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In Fruehauf Trailer Corp. v. Harrow, No. CV 11-09218 DDP, 2013 WL 816446, at *12-*13 (C.D. Cal. Mar. 5, 2013), the court determined that, although the defense counsel failed to appear at the parties' pretrial conference, counsel was permitted to correct that error and was present at trial, "where he offered argument, presented testimony, and asserted objections to the plaintiff's evidence.
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ORDER AFFIRMING DECISION OF THE BANKRUPTCY COURT
DEAN D. PREGERSON, District Judge.
On November 7, 2011, Chriss W. Street appealed an order of the bankruptcy court denying a Motion for Relief from Judgment and/or a Continuance of Trial. Appellees Daniel W. Harrow, as Successor Trustee of The End of the Road Trust, and American Trailer Industries, Inc. (collectively "Appellees") urge the court to affirm. The heart of Street's appeal is that his attorney Phillip Greer allegedly provided inadequate representation during the trial and pretrial stages of this case. For the reasons discussed herein, the court AFFIRMS the bankruptcy court's decision.
Notice of Appeal, Docket No. 2; Appellant's Opening Brief ("Appellant's Opening Brief"), Docket No. 21; see also Appellant's Reply Brief ("Appellant's Reply"), Docket No. 31.
Appellee's Opening Brief ("Appellee's Brief"), Docket No. 26.
I. FACTUAL BACKGROUND
A. The Action
On October 7, 1996, Fruehauf Trailer Corporation and related entities ("Fruehauf") filed petitions for relief under Chapter 11 of the Bankruptcy Code. The plan of reorganization provided for the creation of a trust to liquidate the debtors' assets for the benefit of Fruehauf's creditors. Pursuant to the plan, Chriss Street and Fruehauf entered into a trust agreement creating The End of the Road Trust ("the Trust"). Street served as trustee of the Trust from October 1998 to August 2005. Plaintiff Daniel Harrow ("Harrow") replaced Street as trustee of the Trust on August 1, 2005. In his capacity as successor trustee for the Trust, Harrow commenced an adversary action against Street in February 2007 in the United States Bankruptcy Court for the District of Delaware.
Appellant's Excerpts of Record ("AER"), Docket No. 23, Tab 1 at 6.
Id.
Id., Tab 6 at 125.
Id. at 126.
Id.
Appellant's Supplemental Excerpts of Record ("SER"), Docket No. 28 (June 25, 2012), at 162.
Street commenced an action in Delaware Chancery Court against Harrow seeking an order directing the Trust to advance costs and attorneys' fees he had incurred defending against claims related to his role as former trustee. Harrow removed the action to the United States District Court for the District of Delaware, which referred the action to the bankruptcy court. Street was represented during pretrial and trial phases of the adversary action by attorney Phillip Greer.
Appellees' Supplemental Excerpts of Record ("SER"), Tab 3 at 19-25, Docket No. 28.
AER, Tab 2 at 44-63 (Street's answer to second amended complaint, signed by Greer); SER, Tab 27 at 303. Statements Greer made at a pretrial conference suggest that he conducted discovery and took and/or defended depositions during the lawsuit. (SER, Tab 24 at 225-28.)
On October 9, 2008, both the adversary action and Street's lawsuit were transferred to the United States Bankruptcy Court for the Central District of California. On October 14, 2008, Harrow filed a second adversary proceeding against Street alleging that Street had breached the Trust agreement and breached fiduciary duties he owed the Trust as well.
AER, Tab 25 at 427.
B. Pretrial Proceedings
The bankruptcy court held a pretrial conference in the adversary proceeding on November 4, 2009. Street's attorney failed to appear at the conference, although he had appeared at prior pretrial conferences. As a consequence, the bankruptcy court dismissed Street's action for failure to prosecute, and directed appellees' counsel to give Street's attorney another opportunity to address pretrial stipulations in the adversary action.
SER, Tab 27 ("Nov. 4, 2009 Transcript") at 239.
Id. at 249-58.
Harrow submitted a pretrial order as directed. Greer did not object, and on December 18, 2009, the court entered an order approving the proposed pretrial conference order. The order listed 81 undisputed or stipulated facts, 31 disputed facts, and issues of law regarding to appellees' claims and Street's counterclaim, identified witnesses, and included an exhibit list. Among these facts are figures comprising Harrow's damage claim. While Greer signed the proposed order, and the proposed order indicates that it was jointly submitted, it contains minimal information regarding the evidence Street intended to introduce at trial, or any of Street's factual or legal contentions.
AER, Tab 3 at 64.
See generally, id.
Id. at 65-75.
Id. at 87.
Regarding the exhibits, the pleading stated that appellees intended to introduce certain exhibits and that they had given Street a copy of the exhibits. (Id. at 85.) In contrast, the document is silent concerning Street's intention to introduce exhibits. Likewise, the document states that appellees intended to call certain witnesses, and stated: "Defense counsel has failed to identify any witnesses, but it is believed by Plaintiffs that Defendant will call Chriss Street and Dennis W. Sinclair." (Id.)
The bankruptcy court held another pretrial conference on January 6, 2010, at which the parties discussed their respective preparations for trial. When asked about Street's trial exhibits, Greer stated that the exhibits listed in the pretrial order "were pretty mutual," and "derive[d] from the same activities." He suggested that he would seek to offer a final expert report prepared by Dennis Sinclair, whom he intended to call as a witness. The parties also discussed the disputed and undisputed facts in the pretrial order, and the court asked a number of questions regarding the precise issues to be tried. Based on discussions at the pretrial conference, the parties submitted an amended proposed pretrial conference order that once again stated it was jointly submitted, and the pleading was signed by counsel for both parties. The amended order contained the same 81 stipulated facts and 31 disputed facts found in the prior order, set forth issues of law to be resolved by the court, and identified witnesses and exhibits. Like the previous pleading, it contained few references to Street's exhibits, witnesses, or contentions. Although the order stated that appellees were "trial ready" and that they estimated it would take two days to present their case, the pleading is silent regarding Street's readiness or trial time estimates.
