In re: Stephen Lee Beck and Donita M. Beck

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: February 1, 2016
• Docket: NC-15-1095-JuKuW
• Status: Unpublished

Opinion

FILED FEB 01 2016 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK 2 U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. NC-15-1095-JuKuW ) 6 STEPHEN LEE BECK and DONITA M.) Bk. No. 11-54179-MEH BECK, ) 7 ) Debtors. ) 8 ______________________________) ) 9 STEPHEN LEE BECK; DONITA M. ) BECK, ) 10 ) Appellants, ) 11 ) v. ) M E M O R A N D U M* 12 ) WELLS FARGO HOME MORTGAGE,** ) 13 ) Appellee. ) 14 ______________________________) 15 Argued and Submitted on January 21, 2016 at San Francisco, California 16 Filed - February 1, 2016 17 Appeal from the United States Bankruptcy Court 18 for the Northern District of California 19 Honorable M. Elaine Hammond, Bankruptcy Judge, Presiding _________________________ 20 Appearances: John G. Downing argued for appellants 21 Stephen Lee Beck and Donita M. Beck. _________________________ 22 23 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. 27 See 9th Cir. BAP Rule 8024-1. 28 ** Wells Fargo Bank did not participate in this appeal.

-1- 1 Before: JURY, KURTZ, and WANSLEE,*** Bankruptcy Judges. 2 Debtors Stephen Lee Beck and Donita M. Beck (Debtors) filed 3 a motion under Rule 3012 seeking to value their real property 4 under § 506(a) and (d) (Valuation Motion) prior to confirming 5 their fourth amended chapter 131 plan (FAP). Their plan treated 6 the second deed of trust held by Wells Fargo Bank, N.A. (Wells) 7 against their property as unsecured. 8 In the notice accompanying the Valuation Motion, Debtors 9 identified (1) Wells as the creditor with a second deed of trust 10 on their property; (2) the address of their property; (3) the 11 underlying loan number associated with the security; and (4) the 12 amount of the debt. They also stated that there was a lack of 13 equity in the property based on Stephen Beck’s opinion that the 14 value of the property was less than the sum owed to the creditor 15 who held the first deed of trust. While the Valuation Motion 16 reiterated this information, instead of referring to Wells’ 17 current deed of trust which was recorded against their property 18 in 2004, Debtors mistakenly referred to a deed of trust recorded 19 in 2002 by Wells which had been reconveyed. The bankruptcy 20 court granted their Valuation Motion and the subsequent order 21 (Valuation Order) again listed the deed of trust recorded in 22 2002. 23 24 *** Hon. Madeleine C. Wanslee, United States Bankruptcy Judge for the District of Arizona, sitting by designation. 25 1 26 Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. 27 “Rule” references are to the Federal Rules of Bankruptcy Procedure and “Civil Rule” references are to the Federal Rules of 28 Civil Procedure.

-2- 1 The bankruptcy court then confirmed their FAP, which 2 treated Wells as an unsecured creditor. Having filed a proof of 3 claim (POC), Wells received over $20,000 in distributions as an 4 unsecured creditor over the course of Debtors’ plan. After 5 completing their plan payments, Debtors sought a judgment 6 voiding Wells’ lien. Although served with the Valuation Motion, 7 the Valuation Order, the plan and amended plans, and Debtors’ 8 request for a judgment voiding its lien, Wells failed to 9 respond. 10 After Debtors realized that they had mistakenly referenced 11 the 2002 deed of trust as opposed to the 2004 deed of trust in 12 the Valuation Order, they filed a motion to correct it (Motion 13 to Correct) and again sought a judgment avoiding Wells’ lien. 14 Wells did not respond or appear at the hearing. The bankruptcy 15 court denied the motion, finding that relief under Civil 16 Rule 60(b)(1) was not available since the motion had been 17 brought more than one year after the Valuation Order was 18 entered. The court further found there was no mistake as 19 defined by case law since the information regarding Wells’ deed 20 of trust was readily available from the public records. 21 Although Debtors’ Motion to Correct and request for judgment was 22 uncontested, the court declined to grant the motion on the basis 23 that Wells had not received adequate notice that Debtors 24 intended to strip its lien associated with the 2004 deed of 25 trust. 26 Debtors appeal from the bankruptcy court’s order denying 27 their Motion to Correct and request for judgment voiding lien. 28 For the reasons stated below, we REVERSE the bankruptcy court’s

