In re: Vishaal Virk

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: April 24, 2017
• Docket: EC-16-1193-TaBJu
• Status: Unpublished

Opinion

FILED APR 24 2017 1 NOT FOR PUBLICATION 2 SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL

3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. EC-16-1193-TaBJu ) 6 VISHAAL VIRK, ) Bk. No. 14-25512-C-13C ) 7 Debtor. ) ______________________________) 8 ) VISHAAL VIRK, ) 9 ) Appellant, ) 10 ) v. ) MEMORANDUM* 11 ) RONNY DHALIWAL; SUNITA ) 12 DHALIWAL; DAVID CUSICK, ) Trustee, ) 13 ) Appellees. ) 14 ______________________________) 15 Argued and Submitted on March 23, 2017 at Sacramento, California 16 Filed – April 24, 2017 17 Appeal from the United States Bankruptcy Court 18 for the Eastern District of California 19 Honorable David E. Russell, Bankruptcy Judge, Presiding 20 Appearances: Peter G. Macaluso argued for appellant; Sean 21 Gavin of Foos Gavin Law Firm, P.C. argued for appellees Ronny Dhaliwal and Sunita Dhaliwal. 22 23 Before: TAYLOR, BRAND, and JURY, Bankruptcy Judges. 24 25 26 * This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. 28 See 9th Cir. BAP Rule 8024-1(c)(2). 1 INTRODUCTION 2 Appellees Ronny and Sunita Dhaliwal filed a proof of claim 3 for breach of a 2012 settlement agreement in Debtor Vishaal 4 Virk’s chapter 131 case. Debtor contends that the Dhaliwals 5 should be judicially estopped from raising the claim because 6 Ronny Dhaliwal failed to make appropriate disclosure in his 2007 7 Arizona bankruptcy case. The bankruptcy court first allowed the 8 proof of claim over objection but subject to a potential 9 redetermination of the claim’s amount in the Dhaliwals’ 10 nondischargeability proceeding. It thereafter disagreed with 11 Debtor’s judicial estoppel theory twice: first, when it 12 determined the claim was dischargeable; and then, when it 13 declined to reconsider the initial claim objection order. 14 Debtor appealed only the latter order. He fails, however, to 15 provide us with a transcript of the original hearing where the 16 bankruptcy court stated its findings of fact and conclusions of 17 law. We, thus, summarily AFFIRM. 18 FACTS 19 Debtor’s bankruptcy petition and initial proceedings. In 20 Debtor’s 2014 chapter 13 case, the Dhaliwals filed a proof of 21 claim for $344,568.66, based on Debtor’s breach of a 2012 22 settlement agreement. The settlement arose from Sunita 23 Dhaliwal’s investment in Debtor’s gas station and Debtor’s 24 employment of Ronny Dhaliwal. Allegedly, Debtor did not make 25 1 Unless otherwise indicated, all chapter and section 26 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. 27 All “Rule” references are to the Federal Rules of Bankruptcy Procedure. All “Civil Rule” references are to the Federal Rules 28 of Civil Procedure.

2 1 appropriate payment on his obligations as an employer and 2 otherwise defaulted in his obligations, and Sunita and Ronny 3 Dhaliwal separately sued him in state court. On the eve of 4 trial in 2012, the three parties entered into a global 5 settlement under which Debtor was to pay a sum certain over time 6 to the Dhaliwals. Debtor failed to make timely settlement 7 payments. 8 The Dhaliwals commenced a timely adversary proceeding 9 seeking to hold their claim nondischargeable.2 10 Debtor took an offensive as well as defensive position in 11 relation to the Dhaliwals’ claim and nondischargeability action. 12 As most relevant here, he objected to their proof of claim, 13 arguing, among other things, that they lacked standing to bring 14 the claim because Ronny Dhaliwal, in his 2007 bankruptcy case, 15 failed to schedule and disclose the money Sunita Dhaliwal 16 invested in Debtor’s gas station. 17 The bankruptcy court, Judge Klein presiding, resolved the 18 claim objection after hearing; it entered an order allowing the 19 claim as a $344,568.66 general unsecured claim, unless a 20 different amount was determined in the adversary proceeding, and 21 provided that $12,475 of the claim was entitled to unsecured 22 priority status. The order referred back to oral findings at 23 the hearing as it recited that: “Findings of Fact and 24 Conclusions of Law [were] stated orally on the record.” 25 2 We exercise our discretion to take judicial notice of 26 documents electronically filed in the underlying bankruptcy case 27 and related adversary proceeding. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 28 2003).