AER, Tab 26 at 260.
Id. at 264.
Id. at 264, 272-73.
Id. at 274-85.
AER, Tab 4 at 91-116.
Id. at 113.
The bankruptcy court signed and filed the amended pretrial conference order and served it to the parties on January 14, 2010. That same day, Greer filed an amendment to the order confirming that he intended to call Street and Sinclair as witnesses at trial.
Id. The Amended Pretrial Order contained the following concluding paragraph:
AER, Tab 5 at 117-20.
C. The Trial
The bankruptcy court presided over a two-day trial on February 3-4, 2010. Six witnesses testified, and the parties introduced a number of stipulated exhibits and undisputed rebuttal exhibits. Street was present in the courtroom during a substantial portion of the trial.
SER, Tabs 27-28.
SER, Tab 28 at 337.
The bankruptcy court made several evidentiary rulings during the trial, some of which excluded exhibits that had not been produced in discovery. On several occasions, the bankruptcy court prohibited Street from offering testimony that contradicted stipulated facts in the amended pretrial order. The parties dispute whether Street testified under oath that he did not dispute the validity of any of the stipulated facts. On February 4, 2010, at the conclusion of the appellees' case, appellees' counsel Robert Kugler, stated:
SER, Tab 28 at 355-57.
See e.g., SER, Tab 28 at 338-40, 342-50. For example:
"MR. KUGLER: I guess that brings us back to the question. That concludes our presentation on liability. I'd reiterate again that our liability case is made up not only of testimony, but of the stipulated facts and the 163 exhibits that have been submitted to the Court, that have been stipulated to by Mr. Street. So we're done with liability.
"THE COURT: Okay. Thank you."
Id. at 325.
Id. at 325.
The following morning, on direct examination by Greer, Street testified:
"Q: Mr. Street, you were here yesterday for all the testimony of Mr. Harrow, Ms. Dolan, and Mr. Wynn, correct?
A: Yes.
Q: And you heard Mr. Kugler recite a number of stipulated facts, did you not?
A: Yes.
Q: And do you agree with those stipulated facts?
A: Yes.
Q: Are those the only facts that are pertinent in this matter?
A: No.
Q: Are there other facts that were not stipulated to?
A: Yes."
Id. at 337.
Id. at 337.
Appellees contend in this testimony Street conceded the accuracy of the stipulated facts set forth in the amended pretrial order. Street argues that he agreed only to certain uncontroversial stipulated facts cited by Harrow's counsel the previous day, such as those concerning creation of the trust.
Because a complete transcript of the prior day's proceedings is not included in the record, the court cannot determine which party has the better argument. (Appellant's Opening Brief at 6 n. 3.)
Later that day, Greer attempted to qualify Dennis Sinclair as a damages expert. Appellees objected after Sinclair testified that his opinions were based on certain documents Street had withheld during discovery, and Greer withdrew Sinclair's testimony. Street, who was present in the courtroom, did not object to the withdrawal.
SER, Tab 28 at 366-71. The trial transcript does not clearly reflect why Greer withdrew Sinclair, but it appears that he did so after it became evident that Sinclair had relied on certain documents that should have been, but were not, made available to appellees.
The parties filed post-trial briefs on February 18, 2010. On March 5, 2010, the bankruptcy court issued a memorandum opinion and entered judgment in favor of appellees, awarding them approximately $7 million in damages. The court also found for Harrow on Street's counterclaim for indemnification.
AER, Tab 25 at 433.
AER, Tab 6 at 122. The bankruptcy court also held in Harrow's favor on Street's counterclaim for indemnification. (Id.) In calculating damages, it relied heavily on the stipulated facts.
Id.
D. The Direct Appeal
After entry of judgment, Street obtained new counsel, James Hayes. Hayes appealed the judgment to the district court on March 25, 2010, raising three issues: (1) the bankruptcy court erred in applying Delaware trust law;(2) there was insufficient evidence to show that Street breached his fiduciary duties and/or violated the trust agreement, and (3) the bankruptcy court abused its discretion in making certain evidentiary rulings during trial.
See SER, Tab 2.
See AER, Tab 8.
See id.
Hayes submitted an opening brief on June 18, 2010, and a corrected brief on June 22, 2010. The opening brief argued only the first two issues identified for appeal; it did not address any of The bankruptcy court's evidentiary rulings at trial. The opening brief did, however, make the following statement regarding Greer's performance as trial counsel:
See SER, Tab 4.
Id. at 34.
"The undersigned counsel did not represent Appellant in any way before or during the trial on this proceeding. The Court will no doubt note, as it reads the trial transcripts, the thoroughly incompetent preparation and presentation of Appellant's defense made by his then counsel Phillip B. Greer. This included Mr. Greer's stipulation to 81 facts as undisputed at trial without Appellant's authorization. Appellant makes no excuse for his counsel's performance nor does he assert it as sole grounds for this appeal.
"Mr. Greer's incompetent performance notwithstanding the bankruptcy court made substantial errors of law and abuse of discretion in failing to enforce the exculpatory provisions of the trust agreement and the proper standards of review to the evidence presented by both parties. These errors warrant reversal of the judgment and either entry of the judgment in Appellant's favor or remand to the bankruptcy court for retrial of both the liability and damages portions of the proceeding."
Id. at 38-39.
Id. at 38-39.
These paragraphs constitute the brief's sole reference to the bankruptcy court's evidentiary rulings and Greer's performance as trial counsel. The opening brief also asserted that "[b]y agreement of the parties, the Amended PTO set forth 81 stipulated facts," and that "[d]uring the two-day trial, Appellant firmly defended his actions as trustee as being absolutely shielded by provisions of the trust agreement."