-3- 1 determination that Wells' due process rights were violated, 2 VACATE the order denying the Motion to Correct, and REMAND this 3 matter to the bankruptcy court for further proceedings 4 consistent with this memorandum. 5 I. FACTS 6 On June 27, 2002, Debtors obtained a home equity loan from 7 Wells. The underlying note was secured by a second deed of 8 trust which was recorded on July 3, 2002, as Instrument Number 9 2002-0010687 (2002 Deed of Trust). On September 15, 2004, the 10 2002 Deed of Trust was reconveyed to Debtors. 11 On July 27, 2004, Stephen Beck executed a promissory note 12 for $97,000 in favor of Wachovia Bank of Delaware, N.A. 13 (Wachovia). The note was secured by a second deed of trust 14 against Debtors’ property located at 901 Freedom Drive, 15 Hollister, California (Property). The deed of trust was 16 recorded on August 3, 2004, as Instrument Number 2004-0013967 17 (2004 Deed of Trust). At some point, Wells became the successor 18 by merger to Wachovia. Its records identified Debtors’ loan by 19 a loan number ending in 6995. 20 On April 30, 2011, Debtors filed a chapter 13 petition. 21 One of their assets was their Property. Debtors filed their 22 chapter 13 plan with the petition and both were served on Wells 23 at 3476 Stateview, Fort Mill, South Carolina 29715 (South 24 Carolina Address). Among other things, the plan provided: 25 Debtors will file a motion to value lien of Wells Fargo (loan ending in 6995), currently secured by a 26 2nd deed of trust on Debtor’s [sic] residence, and seek treatment of that lien was [sic] completely 27 unsecured. 28 On June 2, 2011, Debtors filed the Valuation Motion. In

-4- 1 the notice, Debtors stated the address of the Property, named 2 Wells as the creditor, and valued the Property at $270,500, 3 which was less than the approximately $296,900 owed on their 4 first mortgage. Based on this value, Debtors asserted in the 5 notice that “0.00 of the Wells Fargo loan . . . ending in 6995 6 and secured by a second deed of trust against the Residence is 7 secured.” The accompanying motion reiterated this information, 8 but also stated: 9 There is also a home equity loan (number ending in 6995) made by Wells Fargo Bank (the “2nd Loan”). The 10 home equity loan is secured by a Short Form Deed of Trust, recorded against the Residence on July 3, 2002 11 as Instrument Number 2002-0010687 in the Official Public Records of San Benito County. Based on a claim 12 submitted by Wells Fargo Bank, there was $90,376.00 owed pursuant to that second deed of trust. 13 14 Debtors supported the motion with the declaration of Stephen 15 Beck who opined that the value of the Property was $270,500 and 16 reiterated the paragraph above. 17 Debtors served the notice and motion on Wells by regular 18 mail at the South Carolina Address and by certified mail 19 addressed to Stanley Stoup, General Counsel, Wells Fargo & 20 Company, 420 Montgomery Street, San Francisco, CA 94104 (San 21 Francisco Address) and Wells Fargo c/o CSC Lawyers Incorporating 22 Service, 2730 Gateway Oaks Dr., Ste. 100, Sacramento, CA 95833 23 (Sacramento Address). Wells did not respond to the motion. 24 On August 2, 2011, Debtors filed a second notice of 25 opportunity for hearing re the Valuation Motion. The notice 26 again referenced the address of the Property, the asserted value 27 of $270,000 which was less than what was owed on the first deed 28 of trust, and the loan ending in 6995. Debtors again asserted

