Tammy Phillips v. Kevan Gilman

• Court: Court of Appeals for the Ninth Circuit
• Decided: November 25, 2020
• Docket: 19-60056
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 25 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

TAMMY R. PHILLIPS, et al., No. 19-60056

Appellants, BAP No. 18-1100

v. MEMORANDUM* KEVAN HARRY GILMAN, et al.,

Appellees.

TAMMY R. PHILLIPS, et al., No. 19-60057

Appellants, BAP No. 18-1101

v.

KEVAN HARRY GILMAN,

Appellee.

TAMMY R. PHILLIPS, et al., No. 19-60058

Appellants, BAP No. 18-1066

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Appeal from the Ninth Circuit Bankruptcy Appellate Panel Taylor, Lafferty III, and Spraker, Bankruptcy Judges, Presiding

Submitted November 19, 2020** Pasadena, California

Before: CALLAHAN and BUMATAY, Circuit Judges, and PRESNELL,*** District Judge.

Tammy R. Phillips and Tammy R. Phillips, A Professional Law Corporation

(Creditors), appeal three Bankruptcy Appellate Panel (BAP) dispositions that

affirm a number of adverse rulings in Bankruptcy Court proceedings of Kevan

Harry Gilman (Debtor): In re Gilman, 2019 WL 3096872 (9th Cir. BAP 2019)

(Gilman I); In re Gilman, 2019 WL 3074607 (9th Cir. BAP 2019) (Gilman II); In

re Gilman, 603 B.R. 437 (9th Cir. BAP 2019) (Gilman III).1 We have jurisdiction

under 28 U.S.C. § 158(d) and affirm all the rulings at issue.

“We review decisions of the BAP de novo, and we apply the same standard

of review to the bankruptcy court’s decision that the BAP applied.” In re Gardens

Reg’l Hosp. & Med. Ctr., Inc., 975 F.3d 926, 937 (9th Cir. 2020). “We review for

** The panel unanimously concludes these cases are suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Gregory A. Presnell, United States District Judge for the Middle District of Florida, sitting by designation. 1 Because the parties are familiar with the facts, we restate only those necessary to explain our decision.

2 an abuse of discretion [a] court’s decision not to sanction [a party] under Rule 37.”

Magnetar Techs. Corp. v. Intamin, Ltd., 801 F.3d 1150, 1155 (9th Cir. 2015). “We

review the denial of sanctions under Bankruptcy Rule 9011 for an abuse of

discretion.” In re Marino, 37 F.3d 1354, 1358 (9th Cir. 1994). For rulings on

motions for sanctions under the Bankruptcy Court’s inherent power to sanction, we

also review for abuse of discretion. See In re Deville, 361 F.3d 539, 547 (9th Cir.

2004).

Under abuse of discretion, we affirm unless the court below “applied the

wrong legal standard or its findings were illogical, implausible or without support

in the record.” TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th Cir.

2011) (citing United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en

banc)). We may affirm “on any basis supported by the record.” United States v.

Gonzalez-Rincon, 36 F.3d 859, 866 (9th Cir. 1994) (citing United States v.

Washington, 969 F.2d 752, 755 (9th Cir. 1992)).

We review issues of statutory construction, such as whether California’s

anti-SLAPP statute applies to affirmative defenses, de novo. See Einstein/Noah

Bagel Corp. v. Smith (In re BCE W., L.P.), 319 F.3d 1166, 1170 (9th Cir. 2003).

We review questions of law concerning entitlement to attorney’s fees de novo, but

review the amount of attorney’s fees awarded for abuse of discretion. PSM

Holding Corp. v. Nat’l Farm Fin. Corp., 884 F.3d 812, 828 (9th Cir. 2018).

3 1. Creditors’ challenge to the Bankruptcy Court’s denial of sanctions

under Rule 37 for Debtor’s denials of certain Requests for Admission is not

persuasive. Given Debtor’s medical history and then-ongoing medical evaluations,

Debtor “had a reasonable ground to believe that [he] might prevail on the matter.”

See Fed. R. Civ. P. 37(c)(2)(C). Creditors fail to show that the Bankruptcy Court’s

denial of Rule 37 sanctions was without basis in the record, or illogical or

implausible. See Hinkson, 585 F.3d at 1262.

2. We also find unpersuasive Creditors’ challenge to the Bankruptcy

Court’s denial of sanctions under Rule 9011, 11 U.S.C. § 105(a), and the

Bankruptcy Court’s inherent power to sanction (Rule 9011 Motion), asserting

generally that Debtor and his counsel acted in bad faith in litigating the disability

enhancement. Given the evidence of Debtor’s medical conditions and his

testimony regarding his depression and lack of full-time work, Creditors have not

shown that the Bankruptcy Court’s ruling was without support in the record,

implausible, or illogical. See id.

3. Similarly, Creditors fail to show that the Bankruptcy Court erred in

denying the Rule 9011 Motion as to Debtor’s request for mediation sanctions. The

Bankruptcy Court ordered all parties to appear personally at the mediation, but

Phillips failed to appear, although she was available by telephone. As such,

Phillips failed to follow the Bankruptcy Court’s order. Creditors likewise fail to

4 establish that the Bankruptcy Court erred in denying the Rule 9011 sanctions as to

Debtor’s disqualification motion. The Bankruptcy Court recognized that Debtor’s

motion was colorable, because there existed state precedent supporting Debtor’s

position. Thus, the Bankruptcy Court’s finding that Debtor’s requests were not

baseless was not implausible, illogical, or without support in the record. See

Hinkson, 585 F.3d at 1262.

