Szanto v. JP Morgan Chase Bank, N.A.

Filing 28

ORDERED that the case is DISMISSED for lack of jurisdiction. FURTHER ORDERED that the # 21 Motion is DENIED as moot. FURTHER ORDERED that the # 35 Motion to Extend Time is DENIED. FURTHER ORDERED that the Clerk shall close the case. Signed by Judge Robert C. Jones on 3/25/2015. (Copies have been distributed pursuant to the NEF - DRM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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In re PETER SZANTO,
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Debtor.
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PETER SZANTO,

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Appellant,

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vs.
JP MORGAN CHASE BANK, N.A.,

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Appellee.

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Bankr. No. 13-bk-51261-BTB
3:14-cv-00389-RCJ
OPINION AND ORDER

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This is an appeal of an order of the Bankruptcy Court setting aside a previous order upon
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motion of the Appellee. For the reasons given herein, the Court dismisses the appeal for lack of
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jurisdiction.
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I.

FACTS AND PROCEDURAL HISTORY

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Appellant Peter Szanto filed for Chapter 11 bankruptcy protection in this District on June
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25, 2013. On November 11, 2013, Appellant filed a Motion for Court Confirmation of Debt
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Compromise and Novation as to Secured Creditor JP Morgan Chase Bank, pursuant to
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Bankruptcy Rule 9019 (the “Motion”). The Motion noted that Appellant and Appellee JP
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Morgan Chase Bank, N.A. disputed the amount owed by Appellant on his mortgage of real
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property at 11 Shore Pine Drive, Newport Beach, CA 92657 (the “Property”). The motion

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represented that the parties agreed the unpaid principal balance was $953,182.17; Appellant

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would begin making 360 monthly payments of $3865.58 as of December 1, 2013, as well as

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monthly escrow payments of $1511.10 for taxes and insurance, for a total of $5376.68 per

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month; the notice of default and the notice of trustee’s sale recorded against the Property would

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be expunged; and the Court would review the agreement on December 1, 2014 (the

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“Agreement”). (See Motion 3–4, ECF No. 98 in Bankr. No. 13-51261). Attached to the Motion

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as support was a October 17, 2013 letter to Appellant from Appellee informing Appellant of an

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impending adjustment of his monthly payments on his adjustable-rate mortgage (the “Letter”).

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(See Letter, ECF No. 98 in Bankr. No. 13-51261, at 9). As of December 1, 2013, Appellant’s

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monthly payment for principal and interest would be $3865.58, and the total with escrow would

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be $5376.68. (Id.). The Letter recounted the monthly adjustments to the interest rate that had

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occurred over the prior year and noted that the next “scheduled payment review date” was a year

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from the date of the Letter, October 17, 2014. (See id.).

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Appellant filed a notice of hearing for December 18, 2013. On January 1, 2014,

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Appellant filed a declaration indicating that at the December 18, 2013 hearing Judge Beesley

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indicated he would grant the motion if a representative of Appellee signed the Agreement but

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that Appellant believed the order was not contingent on such a signature. On January 8, 2014,

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Judge Beesley approved Appellant’s proposed order granting the Motion (the “Settlement

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Order”), (see Settlement Order, ECF No. 149 in Bankr. No. 13-51261), although there was yet no

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evidence a representative of Appellee had ever signed the Agreement.

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On March 14, 2014, Appellee filed a motion asking the Bankruptcy Court to set aside the

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Settlement Order, because Appellee had not approved any compromise and the Motion had not

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been properly served on Appellee. (See Motion to Set Aside, ECF No. 165 in Bankr. No. 13-

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51261). The Bankruptcy Court granted Appellee’s motion on June 16, 2014 (the “Set Aside

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Order”) after holding a hearing on May 22, 2014. (See Set Aside Order, ECF No. 261 in Bankr.