Id. at 37, 49.
This court affirmed the bankruptcy court's judgment on May 23, 2011. In re Fruehauf Trailer, No. CV 10-02312 DDP, 2011 WL 2014672 (C.D. Cal. May 23, 2011). It found that the bankruptcy court had correctly applied Delaware law and that there was substantial evidence to support the judgment. Id. Hayes represented Street throughout his first appeal. Id.
E. Street's Rule 60 Motions
While the appeal was pending, on March 4, 2011, Hayes served and filed a substitution of attorney in the bankruptcy court, which substituted Street pro se. Three days later, on March 7, 2011, Street filed two documents: a motion for relief from judgment under Rule 60(b), and an application to file the motion under seal. The parties dispute the date these documents were actually filed; the copies submitted to the court bear file-stamps of March 7, 2011, and electronic docket notations indicating that they were entered on March 8, 2011. Street also filed an "amended" motion for relief from judgment on March 11, 2011. Harrow filed an opposition and a motion to strike the March 7 application to file under seal and the March 11 motion. The bankruptcy court scheduled a hearing for May 19, 2011. The bankruptcy court considered Street's additional motions at the May 19 hearing.
See SER, Tab 7. Hayes did not withdraw or file a similar substitution of counsel in the district court appeal.
See AER, Tabs 9-10.
As discussed below, there is some confusion in the record as to when these pleadings were actually filed.
See AER, Tab 12.
See AER, Tabs 13-14; SER, Tab 9.
AER, Tab 13 at 249.
Street's March 11 Rule 60(b) motion sought to set aside the judgment on three grounds: (1) excusable neglect under Rule 60(b)(1); (2) newly discovered evidence under Rule 60(b)(2); and (3) fraud on the court under Rule 60(b)(3). Street's argument under Rule 60(b)(1) was based on Greer's allegedly inadequate representation and focused primarily on Greer's agreement to stipulate to the facts set forth in the amended pretrial conference order, as this had played a role in the court's entry of judgment against Street. Street did not invoke Rule 60(b)(6), and did not cite that provision in his moving papers.
AER, Tab 12 at 219-24.
Id.
On June 9, 2011, The bankruptcy court entered a series of orders regarding the applications and motions pending before the court. He concluded, inter alia, that he lacked jurisdiction to entertain the motions as they were filed while the case was pending before this court on appeal. Several of the orders nonetheless addressed whether Street's March 11 Rule 60(b) motion and his April 20 Rule 60(b) motion had been timely filed:
E.g., AER, Tab 20 (Order Granting Plaintiff's Motion to Strike Defendant's Motion to file Documents Under Seal and Motion(s) for Relief from Judgment); AER Tab 21 (Order Denying Defendant's Motion for Leave to Amend Motion for Relief from Judgment); AER Tab 22 (Order Striking Defendant's April 20, 2011 Amended Motion for Relief from Judgment); SER, Tab 15 (Order Denying Defendant's Motion for Leave to Amend Motion to File Documents Under Seal); SER, Tabs 15-18 (additional June 9 orders striking defendant's motions); SER, Tabs 19-21 (orders entered on June 14 and 22 striking more of defendant's pleadings).
"The judgment in this case was entered on March 5, 2010. One year, would be March 5, 2011, which is a Saturday. Pursuant to Rule 9006(a)(1)(C), the deadline to file a Rule 60(b) motion would be on March 7, 2011 - the following Monday. The original Rule 60 Motion was not filed on March 7, 2011, as required by Rule 60(c). The reality is that the first Rule 60 Motion filed by the Defendant was on March 11, 2011 and not on March 7, 2011. Thus, the motion was filed untimely. Even if a Rule 60(b) motion was filed within a year, it can still be untimely if it fails the reasonable-time' requirement of the rule. Here, there is no showing that this motion was filed timely or within a reasonable time especially since Defendant chose to appeal the judgment before seeking a Rule 60 motion. The Court finds that the Defendant's Rule 60 motion is untimely."
AER, Tab 20 at 397.
AER, Tab 20 at 397.
F. The Order Being Appealed
Before the bankruptcy court issued its June 9, 2011, orders, on May 31, 2011, a document titled "Motion for relief from judgment and continuation of trial" appeared on the bankruptcy court's docket. The parties dispute whether this was a new motion that Street filed for the first time on May 31, or whether it was in actuality the "missing" March 7, 2011, motion that Street claimed to have filed originally along with his March 7 application to seal, which appeared late on the docket due to a docketing error. The bankruptcy court's docket entry associated with the filing contains a notation that the document was "ORIGINALLY FILED 3/7/11," even though it was entered almost three months later. The document itself bears a file stamp of March 7, 2011. Similar to Street's other motions, the May 31, 2011, filing raised arguments under Rule 60(b)(1)-(3).
AER, Tab 25 at 442 (Docket Entry 149).
Id.
AER, Tab 19 at 357.
On October 4, 2011, the bankruptcy court issued an Order denying Street's May 31 Rule 60(b) Motion, which is the subject of the instant appeal. As to timely filing, the bankruptcy court observed that despite the March 7, 2011, file-stamp on the document, the accompanying proof of service was not dated and also misstated the mailing address for appellee's counsel. These facts, the bankruptcy court stated, suggested that both service and timeliness were in issue and that the court therefore could not conclude that the May 31, 2011, docket entry should "relate back" to the March 7, 2011, file stamp date.
SER, Tab 23 ("Order Denying Defendant's Motion for Relief from Judgment and Or Continuation of Trial Under Rule 60" [hereinafter Bankruptcy Court Order]).
Id. at 209.
Id.
