In re: Bobby Joe Wallace and Bridget Janine Wallace

FILED OCT 28 2014 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK 2 U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. NV-13-1518-JuHlPa ) 6 BOBBY JOE WALLACE and ) Bk. No. NV-10-24125-LBR BRIDGET JANINE WALLACE, ) 7 ) Debtors. ) 8 ______________________________) ) 9 BOBBY JOE WALLACE; BRIDGET ) JANINE WALLACE, ) 10 ) Appellants, ) 11 ) v. ) M E M O R A N D U M* 12 ) ABEL ROSALES; ROBERT PIKE; ) 13 GARY AARDEMA; AARDEMA & ) LONDON, ) 14 ) Appellees. ) 15 ______________________________) 16 Argued and Submitted on September 18, 2014 at Las Vegas, Nevada 17 Filed - October 28, 2014 18 Appeal from the United States Bankruptcy Court 19 for the District of Nevada 20 Honorable Linda B. Riegle, Bankruptcy Judge, Presiding _________________________ 21 Appearances: Christopher Burke, Esq. for appellants Bobby Joe 22 Wallace and Bridget Janine Wallace; David Mincin, Esq. for appellees Abel Rosales, Robert Pike, 23 Gary Aardema, and Aardema & London. ________________________ 24 25 26 * This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. 28 See 9th Cir. BAP Rule 8013-1. -1- 1 Before: JURY, HOULE,1 and PAPPAS, Bankruptcy Judges. 2 Chapter 72 debtors Bobby and Bridget Wallace appeal from 3 the bankruptcy court’s order denying (1) their motion to reopen 4 their bankruptcy case and (2) their request for attorney’s fees 5 and costs incurred in defending the appeal of the bankruptcy 6 court’s contempt order issued against appellees Abel Rosales, 7 Robert Pike, Gary Aardema, and Aardema & London (collectively, 8 Rosales). Because the bankruptcy court was precluded from 9 awarding the appellate attorney’s fees requested, we AFFIRM. 10 I. FACTS 11 This appeal marks the third3 occasion in which this case 12 has come before this Panel. In the most recent previous 13 proceeding, the bankruptcy court found Rosales in contempt for 14 violating the § 524 discharge injunction and awarded sanctions 15 to debtors consisting of $260 for the reopening fee, $1,400 for 16 attorney’s fees and costs, and $3,000 for punitive damages. 17 Rosales appealed that order to this Panel.4 The Panel affirmed 18 the bankruptcy court’s finding of contempt and its award of 19 1 The Honorable Mark D. Houle, U.S. Bankruptcy Judge for the 20 Central District of California, sitting by designation. 21 2 Unless otherwise indicated, all chapter and section 22 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and “Rule” references are to the Federal Rules of Bankruptcy 23 Procedure. 24 3 See Rosales v. Wallace (In re Wallace), 490 B.R. 898, 906–07 (9th Cir. BAP 2013) and Rosales v. Wallace 25 (In re Wallace), 2012 WL 2401871 (9th Cir. BAP 2012). 26 4 Rosales v. Wallace (In re Wallace), BAP No. NV-11-1681- 27 KiPaD. Because the material facts leading up to the bankruptcy court’s contempt order were set forth in that decision we do not 28 repeat them here. -2- 1 sanctions based on the reopening fee and attorney’s fees and 2 costs, but the Panel vacated and remanded the matter on the 3 award of punitive damages because the bankruptcy court did not 4 make sufficient findings to support the $3,000 award. On 5 remand, following an evidentiary hearing, the bankruptcy court 6 issued its findings of fact and conclusions of law and entered 7 the order upholding the $3,000 punitive damage award. Debtors’ 8 bankruptcy case was closed for a second time. 9 Debtors moved again to reopen their case and requested 10 additional sanctions of $16,714.80 in attorney’s fees and costs 11 incurred in defending the contempt order on appeal. Relying on 12 Espinosa v. United Student Aid Funds, Inc. (In re Espinosa), 13 2011 WL 2358562, at *5 (Bankr. D. Ariz. 2011), debtors argued 14 that Rosales’ violation of the discharge injunction continued 15 throughout the appeal and remand as Rosales attempted to reverse 16 the bankruptcy court’s decision. Alternatively, relying on 17 Prandini v. Nat’l Tea Co., 585 F.2d 47, 