FILED
NOT FOR PUBLICATION JAN 31 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re JOHN PATRICK KEAHEY, No. 09-60000
Debtor, BAP No. WW-08-1151-PaJuKa
JEFF E. JARED, MEMORANDUM*
Appellant,
v.
JOHN PATRICK KEAHEY,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Pappas, Jury, and Kaufman, Bankruptcy Judges, Presiding
Argued and Submitted August 5, 2010
Seattle, Washington
Before: CANBY, THOMPSON and BERZON, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Appellant Jeff E. Jared appeals a decision of the Bankruptcy Appellate Panel
(“BAP”) affirming an order of the United States Bankruptcy Court for the Western
District of Washington in which the court held that Jared had committed the tort of
outrage in attempting to collect a debt owed by Chapter 13 Debtor and Appellee
John P. Keahey. The bankruptcy court subsequently awarded Keahey $98,376.01
in damages, $51,287.50 in attorneys’ fees, and $2,756.84 in costs.
Jared assigns four errors: first, that the court incorrectly held that his
conduct was “extreme and outrageous,” thereby satisfying the first element of the
tort of outrage; second, that the court lacked a legal basis for awarding attorneys’
fees to Keahey; third, that the court improperly took judicial notice of an attorneys’
fees and costs application in the related bankruptcy case; and, fourth, that the court
exhibited bias against him. We vacate the award of attorneys’ fees and remand that
matter for further proceedings. We affirm in all other respects.1
The parties are aware of the facts of this case. We therefore recite them only
to the extent necessary to our disposition of the case.
1
We have jurisdiction of the appeal pursuant to 28 U.S.C. § 158(d)(1).
Because we are in as good a position as the BAP to consider the decision of the
bankruptcy court, we independently review the decision without deference to the
BAP. See In re Saylor, 108 F.3d 219, 220 (9th Cir. 1997). We review the
bankruptcy court’s conclusions of law de novo and its factual findings for clear
error. See id. We review de novo mixed questions of law and fact. See In re
Bammer, 131 F.3d 788, 792 (9th Cir. 1997) (en banc).
2
DISCUSSION
I. “Extreme and Outrageous” Conduct
The tort of outrage requires the proof of three elements: (1) extreme and
outrageous conduct, (2) intentional or reckless infliction of emotional distress, and
(3) actual result to the plaintiff of severe emotional distress. See Kloepfel v. Bokor,
66 P.3d 630, 632 (Wash. 2003) (en banc). Jared contends that the first element
was not established. He does not contest the underlying factual findings of the
bankruptcy court, but argues that those facts do not support the court’s finding that
Jared’s conduct was “extreme and outrageous.” We reject his contention.
The bankruptcy court based its finding of outrageousness on numerous
misdeeds committed by Jared in the attempted foreclosure proceedings, including
the following:
Jared “had no idea how to conduct a non-judicial
foreclosure sale[,] . . . did just about everything wrong,”
and “signaled to Mr. Keahey with each and every
communication that Mr. Keahey would never be able to
keep his house.”
Jared stipulated to having breached his fiduciary duty to
Keahey as a trustee under Washington’s Deed of Trust
Act (the “DOTA”). See Wash. Rev. Code Ann.
§§ 61.24.010(4).
Although “there was no . . . interest due under the note,”
Jared demanded a 10 percent interest charge, amounting
3
at first to $36,000—a “huge amount[] to people like
Keahey.” He likewise demanded payment for incorrect
and excessive property tax, insurance, and utility charges.
Jared arranged for the foreclosure sale to take place in the
parking lot of his condominium, rather than a public
place, as required by the DOTA. Jared later testified that
he opted for the parking lot because he “was going to
personalize it, make it nice for the bidders, . . . [to]
boutiquify it.”
Even “[w]hen the claimed defaults were cured, Mr. Jared
immediately claimed new defaults entitling him to restart
the foreclosure process and charge additional fees and
costs for his own benefit.” By continually and
unjustifiably varying the amount of debt owed, he
unjustly prevented Keahey from exercising the right to
cure for a period of three years.
On this record, we conclude that “reasonable minds (such as the one
exercised by the trial judge) could conclude that, in light of the severity and
context of the conduct, [the defendant’s conduct] was beyond all possible bounds
of decency, . . . atrocious and utterly intolerable in a civilized community.” Robel
v. Roundup Corp., 59 P.3d 611, 620 (Wash. 2002) (emphasis original) (internal
quotation marks and citations omitted).2 We therefore affirm the finding of
outrageousness.
2
Even if we review the bankruptcy court’s finding of outrage de novo as a
mixed question of law and fact, see In re Bammer, 131 F.3d 788, 792 (9th Cir.
1997)(stating standard of review of mixed questions), we reach the same result.
4
II. The Fees-and-Costs Provision of the Washington Deed of Trust Act
Jared argues that the bankruptcy court erred in awarding attorneys’ fees on
the basis of the fees-and-costs provision of the Deed of Trust Act.3 See Wash.
Rev. Code Ann. § 61.24.090(2). We review de novo the interpretation and
application of state statutes. See Kona Enters., Inc. v. Estate of Bishop, 229 F.3d
877, 883 (9th Cir. 2000).
Jared’s primary contention is that the underlying adversary action was not an
action to determine the reasonableness of any fees under the Deed of Trust Act, but
was an entirely different “ personal injury tort trial.” We agree with Jared, but only
in part.
