FILED JUL 15 2016 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY.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. CC-15-1344-FKiKu ) 6 LYDIA ONG SANDERS, ) Bk. No. 8:15-bk-14615-TA ) 7 Debtor. ) _____________________________ ) 8 ) LYDIA ONG SANDERS, ) 9 ) Appellant, ) 10 ) v. ) MEMORANDUM* 11 ) UNITED STATES TRUSTEE,** ) 12 ) Appellee. ) 13 ______________________________) 14 Argued and Submitted on June 23, 2016 at Pasadena, California*** 15 Filed – July 15, 2016 16 Appeal from the United States Bankruptcy Court 17 for the Central District of California 18 Honorable Theodor C. Albert, Bankruptcy Judge, Presiding 19 Appearances: Richard Lawrence Antognini argued for Appellant 20 Lydia Ong Sanders. 21 22 * This disposition is not appropriate for publication. 23 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 24 9th Cir. BAP Rule 8024-1. 25 ** The United States Trustee did not file an answering brief 26 or otherwise participate in this appeal. *** 27 Oral argument in this matter was consolidated with the appeal in Sanders v. Cohen (In re Sanders), BAP No. CC-15-1284- 28 FKiKu. 1 Before: FARIS, KIRSCHER, and KURTZ, Bankruptcy Judges. 2 INTRODUCTION 3 Appellant/chapter 111 debtor Lydia Ong Sanders appeals the 4 bankruptcy court’s summary dismissal of her bankruptcy case at 5 the time she filed the petition. The court did so without notice 6 or an opportunity for a hearing, based solely on the fact that 7 she and her husband had recently filed numerous bankruptcy 8 petitions. We find that the bankruptcy court deprived 9 Mrs. Sanders of due process. Accordingly, we VACATE the 10 dismissal order and REMAND this case to the bankruptcy court. 11 FACTUAL BACKGROUND2 12 Mrs. Sanders and her husband, Marshall Samuel Sanders, have 13 initiated a combined total of nine bankruptcy petitions since 14 2010. Mrs. Sanders has filed four petitions in the Central 15 District of California, including the petition from which this 16 appeal arises.3 17 Prior to the instant appeal, Mrs. Sanders most recently 18 filed a chapter 11 bankruptcy petition on October 29, 2014. That 19 case was dismissed on November 19, 2014 for failure to file her 20 21 1 Unless specified otherwise, all chapter and section 22 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. 2 23 We have exercised our discretion to review the bankruptcy court’s docket, as appropriate. See Woods & Erickson, LLP v. 24 Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008). 25 3 26 Mrs. Sanders filed a chapter 7 case in June 2010 and received a discharge in September 2010; she filed a chapter 13 27 case in December 2013, which was dismissed in March 2014 with a 180-day bar on refiling; and she filed a chapter 11 case in 28 October 2014, which was dismissed in November 2014.
2 1 schedules, statements, or a plan. The court did not impose any 2 bar against refiling a bankruptcy petition. 3 On September 22, 2015, Mrs. Sanders again attempted to file 4 a chapter 11 petition. Mrs. Sanders’ filings included an 5 Application for Individuals to Pay the Filing Fee in 6 Installments. Her husband filed the documents in the clerk’s 7 office and waited to receive conformed copies. 8 The clerk returned to Mr. Sanders the Order Approving 9 Payment of Filing Fee in Installments with a handwritten note by 10 the bankruptcy judge stating, “denied - dismiss w. 180-day bar. 11 This debtor and husband have filed 9 cases in only about 4 12 years.” 13 The court entered the order and notice of dismissal on the 14 same day. Mrs. Sanders timely appealed. 15 JURISDICTION 16 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 17 §§ 1334 and 157(b)(1). We have jurisdiction under 28 U.S.C. 18 § 158. 19 ISSUE 20 Whether the bankruptcy court violated due process by 21 dismissing Mrs. Sanders’ petition without notice or a hearing.4 22 STANDARD OF REVIEW 23 “Whether an appellant’s due process rights were violated is 24 a question of law we review de novo.” DeLuca v. Seare 25 4 26 Although Mrs. Sanders’ statement of issues on appeal refers to violations of the Federal Rules of Bankruptcy Procedure 27 and the local rules, the argument in her opening brief focuses solely on the alleged denial of due process. As such, we only 28 address the due process issues raised therein.