The bankruptcy court also held that even if Street's motion related back to March 7, the motion would still fail for a number of reasons. First, as of March 7, the bankruptcy court's judgment remained pending on appeal, thereby divesting the bankruptcy court's jurisdiction over the matter. See Gould v. Mut. Life Ins. Co. of N.Y., 790 F.2d 769, 772 (9th Cir. 1986). Second, the bankruptcy court held that Street "cannot overcome the effect of the District Court's May 23 ruling affirming the Judgment," which Street had not appealed. The bankruptcy court suggested that these circumstances rendered Street's Rule 60 motions moot.
Id. at 415.
Id.
Id. at 415-16.
Finally, the bankruptcy court addressed the merits of Street's Rule 60(b) arguments. Street's arguments regarding newly-discovered evidence and purported "fraud on the court" largely relied on the same factual contentions, and although it did not explicitly state that it was doing so, he appears to have addressed those arguments together. The bankruptcy court observed that Street had offered no explanation as to the timing of when these "newly discovered" motions had surfaced, and had proffered no suggestion that they could not have been raised within the time requirements of Rule 60(b)(2). The court also examined the evidence Street had proffered, and stated that they did "not negate the facts... showing that Defendant, himself, breached his duty to the trust," and that Street was not absolved of liability simply "because Plaintiff may have breached his own duties." As for Street's argument of excusable neglect based on Greer's deficient representation, the court concluded:
Id. at 416.
Id. at 416-17.
"Defendant was present throughout the course of trial. If he did not agree with a stipulated fact, he could have challenged those facts at trial or asked his counsel to challenge them. He could have informed the court that he did not stipulate to those facts. Likewise, he could have fired his counsel at or before trial if he believed that he did not consent to the way his counsel conducted his defense. He failed to do so. In addition, the trial was extensive... and numerous items of evidence were presented... that established Defendant's liability. The Court considered all evidence presented at trial not only the stipulated facts. Indeed, Defendant failed to demonstrate that his failure to correct his counsel was excusable' when he was an active participant and a witness at trial. He also had the opportunity to negate the evidence presented in court."
AER, Tab 23 at 417.
AER, Tab 23 at 417.
As Street's motion did not explicitly address relief under Rule 60(b)(6), the court did not address that provision. Finding that Street had failed to raise any meritorious basis for relief under Rule 60(b), the bankruptcy court denied his motion.
Street engaged a third lawyer, Christopher Pitet, shortly before the hearing on his May 31 Rule 60(b) motion, who is representing him through this appeal.
II. DISCUSSION
A. Standard of Review
District Courts have jurisdiction to hear appeals from final judgments, orders or decrees of the bankruptcy court. 28 U.S.C. § 158(a). "When reviewing a bankruptcy court's decision... a district court functions as a[n] appellate court and applies the standard of review generally applied in the federal court[s] [of] appeal[]." In re Webb v. Reserve Life Ins. Co., 954 F.2d 1102, 1103-04 (5th Cir. 1992). The district court must accept the bankruptcy court's findings of fact unless they are clearly erroneous. See In re Banks, 263 F.3d 862, 867 (9th Cir. 2001). A 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.'" Id. at 869 (9th Cir. 2001) (quoting Anderson v. Bessemer City, 470 U.S. 564, 573 (1985)). The district court reviews the bankruptcy court's conclusions of law de novo. Laws v. Sony Music Entm't, Inc., 448 F.3d 1134, 1137 (9th Cir. 2006).
The bankruptcy court's order on a Rule 60(b) motion is reviewed for abuse of discretion. See Latshaw v. Trainer Wortham & Co., 452 F.3d 1097, 1100 (9th Cir. 2006). Reversal is warranted only if the bankruptcy court did "not apply the correct law, rest[ed] its decision on a clearly erroneous finding of a material fact, or applie[d] the correct legal standard in a manner that result[ed] in an abuse of discretion." Engleson v. Burlington N. R.R. Co., 972 F.2d 1038, 1043 (9th Cir. 1992).
When sitting as an appellate court in bankruptcy, the district court need not adopt the bankruptcy court's rationale for its decision. Rather, like other appellate courts, it may affirm on any basis fairly supported by the record. See In re Frontier Props., Inc., 979 F.2d 1358, 1364 (9th Cir. 1992) ("[W]e may affirm on any basis supported by the record..."); In re Hopkins v. United States, 201 B.R. 993 (D. Nev. 1996).
B. Whether the Bankruptcy Court's Order Should Be Reversed
The gravamen of Street's contention on appeal is whether he is entitled to relief under Rule 60(b)(6) as a result of Greer's gross negligence. See Fed.R.Civ.P. 60(b)(6) (stating that court may relieve party or legal representative from final judgment for "any other reason that justifies relief"). In response, appellees raise three primary arguments. First, they contend that Street's current appeal is "at its core... a challenge to [the bankruptcy court's] evidentiary rulings that precluded testimony contrary to stipulated facts," and that Street raised and subsequently abandoned this challenge in his appeal of the underlying judgment. As a consequence, appellees assert, Street can no longer raise this claim. Second, appellees argue that as Street did not appeal from the denial of his March 11 and April 20 "amended" motions, those rulings are final and unappealable and that moreover, the bankruptcy court was correct in ruling that Street's Rule 60(b) motions were untimely filed, thereby procedurally barring the instant appeal. Third, they contend that the bankruptcy court did not abuse its discretion in denying Street's motions on their merits, and that even if the bankruptcy court were to consider Street's motion under Rule 60(b)(6), the record supports a conclusion that Street has failed to demonstrate that he is entitled to relief. The court addresses each contention in turn.
Appellees' Opening Brief at 16-18.
Id.
Id. at 18-21.
Id. at 21-28.
1. Whether Street Has Abandoned Issues Related to the Stipulated Facts and Incompetence of Trial Counsel
Appellees characterize Street's argument regarding Greer's incompetence as trial counsel as a thinly-veiled attempt to overturn The bankruptcy court's evidentiary rulings. This, they contend, is an impermissible means of "avoid[ing] the consequences of his prior appeal to the District Court," where he raised the evidentiary rulings in his statement of issues on appeal, but did not argue them in his briefs.
