FILED FEB 21 2020 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY.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-19-1077-LGTa
SHMUEL ERDE, Bk. No. 2:18-bk-20200-VZ
Debtor.
SHMUEL ERDE,
Appellant,
v. MEMORANDUM*
LOS ANGELES COUNTY TREASURER & TAX COLLECTOR; CAROLYN A. DYE,
Appellees.
Submitted Without Argument on January 30, 2020
Filed – February 21, 2020
Appeal from the United States Bankruptcy Court for the Central District of California
* 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. Honorable Vincent P. Zurzolo, Bankruptcy Judge, Presiding
Appearances: Appellant Shmuel Erde, pro se on brief; Appellee Carolyn A. Dye, pro se on brief.
Before: LAFFERTY, GAN, and TAYLOR, Bankruptcy Judges.
INTRODUCTION
Debtor Shmuel Erde appeals the bankruptcy court’s order denying
his fourth attempt to vacate or amend the order overruling his objection to
the proof of claim filed in his 2018 chapter 111 case by Appellee Los
Angeles County Treasurer and Tax Collector (the “County”). The claim
was for property taxes owed for tax year 2011 on real property that was
sold by the chapter 7 trustee during Mr. Erde’s previous bankruptcy case.
Mr. Erde contends that he does not owe the taxes because he no longer
owns the property; he also asserts that the chapter 7 trustee was
responsible to pay those taxes as part of the sale.
The bankruptcy court never reached the merits of Mr. Erde’s
objection. It overruled the objection for improper service and failure to
1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of Civil Procedure. “LBR” references are to the Local Bankruptcy Rules for the Central District of California.
2 support the objection with admissible evidence. Mr. Erde subsequently
filed four timely motions seeking to vacate or amend the order overruling
his objection. The court denied all four motions on procedural grounds and
because Mr. Erde had failed to establish grounds for reconsideration under
Civil Rule 59, applicable in bankruptcy via Rule 9023.
Although Mr. Erde’s bankruptcy case was dismissed in February
2019, this appeal is not moot. But Mr. Erde has not shown that the
bankruptcy court abused its discretion in overruling his objection to the
County’s claim or in denying his motions to vacate or amend. We therefore
AFFIRM.
FACTUAL BACKGROUND
The facts underlying this appeal reach back to Mr. Erde’s 2009
chapter 11 bankruptcy case.2 That case was converted to chapter 7 in
January 2011, and Appellee Carolyn A. Dye (“Trustee”) was appointed
trustee. In November 2011, the bankruptcy court granted Trustee’s motion
to sell Mr. Erde’s real property located on Roxbury Drive in Beverly Hills,
California (the “Property”). The order approving the sale provided that
two liens in favor of Los Angeles County in the amounts of $33,209.27 and
2 The 2009 filing (No. 2:09-bk-25942-DS) was Mr. Erde’s fourth bankruptcy case. Mr. Erde has a long history of litigation and has been declared a vexatious litigant in both state and federal courts, including the bankruptcy court in this case. For a detailed recitation of that history, see Erde v. Dye (In re Erde), BAP No. CC-19-1043-LSTa, 2019 WL 6115018 (9th Cir. BAP Nov. 15, 2019).
3 $14,040.97, representing property taxes owed for 2010-2011 and 2011-2012,
respectively, would be paid from escrow; the order also authorized Trustee
to pay any current property taxes.3 The Property was sold, known claims
were paid, Trustee submitted her final report, Mr. Erde received a
discharge, and the case was closed in November 2013.
In August 2018, Mr. Erde filed a chapter 11 petition, initiating the
case that underlies this appeal. Shortly thereafter, the County filed a proof
of claim for property taxes of $6,556.69 secured by a lien against the
Property. Attached to the proof of claim is a property tax bill indicating
that it is a correction for the 2010-11 assessment year pursuant to Cal. Rev.
& Tax. Code § 531.4 The bill contains the notation: “Sale or disposal of this
property after January 1, 2011 does not relieve the assessee of this tax.”
Also attached to the claim is a copy of a certificate of tax lien referencing
the Property, bearing a stamp showing it was recorded in the Los Angeles
County Recorder’s Office on August 10, 2012.5
3 We have exercised our discretion to review the bankruptcy court’s docket and papers in the underlying bankruptcy cases and relevant adversary proceeding. See Woods & Erickson, LLP v. Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008). 4 That statute provides, in relevant part: “If any property belonging on the local roll has escaped assessment, the assessor shall assess the property on discovery at its value on the lien date for the year for which it escaped assessment.” 5 The bankruptcy court never adjudicated whether Mr. Erde was liable for the property taxes at issue. The facts regarding the proof of claim are included solely for (continued...)
