Rettig v. Peters (In Re Peters)

191 B.R. 411, 96 Daily Journal DAR 1657, 1996 Bankr. LEXIS 79, 1996 WL 44825
CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedJanuary 18, 1996
DocketBAP No. CC-94-2523-VJRi. Bankruptcy No. LA93-26896 CA. Adv. No. LA93-02735 CA
StatusPublished
Cited by7 cases

This text of 191 B.R. 411 (Rettig v. Peters (In Re Peters)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rettig v. Peters (In Re Peters), 191 B.R. 411, 96 Daily Journal DAR 1657, 1996 Bankr. LEXIS 79, 1996 WL 44825 (bap9 1996).

Opinion

OPINION

VOLINN, Bankruptcy Judge:

OVERVIEW

Nancy Jo Rettig (“Ms. Rettig”), a creditor of the debtor, appeals a judgment holding the debtor not liable for fraud or defalcation while acting in a fiduciary capacity under 11 U.S.C. § 523(a)(4). 2 The panel is without jurisdiction to reach the merits, however, because of an unresolved motion below.

We REMAND.

FACTUAL BACKGROUND AND PROCEEDINGS

Ms. Rettig is a psychotherapist who specializes in family counseling. She had personal savings of $20,000 at the time she started dating the debtor in April of 1991.

*414 The debtor holds a California real estate license. On their first date, he told Ms. Rettig that he jointly owned real property consisting of 104 condominium units in Las Vegas, Nevada. He suggested that she invest money in the venture. Initially, she did not want to loan any money to the debtor, but he convinced her it was safe, and that he would monitor the investment for her. Ms. Rettig had never purchased any real estate before and she was nervous about investing her savings in such a way. The debtor also prepared and sent Ms. Rettig an information package on the property which indicated that the investment would be secured by real estate.

Based on these oral and written representations, Ms. Rettig loaned the debtor $4,000 on April 25, 1991. The debtor gave her a promissory note payable in a year, with interest at the rate of 19% per annum. Ms. Rettig tendered the $4,000 payment at the Moore Investment offices, the real estate company where the debtor told her he was employed. She was not given a deed of trust.

In correspondence dated May 17,1991, the debtor purported to advise Ms. Rettig about the status of her “investment in the Las Vegas condos and trust deeds.” The letter was typed on Moore Investments letterhead. Although the $4,000 transaction was structured as a personal loan to the debtor, Ms. Rettig testified that it was her understanding that the debtor would invest the money in her name in the debtor’s real estate venture.

On July 22, 1991, Ms. Rettig loaned the debtor $16,000. Again, Ms. Rettig tendered the funds at the Moore Investment offices. The transaction was also evidenced by a promissory note payable in one year with interest at the rate of 20% per annum. The debtor gave Ms. Rettig a deed of trust to secure payment of the note. The trust deed encumbered certain real property located in Las Vegas, Nevada, described as 5080 Spencer, Unit “A”. The deed was not recorded at the time of payment nor at any time thereafter. Ms. Rettig did not know that the deed had to be recorded in order to protect her security interest in the property. Because of her relationship with the debtor and his role as her advisor, Ms. Rettig assumed that all requirements associated with securing her investment would be handled by the debtor. He did not tell her that her security interest would be protected against third party interests only if the deed was recorded in Clark County, Nevada.

Two months later, on September 24, 1991, the real property in which Ms. Rettig held a security interest was sold. The debtor was aware of the sale, and the fact that Ms. Rettig’s deed of trust, not having been secured, would effectively deprive her of her security. As a consequence, she was not paid from the sale proceeds. He did not inform her of the sale, nor grant her substitute security in another condominium. Nonetheless, the debtor sent Ms. Rettig a year-end statement in December, 1991 that referenced her two payments, listing them as investments and indicating that they were both secured by real property described as 5080 Spencer, Unit “A”.

The year-end statement was followed by a second version sent in January, 1992. The second statement listed the $4,000 as an unsecured investment. The $16,000 investment was still listed as secured, but by a different piece of real property (5080 Spencer, Unit “D”) from that described in her unrecorded deed of trust. A note under the description of Unit D indicated that escrow had closed on September 24,1991.

Approximately one month before the first note matured, Ms. Rettig informed the debt- or that she would be seeking full payment, plus interest. He assured her that she would be paid. She did not receive any funds or communication from the debtor on the date payment was due.

The debtor ultimately contacted Ms. Rettig and asked her to restructure payment of the loans. She refused and brought a lawsuit to recover the funds. According to the debtor, this litigation resulted in his filing a bankruptcy petition on May 11, 1993. Ms. Rettig was listed as an unsecured creditor on the debtor’s schedules. She filed a complaint to determine dischargeability pursuant to *415 § 523(a)(4). 3

The trial court found that the debtor was a licensed real estate agent in the State of California. The court held, however, that because the debtor was not Ms. Rettig’s real estate agent, no fiduciary relationship arose between them. The court determined that the debtor owed no duty to Ms. Rettig other than that expected of principals in an arms’ length transaction. The court held Ms. Ret-tig responsible for recording the deed of trust. The court further found that the debt- or’s actions and communications were not misleading and held the debts dischargeable.

The court instructed the debtor to prepare Findings of Fact and Statement of Decision (“findings and statement”) and a separate judgment. Ms. Rettig timely objected to the debtor’s findings and statement and filed an alternative pleading in compliance with the applicable local rule. 4 Ms. Rettig also requested a hearing on her objection. The court never responded to Ms. Rettig’s request and signed the findings and statement and judgment as originally filed without indicating whether it had considered appellant’s objections. The judgment was entered on October 17,1994.

On November 14, 1994, approximately 27 days after entry of the judgment, Ms. Rettig filed a motion to extend the time to file a notice of appeal. The clerk set a hearing on the motion for December 12, 1994. After reviewing the evidence, the court granted Ms. Rettig’s request and extended the time to appeal the judgment to December 15, 1994. Ms. Rettig filed her notice of appeal on December 13, 1994 claiming that the trial court’s findings were clearly erroneous and that its conclusions of law constituted an abuse of discretion.

Unaware of Ms. Rettig’s unresolved objections, the panel issued a conditional order of dismissal on November 1, 1995 because it appeared that the notice of appeal was not timely filed. 5 Ms. Rettig responded that the motion for an extension of time was filed within 30 days of the entry of the judgment and that her failure to file the notice of appeal in a timely manner constituted excusable neglect as defined under Rule 8002(c). 6

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191 B.R. 411, 96 Daily Journal DAR 1657, 1996 Bankr. LEXIS 79, 1996 WL 44825, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rettig-v-peters-in-re-peters-bap9-1996.