In re: Darcomm Supply, Inc.

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: February 3, 2012
• Docket: AZ-11-1137-WiJuKi
• Status: Unpublished

Opinion

FILED FEB 03 2012 1 SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 OF THE NINTH CIRCUIT

3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. AZ-11-1137-WiJuKi ) 6 DARCOMM SUPPLY, INC., ) Bk. No. 08-05755-GBN ) 7 Debtor. ) ___________________________________) 8 ) GARY COLVIN, ) 9 ) Appellant, ) 10 ) v. ) M E M O R A N D U M* 11 ) DARCOMM SUPPLY, INC.; TRUDY A. ) 12 NOWAK, Chapter 7 Trustee, ) ) 13 Appellees. ) ___________________________________) 14 Argued and Submitted on January 19, 2012 15 at Phoenix, Arizona 16 Filed - February 3, 2012 17 Appeal from the United States Bankruptcy Court for the District of Arizona 18 Honorable George B. Nielsen, Jr., Bankruptcy Judge, Presiding 19 _________________________ 20 Appearances: Appellant Gary Colvin argued pro se; Lawrence D. 21 Hirsch, Esq., of Deconcini McDonald Yetwin & Lacey, P.C., argued for Appellee Trudy A. Nowak, Chapter 7 22 Trustee. _________________________ 23 Before: WILLIAMS,** JURY, and KIRSCHER, Bankruptcy Judges. 24 25 * This disposition is not appropriate for publication. 26 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 27 Cir. BAP Rule 8013-1. ** 28 Hon. Patricia C. Williams, Bankruptcy Judge for the Eastern District of Washington, sitting by designation.

-1- 1 Creditor Gary Colvin (appellant) appeals the bankruptcy 2 court’s decision denying appellant’s motion for a new trial and 3 granting the motion for summary judgment and an award of attorneys’ 4 fees of debtor Darcomm Supply, Inc. (appellee). The summary 5 judgment disallowed the proof of claim filed by appellant based 6 upon ARIZ. REV. STAT. ANN. (“ARS”) § 47-3310, which provides that 7 if a cashier’s check is taken for an obligation, the obligation is 8 discharged. We AFFIRM.1 9 I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY 10 Originally, appellant and appellee were involved in a dispute 11 which was resolved by a settlement agreement which required the 12 appellee to pay $12,000 to appellant in the form of a cashier’s 13 check. Appellee did so on May 15, 2007. The issuing bank refused 14 to honor the cashier’s check when presented a few days later. One 15 year later, the appellee commenced a bankruptcy proceeding and the 16 appellant filed a proof of claim for $46,000 based upon the 17 dishonor of the cashier’s check. The proof of claim referred to 18 “Breach of Settlement Agreement, fraud, check fraud.” 19 The appellee objected to the proof of claim and an order was 20 entered denying the proof of claim on November 12, 2008. For some 21 reason not apparent in the record, on March 17, 2009, appellee 22 filed a motion for summary judgment arguing that the damage claim 23 portion of the proof of claim should be denied and that the 24 appellee should be awarded attorneys’ fees. 25 The appellee’s motion for summary judgment was heard on 26 1 27 Unless specified otherwise, all chapter, code, and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and 28 the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The Federal Rules of Bankruptcy Procedure are referred to as “FRBP.”