The Deed of Trust Act is meant to provide an alternative to the judicial
foreclosure process by authorizing the foreclosure of deeds of trust without resort
to litigation. See Joseph L. Hoffmann, Comment, Court Actions Contesting the
Nonjudicial Foreclosure of Deeds of Trust in Washington, 59 Wash. L. Rev. 323,
323 (1984). The fees-and-costs provision provides in pertinent part:
Any person entitled to cause a discontinuance of the sale
proceedings shall have the right, before or after
reinstatement, to request any court . . . to determine the
reasonableness of any fees demanded or paid as a
3
Because Jared has included no argument against the award of costs, we
address only the award of attorneys’ fees.
5
condition to reinstatement. The court shall make such
determination as it deems appropriate, which may include
an award to the prevailing party of its costs and
reasonable attorneys’ fees . . . .
Wash. Rev. Code Ann. § 61.24.090(2). The “fees demanded or paid” are the fees a
party must pay the trustee “to cause a discontinuance of the sale proceedings by
curing the default set forth in the notice.” Id. § 61.24.090(1)(b). These provisions
do not appear to have been construed by any Washington court.
Jared contends that § 61.24.090(2) contemplates a limited action by a
plaintiff to forestall foreclosure and to contest the reasonableness of fees demanded
or paid as a condition of curing defaults owing under a deed of trust. He argues
that the action under review was a totally different proceeding – an adversary
action based on the tort of outrage. Under the normal American rule, the
prevailing party in a tort action is not entitled to an award of attorneys’ fees. See
McGreevy v. Oregon Mut. Ins. Co., 128 Wn.2d 26, 35 n.8 (1995).
We agree with Jared that Keahey’s adversary tort action went well beyond a
mere challenge to the fees charged as a condition of reinstatement and that,
accordingly, Keahey was not entitled to recover all or even most of his fees for the
tort action. We do not, however, construe § 61.24.090(2) to be as limited as Jared
contends. It permits a challenge to excessive fees demanded to cure a default
6
under a deed of trust to be brought in “any court.”4 The statute does not specify the
form in which a request to determine reasonableness of fees must be made.
Keahey’s complaint recites that Jared imposed excessive fees as a condition of
terminating the foreclosure attempts, and excessive fees were an element in the
bankruptcy court’s findings of outrage, which we have already quoted.
Under these circumstances, we conclude that the bankruptcy court and
appellate panel could reasonably conclude that some portion of the litigation of the
outrage claim, and some limited part of the recovery, fell within the scope of
§ 61.24.090(2). We also conclude, however, that at least a majority of the fees
were incurred in successfully prosecuting the tort action that resulted in a recovery
that went well beyond any restitution of overcharges of fees or costs.
We therefore vacate the award of attorneys’ fees and remand the matter for a
determination of the portion of the tort recovery that may reasonably be interpreted
as representing a refund of fees excessively charged or demanded. Attorneys’ fees
reasonably attributable to that proportion of the total tort recovery may then be
awarded under § 61.24.090(2).
III. Judicial Notice of Application for Attorneys’ Fees and Costs in the
Bankruptcy Proceeding.
4
The only qualification of “any court” in § 61.24.090(2) is an exclusion, not
relevant here, of small claims courts.
7
In determining the amount of damages due Keahey, the bankruptcy court
took judicial notice of an application for, and award of, attorneys’ fees to Keahey’s
counsel in the related bankruptcy case. Jared contends that it was error to take
judicial notice of the award because, unlike “statistics or geographical, historical or
scientific facts,” requests for attorneys’ fees and costs “are just not something
courts admit into evidence via judicial notice.”5
The bankruptcy court did not abuse its discretion. A trial court may take
judicial notice of its own records, even in unrelated cases, provided that the court
complies with Federal Rule of Evidence 201 concerning judicial notice of
adjudicative facts. See United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980).
Here, the bankruptcy court took notice of an award of attorneys’ fees and costs,
granted after notice (including notice to Jared) and hearing, in a directly related
case. The facts in question were “capable of accurate and ready determination by
resort to a source whose accuracy cannot reasonably be questioned,” and were
properly subject to judicial notice. See Fed. R. Evid. 201(b)(2).
IV. Judicial Bias
5
We review for an abuse of discretion a trial court’s decision to take judicial
notice. See United States v. Daychild, 357 F.3d 1082, 1099 n.26 (9th Cir. 2004).
8
Jared claims that the bankruptcy court exhibited bias sufficient to require a
retrial when it expressed an opinion and a preliminary ruling at a phone conference
before the trial. Having considered the transcript in its entirety, we find no
indication of bias or hostility in the court’s remarks. See Liteky v. United States,
510 U.S. 540, 555 (1994) (“[J]udicial remarks during the course of a trial that are
critical or disapproving of, or even hostile to, counsel, the parties, or their cases,
ordinarily do not support a bias or partiality challenge.”). Furthermore, the
remarks reflected no extrajudicial source. See id. We therefore find no merit in
Jared’s claim of bias.
CONCLUSION
The order of the bankruptcy court is VACATED as to the award of
attorneys’ fees, and that matter is remanded for further proceedings. In all other
respects, the judgment of the Bankruptcy Appellate Panel is AFFIRMED. The
parties will bear their own costs on appeal.
AFFIRMED IN PART, VACATED and REMANDED in part.
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