KENT J. DAWSON, District Judge.
Before the Court is Appellants' Appeal under 28 U.S.C. § 158(a) from the bankruptcy court's Order Re: Objections to Claim Number 12, Contribution Claim of Gregory Grantham and John Saba entered in Case 03-19478-BAM, docket no. 1145, December 29, 2011. Having considered the briefs and the record on appeal, this Court affirms the Order of the bankruptcy court. Further, Appellants' conduct raises serious questions about their ethical and professional character. This is all the more troubling as Appellants are members of the California Bar. They would do well to remember that the highest standards are required of officers of the Court, including accurate, well-supported, and proofread briefs.
The underlying facts before this Court have been detailed by the bankruptcy court in part II of its decision
Following the Ninth Circuit's decision, Appellants filed a Proof of Claim for contribution on or about September 29, 2011. The bankruptcy court disallowed the contribution claim as barred by 11 U.S.C. §502(e)(1)(c), and further because the claim was untimely. The issues before this Court are: 1) whether 11 U.S.C. §502(e)(1)(c) bars a claim for contribution after asserting a claim for subrogation under 11 U.S.C. §509; and 2) whether Appellants' claim is barred as untimely because Fed. R. Bankr. P. 3002(c)(3) does not extend the time for filing and because Appellant has not established an informal proof of claim. If this Court affirms the bankruptcy court on either ground, Appellants' claim fails.
"[D]ecisions by judges are traditionally divided into three categories, denominated questions of law (reviewable de novo ), questions of fact (reviewable for clear error), and matters of discretion (reviewable for abuse of discretion)."
"[A]ny issue presented by the record [can] be raised before the district court, even if it was not presented to the bankruptcy court ... where the issue did not raise facts outside the record.
"[I]n interpreting a statute a court should always turn first to one, cardinal canon before all others. We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there."
Here, Appellants have previously asserted a claim for subrogation under §509. A plain reading of the text of §502(e)(1)(c) therefore prohibits Appellants from bringing a claim for contribution under §502. Appellants argue that the public policy supporting §502(e)(1)(c) is the prevention of a dual-recovery, and as no dual-recovery will occur, the statute should not apply to them.
Courts are not to find any of the terms of a statute meaningless, a prohibition known as the Rule Against Surplussage.
Seeking to bolster their argument that §502(e)(1)(c) should not apply to them for policy reasons, Appellants argue that because the prefatory language of §§ 502(e) and 509 are similar, they must be read identically. Section 502(e)(1)(c) reads in relevant part: "... [A]n entity that is liable with the debtor on or has secured the claim of a creditor. ... Section 509(a) reads: "... [A]n entity that is liable with the debtor on, or that has secured, a claim of a creditor against the debtor. ..." (emphasis added). Appellants assert that the phrase "against the debtor" is "mere surplussage" and should be disregarded. As a result, Appellants contend that because they did not qualify under the definition in §509, they cannot qualify under the similar language of §502(e), making the bar against asserting a claim for contribution once a claim for subrogation has been asserted inapplicable.
Appellants' argument directly contradicts established canons of statutory interpretation and logic. As a result, Appellants' argument is at best unpersuasive, at worst it evidences a serious lack of ethical and professional character. First, this Court cannot and will not cast aside statutory language, in accordance with the Rule Against Surplussage. Second, the plain meaning of these two texts when compared, is that §509 applies to guarantors, etc. who are not jointly and severally liable with the debtor as the language indicates that the claim is not against entity in question, but "against the debtor." Conversely, and in harmony with the Ninth Circuit's previous opinion in this case, §502 applies to those who are jointly and severally liable with the debtor. The statutory text is conclusive as Appellants have failed to establish any persuasive evidence that the plain meaning is "demonstrably at odds" with congressional intent. As Appellants have been determined by the Ninth Circuit as a "joint borrower" with the debtor, §502(e) applies to bar their claim.
Appellants argue that the Ninth Circuit decision affirming that Appellants do not qualify for subrogation as they are jointly and severally liable with the debtor denies or avoids Appellants' interest in property.
Appellants assert a single line of unsubstantiated text as the basis for an informal proof of claim. Appellants provide no citation. Appellants' Reply Brief (#18) at 18, 24. When Appellant attempts to provide a reference, they refer the Court to twenty pages of text, none of which appear consistent with Appellants' assertion. Appellants' Opening Brief (#10) at 22. Appellants' shoddy work avoids the issue of what action Appellants took (presumably filing) with regard to their Proof of Claim on November 19, 2005. Appellants' Reply Brief (#18) at 18. This Court has not discovered any record of this Proof of Claim, nor any filing on that date. Appellants were further Ordered to file Excerpts of Record (#5) but failed to do so. Rather, they simply provided a courtesy copy to chambers, leaving the official record deficient. "Judges are not like pigs, hunting for truffles buried in briefs;" this Court has engaged in far more hunting than Appellants' arguments merit.
Unfortunately, Appellants' failings go beyond those of logic and law. They assert that the bankruptcy court's Order was "irrational, illogical, and plainly ridiculous." Appellants' Opening Brief (#10) at 18. Further, they characterize the lower court's decision as "Alice in Wonderland type analysis." Appellants' Reply Brief (#18) at 6. Advocacy is expected of all members of the Bar, but ridiculing the court crosses a very serious line. This Court urges Appellants to revise their practice of law into harmony with the standards of professional conduct in all aspects to avoid the foreseeable consequences of this style of "practice."
Accordingly, this Court