Summary
stating that the common definition of "refuse" requires a willful expression of noncompliance
Summary of this case from Vaughan v. Weinstein (In re Vaughan)Opinion
NOT FOR PUBLICATION
Argued and Submitted at San Francisco, California: November 16, 2005
Appeal from the United States Bankruptcy Court for the Northern District of California. Honorable James R. Grube, Bankruptcy Judge, Presiding. Bk. No. 03-55289-JRG.
Before: Marlar, Smith and Zurzolo, [ Bankruptcy Judges.
Hon. Vincent P. Zurzolo, United States Bankruptcy Judge for the Central District of California, sitting by designation.
MEMORANDUM
INTRODUCTION
After a trial, the bankruptcy court revoked the chapter 7 debtor's discharge based on his refusal to obey a court order to cooperate with the chapter 7 trustee (" Trustee") and her broker in their efforts to sell his residence.
Unless otherwise indicated, all chapter and section references are to the pre-amended Bankruptcy Code, 11 U.S.C. § § 101-1330 in effect when this case was filed, and prior to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (" BAPCPA"). Rule references are to the Federal Rules of Bankruptcy Procedure (" Fed. R. Bankr. P."), Rules 1001-9036.
In this appeal, the debtor contends that his behavior did not amount to a " refusal" to obey, as that term is used in the discharge statute, and that the bankruptcy court erroneously based its ruling on equitable considerations beyond the scope of the order.
Our review reveals neither an incorrect application of the law nor clear error in the bankruptcy court's findings, which were sufficient for a ruling under § 727(d)(3), and therefore we AFFIRM.
FACTS
Ernest Wilbert Hicks, Jr. (" Debtor") filed a voluntary chapter 7 petition on August 18, 2003. He received a bankruptcy discharge in November, 2003.
As of the petition date, Debtor owned real property (the " Property"), consisting of a house on five acres of land in Gilroy, California. Debtor estimated its value at $800,000, and it was encumbered by a first deed of trust in the amount of $636,000, and by a second deed of trust in the amount of $65,000. As of the petition date, Debtor figured that there was no nonexempt equity considering the encumbrances and homestead exemption. However, Trustee subsequently avoided the second deed of trust and recovered the $65,000 for the estate, yielding nonexempt equity in the Property.
Trustee believed the Property was worth more than $800,000. All parties agreed the Property was in good condition even though certain construction items and repairs were yet to be completed.
In late 2003, Trustee initiated efforts to sell the Property, and the bankruptcy court approved the employment of Trustee's real estate broker, David Cauchi (" Cauchi"), for that purpose.
Cauchi's initial efforts to obtain Debtor's cooperation were unsuccessful, and upon Trustee's motion, the bankruptcy court entered an " Order Directing the Debtor To Provide Access To Real Property And To Cooperate In The Sale of Real Property" (the " Order"), on January 26, 2004, which stated in pertinent part:
IT IS HEREBY ORDERED that [Debtor] shall immediately cooperate with the Trustee's real estate broker, provide access to the [Property], provide a key to the Property, and permit the broker to post a " For Sale" sign in front of the Property, to install a lock box on the house, to hold open houses, and to take prospective buyers through the Property on 24 hours' notice.
Thereafter, Cauchi listed the Property for sale at $875,000, but immediately took it off the market pending negotiations between Debtor and Trustee to allow Debtor to buy the estate's interest in the Property. Those negotiations were unsuccessful.
Trustee then filed a complaint to revoke Debtor's discharge based, in part, on Debtor's alleged refusal to obey the Order, pursuant to § § 727(d)(3) and (a)(6)(A). Trustee's motion for summary judgment on the complaint was heard on May 13, 2004. The bankruptcy court concluded that a trial would be necessary and denied the motion without prejudice.
Meanwhile, the court instructed the parties to cooperate in the showing and sale of the Property. Specifically, the bankruptcy court noted Debtor's resistance to sell, and stated:
THE COURT: Mr. Hicks, let me just tell you something because you sit there and you keep dropping your head and you keep shaking your head, and I can appreciate the fact that you're very upset about this. And if I were sitting there, I'd be very upset about this too. This is not something that is at anybody's whim or within my discretion as to what I do. Congress makes a bankruptcy law. I don't make it. Congress makes it and Congress says here's the way it works, and here's what you do.