4 Shortly after filing his 2018 case, Mr. Erde filed an adversary
proceeding against Trustee. In his first amended complaint, he alleged that
Trustee had breached her duties as chapter 7 trustee in the 2009 case
because she had failed to pay all of the property taxes on the Property. He
requested that the court enter judgment compelling Trustee to pay the
County’s claim. The bankruptcy court granted Trustee’s Civil Rule 12(b)(6)
motion (applicable via Rule 7012) and dismissed the adversary proceeding
with prejudice. The court found that the first amended complaint failed to
comply with Civil Rule 8(a) (applicable via Rule 7008) by: (1) failing to cite
any legal authority that Trustee was required to pay a property tax bill for
taxes incurred post-petition when that bill was not filed in the bankruptcy
case or otherwise brought to Trustee’s attention; (2) failing to set forth the
legal impact of Mr. Erde residing in the Property for up to three months of
the 2011-12 tax year; (3) failing to set forth the legal impact of Mr. Erde’s
argument in his opposition to Trustee’s motion to turn over possession of
the Property that the Property was not property of the estate; and (4) failing
to allege that the order granting the motion to sell the Property indicated
the sale was free and clear and that the buyer took subject to taxes not yet
due and owing. In the same order, the bankruptcy court found Mr. Erde to
be a vexatious litigant and barred him from filing any further claims
5 (...continued) background.
5 against Trustee or requests for relief related to the claims or allegations
made in the adversary proceeding.
In the meantime, in October 2018, Mr. Erde filed an objection to the
County’s claim. As in the adversary proceeding, he alleged that, in his 2009
bankruptcy case, Trustee had failed to pay off the property taxes from the
sale of the Property and argued that Trustee was obligated to pay the
County’s claim. No declaration accompanied the objection. The County did
not file a response. The bankruptcy court entered an order overruling the
objection after a hearing on November 27, 2018. The order states that it is
based on the findings made at the hearing, but no hearing transcript
appears in the record or on the bankruptcy court docket.
Two days later, Mr. Erde filed a Motion for Findings of Fact and
Conclusions of Law regarding the order overruling the claim objection (the
“First Motion to Amend”). Substantively, the motion requested that the
court amend its ruling in accordance with Mr. Erde’s proposed findings
and conclusions, which included a conclusion of law that property taxes
cannot be enforced as a personal liability against the owner. Mr. Erde
included a declaration attesting to some of the facts in the motion and
included a proof of service showing service by mail on the County’s tax
service clerk who had signed the proof of claim at the designated P.O. Box
for the County.
The bankruptcy court entered an order denying the First Motion to
6 Amend. In that order, the court recounted the findings it had made at the
November 27, 2018 hearing. First, it found that the claim objection had not
been served in accordance with Rule 7004, as required for contested
matters under Rule 9014(b) pursuant to LBR 3007-1(b).6 Second, it found
that the objection was not supported by admissible evidence, as required
under LBR 3007-1(c).
One week later, Mr. Erde filed a Second Motion for Findings of Fact
and Conclusions of Law (the “Second Motion to Amend”). The Second
Motion to Amend was substantively identical to the previous one. Again,
Mr. Erde included a supporting declaration and a proof of service showing
that the motion had been served by first class mail to the County’s tax
service clerk.
The bankruptcy court denied Mr. Erde’s Second Motion to Amend
because: (1) the motion requested relief previously sought in the First
Motion to Amend, but it did not comply with LBR 9013-1(l)7; (2) Mr. Erde
6 LBR 3007-1 provides that a claim objection is a contested matter under Rule 9014 and “must be served on the claimant at the address on the proof of claim and at such other addresses and upon such parties as may be required by FRBP 7004 and other applicable rules.” (Emphasis added). 7 That rule provides that when relief is sought that has previously been denied, the movant must present with the subsequent motion a declaration setting forth the material facts and circumstances surrounding each prior motion, including:
(1) The date of the prior motion; (continued...)
7 had not cited Rules 9023 or 9024 nor established cause to amend under
either rule; (3) the Second Motion to Amend was served 20 days before the
hearing date, one day short of the 21-day period required under LBR 9013-
1(d); and (4) the motion was not served in accordance with Rules 9014 and
7004.