-5- 1 that Wells’ second deed of trust was wholly unsecured. This 2 notice was served on Wells at the three addresses set forth 3 above. Again, Wells did not respond. 4 On August 17, 2011, Wells filed POC 3-1. The POC asserted 5 a secured claim in the amount of $98,809.30 and referenced the 6 loan number “708xxxxxx6995.” Attached as Exhibit “A” was an 7 itemization of the total debt and arrearages as of the time of 8 the filing. This itemization stated that the principal balance 9 as of the petition date (April 30, 2011) was $90,376.22, and 10 listed late charges as $262.45 and accrued interest of 11 $8,170.06. No arrearages were listed on the face of the POC. 12 Also attached to the POC was the 2004 Deed of Trust and the 13 promissory note dated July 27, 2004. 14 On March 27, 2012, Debtors filed a third amended plan which 15 stated: 16 Debtors have file [sic] a motion to value lien of Wells Fargo (loan ending in 6995), currently secured 17 by a 2nd deed of trust on Debtor’s [sic] residence, and seek treatment of that lien as completely 18 unsecured. Wells Fargo shall receive payment pursuant to Class 2(d) above. 19 20 The third amended plan provided that the unsecured creditors in 21 Class 2(d) would receive twenty cents on the dollar. Debtors 22 served Wells with the third amended plan at the South Carolina 23 Address. Wells did not object to the third amended plan. 24 On April 23, 2012, Debtors filed the FAP which contained 25 the identical provision stated above. The plan, as amended, 26 further stated: “Notwithstanding section 2(d) above, general 27 unsecured creditors shall receive a minimum of $20,140.85.” The 28 plan did not provide for Debtors to make any direct payments to

-6- 1 Wells. Debtors served Wells with the FAP at the South Carolina 2 Address. Wells did not object. 3 The bankruptcy court granted Debtors’ Valuation Motion by 4 order dated May 2, 2012. The Valuation Order referred to the 5 2002 Deed of Trust and further stated: 6 The court finds that notice of the motion upon [Wells] was proper. . . [Wells] having failed to file timely 7 opposition to Debtors’ motion, the court hereby orders as follows: 8 (1) For purposes of Debtors’ Chapter 13 plan only, the 9 Lien is valued at zero. Wells Fargo Bank[], does not have a secured claim, and the Lien may not be 10 enforced, pursuant to 11 U.S.C. §§ 506, 1322(b)(2) and 1327. 11 (2) This order shall become part of Debtors’ confirmed 12 Chapter 13 plan. 13 Debtors served Wells with the order by regular mail at the 14 South Carolina Address and by certified mail to Stanley Stroup, 15 General Counsel, Wells Fargo Bank, N.A., 101 N. Phillips Avenue, 16 Sioux Falls, South Dakota 57104 (South Dakota Address)2 and to 17 Wells at the Sacramento Address. 18 On June 5, 2012, the bankruptcy court confirmed the FAP. 19 Debtors elected to have property of the estate revest in Debtors 20 upon plan confirmation. 21 On October 17, 2014, the chapter 13 trustee filed her Final 22 Report and Account which stated that payments of $20,038.63 were 23 made to Wells on its unsecured claim. 24 On October 20, 2014, Debtors filed their application for 25 voiding lien. There, Debtors sought a judgment stating that the 26 2 27 The South Dakota Address used for Stanley Stroup was different from the San Francisco Address that was used previously 28 for service.

-7- 1 2004 Deed of Trust listing Wells as a beneficiary was “for all 2 purposes void and unenforceable.” Debtors served the 3 application and accompanying declaration on Wells by regular 4 mail at Wells Fargo Home Mortgage, 1 Home Campus, MAC 5 #X2302-04C, Des Moines, IA 50328 (Iowa Address),3 and by 6 certified mail to Stanley Stroup at the South Dakota Address and 7 to Wells at the Sacramento Address. Wells did not respond. 8 At some point, Debtors discovered that they had mistakenly 9 referred to the 2002 Deed of Trust in the Valuation Motion and 10 Valuation Order. Accordingly, on February 12, 2015, Debtors 11 filed the Motion to Correct and again requested a judgment 12 voiding lien. Through the Motion to Correct, Debtors sought to 13 have the Valuation Order reflect that the lien affected by the 14 valuation was the 2004 Deed of Trust. The Motion to Correct was 15 based on Rule 9024, which incorporates Civil Rule 60(a), 16 Rule 3012, and the bankruptcy court’s Guidelines for Valuing and 17 Avoiding Liens in Chapter 11 and Chapter 13 cases.4 18 19 3 This address was listed on Wells’ POC as the address where 20 payment should be sent. 21 4 The guidelines require the debtor to file a separate motion to obtain valuation of a secured creditor’s claim. The 22 motion must be served upon the affected lienholder in accordance 23 with Bankruptcy Local Rule (BLR) 9014-1(b) & (c) and in the manner required by the Rules; “in particular, Rule 7004(b) and 24 7004(h).” The guidelines further provide that the motion must be resolved before the plan is confirmed. Finally, the guidelines 25 require that the motion be supported by a memorandum of points 26 and authorities and any declarations under penalty of perjury establishing all facts necessary to entitle debtor to the relief 27 required. “At minimum, required declarations include statements by competent witnesses regarding the value of the collateral and 28 the balance due on each lien relevant to the motion.”

