Deborah Johannes v. Patrick Johannes

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 13, 2019
• Docket: 17-55749
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 13 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

In re: PATRICK ALLEN JOHANNES, No. 17-55749

Debtor, D.C. No. ______________________________ 3:15-cv-02598-AJB-BGS

DEBORAH JOHANNES, MEMORANDUM* Appellant,

v.

PATRICK ALLEN JOHANNES,

Appellee.

Appeal from the United States District Court for the Southern District of California Anthony J. Battaglia, District Judge, Presiding

Argued and Submitted November 7, 2018 Pasadena, California

Before: WARDLAW, RAWLINSON, and HURWITZ, Circuit Judges.

Deborah Johannes appeals a district court judgment affirming the bankruptcy

court’s confirmation of her ex-husband Patrick Johannes’s Chapter 11 plan. We

have jurisdiction under 28 U.S.C. § 158(d)(1). Reviewing de novo, see In re

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Cloobeck, 788 F.3d 1243, 1245 (9th Cir. 2015), we affirm.

1. Although Deborah did not obtain a stay of the Chapter 11 plan, this appeal

is neither equitably nor statutorily moot. On appeal, Deborah simply seeks an

increased equalization payment for her community property interest in a business

venture; any increased payment would be consistent with the plan’s general

structure, and no third party’s rights would be affected. See In re Spirtos, 992 F.2d

1004, 1006 (9th Cir. 1993). Patrick is not a good faith purchaser of Deborah’s

community property interest for purposes of this litigation because the central issue

is the valuation of the property. See In re Ewell, 958 F.2d 276, 281 (9th Cir. 1992).

2. The plan was not proposed in bad faith. Deborah does not dispute that

Patrick was insolvent, and there is no evidence the plan harasses Deborah. See In re

Marsch, 36 F.3d 825, 828 (9th Cir. 1994).

3. Deborah contends that the bankruptcy court made a “math error” in

calculating the value of her community property share in Foothills Consulting, Inc.

There was no such error. The bankruptcy court accepted the total valuation of

Foothills proposed by Patrick’s expert, which included a discount because of

litigation against the venture threatened by Deborah. The court then ordered an

equalization payment to Deborah equal to the expert’s valuation of her 25% share in

Foothills.

4. Deborah’s real argument seems to be that the bankruptcy court should have

2 reduced the litigation discount in light of the uncertain merits of her claims. But,

there was no evidence before the bankruptcy court that would have allowed it to

reach such a conclusion. Both Patrick’s and Deborah’s valuation experts expressly

declined to opine on the topic in reaching their opinions as to the value of Deborah’s

25% share in Foothills. Because the valuation adopted by the bankruptcy court was

supported by expert testimony, it was not clearly erroneous. See Seller Agency

Council, Inc. v. Kennedy Ctr. for Real Estate Educ., Inc., 621 F.3d 981, 986 (9th Cir.

2010).

5. Deborah argues that the bankruptcy court erred in denying her motion for

a new trial because she filed a post-trial notice offering to waive her claims against

Foothills. The court did not abuse its discretion in deeming that filing “too little too

late.” Deborah knew at least eleven days before the two-day trial in the bankruptcy

court that Patrick’s expert would proffer testimony that her threat of litigation against

Foothills affected its value, but she waited until two weeks after trial ended to file

the conditional waiver; she offered no excuses either below or on appeal for her lack

of diligence.

AFFIRMED.