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No. 13-51261). The Bankruptcy Court ruled that the Motion had been a contested matter under

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Bankruptcy Rule 9014 that was not properly served upon Appellee. The Settlement Order was

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therefore void under Civil Rule 60(b)(4). Furthermore, the Letter was not a compromise

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agreement under Bankruptcy Rule 9019. Finally, the Settlement Order was entered as a result of

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mistake, inadvertence, surprise, or excusable neglect under Civil Rule 60(b)(1). Appellant

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appealed the Set Aside Order to the Bankruptcy Appellate Panel, and Appellee elected to have

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the appeal heard in this Court.

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II.

STANDARD OF REVIEW

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A bankruptcy court’s conclusions of law, including its interpretations of the bankruptcy

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code, are reviewed de novo, and its factual findings are reviewed for clear error. See Blausey v.

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U.S. Trustee, 552 F.3d 1124, 1132 (9th Cir. 2009). A reviewing court must accept the

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bankruptcy court’s findings of fact unless it is left with the definite and firm conviction that a

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mistake has been committed. See In re Straightline Invs., Inc., 525 F.3d 870, 876 (9th Cir. 2008).

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III.

ANALYSIS

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A.

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Appellee first argues that the Court lacks jurisdiction over the appeal under 28 U.S.C.

Jurisdiction

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§ 158(a). Appellee argues that the Set Aside Order is at most an interlocutory order, not a final

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order, and that interlocutory appeal under § 1292(a) is not appropriate, both because the dispute

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concerns no controlling question of law as to which there is substantial ground for difference of

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opinion and because an immediate appeal will not materially advance the termination of the

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litigation. Appellee notes that the bankruptcy action was dismissed the day after the Set Aside

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Order issued. In any case, Appellee notes, the Bankruptcy Court has never certified the present

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matter for interlocutory review, as required under § 1292(b).

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The Court agrees it has no jurisdiction under § 1292, the required certification not

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appearing, even assuming the other requirements could be satisfied. The Court also agrees it has

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no jurisdiction under § 158(a). Issuance of an order approving a settlement under Bankruptcy

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Rule 9019 is a final order for the purposes of § 158(a) if it ends the litigation between the parties

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to the settlement. See Ades–Berg Investors v. Breeden (In re The Bennett Funding Grp., Inc.),

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439 F.3d 155, 160 (9th Cir. 2006) (citing Adam v. Itech Oil Co. (In re Gibralter Resources, Inc.),

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210 F.3d 573, 576 (5th Cir. 2000)). But although the Court would have had jurisdiction over a

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putative appeal by Appellee as to the Settlement Order (had the Bankruptcy Court denied

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Appellee’s motion to set the Settlement Order aside), the Set Aside Order is an order setting

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aside a 9019 order, not an order granting one. It did not end any litigation between the parties.

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To the contrary, it revived it. The order that ended the litigation between the parties to this

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appeal was the dismissal order the Bankruptcy Court issued the next day. (See Dismissal Order,

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ECF No. 268 in Bankr. No. 13-51261). Appellant has separately appealed that order in Case No.

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3:14-cv-355.

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B.

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Even if the Court had jurisdiction over the present appeal, it would affirm the Bankruptcy

The Merits

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Court. Not only was the Set Aside Order not in error, but its denial would have been error. The

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Letter was not an offer of compromise but an informational letter indicating the status of

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Appellant’s mortgage. There is no language of compromise whatsoever in the Letter, or even

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any acknowledgment of any dispute to be compromised. If there were jurisdiction, the Court

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could affirm for this reason alone. The Court could also affirm on the alternative basis that

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Appellant never properly served Appellee with the Motion before the hearing. Appellant has

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made no showing of error of fact or law in this regard.

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Appellant argues that the Court should reverse because the Bankruptcy Court made no

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factual findings on the record and did not issue a written opinion. That is incorrect. The Set

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Aside Order is a written order that includes factual findings and conclusions of law, even if not

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explicitly so labeled, as the Court has recounted, supra. Next, Appellant argues that the

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Bankruptcy Judge failed to recuse. But Plaintiff has not via the present appeal challenged a

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denial of any motion for recusal, and as Appellee notes, Appellant filed his recusal motion after

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the Bankruptcy Judge entered the Set Aside Order. Next, Appellant argues that the Bankruptcy

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Judge wrongly overruled Appellant’s evidentiary objections at the hearing. But the only alleged

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evidentiary error is that the Bankruptcy Court refused to declare that Appellee had been served

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with the Motion simply because Appellee had actual notice of the Motion. That was not a

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potential evidentiary error, but a potential error concerning the law of service of process.

