Opinion
NOT FOR PUBLICATION
Argued and Submitted at Sacramento, California: September 13, 2006
Appeal from the United States Bankruptcy Court for the Northern District of California. Bk. No. 99-42138-NS. Honorable Randall J. Newsome, Chief Bankruptcy Judge, presiding.
Before: SMITH, JURY[ and BRANDT, Bankruptcy Judges.
Hon. Meredith A. Jury, United States Bankruptcy Judge for the Central District of California, sitting by designation.
MEMORANDUM
The chapter 7 trustee sought approval of his final report which provided for the payment of administrative fees to trustee's counsel. The bankruptcy court approved the final report (the " Final Report Order") and concurrently entered an order discharging the trustee of any further administrative duties while allowing the case to remain open due to Debtor's pending appeals before the United States Supreme Court (the " Trustee Discharge Order"). Debtor appeals both orders. We AFFIRM the appeal as to the Trustee Discharge Order and DISMISS the Final Report Order appeal on jurisdictional grounds.
I. FACTS
On March 26, 1996, Pepi Schafler (" Debtor") filed a chapter 7 petition in the District of Maryland. Shortly thereafter, the trustee filed his no distribution report, and a final decree was entered on July 9, 1996, closing the case.
Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. § § 101-1330, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9036, as enacted and promulgated prior to the effective date (October 17, 2005) of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, Apr. 20, 2005, 119 Stat. 23.
After the case was closed, the trustee received information from an interested party regarding potential undisclosed assets. Based on this information, the trustee sought to have the case reopened and the final decree vacated in order to permit him to investigate and pursue recovery of the potential estate assets. The case was reopened on May 7, 1998.
Pursuant to Debtor's request, on March 12, 1999, the case was transferred to the Northern District of California. Subsequently, the successor trustee initiated an adversary proceeding against Debtor for a declaration that certain assets, namely stock certificates and bonds held in trust and a condominium, were property of the bankruptcy estate.
Debtor relocated to San Francisco to assist in the care of her terminally ill brother.
The chapter 7 trustee in Maryland was Scott D. Field. Richard Spear was appointed as the successor trustee when the case transferred to the Northern District of California. Richard Spear is the appellee in this appeal.
On December 20, 2000, the bankruptcy court ruled that Debtor had fraudulently concealed her interest in the assets and deemed them property of the estate. Debtor appealed the judgment to the District Court and then to the Ninth Circuit. Both courts affirmed. Debtor sought review of the Ninth Circuit's ruling to the United States Supreme Court but was denied certiorari.
On February 14, 2001, while her appeal to the District Court was pending, Debtor filed an amended schedule C in which she claimed that an Individual Retirement Account (" IRA") was exempt from the bankruptcy estate. The trustee objected to the exemption on the ground that Debtor initially failed to disclose the IRA on her petition. The court sustained the objection, finding that she had fraudulently concealed the IRA. Debtor appealed the bankruptcy court's ruling to the District Court which affirmed the decision.
The trustee eventually recovered most of the assets and by December 2005 had completed the administration of the estate. Consequently, on December 6, 2005, the trustee filed his final report, later amended on December 16, 2005. The final report showed total receipts of $377,598.15, disbursements of $268,732.68, and a balance of funds on hand of $109,042.66. The hearing on the final report was set for January 12, 2006.
The final report states that all assets of Debtor in the trustee's possession have been reduced to cash. However, the trustee was unable to liquidate certain stocks because of Debtor's failure to locate and provide the stock certificates to the trustee.
In connection with the final report, Goldberg, Stinnett, Meyers, & Davis (" GSMD"), counsel to the trustee in California, filed its second and final application for compensation and reimbursement of expenses, requesting fees of $217,851.50 and expenses of $20,375.17. The law firm of Whiteford, Taylor & Presenton (" WTP"), counsel to the initial trustee in Maryland, also filed a final application for fees of $53,170.50 and expenses of $3,551.80.
On December 23, 2005, Debtor filed a " Motion In Opposition To The Proceedings Of January 12, 2006." The opposition did not direct any specific objections to the final report or to the fees and expenses of GSMD and WTP, but instead asserted Debtor's objection to the proceeding on the basis of her belief that it was " intended to legitimize the conspiracy racketeering theft, fraud and malicious misconduct by all of the participants."
On January 11, 2006, in light of the hearing on the final report and his intent to close the case, the trustee filed an " Application For Order That Undisclosed Assets Not Be Deemed Abandoned At Close Of Case" (the " Abandonment Application"). By the Abandonment Application, the trustee requested that upon the closing of Debtor's bankruptcy case, the court not deem abandoned any assets that Debtor had not turned over to the trustee pursuant to orders of the court or which had not been listed on Debtor's schedules. In response, Debtor filed a " Motion To Deny Application Re Closing Of The Case And Not Abandon Petitioner's Asset" wherein Debtor requested the court not close her case due to her pending petitions to the United States Supreme Court.
