Filed: May 29, 2020
Latest Update: May 29, 2020
Summary: FILED MAY 29 2020 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY.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 Nos. WW-19-1251-FSTa WW-19-1277-FSTa SHELLEY ANN ERICKSON, (Consolidated) Debtor. Bk. No. 2:19-bk-12026-TWD SHELLEY ANN ERICKSON, Appellant, v. MEMORANDUM* JASON WILSON-AGUILAR, Chapter 13 Trustee, Appellee. Submitted Without Argument on May 20, 2020 Filed – May 29, 2020 Appeal from the United States Bankruptcy Court for
Summary: FILED MAY 29 2020 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY.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 Nos. WW-19-1251-FSTa WW-19-1277-FSTa SHELLEY ANN ERICKSON, (Consolidated) Debtor. Bk. No. 2:19-bk-12026-TWD SHELLEY ANN ERICKSON, Appellant, v. MEMORANDUM* JASON WILSON-AGUILAR, Chapter 13 Trustee, Appellee. Submitted Without Argument on May 20, 2020 Filed – May 29, 2020 Appeal from the United States Bankruptcy Court for t..
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FILED
MAY 29 2020
NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK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 Nos. WW-19-1251-FSTa
WW-19-1277-FSTa
SHELLEY ANN ERICKSON, (Consolidated)
Debtor. Bk. No. 2:19-bk-12026-TWD
SHELLEY ANN ERICKSON,
Appellant,
v. MEMORANDUM*
JASON WILSON-AGUILAR, Chapter 13
Trustee,
Appellee.
Submitted Without Argument on May 20, 2020
Filed – May 29, 2020
Appeal from the United States Bankruptcy Court
for the Western District of Washington
Honorable Timothy W. Dore, Bankruptcy Judge, Presiding
*
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.
Appearances: Appellant Shelley Ann Erickson, pro se, on the brief;
Appellee Jason Wilson-Aguilar, Chapter 13 Trustee, pro
se, on the brief.
Before: FARIS, SPRAKER, and TAYLOR, Bankruptcy Judges.
INTRODUCTION
Chapter 131 debtor Shelley Ann Erickson failed to make her mortgage
payments for ten years and was facing foreclosure in state court. As a last-
ditch effort to save her property, she filed for bankruptcy protection. The
bankruptcy court denied plan confirmation and dismissed her case.
Ms. Erickson appeals, arguing that she did not have notice of the
hearing on the motion to dismiss. She also argues that the state court
foreclosure proceeding was flawed.
The record shows that Ms. Erickson had notice of the hearing and
that cause existed to dismiss her case. Furthermore, the bankruptcy court
was correct in refusing to review the state court’s decisions. We AFFIRM.
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
FACTUAL BACKGROUND2
A. The state court proceedings
Ms. Erickson and her husband own real property located in Auburn,
Washington (the “Property”) worth approximately $700,000. Deutsche
Bank National Trust Company, as Trustee, in trust for registered Holders
of Long Beach Mortgage Loan Trust 2006-4, Asset-Backed Certificates,
Series 2006-04 (“Deutsche Bank”), holds a first-position lien against the
Property to secure a debt of about $923,193.
Deutsche Bank sought to foreclose on its lien. At Ms. Erickson’s
request, the state court issued a temporary restraining order halting
foreclosure. It declined to convert the temporary restraining order to a
preliminary injunction, and it expired.
B. Ms. Erickson’s bankruptcy petition and proposed plan
Ms. Erickson filed a chapter 13 bankruptcy petition and scheduled
Deutsche Bank’s lien. She reported that she and her husband had a
combined gross monthly income of $4,126.19 and monthly disposable
income of $1,182.02.
Her initial chapter 13 plan (“Plan”) proposed that she would pay
$1,182.02 per month for the first three months while she attempted to
2
We exercise our discretion to review the bankruptcy court’s docket, as
appropriate. See Woods & Erickson, LLP v. Leonard (In re AVI, Inc.),
389 B.R. 721, 725 n.2
(9th Cir. BAP 2008).
3
modify the loan. Thereafter, the monthly plan payments would increase to
$12,949.98, unless she could secure a loan modification and modify the
Plan. Elsewhere in the Plan, she proposed to sell the Property if the loan
modification was unsuccessful.
Deutsche Bank objected to plan confirmation. It argued that the Plan
failed to meet the confirmation requirements in § 1325(a), primarily
because Ms. Erickson could not afford the cure and maintenance payments
totaling over $14,000 per month.
In response, Ms. Erickson filed an objection to Deutsche Bank’s
objection and an application for a Rule 2004 examination of Deutsche Bank.
She took the position that she did not owe Deutsche Bank anything because
it was a “fraudulent creditor.”
