Filed: Dec. 03, 2019
Latest Update: Mar. 11, 2020
Summary: FILED DEC 3 2019 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT In re: BAP No. CC-19-1083-GTaS SHMUEL ERDE, Bk. No. 2:18-bk-20200 Debtor. Adv. No. 2:18-ap-01290 SHMUEL ERDE, Appellant, v. MEMORANDUM* DAVID EISENBERG; GEORGE VETRANO, Appellees. Argued and Submitted on November 21, 2019 at Pasadena, California Filed – December 3, 2019 Appeal from the United States Bankruptcy Court for the Central D
Summary: FILED DEC 3 2019 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT In re: BAP No. CC-19-1083-GTaS SHMUEL ERDE, Bk. No. 2:18-bk-20200 Debtor. Adv. No. 2:18-ap-01290 SHMUEL ERDE, Appellant, v. MEMORANDUM* DAVID EISENBERG; GEORGE VETRANO, Appellees. Argued and Submitted on November 21, 2019 at Pasadena, California Filed – December 3, 2019 Appeal from the United States Bankruptcy Court for the Central Di..
More
FILED
DEC 3 2019
NOT FOR PUBLICATION
SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. CC-19-1083-GTaS
SHMUEL ERDE, Bk. No. 2:18-bk-20200
Debtor. Adv. No. 2:18-ap-01290
SHMUEL ERDE,
Appellant,
v. MEMORANDUM*
DAVID EISENBERG; GEORGE
VETRANO,
Appellees.
Argued and Submitted on November 21, 2019
at Pasadena, California
Filed – December 3, 2019
Appeal from the United States Bankruptcy Court
for the Central District of California
*
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.
Honorable Vincent P. Zurzolo, Bankruptcy Judge, Presiding
Appearances: Appellant Shmuel Erde argued pro se.**
Before: GAN, TAYLOR, and SPRAKER, Bankruptcy Judges.
INTRODUCTION
Chapter 111 debtor Shmuel Erde appeals from an order denying his
motion pursuant to Rule 9024, to alter or amend the order dismissing his
first amended complaint with prejudice. Mr. Erde did not appeal the order
dismissing his first amended complaint and instead sought relief from the
order on the basis of newly discovered evidence.
The bankruptcy court denied the motion to alter or amend as moot
because the underlying bankruptcy case was dismissed and Mr. Erde was
determined to be a vexatious litigant. We AFFIRM on the separate basis
that Mr. Erde did not present any newly discovered evidence.
**
None of the named appellees actively participated in this appeal.
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
FACTS
Mr. Erde filed a chapter 11 case, pro se, on August 31, 2018. He
initiated an adversary proceeding against Jaime Mendoza, The Puffy Trust,
David Eisenberg, and George Vetrano seeking $52,000 which Mr. Erde
alleged was payable to him for his efforts in procuring a loan transaction.
A. The first complaint
Mr. Erde alleged that he received a loan request from George Vetrano
for $6,000,000 to be secured by real property in New York, owned by the
Puffy Trust. Mr. Erde alleged that he submitted the loan request to David
Eisenberg, who promised that Mr. Erde would receive one point of the
gross amount of the loan as compensation for arranging the transaction.
After the loan closed for $5,700,000, Mr. Eisenberg deposited $5,000 into
Mr. Erde’s brokers account.
The trustee of the Puffy Trust, Jaime Mendoza, filed a motion to
dismiss the complaint pursuant to Civil Rule 12(b)(6) on the basis that
Mr. Erde did not allege any facts involving actions taken by Mr. Mendoza
or the Puffy Trust. Mr. Mendoza also argued that Mr. Erde was not entitled
to a commission as a matter of law because the complaint made no
allegations that Mr. Erde was licensed to charge and receive a commission
as required by New York law, or that there was a written commission
agreement as required by California law.
The bankruptcy court dismissed the complaint without prejudice on
3
October 25, 2018, and set a deadline of November 16, 2018, for Mr. Erde to
file an amended complaint. The court required that any amended
complaint be served according to the rules of bankruptcy procedure and
applicable laws.
B. The first amended complaint
Mr. Erde filed a first amended complaint on November 8, 2018. He
named Mr. Vertrano and Mr. Eisenberg as defendants and made the same
factual allegations about the loan and his claim.