And so number one, you have a duty, according to the Bankruptcy Code, the bankruptcy law, to cooperate with the trustee. The trustee wants to look at something. The trustee gets to look at something. It's not up to me whether they get to look. As long as they act politely and in a businesslike fashion, they get to look. That's number one.
Tr. of Proceedings (May 13, 2004), p. 22:7-22.
The parties then agreed to show the Property by appointment only. The bankruptcy court commented that Debtor's request to set parameters on showing the Property was reasonable, assuming his full cooperation.
Finally, when Debtor's attorney expressed concern that Trustee's sale efforts might continue indefinitely, the bankruptcy court suggested that Debtor file a motion to compel abandonment. Debtor filed the motion, but it was not resolved prior to the trial on the complaint.
The bankruptcy court docket reveals that the motion was denied without prejudice by order entered on September 2, 2004.
Following the hearing, Trustee re-listed the Property for sale at $875,000 and there was immediate interest in it. Michelle Beltran (" Ms. Beltran"), a local real estate broker, represented a family who visited the Property on or about May 16, 2004. Ms. Beltran's husband, a contractor, also accompanied her for the showing in order to advise on the cost to construct or repair the incomplete items. They were also accompanied by a sheriff's deputy, as Ms. Beltran had been advised to obtain a " civil standby" for the rural showing.
At that first visit, the Beltrans later testified, Debtor had posted multiple signs inside the house with curses, such as " a curse on all who entered uninvited, " and with upside-down crosses. Tr. of Proceedings (Aug. 11, 2004), p. 107:1-4. Debtor had also posted lists of alleged defects with the Property in prominent places throughout the house. Another sign had a child's picture, supposedly Debtor's son, with a quotation stating that if the house were sold, the son would have nowhere to live. Between the first and second showing, Debtor removed these signs.
During a second showing of the Property, Debtor refused to allow access to the contractor, even though the prospective buyers required advice on improvements, such as the placement of a barn and on the cost of completion of certain items on the Property.
In each case, the prospective buyers did not follow through with offers. On June 11, 2004, Trustee filed a first amended complaint to revoke Debtor's bankruptcy discharge under § § 727(d)(3) and (a)(6)(A). Trustee alleged that Debtor " had refused to obey a lawful order of the court, directing him, in January, 2004, to cooperate with the Trustee in the marketing and efforts to sell the Debtor's Property." Id. at 3-4, ¶ 22. The trial went forward on August 11, 2004, and the following testimony was pertinent to the court's ruling.
Trustee also asserted a § 727(d)(1) count which alleged that: " Debtor's discharge was obtained through fraud, and that the Debtor had the intent, at the time that the discharge was entered, to retain for himself the non-exempt estate property, specifically the non-exempt equity in the Property, and has in fact retained for himself the non-exempt equity in the Property, as shown by the Debtor's deliberate efforts to hinder and discourage potential buyers of the Property." First Amended Complaint (June 11, 2004), p. 3, ¶ 19.
Trial Testimony
1. Trustee's Broker, David Cauchi
Cauchi testified that, from Debtor's comments at that first meeting, his opinion was that the sale would be difficult. Initially, Debtor did not give Cauchi a key nor allow him to install a lock box, nor did he return Cauchi's telephone calls. For these reasons, Cauchi and Trustee requested the court's Order requiring Debtor to cooperate.
Cauchi viewed the Property in January, 2004, and listed it for a price of $875,000. Cauchi testified that after the Order was entered, Debtor still did not comply with it, but was negotiating with Trustee for a settlement in regards to purchasing the equity. Therefore, Cauchi took the Property off of the market in late February, 2004, so that it would not get " stale." Tr. of Proceedings (Aug. 11, 2004), p. 22:10.
Cauchi relisted the Property in May, 2004, after which time Debtor gave him a key, and he was able to put a lock box on the Property in June, 2004. (However, Debtor admitted, under cross-examination, that he did not give Cauchi a key or access to install the lock box until July, 2004. See id. at 180:23-25; 181:3-10.)
Cauchi also stated that on two occasions he found that the " for sale" sign on the Property had been removed and was lying on the ground, and that he reattached it.