52-53 (3d Cir. 1978), 18 debtors maintained that their attorney should be compensated for 19 the time spent in defending their fee award.5 Finally, debtors 20 asserted that they had to defend against Rosales’ appeal and at 21 22 23 5 24 The Ninth Circuit has uniformly held that time spent in establishing the entitlement to and amount of the fee is 25 compensable. See Orange Blossom Ltd. P’ship v. S. Cal. Sunbelt 26 Devs., Inc. (In re S. Cal. Sunbelt Devs., Inc.), 608 F.3d 456, 463 (9th Cir. 2010). “This is so because it would be 27 inconsistent to dilute a fees award by refusing to compensate attorneys for the time they reasonably spent in establishing 28 their rightful claim to the fee.” Id. -3- 1 remand6 and should be compensated. Attached to the motion to 2 reopen was the declaration of debtors’ counsel, Christopher 3 Burke, and his time sheets documenting that he had expended 36.3 4 hours in defending the appeal, including the remand, evidentiary 5 hearing, status conference, and meeting with clients. 6 In opposition, Rosales referred obliquely to Rule 80207 and 7 Fed. R. App. P. (FRAP) 38,8 which provide specific vehicles for 8 recovery of attorney’s fees for appeals to the appellate court 9 and argued that these rules cannot be bypassed under the holding 10 in Vasseli v. Wells Fargo Bank (In re Vasseli), 5 F.3d 351, 353 11 (9th Cir. 1993). Rosales also asserted that there was no basis 12 for awarding fees related to the evidentiary hearing on remand 13 when they had made an offer of judgment equal to the $3,000 14 15 6 This is the only mention of the fees associated with the 16 evidentiary hearing on remand in debtors’ motion. Throughout these proceedings it appears that debtors simply lump the fees 17 associated with the evidentiary hearing with those incurred for 18 defending the appeal. 7 19 Rule 8020 provides, 20 If a district court or bankruptcy appellate panel determines that an appeal from an order, judgment, or 21 decree of a bankruptcy judge is frivolous, it may, 22 after a separately filed motion or notice from the district court or bankruptcy appellate panel and 23 reasonable opportunity to respond, award just damages and single or double costs to the appellee. 24 8 FRAP 38 provides, 25 26 If a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or 27 notice from the court and reasonable opportunity to respond, award just damages and single or double costs 28 to appellee. -4- 1 punitive sanction. 2 In reply, debtors argued that the holding and reasoning in 3 Am. Serv. Co. v. Schwartz-Tallard (In re Schwartz-Tallard), 4 473 B.R. 340, 349 (9th Cir. BAP 2012), aff’d, 751 F.3d 966 (9th 5 Cir. 2014) should apply to this case. There, this Panel 6 affirmed the award of attorney’s fees to the debtor for 7 defending a stay violation order on appeal. Debtors further 8 asserted that under Rule 7068 an offer of judgment applies only 9 in an adversary proceeding and thus Rosales’ offer of judgment 10 was irrelevant. Debtors maintained that they were entitled to 11 all their fees because the remand was a result of the appeal, 12 and as Espinosa points out, the fees for both “litigation” and 13 appeals are actual damages. 14 At the hearing, after a short discussion, the bankruptcy 15 court denied debtors’ motion for the additional fees on the 16 ground that only the appellate court had the authority to award 17 attorney’s fees and costs for an appeal. The bankruptcy court 18 did not discuss the parties’ arguments regarding the offer of 19 judgment nor did it address whether it lacked authority to award 20 additional fees and costs related to the evidentiary hearing on 21 remand. The bankruptcy court requested Rosales’ counsel to 22 prepare the proposed findings, conclusions, and an order. 23 On October 7, 2013, the bankruptcy court entered the order 24 which stated simply that debtors’ motion for attorney’s fees and 25 costs for defending the appeal was denied. The order did not 26 27 28 -5- 1 contain findings or conclusions.9 Debtors filed a timely notice 2 of appeal from that order. 