FILED NOV 9 2021 SUSAN M. SPRAUL, CLERK NOT FOR PUBLICATION U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT
In re: BAP No. SC-19-1065-SFL TODD E. MACALUSO, Debtor. Bk. No. 16-04214-LT7
TODD E. MACALUSO, Adv. No. 16-90157-LT Appellant, v. MEMORANDUM* RJC FUNDING, LLC, Appellee.
Appeal from the United States Bankruptcy Court for the Southern District of California Laura S. Taylor, Bankruptcy Judge, Presiding
Before: SPRAKER, FARIS, and LAFFERTY, Bankruptcy Judges.
INTRODUCTION
In a federal diversity action, creditor RJC Funding, LLC, obtained a
partial default judgment against debtor Todd E. Macaluso on several
causes of action, including its fraud claim. The district court awarded RJC
* 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. damages of $2,385,000.70. Afterwards, Macaluso commenced his chapter 7 1
bankruptcy, and RJC initiated an adversary proceeding to except the
judgment debt from discharge. The bankruptcy court ultimately granted
RJC summary judgment on its claim under § 523(a)(2)(A) based on the
issue preclusive effect of the district court’s default judgment. The
bankruptcy court also granted summary judgment in a smaller amount
under § 523(a)(13) based on a judgment for criminal restitution resulting
from Macaluso’s guilty plea for wire fraud. RJC then dismissed its other
nondischargeability claims.
Because none of Macaluso’s arguments on appeal justify reversal, we
AFFIRM.
FACTS 2
RJC and its affiliates (collectively, “RJC”) provided litigation funding
to law firms and their litigation clients including Macaluso and his wholly-
owned law firm Macaluso & Associates, APC. For several years, the
litigation funding transactions between RJC and Macaluso were performed
in accordance with the parties’ agreements. Under the agreements,
Macaluso “sold” to RJC his interest in the anticipated proceeds from the
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. 2 We exercise our discretion to take judicial notice of documents electronically
filed in the underlying bankruptcy case and adversary proceeding. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003). 2 underlying litigation, and he was required to pay specified amounts in
accordance with a payment schedule in the parties’ agreements, subject to a
condition precedent that the underlying litigation yielded the anticipated
proceeds.
For every agreement between RJC and Macaluso, there was a
companion agreement between RJC and Macaluso’s litigation client. Under
the companion agreement, the client would sell RJC a portion of the
anticipated proceeds from the underlying litigation and also would agree
to non-recourse “pay-off amounts” from the litigation proceeds in
accordance with a payment schedule included in the companion
agreement.
In 2012 and 2013, the parties entered into a series of litigation funding
transactions that later resulted in years of litigation (collectively, the
“Failed Transactions”). RJC claims that Macaluso defaulted on the Failed
Transactions. In contrast, Macaluso claims that the Failed Transactions did
not yield any litigation proceeds for RJC because his litigation clients did
not prevail. Under such circumstances, Macaluso contended that he was
not obliged to pay anything.
In August 2014, the parties entered into a Promissory Note
Settlement Agreement (“Settlement”). Though neither party admitted fault
or breach, Macaluso agreed to pay over time a fraction of what RJC claimed
it was owed, plus 15% interest. Macaluso also offered to assign additional
anticipated litigation proceeds from various litigation matters. There were
3 several different default provisions in the Settlement. Ultimately, however,
if Macaluso defaulted and failed to cure, the claimed “full purchase price”
of $1,906,762, plus 15% interest, would be due. Macaluso defaulted and
never paid the amount agreed to under the Settlement.
In April 2015, the United States filed a criminal information against
Macaluso for one count of wire fraud under 18 U.S.C. § 1343. In the
information, the United States alleged that Macaluso:
knowingly devised and intended to devise, with the intent to defraud, a material scheme and artifice to defraud and to obtain money and property by means of materially false and fraudulent pretenses, representations and promises, and by intentional concealment and omission of material facts.
The information further alleged that in furtherance of his fraud scheme,
Macaluso caused to be transmitted a “funding agreement” in interstate
commerce.