3 1 Judgment in the adversary proceeding. Meanwhile, the 2 adversary proceeding went to trial. The bankruptcy court, Judge 3 Russell presiding, ruled orally from the bench, determined that 4 the Dhaliwals’ claim was dischargeable, declined to otherwise 5 alter the amount of their claim, and subsequently entered a 6 judgment consistent with this oral ruling. 7 Debtor’s reconsideration motion. Less than two weeks after 8 entry of judgment in the adversary proceeding, Debtor filed a 9 motion to reconsider and vacate the claim objection order.3 10 After one continuance so that Debtor might “better identify the 11 judgments and orders for which the Debtor seeks relief,” the 12 bankruptcy court, Judge Sargis presiding, continued the matter 13 to a different department. The bankruptcy court, now Judge 14 Klein presiding, then continued the matter to yet another 15 department; the bankruptcy court, Judge Russell again presiding, 16 entertained extensive oral argument and ruled from the bench. 17 The amended civil minute order stated: “Findings of fact and 18 conclusions of law having been stated orally on the record and 19 good cause appearing, IT IS ORDERED that the motion is denied.” 20 Debtor timely appealed. 21 JURISDICTION 22 The bankruptcy court had jurisdiction under 28 U.S.C. 23 §§ 1334 and 157(b)(2)(B). We have jurisdiction under 28 U.S.C. 24 § 158. 25 26 27 3 The chapter 13 trustee opposed but played no further 28 role in the dispute.

4 1 ISSUE 2 Whether the bankruptcy court abused its discretion in: 3 (1) denying Debtor’s motion to reconsider or vacate its order on 4 the claim objection; and (2) declining to apply judicial 5 estoppel. 6 STANDARDS OF REVIEW 7 We review for an abuse of discretion a bankruptcy court’s 8 decision on: (1) a reconsideration motion under § 502(j) and 9 Rule 3008, Heath v. Am. Express Travel Related Servs. Co. 10 (In re Heath), 331 B.R. 424, 429 (9th Cir. BAP 2005); (2) a 11 Civil Rule 59 reconsideration motion, Ybarra v. McDaniel, 12 656 F.3d 984, 998 (9th Cir. 2011); and (3) a Rule 60(b) 13 reconsideration motion, Lal v. California, 610 F.3d 518, 523 14 (9th Cir. 2010); Weiner v. Perry, Settles & Lawson, Inc. 15 (In re Weiner), 161 F.3d 1216, 1217 (9th Cir. 1998). We also 16 review for abuse of discretion the bankruptcy court’s decision 17 to apply judicial estoppel to the facts of a case. Hamilton v. 18 State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 2001). 19 A bankruptcy court abuses its discretion if it applies the 20 wrong legal standard, misapplies the correct legal standard, or 21 if it makes factual findings that are illogical, implausible, or 22 without support in inferences that may be drawn from the facts 23 in the record. See TrafficSchool.com, Inc. v. Edriver Inc., 24 653 F.3d 820, 832 (9th Cir. 2011) (citing United States v. 25 Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc)). 26 DISCUSSION 27 The scope of the appeal. Debtor wants the Dhaliwals’ claim 28 disallowed on judicial estoppel grounds. His judicial estoppel

5 1 theory was well ventilated before the bankruptcy court. In his 2 original claim objection, he asserted that the claim was 3 property of Ronny Dhaliwal’s chapter 7 bankruptcy estate. The 4 bankruptcy court, however, overruled Debtor’s objection and 5 allowed the claim; it left open only the possibility that the 6 amount of the claim could change as part of any decision in the 7 nondischargeabilty proceeding. 8 Beyond the bare articulation of the bankruptcy court’s 9 initial ruling, we know nothing about what happened when the 10 bankruptcy court first considered Debtor’s judicial estoppel 11 defense; Debtor did not provide us with a transcript from that 12 critical hearing. 13 During the adversary proceeding, while the claim objection 14 remained unresolved as to amount and subject to final 15 determination in some regard, Debtor again raised judicial 16 estoppel in his trial brief and re-asserted it at trial. The 17 bankruptcy court, however, declined to apply judicial estoppel 18 in connection with its determinations at the trial. We have the 19 transcript of the trial, but it sheds no light on the initial 20 determination by another judge of the bankruptcy court. 21 Finally, in his reconsideration motion and amended 22 reconsideration motion, Debtor again argued judicial estoppel; 23 the bankruptcy court, again, decided not to apply it. We have 24 the transcript of the reconsideration hearing, but it again 25 fails to explain the initial and most critical determination on 26 the issue. 27 Debtor’s notice of appeal identifies only one order: the 28 order denying his motion to reconsider the order overruling his

