In re: John Badea

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: March 10, 2017
• Docket: NV-16-1115-LJuKu
• Status: Unpublished

Opinion

FILED MAR 10 2017 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY.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. NV-16-1115-LJuKu ) 6 JOHN BADEA, ) Bk. No. 2:15-bk-10638-LED ) 7 Debtor. ) Adv. No. 2:15-ap-01035-LED ______________________________) 8 ) JOHN BADEA, ) 9 ) Appellant, ) 10 ) v. ) MEMORANDUM* 11 ) EMIL BOTEZATU; GABRIELA ) 12 BOTEZATU, ) ) 13 Appellees. ) ______________________________) 14 Argued and Submitted on February 24, 2017 15 at Las Vegas, Nevada 16 Filed - March 10, 2017 17 Appeal from the United States Bankruptcy Court for the District of Nevada 18 Honorable Laurel E. Davis, Bankruptcy Judge, Presiding 19 _________________________ 20 Appearances: Appellant John Badea argued pro se; Michael R. Mushkin argued for appellees Emil and Gabriela 21 Botezatu. _________________________ 22 Before: LAFFERTY, JURY, and KURTZ, Bankruptcy Judges. 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 John Badea filed his chapter 71 petition, creditors 3 Emil and Gabriela Botezatu filed a complaint seeking denial of 4 Badea’s discharge under § 727. After a trial, the bankruptcy 5 court entered a judgment denying discharge (the “Judgment”) based 6 upon Badea’s pre-petition transfer of property with intent to 7 hinder, delay or defraud a creditor and for false oaths in his 8 schedules and statements of financial affairs. 9 Badea moved for reconsideration, arguing that the bankruptcy 10 court had erroneously interpreted the evidence presented in 11 finding that he had acted with fraudulent intent. After a 12 hearing, the bankruptcy court denied Badea’s motion. Badea 13 timely appealed. Because Badea did not provide an adequate 14 record to permit our review of the Judgment, and because he did 15 not demonstrate any ground for reconsideration, we AFFIRM. 16 FACTS2 17 In October 2007 the District Court for Clark County, Nevada, 18 entered a judgment against Badea and in favor of the Botezatus in 19 the amount of $47,401.29 for attorneys’ fees and costs, plus 20 $2,500 for sanctions, plus interest. 21 In January 2010, Badea purchased a condominium in Las Vegas 22 (the “Silverado Ranch Property”) for $52,000. On February 24, 23 24 1 Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, 25 “Rule” references are to the Federal Rules of Bankruptcy 26 Procedure, and “Civil Rule” references are to the Federal Rules of Civil Procedure. 27 2 The facts are taken primarily from the bankruptcy court’s 28 findings and conclusions.

-2- 1 2014, Badea transferred the Silverado Ranch Property to his 2 brother, George Badea, by quit claim deed. The deed noted that 3 no consideration was given in exchange for the transfer. 4 Less than a year later, on February 12, 2015, Badea filed a 5 petition for relief under chapter 7. At the initial meeting of 6 creditors, several problems with Badea’s schedules came to light. 7 Badea failed to list his second motor vehicle or his interest in 8 a family home in Romania; misstated the date on which he 9 transferred the Silverado Ranch Property to George as “mid-2013”; 10 listed zero income on Schedule I and $2,579 in monthly expenses 11 on Schedule J; and listed a 2005 Mercedes Benz 350 on Schedule B 12 with a value of zero and a monthly car payment of $800 on 13 Schedule J but did not list any secured creditor or lessor for 14 that vehicle. Although the chapter 7 trustee sent a written 15 request to Badea to amend his schedules and statements, no 16 amendments were ever filed that corrected these issues. 17 The Botezatus filed an adversary proceeding seeking denial 18 of Badea’s discharge pursuant to § 727; the matter was tried on 19 December 4, 2015. As discussed below, Badea did not provide a 20 copy of the trial transcript; thus, we do not have a record of 21 the testimony or evidence presented at trial. However, the 22 bankruptcy court noted in its findings and conclusions that it 23 had declined to admit Badea’s Trial Exhibit B entitled “Agreement 24 and Power of Attorney,” which purportedly memorialized an 25 agreement for George to loan Badea $50,000 in August 2009 to 26 purchase a condominium in Las Vegas. The bankruptcy court did 27 not admit this document because Badea had not laid a proper 28 evidentiary foundation for the agreement and for other concerns

