In re: Gloria Dean Wells

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: October 10, 2017
• Docket: CC-16-1319-LSTa
• Status: Unpublished

Opinion

FILED OCT 10 2017 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 OF THE NINTH CIRCUIT

3 UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT 4 5 In re: ) BAP No. CC-16-1319-LSTa ) 6 GLORIA DEAN WELLS, ) Bk. No. 2:15-bk-27834-BB ) 7 Debtors. ) ) 8 MICHAEL GRIFFITH, ) ) 9 Appellant, ) ) 10 v. ) M E M O R A N D U M* ) 11 GLORIA DEAN WELLS, ) ) 12 Appellee. ) ) 13 Argued and Submitted on September 29, 2017 14 at Pasadena, California 15 Filed - October 10, 2017 16 Appeal from the United States Bankruptcy Court for the Central District of California 17 Honorable Sheri Bluebond, Chief Bankruptcy Judge, Presiding 18 _________________________ 19 Appearances: Appellant Michael Griffith appeared pro se; Barry R. Wegman argued for Appellee. 20 _________________________ 21 Before: LAFFERTY, SPRAKER, and TAYLOR, Bankruptcy Judges. 22 23 24 25 26 * This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. 28 See 9th Cir. BAP Rule 8024-1. 1 INTRODUCTION 2 After an evidentiary hearing to determine the fair market 3 value of Debtor’s residence for purposes of avoiding Appellant 4 Michael Griffith’s judgment lien, the bankruptcy court found that 5 the residence was worth $360,000 as of the petition date. On the 6 basis of that valuation, and after deducting consensual liens and 7 Debtor’s homestead exemption, the court found that Mr. Griffith’s 8 lien impaired Debtor’s homestead exemption and entered an order 9 avoiding the lien. On appeal, Mr. Griffith argues that he was 10 denied due process and challenges the bankruptcy court’s 11 valuation finding. Having thoroughly reviewed the record, we 12 find no denial of due process or clear error in the bankruptcy 13 court’s valuation finding. Accordingly, we AFFIRM. 14 FACTS 15 Debtor Gloria Dean Wells filed her chapter 71 petition on 16 November 20, 2015. On Schedule A, Debtor listed her residence on 17 Cherrywood Avenue in Los Angeles (the “Property”) with a value of 18 $325,000. On Schedule D, Debtor listed a consensual lien in 19 favor of Chase Bank in the amount of $250,313.99. And on 20 Schedule C, Debtor claimed a homestead exemption of $175,000 21 under Cal. Civ. Proc. Code § 704.730(a)(3). 22 About a month later, Debtor filed a motion under 23 § 522(f)(1)(A) (the “Motion”) to avoid Mr. Griffith’s judgment 24 25 1 26 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, all 27 “Rule” references are to the Federal Rules of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal 28 Rules of Civil Procedure.

-2- 1 lien in the amount of $40,527.14.2 Debtor’s declaration in 2 support of the Motion contained a calculation showing that 3 deducting the consensual lien and homestead exemption from the 4 fair market value of $325,000 left no available non-exempt equity 5 to secure Mr. Griffith’s judgment lien. As evidence of value, 6 Debtor attached to her motion the declaration of appraiser Todd 7 Turner, which authenticated a May 26, 2015 appraisal establishing 8 a fair market value of $325,000. 9 Mr. Griffith filed an opposition, arguing that the May 26 10 appraisal was outdated and requesting that a “third party 11 appraisal” be performed before the court ruled on the motion. 12 Mr. Griffith attached to his opposition a comparative market 13 analysis dated January 7, 2016, which estimated the value of the 14 Property at between $617,000 and $645,000. 15 At the initial hearing, the bankruptcy court, after noting 16 that Mr. Griffith had initially been served at the wrong address, 17 gave him additional time to hire an appraiser to value the 18 Property. The court continued the matter for a status 19 conference. Mr. Griffith thereafter filed a declaration and an 20 appraisal performed by Lawrence Walsh dated April 13, 2016, which 21 reflected a fair market value of $505,000. At the subsequent 22 status conference, the bankruptcy court pointed out to the 23 parties that neither’s appraisal was adequate for the court to 24 determine the fair market value of the Property as of the 25 26 2 Debtor filed three additional motions to avoid judgment 27 liens against her residence. None of those lienholders objected to the requested relief, and the court entered orders avoiding 28 those liens.