Id. at 17.
As an initial matter, the court agrees that by raising the propriety of the bankruptcy court's evidentiary rulings, but failing to argue the issue in his appeal brief before this court, Street raised and subsequently abandoned any challenge to those rulings. Kohler v. Inter-Tel. Tech., 244 F.3d 1167, 1182 (9th Cir. 2001) ("Issues raised in a brief which are not supported by argument are deemed abandoned." (citations omitted)).
This conclusion does not compel a finding that Street has similarly abandoned any arguments as to Greer's incompetence as counsel. Although the two issues rely to some extent on the same facts and parts of the record, they are nonetheless quite distinct and rely on different legal theories and factual contentions. Most importantly, any challenge to the bankruptcy court's evidentiary rulings goes directly to the merits of the bankruptcy court's judgment, while arguments regarding Greer's competence address whether Street is entitled to some form of relief from the entry of judgment notwithstanding its merits. Indeed, despite the appeal brief's mention of Greer's incompetence, Street procedurally could not have raised any arguments to this court regarding trial counsel's deficiencies, as at the time of appeal those issues had not been raised before the bankruptcy court. See United States v. Robertson, 52 F.3d 789, 791 (9th Cir. 1994) ("Issues not presented to the district court cannot generally be raised for the first time on appeal."). Accordingly, it is highly doubtful that Street could even have properly presented that issue on appeal, much less raised it only to abandon it.
Although appellees offer various authorities that allegedly support their contentions, all of the cases cited are inapposite. Some of its cited authority addresses the separate issues of the timeliness of a Rule 60(b)(6) motion, See Hoult v. Hoult, 57 F.3d 1, 3 (1st Cir. 1995), or the legal standard governing the merits of such a motion, See Hopper v. Euclid Manor Nursing Home, Inc., 867 F.2d 291, 294 (6th Cir. 1989).
Additionally, while appellees' argument on this point is unclear, they draw on cases addressing the rule of mandate in support of this argument, contending that this court's affirmance of the bankruptcy court's judgment somehow precludes plaintiff from raising any argument as to Greer's incompetence. See United States v. Kellington, 217 F.3d 1084, 1093 (9th Cir.2000) ("According to the rule of mandate, although lower courts are obliged to execute the terms of a mandate, they are free as to anything not foreclosed by the mandate...'"). Appellees suggest that the bankruptcy court "implicitly" recognized this principle when it held that this court's mandate rendered Street's pending Rule 60(b) motion moot. However, to the extent that the bankruptcy court or appellees believe that the rule of mandate precluded the bankruptcy court from hearing this argument after affirmance, they are incorrect. The rule of mandate prohibits "entertain[ing] a proceeding inconsistent with" the appellate court's decision, not more. See United States v. Cote, 51 F.3d 178, 181 (9th Cir. 1995). As noted, the question of Greer's competence as counsel was not raised as a ground for reversal and this court neither expressly nor impliedly resolved the issue on appeal. Consequently, the mandate did not foreclose the bankruptcy court from considering the issue. For those reasons, the court cannot conclude that Street is precluded from arguing this issue under a waiver or abandonment theory.
2. Whether Street's Rule 60 Motion was Timely
Appellees claim that Street's Rule 60 Motion was time barred. Federal Rule of Civil Procedure 60 governed Street's Rule 60 Motion. See Fed. R. Bank. P. 9024. Federal Rule of Civil Procedure 60(c) requires such motions to be "made within a reasonable time-and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order of the date of the proceeding." Fed.R.Civ.P. When a judge bars a motion because an unreasonable amount of time has passed, the appellate court reviews the decision on an abuse of discretion standard. United States v. Holtzman, 762 F.2d 720, 725 (9th Cir. 1985).
The bankruptcy court denied Street's Rule 60 Motion for two reasons: first, it was beyond the time limit that Federal Rule of Civil Procedure 60(c) sets, and, second, it was not filed in a reasonable time, as Rule 60(c) requires. Street focuses his argument on the first reason. He only briefly addresses the second, cursorily arguing that since his first appeal to this court took longer than a year, it would be unfair to say that he did not file within a reasonable time. However, the bankruptcy court faulted Street for pursuing that appeal before filing his Rule 60 motion in bankruptcy court. Street does not address this concern, and therefore fails to carry his burden on appeal.
AER, Tab 20 at 397.
Appellant's Reply at 5 n.1.
AER, Tab 20 at 397.
3. Whether the Bankruptcy Court's Ruling Was Correct on Its Merits
"Judgments are not often set aside under Rule 60(b)(6). Latshaw v. Trainer Wortham & Co., 452 F.3d 1097, 1103 (9th Cir. 2006). Instead, the rule is "used sparingly as an equitable remedy to prevent manifest injustice," and "is to be utilized only where extraordinary circumstances prevented a party from taking timely action to prevent or correct an erroneous judgment." United States v. Alpine Land & Reservoir Co., 984 F.2d 1047, 1049 (9th Cir.1993)).
Rule 60(b)(6) applies only when the reason for granting relief is not covered by any of the rationales outlined in Rule 60(b)(1)-(5), Cmty. Dental Servs. v. Tani, 282 F.3d 1164, 1168 n. 8 (9th Cir. 2002), and "is to be utilized only where extraordinary circumstances prevented a party from taking timely action to prevent or correct an erroneous judgment." Alpine Land & Reservoir Co., 984 F.2d at 1049. Accordingly, a party who moves for such relief "must demonstrate both injury and circumstances beyond his control that prevented him from proceeding with... the action in a proper fashion." Tani, 282 F.3d at 1168.
a. Whether Street's Failure to Cite Rule 60(b)(6) Precludes Consideration of the Issue on Appeal
Before turning to the merits of the parties' contentions, the court must address a threshold issue. None of Street's numerous Rule 60(b) motions before the bankruptcy court explicitly cited Rule 60(b)(6) or offered any argument suggesting that he was trying to bring a motion under that provision. Street concedes that this was the case, but argues that the bankruptcy court nonetheless erred in failing to consider his motion under that provision, as the facts raised in Street's briefs clearly suggested an attempt to assert that "extraordinary circumstances" justified relief.