-8- 1 Attached to the motion was the supporting declaration of 2 Debtors’ attorney, John G. Downing. Downing declared that at 3 the time the Valuation Motion was filed (1) the only deed of 4 trust in his file was the 2002 Deed of Trust; (2) this deed of 5 trust was reconveyed on September 15, 2004; and (3) Wells had 6 not filed its POC until after the Valuation Motion was decided. 7 Based on these facts, Downing contended that the Valuation Order 8 contained a clerical mistake and should be corrected pursuant to 9 Civil Rule 60(a) to reference the 2004 Deed of Trust and the 10 requested judgment should reflect that lien. Also attached to 11 the motion was the 2002 Deed of Trust and the reconveyance of 12 that deed of trust recorded on September 15, 2004. 13 On February 13, 2015, Debtors served a corrected notice of 14 hearing on Wells in connection with the Motion to Correct and 15 their request for judgment. This notice was served on Wells by 16 regular mail at the Iowa Address and by certified mail to 17 Stanley Stroup at the South Dakota Address and Wells at the 18 Sacramento Address. Wells did not respond. 19 On March 12, 2015, the bankruptcy court heard the matter. 20 Wells did not appear at the hearing. Downing argued that Wells 21 received notice and that it was effective because the Valuation 22 Motion referenced the loan ending in 6995, which was the correct 23 loan number. Downing further argued that Wells had notice of 24 their Motion to Correct and request for judgment voiding lien 25 and, therefore, Debtors were entitled to entry of default 26 against Wells under Civil Rule 55(a), made applicable to 27 contested matters by Rule 9014(c). 28 The bankruptcy court denied the motion on several grounds.

-9- 1 First, referring to Rule 60(b)(1), the court found that the 2 motion was untimely since motions under that subsection had to 3 be brought within a year. Second, the court did not find there 4 was a mistake or excusable neglect as the original Valuation 5 Motion and Valuation Order clearly stated that Debtors were 6 seeking to avoid a junior lien that was recorded on July 3, 7 2002, and described a document number recorded in 2002. The 8 bankruptcy court stated that there was no such lien in existence 9 at that time so there was no basis for Wells to object to the 10 Valuation Motion, and they did not. 11 The court also denied Debtors’ motion and request for 12 judgment on due process grounds. The court found that although 13 the notice to Wells may have had the correct loan number for a 14 loan they had pending, this was not sufficient notice when other 15 information was incorrect. The bankruptcy court further opined 16 that the information was publicly available at the time and 17 could have been obtained, but it was not. 18 The bankruptcy court entered the order denying Debtors’ 19 Motion to Correct and request for judgment voiding lien on 20 March 12, 2015. Debtors filed a timely notice of appeal. 21 II. JURISDICTION 22 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 23 §§ 1334 and 157(b)(2)(A). We have jurisdiction under 28 U.S.C. 24 § 158. 25 III. ISSUES 26 Did the bankruptcy court err by finding that Wells had 27 inadequate notice of Debtors’ intent to value their Property for 28 the purpose of treating Wells’ claim as wholly unsecured and