Macaluso pled guilty to the one count of wire fraud. At the
sentencing hearing, the U.S. attorney described the nature of the fraud. He
stated that RJC was the victim and that it “invested in Mr. Macaluso’s
ongoing cases with the belief that those funds would be used for litigation
expenses, which they were not.” As for the amount of money RJC lost, the
U.S. attorney stated that at least $150,000 of the amount that RJC funded
“had not been repaid.”
The U.S. attorney further explained that RJC was presented with the
companion agreements supposedly obtained by Macaluso from his
4 litigation clients acknowledging their desire to obtain litigation funding
and to use a portion of the anticipated litigation proceeds as a payment
source for the specified payoff amounts. According to the U.S. attorney, the
signatures of the litigation clients and the attendant notary stamps on the
companion agreements were forged. Macaluso conceded that the
signatures and the notary stamps on the subsidiary agreements were not
done properly. But Macaluso denied that any litigation funds were
misused.
In November 2015, the district court entered its criminal judgment,
sentenced Macaluso to five months imprisonment, and imposed a $100,000
fine. The court also ordered Macaluso to pay RJC $150,000 in restitution.
That same month, RJC sued Macaluso and others in federal court for
fraud, breach of contract, and other causes of action. RJC alleged that
Macaluso and his co-defendants engaged in an intentional scheme to
defraud RJC by entering into litigation funding transactions under false
pretenses. According to RJC, Macaluso requested litigation funding for two
cases, Marsch v. DLA Piper US, LLC and Giordano v. Amex Assurance Co. RJC
asserted that Macaluso led RJC to believe that the plaintiffs in each of these
cases desired to sell their anticipated litigation proceeds for litigation
funding purposes and that they agreed to enter into the companion
agreements necessary to consummate litigation funding transactions. As
RJC explained, Macaluso presented RJC with fully executed companion
agreements that purported to include the notarized signatures of the
5 plaintiffs in the underlying cases. RJC maintained that, in reality, Macaluso
caused the client signatures and notary stamps to be forged and that he
never intended to use the funding for litigation expenses; rather, he always
intended to and did use the funding for his own personal use or for his co-
defendants’ benefit.
With respect to both the Marsch and Giordano transactions, RJC
contended that it reasonably relied on the information and documentation
Macaluso provided. RJC asserted that it suffered damages of not less than
$2,240,445.34, on which interest, costs, and attorney’s fees were continuing
to accrue.
Macaluso was duly served with the complaint in the district court
civil action. He never filed an answer, though he did file a request to
extend the time to respond to the original request for entry of default.
Indeed, he later admitted that he affirmatively chose not to defend the
district court civil action on the advice of counsel and based on his own
legal research. Ultimately, the district court entered partial default
judgment against Macaluso for $2,385,000.70. 3 The default judgment was
specifically granted on both RJC’s breach of contract and fraud causes of
action — as well as on certain other causes of action.
Macaluso commenced his chapter 7 case in July 2016. RJC filed its
nondischargeability complaint a few months later. Among other claims for
Although the default judgment only disposed of some of RJC’s claims, RJC 3
dismissed its remaining claims in July 2017, as reflected in the district court’s docket. 6 relief, RJC asserted a claim under § 523(a)(2)(A) that Macaluso fraudulently
induced it to enter into the Failed Transactions and the Settlement, which
resulted in RJC suffering damages of at least $2,380,000. For purposes of
this claim for relief, RJC relied on allegations that largely mirrored the
content of its first amended complaint filed in the district court civil action.
It attached and incorporated the district court’s default judgment into its
nondischargeability complaint.
RJC also stated a claim for relief under § 523(a)(13) seeking to except
from discharge the $150,000 restitution award provided for in the district
court’s criminal judgment.
Macaluso appeared through counsel and filed an answer to the
nondischargeability complaint. Notably, Macaluso admitted the truth of
paragraph 41 of the nondischargeability complaint, which provided: “[a]s a
direct and proximate result of the foregoing [fraudulent conduct], Plaintiff
has suffered damages in an amount not presently ascertained but believed
to be in excess of $2,380,000 which should be exempted from discharge in
the Debtor Macaluso’s bankruptcy.”