2. The Beltrans
a. First Showing
Ms. Beltran and her husband Dick (" Mr. Beltran"), a contractor, testified that, in mid-May, 2004, they showed the property to a family with three children. Based on her conversations with Cauchi and the rural setting, Ms. Beltran had requested that a sheriff be present.
When they arrived at the Property, Debtor met them. The sheriff asked Debtor to lock up two very large dogs which were running loose. Debtor then led the people into the house through the garage, first requiring them to take off their shoes so as not to scuff up the floors. In her letter evidence, Ms. Beltran stated that Debtor also instructed them not to open any doors, cupboards or drawers.
Ms. Beltran's follow-up letter to Cauchi was also admitted into evidence in which she repeated these allegations and added a few more details. (See May 18, 2004 letter.)
Mr. and Ms. Beltran testified that when they went inside, there were papers taped to the floors, walls and windows of the house. Ms. Beltran stated: " [T]he writing on it was a curse, a curse on all who entered uninvited. . . . And there was [an] upside down crucifix on it." Id. at 107:1-4 (alteration added).
Ms. Beltran described the proliferation of signs and how Debtor captured the buyers' attention by listing problems with the Property:
Q. Was it one poster, two posters, three posters?
A. Very, very many posters. In the laundry room it was on the floor, it was on the wall, it was on the window. We went through into the main hallway. It was on the floor, on the walls, on the bedroom windows. I mean, just to a point of ridiculous, in my mind. And the same repetition until we went into the master bedroom.
Q. What was there?
A. Well, that great big, beautiful window was - had the same stuff, but then it had a big long list of problems with this property. And, of course clients go right to it and they are staring there and reading them, you know, instead of viewing the property like they should.
Q. Do you recall what some of those problems were that were listed on there?
A. A thing about a rodent infestation, rattlesnakes, leaky roof, no PG& E, trucking company next door. " You'll be kicking my child out into the streets."
Q. Did you get the impression that the signs were set up for the purpose of preventing a sale of the house?
. . . .
A. They threw me, too. Yes, they were there. Plus the fact that it said, " It won't appraise for over 600, 000, " . . . .
Id., at 107:5-25; 108:1-4.
Afterwards, the prospective buyers discussed making an offer, but did not follow through. Ms. Beltran testified that, in her opinion, their decision was related to the signs and posters on the Property.
b. Second Showing
Ms. Beltran then took another couple to see the Property. They were interested in erecting a barn, and Mr. Beltran came along to advise on construction and repairs. However, the Beltrans testified that after Debtor had a discussion with the sheriff, the sheriff would not let Mr. Beltran onto the Property.
She further testified that the prospective buyers' inability to " visualize" the barn, without Mr. Beltran's input, influenced their decision not to make an offer. Id. at 114:25.
Ms. Beltran also testified that, when driving by the Property, she saw the " for sale" sign unhinged and lying on the ground.
3. Debtor's Neighbor
Debtor's neighbor, Robert Maciel (" Maciel"), who owned the trucking company, also testified that he had viewed the property with his interested friends on or about May 16, 2004, and recalled seeing the posters, including one of a child who apparently represented Debtor's son, asking " Where will I live?"
He testified:
A. Mr. Hicks had - well, there were numerous . . . pieces of paper all throughout the house, in every room. They all had writings, sayings on them. The ones that stand out my [sic] head the most were, " Curse those who" - to - " want to buy this house." There was another one of a picture of this - this child and in the -- one of the -- in the hallway or in the bedroom. " If you buy this house" -- it was a quote coming from this child -- " If you buy this house, where am I to go? Where will I live? Seven reasons why not to buy this home." That one stood out the most, because I was number seven, and said because of a trucking company lives next door.
Id. at 149:5-16.
Maciel also observed that the " for sale" sign was sometimes up and sometimes down.
4. Debtor
Debtor took the stand as well. He testified that he took down the offending posters after his attorney told him to.
The transcript of Debtor's testimony in the excerpts of record is sketchy. We may presume that any additional transcript would not have been helpful to Debtor's case. McCarthy v. Prince (In re McCarthy), 230 B.R. 414, 417 (9th Cir. BAP 1999).
He admitted asking the sheriff to keep Mr. Beltran off the Property for the second showing. He explained, as follows:
So Ms. Beltran came down, . . . And said that she was the Realtor and she would be showing the property.