-3- 1 petition date of November 20, 2015. The court continued the 2 matter again to give the parties time either to hire an agreed- 3 upon independent appraiser or to have their respective appraisers 4 adjust their numbers to reflect the value as of the petition 5 date. 6 Thereafter, Debtor filed a new declaration from Mr. Turner 7 and a new appraisal as of the petition date, which opined that 8 the Property’s value as of that date was $360,000. Mr. Griffith 9 also filed an updated appraisal, supported by Mr. Walsh’s 10 declaration, reflecting a petition date value of $470,000. 11 The bankruptcy court set an evidentiary hearing. At that 12 hearing, both appraisers testified as to their credentials and 13 methodology and were examined by Debtor’s counsel, Mr. Griffith, 14 and the court. Both appraisers testified that the Property 15 needed repairs as a result of deferred maintenance. The 16 difference in their respective appraisals appeared to be 17 primarily due to differences in the deductions made for that 18 deferred maintenance. Mr. Turner concluded, based upon a May 19 2015 inspection, that the Property was in “fair to poor” 20 condition and estimated a cost of $50,000-$100,000 for needed 21 repairs. Mr. Walsh, on the other hand, based on an inspection 22 performed on June 23, 2016, concluded that the Property was in 23 average to fair condition and estimated costs to repair totaling 24 $8,000. Mr. Walsh testified that he did not see all of the 25 damage noted by Mr. Turner and displayed in the color photographs 26 included in Mr. Turner’s appraisal: termite damage, dry rot, 27 holes in the ceiling, damage to the kitchen, and leaking pipes. 28 At the conclusion of testimony, the bankruptcy court found

-4- 1 that the evidentiary record was sufficient to support 2 Mr. Turner’s appraisal and that the Property was worth $360,000 3 as of the petition date. On the basis of that value, the 4 bankruptcy court concluded that it was appropriate to avoid 5 Mr. Griffith’s judicial lien against the Property as impairing 6 Debtor’s homestead exemption. 7 Mr. Griffith timely appealed. 8 JURISDICTION 9 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 10 §§ 1334 and 157(b)(2)(K). We have jurisdiction under 28 U.S.C. 11 § 158. 12 ISSUES 13 Whether the bankruptcy court denied Mr. Griffith due 14 process. 15 Whether the bankruptcy court erred in granting Debtor’s 16 motion to avoid Mr. Griffith’s judgment lien under 17 § 522(f)(1)(A). 18 STANDARDS OF REVIEW 19 Whether an appellant’s due process rights were violated is a 20 question of law that we review de novo. DeLuca v. Seare 21 (In re Seare), 515 B.R. 599, 615 (9th Cir. BAP 2014); see HSBC 22 Bank USA, Nat’l Ass’n v. Blendheim (In re Blendheim), 803 F.3d 23 477, 497 (9th Cir. 2015) (“Whether adequate notice has been given 24 for the purposes of due process is a mixed question of law and 25 fact that we review de novo.”). 26 A fair market value determination is a finding of fact that 27 we review for clear error. Arnold & Baker Farms v. United States 28 (In re Arnold & Baker Farms), 85 F.3d 1415, 1421 (9th Cir. 1996).