3 II. JURISDICTION 4 The bankruptcy court had jurisdiction under 28 U.S.C. 5 §§ 1334 and 157(b)(2)(A). We have jurisdiction under 28 U.S.C. 6 § 158. 7 III. ISSUE 8 Whether the bankruptcy court erred in finding that it did 9 not have authority to award debtors’ attorney’s fees and costs 10 incurred in defending the contempt order on appeal and on 11 remand. 12 IV. STANDARD OF REVIEW 13 The bankruptcy court’s denial of an award of attorney’s 14 fees is reviewed for an abuse of discretion or an erroneous 15 application of the law. State of Cal. Emp. Dev. Dep’t v. Taxel 16 (In re Del Mission Ltd.), 98 F.3d 1147, 1153 (9th Cir. 1996). 17 V. DISCUSSION 18 It is well settled that if a bankruptcy court finds that a 19 party has willfully violated the discharge injunction, the court 20 may award actual damages, punitive damages and attorney’s fees 21 to the debtor. Espinosa v. United Student Aid Funds, Inc., 22 553 F.3d 1193, 1205 n.7 (9th Cir. 2008), aff’d 559 U.S. 260 23 (2010); Knupfer v. Lindblade (In re Dyer), 322 F.3d 1178, 1195 24 (9th Cir. 2003) (actual damages, including attorney’s fees, 25 incurred as a result of the noncompliant conduct can be 26 9 27 The hearing was conducted by the Honorable Lloyd King and the order was signed by the Honorable Linda B. Riegle. Debtors 28 did not move to amend the order. -6- 1 recovered as part of a compensatory civil contempt sanctions 2 award). 3 In Del Mission the Ninth Circuit addressed the issue of 4 whether the bankruptcy court has authority under § 105(a) to 5 award fees to the movant incurred in defending the court’s 6 contempt order on appeal. In re Del Mission Ltd., 98 F.3d at 7 1152-54. There, the bankruptcy court earlier ordered the 8 California Employment Development Department and the State Board 9 of Equalization (collectively, the “State”) to repay the 10 chapter 7 bankruptcy estate certain taxes, as the State had 11 violated the automatic stay. The State failed to comply while 12 the underlying bankruptcy order was on appeal. Id. at 1149-50. 13 The chapter 7 trustee filed a motion requesting the 14 bankruptcy court to hold the State in civil contempt under 15 § 105(a) and to impose sanctions in the form of his attorney’s 16 fees and costs for enforcing the automatic stay on appeal. Id. 17 at 1150. The bankruptcy court denied the chapter 7 trustee’s 18 request to impose sanctions, determining that it had no legal 19 authority to award fees incurred on prior appeals. This Panel 20 reversed the bankruptcy court, awarding the chapter 7 trustee 21 the fees and costs he incurred in the prior appeals. Id. at 22 1152-53. 23 The Ninth Circuit reversed this Panel, holding that 24 § 105(a) did not authorize bankruptcy courts to award previously 25 incurred appellate fees. In doing so, it relied on the prior 26 Ninth Circuit decision in Vasseli which held that bankruptcy 27 courts lacked authority to award appellate attorney’s fees under 28 § 523(d). In re Vasseli, 5 F.3d at 352. In that case, the -7- 1 Ninth Circuit relied on FRAP 38 in support of its holding. Id. 2 at 353. The court determined that FRAP 38 authorizes only 3 appellate courts, not bankruptcy courts, to award attorney’s 4 fees and other expenses incurred by an appellee in response to a 5 frivolous appeal. Id. The Ninth Circuit held that while 6 § 523(d) authorized attorney’s fees for the debtor, “it [did] 7 not grant the bankruptcy court authority to award attorney’s 8 fees to the debtor for appellate representation. . . .” Id. In 9 addition, the Ninth Circuit determined that appellate courts 10 lacked authority “to delegate this power” to bankruptcy courts. 11 Id. 12 Applying the holding of Vasseli, the Ninth Circuit in 13 Del Mission concluded that a bankruptcy court’s express 14 discretionary authority under § 105(a) to award fees at the 15 trial level did not extend to allow it to award fees at the 16 appellate level. In re Del Mission, Ltd., 98 F.3d at 1153–54. 