The pending petitions concerned Debtor's allegations of extortion and the theft of her exempt assets by the bankruptcy court, the trustee, and the trustee's counsel.
On January 12, 2006, the court conducted a hearing on the trustee's final report, the professionals' final fee applications, and the Abandonment Application, as well as Debtor's opposition to closing the case. All parties, except Debtor, were in attendance. In approving both fee applications, the court made clear that it went through " each and every page of both applications and . . . reviewed all the time records therein." Hr'g Tr. at 6, Jan. 12, 2006. Specifically, the court found that
under Section 330(a) that the amounts that I'm about to award do constitute reasonable compensation for actual and necessary expenses rendered by a Trustee; that I've examined the nature, extent, and value of the services and the time spent; the rates charged, whether the services were necessary to and beneficial to the estate; and whether or not there was a reasonable amount of time, expense, commensurate with the complexity and difficulties which can't be overemphasized in this case; and that the fees, the hourly rates, appear to be - and the charges appear to be based upon comparable charges by comparably skilled practitioners; that there wasn't any unnecessary duplication; and that the services when they were rendered were reasonably likely to benefit the estate and were necessary to the administration of the case.
Id. Based on its findings, the court awarded $40,000 in fees and expenses to WTP, $217,851.50 in fees and expenses of $20,375.17 to GSMD, and approved the final report.
WTP originally requested more than $50,000 in fees and expenses. At the hearing, in light of concerns expressed by the court, as well as the objections of the trustee, WTP agreed to fees in the reduced amount of $40,000.
The court then addressed the Abandonment Application and the closure of the case. In light of Debtor's three appeals pending before the United States Supreme Court, the court found it appropriate to enter an order that relieved the trustee of all further administrative responsibilities, but kept the case open pending information from the trustee that the case could be closed. The court believed that structuring the order in this manner accomplished everyone's goals without complicating the legal issues regarding abandonment, which had already been litigated through numerous appeals. In addition, the order relieved the parties of the burden of having to pay a reopening fee if any decision by the Supreme Court required further action in the case or the trustee discovered undisclosed assets that needed to be administered.
Debtor appeals.
Debtor presents numerous protestations regarding alleged acts of extortion, fraud, theft, and racketeering on the part of the bankruptcy judge, the trustee, GSMD, and others in her opening and reply briefs. As the criminal allegations go beyond the scope of this appeal, we decline to consider these matters. Birting Fisheries, Inc. v. Huse-Sporsem (In re Birting Fisheries, Inc.), 300 B.R. 489, 504 n.15 (9th Cir. BAP 2003).
1) Whether Debtor's appeal of the Trustee Discharge Order articulates any specific issue warranting review by this panel.
2) Whether the appeal of the Final Report Order is moot.
III. JURISDICTION
Federal subject matter jurisdiction is founded under 28 U.S.C. § § 1334(b) and 157(b)(1). We have appellate jurisdiction over final orders pursuant to 28 U.S.C. § 158(b)(1) and (c)(1).
IV. DISCUSSION
As a preliminary matter, the trustee argues that the appeal should be dismissed due to Debtor's failure to comply with certain of the Federal Rules of Appellate Procedure (" FRAP") and the Federal Rules of Bankruptcy Procedure (" FRBP"). Specifically, the trustee complains that Debtor's opening brief fails to conform to 1) FRBP 8010 or FRAP 32(a), which provides the requirements for the form of the briefs; 2) FRAP 28, which requires an appropriate jurisdictional statement, appropriate references to record, appropriate summary of argument, and statement of applicable standard of review with respect to each issue presented; and 3) FRBP 8006 and FRBP 8009, which require an appellant to include an appendix that includes a copy of the order or judgment appealed from.
While it is true that Debtor has not strictly complied with the appellate rules, pro se litigants should be given latitude in complying with the FRAP and FRBP and be held to " less stringent standards than formal pleadings drafted by lawyers." Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972); see also Ms. S. v. Vashion Island Sch. Dist., 337 F.3d 1115, 1125 n.15 (9th Cir. 2003). Consequently, instead of dismissing the appeals on procedural grounds, we have chosen to rule on them based on the merits.
