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In re Eisen

United States Bankruptcy Appellate Panel of the Ninth Circuit
Oct 26, 2007
BAP CC-06-1313-PaMkT (B.A.P. 9th Cir. Oct. 26, 2007)

Opinion


In re: WILLIAM EISEN, Debtor. WILLIAM EISEN, Appellant, v. JEFFREY I. GOLDEN, Chapter 7 Trustee, Appellee BAP No. CC-06-1313-PaMkT United States Bankruptcy Appellate Panel of the Ninth CircuitOctober 26, 2007

NOT FOR PUBLICATION

Argued and Submitted at Pasadena, California: September 21, 2007

Appeal from the United States Bankruptcy Court for the Central District of California. Bk. No. SA 06-10372-ES, Adv. No. SA 05-01715-ES. Honorable Erithe A. Smith, Bankruptcy Judge, Presiding.

Before: PAPPAS, MARKELL and TCHAIKOVSKY, [ Bankruptcy Judges.

Hon. Leslie J. Tchaikovsky, United States Bankruptcy Judge for the Northern District of California, sitting by designation.

MEMORANDUM

This is an appeal of an order imposing sanctions of $2,000 on debtor William Eisen (" Eisen") for discovery violations. Following the filing of this appeal, the bankruptcy court announced that it lacked sufficient evidence to enforce the sanction order, and that it would not enforce the order unless the trustee refiled the motion for sanctions. Because at that point Eisen ceased to have the requisite personal interest in the outcome of his appeal, and since there are no other appellants with standing, this appeal will be dismissed as moot under the doctrine of standing set in a time frame.

FACTS

There are currently four appeals before this Panel in Eisen's bankruptcy case. We present here only the facts relevant to this appeal (CC-06-1313) of the decision to sanction Eisen in the adversary proceeding Eisen v. Golden, adv. no. 05-1765-ES. For the background in the disallowance of James A. Law's claims, please see our memorandum in CC-06-1387; for the compromise involving DFL, see CC-06-1385; for the rehearing/reconsideration see CC-06-1433.

Eisen filed a voluntary petition for relief under chapter 11 on December 3, 1993, in the Southern District of California. The case was converted to one under chapter 7 on August 24, 1994.

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 relevant provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, April 20, 2005, 119 Stat. 23.

A note about the many procedural irregularities in Eisen's submissions is appropriate here. For example, the excerpts of record begin with page " 521." Fed.R.Bankr.P. 8009(b)(1)-(b)(2) requires only that the excerpts be continuously paginated; it does not dictate that the pagination begin with page one. Apparently, Eisen begins the excerpts on page 521 to allow for inclusion in the record on appeal of the 520 pages submitted to this panel in a previous appeal. In the table of contents, Eisen begins with " Matters for which this court is requested to take judicial notice." Eisen then lists the 520 pages of the excerpts of record in an earlier BAP appeal, CC-05-1333, as well as over 640 pages in an appeal taken to the United States District Court for the Central District of California. Eisen has not provided copies of any of those documents from the other appeals, and we are not obligated to examine portions of the record not submitted in the excerpts of record. In re Kritt, 190 B.R. 382, 386-87 (9th Cir. BAP 1995). Because Eisen did not file a separate request for judicial notice, and has given us neither copies of those 1, 160+ pages of documents nor any reasons why we should take judicial notice of them, Eisen's request that we take judicial notice of those documents is DENIED.

Eisen had filed at least four prior personal bankruptcy cases between 1984 and 1992 in the Central District of California. In 1994, the Ninth Circuit affirmed the dismissal of one case as a bad faith filing and imposed sanctions against Eisen for prosecuting a frivolous appeal. Eisen v. Curry (In re Eisen), 14 F.3d 469 (9th Cir. 1994). After the bankruptcy court in the Central District dismissed most of the cases, Eisen filed chapter 13 and chapter 11 petitions in the Southern District of California; the Southern District bankruptcy court dismissed the chapter 13 case in 1993, converted the chapter 11 case to chapter 7 in 1994 (the instant case) and transferred the latter to the Central District in 1995.

On or about May 1, 1995, the case was transferred to the Bankruptcy Court of the Central District of California, and Gilbert R. Vasquez was appointed chapter 7 trustee. On January 4, 2002, Vasquez resigned, and Jeffrey I. Golden was appointed successor trustee (the " Trustee") on January 29, 2002.