As support for this proposition, Street cites to a line of unpublished Ninth Circuit and district court cases that have opined about a court's discretion to consider a motion as brought under Rule 60(b)(6), even when the movant fails to cite to or argue the motion under that rule. For example, in Moore v. United States, 262 Fed. App'x 828, 829-30 (9th Cir. 2008), the court reversed the district court's denial of a Rule 60(b) motion where the movants sought relief from the trial court's entry of summary judgment after their attorney failed to oppose defendant's motion. See id. at 829. "Because the attorney's actions amounted to gross negligence," the Ninth Circuit concluded, it was error for the court to deny relief under Rule 60(b)(6). Id. Similarly, in Spates-Moore v. Henderson, 305 Fed. App'x 449 (9th Cir. 2008), the court suggested that the district court had erred in failing to analyze a motion for relief from judgment under Rule 60(b)(6), even when the movant had explicitly brought her motion under three other subsections of Rule 60(b) without mentioning the "extraordinary circumstances" provision. Id. at 450. Spates-Moore also addressed a circumstance where the movant's counsel had failed to oppose a motion for summary judgment. Id. The Ninth Circuit recognized that "much of this information [addressing counsel's negligence] was never available to the trial judge," but that the trial court "should have an opportunity to consider whether relief is warranted under this subsection" and remanded the matter for further consideration. Id. at 451. Additionally, in McKinney v. Boyle, 404 F.2d 632, 633 (9th Cir. 1968), a case neither party cites nor discusses, the Ninth Circuit held that the district court had erred in denying as untimely a Rule 60(b) motion made on the ground of "fraud and deceit," thus seemingly bringing it within the purview of Rule 60(b)(3). In that case, the movant contended that his own counsel had deceived him and entered into a stipulation to dismiss the case without his consent. Id. at 633. The movant had apparently not cited to a specific subsection of the rule, but since the motion addressed fraud committed on the movant by his own counsel, it brought him "within ground (6), as to which there is no fixed time limit." Id. at 634. The Ninth Circuit remanded for the district court to "receive further evidence relating to the plaintiff's motion to set aside the order of dismissal, and to decide the motion," as well as address whether the motion was brought under a "reasonable time." Id.
Following this seeming trend in the Ninth Circuit, at least one other California district court has considered whether "any other reason []justifies relief" under Rule 60(b)(6), even if the movant never cited to or raised arguments under that subsection. See Slama v. City of Madera, No. 1:08-cv-00810-AWI-SKO, 2011 WL 3667334 (E.D. Cal. 2011) ("Although Plaintiff does not specifically argue for relief pursuant to Rule 60(b)(6), unpublished Ninth Circuit cases indicate that district courts should determine whether circumstances warrant consideration under Rule 60(b)(6).... As such, the Court considers whether there is "any other reason that justifies relief" pursuant to Rule 60(b)(6)." (internal citations omitted)).
This court appreciates the need to discern trends in Ninth Circuit authority even when the circuit has not issued published guidance directly on point. Nonetheless, the court does not find that the bankruptcy court erred as a matter of law in failing sua sponte to raise an issue that Street never attempted to raise before the district court. As noted, Street's arguments were explicitly brought under Rules 60(b)(1)-(3) and its argument on the issue of Greer's negligence comprised a little over a page of his briefs, which focused heavily on plaintiff's alleged fraud on the court. Although Street was a pro se plaintiff who lacked awareness of the intricacies of the Federal Rules, the fact that he specifically cited three separate subsections of Rule 60 in his motions suggests some level of understanding of the Rule's operation. This court will not require the bankruptcy court to construct an argument on defendant's behalf.
This issue has been raised to the Ninth Circuit at least once before in a published opinion, but there the court decided that it need not reach the issue and rested its opinion on other grounds. See Hopper v. Euclid Manor Nursing Home, Inc., 867 F.2d 291, 294 (9th Cir. 1989) ("As an initial matter, defendant challenges the District Court's authority to utilize Rule 60(b)(6) on its own motion. We need not decide this issue since we conclude that the facts of this case do not present an exceptional situation justifying the application of Rule 60(b)(6).").
AER, Tab 12 at 16-17; Tab 19 at 16-17.
Moreover, it is far from a settled proposition that a court is obligated, as a matter of law, to consider Rule 60(b)(6) despite a movant's failure to identify or offer argument under that provision. Moore, for example, was decided over a strongly worded dissent from Judge Bea, who pointed out that "plaintiffs never argued in the district court they were entitled to relief under subsection (b)(6); indeed, they do not do so here.... The only people who so argue are the majority, and as an original proposition on appeal." 262 Fed. App'x at 829. In yet another unpublished decision, the Ninth Circuit concluded that the district court had acted within its discretion in denying a motion for relief under Rule 60(b)(1) from a default judgment and did not reach the issue of whether Rule 60(b)(6) applied. Icho v. Hammer, 434 Fed.Appx. 588 (9th Cir. 2011). The panel declined to apply that subsection over a dissent from Judge Goodwin, who contended that "this circuit has long recast a party's own characterization of subject matter from one subsection to another." Id. at 592 n. 1 (citing McKinney, 404 F.2d at 634). Judge Goodwin characterized this decision as a choice "within [a] court's discretion," and did not necessarily contend that the lower court had erred as a matter of law. Id. These cases strongly suggest that far from a trend in Ninth Circuit law on the area toward applying Rule 60(b)(6) even in the absence of citation or argument under the rule, the law is simply unsettled on this point, and no precedential, binding authority requires its application in these circumstances.