1. Debtor Fails to Present Any Issues Which Warrant the Reversal of the Trustee Discharge Order
In reviewing Debtor's briefs as to the Trustee Discharge Order appeal, the only recognizable argument is that the Trustee Discharge Order was decided ex parte without proper notice to her, thus it should be reversed on due process grounds. The allegations of lack of due process regarding the Trustee Discharge Order are raised for the first time in Debtor's reply brief, thereby (ironically) depriving the trustee of an opportunity to address the issue in his responsive brief. The latitude granted to the shortcomings of pleadings presented by pro se litigants must cease when the due process rights of their opponents are adversely affected. See Leer, 844 F.2d at 634. And " arguments not raised by a party in [her] opening brief are deemed waived." Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999); Eberle v. City of Anaheim, 901 F.2d 814, 817-18 (9th Cir. 1990)(" It is well established in this circuit that the general rule is that appellants cannot raise a new issue for the first time in their reply briefs.").
Even if we were to consider this argument, the proof of service attached to the Trustee Discharge Order indicates that Debtor was served at her correct address. Moreover, the court did not enter the Trustee Discharge Order until after it held a hearing, which had been properly noticed, on the Abandonment Application and Debtor's " Motion To Deny Application Re Closing Of The Case And Not Abandon Petitioner's Asset." Thus, Debtor's due process arguments would be an insufficient basis for us to vacate the Trustee Discharge Order in any event.
Because Debtor's opening brief does not include any other arguments concerning the Trustee Discharge Order from which we can construe an issue, we deem Debtor's appeal of the Trustee Discharge Order as to any other issue to be abandoned. See Leer v. Murphy, 844 F.2d 628, 634 (9th Cir. 1988)(" Issues raised in a brief which are not supported by argument are deemed abandoned."); see also FRAP 28(a)(4)(the brief of an appellant must contain " the contentions of the appellant with respect to the issues presented. . . ."). Accordingly, Debtor's appeal of the Trustee Discharge Order fails.
2. No Relief Can Be Granted as to the Final Report Order Making Debtor's Appeal of It Moot
Although Debtor does not clearly articulate any specific issues regarding the Final Report Order, based upon a close review of her opening and reply briefs, we construe her argument to be as follows: the bankruptcy court abused its discretion in approving the final report which allowed for the disbursement of GSMD's and WTP's final fees and costs.
A court lacks jurisdiction over appeals which are moot. Baker & Drake, Inc., v. Pub. Serv. Comm'n of Nev. (In re Baker & Drake, Inc.), 35 F.3d 1348, 1351 (9th Cir. 1994). An appeal will be dismissed as moot if the requested appellate relief is impracticable. See id. " Failure to obtain a stay, standing alone, is often fatal[, ]" if the appeal is associated with property that has been sold to a third party or is based upon a simple plan of reorganization that has been substantially culminated. Id.
An appellant's failure to obtain a stay of an order authorizing the payment of attorney's fees to a party to the appeal, however, does not cause the appeal to be moot. Int'l Envtl. Dynamics, Inc., v. Logan (In re Int'l Envtl. Dynamics, Inc.), 718 F.2d 322, 325-26 (9th Cir. 1983). In such a situation, we have the ability to " fashion effective relief by remanding with instructions to the bankruptcy court to order the return of erroneously disbursed funds." Id. at 326.
Debtor is appealing the Final Report Order which approved the disbursement of fees by the trustee to WTP and GSMD. The only party to this appeal, however, is the trustee. As a result, we only have the ability to remand with instructions to the bankruptcy court to order the disgorgement of any fees paid to the trustee. According to the final report, the trustee was not awarded any fees. Consequently, for us to be able to provide effective relief to Debtor (i.e., the return of the funds paid to WTP and GSMD), Debtor needed to obtain a stay of the Final Report Order prior to distribution. No stay was obtained by Debtor prior to the trustee's distribution; therefore, the trustee had every right to disburse estate funds to pay the fees approved in the Final Report Order, including those to WTP and GSMD. Because the trustee has already made all distributions pursuant to the final report, which we have no legal authority to undo, Debtor's requested relief that the distributed funds be returned is impracticable. Accordingly, we lack jurisdiction over the appeal as to the final report on the grounds that it is moot.
Debtor filed a motion with the panel requesting a stay of the Final Report Order. The panel denied the motion on the grounds that she failed to " demonstrate irreparable injury or probability of success on the merits sufficient to obtain a stay pending appeal." Order Denying Stay Pending Appeal at 2, Apr. 7, 2006.
There were also separate orders entered on January 19, 2006, that approved the fees of WTP and GSMD. Debtor did not appeal either of those orders.
V. CONCLUSION
For the foregoing reasons, we AFFIRM as to the Trustee Discharge Order, and DISMISS the appeal of the Final Report Order.