-10- 1 stripping its lien after completing their chapter 13 plan? 2 Did the bankruptcy court abuse its discretion by denying 3 Debtors’ Motion to Correct under Civil Rule 60(a)? 4 IV. STANDARDS OF REVIEW 5 Whether adequate due process notice was given in any 6 particular instance is a mixed question of law and fact that we 7 review de novo. Berry v. U.S. Trustee (In re Sustaita), 8 438 B.R. 198, 207 (9th Cir. BAP 2010). However, to the extent 9 an issue within the mixed question can be identified as solely a 10 question of fact, it is subject to a clearly erroneous standard 11 of review. See Rose v. United States, 905 F.2d 1257, 1259 (9th 12 Cir. 1990). 13 A bankruptcy court’s denial of a motion under Civil Rule 60 14 is reviewed for an abuse of discretion. Lemoge v. United 15 States, 587 F.3d 1188, 1191–92 (9th Cir. 2009). 16 Review for abuse of discretion has two parts. First, “we 17 determine de novo whether the bankruptcy court identified the 18 correct legal rule to apply to the relief requested.” U.S. v. 19 Hinkson, 585 F.3d 1247, 1261–62 (9th Cir. 2009) (en banc). If 20 so, we then determine under the clearly erroneous standard 21 whether the bankruptcy court’s factual findings and its 22 application of the facts to the relevant law were 23 “(1) illogical; (2) implausible; or (3) without support in 24 inferences that may be drawn from the facts in the record.” Id. 25 at 1262. 26 V. DISCUSSION 27 A. Due Process 28 The bankruptcy court concluded that to modify the Valuation

-11- 1 Order to pertain to the 2004 Deed of Trust would deny Wells due 2 process. We disagree with this conclusion because due process 3 was served. “The standard for what amounts to constitutionally 4 adequate notice, [], is fairly low; it’s ‘notice reasonably 5 calculated, under all the circumstances, to apprise interested 6 parties of the pendency of the action and afford them an 7 opportunity to present their objection.’” Espinosa v. United 8 Student Aid Funds, Inc., 553 F.3d 1193, 1202 (9th Cir. 2008) 9 (citing Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 10 314–15, (1950)), aff’d, 559 U.S. 260 (2010). 11 Here, the key inquiry is in connection with the second part 12 of the Mullane test which requires that the notice provided must 13 afford the affected party an opportunity to present objections. 14 Mullane, 339 U.S. at 314. While Mullane revolved principally 15 around the constitutional adequacy of service by publication, 16 the court stated that “[t]he notice must be of such nature as 17 reasonably to convey the required information.” Id.; see also 18 Fogel v. Zell, 221 F.3d 955, 962 (7th Cir. 2000) (“If notice is 19 unclear, the fact that it was received will not make it 20 adequate.”). 21 In the notice accompanying their Valuation Motion, Debtors 22 identified the address of their Property and stated that its 23 value was less than owed on the first deed of trust. Debtors 24 also identified (1) Wells as the creditor whose lien in the 25 second position was affected; (2) the loan number associated 26 with its security; and (3) the amount of the loan. Both the 27 loan number and the amount of the loan were identical to that 28 identified by Wells in its POC which was based on the 2004 Deed

-12- 1 of Trust. This information was sufficient to allow Wells to 2 identify the loan in question as the one secured by its current 3 deed of trust and that the basis for treating Wells as wholly 4 unsecured was the lack of equity in the Property and § 506(a).5 5 In sum, the notice reasonably conveyed the required information 6 under the standards set forth in Mullane and thus satisfied 7 Wells’ due process rights. 8 Further, the record shows that Wells was served with 9 Debtors’ plan and amended plans which clearly stated the 10 proposed treatment of Wells’ claim was as an unsecured creditor. 11 The plans referred to Debtors’ pending Valuation Motion in 12 connection with Wells’ second deed of trust and loan number 13 ending in 6955. Again, this was sufficient to put Wells on 14 notice that its in rem rights associated with its current deed 15 of trust in the second position would be affected. Wells had 16 notice of its treatment under Debtors’ plan and amended plans 17 and yet failed to timely object. 18 There is no indication in the record that Wells expected 19 direct payments from Debtors to satisfy its secured debt over 20 the long term. Indeed, the confirmed plan did not provide for 21 any such payments. In accordance with the terms of the 22 5 23 Section 506(a) governs the amount and treatment of secured claims. In a reorganization case, § 506 is relevant regarding 24 what claims get paid through the plan, “and the would-be secured creditor whose claim is allowed only as unsecured gets paid as an 25 unsecured creditor.” Laskin v. First Nat’l Bank of Keystone 26 (In re Laskin), 222 B.R. 872, 876 (9th Cir. BAP 1998). Rule 3012 implements the substantive rights of § 506(a). It provides that 27 the bankruptcy court may determine the value of a secured claim, upon motion of a party in interest, and after hearing on notice 28 to the holder of the secured claim.