On December 6, 2018, the court held a hearing on the adversary
proceeding and dismissed the first amended complaint. Mr. Erde did not
provide a transcript of that hearing.
Mr. Erde filed a request for a written order on December 26, 2018, in
which he stated that the bankruptcy court had dismissed the first amended
complaint at the December 6, 2018 hearing but had not entered a written
order on the docket. The next day, the court entered a separate written
order dismissing the first amended complaint with prejudice because
Mr. Erde failed to serve the first amended complaint in accordance with the
rules of bankruptcy procedure. Mr. Erde did not appeal.
C. The motion to alter or amend
On February 5, 2019, Mr. Erde filed a motion to alter or amend the
order dismissing the complaint and the first amended complaint on the
basis of newly discovered evidence. Mr. Erde stated that he had discovered
4
a new claim against all of the defendants based on their allegedly illegal
scheme to pay kickback commissions in violation of the rules of the
Consumer Financial Protection Bureau (“CFPB”). Mr. Erde argued that
Mr. Vetrano and Mr. Eisenberg were not licensed brokers at the time of the
loan transaction and therefore they could not be paid a commission unless
they were listed in the closing statement. Mr. Erde stated that after the loan
closed in 2017, he asked for a closing statement but was told that no closing
statement was issued. Mr. Erde noticed a hearing on his motion for
February 28, 2019.
On February 7, 2019, Mr. Mendoza filed a motion to continue the
hearing. Mr. Mendoza argued that the court should conduct the hearing on
its order to show cause why the bankruptcy case should not be dismissed
prior to the deadline for responses to the motion to alter or amend. The
court continued the hearing to May 2, 2019.
On February 21, 2019, the bankruptcy court dismissed the
bankruptcy case and declared Mr. Erde a vexatious litigant. On April 2,
2019, the bankruptcy court entered an order denying Mr. Erde’s motion to
alter or amend as moot because the bankruptcy case was dismissed and
Mr. Erde was determined to be a vexatious litigant. Mr. Erde timely
appealed.
JURISDICTION
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334
5
and 157(b)(1). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Whether the bankruptcy court erred in denying Mr. Erde’s motion to
alter or amend the dismissal order.
STANDARD OF REVIEW
We review decisions regarding relief from judgment under Rule 9024
for abuse of discretion. Heritage Pacific Fin., LLC v. Montano (In re Montano),
501 B.R. 96, 105 (9th Cir. BAP 2013). A bankruptcy court abuses its
discretion if it applies the wrong legal standard, misapplies the correct
legal standard, or if its factual findings are illogical, implausible, or without
support in the record. Traffic School.com, Inc. v. Edriver Inc.,
653 F.3d 820, 832
(9th Cir. 2011). We may affirm the decision of the bankruptcy court on any
basis supported by the record. Western Funding Inc. v. Shapiro (In re Western
Funding Inc.),
550 B.R. 841, 849 (9th Cir. BAP 2016).
We review our own jurisdiction de novo. Silver Sage Partners, Ltd. v.
City of Desert Hot Springs (In re City of Desert Hot Springs), 339 F.3d 782, 787
(9th Cir. 2003). De novo review requires that we consider the matter as if no
decision had been previously rendered. Kashikar v. Turnstile Capital Mgmt.,
LLC (In re Kashikar),
567 B.R. 160, 164 (9th Cir. BAP 2017).
6
DISCUSSION
A. We do not have jurisdiction to review the order dismissing
the first amended complaint.
Mr. Erde did not include the order dismissing the first amended
complaint in his notice of appeal or attach that order, but his brief focuses
primarily on the dismissal order and not the denial of his Rule 9024
motion. Despite Mr. Erde’s failure to include the dismissal order in his
notice of appeal, it is possible that we could have discretion to review that
order if the notice of appeal was timely. See Mahakian v. William Maxwell
Investments, LLC, (In re Mahakian), 529 B.R. 268 (9th Cir. BAP 2015); Rule
8003(a)(2). However, because Mr. Erde did not timely appeal the dismissal
order, we lack jurisdiction to review it.
Rule 8002(a) provides that a notice of appeal must be filed within
fourteen days after entry of the judgment, order, or decree being appealed.
This deadline is incorporated into 28 U.S.C. § 158(c)(2) and is a
jurisdictional requirement. Wilkins v. Menchaca (In re Wilkins), 587 B.R. 97,
106 (9th Cir. BAP 2018).