-5- 1 A factual finding is clearly erroneous only if it is illogical, 2 implausible or without support in the record. Retz v. Samson 3 (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010). Where there 4 are two permissible views of the evidence, the factfinder’s 5 choice between them cannot be clearly erroneous. Anderson v. 6 City of Bessemer City, N.C., 470 U.S. 564, 574 (1985). 7 DISCUSSION 8 Mr. Griffith argues that (i) the bankruptcy court should 9 have dismissed Debtor’s case for failure to serve notice of the 10 commencement of the case on Mr. Griffith at his correct address; 11 (ii) the court should have denied Debtor’s Motion for the same 12 reason; (iii) the court should have denied the Motion because 13 Debtor’s appraisal was outdated; (iv) the court erred in not 14 permitting Debtor to present evidence showing that property 15 values in the relevant neighborhood were increasing; and (v) the 16 court erred in “allowing” a $125,000 adjustment to the value of 17 the Property for costs of rehabilitation. 18 We make reasonable allowance for pro se litigants and 19 construe their papers liberally. Ozenne v. Bendon 20 (In re Ozenne), 337 B.R. 214, 218 (9th Cir. BAP 2006). At the 21 same time, we do not ordinarily consider arguments not raised in 22 the trial court sufficiently for the court to have ruled on it. 23 O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d 24 955, 957 (9th Cir. 1989). In balancing these principles, we 25 interpret Mr. Griffith’s arguments as falling into two categories 26 and will address both of them: first, that Mr. Griffith was 27 denied due process; and second, that the bankruptcy court clearly 28 erred in finding that the Property was worth $360,000.

-6- 1 A. The bankruptcy court did not deny Mr. Griffith due process. 2 Generally speaking, a party must receive sufficient notice 3 of any potentially adverse action and the opportunity to be 4 heard. See Tennant v. Rojas (In re Tennant), 318 B.R. 860, 870 5 (9th Cir. BAP 2004). Here, although the Motion and supporting 6 documents were initially served on Mr. Griffith at an incorrect 7 address, Mr. Griffith learned of the bankruptcy filing and 8 Debtor’s Motion, filed an opposition to the Motion, and 9 thereafter actively participated in the proceedings. The record 10 does not reflect that he ever raised inadequate notice as a 11 ground for either dismissal of the bankruptcy case or denial of 12 the Motion. 13 1. Improper notice of bankruptcy filing 14 Mr. Griffith argues that the bankruptcy court should have 15 dismissed Debtor’s bankruptcy case because Debtor had listed the 16 wrong address for Mr. Griffith on the master mailing matrix.3 17 Mr. Griffith alleges that because of this error, he was not 18 notified timely of the § 341 meeting of creditors or the 19 pertinent deadlines and was thus “unable to exercise his 20 fundamental rights in regard to deadlines, timing to seek legal 21 advice, raise objections and . . . obtain competent counsel.” 22 Mr. Griffith states that he learned of the bankruptcy filing in 23 early January 2016. 24 The only matter before us in this appeal is the bankruptcy 25 court’s ruling on Debtor’s Motion. As noted, Mr. Griffith did 26 27 3 As pointed out by Debtor, the address used for service on 28 Mr. Griffith was the address listed on the abstract of judgment.

-7- 1 not seek relief in the bankruptcy court on grounds of inadequate 2 notice of the bankruptcy case. If Debtor believed he was 3 prejudiced by the lack of this notice, he should have raised the 4 issue before the bankruptcy court. Because he failed to do so, 5 we cannot consider this due process argument on appeal.4 6 2. Improper notice of the Motion 7 Mr. Griffith also argues that because the Motion was 8 initially served at an incorrect address the bankruptcy court 9 should have denied it; he contends that the bankruptcy court 10 lacked personal jurisdiction over him. Again, Mr. Griffith did 11 not raise this issue in the bankruptcy court, and a general 12 appearance or responsive pleading that fails to dispute personal 13 jurisdiction waives any defect in service. Benny v. Pipes, 14 799 F.2d 489, 492 (9th Cir. 1986), opinion amended, 807 F.2d 1514 15 (9th Cir. 1987) (citing Civil Rule 12(h), applicable in 16 bankruptcy via Rule 7012). A defendant may also waive the 17 defense as a result of his course of conduct during litigation. 18 Peterson v. Highland Music, Inc., 140 F.3d 1313, 1318 (9th Cir. 19 1998). Here, Mr. Griffith filed an opposition and appeared and 20 participated in all of the hearings on the Motion without raising 21 the issue of personal jurisdiction; he thus waived the issue. 22 As for due process generally, at the initial hearing, the 23 bankruptcy court acknowledged that Mr. Griffith had not been 24 served at the correct address and continued the hearing to give 25 26 4 Mr. Griffith’s reply brief in this appeal focuses almost 27 entirely on an argument that Debtor filed her bankruptcy in bad faith, an issue that was never raised before the bankruptcy 28 court.