RJC filed its summary judgment motion based largely on the issue
preclusive effect of the district court default judgment. But it also relied on
the preclusive effect of the federal criminal judgment, especially for its
§ 523(a)(13) claim for relief. It further relied on Macaluso’s admission of
paragraph 41 of the nondischargeability complaint.
7 Macaluso complained that RJC gave his counsel insufficient notice of
the summary judgment hearing. Nonetheless, Macaluso opposed the
summary judgment motion. He principally argued that the Settlement
subsumed and superseded the Failed Transactions, and the Settlement was
insufficient by itself to support the district court’s fraud finding.
At the hearing on the summary judgment motion, the bankruptcy
court rejected Macaluso’s arguments and granted partial summary
judgment in favor RJC on its claims for relief under § 523(a)(2)(A) and (13).
The court made it clear it was denying summary judgment with respect to
the remainder of RJC’s nondischargeability claims and required RJC to
advise the court whether it wanted to continue to prosecute those other
claims or to dismiss them without prejudice.
Macaluso filed a notice of appeal on March 18, 2019 and an amended
notice of appeal on March 25, 2019. On May 16, 2019, he filed a motion for
reconsideration. Meanwhile, the bankruptcy court entered on April 16,
2019 an order granting partial summary judgment in favor of RJC. That
order contemplated not only the voluntary dismissal of RJC’s lingering
nondischargeability claims but also the submission and entry of a “final
separate judgment” to fully and finally dispose of the adversary
proceeding. The bankruptcy court entered that judgment on June 19, 2019.
On July 1, 2019, the bankruptcy court entered an order denying
Macaluso’s reconsideration motion. Among other things, the court noted
that Macaluso had admitted in his declaration in support of his
8 reconsideration motion that he affirmatively chose not to defend the
district court civil action based on the advice of his counsel and his own
legal research. The court further observed that most of the points Macaluso
sought to advance in his reconsideration motion amounted to defenses and
arguments that he might have asserted in the district court civil action but
were not properly before the bankruptcy court as part of the
nondischargeability action.
Macaluso did not file a new notice of appeal or an amended notice of
appeal from the denial of his reconsideration motion, as contemplated in
Rule 8002(b)(3).
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and
157(b)(2)(I). We have jurisdiction under 28 U.S.C. § 158.
ISSUES
1. Did the bankruptcy court err when it granted summary judgment in
favor of RJC on its claim under § 523(a)(2)(A)?
2. Did the bankruptcy court err when it granted summary judgment in
favor of RJC on its claim under § 523(a)(13)?
STANDARDS OF REVIEW
We review de novo the bankruptcy court’s grant of summary
judgment. Plyam v. Precision Dev., LLC (In re Plyam), 530 B.R. 456, 461 (9th
Cir. BAP 2015). We also review de novo the bankruptcy court's
determination that issue preclusion is available. Lopez v. Emergency Serv.
9 Restoration, Inc. (In re Lopez), 367 B.R. 99, 103 (9th Cir. BAP 2007). When we
review a matter de novo, “we consider [the] matter anew, as if no decision
had been rendered previously.” Kashikar v. Turnstile Cap. Mgmt., LLC (In re
Kashikar), 567 B.R. 160, 164 (9th Cir. BAP 2017).
If we determine that issue preclusion is available, we then review the
bankruptcy court’s decision to apply it for an abuse of discretion. In re
Lopez, 367 B.R. at 103. A bankruptcy court abuses its discretion if it applies
the wrong legal standard, or its findings of fact are illogical, implausible or
without support in the record. TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d
820, 832 (9th Cir. 2011).
DISCUSSION
A. Summary judgment and issue preclusion legal standards.
A bankruptcy court may grant summary judgment when the record
demonstrates “that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law.” Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also In re Plyam, 530 B.R. at 462
(citing Civil Rule 56(a), which is made applicable in adversary proceedings
by Rule 7056).