4. Creditors’ objections to the Bankruptcy Court’s award of $2,000 to

Debtor for opposing the Rule 9011 Motion are unavailing. First, “[c]ase law

interpreting Rule 11 is applicable to Rule 9011.” Shalaby v. Mansdorf (In re

Nakhuda), 544 B.R. 886, 899 (9th Cir. BAP 2016) (citing Marsch v. Marsch (In re

Marsch), 36 F.3d 825, 829 (9th Cir. 1994)). Thus, Rule 9011 motions, like Rule

11 motions, “cannot be served after the [lower] court has decided the merits of the

underlying dispute giving rise to the questionable filing.” See Islamic Shura

Council of S. Cal. v. F.B.I., 757 F.3d 870, 873 (9th Cir. 2014).

Second, our subsequent vacation of the 2016 homestead exemption

judgment in 2018 does not change the fact that Creditors untimely filed their Rule

9011 Motion after the Bankruptcy Court had already ruled on “the underlying

dispute[s] giving rise to” the Rule 9011 Motion See id.

5 Third, Creditors’ contention that Debtor’s counsel has not filed a 11 U.S.C.

§ 329 statement fails to show that the Bankruptcy Court lacked discretion to shift

fees from Creditors to Debtor.

Finally, whether Debtor’s counsel may have some conflict issues (not before

this Court) does not establish that the Bankruptcy Court abused its discretion in

shifting fees from Creditors to Debtor, given that Debtor had to expend costs to

oppose the Rule 9011 Motion.

5. Nor do we agree with Creditors’ assertion that the BAP erred in

deferring to the district court’s ruling on the anti-SLAPP appeal because it was not

decided on the merits. The district court rejected the appeal precisely because it

held that the anti-SLAPP statute did not apply to Debtor’s affirmative defense. We

agree with the district court that the plain language of the statute and precedent

make clear that the statute does not apply to affirmative defenses such as Debtor’s

offset defense. The statute applies to a “cause of action” contained in a

“complaint” or a “cross-complaint.” Cal. Code Civ. Proc. § 425.16(b)(1), (h); see

also § 425.16(a) (stating that the purpose of the anti-SLAPP statute is to limit

“lawsuits”); Batzel v. Smith, 333 F.3d 1018, 1025–26 (9th Cir. 2003).

6. Creditors mistakenly contend that California Code of Civil Procedure

§ 685.080’s “two-year” provision limiting fees and costs does not apply to their

§ 685.040 fee motions because § 685.080 is procedural state law. We have

6 specifically held that where a party’s “right to recover post-judgment attorney fees

is dependent on section 685.040, [it is] required to comply with the timeliness

requirements for post-judgment attorney fee motions set forth in the [California

Enforcement of Judgments Law],” which includes § 685.080. Carnes v. Zamani,

488 F.3d 1057, 1061 (9th Cir. 2007). Creditors moved explicitly under § 685.040

for fees in enforcing their state court judgment.

Moreover, the BAP correctly noted that “the time limitations are built into

the statute itself and are more properly read as an element of recovery.” See

Gilman III, 603 B.R. at 443. Creditors have not established that the time limit can

be waived, tolled, or extended here. Creditors mistakenly rely on Highland

Springs Conference & Training Center v. City of Banning, 42 Cal. App. 5th 416

(2019), for the proposition that § 685.080 was tolled until they prevailed in the

Bankruptcy Court. Unlike in Highland, the Bankruptcy Court proceedings here

were not for the purpose of seeking pre-judgment fees incurred in obtaining a

judgment, see id. at 425, but post-judgment fees in enforcing the state court

judgment.

Furthermore, Creditors’ argument that 11 U.S.C. § 108(c) extends the time-

limit in § 685.080 fails. As the BAP correctly explained, § 108(c) does not apply

here because Creditors filed their fee motions in the Bankruptcy Court for fees

7 incurred after Debtor filed his bankruptcy petition. See Gilman III, 603 B.R. at

444–45.

7. While Creditors do not argue that the Bankruptcy Court abused its

discretion in denying any particular category of timely fees, they unpersuasively

assert that the Bankruptcy Court erred in not assessing recoverability at the

“macro” level by looking to the “purpose of the action,” citing Globalist Internet

Technologies, Inc. v. Reda, 167 Cal. App. 4th 1267 (2008). Globalist does not

support Creditors’ contrived “purpose of the action rule,” but rather assumes the

unremarkable proposition that it is within a trial court’s province to assess the

reasonableness of fees. Id. at 1276. Creditors also broadly argue that the

Bankruptcy Court was not specific enough in its fee cut explanations, contending

that a fee request should not be reduced more than ten percent without a more

specific explanation, citing Moreno v. City of Sacramento, 534 F.3d 1106 (9th Cir.

2008). However, the Bankruptcy Court spent six pages in its main case fee ruling

parsing Creditors’ individual fee categories and providing specific reasons for

disallowance, which the BAP further reviewed. See Gilman I, 2019 WL 3096872,

at *6. The Bankruptcy Court spent seven pages in its adversary proceeding fee

ruling reviewing the individual fee categories set forth in Creditors’ fee

application, which the BAP also further reviewed. See Gilman II, 2019 WL

3074607, at *17. Given the lack of specific objections from Creditors and the

8 detailed analyses by the Bankruptcy Court and the BAP, Creditors fail to establish

abuse of discretion in any particular fee disallowance.2

AFFIRMED.

2 Creditors’ requests for judicial notice, Dkt. 48 (Appeal No. 19-60056); Dkt. 39 (Appeal No. 19-60057); Dkt. 42 (Appeal No. 19-60058), are GRANTED.