-13- 1 confirmed plan, the chapter 13 trustee made payments to Wells 2 over forty-two months on the basis that its claim was unsecured. 3 The plan is preclusive as to the treatment of Wells’ claim. See 4 Lomas Mortgage USA v. Wiese, 980 F.2d 1279, 1284 (9th Cir. 5 1992), vacated on other grounds, 508 U.S. 958 (1993) (“An order 6 confirming a Chapter 13 plan is res judicata as to all 7 justiciable issues which were or could have been decided at the 8 confirmation hearing.”); see also Fietz v. Great W. Sav. 9 (In re Fietz), 852 F.2d 455, 458 (9th Cir. 1988) (“Once a 10 Chapter 13 plan is confirmed, all of the property of the estate 11 vests in the debtor and creditors are precluded from asserting 12 any other interest than that provided for them in the confirmed 13 plan.”). 14 Under these circumstances, we conclude that Wells had 15 adequate notice regarding the stripping of its current deed of 16 trust recorded in 2004 and Debtors’ proposed treatment of its 17 wholly unsecured claim in their confirmed FAP. It is not 18 possible to tell from the record whether the bankruptcy court 19 applied the legal standards for notice and due process set forth 20 in Mullane. Assuming that it did not, under a de novo review, 21 the court’s ruling that Wells had inadequate notice was in 22 error. Moreover, to the extent the finding of inadequate notice 23 is purely one of fact, it is not supported by the record and 24 thus is clearly erroneous. 25 B. Civil Rule 60(a): Clerical Mistakes, Oversights and Omissions 26 27 In their Motion to Correct, Debtors requested the 28 bankruptcy court to correct the Valuation Order based on Civil

-14- 1 Rule 60(a), incorporated by Rule 9024.6 Under Civil Rule 60(a), 2 a bankruptcy court may “correct a clerical mistake or a mistake 3 arising from oversight or omission whenever one is found in a 4 judgment, order, or other part of the record.” Relief under 5 Civil Rule 60(a) is not limited to clerical mistakes committed 6 only by the clerk; the rule applies to mistakes by the court, 7 the parties, and the jury as well. Icho v. Hammer, 434 F.Appx. 8 588, 2001 WL 1979163, at *1 (9th Cir. May 23, 2011 (citing Day 9 v. McDonough, 547 U.S. 198, 210–11 (2006)); see also Warner v. 10 Bay St. Louis, 526 F.2d 1211, 1212 (5th Cir. 1976) (mistakes 11 correctable by [Civil] Rule 60(a) are “not necessarily made by 12 the clerk”); Pattiz v. Schwartz, 386 F.2d 300, 303 (8th Cir. 13 1968) (mistakes by parties correctable by [Civil] Rule 60(a)). 14 Corrections pursuant to Civil Rule 60(a) have no time limit. 15 In determining whether a mistake may be corrected under 16 Civil Rule 60(a), the Ninth Circuit focuses on what the court 17 originally intended to do. Tattersalls, Ltd. v. Dehaven, 18 745 F.3d 1294, 1297 (9th Cir. 2014). Further, Civil Rule 60(a) 19 covers more than the “quintessential clerical error” such as 20 where the court errs in transcribing the judgment or makes a 21 computational mistake. See Korea Exchange Bank v. Hanil Bank, 22 Ltd. (In re Jee), 799 F.2d 532 (9th Cir. 1986) (Civil 23 Rule 60(a) used to amend a prior dismissal order where the 24 record and the recollection of the judge who entered the order 25 indicated that the dismissal was intended to be without 26 27 6 In denying the motion, the court referenced Civil 28 Rule 60(b), not 60(a).