Eisen's Schedule A listed as an asset certain real property (the " Crest Drive Property") " subject to unperfected foreclosure sale." Allen Group Partners (" Allen") claims to be the owner of the Crest Drive Property via a purchase at that foreclosure sale, which allegedly occurred in 1990. In January 2005, the Trustee filed an application to employ real estate brokers to sell the Crest Drive Property. Eisen opposed the application and attached to his opposition a trustee's deed purportedly transferring the Crest Drive Property to Allen. That trustee's deed was not recorded until January 11, 2005, some fifteen years after the purported foreclosure sale, and just after the Trustee filed the application to employ the real estate brokers.

On July 15, 2005, the Trustee initiated an adversary proceeding in Eisen's bankruptcy case against Allen and DFL Partnership (" DFL"). The complaint seeks, among other things, to establish the bankruptcy estate's right, title and interest in the Crest Drive Property.

DFL is successor in interest to Judith Day, who claims to have had an agreement with Eisen to purchase the Crest Drive Property in 1986. The claims of Day and DFL are examined in appeal CC-05-1385.

On February 1, 2006, the Trustee issued a subpoena directing Eisen to appear at a deposition in connection with the adversary proceeding, which would occur on March 9, 2006, and to produce documents in 68 categories for the Trustee's review. On March 1, 2006, Eisen sent a letter to the Trustee's counsel stating that service of the subpoena had been improper. He also argued that the document production demand was too broad. On March 2, 2006, the Trustee sent a letter to Eisen pursuant to C.D. Cal. Bankr. Local Rule 9013-1(c), requesting that Eisen contact the Trustee's counsel to arrange a meeting to discuss Eisen's failure to comply with the subpoena. On the same day, Eisen moved to quash the subpoena and for a protective order.

Eisen noted that the process server had attempted to serve the subpoena upon Eisen at a meeting of a school board of which he was a member. Eisen argued that the service was disruptive and violated Cal. Ed. Code § 32210 (2007) which provides, " Willful disturbance of public school or meeting; Misdemeanor. Any person who willfully disturbs any public school or any public school meeting is guilty of a misdemeanor, and shall be punished by a fine of not more than five hundred dollars ($500)."

Although the bankruptcy court denied the motion to quash on March 8, 2006, Eisen produced no documents in response to the subpoena, did not attend the deposition, and ignored the Trustee's request to meet and confer. On April 25, 2006, the Trustee filed a Motion for Order Compelling William Eisen to Produce Documents and Appear in his Deposition (the " Motion to Compel"), in which he sought an order directing Eisen to produce the documents, appear at the deposition, and pay $2,750 to reimburse the Trustee for the cost of preparing and filing the Motion to Compel.

On May 10, 2006, Eisen replied to the Motion to Compel. Eisen first argued that the discovery requests concerned materials and information that should have been covered in the § 341(a) meeting. Second, Eisen argued that because the Trustee had allegedly made criminal accusations against him, Eisen should be allowed to invoke his Fifth Amendment right to decline to testify or produce documents. In another submission to the bankruptcy court made the day before the hearing on the Motion to Compel, Eisen repeated his Fifth Amendment defense, and added two additional arguments: that sanctions should be denied because he filed the motion to quash the subpoena, and that the document production request would require hundreds of hours to complete for which he was not compensated.

The bankruptcy court hearing on the Motion to Compel took place on May 24, 2006. Eisen appeared pro se; Law and Allen were represented by counsel at the hearing, but neither counsel argued regarding the Motion to Compel. After hearing from the Trustee's counsel and Eisen, the court decided that Eisen should be compelled to attend the deposition, but significantly reduced the scope of documents he would be required to produce. The court ruled that Eisen should pay a sanction of $2,000 for his failure to cooperate in discovery, but that this sanction would not be imposed if Eisen complied with the court's directions. The court memorialized its decision in an Order Compelling William Eisen to Produce Documents and Appear at his Deposition on July 11, 2006 (the " July 11 Order"), which provided:

The debtor is not required to pay sanctions to the Trustee at this time. If the debtor complies with this order by appearing at the deposition and timely producing documents, no sanctions will be awarded. If the debtor fails to comply with this order, the Trustee may submit a declaration regarding the debtor's noncompliance together with a proposed order requiring the debtor to pay sanctions payable to the Trustee in the amount of $2,000.