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Anyway, it was no error. Although actual knowledge may alleviate due process concerns, it does

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not excuse the separate requirement of service of process. A waiver of service under Civil Rule

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4(d)—which Appellant argues applies here because counsel at the hearing admitted having

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knowledge of the lawsuit before the hearing—requires more than acknowledgment of actual

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notice, otherwise there could be no such thing as a motion to dismiss for insufficient service of

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process, because a person making such a challenge necessarily has actual notice. Under Civil

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Rule 4(d), a waiver of service of process requires a defendant to agree in writing to a plaintiff’s

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written request to waive service under the strictures of that rule. See Fed. R. Civ. P. 4(d).

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Appellant makes no claim that this ever occurred in this case. A review of the transcript of the

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hearing indicates no error as to the Bankruptcy Court’s factual determination that Appellant

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failed to serve Appellee with the Motion under Bankruptcy Rule 7004(h).

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Finally, Appellant has requested an additional 30 days to file his reply brief. Appellant

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previously requested an additional 30 days to file the reply brief based on his argument that his

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medical condition made research and briefing difficult. In that motion, Appellant also asked the

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Court for guidance as to what to do with a compact disc (“CD”) provided to him by Appellee that

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had not been filed with the Court. The Court did not previously address this request, and

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Appellant has made the request again. The Court notes that discovery materials not only need

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not be filed with the Court but may not be. Only evidence in support of motions is filed with the

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Court. The Court cannot give Appellant legal advice as to “what to do with this new potential

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evidence.” His request for the Court to do so is denied.

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The first basis proffered for Appellant’s request for another 30-day extension of time is

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that he has been unable to figure out what to do with the CD. The Court finds this is not good

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cause for an extension. Appellant does not allege, for example, that he lacks access to the record,

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that the CD is the only method by which he might access it, and that he cannot figure out how to

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operate the CD. Rather, he alleges—along with his unsubstantiated suspicions that the CD might

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contain malware and his frankly incredible allegations that a private firm he paid to analyze the

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CD found pornography on it—that he is concerned the CD may contain privileged documents.

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That is no basis to extend time. Second, neither are the issues particularly complex in this case.

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Third, neither does the Court find good cause to further extend the deadline based on Appellant’s

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alleged medical problems. Appellant’s medical problems have not prevented him from

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researching, authoring, and filing the present 11-page motion listing and arguing several bases for

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an extension. Fourth, neither is Appellant’s pro se status good cause for an additional extension

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in this case. Appellant has prosecuted half a dozen cases pro se in this Court and has had no

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problem filing many briefs and motions in those cases. Indeed, he filed his opening brief in a

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timely manner in this appeal. Fifth, neither do the interests of justice or the policy of deciding

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cases on the merits rather than technicalities provide good cause for an extension, because the

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Court has herein adjudicated the case based on the opening and answering briefs, not based on

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any technicalities, e.g., failure to file the reply brief within the time ordered, and the case is not a

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difficult one. There are no close legal or factual issues. Finally, the time limits under Rule 60(c)

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are irrelevant. The present motion is not in the nature of a Rule 60(b) motion. It is a timely filed

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motion to extend time that requires no basis under Rule 60(b). In summary, there is no reason to

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extend the time to reply but delay.

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CONCLUSION

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IT IS HEREBY ORDERED that the case is DISMISSED for lack of jurisdiction.

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IT IS FURTHER ORDERED that the Motion (ECF No. 21) is DENIED as moot.

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IT IS FURTHER ORDERED that the Motion to Extend Time (ECF No. 25) is DENIED.

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IT IS FURTHER ORDERED that the Clerk shall close the case.

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IT IS SO ORDERED.

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Dated this 5th day of March, 2015.
Dated this 25th day of March, 2015.

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_____________________________________
ROBERT C. JONES
United States District Judge

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