The bankruptcy court dismissed the first amended complaint at the
December 6, 2018 hearing and entered a separate written order on
December 27, 2018.2 Mr. Erde did not file a notice of appeal within fourteen
2
Mr. Erde has not argued that the dismissal order failed to satisfy Rule 7058, but
“when a court enters a short order that clearly constitutes a final decision, that short
(continued...)
7
days of the entry of the order as required by Rule 8002(a), and did not file
any other motion sufficient to toll the time to appeal under Rule 8002(b). As
a result, we lack jurisdiction to review the order dismissing the first
amended complaint, and this appeal is limited to the order denying the
motion to alter or amend.
B. The bankruptcy court did not err in denying the motion to
alter or amend.
Although the court denied the motion to alter or amend as moot,
relief under Civil Rule 60(b) was unavailable because Mr. Erde did not
present any newly discovered evidence.
Civil Rule 60(b), made applicable by Rule 9024, allows the court to set
aside a judgment or order for the following reasons:
(1) mistake, inadvertence, surprise, or excusable
neglect;
(2) newly discovered evidence that, with reasonable
diligence, could not have been discovered in time to
2
(...continued)
order meets the separate judgment rule.” Unites States v. Schimmels (In re Schimmels), 85
F.3d 416, 421 (9th Cir. 1996). The dismissal order references the findings and
conclusions made at the December 6, 2018 hearing and was entered after Mr. Erde’s
request for a separate written order. The dismissal order clearly states “IT IS ORDERED
that the First Amended Complaint is DISMISSED WITHOUT LEAVE TO AMEND.”
However, even if the order did not satisfy Rule 7058, Mr. Erde waived any objection by
moving to abandon the claims in the main case and by filing a Civil Rule 60(b) motion.
See Casey v. Albertson’s Inc.,
362 F.3d 1254, 1259 (9th Cir. 2004) (“[A] party’s actions
indicating its belief that a final judgment was entered can be sufficient to waive any
Rule 58 objections.”).
8
move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or
extrinsic), misrepresentation, or misconduct by an
opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released, or
discharged; it is based on an earlier judgment that
has been reversed or vacated; or applying it
prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Mr. Erde’s sole basis for relief was newly discovered evidence that,
with reasonable diligence, could not have been discovered in time to move
for a new trial. To constitute newly discovered evidence under Civil Rule
60(b)(2), the evidence (1) must have existed at the time the order was
entered; (2) could not have been discovered through due diligence; and (3)
was “of such magnitude that production of it earlier would have been
likely to change the disposition of the case.” Jones v. Aero/Chem Corp., 921
F.2d 875, 878 (9th Cir. 1990).
Mr. Erde’s “newly discovered evidence” is that Mr. Vetrano and
Mr. Eisenberg engaged in an allegedly illegal kickback scheme in violation
of CFPB regulations. All of the facts surrounding the loan transaction were
9
known to Mr. Erde at the time of filing the first amended complaint.3
Mr. Erde offered no new evidence, only a new theory based on existing
facts. However, “learning of a new legal theory is not the discovery of new
evidence” required for relief under Civil Rule 60(b)(2). FDIC v. Arciero, 741
F.3d 1111, 1118 (10th Cir. 2013).
Even if the new legal theory could constitute newly discovered
evidence, it was not of such a magnitude that it was likely to change the
outcome of the case. The bankruptcy court dismissed the first amended
complaint because Mr. Erde failed to serve the first amended complaint in
accordance with the rules of bankruptcy procedure. Additional factual
allegations or new legal theories would not have changed the result. Relief
under Rule 60(b)(2) was not warranted and the bankruptcy court did not
abuse its discretion in denying the motion.
CONCLUSION
For the reasons set forth above, we AFFIRM the bankruptcy court's
order denying Mr. Erde’s motion to amend the order dismissing the first
amended complaint.
3
It is possible that the new legal theory was also known to Mr. Erde at the time
of the first amended complaint. The declaration attached to his motion to alter or amend
states that it was executed on November 1, 2019, before the dismissal order was entered.
Facts known to Mr. Erde before the dismissal order was entered cannot be newly
discovered evidence sufficient to alter or amend under Civil Rule 60(b)(2). See Coastal
Transfer Co. v. Toyota Motor Sales, U.S.A., Inc., 833 F.2d 208, 212 (9th Cir. 1987).
10