-2- 1 May 18, 2009. According to the minute entry, at that time the 2 bankruptcy court denied allowance of the damage portion of the 3 claim, granted the summary judgment motion, reserved the issue of 4 attorneys’ fees and admonished the parties that each had 10 days to 5 perfect an appeal with either the District Court or this court. 6 After further briefing, at the hearing on July 30, 2010, the 7 bankruptcy court awarded attorneys’ fees and determined the amount. 8 No transcript of the July 30, 2010 hearing has been provided. On 9 September 22, 2010, the court entered the final order granting 10 summary judgment and awarding attorneys’ fees. Darcomm Supply, 11 Inc. was converted from chapter 11 to chapter 7 on July 8, 2011. 12 II. JURISDICTION 13 Appellant filed a motion for a new trial, no copy of which is 14 in the record, but which appears to be related to the court’s 15 July 30, 2010 ruling and September 22, 2010 order. At the hearing 16 for a new trial on March 10, 2011, the appellant again argued the 17 merits of the summary judgment motion and award of fees. The 18 appellee has not raised any issue concerning the timeliness of the 19 appeal. Despite the incomplete record, this appeal appears to be 20 timely. FRBP 8002(b). 21 The bankruptcy court had jurisdiction under 28 U.S.C. 22 §§ 157(b)(2)(K) and 1334. This court has jurisdiction under 28 23 U.S.C. § 158. 24 III. ISSUES 25 A. Have the issues regarding entry of the order denying a 26 new trial been waived by the appellant? In the alternative, did the 27 bankruptcy court abuse its discretion by denying the motion for a 28 new trial?

-3- 1 B. Did the bankruptcy court apply the proper legal standard 2 in granting the summary judgment and awarding attorneys’ fees and 3 costs? Did it violate appellant’s due process rights in making 4 that determination? 5 IV. STANDARD OF REVIEW 6 A. The standard of review for an order denying a new trial 7 is abuse of discretion. Dixon v. Wallowa Cnty., 336 F.3d 1013, 8 1022 (9th Cir. 2003). To determine whether the bankruptcy court 9 has abused its discretion, we conduct a two-step inquiry: (1) we 10 review de novo whether the bankruptcy court “identified the correct 11 legal rule to apply to the relief requested” and (2) if it did, 12 whether the bankruptcy court’s application of the legal standard 13 was illogical, implausible or “without support in inferences that 14 may be drawn from the facts in the record.” United States v. 15 Hinkson, 585 F.3d 1247, 1261-62 n. 21 (9th Cir. 2009) (en banc). 16 B. A grant of summary judgment is reviewed de novo. Jones 17 v. Union Pac. R.R. Co., 968 F.2d 937, 940 (9th Cir. 1992). An 18 appellate court must determine, viewing the evidence in the light 19 most favorable to the non-moving party, whether there is any 20 genuine issues of material fact, and whether the bankruptcy court 21 correctly applied the relevant substantive law. Gizoni v. Sw. 22 Marine, Inc., 909 F.2d 385, 387 (9th Cir. 1990), aff’d, 502 U.S. 81 23 (1991). The appellate court must not weigh the evidence or 24 determine the truth of the matter, but only determine whether there 25 was a genuine issue of fact requiring trial. 26 V. DISCUSSION 27 A. The parties failed to address or argue the appeal of the 28 order denying a new trial. Issues not addressed in a brief may be

-4- 1 considered waived by the appellate court. An appellate court in 2 this circuit “will not review issues which are not argued 3 specifically and distinctly in a party’s opening brief.” City of 4 Emeryville v. Robinson, 621 F.3d 1251, 1261 (9th Cir. 2010). Even 5 if we did review the matter, we see no abuse of discretion by the 6 bankruptcy court in denying it. 7 The reasoning of the bankruptcy court for its ruling is 8 referenced in the transcript of the hearing held March 10, 2011, 9 which related to the appellant’s motion for a new trial. The 10 transcript reflects that the motion, which is not part of the 11 record on appeal, sought alteration or modification of the order 12 granting summary judgment and awarding attorneys’ fees.2 13 The bankruptcy court treated the motion as a post judgment 14 motion under FRBP 7052(b) and stated that the first ruling in May 15 2010 regarding summary judgment “stands on its own” and that on 16 July 30, 2010, the appellant’s motion to amend that ruling had been 17 denied. 18 The bankruptcy court cited E.E.O.C. v. Sunfire Glass, Inc., 19 2009 W.L. 2450472 (D. Ariz. Aug. 11, 2009), which states the 20 correct legal standard to be applied to a post judgment motion 21 under FRBP 7052(b) in which a party asks the court to correct on 22 the non-jury record any errors of law, mistakes of fact or 23 oversights that require correction. The following facts were 24 25 2 The record does contain a Motion to Amend Bankruptcy Court 26 Finding filed May 28, 2010 and the response filed June 28, 2010, which relates to the May 18, 2010 summary judgment hearing. The 27 record also contains a response to a motion for a new trial filed October 25, 2010. It is apparent from the record that the 28 appellant has filed various motions seeking reconsideration and repeatedly reargued the merits of the summary judgment.

