, 858-859 (Idaho 1991) (stating
the prima facie elements for tortious interference with a contract).
E.

Other Rulings

Mr. Wisdom also challenges the Bankruptcy Court’s rulings regarding a Motion to
Strike, request to call witnesses, augmentation of briefing and the record, and requests for
extension of time. (Dkt. 9 at 43-51.) Having reviewed these arguments, the Bankruptcy
Court’s rulings, and the entire record herein, the Court finds Judge Myers did not abuse his
discretion with regard to these matters. Just the opposite, the Bankruptcy Court was well

MEMORANDUM DECISION AND ORDER - 14

within its discretion in ruling on these matters and acted reasonably and appropriately in
doings so.
5.

Costs and Attorney Fees
At the end of their response brief, Appellees ask that they be awarded costs and

attorney fees under Federal Rules of Bankruptcy Procedure 8020 and 8021.3 (Dkt. 10 at
30-31.)
As to the Appellees’ request for attorney fees, Rule 8020 allows the Court to award
damages and costs to an appellee where an appeal is determined to be frivolous after a
separately filed motion or notice from the court and a reasonable opportunity to respond
are provided. Fed. R. Bankr. P. 8020. “Rule 8020 is strictly enforced.” In re Tanzi, 297
B.R. 607, 613 (9th Cir. BAP 2003). “A request for sanctions in an appellee’s brief is
procedurally improper...as it does not provide the appellant sufficient notice and
opportunity to respond to the request.” Id. (quoting In re Marino, 234 B.R. 767, 770 (9th
Cir. BAP 1999) (citation omitted)). As such, the Appellees request for relief contained
within their brief is denied. Appellees may, however, file a separate motion for attorney
fees in accordance with Rule 8020.
As to the request for costs, Rule 8021 provides, in relevant part, that where an appeal
is dismissed and/or a judgment or order is affirmed “costs are taxed against the appellant.”

3

Appellees cite to Rule 8014 in their request for costs. The Rule applying to costs is now
Rule 8021.

MEMORANDUM DECISION AND ORDER - 15

Because this Court has affirmed the Bankruptcy Court, the Appellees are entitled to costs
in this case. Appellees shall file a bill of costs in accordance with Rule 8021.

ORDER
NOW THEREFORE IT IS HEREBY ORDERED as follows:
1)

The Appellant’s Request for Recusal of this Court is DENIED.

2)

The Bankruptcy Court’s decisions denying the Motions to Recuse are
AFFIRMED.

3)

The Bankruptcy Court’s decision denying the Application for Default
Judgment is AFFIRMED.

4)

The Bankruptcy Court’s decision granting the Motion for Summary
Judgment is AFFIRMED.

5)

Appellant’s Motion for Leave for Enlargement of Opening Brief (Dkt. 8) is
MOOT.

DATED: March 21, 2017
_________________________
Edward J. Lodge
United States District Judge

MEMORANDUM DECISION AND ORDER - 16