West v. High Desert et al

Filing 7

MEMORANDUM DECISION denying 3 Motion to Set Aside Dismissal of Counterclaim. Signed by Judge Jill N. Parrish on 7/20/16. (jlw)

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

In re: DAVID N. FISHER,
Debtor.
DAVID C. WEST, Chapter 7 Bankruptcy
Trustee,

MEMORANDUM DECISION AND
ORDER DENYING
COUNTERCLAIMANTS’ RULE 60(B)
MOTION TO SET ASIDE DISMISSAL
OF COUNTERCLAIM

Plaintiff,
v.
HIGH DESERT, LLC, DEL K. BARTEL,
and DALE THURGOOD,

Case No. 2:15-cv-858-JNP
Judge Jill N. Parrish

Defendants.

DEL K. BARTEL and DALE THURGOOD,
Counterclaimants,
v.
DAVID C. WEST, GARY JUBBER,
SHELDON SMITH, and JOHN DOES 1-5,
Counterclaim Defendants.

Before the court is Counterclaimants Del K. Bartel’s and Dale Thurgood’s Rule 60(b)
Motion to Set Aside the Order of Dismissal of Counterclaim (Docket 3). Pursuant to DUCivR 71(f), the court determined that oral argument would not be helpful or necessary to resolve the
Counterclaimants’ motion. After careful consideration of the record, the relevant law, and the
parties’ memoranda, the court DENIES Counterclaimants’ Rule 60(b) Motion to Set Aside the
Order of Dismissal of Counterclaim.

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BACKGROUND
On December 4, 2015, Bankruptcy Judge William T. Thurman filed a Report and
Recommendation on Counterclaim Defendants’ Motion to Dismiss Counterclaim (Docket 1).
Judge Thurman recommended that this court dismiss the counterclaims for lack of jurisdiction
under the Barton doctrine because the Counterclaimants did not request leave from the court to
pursue their counterclaims against the trustee. Counterclaimants did not object to Judge
Thurman’s Report and Recommendation.
The court adopted Judge Thurman’s Report and Recommendation on February 4, 2016
(Docket 2). The court’s decision was carefully made after the court’s de novo review of the
record, the relevant legal authorities, and Judge Thurman’s Report and Recommendation.
On February 20, 2016, the Counterclaimants filed a Rule 60(b) Motion to Set Aside the
Order of Dismissal of Counterclaim (Docket 3). In their motion, Counterclaimants argue that the
court should set aside its order adopting Judge Thurman’s Report and Recommendation for the
following reasons: (1) the setting aside of the judgment is justified under Federal Rule of Civil
Procedure 60(b), (2) Counterclaimants did not receive notice of the court’s review of the Report
and Recommendation, (3) this court should have conducted a trial de novo, (4) this court ignored
the Counterclaimants’ legal arguments concerning their counterclaims, (5) the Trustee’s motion
to dismiss for lack of jurisdiction was not on point, and (6) the Bankruptcy Court ignored
Counterclaimants’ pending motion for partial summary judgment.
LEGAL STANDARD
Federal Rule of Civil Procedure 60(b) provides for relief from a final judgment or order
in the event of “mistake, inadvertence, surprise, excusable neglect, . . . [or] any other reason
justifying relief.” Relief under Rule 60(b) is “extraordinary and may only be granted in

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exceptional circumstances.” Manzanares v. City of Albuquerque, 628 F.3d 1237, 1241 (10th Cir.
2010) (quoting Zurich N. Am. v. Matrix Serv., Inc., 426 F.3d 1281, 1289 (10th Cir. 2005)). “A
Rule 60(b) motion is not intended to be a substitute for a direct appeal.” Servants of Paraclete v.
Does, 204 F.3d 1005, 1009 (10th Cir. 2000). Thus, “[a] plaintiff must overcome a higher hurdle
to obtain relief from a post-judgment motion than on direct appeal from a judgment.” LaFleur v.
Teen Help, 342 F.3d 1145, 1153 (10th Cir. 2003). A district court’s decision under Rule 60(b) is
evaluated under an abuse of discretion standard. Id.
Because Counterclaimants are acting pro se, the court construes their pleadings liberally
and applies a “less stringent standard than formal pleadings drafted by lawyers.” Smith v. United
States, 561 F.3d 1090, 1096 (10th Cir. 2009) (quoting Garrett v. Selby Connor Maddux & Janer,
425 F.3d 836, 840 (10th Cir. 2005)); see also Craft v. Global Expertise in Outsourcing, No. 166034, 2016 WL 3866092, at *1 n.1 (10th Cir. July 12, 2016) (noting that a pro se party’s filings
should be liberally construed in the Rule 60(b) context). Thus, “if the court can reasonably read
the pleadings to state a valid claim on which the plaintiff could prevail, it should do so despite
the plaintiff’s failure to cite proper legal authority, his confusion of various legal authorities, his
poor syntax and sentence construction, or his unfamiliarity with pleading requirements.” Id.
(quoting Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991)). The court “will not supply
additional factual allegations to round out a plaintiff’s complaint or construct a legal theory on a
plaintiff’s behalf.” Whitney v. New Mexico, 113 F.3d 1170, 1173–74 (10th Cir. 1997).
ANALYSIS
Counterclaimants raise a host of arguments contending that this court should set aside its
judgment. First, Counterclaimants claim they did not receive notice of Judge Thurman’s Report
and Recommendation. In narrow circumstances, Rule 60(b) relief may be granted when “a