Exactly two weeks later, Mr. Erde filed a Motion for Declaratory
Judgment (“Third Motion to Amend”), in which he requested essentially
the same relief sought in his prior motions to amend, but presented the
motion as a request for a declaration that he does not owe any property
taxes to the County. The bankruptcy court denied the Third Motion to
Amend, again for failure to comply with LBR 9013-1(l), failure to properly
serve the motion on the County, and failure to cite or establish cause to
amend under Rules 9023 or 9024. Additionally, the court noted that
Mr. Erde had not cited any authority for seeking a declaratory judgment by
way of a contested matter under Rule 9014 rather than an adversary
7 (...continued) (2) The identity of the judge to whom the prior motion was made; (3) The ruling, decision or order on the prior motion; (4) The new or different facts and circumstances claimed to exist, which either did not exist or were not shown upon the prior motion; and (5) The new or different law or legal precedent claimed to exist, which either did not exist or were not shown upon the prior motion.
The rule further provides that noncompliance with this requirement “is grounds for the court to set aside any order or ruling made on the subsequent motion, and subjects the offending party or attorney to sanctions.”
8 proceeding, as required under Rule 7001(9).
On February 21, 2019, the bankruptcy court entered an order
dismissing Mr. Erde’s case and declaring him a vexatious litigant.8 On the
same day, Mr. Erde filed a “Motion to Amend an Order Pursuant to FRBP
9023” (“Fourth Motion to Amend”). This time around, he cited Rule 9023
but did not state specific grounds under that rule, instead simply repeating
his previous argument that he was not liable for the unpaid taxes.
The bankruptcy court denied Mr. Erde’s Fourth Motion to Amend.
Initially, the court observed that the dismissal of the case rendered all
pending motions moot. In addition, the court found that the motion again
did not comply with LBR 9013-1(l). Additionally, the court explained that
Mr. Erde had not established cause to grant the motion. The court cited its
order dismissing the adversary proceeding against Trustee, noting that
Mr. Erde had still not addressed the deficiencies described in that order. In
addition to denying the motion, the order prohibits Mr. Erde from filing,
without court permission, any further documents attempting to change the
order overruling his objection to claim.
Mr. Erde timely appealed.
8 Mr. Erde appealed the dismissal and vexatious litigant ruling to this Panel, which affirmed. Erde v. Dye (In re Erde), BAP No. CC-19-1043-LSTa, 2019 WL 6115018 (9th Cir. BAP Nov. 15, 2019). Mr. Erde appealed that decision to the Ninth Circuit Court of Appeals on November 27, 2019.
9 JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and
157(b)(1) and (b)(2)(A) and (B). We have jurisdiction under 28 U.S.C. § 158.
ISSUES
Whether the bankruptcy court abused its discretion in overruling
Mr. Erde’s objection to the County’s proof of claim on procedural grounds.
Whether the bankruptcy court abused its discretion in denying
Mr. Erde’s motions to amend.
STANDARDS OF REVIEW
The bankruptcy court overruled Mr. Erde’s claim objection for failure
to comply with local rules. The bankruptcy court’s application of a local
rule is reviewed for an abuse of discretion. Steinacher v. Rojas (In re
Steinacher), 283 B.R. 768, 772 (9th Cir. BAP 2002). We also review the
bankruptcy court’s denial of a motion to alter or amend a judgment for
abuse of discretion. Clinton v. Deutsche Bank Nat’l Trust Co. (In re Clinton),
449 B.R. 79, 82 (9th Cir. BAP 2011) (citing Ta Chong Bank Ltd. v. Hitachi High
Techs. Am., Inc., 610 F.3d 1063, 1066 (9th Cir. 2010)).
Under the abuse of discretion standard, we first “determine de novo
whether the [bankruptcy] court identified the correct legal rule to apply to
the relief requested.” United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir.
2009)(en banc). If the bankruptcy court identified the correct legal rule, we
then determine under the clearly erroneous standard whether its factual
10 findings and its application of the facts to the relevant law were:
“(1) illogical, (2) implausible, or (3) without support in inferences that may
be drawn from the facts in the record.” Id. (internal quotation marks
omitted).
DISCUSSION
A. Scope of Appeal
Although Mr. Erde’s notice of appeal references and attaches only the
order denying the Fourth Motion to Amend, Mr. Erde argues in his
opening brief that the bankruptcy court erred in overruling his objection to
the County’s claim and in denying the subsequent motions to amend. All
of his motions to amend were filed within fourteen days of entry of the
previous orders. Additionally, Appellee Dye has fully briefed the issues
raised in the claim objection and the motions to amend. As such, the Panel
has discretion to review the orders denying the motions to amend as well
as the order overruling the claim objection. See Wall Street Plaza, LLC v. JSJF
Corp. (In re JSJF Corp.), 344 B.R. 94, 99-100 (9th Cir. BAP 2006), aff’d and
remanded, 277 F. App’x 718 (9th Cir. 2008) (noting that although 9th Cir.