When a federal district court, sitting in diversity, disposes of a cause
of action under state law, the issue preclusive effect of the district court’s
judgment also is determined by state law. See Taco Bell Corp. v. TBWA
Chiat/Day Inc., 552 F.3d 1137, 1144-45 (9th Cir. 2009) (citing Semtek Int'l Inc.
v. Lockheed Martin Corp., 531 U.S. 497, 508 (2001)). RJC’s causes of action set
10 forth in its district court complaint were founded on California law. Under
California issue preclusion law, the proponent must establish the following
threshold elements:
(1) the issue sought to be precluded from relitigation is identical to that decided in a former proceeding; (2) the issue was actually litigated in the former proceeding; (3) the issue was necessarily decided in the former proceeding; (4) the decision in the former proceeding is final and on the merits; and (5) the party against whom preclusion is sought was the same as, or in privity with, the party to the former proceeding.
In re Plyam, 530 B.R. at 462 (citing Lucido v. Super. Ct., 51 Cal. 3d 335, 341
(1990)).
Before applying issue preclusion, the bankruptcy court additionally
needs to assess “whether imposition of issue preclusion in the particular
setting would be fair and consistent with sound public policy.” Khaligh v.
Hadaegh (In re Khaligh), 338 B.R. 817, 824-25 (9th Cir. BAP 2006), aff'd, 506
F.3d 956 (9th Cir. 2007) (citing Lucido, 51 Cal. 3d at 341-43).
The party asserting issue preclusion has the burden of proof to
establish each of the threshold requirements. See Harmon v. Kobrin (In re
Harmon), 250 F.3d 1240, 1245 (9th Cir. 2001). To satisfy this burden, the
moving party “must introduce a record sufficient to reveal the controlling
facts and pinpoint the exact issues litigated in the prior action.” Kelly v.
Okoye (In re Kelly), 182 B.R. 255, 258 (9th Cir. BAP 1995), aff'd, 100 F.3d 110
(9th Cir. 1996). Any reasonable doubt regarding what the prior court
decided is resolved against the moving party. Id. 11 California generally applies issue preclusion to default judgments. As
the California Supreme Court has explained: “The fact that the judgment
was secured by default does not warrant the application of a special rule. A
default judgment is an estoppel as to all issues necessarily litigated therein
and determined thereby exactly like any other judgment.” Williams v.
Williams (In re Williams' Estate), 36 Cal. 2d 289, 293 (1950) (cleaned up),
quoted with approval in In re Harmon, 250 F.3d at 1246.
Harmon interpreted Williams’ rules for applying issue preclusion to
default judgments through the lens of modern (post-Lucido) California
issue preclusion law. In re Harmon, 250 F.3d at 1246-47 & nn. 5, 6. Based on
its interpretation of Williams, Harmon explained that when a litigant
invokes the issue preclusive effect of a prior default judgment, he or she
must establish — in addition to Lucido’s threshold elements — that the
defendant in the prior action duly received service of the summons and the
complaint or had actual knowledge of the existence of the prior action. Id.
at 1247 (citing In re Williams’ Estate, 36 Cal. 2d at 297).
According to Harmon, the plaintiff must also show that the court in
the prior action made express findings on the issues to be precluded or that
such findings, even if not expressly made, were essential to the prior
court’s default judgment — in the sense that the default judgment could
not have been properly rendered without implicitly making such findings.
Id. at 1247-48. As Harmon further explained, if the issues were essential to
the default judgment, they were both actually litigated and necessarily
12 decided for issue preclusion purposes. Id. at 1248-49 (citing Baldwin v.
Kilpatrick (In re Baldwin), 249 F.3d 912, 919 (9th Cir. 2001)).
B. Macaluso’s arguments on appeal.
Macaluso exclusively attacks the portion of the bankruptcy court’s
judgment based on § 523(a)(2)(A). That section generally excepts from
discharge debts for money, property, or services procured by fraud. Oney v.
Weinberg (In re Weinberg), 410 B.R. 19, 35 (9th Cir. BAP 2009). The elements
for a fraud claim under § 523(a)(2)(A) mirror the elements for a fraud cause
of action under California law, which require: “(1) a misrepresentation
(false representation, concealment, or nondisclosure); (2) knowledge of
falsity; (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance;
and (5) resulting damage.” Zuckerman v. Crigler (In re Zuckerman), 613 B.R.