3 1 (In re Seare), 515 B.R. 599, 615 (9th Cir. BAP 2014) (citing 2 Miller v. Cardinale (In re DeVille), 280 B.R. 483, 492 (9th Cir. 3 BAP 2002), aff’d, 361 F.3d 539 (9th Cir. 2004)); see also HSBC 4 Bank USA, Nat’l Ass’n v. Blendheim (In re Blendheim), 803 F.3d 5 477, 497 (9th Cir. 2015) (“Whether adequate notice has been given 6 for the purposes of due process is a mixed question of law and 7 fact that we review de novo.”). “De novo review requires that we 8 consider a matter anew, as if no decision had been made 9 previously.” Francis v. Wallace (In re Francis), 505 B.R. 914, 10 917 (9th Cir. BAP 2014) (citations omitted). 11 DISCUSSION 12 A. Due process generally requires notice and an opportunity to be heard. 13 14 The sole issue on appeal concerns whether the bankruptcy 15 court violated Mrs. Sanders’ due process rights by dismissing her 16 petition without notice or an opportunity to be heard. 17 Generally speaking, a court must give sufficient notice of 18 its intention to dismiss a case and the opportunity for 19 interested parties to be heard. See Tennant v. Rojas 20 (In re Tennant), 318 B.R. 860, 870 (9th Cir. BAP 2004) (“the 21 concept of procedural due process requires a notice and an 22 opportunity to be heard” (citing Muessel v. Pappalardo 23 (In re Muessel), 292 B.R. 712, 717 (1st Cir. BAP 2003))). 24 According to the United States Supreme Court: 25 An elementary and fundamental requirement of due process in any proceeding which is to be accorded 26 finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the 27 pendency of the action and to afford them an opportunity to present their objections. The notice 28 must be of such nature as reasonably to convey the
4 1 required information, . . . and it must afford a reasonable time for those interested to make their 2 appearance[.] 3 Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950) 4 (internal citations omitted).
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FILED JUL 15 2016 1 NOT FOR PUBLICATION 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. CC-15-1344-FKiKu ) 6 LYDIA ONG SANDERS, ) Bk. No. 8:15-bk-14615-TA ) 7 Debtor. ) _____________________________ ) 8 ) LYDIA ONG SANDERS, ) 9 ) Appellant, ) 10 ) v. ) MEMORANDUM* 11 ) UNITED STATES TRUSTEE,** ) 12 ) Appellee. ) 13 ______________________________) 14 Argued and Submitted on June 23, 2016 at Pasadena, California*** 15 Filed – July 15, 2016 16 Appeal from the United States Bankruptcy Court 17 for the Central District of California 18 Honorable Theodor C. Albert, Bankruptcy Judge, Presiding 19 Appearances: Richard Lawrence Antognini argued for Appellant 20 Lydia Ong Sanders. 21 22 * This disposition is not appropriate for publication. 23 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 24 9th Cir. BAP Rule 8024-1. 25 ** The United States Trustee did not file an answering brief 26 or otherwise participate in this appeal. *** 27 Oral argument in this matter was consolidated with the appeal in Sanders v. Cohen (In re Sanders), BAP No. CC-15-1284- 28 FKiKu. 1 Before: FARIS, KIRSCHER, and KURTZ, Bankruptcy Judges. 2 INTRODUCTION 3 Appellant/chapter 111 debtor Lydia Ong Sanders appeals the 4 bankruptcy court’s summary dismissal of her bankruptcy case at 5 the time she filed the petition. The court did so without notice 6 or an opportunity for a hearing, based solely on the fact that 7 she and her husband had recently filed numerous bankruptcy 8 petitions. We find that the bankruptcy court deprived 9 Mrs. Sanders of due process. Accordingly, we VACATE the 10 dismissal order and REMAND this case to the bankruptcy court. 11 FACTUAL BACKGROUND2 12 Mrs. Sanders and her husband, Marshall Samuel Sanders, have 13 initiated a combined total of nine bankruptcy petitions since 14 2010. Mrs. Sanders has filed four petitions in the Central 15 District of California, including the petition from which this 16 appeal arises.3 17 Prior to the instant appeal, Mrs. Sanders most recently 18 filed a chapter 11 bankruptcy petition on October 29, 2014. That 19 case was dismissed on November 19, 2014 for failure to file her 20 21 1 Unless specified otherwise, all chapter and section 22 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. 2 23 We have exercised our discretion to review the bankruptcy court’s docket, as appropriate. See Woods & Erickson, LLP v. 24 Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008). 25 3 26 Mrs. Sanders filed a chapter 7 case in June 2010 and received a discharge in September 2010; she filed a chapter 13 27 case in December 2013, which was dismissed in March 2014 with a 180-day bar on refiling; and she filed a chapter 11 case in 28 October 2014, which was dismissed in November 2014.