At that time I saw who she was bringing. I informed the sheriff that the one gentleman that was with her, I believe was her husband and not a potential client. He had been on the property once before and I was only willing to show the property to the clients, the Realtors, and any of their associates.
And she said that - I think she said that she'd talked [sic] to them and come back. So she went.
The officer talked to me for a few more minutes. He went and spoke to them and came back. And he said, " That's fine. There's no objection to that. Can they now view the property?"
I said, " Yeah, no problem."
Id. at 172:10-25.
In cross-examination, Debtor testified that he learned from his attorney, in January of 2004, that Trustee would be selling the Property. Although he stated that his attorney had sent him a copy of the Order, Debtor did not specify when he actually saw it or learned its contents.
Debtor further testified that he had made only three monthly payments of $4,000 each on the first deed of trust and had not paid any property taxes postpetition.
The Court's Ruling
On January 20, 2005, the bankruptcy court issued its oral ruling on the first amended complaint.
First, the court found that the Order compelled Debtor's cooperation in the sale of the property and directed him to immediately cooperate with Trustee's broker.
Next, it found that Cauchi's testimony was factually ambiguous and did not prove that Debtor knew about the Order between December of 2003, when Cauchi first began his efforts to sell the Property, and the May 13, 2004 summary judgment hearing, when Debtor was made aware of his duty to cooperate with Trustee and Cauchi, and of the Order itself. Therefore, the bankruptcy court based its ruling on Debtor's behavior after May 13, 2004, which time period included both showings of the Property by Ms. Beltran.
Next, the bankruptcy court made the following findings:
After this [May 13, 2004] hearing, the property was shown by Ms. Beltran to potential buyers. Ms. Beltran testified that she wrote the letter dated May 18, 2004 immediately after showing the property.
The letter and Ms. Beltran's testimony outlined what she saw at this showing. When she entered Mr. Hicks' home with her client she noticed that there were signs on the walls with curses, such as: A curse on all who enter uninvited.
There were upside down crucifixes on the signs. She elaborated that signs to the same effect were put up throughout the house, on the floor, on windows, and she stated that it was to the point of being ridiculous.
In addition, when she entered the master bedroom she saw that there was a large sign up on the wall which posted all the problems with the house that would affect a potential buyer.
Nevertheless, she was confident after this showing that an offer would be made. However, the client later contacted her and told her that they would not make an offer. She was of the impression that it was due in large part to the signs Mr. Hicks had put up throughout the house.
On the second showing of the property to a potential buyer, Mr. Hicks would not let the buyer's contractor go on the property. Mr. Hicks stated it was because he had already been on the property once before.
Ms. Beltran felt that an offer was not made on the house because the buyer did not have the assistance of the contractor to help visualize the improvements that she wanted to make.
Court's Oral Ruling (Jan. 20, 2005), pp. 6:20-25, 7:1-22.
The bankruptcy court further found that Debtor took these actions in order " to discourage any sale of the Property" and that his " behavior during the showings discouraged any offers." Id. at 10:7-13. Therefore, the bankruptcy court determined that Debtor had ignored the Order and failed in his affirmative duties, including his " duty to participate in that [bankruptcy] proceeding by meeting the requirements of the Bankruptcy Code and by obeying the Court's lawful orders." Id. at 9:21-24. The court stated:
Debtors are not free to ignore a court's orders. [Debtor] went beyond ignoring the Court's January 26th order. He chose to flaunt the very process he chose to participate in.
Id. at 9:24-25-10:1.
Debtor's behavior was " particularly disturbing, " the bankruptcy court found, in regards to upholding the integrity of the bankruptcy process. Id. at 10:2. To wit, Debtor had not kept current on the mortgage payments, and if the Property were not sold by Trustee, then a foreclosure sale would be detrimental to the unsecured creditors. Essentially, the court found, Debtor's behavior " prevented the equitable distribution of the estate among his creditors by prolonging the period it took to sell the property and increasing the arrearages owed to the secured creditor holding the first deed of trust." Id. at 10:14-17.
We take judicial notice of the sale of the Property for $801,000 in November, 2004. See Order Approving Sale (Nov. 17, 2004).