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litigant has, through no fault of his own, failed to receive notice of entry of judgment, and has
shown that he has exercised due diligence to ascertain whether the judgment has been entered.”
Servants of Paraclete, 204 F.3d at 1009. But the “Service List” on the Report and
Recommendation indicates that notice was sent to the Counterclaimants at the addresses they
provided to the bankruptcy court. Further, Counterclaimants fail to present circumstances beyond
their control that precluded them from receiving notice of or timely opposing the Report and
Recommendation. See id. Thus, Counterclaimants’ argument that they did not receive notice of
Judge Thurman’s Report and Recommendation is without merit.
Second, Counterclaimants argue that this court should have conducted a “trial de novo.”
Counterclaimants contend that “[a] trial de novo was ordered by the bankruptcy court, but not
conducted.” But Judge Thurman’s Report and Recommendation stated that “the findings of fact
and conclusions of law” would be sent to “the District Court for de novo review,” not a trial de
novo. A de novo review requires the district court to make “an independent determination of the
issues, giving no special weight to the bankruptcy court’s decision.” In re Expert S. Tulsa, LLC,
522 B.R. 634, 644 (B.A.P. 10th Cir. 2014). It does not mean the court will conduct a trial on the
issues before it. See id. Thus, when the court conducted a de novo review of Judge Thurman’s
Report and Recommendation, it conducted an independent review of the record and relevant
legal authorities without giving deference to Judge Thurman’s decision. And in conducting that
review, the court reached the same conclusion as Judge Thurman: neither this court nor the
Bankruptcy Court has jurisdiction over the counterclaims under the Barton doctrine.
There appears to have been a lack of understanding on the part of Counterclaimants as to
the consequences of Judge Thurman’s Report and Recommendation. But a mere
misunderstanding of the nature of the Report and Recommendation does not meet the requisite

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standard to grant Rule 60(b) relief. See Cessna Fin. Corp. v. Bielenberg Masonry Contracting,
Inc., 715 F.2d 1442, 1445–47 (10th Cir. 1983) (holding defendant’s misunderstanding of the law
did not meet the standard to grant Rule 60(b) relief).
Finally, Counterclaimants argue that the court should set aside its order because the
Trustee’s motion to dismiss for lack of jurisdiction was not on point and the Bankruptcy Court
ignored Counterclaimants’ pending motion for partial summary judgment. Counterclaimants also
argue that neither the Bankruptcy Court nor this court addressed their eleven counterclaims. But
these arguments are not “the requisite extraordinary circumstances” that constitute grounds for
relief under Rule 60(b). See LaFleur, 342 F.3d at 1153–54. Furthermore, these arguments go to
the heart of Counterclaimants’ counterclaims. Yet as noted by both this court and the Bankruptcy
Court in its Report and Recommendation, pursuant to the Barton doctrine, neither court has
jurisdiction to hear those claims. Satterfield v. Malloy, 700 F.3d 1231, 1234 (10th Cir. 2012).
The court acknowledges Counterclaimants’ frustration that their counterclaims were not
addressed by either this court or the Bankruptcy Court. But without jurisdiction, this court is
prohibited under the Constitution from hearing those claims. U.S. Const. art. III, § 2, cl. 1;
Satterfield, 700 F.3d at 1234.
CONCLUSION
Based on the foregoing reasons, the court DENIES Counterclaimants’ Rule 60(b) Motion
to Set Aside the Order of Dismissal of Counterclaim for Relief (Docket 3).
DATED this 20th day of July, 2016.
BY THE COURT:

___________________________________
Judge Jill N. Parrish
United States District Court

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