707, 714 (9th Cir. BAP 2020), appeal docketed, Case No. 20-60031 (9th Cir. July
13, 2020).
We will address in turn each of Macaluso’s arguments challenging
the portion of the bankruptcy court’s judgment based on § 523(a)(2)(A).
1. Macaluso’s argument that no actionable fraud occurred is an impermissible collateral attack on the default judgment.
Macaluso initially contends that the bankruptcy court erred in
granting summary judgment on RJC’s § 523(a)(2)(A) claim because no
actionable fraud occurred. He reasons that RJC could not have suffered
compensable fraud damages inasmuch as his clients lost the underlying
litigation. Given that the underlying litigation was lost, Macaluso
13 maintains that he owed nothing to RJC on account of the Failed
Transactions. As he further maintains, he only agreed in the Settlement to
make further payments on account of the Failed Transactions because he
hoped to obtain additional litigation funding from RJC in the future.
In addition, Macaluso posits that because the district court already
had awarded RJC $150,000 in restitution in its criminal judgment, any
amount of damages awarded in the district court civil action would have
been duplicative and a windfall because the restitution award made RJC
whole.
It is too late for Macaluso to argue that he did not commit any
actionable fraud. As the bankruptcy court correctly observed, Macaluso
could have asserted this and similar arguments if he had elected to defend
the district court civil action. But he chose not to do so, and the district
court entered judgment against Macaluso for fraud.
Put differently, Macaluso’s argument that he did not commit
actionable fraud amounts to an impermissible collateral attack on the
district court’s default judgment. Therefore, we will not further consider it.
“Our prior decisions make clear that appellants cannot successfully
challenge an order on appeal by attacking a prior final order that they did
not timely appeal.” Jue v. Liu (In re Liu), 611 B.R. 864, 881 (9th Cir. BAP
2020); see also Heritage Pac. Fin., LLC v. Machuca (In re Machuca), 483 B.R.
726, 735-36 (9th Cir. BAP 2012) (“[T]he bankruptcy court’s order granting
14 summary judgment was final. HPF cannot collaterally attack that judgment
through the § 523(d) proceeding.”).
2. The bankruptcy court did not err in applying issue preclusion to the default judgment.
Macaluso next argues that the bankruptcy court should not have
applied issue preclusion to the district court default judgment. Macaluso
reasons that he did not have a full and fair opportunity to defend against
the district court civil action because he was incarcerated at the time and
was not able to work effectively with his counsel or review necessary
documents to mount a meaningful defense within the time permitted. He
further asserts that the district court should not have denied his request for
additional time to respond to the request for entry of default.
Macaluso’s assertions regarding his opportunity to defend the district
court action are at odds with his admission that he affirmatively chose not
to defend the action. Furthermore, though courts consider the opportunity
to litigate when deciding the issue preclusive effect of a default judgment,
that requirement generally is satisfied if the defendant received service of
the summons and the complaint or had actual knowledge of the existence
of the prior action. In re Harmon, 250 F.3d at 1247 (citing In re Williams’
Estate, 36 Cal. 2d at 297). Here, there is no legitimate dispute that Macaluso
was duly served with the summons and complaint in the district court civil
action and that he was aware of the action. Indeed, his counsel made an
15 appearance in the action when he requested an extension of time to
respond to RJC’s initial request for entry of default.
Under California law, the opportunity to litigate can be considered
more fully as part of the public policy inquiry the court must undertake if it
determines that the threshold elements for application of issue preclusion
have been met. See id. at 1247 & n.6. Here, the bankruptcy court applied the
correct law. It expressly considered Macaluso’s points about his
opportunity to litigate in the process of considering whether public policy
supported the application of issue preclusion to the district court default
judgment. The bankruptcy court found that in spite of his incarceration,
Macaluso had ample opportunity both before and after entry of the default
judgment to challenge the district court’s entry of a default judgment.