The court concluded that it would revoke Debtor's discharge under § 727(d)(3) " in order to uphold the integrity of the bankruptcy process." Id. at 10:18-19. The judgment was entered on January 26, 2005, and was timely appealed by Debtor.
ISSUES
1. Whether we have jurisdiction over a judgment which resolved only one count of a two-count complaint.
2. Whether Debtor's behavior during the first and second showings, including posting paper signs with offensive content and not allowing repeat visits on the Property by the contractor, constituted a refusal to obey the Order, as those terms are used in § § 727(d)(3) and (a)(6)(A).
3. Whether the bankruptcy court's revocation order was based on sufficient findings of Debtor's refusal to obey the Order.
STANDARDS OF REVIEW
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).
In denial of discharge cases, the panel reviews a bankruptcy court's findings of fact for clear error, its conclusions of law de novo, and its conclusions on mixed questions of law and fact de novo. Searles v. Riley (In re Searles), 317 B.R. 368, 373 (9th Cir. BAP 2004). " A mixed question of law and fact exists if historical facts are established, the rule of law is undisputed, and the issue is whether the facts satisfy the legal rule." Id.
Appellee incorrectly cites Cox v. Lansdowne (In re Cox), 904 F.2d 1399, 1401 (9th Cir. 1990), for the proposition that denial of discharge cases are reviewed for " gross abuse of discretion." Searles, 317 B.R. at 373, overruled cases which reviewed discharge judgments for an abuse of discretion. We have held that the bankruptcy court's equitable power must be linked to a specific provision of § 727(a)(1)-(10) and, therefore, the sound discretion of the court is not a sufficient standard upon which to rely. See Yadidi v. Herzlich (In re Yadidi), 274 B.R. 843, 852 (9th Cir. BAP 2002). Although the bankruptcy court, here, also spoke of its discretion to revoke Debtor's discharge, we can affirm on any basis fairly supported by the record. Aheong v. Mellon Mortgage Co. (In re Aheong), 276 B.R. 233, 240 n.8 (9th Cir. BAP 2002).
DISCUSSION
A. Our Jurisdiction
The judgment revoking Debtor's discharge did not dismiss the alternative count under § 727(d)(1). Under this circumstance, we may raise, sua sponte, the threshold question of whether we have jurisdiction over an appeal of a judgment as to only one count of a multiple-count complaint. See Belli v. Temkin (In re Belli), 268 B.R. 851, 853 (9th Cir. BAP 2001).
The panel has jurisdiction over appeals from final orders. See 28 U.S.C. § 158(b)(1)(A). Judgments that resolve only one claim in a multiple-claim adversary proceeding may be interlocutory, unless the bankruptcy court has certified the judgment for appeal. A court which rules on one count of a multiple-count complaint ordinarily will dismiss the adversary proceeding in regard to the remaining counts following a trial on the merits, see Roberts v. Erhard (In re Roberts), 331 B.R. 876, 880 (9th Cir. BAP 2005). Or, the court can certify for immediate appeal a judgment of less than all claims, under Federal Rule of Civil Procedure (" FRCP") 54(b) (incorporated by Bankruptcy Rule 7054). Here, the bankruptcy court did neither.
FRCP 54(b) provides:
The jurisdictional question turns on whether the § § 727(d)(1) and (d)(3) counts were separate claims. See Talamini v. Allstate Ins. Co., 470 U.S. 1067, 1069 n.5, 105 S.Ct. 1824, 85 L.Ed.2d 125 (1985) (" 'The line between deciding one of several claims and deciding only part of a single claim is sometimes very obscure.'") (quoting 10 C. Wright, A. Miller & M. Kane, Fed. Prac. & Proc. § 2657, pp. 60-61 (1983)). The Ninth Circuit has held that " [t]he word 'claim' in Rule 54(b) refers to a set of facts giving rise to legal rights in the claimant, not to legal theories of recovery based upon those [same] facts." CMAX, Inc. v. Drewry Photocolor Corp., 295 F.2d 695, 697 (9th Cir. 1961) (alteration added). Where one claim is stated in two ways for the purpose of presenting two legal theories of recovery, FRCP 54(b) is inapplicable. Id.