The July 11 Order further directed Eisen to produce the required documents by the close of business on July 17, 2006, and to appear at the deposition on July 24, 2006.

Eisen did not submit any documents before the deadline on July 17, 2006. Eisen appeared for the scheduled deposition, but he informed the Trustee's counsel that he would make his own tape recording of the proceedings. The following colloquy ensued:

BURSTEIN [attorney for the Trustee]: I've asked you to turn [the tape recorder] off and put it away and you've refused. Is that true?

EISEN: That's correct.

BURSTEIN: All right, sir. It's our view, Trustee's view, that there's only one transcript and one recording of your testimony made today; that is the reporter's, as provided in the notice of your deposition and in the order.

You're not entitled to any other record, sir, including your own audio recording. If you refuse to turn that off and put it away, then we will suspend the deposition. We will file a motion with Judge Smith and ask that you be held in contempt, with regard to her previously entered order on your deposition.

We will ask her, in addition, to make issue preclusion findings against you on all issues the Trustee wished to take your deposition on and we will be done with your deposition.

EISEN: All right. It's my view that I have a right to record my - my testimony for my personal use, and these are - this is a recording - a recordation of my - for my personal use.

The deposition was suspended, and on July 27, 2006, the Trustee submitted a declaration of his counsel to the bankruptcy court advising the court of Eisen's alleged noncompliance with the July 11 Order.

At this point, the record on appeal becomes somewhat murky. On August 10, 2006, the Trustee filed a Motion for Order Holding the Debtor in Contempt Due to the Debtor's Failure to Comply With This Court's Order Compelling Him to Produce Documents and Appear at his Deposition (the " Contempt Motion"). The Trustee's Contempt Motion provides:

Evidently, the threat of a $2,000 sanction was insufficient to prompt the debtor to comply with his obligations under the subpoena. The Trustee requests that the Court issue sanctions against the debtor in an additional amount of $2,000, payable to the Trustee, to compensate the Trustee for the expense in bringing this motion and appearing at the hearing. The trustee further requests that the Court issue sanctions against the debtor in an amount of $10,000, payable to the Clerk of the Court. . . .

(emphasis added).

This Contempt Motion is clearly distinguishable from the earlier Motion to Compel in that it sought sanctions in addition to those sought in the Motion to Compel.

On August 18, 2006, the bankruptcy court entered its Order Awarding Sanctions Due to Debtor's Failure to Comply with This Court's Order Compelling William Eisen to Produce Documents and to Appear at his Deposition (the " Sanctions Order"). Specifically referring to the Declaration of the Trustee's counsel, the court awarded a $2,000 sanction pursuant to its July 11 Order. The Sanctions Order made no reference to the Contempt Motion or the additional damages sought therein.

Also on August 18, 2007, in response to the Contempt Motion, the bankruptcy court entered an Order to Show Cause Why Debtor Should Not be Held in Contempt due to the Debtor's Failure to Comply With This Court's Order Compelling Him to Produce Documents and Appear at his Deposition (the " Contempt OSC"). The Contempt OSC made no reference to the Sanctions Order. A hearing on the Contempt OSC was set for October 5, 2006.

On August 28, 2006, Eisen filed a timely appeal of the Sanctions Order. This is the appeal now before this Panel.

Events Subsequent to the Entry of the Sanctions Order

On October 5, 2007, the bankruptcy court held a hearing on the Contempt OSC. Eisen was present, and the Trustee was represented by counsel. Although an attorney appeared representing both Allen and Law, that attorney did not participate in the discussion of the Contempt OSC.

The attorney for Allen and Law, David Burkenroad, made one comment at the hearing: he agreed with the court's reasoning that Eisen could tape record his deposition for his personal use. Tr. Hr'g 16:16-23 (October 5, 2006).

At the beginning of the OSC hearing, Eisen questioned the bankruptcy court's jurisdiction to impose a $2,000 sanction because the Sanction Order was on appeal:

EISEN: I would like to note that the motion to compel involves $2,000 in sanctions awarded against me personally, and that motion - that order is on appeal to the BAP. So I question whether this is properly before the Court in that the very same order compelling is before the BAP.

THE COURT: Well, the thing is, whether it's before the BAP or not, unless there was a stay of the execution of the order, the order is a final order, and that can be acted upon, absent a stay. And I'm not aware that there has been any stay pending appeal.