The court finds that the bankruptcy court did not err by failing to construe Street's motion as brought under Rule 60(b)(6).
b. Whether Relief Under Rule 60(b)(6) is Warranted
Even were the court to conclude that the bankruptcy court should have addressed Street's motion under Rule 60(b)(6), the record discloses more than sufficient basis to find that the bankruptcy court did not abuse his discretion in denying Street's motion on its merits. As an initial matter, Street relies on a line of Ninth Circuit authority that is of questionable applicability to the present case. Specifically, Street cites Comty. Dental Servs. v. Tani, where the Ninth Circuit joined a number of other circuits in "in holding that where the client has demonstrated gross negligence on the part of his counsel, a default judgment against the client may be set aside pursuant to Rule 60(b)(6)." 282 F.3d at 1169. In reaching this conclusion, the Tani court observed that "judgment by default is an extreme measure" cutting against the strong preference for resolving a case on its merits, and that "the judicial system loses credibility as well as the appearance of fairness, if the result is that an innocent party is forced to suffer drastic consequences." Id. at 1170. Tani also drew a crucial distinction between "gross negligence-which is not chargeable to the client-and ordinary negligence or neglect-which is." Id. In the former set of circumstances, the Ninth Circuit held that a party should not be held responsible for his or her counsel's failures, especially if that failure leads to the entry of judgment without the opportunity to properly defend his or her claims.
The Ninth Circuit extended Tani's reasoning outside the default judgment context in Lal v. California, 610 F.3d 518, 520-21 (2010), ruling that counsel's gross negligence warranted relief from a district court's order dismissing a case after the attorney "failed to meet deadlines and attend hearings." Id. at 520-21. The fact situation confronting the Lal court was "the converse of a default judgment," and the "only significant difference is that the plaintiff rather than the defendant suffers the adverse judgment." Id. at 524-25. As "[a] dismissal for failure to prosecute under Rule 41(b) is much more like a default judgment.... The same policy considerations underlie dismissal for failure to prosecute." Id. at 525. In either circumstance, the Ninth Circuit held, it would be unfair to impute counsel's failures to a litigant, as "[i]n both instances, the consequence of the attorney's action (or inaction) is a loss of the case on the merits." Id. at 524.
In relying on Tani and Lal, Street elides a critical distinction. Here, Street did not default on his claims, nor was judgment entered against him simply because he had failed to respond to a court order or comply with court rules. Instead, judgment was only entered after Street had the opportunity to litigate his claims in a full trial on the merits, where his attorney made objections, presented evidence, and made arguments in an effort to defend against Harrow's claims. Street points out that Greer failed to attend a pretrial conference, agreed to numerous stipulated facts that supported the bankruptcy court's finding of liability, and attempted to call, then withdrew, a damages expert who may have mitigated some of the judgment amount. He characterizes Greer's failures as akin to counsel's failures in Tani and Lal, and suggests that Greer essentially abandoned Street to the mercies of Harrow's counsel and the court. Street cannot dispute, however, that unlike the litigants in those cases, he had ample opportunity for a hearing on the merits of his case, and that Greer's failure to appear at a single pretrial conference notwithstanding, he was duly represented at other pretrial conferences and hearings, as well as at trial itself. Whatever his problems with Greer's representation, he cannot claim that counsel's "abandonment" inevitably led to judgment without consideration of the merits of his defenses.
Additionally, Street fails to recognize the import of the Ninth Circuit's opinion in Latshaw, 452 F.3d at 1097, which declined to apply the Tani-Lal rule to relief from judgment under Rule 68. As Rule 68 judgments are "actively supported by courts," by contrast to disfavored default judgments, the court held that counsel's "alleged gross negligence does not provide grounds to vacate the judgment under Rule 60(b)(6)." Id. at 1103-04. Given the strong policy interest in the finality of judgments, the Ninth Circuit explicitly declined to apply Rule 60(b)(6) so liberally outside a context where judgment had been entered by sole reason of counsel's lapses. See id. at 1104 ("Latshaw knowingly and voluntarily signed the Rule 68 acceptance. Though Latshaw's decision may have been driven by inept or erroneous advice or conduct of her counsel, neither the alleged negligence at issue nor the purported fraud on the court fall among those exceptional circumstances meriting Rule 60(b)(6) relief."). Given that the Ninth Circuit has expressly distinguished some types of judgments from the default judgments and dismissal orders at issue in Tani and Lal, Street fails to offer a convincing reason that the "gross negligence" rule applied in those cases necessarily governs the court's review here. See also Sanchez v. Stryker Corp., No. 2:10-cv-08832-ODW 2012 WL 1570569, at *4 (C.D. Cal. May 2, 2012) (holding that Tani did not apply to Rule 60(b)(6) motion for relief from order on motion in limine, since movant "[did] not seek relief from a default judgment").