In Belli, we held that a complaint to determine the nondischargeability of a debt that asserts claims under both § 523(a)(4) (fiduciary fraud) and § 523(a)(6) (willful and malicious injury) was a multiple-claim complaint, which was subject to Rule 54(b) in a partial summary judgment proceeding. However, the issue of whether the subsections of § 523 could be a single claim was not addressed in Belli.
The various subsections of § 727(d), like the § 523 exceptions, require proof of different facts. Subsection (d)(1) requires proof of fraudulent intent at the time of discharge. Here, Debtor already obtained his discharge, in November, 2003, before Trustee had even begun her efforts to sell the Property. And yet, in the first amended complaint, Trustee relied on the same facts for both counts. To wit, Trustee alleged that proof of Debtor's fraudulent intent could be " shown by the Debtor's deliberate efforts to hinder and discourage potential buyers of the Property." First Amended Complaint (June 11, 2004), p. 3, ¶ 19. In essence, Trustee asserted two legal theories based on the same underlying facts.
Therefore, we hold that FRCP 54(b) was inapplicable, and we have jurisdiction over the final order.
Even if the § 727 counts were independent claims, the death-knell doctrine is a possible exception to Rule 54(b) that applies in this case. That doctrine requires the appellant to have been put effectively out of court. Belli, 268 B.R. at 857. See also Eisen v. Carlisle & Jacquelin, 370 F.2d 119, 121 (2d Cir. 1966) (" Where the effect of a district court's order, if not reviewed, is the death knell of the action, review should be allowed."), cert. denied, 386 U.S. 1035, 87 S.Ct. 1487, 18 L.Ed.2d 598 (1967). But see Eluska v. Andrus, 587 F.2d 996, 1000-01 (9th Cir. 1978) (noting disapproval of this theory by the Supreme Court).
B. Revocation of Discharge for Refusal to Obey a Lawful Order: § 727(d)(3) and § 727(a)(6)(A)
Section 727 " is the heart of the fresh start provisions of the bankruptcy law" and " must be construed liberally in favor of the debtor and strictly against the objector." Beauchamp v. Hoose (In re Beauchamp), 236 B.R. 727, 730 (9th Cir. BAP 1999) (citations omitted), aff'd, 5 Fed.Appx. 743 (9th Cir. 2001).
Nevertheless, a bankruptcy discharge and fresh start are intended only for honest debtors, First Beverly Bank v. Adeeb (In re Adeeb), 787 F.2d 1339, 1345 (9th Cir. 1986), and for those who comply with the requirements of the Bankruptcy Code and Rules, and with orders of the court. The denial of discharge under § 727 is consistent with the well-established principle that " [t]here is no constitutional right to obtain a discharge of one's debts in bankruptcy." United States v. Kras, 409 U.S. 434, 446, 93 S.Ct. 631, 34 L.Ed.2d 626 (1973).
Trustee, as the plaintiff, has the initial burden of going forward and the ultimate burden to prove the elements of § 727 by a preponderance of the evidence. See Searles, 317 B.R. at 377; Grogan v. Garner, 498 U.S. 279, 291, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991); 6 Collier on Bankruptcy ¶ 727.09[1] (15th ed. rev. 2005). Once Trustee has produced sufficient evidence to support the claim, the burden of going forward then shifts to Debtor to satisfactorily explain his behavior. See Chalik v. Moorefield (In re Chalik), 748 F.2d 616, 619 (11th Cir. 1984); 6 Collier, supra.
Section 727(d)(3) provides that the court shall revoke a debtor's discharge upon the trustee's request if the debtor committed an act enumerated in § 727(a)(6). Section 727(a)(6)(A) provides that a debtor is not entitled to a discharge if he " has refused . . . to obey any lawful order of the court, other than an order to respond to a material question or to testify." 11 U.S.C. § 727(a)(6)(A).
Trustee asserted, and the bankruptcy court found, that Debtor's conduct violated the Order which mandated his cooperation in regards to the sale of the Property.
Debtor does not dispute the bankruptcy court's specific findings regarding his awareness of the Order and his conduct during the first and second showings of the Property. He concedes that he posted the signs and posters, and that he would not allow Mr. Beltran onto the Property for the second showing. Debtor challenges, however, the bankruptcy court's conclusion that he " refused" to obey the Order, as that term is used in § 727(a)(6)(A). Specifically, Debtor maintains that his behavior was merely bad judgment or protected expression of opinion.