17 The Ninth Circuit further reasoned that using § 105(a) as a 18 device to award appellate fees would impermissibly overlap with 19 FRAP 38. Id. at 1154. The court noted that its holding was 20 “limited to awards of discretionary appellate fees in bankruptcy 21 proceedings.” Id. at 1154 n.7. 22 Del Mission is controlling authority on the question before 23 us — whether the bankruptcy court has discretionary authority to 24 award appellate fees under § 105(a). This Panel’s decision in 25 Schwartz–Tallard, affirmed by the Ninth Circuit, does not compel 26 a different result because that decision dealt with an award of 27 appellate fees under § 362(k)(1) while Del Mission specifically 28 analyzed the bankruptcy court’s discretionary authority to award -8- 1 appellate fees under § 105(a). Indeed, the bankruptcy court 2 noted at the hearing on this matter that the case law debtors 3 relied upon involved § 362 rather than § 105(a) and that their 4 request was under § 105(a). Contrary to debtors’ assertion, 5 there is a distinction between the bankruptcy court’s statutory 6 mandate to award attorney’s fees under § 362(k)(1) and its 7 discretionary authority under § 105(a). Because § 105(a) 8 directly applies to this matter, we are bound to follow 9 Del Mission’s broad holding that bankruptcy courts have 10 discretionary authority to award fees at the trial level under 11 § 105(a) and not on appeal. See Hart v. Massanari, 266 F.3d 12 1155, 1171 (9th Cir. 2001) (circuit law “binds all courts within 13 a particular circuit.”). The bankruptcy court thus did not err 14 in declining to award debtors’ attorney’s fees and costs 15 incurred in defending the contempt order on appeal.10 16 Debtors also requested as an additional sanction the fees 17 they incurred in the evidentiary hearing on remand. In their 18 second statement of issue on appeal, debtors argue that an 19 attorney is entitled to fees incurred for defending against 20 Rosales’ appeal of an order imposing sanctions for violating the 21 22 10 Debtors’ attorney suggested at oral argument that this 23 Panel had the authority to award the fees for defending the appeal if the bankruptcy court did not. First, such motion for 24 appellate fees generally must be made by separate motion, something that was not done here. See Rule 8020. Moreover, to 25 the extent it is proper, any such fee request should be made to 26 the Panel that upheld the bankruptcy court’s decision to award the reopening fee and attorney’s fees, but remanded on the 27 punitive damage award. We express no opinion as to whether debtors would be entitled to such fees in the event they filed a 28 motion before that Panel. -9- 1 discharge injunction. Debtors then state they incurred such 2 fees and ask the question “shouldn’t the attorney[’]s fees 3 incurred defending against the appeal be awarded to the 4 Wallaces?” Debtors’ brief contains arguments relating only to 5 this issue and the fees for defending the appeal. It does not 6 contain any arguments as to why the bankruptcy court erred by 7 denying the fees related to the evidentiary hearing conducted in 8 the bankruptcy court.11 We “will not ordinarily consider matters 9 on appeal that are not specifically and distinctly argued in 10 appellant’s opening brief.” Miller v. Fairchild Indus., 11 797 F.2d 727, 738 (9th Cir. 1986); see also Meehan v. Cnty. of 12 L.A., 856 F.2d 102, 105 n.1 (9th Cir. 1988) (issue not briefed 13 by a party is deemed waived). Because of debtors’ waiver, we 14 decline to consider this issue on appeal. 15 VI. CONCLUSION 16 For the reasons stated, we AFFIRM. 17 18 19 20 21 22 23 24 11 25 In their motion before the bankruptcy court, debtors make a like argument, asserting only that they may recover fees for 26 “defending the appeal.” However, the billing statements which support the requested fees include the time related to the 27 evidentiary hearing on remand. 28 -10-