Even applying the liberal standard laid forth in Tani and Lal, Street's appeal still fails. The record discloses sufficient evidence to uphold the bankruptcy court's exercise of discretion. Courts in analogous circumstances have drawn clear distinctions between an attorney's total abandonment of his client's interests, and an attorney's lax or deficient performance and concluded that the latter does not warrant relieving a party from judgment. For example, in Markray v. AT & T-SBC-Pacific Bell Directory, No. CV 07-08001 DDP (CTx), 2010 WL 3220096, *3 (C.D. Cal. Aug. 13, 2010), the court denied relief from summary judgment as [p]laintiff's attorney was not grossly negligent." While the attorney had filed a "substantively weak" opposition to a summary judgment motion, the court could not conclude that he had deliberately misled his client about the case, and had informed her client of the judgment and the need to file a Rule 60(b) motion. Id. Under those facts, the court held that the "plaintiff's attorney did not virtually abandon" her client and denied relief under Rule 60(b)(6). Id. Similarly, in Brown v. Cowlitz County, No. C09-5090 RBL, 2010 WL 1608876, *1-*2 (W.D.Wash. Apr.19, 2010), the district court denied relief from summary judgment under Rule 60(b)(6), finding that "counsel cannot be considered to have abandoned his client." Id. at *2. Counsel filed pleadings opposing one of the motions for summary judgment, although he had failed to oppose the other. Counsel had also subsequently filed a motion for reconsideration. Id. As such, the plaintiff was "not entitled to relief due to attorney abandonment or gross negligence under Rule 60(b)(6)." Id. Additionally, in Sylver v. Mathis, No. 2:09-cv-00855-RLH-LRL, 2012 WL 1946966, *2 (D. Nev. 2012), the court declined to grant relief on the basis of a "theoretically faulty opposition to the motion for summary judgment," since counsel "did oppose the motion, just in a way [the plaintiff] disagrees with and that may have been negligent." Id.
The court cannot conclude on this record that the bankruptcy court abused its discretion in denying relief. As the bankruptcy court observed, his order entering judgment relied on "numerous items of evidence" aside from the stipulated facts, and that Street "had the opportunity to negate the evidence presented in court." While Greer failed to appear at the parties' initial pretrial conference, the bankruptcy court gave defense counsel the opportunity to correct that error, and Greer later appeared at a second pretrial conference before the court, where the parties discussed the conference order and Greer suggested that the defendant would be relying on the same stipulated facts as the plaintiff. Greer was also unquestionably present at trial, where he offered argument, presented testimony, and asserted objections to the plaintiff's evidence. Although Street may now have concerns with how the case was handled and the efficacy of Greer's representation, the court discerns no basis for concluding that his performance was so ineffective or absent that it amounts to the entry of default judgment against defendant.
Bankr. Ct. Order at 5.
Street's moving papers suggest in conclusory fashion that Greer acted "without [his] authority or in [his] interest," a contention that may support a conclusion that his performance was grossly deficient. The record discloses minimal evidence on this point, however, and neither the bankruptcy court nor this court in review has any reason to believe that Greer failed to communicate with Street regarding his representation, or that the stipulations entered into via the pretrial conference orders were made without his knowledge and consent. On appeal, Street has not pointed to any evidence indicating otherwise; indeed, the only testimony in the record about the defendant's position on the stipulated facts is testimony on the second day of trial suggesting that Street agreed with at least some of the stipulated facts laid forth in the amended pretrial conference order. Additionally, although the trial transcript discloses an instance where Street was prevented from testifying about his belief that one of the stipulated facts was not correct, he has adduced no evidence before the bankruptcy court of his purported disagreement with the remaining 80 stipulated facts, nor does he identify any such evidence now. Cf. Madison v. First Mangus Financial Corp., No. CV-08-1562-PHX-GMS, 2009 WL 1148453, at *2-*4 (D. Ariz. Apr.28, 2009) ("Despite receiving notice of dismissal and knowledge of the deadline for repleading the matter, Mr. Jung failed to properly inform his client of the developments, failed to notify her when the deadline was imminent, failed to file a second amended complaint despite assurances the he would do so, and even avoided corresponding with Plaintiff after the deadline was missed. Nor did Mr. Jung file a motion for relief on behalf of his client. His deficient representation resulted in the ultimate sanction' against Plaintiff-the loss of her ability to present the merits of her case....").
SER, Tab 28 at 345.
While Street may have claims that Greer's representation was negligent and harmful to his interests, the present record discloses no reason to conclude that the bankruptcy court abused its discretion by denying Street's motion. See Allmerica Fin. Life Ins. & Annuity Co. v. Llewellyn, 139 F.3d 664, 666 (9th Cir.1997) (holding that "[c]ontrary to Llewellyn's contention, counsel's failure to plead an affirmative defense of waiver in the First Amended Answer does not provide a basis for equitable relief under Rule 60(b)(1)" or 60(b)(6)). Cf. Casey v. Albertson's Inc., 362 F.3d 1254, 1260 (9th Cir.2004) ("As a general rule, parties are bound by the actions of their lawyers and alleged attorney malpractice does not usually provide a basis to set aside a judgment pursuant to Rule 60(b)(1).").
IV. CONCLUSION
For the reasons stated, the decision of the bankruptcy court is AFFIRMED.
IT IS SO ORDERED.
Harrow suggests that Greer also represented Street in the action filed by Street, but the record is not clear on that point. As support for this proposition, Harrow cites a pretrial conference in the adversary action that took place on September 16, 2009, at which the parties discussed the status of Street's action. (Id. at 220-25.) Greer stated that Street was "still working with Delaware counsel" on matters related to the action, and that "that's being handled back in Delaware. I'm really not involved in that." (Id. at 220.) Greer's statements, however, suggest that, at a minimum, he was not the primary counsel of record.
"EFFECT OF PRETRIAL ORDER
"The foregoing admissions have been made by Plaintiffs and Defendant, and Plaintiffs and Defendant specified the foregoing issues of fact and law remaining to be litigated. Therefore, this order shall supersede the pleadings and govern the course of trial of this cause, unless modified to prevent manifest injustice." (Id. at 113.)
"[MR. GREER:] So would it be your opinion then that the stipulated fact of $2,074,000 is incorrect? STREET: Yes.
MR. KUGLER: Your Honor
THE COURT: Object. You stipulated that was a fact, Mr. Greer. So
MR. GREER: I appreciate that, your Honor.
THE COURT: Let's not challenge your own stipulation.
MR. GREER: I can't unstipulate it. I understand your Honor. Thank you." (Id. at 345.)