-5- 1 articulated as the basis for the court’s ruling: “I’ll repeat my 2 early–the essentials of my earlier ruling, although the reality is 3 that that ruling in last May is–stands on its own, but I’ll repeat 4 a brief summary.” After reciting its prior analysis, the court 5 concluded “I believed in May and I believe now in March that the 6 debtor was entitled to summary judgment. The debtor’s obligation 7 to Mr. Colvin was discharged when the debtor purchased the 8 cashier’s check.” 9 The bankruptcy court applied the correct legal standard and 10 its decision is not illogical, implausible or without support in 11 inferences that may be drawn from the facts in the record.3 12 B. The basis for the court’s grant of summary judgment is 13 contained in the oral ruling of May 18, 2010. The court correctly 14 stated the standard for entry of a summary judgment. The movant 15 bears the initial responsibility of providing evidence. Once that 16 burden is met, the responding party has the burden of producing 17 evidence to the contrary, with the moving party bearing the 18 ultimate responsibility to establish the absence of a genuine issue 19 of material fact. In this case, the evidence presented by the 20 appellee as moving party was in the form of declarations of the 21 issuing bank and of the appellee and included bank records of the 22 appellee. The evidence presented by the appellant was his 23 3 24 In his brief, appellant discusses at length issues regarding the bankruptcy court’s denial of the appellant’s motion to dismiss 25 the bankruptcy proceeding which was also heard on March 10, 2011, and the appellee has responded to those arguments. No appeal was 26 taken from the order denying the motion to dismiss. The appellant argues that since the hearing on the motion to dismiss and the 27 hearing on the motion for a new trial occurred on the same day, the court’s denial of the motion to dismiss should also be part of this 28 appeal. The issues concerning that motion and order are irrelevant to this appeal and will not be considered.

-6- 1 declaration stating that the issuing bank had refused to honor the 2 check. A copy of the cashier’s check was part of the record before 3 the bankruptcy court. The cashier’s check was drawn, not from the 4 account of the appellee, but from an account of the issuing bank. 5 ARS § 47-3104(G) defines a cashier’s check as a draft with 6 respect to which the drawer and the drawee are the same bank or 7 branches of the same bank. The court determined that the 8 instrument constituted a cashier’s check drawn upon the account of 9 the issuing bank and the evidence supports that conclusion. ARS 10 § 47-3104(G). ARS §§ 47-1101, et seq., contains Arizona’s 11 enactment of the Uniform Commercial Code. ARS § 47-3310 12 establishes the relationship between checks and the underlying 13 obligations for which the check is issued. Subpart (A) of that 14 statute reads in part: 15 A. Unless otherwise agreed, if a certified check, cashier's check or teller's check is taken for an 16 obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal 17 to the amount of the instrument were taken in payment of the obligation. . . . 18 19 The statute is not ambiguous. Appellee’s obligation to pay 20 appellant $12,000 was discharged when the cashier’s check for that 21 amount was delivered to the appellant in May of 2007. Upon 22 delivery of the cashier’s check, the appellant had no further claim 23 against the appellee. The appellant did not produce any evidence 24 which created a material issue of fact. The proof of claim filed 25 by appellant was properly disallowed. 26 Appellant also based the proof of claim upon ARS § 12-671 27 which provides: 28 A person who, for himself or for another, with intent to defraud, makes, draws, utters or delivers to another