2 1 schedules, statements, or a plan. The court did not impose any 2 bar against refiling a bankruptcy petition. 3 On September 22, 2015, Mrs. Sanders again attempted to file 4 a chapter 11 petition. Mrs. Sanders’ filings included an 5 Application for Individuals to Pay the Filing Fee in 6 Installments. Her husband filed the documents in the clerk’s 7 office and waited to receive conformed copies. 8 The clerk returned to Mr. Sanders the Order Approving 9 Payment of Filing Fee in Installments with a handwritten note by 10 the bankruptcy judge stating, “denied - dismiss w. 180-day bar. 11 This debtor and husband have filed 9 cases in only about 4 12 years.” 13 The court entered the order and notice of dismissal on the 14 same day. Mrs. Sanders timely appealed. 15 JURISDICTION 16 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 17 §§ 1334 and 157(b)(1). We have jurisdiction under 28 U.S.C. 18 § 158. 19 ISSUE 20 Whether the bankruptcy court violated due process by 21 dismissing Mrs. Sanders’ petition without notice or a hearing.4 22 STANDARD OF REVIEW 23 “Whether an appellant’s due process rights were violated is 24 a question of law we review de novo.” DeLuca v. Seare 25 4 26 Although Mrs. Sanders’ statement of issues on appeal refers to violations of the Federal Rules of Bankruptcy Procedure 27 and the local rules, the argument in her opening brief focuses solely on the alleged denial of due process. As such, we only 28 address the due process issues raised therein.
3 1 (In re Seare), 515 B.R. 599, 615 (9th Cir. BAP 2014) (citing 2 Miller v. Cardinale (In re DeVille), 280 B.R. 483, 492 (9th Cir. 3 BAP 2002), aff’d, 361 F.3d 539 (9th Cir. 2004)); see also HSBC 4 Bank USA, Nat’l Ass’n v. Blendheim (In re Blendheim), 803 F.3d 5 477, 497 (9th Cir. 2015) (“Whether adequate notice has been given 6 for the purposes of due process is a mixed question of law and 7 fact that we review de novo.”). “De novo review requires that we 8 consider a matter anew, as if no decision had been made 9 previously.” Francis v. Wallace (In re Francis), 505 B.R. 914, 10 917 (9th Cir. BAP 2014) (citations omitted). 11 DISCUSSION 12 A. Due process generally requires notice and an opportunity to be heard. 13 14 The sole issue on appeal concerns whether the bankruptcy 15 court violated Mrs. Sanders’ due process rights by dismissing her 16 petition without notice or an opportunity to be heard. 17 Generally speaking, a court must give sufficient notice of 18 its intention to dismiss a case and the opportunity for 19 interested parties to be heard. See Tennant v. Rojas 20 (In re Tennant), 318 B.R. 860, 870 (9th Cir. BAP 2004) (“the 21 concept of procedural due process requires a notice and an 22 opportunity to be heard” (citing Muessel v. Pappalardo 23 (In re Muessel), 292 B.R. 712, 717 (1st Cir. BAP 2003))). 24 According to the United States Supreme Court: 25 An elementary and fundamental requirement of due process in any proceeding which is to be accorded 26 finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the 27 pendency of the action and to afford them an opportunity to present their objections. The notice 28 must be of such nature as reasonably to convey the
4 1 required information, . . . and it must afford a reasonable time for those interested to make their 2 appearance[.] 3 Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950) 4 (internal citations omitted). 5 Section 1112(b) provides that, “after notice and a hearing,” 6 a court may dismiss a chapter 11 case “for cause.” 7 Section 102(1) defines the phrase “after notice and a hearing”: 8 (1) “after notice and a hearing”, or a similar phrase - 9 (A) means after such notice as is appropriate in the particular circumstances, and such opportunity 10 for a hearing as is appropriate in the particular circumstances; but 11 (B) authorizes an act without an actual hearing if 12 such notice is given properly and if - 13 (i) such a hearing is not requested timely by a party in interest; or 14 (ii) there is insufficient time for a hearing 15 to be commenced before such act must be done, and the court authorizes such act[.] 