Separately, chapter 13 trustee Jason Wilson-Aguilar (“Trustee”) filed
an objection to plan confirmation. He argued that the Plan was not feasible,
most notably because Ms. Erickson lacked sufficient income and proposed
paying significantly less than what she owed her creditors.
C. The Trustee’s motion to dismiss
The Trustee also filed a motion to dismiss Ms. Erickson’s case
(“Motion to Dismiss”) under § 1307(c). He argued (among other things)
that Ms. Erickson could not afford the monthly plan payments necessary to
confirm her Plan and that she did not propose the Plan in good faith. He
also argued that she probably could not obtain refinancing, given that the
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mortgage arrears totaled nearly $600,000, or sell the Property, because
Deutsche Bank’s secured claim greatly exceeded the value of the Property.
The Motion to Dismiss was set for hearing on September 18, 2019.
The Trustee served Ms. Erickson with a copy of the Motion to Dismiss and
notice of hearing by U.S. mail.
D. Hearing on plan confirmation
Ms. Erickson appeared at the hearing on plan confirmation on
August 7, 2019. Ms. Erickson stated that she did not want to pursue
confirmation of the existing Plan. The bankruptcy court agreed that the
Plan as proposed was not confirmable, in part because there was no
indication that she had the ability to make the minimum necessary plan
payments. The court allowed Ms. Erickson to file an amended plan and
said that it would hold a continued confirmation hearing on October 2.
When the court held the August 7 confirmation hearing, the Motion
to Dismiss was on file and set for hearing on September 18. The parties did
not discuss that hearing date, Ms. Erickson did not inquire about that
hearing date, and the court did not change that date.
The bankruptcy court issued an order (“Order Denying
Confirmation”) denying confirmation of the Plan, allowing Ms. Erickson to
file an amended plan, and continuing the hearing. It provided that “This
order is without prejudice to the Trustee’s Motion to Dismiss Case . . .
which may be heard on the Court’s September 18, 2019 calendar[.]”
5
Ms. Erickson filed an amended plan that decreased her monthly
payment to $1,140. She asserted that she did not have any mortgage debt.
She also filed a document styled as an “Objection to Motion to Object
to Objection Dismiss Confirmation” (“Omnibus Objection”). She stated that
she was opposing the Motion to Dismiss and argued that she did not owe
Deutsche Bank any money.
E. Hearing on the Motion to Dismiss
The bankruptcy court held a hearing on the Trustee’s Motion to
Dismiss on September 18, 2019. Ms. Erickson did not appear.
The bankruptcy court found cause to dismiss her case under
§ 1307(c). It held that her income was insufficient to fund a confirmable
plan. It further held that the amended plan was unconfirmable on its face
and that there was prejudicial delay to her creditors. The court issued an
order dismissing the case (“Dismissal Order”).
F. The motions to vacate
Ms. Erickson filed a “Motion for Appeal” and asserted that she “was
not told about this hearing . . . . The hearing was set to be October 2, 2019.”
The following day, she filed a motion to vacate the Dismissal Order that
repeated the same argument.
The bankruptcy court denied the motion to vacate. It stated that
Ms. Erickson did not provide any legally sufficient reason to vacate the
dismissal. It also rejected Ms. Erickson’s argument that she did not have
6
notice of the September 18 hearing.
Ms. Erickson filed a notice of appeal from the Dismissal Order. She
also filed a second motion to vacate, which the bankruptcy court denied.
Ms. Erickson amended her notice of appeal to include the order denying
the second motion to vacate.
JURISDICTION
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334
and 157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Whether the bankruptcy court erred in dismissing Ms. Erickson’s
bankruptcy case.
STANDARDS OF REVIEW
We review for abuse of discretion the bankruptcy court’s decision to
dismiss a case. Leavitt v. Soto (In re Leavitt),
171 F.3d 1219, 1223 (9th Cir.
1999). Similarly, we review for abuse of discretion the court’s ruling on a
motion for reconsideration. Determan v. Sandoval (In re Sandoval),
186 B.R.
490, 493 (9th Cir. BAP 1995).
To determine whether the bankruptcy court has abused its discretion,
we conduct a two-step inquiry: (1) we review de novo whether the
bankruptcy court “identified the correct legal rule to apply to the relief
requested” and (2) if it did, we consider whether the bankruptcy court’s
application of the legal standard was illogical, implausible, or without
7
support in inferences that may be drawn from the facts in the record.
United States v. Hinkson,
585 F.3d 1247, 1262-63 & n.21 (9th Cir. 2009) (en
banc).