-3- 1 related to the agreement’s authenticity. 2 In December 2015 the bankruptcy court orally ruled on the 3 matters presented at trial, finding for the Botezatus on their 4 claims under §§ 727(a)(2)(A) and (a)(4); the bankruptcy court 5 thereafter entered the Judgment. 6 Badea timely moved for reconsideration, arguing that the 7 bankruptcy court had erred in finding that he intended to defraud 8 the Botezatus and that his failure to amend the schedules was 9 fraudulent. After a hearing, the bankruptcy court denied the 10 motion for reconsideration. Badea timely appealed. 11 JURISDICTION 12 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 13 § 1334 and 157(b)(2)(J). We have jurisdiction under 28 U.S.C. 14 § 158. 15 ISSUES 16 1. Whether the Panel has jurisdiction to review the 17 Judgment denying discharge. 18 2. Whether the Panel should affirm the bankruptcy court’s 19 Judgment denying discharge under §§ 727(a)(2)(A) and (a)(4) based 20 on Badea’s failure to provide an adequate record. 21 3. Whether the bankruptcy court abused its discretion in 22 denying Badea’s motion for reconsideration. 23 STANDARDS OF REVIEW 24 We review the bankruptcy court’s findings of fact for clear 25 error and its conclusions of law de novo. Carrillo v. Su 26 (In re Su), 290 F.3d 1140, 1142 (9th Cir. 2002). If an appellant 27 challenges a finding of fact, it is his responsibility to provide 28 an adequate record to show clear error. Massoud v. Ernie

-4- 1 Goldberger & Co. (In re Massoud), 248 B.R. 160, 163 (9th Cir. BAP 2 2000). 3 We review the bankruptcy court’s denial of a motion to alter 4 or amend a judgment for abuse of discretion. Ta Chong Bank Ltd. 5 v. Hitachi High Techs. Am., Inc., 610 F.3d 1063, 1066 (9th Cir. 6 2010). Under the abuse of discretion standard, we “determine de 7 novo whether the [bankruptcy] court identified the correct legal 8 rule to apply to the relief requested.” United States v. 9 Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009). If the 10 bankruptcy court identified the correct legal rule, we then 11 determine under the clearly erroneous standard whether its 12 factual findings and its application of the facts to the relevant 13 law were: “(1) illogical, (2) implausible, or (3) without support 14 in inferences that may be drawn from the facts in the record.” 15 Id. 16 DISCUSSION 17 A. The Panel has jurisdiction over the appeal of the Judgment 18 denying discharge, and Appellees will not be prejudiced by 19 our consideration of that matter on the merits. 20 The Botezatus argue in their answering brief that we do not 21 have jurisdiction to consider Badea’s appeal of the Judgment 22 because the notice of appeal references and attaches only the 23 order denying reconsideration. The Botezatus reason that there 24 was no timely notice of appeal filed from the Judgment, and thus 25 this Panel lacks jurisdiction to consider the appeal of the 26 Judgment. 27 The Botezatus misconstrue the applicable rules. As an 28 initial matter, Rule 8002 provides that, if a party timely moves

-5- 1 to alter or amend a judgment under Rule 9023, then the 14-day 2 deadline under Rule 8002 for filing an appeal runs from the entry 3 of the order disposing of the last such motion outstanding. We 4 consider a motion for reconsideration filed within 14 days of a 5 judgment to be a timely motion to “alter or amend” within the 6 meaning of Rule 8002(b). Shapiro ex rel. Shapiro v. Paradise 7 Valley Unified Sch. Dist., 374 F.3d 857, 863 (9th Cir. 2004). If 8 the motion is timely under Rule 9023, we have jurisdiction to 9 review both the underlying order and the order denying 10 reconsideration. Tennant v. Rojas (In re Tennant), 318 B.R. 860, 11 866 n.5 (9th Cir. 2004). 12 Here, the motion for reconsideration was filed less than 13 14 days after entry of the Judgment, and the notice of appeal was 14 filed less than 14 days after entry of the order denying 15 reconsideration. We thus have jurisdiction to review the 16 Judgment. 17 As for Badea’s failure to reference the Judgment in the 18 notice of appeal, Rule 8001(a) does not require the underlying 19 order or judgment to be attached to the notice of appeal. 20 Although 9th Cir. BAP R. 8003 does require such a designation, we 21 may depart from this local rule absent a showing of prejudice. 22 Wall Street Plaza, LLC v. JSJF Corp. (In re JSJF Corp.), 344 B.R. 23 94, 100 (9th Cir. BAP 2006), aff’d, 277 F. App’x 718 (9th Cir. 24 2008). When a party seeks to argue the merits of an underlying 25 order that does not appear on the notice of appeal, the reviewing 26 court will generally consider (1) whether the intent to appeal a 27 specific judgment is fairly inferred and (2) whether the appellee 28 will be prejudiced by the mistake. See Lolli v. County of