BAP Rule 8001(a)-1 [now Rule 8003-1] requires a party to attach copies of
the orders appealed from, the Panel may depart from the rule absent
prejudice).
B. This appeal is not moot.
Trustee argues that this appeal is moot if the Panel affirms the
11 dismissal of Mr. Erde’s 2018 bankruptcy case. Although the Panel has
affirmed the order of dismissal, Mr. Erde has appealed that decision to the
Ninth Circuit Court of Appeals, which has not yet issued a disposition. We
thus have jurisdiction to consider this appeal. Cf. Castaic Partners II, LLC, v.
Daca–Castaic, LLC (In re Castaic Partners II, LLC), 823 F.3d 966, 968-69 (9th
Cir. 2016) (noting that when the dismissal of a bankruptcy case becomes
final, there is likely no longer any case or controversy with respect to issues
directly involving the reorganization of the estate).
C. The bankruptcy court did not abuse its discretion in overruling Mr. Erde’s claim objection on procedural grounds.
The bankruptcy court overruled Mr. Erde’s objection to the County’s
claim because, in addition to failing to serve the objection in accordance
with Rule 7004, Mr. Erde failed to support his objection with any
admissible evidence. On appeal, Mr. Erde’s sole argument with respect to
the order overruling the claim objection is that the order did not contain
any findings. But the court apparently made findings at the November 27,
2018 hearing. Mr. Erde failed to provide a transcript of that hearing on
appeal. As a result, he is estopped from asserting error in this regard. See
Kritt v. Kritt (In re Kritt), 190 B.R. 382, 387 (9th Cir. BAP 1995) (appellant
bears the responsibility to provide an adequate record, including
transcripts). Further, the court later provided written findings in its order
denying Mr. Erde’s First Motion to Amend, and Mr. Erde had more than
12 ample opportunity to remedy the procedural deficiencies cited by the
court. He never did so.9 Mr. Erde has not shown that the bankruptcy court
abused its discretion in overruling his objection.
D. The bankruptcy court did not abuse its discretion in denying Mr. Erde’s First Motion to Amend.
Mr. Erde’s First Motion to Amend was filed within fourteen days of
entry of the order overruling his claim objection. As such, we review that
motion as one for relief from judgment under Rule 9023. Heritage Pac. Fin.,
LLC v. Montano (In re Montano), 501 B.R. 96, 112 (9th Cir. BAP 2013). Rule
9023 incorporates Civil Rule 59(e), and the same standards apply to both
rules. Id. To justify relief under Rule 9023, the movant must show:
“(a) newly discovered evidence, (b) the court committed clear error or
made an initial decision that was manifestly unjust, or (c) an intervening
change in controlling law.” Id. (citing Duarte v. Bardales, 526 F.3d 563, 567
(9th Cir. 2008)).
Mr. Erde’s First Motion to Amend, styled as a motion for findings
and conclusions, did not assert any grounds for relief under Rule 9023.
Substantively, the motion requested that the court amend its ruling in
accordance with Mr. Erde’s proposed findings and conclusions, including a
9 Mr. Erde never complied with Rule 7004 in serving the objection to claim or the subsequent motions to amend. Although he served the clerk who executed the proof of claim by first class mail to the designated post office box, there is no evidence that he served the County’s designated person or office for service of process as required under Rule 7004(b)(6).
13 conclusion of law that property taxes cannot be enforced as a personal
liability against a property owner. Mr. Erde did not address the service
issue, nor did he provide any newly discovered evidence or show any
intervening change in law, clear error, or manifest injustice. On appeal,
Mr. Erde argues that the failure to comply with Rule 7004 does not
automatically mandate “dismissal” if the party had actual notice, suffers no
prejudice from a technical defect in service, and there is a justifiable excuse
for failure to serve properly, citing Borzeka v. Heckler, 739 F.2d 444, 447 (9th
Cir. 1984). But he points to no evidence in the record that all those
requirements were met.