Ms. Erickson argues that the bankruptcy court violated her due
process rights because she did not have notice of the hearing on the Motion
to Dismiss. We review this aspect of the decision de novo. See HSBC Bank
USA, Nat’l Ass’n v. Blendheim (In re Blendheim),
803 F.3d 477, 497 (9th Cir.
2015). “De novo review requires that we consider a matter anew, as if no
decision had been made previously.” Francis v. Wallace (In re Francis),
505
B.R. 914, 917 (9th Cir. BAP 2014) (citations omitted).
DISCUSSION
A. Ms. Erickson had proper notice of the hearing on the Motion to
Dismiss.
Ms. Erickson argues that she was “tricked” and told that there was no
hearing set for September 18, 2019, which caused her to miss the hearing.
We reject her argument, because the record shows that she had proper
notice of the hearing on the Motion to Dismiss.
Generally speaking, a court must give sufficient notice of its intention
to dismiss a case and the opportunity for interested parties to be heard. See
Tennant v. Rojas (In re Tennant),
318 B.R. 860, 870 (9th Cir. BAP 2004) (“[T]he
concept of procedural due process requires a notice and an opportunity to
be heard.” (citation omitted)). “The notice must be of such nature as
8
reasonably to convey the required information . . . and it must afford a
reasonable time for those interested to make their appearance.” Mullane v.
Cent. Hanover Bank & Tr. Co.,
339 U.S. 306, 314 (1950) (citations omitted).
Section 1307(c) provides that, “[o]n request of a party in interest or
the United States trustee and after notice and a hearing, the court . . . may
dismiss a case under this chapter . . . .” Section 102(1) defines the phrase
“after notice and a hearing” to include “after such notice as is appropriate
in the particular circumstances, and such opportunity for a hearing as is
appropriate in the particular circumstances[,]” or even in some situations
without any formal notice. Under this broad definition, “the concept of
notice and a hearing is flexible and depends on what is appropriate in the
particular circumstance.” In re
Tennant, 318 B.R. at 870 (citing Great Pac.
Money Markets, Inc. v. Krueger (In re Krueger),
88 B.R. 238, 241 (9th Cir. BAP
1988)).
Ms. Erickson argues that she did not know that the hearing on the
Motion to Dismiss was scheduled for September 18, 2019. But the record
shows that the Trustee sent Ms. Erickson a copy of the Motion to Dismiss
and notice of hearing by U.S. mail. Ms. Erickson does not deny receiving
the document. She also does not deny receiving a copy of the Order
Denying Confirmation, which specifically stated that the hearing on the
Motion to Dismiss was set for September 18.
Ms. Erickson contends that, at the hearing on plan confirmation, she
9
told the court that the Trustee had sent her a notice of hearing for
September 18, but “Judge Dore looked down at this desk and then looked
up at me and said there is no hearing set for 9,18,2019 [sic].”
Ms. Erickson’s misrepresents the record. The hearing transcript does
not contain any such exchange.3 The September 18 hearing date simply did
not come up at the hearing.
She also argues that the Order Denying Confirmation only indicated
that the hearing on the Motion to Dismiss “may be” held on September 18.
She claims that, because no one confirmed that date, she assumed there
was no hearing scheduled for that day.
The phrase “may be heard” in the Order Denying Confirmation is
unfortunate; it would have been better to use the words “will” or “shall”
that appear elsewhere in the same order. But Ms. Erickson had previously
received an unequivocal notice that the Motion to Dismiss would be heard
on September 18, and there is nothing in the record that could reasonably
have led Ms. Erickson to believe that the hearing was canceled or moved.
Even if the notice were less than perfect, it did not prejudice her,
3
The only date Ms. Erickson discussed with the court was the deadline to file
the amended plan; she thought the deadline was September 11 (the deadline to oppose
the Motion to Dismiss). The court responded that it had not yet set any deadline for the
amended plan and that she might have “a response to a different motion due September
11th.” Ms. Erickson also wanted to argue a motion that she had just filed a few days
prior, but the court informed her that the motion had not yet been noticed for hearing
and was “just sitting on the docket.”
10
because she has not given us any reason to think that the bankruptcy court
would have reached a different result if she had appeared. See Rosson v.
Fitzgerald (In re Rosson),
545 F.3d 764, 776-77 (9th Cir. 2008). She has not
addressed any of the bankruptcy court’s reasons for dismissing her case or
explained what she would have argued that would have averted dismissal.
B. The bankruptcy court properly found cause to dismiss
Ms. Erickson’s case.
Ms. Erickson does not challenge any of the bankruptcy court’s actual
reasons for dismissing her case. We hold that it did not err.