Tr. Hr'g 10:22-11:6 (emphasis added). In making this comment, it would appear that Eisen confused the sanction imposed in the Sanction Order with the requested additional $2,000 sanction in the Contempt Motion that was the subject of the hearing. The bankruptcy court did not correct Eisen, and instead a colloquy between the court and the Trustee's attorney shows that the court's attention shifted toward enforcement of the Sanctions Order:

THE COURT: I think my ruling was that I would not impose the sanctions of $2,000 against Mr. Eisen, so long as he complied with the court's order, and if he didn't comply, then he would have to pay the $2,000.

As far as this motion is concerned, I'm going to suspend that portion of the order regarding the sanctions.

MR. TEDFORD [Trustee's attorney]: May I note, your Honor, that the Debtor has created a jurisdictional problem by appealing that portion of the order, by appealing the order issuing the $2,000 sanctions against him?

THE COURT: That's true.

MR. TEDFORD: It's the portion that he tried to use earlier in this hearing to say that this Court could not go forward with the present motion.

THE COURT: Got it. I guess I can't really suspend it. All I can do at this point is enforce it. Thank you for pointing that out. . . .

THE COURT: So, at this point, I'm not enforcing the portion of the order requiring the $2,000 in sanctions against Mr. Eisen at this point due to insufficiency of evidence, meaning there was a portion requiring that he show up for the deposition. He did. There was a requiring [sic] that he produce documents. He claims not to have them.

So at this point, I don't have sufficient evidence that he does have them, but again, should any documents surface or he produce them or anything like that, there's nothing I'm doing today that would prevent the Trustee from filing or refiling the motion. But as far as what is before me today, I am not going to enforce the order to hold Mr. Eisen in contempt as of this hearing.

Tr. Hr'g 24:17-26:2.

Viewed in the complicated procedural context of the adversary proceeding, we believe a fair interpretation of the bankruptcy court's comments at the hearing shows that the court: (1) was considering what action to take regarding the sanctions imposed in the Sanctions Order, and not the proposed additional sanctions referred to in the Contempt Motion; (2) decided not to enforce the Sanctions Order because of insufficiency of evidence that Eisen actually possessed the documents he was accused of failing to produce; and (3) instead determined that it would only enforce the existing Sanctions Order, or impose other sanctions, if the Trustee filed a new motion, or refiled the Contempt Motion.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C. § § 1334 and 157(b)(2)(A) and (O). We have jurisdiction pursuant to 28 U.S.C. § 158.

ISSUE

Because we dismiss this appeal as moot, we do not reach the issues framed by Eisen in his Statement of Issues.

Whether this appeal is moot because, during its pendency, the bankruptcy court decided it would not enforce the sanctions awarded against Eisen.

STANDARD OF REVIEW

We examine our own jurisdiction, including mootness issues, de novo. Wiersma v. D.H. Kruse Grain & Milling (In re Wiersma), 324 B.R. 92, 110 (9th Cir. BAP 2005).

DISCUSSION

This appeal is moot because Eisen no longer has a personal interest in this appeal.

There is no question that Eisen had standing to initiate this appeal. Eisen was ordered by the bankruptcy court to pay sanctions in the amount of $2,000. He was an " aggrieved person" because he was " directly and adversely affected pecuniarily" by the court's Sanctions Order. In re Fondiller, 707 F.2d 441, 442 (9th Cir. 1983).

As noted above, Eisen alone filed the Notice of Appeal commencing this appeal. That makes sense since this appeal concerns sanctions imposed against Eisen personally for his failure to cooperate in discovery. The Trustee made no request to recover sanctions from Law or Allen, and neither is liable, directly or indirectly, for any sanctions awarded against Eisen. In other words, Eisen alone has a financial stake in the order being appealed. In spite of this, for reasons that are not apparent, Law and Allen were listed in the captions in the four nearly identical short (seven-page) briefs filed in the four appeals pending before the Panel arising from Eisen's bankruptcy case, including this appeal.