-8- 1 him time to hire an appraiser. The court continued the hearing 2 two more times to permit the parties to obtain appropriately 3 dated appraisals, after which the court scheduled an evidentiary 4 hearing. At that hearing, Mr. Griffith presented evidence and 5 examined the witnesses. Accordingly, even if we consider the 6 merits of his relevant due process argument, we cannot conclude 7 that Mr. Griffith was deprived of a meaningful opportunity to be 8 heard on the issues relating to the Motion; he was not denied due 9 process or otherwise prejudiced by any error in service. See 10 Matthews v. Eldridge, 424 U.S. 319, 333 (1976) (fundamental 11 requirement of due process is the opportunity to be heard at a 12 meaningful time and in a meaningful manner). 13 B. The bankruptcy court did not clearly err in finding that Debtor’s Property was worth $360,000 and consequently 14 granting the Motion. 15 1. The bankruptcy court did not abuse its discretion in not denying the Motion due to Debtor’s submission of an 16 outdated appraisal. 17 At the initial status conference on the Motion, the court 18 set a deadline for Mr. Griffith to file an appraisal of the 19 Property and a further status conference. Mr. Griffith was 20 unable to meet the deadline, and two days before it expired, he 21 moved to extend it. He filed his appraisal a few days before the 22 continued status conference, and, at that hearing, the bankruptcy 23 court stated that it intended to continue the hearing to give the 24 court and Debtor’s counsel time to review the late-filed 25 appraisal. And noting that neither Debtor’s nor Mr. Griffith’s 26 appraisal was dated as of the petition date, the court instructed 27 both parties to obtain appraisals as of that date with the hope 28 that the appraisers or the parties could reach an agreement on

-9- 1 value. The court then commented: “But as we sit here today, I 2 don’t have a number from either party as of the operative date. 3 So . . . burden of proof is on the debtor[.] [A]s the . . . 4 evidentiary record is now, debtor loses because I don’t know what 5 the value was as of November 20.” 6 Mr. Griffith agreed to the continuance without objection. 7 On appeal, however, Mr. Griffith argues that the bankruptcy court 8 abused its discretion in failing to deny the Motion based on 9 Debtor’s submission of an outdated appraisal. Again, we need not 10 consider arguments not raised in the trial court. In any event, 11 the decision to continue the matter was within the sound 12 discretion of the bankruptcy court. See Khachikyan v. Hahn 13 (In re Khachikyan), 335 B.R. 121, 125 (9th Cir. BAP 2005) 14 (decisions regarding continuances are reviewed for abuse of 15 discretion). Mr. Griffith has not persuaded us that the court 16 abused this discretion. 17 2. The bankruptcy court did not err in denying Mr. Griffith’s request to present exhibits to establish 18 that Debtor’s appraiser relied on comparable properties outside the relevant area. 19 20 Mr. Griffith argues that the bankruptcy court erred by 21 denying him the opportunity to present certain exhibits at the 22 evidentiary hearing. Mr. Griffith contends that the exhibits 23 showed that property values in the Leimert Park neighborhood, 24 where the Property was located, were increasing but that Turner’s 25 appraisal had used one comparable property outside that 26 neighborhood in determining the value of the Property. 27 At the beginning of the evidentiary hearing, Mr. Griffith 28 asked the court for time to “finish up a few exhibits.” The