Section 1307(c) allows the bankruptcy court to dismiss a case “for
cause.” “Cause” may include “unreasonable delay by the debtor that is
prejudicial to creditors[,]” § 1307(c)(1), but it is not limited to the
circumstances enumerated in the statute. “The decision to dismiss a
chapter 13 case under § 1307(c) is a discretionary decision of the trial
court.” Schlegel v. Billingslea (In re Schlegel),
526 B.R. 333, 339 (9th Cir. BAP
2015) (citation omitted).
The bankruptcy court explained that, with only $1,182 in monthly
disposable income, Ms. Erickson simply did not have enough money to
fund her Plan, even if Deutsche Bank’s mortgage lien was extinguished. It
concluded that cause to dismiss existed because: (1) she could not fund a
plan under any circumstances; (2) her amended plan was unconfirmable on
its face; and (3) there was unreasonable prejudicial delay to creditors.
11
Ms. Erickson fails to address any of these holdings, and we discern
no abuse of discretion.
Instead, Ms. Erickson argues on appeal that she should have been
given another chance to amend her plan. However, the bankruptcy court
considered her amended plan (which actually decreased her monthly plan
payments) and stated that it was facially unconfirmable. She had two
chances to propose a confirmable plan but squandered those opportunities.
Ms. Erickson also argues that the bankruptcy court should have
stayed all proceedings “until RCW 2.44.030 was invoked.” 4 Presumably,
she is arguing that the attorneys representing Deutsche Bank did not have
authority to prosecute the foreclosure action against her.
This argument is meritless. Even assuming that the state statute
applies, it was the Trustee, not Deutsche Bank, who moved to dismiss, and
the Trustee unquestionably had the authority to do so. Ms. Erickson argues
on appeal that the Trustee lacked standing to appear on behalf of Deutsche
Bank, but the Trustee represents the estate generally and does not
represent Deutsche Bank or any other creditor.
4
Revised Code of Washington § 2.44.030 provides that the court may “require
the attorney for the adverse party . . . to produce or prove the authority under which he
or she appears, and until he or she does so, may stay all proceedings by him or her on
behalf of the party for whom he or she assumes to appear.”
12
C. The bankruptcy court properly declined to review the state court’s
decisions.
Most of Ms. Erickson’s arguments focus on the state court’s rulings
regarding Deutsche Bank’s foreclosure. The bankruptcy court was correct
in refusing to consider Ms. Erickson’s arguments, and we similarly will not
entertain any challenges to the state court’s decisions.
Essentially, Ms. Erickson wanted the bankruptcy court to review the
state court’s rulings. But under the Rooker-Feldman doctrine, “[i]f a federal
plaintiff asserts as a legal wrong an allegedly erroneous decision by a state
court, and seeks relief from a state court judgment based on that decision,
Rooker-Feldman bars subject matter jurisdiction in federal district court.”
Noel v. Hall,
341 F.3d 1148, 1164 (9th Cir. 2003). It is well established that
“federal district courts are courts of original, not appellate, jurisdiction.
Thus, it follows that federal district courts have ‘no authority to review the
final determinations of a state court in judicial proceedings.’” Gruntz v. Cty.
of L.A. (In re Gruntz),
202 F.3d 1074, 1078 (9th Cir. 2000) (citations omitted).
Ms. Erickson raises a host of reasons why she feels she was wronged
in state court. We will not consider any of these arguments. The federal
bankruptcy court generally lacks power to review state court decisions. If
Ms. Erickson wants to reverse the state court’s decisions, she must seek
recourse in the state appellate courts, not the bankruptcy court.
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D. The bankruptcy court did not abuse its discretion in denying the
motions to vacate.
Ms. Erickson twice sought to vacate the Dismissal Order but failed to
raise any grounds showing that the bankruptcy court was wrong. The
bankruptcy court properly denied both motions.
We examine Ms. Erickson’s arguments under Civil Rule 59, made
applicable in bankruptcy cases by Rule 9023. See Am. Ironworks & Erectors,
Inc. v. N. Am. Constr. Corp.,
248 F.3d 892, 898-99 (9th Cir. 2001). The Ninth
Circuit has stated that, “[u]nder [Civil] Rule 59(e), a motion for
reconsideration should not be granted, absent highly unusual
circumstances, unless the district court is presented with newly discovered
evidence, committed clear error, or if there is an intervening change in the
controlling law.” 389 Orange St. Partners v. Arnold,
179 F.3d 656, 665 (9th
Cir. 1999) (citation omitted).
Ms. Erickson argued that she did not have notice of the hearing on
the Motion to Dismiss and that she filed an opposition to that motion.
However, the bankruptcy court properly held that she had notice of the
hearing and considered all of her filings, including the Omnibus Objection.
It did not abuse its discretion in denying both motions to vacate.
CONCLUSION
The bankruptcy court did not err in dismissing Ms. Erickson’s
bankruptcy case. We AFFIRM.
14