-7- 1 person or persons a check or draft on a bank or depositary for payment of money, knowing at the time of 2 such making, drawing, uttering or delivery, that he or his principal does not have an account or does not have 3 sufficient funds in, or credit with, such bank or depositary to meet the check or draft in full upon 4 presentation, shall be liable to the holder of such check or draft for twice the amount of such check or draft or 5 fifty dollars, whichever is greater, together with costs and reasonable attorney's fees as allowed by the court on 6 the basis of time and effort expended by such attorney on behalf of plaintiff. 7 8 The bankruptcy court found the statute inapplicable to appellee as 9 the cashier’s check was drawn upon the account of the issuing bank. 10 Further, the appellant was unable to establish that at the time of 11 presentment, the appellee lacked sufficient funds in its account. 12 Moreover, the bank records indicated Darcomm Supply, Inc. had 13 sufficient funds in its account at the time the check was drawn. 14 Even assuming that mere delivery of the cashier’s check by appellee 15 to appellant could give rise to a claim under ARS § 12-671, the 16 bankruptcy court held that the evidence failed to establish the 17 elements required by that statute. 18 The appellant also argues that he was deprived of his due 19 process rights as the appellee did not commence an adversary 20 proceeding to determine that the obligation was not subject to 21 discharge. Firstly, the bankruptcy court held due process had not 22 been denied as appellant had an opportunity to and did respond to 23 the objection to the proof of claim, which objection was filed on 24 August 13, 2008. Further, the appellant had been given ample 25 opportunity to argue the merits of his claim, including an 26 opportunity to depose bank representatives and conduct other 27 discovery. Secondly, the appellant cited 11 U.S.C. § 523(a) for 28 the proposition that the claim was not subject to discharge. That

-8- 1 provision is only applicable in cases involving an “individual 2 debtor” and thus inapplicable to the appellee. The failure of the 3 appellee to commence an adversary proceeding to determine that the 4 claim was not subject to discharge did not deprive the appellant 5 of his due process rights. Lastly, an objection to a proof of 6 claim is a contested matter under FRBP 9014. In re Garvida, 7 347 B.R. 697, 704 (9th Cir. BAP 2006). Appellee also moved for 8 summary judgment as to the damage claim and sought an award of 9 attorneys’ fees. The bankruptcy court concluded that no claim 10 existed against appellee pursuant to state law. No adversary 11 proceeding was necessary, as the court concluded that no claim 12 existed, not that an existing claim was or was not subject to 13 discharge. 14 Regarding appellant’s objections to the award and amount of 15 attorneys’ fees, appellant did not include in the record a 16 transcript of the July 30, 2010 hearing at which time the award was 17 made. The order states that fees and costs are awarded based upon 18 the original settlement agreement between the parties and pursuant 19 to ARS § 12-341 as appellee was the prevailing party. This court 20 generally limits its review to examination of the record on appeal 21 and appellant has the duty to provide an adequate record. 22 Appellant has not done so regarding the award of attorneys’ fees 23 and their calculation. Failure to provide a trial transcript 24 precludes review of alleged errors. Syncom Capital Corp. v. Wade, 25 924 F.2d 167, 169 (9th Cir. 1991). 26 VI. CONCLUSION 27 A. The order denying a new trial is AFFIRMED as the parties 28 failed to argue the merits of the entry of that order and thus

-9- 1 waived issues relating to that motion. Alternatively, the record 2 shows that the bankruptcy court applied the correct legal standard 3 and based its ruling on facts which adequately supported its 4 decision. Therefore, the bankruptcy court did not abuse its 5 discretion in denying a new trial. 6 B. The granting of the appellee’s motion for summary 7 judgment is AFFIRMED. The bankruptcy court applied the correct 8 legal standard for consideration of summary judgment motions. The 9 appellant was not denied due process and the undisputed facts 10 support the bankruptcy court’s conclusions. Arizona law discharged 11 the appellee from any obligation to appellant upon issuance and 12 delivery of the cashier’s check. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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