-6- 1 Orange, 351 F.3d 410, 414 (9th Cir. 2003) (interpreting Fed. R. 2 App. P. 3). 3 Intent to appeal a specific order can be “fairly inferred” 4 by the issues raised in the appellant’s opening brief. Id. 5 Here, the intent to appeal the Judgment denying discharge is 6 easily inferred from the substantial discussion of the Judgment 7 in Badea’s brief, which focuses entirely on the request for a 8 reversal of the denial of discharge and requests remand for 9 further proceedings. Badea also designated the transcript of the 10 bankruptcy court’s December 22, 2015 ruling on denial of 11 discharge as part of the record on appeal. Thus, Badea’s intent 12 to appeal the Judgment can be fairly inferred. 13 There can be no claim of prejudice if both parties have 14 briefed the issues in the underlying order. Id. at 415. The 15 Botezatus addressed Badea’s reasoning in their answering brief. 16 Therefore, they will not be prejudiced by our review of the 17 Judgment.3 18 B. We cannot find that the bankruptcy court clearly erred in 19 denying Badea’s discharge under §§ 727(a)(2)(A) or (a)(4) 20 because Badea has not provided an adequate record on appeal. 21 Sections 727(a)(2)(A) and (a)(4) both require a finding of 22 fraudulent intent. Section 727(a)(2)(A) provides, in relevant 23 part: 24 The court shall grant the debtor a discharge, unless . . . the debtor, with intent to hinder, delay, or 25 defraud a creditor or an officer of the estate charged 26 3 27 Moreover, Botezatus’ counsel conceded at oral argument that his clients were not prejudiced by Badea’s failure to attach 28 the Judgment to the Notice of Appeal.

-7- 1 with custody of property under this title, has transferred, removed, destroyed, mutilated, or 2 concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed . . . property of 3 the debtor, within one year before the date of the filing of the petition. 4 5 To succeed on a claim for denial of discharge under 6 § 727(a)(2)(A), the plaintiff must show by a preponderance of the 7 evidence (1) that a transfer or concealment took place within one 8 year before the filing of a bankruptcy petition, and (2) the 9 subjective intent of the debtor to hinder, delay or defraud a 10 creditor through the disposition of the property. Retz v. 11 Sampson (In re Retz), 606 F.3d 1189, 1200 (9th Cir. 2010). As 12 direct evidence is rarely available to determine fraudulent 13 intent, certain “badges of fraud” may support such a finding: 14 (1) a close relationship between the transferor and the transferee; (2) that the transfer was in anticipation 15 of a pending suit; (3) that the transferor Debtor was insolvent or in poor financial condition at the time; 16 (4) that all or substantially all of the Debtor's property was transferred; (5) that the transfer so 17 completely depleted the Debtor’s assets that the creditor has been hindered or delayed in recovering any 18 part of the judgment; and (6) that the Debtor received inadequate consideration for the transfer. 19 20 Id. 21 Section 727(a)(4)(A) provides in relevant part: “The court 22 shall grant the debtor a discharge, unless . . . the debtor 23 knowingly and fraudulently, in or in connection with the case[,] 24 made a false oath or account.” To prevail on a claim under this 25 subsection, the plaintiff must show by a preponderance of the 26 evidence that (1) the debtor made a false oath in connection to 27 the case, (2) that related to a material fact, (3) made 28 knowingly, (4) and fraudulently. In re Retz, 606 F.3d at 1197.