-10- 1 court refused Mr. Griffith’s request, noting that the only 2 exhibits that were to be presented were the appraisals. The 3 court had so stated in its tentative ruling for the June 29 4 status conference, and Mr. Griffith had not objected or asked to 5 present additional evidence. Later, the court permitted 6 Mr. Griffith to recall Mr. Walsh to the witness stand to ask 7 about the locations of the comparable properties selected by 8 Mr. Turner in his appraisal. Mr. Walsh initially testified that 9 Mr. Turner’s appraisal included two comparable properties that 10 were in “inferior” neighborhoods. Further questioning, however, 11 revealed that Mr. Walsh’s statement referred to Mr. Turner’s 12 initial appraisal rather than the second appraisal dated 13 November 20, 2015. As to the latter appraisal, Mr. Walsh 14 testified that all of the comparables used by Mr. Walsh were 15 located in the Leimert Park neighborhood. 16 On appeal, Mr. Griffith contends that during Mr. Walsh’s 17 testimony, when the court asked Mr. Walsh whether any of the 18 comparables in Mr. Turner’s second appraisal were outside the 19 Leimert Park area, the court had covered with her thumb the 20 comparable property that was 1.4 miles outside of the Leimert 21 Park neighborhood. The record does not reflect anything to 22 support Mr. Griffith’s assertion, but even if this statement is 23 accurate, Mr. Griffith did not object at the hearing. Moreover, 24 after Mr. Walsh stepped down from the witness stand, the court 25 recalled Mr. Turner for voir dire as to his opinion regarding 26 market appreciation in the relevant area. Mr. Turner testified 27 that while examination of a wide range of comparables in the 28 Leimert Park neighborhood might show appreciation due to

-11- 1 investors “flipping” some of the homes, overall he believed that 2 the market for homes comparable to the Property was generally 3 stable during the relevant period. 4 To the extent Mr. Griffith’s argument is that the bankruptcy 5 court clearly erred in accepting Mr. Turner’s valuation of the 6 Property, Mr. Griffith has not demonstrated that the bankruptcy 7 court’s valuation finding is illogical, implausible, or without 8 support in the record. To the contrary, Mr. Turner’s appraisal 9 and his explanations for how he reached his conclusions were 10 logical and plausible. Under these circumstances, we cannot 11 reverse the bankruptcy court’s factual finding even if we would 12 have decided the matter differently. See United States v. 13 Hinkson, 585 F.3d 1247, 1261 (9th Cir. 2009) (en banc) (“[T]he 14 scope of our review limits us to determining whether the trial 15 court reached a decision that falls within any of the permissible 16 choices the court could have made.”). 17 3. The bankruptcy court did not err in accepting Mr. Turner’s adjustment to the Property’s value. 18 19 Mr. Griffith argues that Mr. Turner’s $125,000 deduction 20 from the market value of the Property for deferred maintenance 21 was excessive. We do not find this argument persuasive. First, 22 the $125,000 deduction was not entirely for deferred maintenance: 23 Mr. Turner testified that he had taken a deduction for repairs, 24 but he also took into account the quality of construction, 25 styling, and details of the comparable properties in arriving at 26 his final figure. And second, as discussed above, we are not at 27 liberty to second guess the bankruptcy court’s factual findings 28 unless they are illogical, implausible, or without support in the

-12- 1 record. Mr. Turner’s valuation is supported by the evidence, and 2 Mr. Griffith has not convinced us that it was illogical or 3 implausible. Accordingly, we find no error in the bankruptcy 4 court’s acceptance of Mr. Turner’s opinion of value. 5 CONCLUSION 6 For the reasons discussed above, we AFFIRM. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

-13-