On this record, the bankruptcy court’s findings regarding Macaluso’s
opportunity to defend the district court civil action were logical, plausible,
and supported by the record. Consequently, we perceive no ground for
reversal based on Macaluso’s opportunity to defend against the district
court civil action.
Macaluso also challenges the bankruptcy court’s determination that
his fraudulent conduct was actually litigated in the district court civil
action. By implication, he also challenges the necessarily decided issue
preclusion element. See id. at 1248 (“As a conceptual matter, if an issue was
necessarily decided in a prior proceeding, it was actually litigated.”).
Relying exclusively on federal issue preclusion law, Macaluso asserts that a
16 default judgment generally should not be considered to satisfy the issue
preclusion elements of actually litigated and necessarily decided.
However, the bankruptcy court correctly applied California issue
preclusion law, which provides that a default judgment satisfies the
actually litigated and necessarily decided elements when it includes
express findings or when such findings are implicit in the prior judgment
because they were essential elements of the causes of action on which the
prior court specifically granted relief. See id. at 1248-49; In re Baldwin, 249
F.3d at 919. Here, the default judgment established that all the elements for
RJC’s fraud claim were met. Because the fraud elements obviously were
essential to rendering judgment on the fraud claim, the fraud elements
were actually litigated and necessarily decided for issue preclusion
purposes.
Thus, we reject as meritless Macaluso’s arguments that the
bankruptcy court erred when it applied issue preclusion to the district
court’s default judgment.
3. The bankruptcy court did not err in its treatment of the federal criminal judgment.
The bankruptcy court granted summary judgment for RJC on its
§ 523(a)(13) claim based on the criminal judgment entered on Macaluso’s
guilty plea. Section 523(a)(13) excepts from discharge any debt “for any
payment of an order of restitution issued under title 18, United States
Code.” Nothing other than a criminal judgment for violation of title 18 that
17 provides for restitution is necessary to except a debt from discharge under
§ 523(a)(13). See Sanders v. Progressive Cas. Ins. Co. (In re Sanders), BAP No.
AZ-06-1382-PaBMo, 2007 WL 7540961, at *1, *4 (9th Cir. Mar. 30, 2007).
Macaluso did not challenge the bankruptcy court’s decision that the
criminal restitution judgment was nondischargeable under § 523(a)(13) and
has waived any argument for reversing that portion of the bankruptcy
court’s judgment. See Christian Legal Soc'y v. Wu, 626 F.3d 483, 487-88 (9th
Cir. 2010).
Macaluso does contend that the bankruptcy court erred in giving the
criminal judgment issue preclusive effect as to RJC’s nondischargeability
claim under § 523(a)(2)(A). However, as explained above, the bankruptcy
court’s summary judgment on RJC’s § 523(a)(2)(A) claim was adequately
supported by the issue preclusive effect of the default judgment, so there is
no need for us to address the extent to which the criminal judgment also
supported summary judgment on RJC’s § 523(a)(2)(A) claim.
4. The bankruptcy court’s alleged violation of Macaluso’s due process rights was not reversible error.
Macaluso argues that the bankruptcy court erred when it failed to
continue the summary judgment hearing. He contends that he did not have
enough time to meaningfully respond to the summary judgment motion
and that the bankruptcy court violated his due process rights by denying
his counsel’s request for a continuance of the summary judgment
proceedings. He states that his counsel was given only 20 days advance
18 notice of RJC’s summary judgment motion rather than 28 days as required
by Local Rule 9013-6(a)(1).
This is a misstatement of the record. Whereas Macaluso says that the
summary judgment motion was served on his counsel on January 16, 2019,
the record reflects that the summary judgment motion and the moving
papers filed contemporaneously with the motion were served on January 3,
2019. This was more than 30 days before the February 6, 2019 summary
judgment hearing. The notice of the February 6, 2019 summary judgment
hearing was the only document that RJC served on January 16, 2019. But
Macaluso’s counsel was actually apprised of the February 6, 2019 hearing
date much earlier. At the time of the status conference held on November
2, 2018, which counsel for both sides attended, the court set February 6,
2019 for hearing any dispositive motions filed in the action. On the same
day as the November 2, 2018 status conference, the bankruptcy court
entered a minute order reflecting the February 6, 2019 hearing date as well
as other dates and deadlines set by the court.