-8- 1 On appeal, Badea does not dispute that he transferred the 2 Silverado Ranch Property to his brother within a year of filing 3 his bankruptcy petition or that his schedules and statement of 4 financial affairs contained material misstatements. Badea 5 disputes only the bankruptcy court’s finding of fraudulent 6 intent, which was based on the following badges of fraud: there 7 was a close relationship between transferor and transferee, the 8 transfer was made to avoid collection activity on the Botezatus’ 9 renewed judgment, and Badea did not receive consideration for the 10 transfer of the Silverado Ranch Property. Badea disputes these 11 underlying factual findings. 12 However, under 9th Cir. BAP R. 8009-1: 13 The excerpts of record shall include the transcripts necessary for adequate review in light of the standard 14 of review to be applied to the issues before the Panel. The Panel is required to consider only those portions 15 of the transcript included in the excerpts of the record. 16 17 When a complete record is not provided, we are entitled to 18 presume that the omitted portions do not further the appellant’s 19 arguments. Gionis v. Wayne (In re Gionis), 170 B.R. 675, 680-81 20 (9th Cir. BAP 1994), aff’d, 92 F.3d 1192 (9th Cir. 1996). 21 “[F]ailure to provide a sufficient record to support informed 22 review of trial-court determinations may, but need not, lead 23 either to dismissal of the appeal or to affirmance for inability 24 to demonstrate error.” Kyle v. Dye (In re Kyle), 317 B.R. 390, 25 393 (9th Cir. BAP 2004), aff’d, 170 F. App’x 457 (9th Cir. 2006). 26 As noted, Badea failed to provide a transcript of the trial 27 testimony in his excerpts of record, and no trial transcript was 28 filed with the bankruptcy court. To find clear error, we must be

-9- 1 able to review the entire record. See Anderson v. City of 2 Bessemer City, N.C., 470 U.S. 564, 573 (1985) (“A finding is 3 clearly erroneous when although there is evidence to support it, 4 the reviewing court on the entire evidence is left with the 5 definite and firm conviction that a mistake has been committed.”) 6 (emphasis added) (citation omitted). Because Badea did not 7 include the complete transcript necessary for us to review the 8 “entire evidence” for clear error, we must affirm the Judgment 9 denying discharge. See Morrissey v. Stuteville 10 (In re Morrissey), 349 F.3d 1187, 1191 (9th Cir. 2003) (affirming 11 this Panel’s dismissal of appeal based in part on the inadequacy 12 of the appellate record); In re Kyle, 317 B.R. at 393. 13 C. The bankruptcy court did not abuse its discretion in denying 14 Badea’s motion for reconsideration. 15 We construe a timely motion for reconsideration as a motion 16 to alter or amend judgment under Civil Rule 59(e), applicable in 17 bankruptcy via Rule 9023. Rule 59(e) allows for reconsideration 18 if the bankruptcy court (1) is presented with newly discovered 19 evidence, (2) committed clear error or the initial decision was 20 manifestly unjust, or (3) if there is an intervening change in 21 controlling law. Kona Enters., Inc. v. Estate of Bishop, 22 229 F.3d 877, 890 (9th Cir. 2000). 23 In his motion for reconsideration, Badea argued that the 24 bankruptcy court’s fraud finding was clearly erroneous. However, 25 he pointed to no newly discovered evidence, clear error, manifest 26 injustice, or intervening change in controlling law. Badea 27 simply disagreed with the inferences drawn by the bankruptcy 28 court. The bankruptcy court denied the motion because Badea had

-10- 1 not demonstrated any of the required grounds for reconsideration. 2 On appeal, Badea focused solely on the bankruptcy court’s factual 3 findings supporting the § 727 Judgment and did not argue, much 4 less demonstrate, that he met the appropriate standard on 5 reconsideration or that the bankruptcy court abused its 6 discretion in denying that motion. 7 D. Appellees’ request for fees and costs is denied for failure 8 to file the request in a separate motion. 9 In their brief, the Botezatus requested fees and costs under 10 Fed. R. App. P. 38 for filing a frivolous appeal. In bankruptcy 11 appeals, the relevant rule is Rule 8020, which provides: 12 If the district court or BAP determines that an appeal is frivolous, it may, after a separately filed motion 13 or notice from the court and reasonable opportunity to respond, award just damages and single or double costs 14 to the appellee. 15 Because the Botezatus did not make their request in a 16 separately filed motion, we must deny it. See Nghiem v. Ghazvini 17 (In re Nghiem), 264 B.R. 557, 560 n.4 (9th Cir. BAP 2001). 18 CONCLUSION 19 Badea failed to provide an adequate record to enable review 20 of the bankruptcy court’s finding of fraudulent intent, and he 21 has not shown that the bankruptcy court abused its discretion in 22 denying Badea’s motion for reconsideration. Accordingly, we 23 AFFIRM. 24 25 26 27 28

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