-15- 1 prejudice); Jones & Guerrero Co. v. Sealift Pac., 650 F.2d 1072 2 (9th Cir. 1981) (Civil Rule 60(a) used to correct a blanket 3 order dismissing twenty-two diversity cases, where the court 4 intended to remand one of those cases — the only one not 5 originally filed in federal court — to territorial court); Robi 6 v. Five Platters, Inc., 918 F.2d 1439, 1444-45 (9th Cir. 1990) 7 (uncorrected judgment “ordered, among other things, that [a 8 party’s trademark] be canceled,” but it “failed to identify the 9 particular trademark to be canceled or to include any trademark 10 registration numbers or dates of issuance.” The United States 11 Patent and Trademark Office was unable to identify the 12 trademarks to be cancelled, the district court amended its 13 judgment under Civil Rule 60(a) to identify the trademarks with 14 more particularity.); Garamendi v. Henin, 683 F.3d 1069, 1180-81 15 (9th Cir. 2012) (Civil Rule 60(a) used to clarify a judgment 16 that could not be domesticated in a foreign country because its 17 reasoning was not sufficiently detailed). 18 In short, the Ninth Circuit has construed Civil Rule 60(a) 19 broadly, holding that the “[r]ule ‘allows a court to clarify a 20 judgment in order to correct a failure to memorialize part of 21 its decision, to reflect the necessary implications of the 22 original order, to ensure that the court’s purpose is fully 23 implemented, or to permit enforcement.” Garmendi, 683 F.3d at 24 1079. 25 We thus conclude that the bankruptcy court erred by not 26 considering and applying Civil Rule 60(a) to correct the error 27 in the Valuation Order. We provide our analysis on the 28 applicability of Civil Rule 60(a) with the hope that such

-16- 1 guidance might be utilized by Debtors and the bankruptcy court 2 on remand. McDonald v. Sperna (In re Sperna), 173 B.R. 654 (9th 3 Cir. BAP 1994) (providing guidance to the bankruptcy court on 4 remand); Sapper v. Lenco Blade, Inc., 704 F.2d 1069, 1072 (9th 5 Cir. 1983) (addressing a question to provide guidance on 6 remand). 7 As noted above, the error can be made by a party and here 8 it appears to have been a mistake arising from oversight on the 9 part of Debtors and their counsel. Furthermore, the correction 10 proposed by Debtors would not change the Valuation Order’s 11 operative substantive terms or result in a different outcome — 12 the value of Debtors’ Property remains the same and Wells’ 13 second deed of trust (which had been correctly identified by 14 loan number and amount) was wholly unsecured due to that value. 15 Wells suffers no prejudice because the relief sought by Debtors 16 is the very same relief that would have been granted in May 2012 17 in connection with the Valuation Order, but for the unfortunate 18 oversight of Debtors regarding the date of Wells’ deed of trust. 19 Moreover, Wells received payments as an unsecured creditor over 20 the course of Debtors’ plan. In addition, the use of Civil 21 Rule 60(a) is not precluded by the fact that Debtors submitted 22 new evidence relating to the lien in question. Tattersalls, 23 745 F.3d at 1299 (permitting new evidence relating to loss of 24 value) (citing Robert Lewis Rosen Assocs., Ltd. v. Webb, 25 473 F.3d 498, 504–06 (2d Cir. 2007) (permitting the admission of 26 new evidence to correct a judgment)). Finally, the proposed 27 correction would not reflect any change in reasoning that led 28 the bankruptcy court to enter the Valuation Order in the first

-17- 1 place. Accordingly, modifying the Valuation Order to reflect 2 the 2004 Deed of Trust is warranted as there are no obstacles to 3 a proper application of Civil Rule 60(a). 4 C. Civil Rule 60(b)(1): Mistake or Excusable Neglect 5 Civil Rule 60(b)(1) permits a court to reopen judgments for 6 reasons of “mistake, inadvertence, surprise, or excusable 7 neglect, but only on motion made within one year of the 8 judgment.” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. 9 P’ship, 507 U.S. 380, 393 (1993). If a Civil Rule 60(b)(1) 10 motion is untimely, the bankruptcy court lacks jurisdiction to 11 consider the merits of the motion. Nevitt v. United States, 12 886 F.2d 1187, 1188 (9th Cir. 1989). The bankruptcy court 13 correctly concluded that to the extent Debtors relied upon Civil 14 Rule 60(b)(1) to correct the Valuation Order, their motion was 15 untimely. 16 VI. CONCLUSION 17 For the reasons stated below, we REVERSE the bankruptcy 18 court’s determination that Wells' due process rights were 19 violated, VACATE the order denying the Motion to Correct, and 20 REMAND this matter to the bankruptcy court for further 21 proceedings consistent with this memorandum. 22 23 24 25 26 27 28

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