In addition, Mr. Erde argues that the bankruptcy court erred in
finding that the objection was not supported by admissible evidence
because he supported the First Motion to Amend with a declaration. But
the court’s finding regarding the lack of admissible evidence pertained to
the original objection. In any event, Mr. Erde’s declaration attached to the
First Motion to Amend did not attest to facts affecting the validity of the
County’s claim. That declaration states that he was the debtor in the 2009
bankruptcy case that was converted to chapter 7 in January 2011, and
continues:
19.10 As a result, I was no longer Debtor-In-Possession in my
10 The declaration consists of nine numbered statements. For reasons that are not (continued...)
14 2009 Bankruptcy Case, and had no control over my Debtor’s Estate.
20. My Debtor’s Estate included my Home.
21. As part of liquidating my 2009 Debtor’s Estate, my Home was sold.
22. I was led to believe that the proceeds from the sale of my Home were used to settle the loans and property taxes secured by the Home.
23. I had no control or say in determining how the funds generated from the sale of my Home as part of liquidating my 2009 Debtor’s Estate were disbursed.
In short, Mr. Erde’s First Motion to Amend did not establish grounds for
relief under Rule 9023.
E. The bankruptcy court did not abuse its discretion in denying Mr. Erde’s Second Motion to Amend.
Mr. Erde’s Second Motion to Amend was substantively identical to
the previous motion. The bankruptcy court denied it because Mr. Erde
failed to provide the declaration required under LBR 9013-1(l) when relief
is sought that has previously been denied, for improper notice and service,
and because Mr. Erde had not cited Rules 9023 or 9024 nor established
cause to amend under either rule. On appeal, Mr. Erde argues that his
10 (...continued) clear, the numbering of statements in the declaration jumps from 3 to 18.
15 Second Motion to Amend did not request the same relief sought in the First
Motion to Amend and, in any event, LBR 9013-1(l) does not require denial
of a motion that does not comply with the rule. While this latter point is
correct, the bankruptcy court was well within its discretion to deny the
motion on that ground. Moreover, despite Mr. Erde’s protestations to the
contrary, the relief requested (a ruling that Mr. Erde is not personally liable
for the subject property taxes), although worded differently, was
substantively identical to that sought in the First Motion to Amend and the
claim objection. Mr. Erde makes the same meritless arguments regarding
service as he did with respect to the First Motion to Amend, and he does
not explain how the Second Motion to Amend established grounds for
relief under Rule 9023. Again, Mr. Erde has not shown that the bankruptcy
court abused its discretion in denying the Second Motion to Amend.
F. The bankruptcy court did not abuse its discretion in denying the Third Motion to Amend.
Mr. Erde’s Third Motion to Amend, which he styled as a Motion for
Declaratory Judgment (“Third Motion to Amend”) sought essentially the
same relief as in his prior motions to amend: a declaration that he does not
owe any property taxes to the County. The bankruptcy court denied the
Third Motion to Amend for the same reasons it denied the Second, in
addition noting that an adversary proceeding is required to obtain
declaratory relief. Although Mr. Erde’s brief is difficult to decipher, he does
16 not appear to present any unique arguments with respect to the denial of
this motion, and our conclusion is the same: the bankruptcy court did not
abuse its discretion in denying the Third Motion to Amend.
G. The bankruptcy court did not abuse its discretion in denying the Fourth Motion to Amend.
Mr. Erde’s Fourth Motion to Amend cited Rule 9023 but did not
include any specific grounds for relief under that rule, instead simply
repeating the argument that he is not liable for the subject taxes. The
bankruptcy court again denied the motion for failure to comply with LBR
9013-1(l). The court also recounted the reasons for dismissal of the
adversary proceeding against Trustee, noting that Mr. Erde had still not
addressed the deficiencies described in that order. Again, Mr. Erde simply
repeats the same arguments he made regarding the previous motions to
amend. Again, these arguments are without merit. Mr. Erde repeatedly
failed to comply with applicable procedural rules and, more importantly,
he never provided any relevant admissible evidence to support his
objection to the County’s claim.11 His arguments on appeal do not convince
us that the bankruptcy court abused its discretion in denying relief on that
11 The declarations filed in support of the Second, Third, and Fourth Motions to Amend were essentially the same as those filed with the First, except that Mr. Erde added conclusions of law and argument in the later declarations, which do not constitute admissible evidence. See Int’l Ass’n of Firefighters, Local 1186 v. City of Vallejo (In re City of Vallejo), 408 B.R. 280, 291 (9th Cir. BAP 2009) (noting that legal conclusions are generally inadmissible).
17 basis.
CONCLUSION
Mr. Erde has not demonstrated that the bankruptcy court abused its
discretion in overruling his objection to the County’s claim on procedural
grounds. Nor has he shown that the bankruptcy court abused its discretion
in denying his four subsequent motions to amend. We therefore AFFIRM.