In re: C&M Russell, LLC

CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedJuly 30, 2019
DocketCC-18-1312-KuTaS
StatusUnpublished

This text of In re: C&M Russell, LLC (In re: C&M Russell, LLC) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel 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
In re: C&M Russell, LLC, (bap9 2019).

Opinion

FILED JUL 30 2019 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT

In re: BAP No. CC-18-1312-KuTaS

C&M RUSSELL, LLC, Bk. No. 2:11-bk-53845-RK

Debtor. Adv. No. 2:16-ap-01577-RK

MATTIE BELINDA EVANS,

Appellant, v. MEMORANDUM*

ALAN G. TIPPIE; SULMEYERKUPETZ, a professional corporation,

Appellees.

Submitted Without Argument** on July 18, 2019 at Pasadena, California

Filed – July 30, 2019

Appeal from the United States Bankruptcy Court

* This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. ** By order entered on June 3, 2019, a motions panel determined these appeals suitable for submission on the briefs and record without oral argument. for the Central District of California

Honorable Robert N. Kwan, Bankruptcy Judge, Presiding

Appearances: Appellant Mattie Belinda Evans pro se on brief; David J. Richardson of SulmeyerKupetz on brief for appellees, Alan G. Tippie and SulmeyerKupetz

Before: KURTZ, TAYLOR, and SPRAKER, Bankruptcy Judges.

INTRODUCTION

Chapter 111 debtor, C&M Russell, LLC (C&M), sold its assets, paid its

undisputed creditors in full, and filed a motion to dismiss its case. The

bankruptcy court granted C&M's motion and the case closed in late 2012.

Per the dismissal order, the remaining sale proceeds were held in trust

pending the outcome of state court litigation with a disputed creditor. The

litigation resolved in favor of C&M, and the proceeds were turned over to

it in November 2016.

Shortly after, Mattie Belinda Evans, individually and as Chief

Executive Manager as Real Party in Interest for C&M, filed a malpractice

action in the state court against Alan G. Tippie, and his law firm

SulmeyerKupetz, APC (SulmeyerKupetz) (collectively, Defendants) in

1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and “Rule” references are to the Federal Rules of Bankruptcy Procedure.

2 connection with legal services performed for C&M during its bankruptcy

case (State Court Action). Defendants removed the action to the

bankruptcy court, arguing that it had jurisdiction over the claims alleged

under 28 U.S.C. § 1334. Ms. Evans filed a motion to remand, which the

bankruptcy court denied. Defendants then filed a motion for summary

judgment (MSJ), asserting that claim and issue preclusion applied to the

claims. Ms. Evans filed a motion for judgment on the pleadings. The

bankruptcy court granted Defendants' MSJ, denied Ms. Evans' motion for

judgment on the pleadings, entered judgment in favor of Defendants, and

dismissed all claims with prejudice. Ms. Evans appeals from these rulings.

We AFFIRM.

FACTS

A. The Bankruptcy Proceeding

C&M filed its chapter 11 petition in October 2011. At the time, C&M

owned and managed five multi-residential properties. Ms. Evans was the

managing member of C&M.

In February 2012, the bankruptcy court approved C&M's application

to employ SulmeyerKupetz as general bankruptcy counsel. Mr. Tippie was

lead counsel.

In May 2012, SulmeyerKupetz filed its first application for

compensation. Ms. Evans filed a declaration in support of the request

stating that she had no objections and asking that all professional fees and

3 costs be approved in full.

During the bankruptcy case, resolution was reached with the secured

creditors and C&M's properties were sold. The sale proceeds were used to

pay all of C&M's creditors in full, except for one disputed creditor whose

claim was the subject of ongoing litigation in state court.

In August 2012, C&M moved to dismiss its case. In October 2012, the

bankruptcy court granted the motion and SulmeyerKupetz's employment

terminated. In the order dismissing the case (Dismissal Order), certain

distributions were authorized and the balance of the sale proceeds were

placed in SulmeyerKupetz's client trust account pending the outcome of

the litigation with the disputed creditor. The bankruptcy court retained

jurisdiction to hear and determine applications for compensation for

services rendered by professionals employed by order of the bankruptcy

court, including SulmeyerKupetz.

Thereafter, SulmeyerKupetz sought approval of its amended second

and final fee application. Ms. Evans again filed a declaration in support of

the application. The bankruptcy court approved the application in its

entirety.

On December 17, 2013, the bankruptcy case was closed.

In February 2016, the litigation in state court with the disputed

creditor was finalized in favor of C&M. The sale proceeds held in trust

were turned over to C&M in November 2016.

4 B. The Malpractice Lawsuit

On November 30, 2016, Ms. Evans filed a complaint in the Superior

Court for the County of Los Angeles against Defendants seeking over

$10,000,000 in damages, and alleging claims for legal malpractice,

intentional and negligent misrepresentation, breach of the implied

covenant of good faith and fair dealing, breach of fiduciary duty, civil

conspiracy, racism, fraud and fraudulent inducement, and intentional and

negligent infliction of emotional distress. Ms. Evans asserted these claims

in her individual capacity and as the chief executive manager of C&M and

Trustee of the Mattie B. Evans Family Trust. The caption page of the

complaint listed C&M's bankruptcy case as a related case, and made a

demand for a jury trial.

All of the allegations in Ms. Evans' complaint related to Defendants'

legal services provided during C&M's chapter 11 case one way or another.

Her claim for racism was based on the bankruptcy judge's alleged bias.

Ms. Evans complained that C&M's properties were sold instead of

reorganized, and alleged that she was not informed about the dismissal of

C&M's case. She further alleged Defendants wrongfully withheld funds in

their client trust account and did not release the funds until February 2016.

According to Ms. Evans, she was in a vulnerable financial position and

unable to timely make monthly payments on her home mortgage, resulting

in a Notice of Default and Intent of Sale being filed by her lender. She was

5 forced to borrow $87,000 from a hard money lender to save her home.

In December 2016, Defendants filed a notice of removal, arguing that

the bankruptcy court had jurisdiction over the State Court Action under 28

U.S.C. §§ 1334 and 157(b)(2)(A), (B), and (C) because the allegations in the

complaint concerned the administration of the estate and claims against

C&M's bankruptcy counsel for work performed during the bankruptcy

case.

Ms. Evans filed a motion to remand the action to the state court. She

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