When interpreting a statute on appeal, the task begins with the language of the statute itself. United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). When a statute's language is plain, " 'the sole function of the courts is to enforce it according to its terms.'" Id. (quoting Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 61 L.Ed. 442 (1917)).
" Refuse" means " to express oneself as unwilling to accept" or " to show or express unwillingness to do or comply with." Miriam-Webster OnLine Dictionary (2005-2006). This common definition is clear and it requires a willful expression of noncompliance.
The question whether Debtor's behavior constituted a refusal to obey the Order, because it was a " willful expression of noncompliance, " is a mixed question of fact and law. Searles, 317 B.R. at 373. Mixed questions are reviewed de novo because the court, in selecting and applying the applicable law, " consider[s] legal concepts and exercise[s] judgment about values animating legal principles." Id.
The entire evidence reveals that Debtor, being motivated by a desire to retain the nonexempt equity in the Property, took affirmative steps to control the disposition of the Property, in hopes that it would eventually be abandoned to him. Indeed, Debtor was informed, at the May 13, 2004 hearing, that the court would not allow Trustee's sale efforts to go on indefinitely. In May, 2004, he attempted to frustrate the sales, and in June, 2004, he filed a motion to compel abandonment.
The bankruptcy court found that by mid-May, 2004, Debtor was fully aware of the Order and of his duty to cooperate with Trustee in the sale efforts. Nevertheless, Debtor engaged in delay and scare tactics at the two showings by Ms. Beltran, which frustrated the sale process. The evidence was undisputed that his conduct resulted in the loss of offers from both potential buyers.
Therefore, Debtor's conduct in posting offensive signs and information that could undermine any potential sale, as well as in preventing Mr. Beltran from giving contractor's advice, were all willful expressions of noncompliance with Trustee's sale efforts. We conclude that Debtor's behavior constituted a " refusal" to obey as that term is used in the statute.
C. The Bankruptcy Court's Findings
Debtor contends that the bankruptcy court's ruling was based on equitable considerations that exceeded the scope of any violation of the Order. He finds support for this argument in the bankruptcy court's ruling that Debtor " went beyond ignoring" the Order, as well as its findings concerning the effects of Debtor's affirmative actions upon the estate. To the contrary, Debtor contends that he obeyed the Order and therefore, there were no grounds for revocation under § § 727(d)(3) and (a)(6)(A). We disagree.
This argument simply presents a factual question: whether the bankruptcy court made sufficient findings to meet the statutory requirements for revocation.
The bankruptcy court found that the Order compelled Debtor to cooperate with Trustee in the sale of the Property as well as directing him to perform certain immediate steps to cooperate with Cauchi. It further determined that Debtor had ignored the Order based on his conduct during the two showings.
The Order required affirmative acts from Debtor:
1. " immediately cooperate with the Trustee's real estate broker";
2. " provide access to the [Property]";
3. " provide a key to the Property";
4. " permit the broker to"
a) " post a " For Sale" sign in front of the Property";
b) " install a lock box on the house";
c) " hold open houses"; and
d) " take prospective buyers through the Property on 24 hours' notice."
Debtor maintains that he performed steps 2 through 4 and that those steps showed his compliance with step 1. That interpretation is not in accord with the express terms of the Order, because step 1 is a separate " cooperation provision" that also required Debtor's compliance. Such " cooperation provision" is a reinforcement of the Bankruptcy Code, which provides that debtors have a duty to " cooperate with the trustee as necessary to enable the trustee to perform the trustee's duties under this title." 11 U.S.C. § 521(3). As a corollary, any conduct which frustrates a trustee's efforts is a violation of the Code. In this case, a violation of the Code and the Order are one and the same.
The undisputed evidence was overwhelming of Debtor's noncompliance with the cooperation provision of the Order. When the first buyers came to see the Property, including children, Debtor's two large dogs had to be locked up, on the sheriff's orders. Then, Debtor restricted the showing by requiring Ms. and Mr. Beltran and the family to remove their shoes and not to open any doors or drawers. In addition, Debtor posted curses and offensive signs throughout the house to intimidate the buyers, usurped the broker's presentation by focusing the buyers' attention on his posted list of problems with the Property, and pointed out to them that the house was allegedly worth less than the listing price. He then discouraged the second buyers by not allowing access to their chosen contractor in order to advise them, even though the house had construction items still to be completed. It was uncontroverted that the lack of offers from both buyers was due, at least in part, to Debtor's conduct during the showings. Therefore, the bankruptcy court's ultimate finding, that Debtor's conduct during the showings was intended to, and did, discourage and frustrate Trustee's efforts to sell the property, was not clearly erroneous. See Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (finding is clearly erroneous " when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed").