6 1 claim objection. 2 An allowed or disallowed proof of claim “may be 3 reconsidered for cause.” 11 U.S.C. § 502(j); Fed. R. Bankr. 4 P. 3008. And a “reconsidered claim may be allowed or disallowed 5 according to the equities of the case.” 11 U.S.C. § 502(j). If 6 the time to appeal an order on a claim objection has not 7 expired, a reconsideration request is governed by Civil Rule 59, 8 applied in bankruptcy by Rule 9023. Wall Street Plaza, LLC v. 9 JSJF Corp. (In re JSJF Corp.), 344 B.R. 94, 103 (9th Cir. BAP 10 2006), aff’d, 277 F. App’x 718 (9th Cir. 2008). When “the time 11 for appeal has expired, a [§ 502(j)] motion to reconsider should 12 be treated as a motion for relief from judgment under Bankruptcy 13 Rule 9024.” S.G. Wilson Comp. v. Cleanmaster Indus., Inc. 14 (In re Cleanmaster Indus., Inc.), 106 B.R. 628, 630 (9th Cir. 15 BAP 1989). Rule 9024 applies Civil Rule 60 in bankruptcy 16 proceedings. 17 We summarily affirm because Debtor provided us with an 18 incomplete record on appeal. This case is a procedural tangle, 19 and Debtor’s excerpts of record are deficient and unhelpful. He 20 asks us to review the bankruptcy court’s decision on his motion 21 to reconsider the order on his objection to the Dhaliwals’ proof 22 of claim. He initially provided us, however, with only limited 23 documents: (1) the bankruptcy court’s minute order denying the 24 reconsideration motion; (2) the original proof of claim; 25 (3) Ronny Dhaliwal’s Arizona bankruptcy petition; (4) the trial 26 transcript from the adversary proceeding; and (5) the Dhaliwals’ 27 reply to a set of interrogatories. After the Panel issued an 28 order directing him to provide the transcript from the

7 1 reconsideration hearing, Debtor submitted it. He never 2 provided: 3 • his underlying motion to reconsider or any of the resulting 4 filings; 5 • his original objection to the Dhaliwals’ claim or any of 6 the accompanying filings; or 7 • the bankruptcy court’s original order on his claim 8 objection. 9 If this were all that was missing, we could fill in the blanks 10 by exercising our discretion to independently review the docket. 11 But Debtor also did not provide us with the transcript from 12 the hearing on his claim objection, and he now seeks 13 reconsideration of the order resolving that objection. The 14 order itself does not contain findings and, instead, refers to 15 oral findings at the hearing as it states: “Findings of Fact and 16 Conclusions of Law having been stated orally on the record.” 17 If a bankruptcy court makes its findings of facts and 18 conclusions of law on the record, the appellant must include the 19 transcript as part of the excerpts of record. McCarthy v. 20 Prince (In re McCarthy), 230 B.R. 414, 416–17 (9th Cir. BAP 21 1999). Here, Debtor did not. Nor can we find a copy of the 22 transcript on the bankruptcy court’s docket. We, thus, cannot 23 meaningfully review either the original claim objection order or 24 the second order denying reconsideration of the claim objection 25 order.4 Ehrenberg v. Cal. State Univ., Fullerton Found. 26 4 27 Nor did Debtor, in asking for reconsideration of Judge Klein’s claim objection order, provide Judge Russell with a 28 (continued...)

8 1 (In re Beachport Entm’t), 396 F.3d 1083, 1087-88 (9th Cir. 2 2005); Morrissey v. Stuteville (In re Morrissey), 349 F.3d 1187, 3 1189 (9th Cir. 2003) (failing to provide a critical transcript 4 may result in summary affirmance). 5 CONCLUSION 6 Based on the foregoing, we AFFIRM. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 4 24 (...continued) transcript of the claim objection hearing. The reconsideration 25 hearing transcript reflects that Judge Russell was justifiably perplexed at what he was being asked to consider. Hr’g Tr. 26 (Feb. 16, 2016) 4:2-5 (“Now, what’s got me a little bit 27 concerned here is apparently the judgments that we’re seeking to reconsider were the judgments entered by Judge Klein and not by 28 me; is that right?”).