Curry v. Castillo

297 F.3d 940
CourtCourt of Appeals for the Ninth Circuit
DecidedSeptember 6, 2002
DocketNos. 00-55846, 00-55851
StatusPublished
Cited by11 cases

This text of 297 F.3d 940 (Curry v. Castillo) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Curry v. Castillo, 297 F.3d 940 (9th Cir. 2002).

Opinion

WARDLAW, Circuit Judge.

We must decide whether a standing Chapter 13 Bankruptcy Trustee enjoys absolute quasi-judicial immunity for scheduling and noticing a bankruptcy confirmation hearing. We agree with the Bankruptcy Appellate Panel (“BAP”) that the Trustee and her assistant enjoy absolute quasi-judicial immunity from liability for the decision to schedule the bankruptcy confirmation hearing. Because we further conclude that the giving of notice is a part of the discretionary scheduling function, however, we reject the BAP’s holding that immunity does not extend to the failure to give notice of the hearing.

I. Factual and Procedural Background

Cherry Barbara Castillo filed this Chapter 13 bankruptcy case on September 18, 1997. Nancy Curry was appointed as Trustee in Castillo’s case. A staff attorney employed by her, Julie Feder, assisted Curry with certain matters in the case. After Castillo’s petition was filed, Curry conducted an 11 U.S.C. § 341(a) meeting of creditors on October 29, 1997. At the meeting, Curry decided on the basis of various irregularities in the petition that the § 341(a) meeting should be continued to January 20,1998. She believed that she could not determine the feasibility of Castillo’s proposed plan until the court adjudicated objections to the plan on December 4, 1997. As Curry conceded in her briefs to the Bankruptcy Court, due to a clerical error in her office, the confirmation hearing was actually set for December 3, 1997. Neither Castillo nor her counsel was notified of the rescheduled confirmation hearing date. Nevertheless, on December 3, 1997, a confirmation hearing was held. Castillo did not appear, and therefore did not provide proof that she had made the plan payments as required for confirmation. The Trustee informed the court that a plan payment had not been made because one had not been recorded on the Trustee’s books, even though Castillo had in fact mailed a late payment to the Trustee sometime after November 22, 1997. As a result, the debtor’s Chapter 13 case was dismissed on December 16,1997.

Castillo’s counsel, G. Thomas Leonard, received notice of the dismissal sometime after it was served on December 19, 1997, but did not take any action during the [944]*944seven days before the mortgagee took advantage of the dismissal to foreclose on Castillo’s residence on December 26, 1997. Leonard then successfully moved to vacate the dismissal, as Curry did not oppose the debtor’s motion to vacate. Because Castillo’s residence had been sold to a third party, however, the bankruptcy court refused to set aside the foreclosure sale. On January 25, 1999, Castillo sought leave of the bankruptcy court to prosecute suit against the Trustee and her staff attorney in Los Angeles County Superior Court. Castillo also named her attorney, Leonard, as a defendant, based on the fact that despite receiving timely notice of the dismissal, Leonard’s office failed to file a motion to vacate the dismissal before the foreclosure sale date of December 26, 1997.

Before the bankruptcy court, Castillo contended that (1) the Trustee was negligent in scheduling the December 3, 1997 confirmation hearing without due notice to Castillo or her counsel; (2) the Trustee was not immune from suit; and (3) the requirement that Castillo bring her state law claim against her bankruptcy attorney for any malpractice on his part in state court created a danger of conflicting rulings. The bankruptcy court granted Castillo’s motion after hearing on February 16, 1999, by order entered March 23, 1999. The court reasoned that the Trustee had a duty to “provide due process to the debt- or” and that “in this case debtor and debt- or’s counsel were not given the proper ... due process,” which resulted in “serious” consequences. The court also noted that the debtor had complied with her Chapter 13 requirements.

The Trustee sought reconsideration of the bankruptcy court’s orders. In addition, attorney Leonard moved the bankruptcy court for leave to cross-complain against Curry and Feder in state court. The bankruptcy court denied Curry’s motion for reconsideration after hearing on May 6, 1999, by order entered May 20, 1999. It also granted Leonard’s motion for leave to sue Curry and Feder on July 23, 1999.

The BAP granted leave to appeal what it viewed as the interlocutory bankruptcy court decision, citing In re Kashani, 190 B.R. 875 (B.A.P. 9th Cir.1995). It then extended quasi-judicial immunity for damages relating to the miscalendaring of the confirmation hearing, but not for damages resulting from the failure to give notice of the hearing. Further ruling that the failure to give notice violated a duty imposed by law upon the Trustee, the BAP held that the suit could proceed under our decision in In re Cochise College Park, 703 F.2d 1339 (9th Cir.1983).

II. Jurisdiction

Curry challenges the bankruptcy court’s jurisdiction to grant Castillo and Leonard leave to sue and, in turn, appellate jurisdiction of the BAP and our court to review those orders.

A. Jurisdiction of the Bankruptcy Court

Curry asserts that the bankruptcy court lacked jurisdiction to hear Castillo’s and Leonard’s motion for leave to file suit against the Trustee because the case had previously been dismissed and a bankruptcy court may not sua sponte reopen a dismissed bankruptcy case. Curry has couched her argument as a challenge to the bankruptcy court’s power to “reopen” a previously dismissed case. However, as the bankruptcy judge noted, although the Chapter 13 case had been dismissed, it had not been closed. Thus there was no need to reopen the case to hear the motion. In any event, a bankruptcy court has broad discretion to reopen a case sua sponte:

[945]*945The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.

11 U.S.C. § 105(a); see also 11 U.S.C. § 350(b) (“A case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause.”).

A bankruptcy “court’s decision to reopen is entirely within its sound discretion, based upon the circumstances of each case.” In re Elias, 215 B.R. 600, 604 (B.A.P. 9th Cir.1997), citing In re Rosinski 759 F.2d 539, 540-41 (6th Cir.1985); Citizens Bank & Trust Co. v. Case, 937 F.2d 1014, 1018(5th Cir.1991); In re Rediker, 25 B.R. 71, 73 (Bankr.M.D.Tenn.1982). As the Seventh Circuit has stated:

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297 F.3d 940, Counsel Stack Legal Research, https://law.counselstack.com/opinion/curry-v-castillo-ca9-2002.