We may affirm on any basis fairly supported by the record. United States v. Hemmen, 51 F.3d 883, 891 (9th Cir. 1995). " A reviewing court may 'look to facts in the record not specifically mentioned by the fact finder when such facts support the fact finder's factual findings and inferences.'" Leavitt v. Soto (In re Leavitt), 209 B.R. 935, 940 (9th Cir. BAP 1997) (quoting In re Love, 957 F.2d 1350, 1362 (7th Cir. 1992)), aff'd, 171 F.3d 1219 (9th Cir. 1999).
The bankruptcy court properly found that Debtor's conduct was not only a violation of the Order but also an abuse of the Code, from which the Order sprung. These findings were sufficient grounds to deny Debtor his discharge.
Finally, Debtor maintains that revoking his discharge was too severe a sanction for his behavior. " Denial of discharge is a harsh result. However, bankruptcy has its roots in equity. To get equity, one must do equity." Bernard v. Sheaffer (In re Bernard), 96 F.3d 1279, 1283 (9th Cir. 1996). To the extent Debtor maintains that discharge was improper because he complied with other provisions of the same Order, such argument misses the mark. Debtor failed in his duty to cooperate, notwithstanding his alleged technical compliance with other, more specific instructions.
Moreover, the evidence reveals that Debtor's acquiescence in the Order's other directives was merely half-hearted. Indeed, he provided a key to the Property and access to Cauchi to install a lock box, but not until July of 2004, two months after the May summary judgment hearing. He also allowed a " For Sale" sign to be erected, but it could be inferred that he was responsible for the sign being down on the ground, a phenomenon repeatedly witnessed by Cauchi, Ms. Bernard, and the neighbor. Debtor did not deny or controvert these facts in the testimony provided on appeal.
Furthermore, the bankruptcy court properly rejected Debtor's excuses for his behavior. His posters and signs were well-planned subversion techniques, not a mere mistake or bad judgment. Debtor's excuse for not allowing Mr. Beltran onto the Property a second time was that the contractor had already seen it and was not a broker or trustee. Such testimony did not address the broker's opinion that the second buyers desired, and needed to obtain, a contractor's advice during the showing. By this conduct, Debtor subverted the broker's role, imposing unnecessary conditions and obstructing the sale process.
We conclude that the bankruptcy court made sufficient findings that Debtor refused to obey the Order, which findings were based on undisputed evidence of Debtor's behavior during the two showings. In addition, such findings were supported by the entire record evidence and were not clearly erroneous.
CONCLUSION
Debtor voluntarily sought the protection of the bankruptcy court to shield him from his creditors. By so doing, he assumed a duty to participate in that proceeding by obeying the court's lawful orders. This he refused to do, instead engaging in willful acts of noncompliance and frustrating Trustee's efforts to sell the Property. His behavior was an abuse of the bankruptcy process. The bankruptcy court acted within its statutory authority to revoke Debtor's discharge under § 727(d)(3).
AFFIRMED.
This count was not upheld by the bankruptcy court, nor has fraud been raised as an issue in this appeal. Therefore, the issue has been waived and we do not address it, except as it may affect our jurisdiction. Doty v. Co. of Lassen, 37 F.3d 540, 548 (9th Cir. 1994) (by failing to brief an issue on appeal, the appellant waives his right to raise that issue). See the jurisdictional discussion, below.
(b) Judgment Upon Multiple Claims or Involving Multiple Parties. When more than one claim for relief is presented in an action, whether as a claim, counterclaim, crossclaim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.
Here, the court's adjudication of the remaining count is dead. Debtor's discharge has already been revoked, the trial on the merits is over, Trustee has not requested a continued trial date on the remaining count, and the Property, which Debtor allegedly sought to retain with fraudulent intent, has been sold by the bankruptcy estate.