But although Eisen clearly had standing to commence this appeal, like any litigant he must continue " to have a personal stake in the outcome of the [case] throughout all stages of federal judicial proceedings." United States v. Verdin, 243 F.3d 1174, 1177 (9th Cir. 2001). " The requisite personal interest that must exist at the commencement of a case must continue throughout its existence." U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 397, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980). At any stage of the proceeding, a case becomes moot when " it no longer presents a case or controversy under Article III, § 2 of the Constitution." Spencer v. Kemna, 523 U.S. 1, 7, 118 S.Ct. 978, 140 L.Ed.2d 43 (1998). During the course of an appeal, appellants must continue to have " a personal stake in the outcome." Lewis v. Cont'l Bank Corp., 494 U.S. 472, 478, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990). The Supreme Court refers to this as the " doctrine of standing set in a time frame" and has recently reaffirmed its vitality. Friends of the Earth, Inc. v. Laidlaw Env't Servs., Inc., 528 U.S. 167, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000); Arizonians for Official English v. Arizona, 520 U.S. 43, 68, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997).

At the hearing on October 5, 2006, the bankruptcy court stated that it would not enforce the Sanctions Order directing Eisen to pay the $2,000 sanction to the Trustee. The sanction had been conditionally imposed, and Eisen was allowed an opportunity to avoid it by attending the deposition and producing any relevant documents he might have. At the October 5 hearing, the bankruptcy court declined to enforce the Sanctions Order because there was insufficient evidence that Eisen had violated that order by withholding any documents that the Trustee had demanded be produced. The court also indicated that it would not revive the sanctions unless evidence of the existence of documents in Eisen's possession was thereafter uncovered, and the Trustee refiled the motion requesting sanctions or filed a new motion. The bankruptcy court thereby ended any controversy between the Trustee and Eisen concerning the Sanctions Order. The court decided it would not revisit the dispute unless a new or renewed motion was filed initiating a new controversy, which would require further notice, hearing, and a new order. From the moment the bankruptcy court ruled that Eisen would not be required to pay the $2,000 sanction, and that this matter would not be revisited unless a new motion was filed, Eisen ceased to have a pecuniary interest or personal stake in the outcome of this appeal. There was no longer an active controversy.

We therefore conclude that this appeal is moot under the doctrine of standing set in a time frame.

CONCLUSION

The appeal is DISMISSED as moot.

Eisen also failed to provide copies of certain required documents in his excerpts, such as the complaint and answer in this adversary proceeding, which violates Rule 8009(b)(1). In addition, Eisen's citations in the opening brief to documents not submitted in the excerpts of record violate Rule 8010(a)(1)(D).

Finally, we note that Eisen submitted a single set of excerpts of record for all four appeals currently before the Panel without leave of the Panel, and this significantly complicates the parties' and the Panel's ability to examine the record. Opposing parties and the Panel are not obliged to search the entire record unaided for error. Dela Rosa v. Scottsdale Mem'l Health Sys., Inc., 136 F.3d 1241 (9th Cir. 1998).

Under these circumstances, we do not consider Law or Allen to be appellants in this appeal. Even if Allen or Law intended to join in this appeal, they would be dismissed as appellants for lack of standing to appeal. In this circuit, only " persons aggrieved" have standing to appeal an order of the bankruptcy court. Fondiller, 707 F.2d at 442. Whether a person is aggrieved for purposes of a bankruptcy appeal is measured by whether that person is " directly and adversely affected pecuniarily by an order of the bankruptcy court." Duckor Spradling & Metzger v. Baum Trust (In re P.R.T.C., Inc.), 177 F.3d 774, 777 (9th Cir. 1999)(emphasis added). Simply put, since neither Law nor Allen has any financial exposure whatsoever as a result of the Sanctions Order, they lack standing to appeal.

We therefore ORDER that the caption in this appeal reflect that William Eisen is the only appellant in this appeal. This order does not affect the captions in the three other appeals in the Eisen bankruptcy case presently before the Panel.


Summaries of

In re Eisen

United States Bankruptcy Appellate Panel of the Ninth Circuit
Oct 26, 2007
BAP CC-06-1313-PaMkT (B.A.P. 9th Cir. Oct. 26, 2007)
Case details for

In re Eisen

Case Details

Full title:In re: WILLIAM EISEN, Debtor. v. JEFFREY I. GOLDEN, Chapter 7 Trustee…

Court:United States Bankruptcy Appellate Panel of the Ninth Circuit

Date published: Oct 26, 2007

Citations

BAP CC-06-1313-PaMkT (B.A.P. 9th Cir. Oct. 26, 2007)