16 17 “[T]he concept of notice and a hearing is flexible and 18 depends on what is appropriate in the particular circumstance.” 19 In re Tennant, 318 B.R. at 870 (citing Great Pac. Money Markets, 20 Inc. v. Krueger (In re Krueger), 88 B.R. 238, 241 (9th Cir. BAP 21 1988)). A procedure may be “perfectly appropriate” if it 22 “notifies the debtor of the deficiencies of his petition and 23 dismisses the case sua sponte without further notice and a 24 hearing when the debtor fails to file the required forms within a 25 deadline.” Id. at 870-71 (citing Minkes v. LaBarge 26 (In re Minkes), 237 B.R. 476, 478–79 (8th Cir. BAP 1999)). 27 However, we have acknowledged that the “flexible” notice and 28 hearing requirement does not allow a bankruptcy court to
5 1 steamroll over a party’s due process rights. Id. at 871 (citing 2 Dinova v. Harris (In re Dinova), 212 B.R. 437, 443-44 (2d Cir. 3 BAP 1997)). 4 B. The court violated due process by failing to afford Mrs. Sanders adequate notice and the right to be heard prior 5 to dismissing her bankruptcy petition. 6 In the present case, the bankruptcy court dismissed 7 Mrs. Sanders’ petition at the clerk’s office filing window. It 8 did not give her any notice prior to dismissing her petition, nor 9 did it allow her an opportunity to present arguments to the court 10 or rectify any deficiencies. This was an error. 11 Section 102(d) requires only such notice and opportunity for 12 hearing as is “appropriate in the particular circumstances.” But 13 it was not “appropriate” to dismiss Mrs. Sanders’ case (by way of 14 a handwritten note on an unrelated form) without giving 15 Mrs. Sanders any semblance of prior notice or any opportunity for 16 a hearing. 17 This was not a harmless error. See Rosson v. Fitzgerald 18 (In re Rosson), 545 F.3d 764, 776-77 (9th Cir. 2008) (“Because 19 there is no reason to think that, given appropriate notice and a 20 hearing, Rosson would have said anything that could have made a 21 difference, Rosson was not prejudiced by any procedural 22 deficiency.”). Mrs. Sanders could have pointed out that the only 23 reason the court gave for dismissing her case is invalid: no rule 24 or statute allows for summary dismissal solely because a debtor 25 and her spouse have filed a particular number of bankruptcy cases 26 in a given time period. But the bankruptcy court did not give 27 her a chance to say this or anything else. 28 We acknowledge that the dismissal of Mrs. Sanders’
6 1 chapter 11 case may have been inevitable. The Sanders family’s 2 record of filings and dismissals does not bode well. Further, it 3 is nearly impossible for an unrepresented debtor to navigate the 4 complexities of a chapter 11 case. Nevertheless, a court may not 5 “cut to the chase” in a manner that deprives a party of due 6 process. 7 Accordingly, the bankruptcy court erred when it dismissed 8 Mrs. Sanders’ petition without giving her notice of its intent to 9 dismiss the case and affording her an opportunity to be heard on 10 that issue.5 11 CONCLUSION 12 For the reasons set forth above, we VACATE the bankruptcy 13 court’s dismissal of Mrs. Sanders’ bankruptcy petition and REMAND 14 the case to the bankruptcy court. 15 16 17 18 19 20 21 22 23 24 5 Arguably, the present appeal may be moot, since the 25 180-day bar on filing has since expired, and Mrs. Sanders may 26 file a new petition. But the improper dismissal of this case might still prejudice Mrs. Sanders because she and her husband 27 would have filed ten bankruptcy cases in six years. In other words, if we allow the court’s order to stand, Mrs. Sanders may 28 never be able to get past the filing window.