The bankruptcy court effectively denied Macaluso’s continuance
request during the summary judgment hearing. In doing so, the court
observed that there was little or nothing additional that Macaluso could
meaningfully say that could potentially change its analysis and resolution
of the summary judgment motion given the issue preclusive effect of the
default judgment and nature of the criminal restitution. In short, Macaluso
has failed to establish how he was harmed by the denial of the continuance.
19 The contents of Macaluso’s subsequent motion for reconsideration
bear out the bankruptcy court’s observation. The motion for
reconsideration largely mirrors the arguments that Macaluso has advanced
on appeal. As we have explained in this decision, most of Macaluso’s
arguments are meritless and none justify reversal. When as here the record
demonstrates that appellant was not prejudiced in any discernable way by
an alleged denial of due process, the appellant’s due process argument will
not support reversal. See Rosson v. Fitzgerald (In re Rosson), 545 F.3d 764,
776-77 (9th Cir. 2008), partially overruled on other grounds by Nichols v.
Marana Stockyard & Livestock Mkt., Inc. (In re Nichols), 10 F.4th 956, 962 (9th
Cir. 2021).
5. Macaluso was not entitled to a sua sponte grant of summary judgment in his favor.
Next, Macaluso argues that the bankruptcy court should have sua
sponte granted summary judgment in his favor. Civil Rule 56(f), made
applicable in adversary proceedings by Rule 7056, sets forth procedures
that enable a court to exercise its discretion to grant summary judgment in
favor of a nonmoving party. But nothing in Macaluso’s appeal papers
demonstrates that the bankruptcy court was obliged to sua sponte exercise
such discretion. To the contrary, the general rule is that an appellant cannot
successfully argue on appeal that a court abused its discretion by failing to
grant discretionary relief when the appellant never asked the court for that
relief. See, e.g., Consorzio Del Prosciutto Di Parma v. Domain Name Clearing
20 Co., LLC, 346 F.3d 1193, 1195 (9th Cir. 2003); Rohauer v. Friedman, 306 F.2d
933, 937 (9th Cir. 1962).
In any event, Macaluso’s argument that he should have been granted
summary judgment is largely a recapitulation of the same points Macaluso
made in his initial argument that his conduct did not amount to actionable
fraud. Thus, for the same reasons we rejected Macaluso’s initial argument,
we also reject his final argument attacking the bankruptcy court’s summary
judgment ruling.
6. The denial of Macaluso’s reconsideration motion is beyond the scope of this appeal.
There is one final issue that we must address. To the extent Macaluso
sought to challenge on appeal the denial of his motion for reconsideration,
he should have filed a new notice of appeal or an amended notice of appeal
as contemplated in Rule 8002(b)(3). Because he failed to do so, the denial of
his reconsideration motion is beyond the scope of this appeal. Olomi v.
Tukhi (In re Tukhi), 568 B.R. 107, 112 (9th Cir. BAP 2017); see also Linton v.
Colpo Talpa, LLC (In re Linton), ___ B.R. ___, BAP No. NC-20-1175-KTB, 2021
WL 4592517, at *7 (9th Cir. BAP Oct. 6, 2021) (“Linton's notice of appeal
challenged only the denial of the Civil Rule 21 motion to join parties. As
Linton did not appeal the § 303(i) judgment, no other ruling by the
bankruptcy court arising from the § 303(i) relevant proceeding is before
us.”), appeal docketed, Case No. 21-60053 (9th Cir. Oct. 19, 2021).
21 Even if we were to conclude that we somehow have jurisdiction to
review the denial of the reconsideration motion, we still would affirm.
Macaluso has forfeited any issue concerning the propriety of that denial by
not specifically and distinctly advancing any argument for reversal of the
denial. See Christian Legal Soc'y, 626 F.3d at 487-88.
CONCLUSION
For the reasons set forth above, the bankruptcy court’s grant of
summary judgment in favor of RJC on its claims for relief under
§ 523(a)(2)(A) and (13) is AFFIRMED.