- Bookmark
- Share
- CaseIQ
In re Kepreos
NOT FOR PUBLICATION
Submitted Without Argument, May 17, 2006
Appeal from the United States Bankruptcy Court for the Eastern District of California. Honorable Christopher M. Klein, Bankruptcy Judge, Presiding. Bk. No. 05-21669. Adv. No. 05-02228.
Before: BRANDT, PAPPAS, and ALBERT, [ Bankruptcy Judges.
Hon. Theodor C. Albert, United States Bankruptcy Judge for the Central District of California, sitting by designation.
MEMORANDUM
The bankruptcy court dismissed Appellant's complaint, which sought a declaration of nondischargeability under § 523(a)(6), and then denied reconsideration. Because the orders were based on a misunderstanding of the relief requested, we VACATE and REMAND.
Absent contrary indication, all " Code, " chapter and section references are to the Bankruptcy Code, 11 U.S.C. § § 101-1330 prior to its amendment by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 119 Stat. 23, as the case from which the adversary proceeding and these appeals arise was filed before its effective date (generally 17 October 2005).
On 11 January 2006 we entered an order permitting Appellant to file an informal brief, and waiving Rule 8009's requirement that Appellant file and serve excerpts of record. The facts set forth in this memorandum are taken from documents retrieved from the bankruptcy court docket available on ECF/PACER.
Debtors Gust and Linda Kepreos filed for chapter 7 relief on 16 February 2005, listing a $200, 000 " lawsuit" in favor of Appellant Kimberly Olson on Schedule F. Olson moved for relief from the automatic stay on 28 March 2005 to proceed with an action against debtors in Siskiyou County Superior Court. The motion was dismissed on 29 April 2005 for failure to pay the filing fee.
The deadline for filing complaints objecting to discharge or to determine the dischargeability of a debt was set for 16 May 2005; notice was sent to Olson on 20 February 2005. The case was discharged 24 May 2005. Thereafter, on 17 June 2005, Olson filed an adversary proceeding seeking a determination of nondischargeability under § 523(a)(6). The complaint alleged that debtors were managers of the mobile home park where Olson resides, that they had harassed and intimidated her, had attacked her caregiver (Olson is disabled), had refused to make necessary repairs, and had instituted frivolous legal actions against her.
The complaint referenced a $1, 000 judgment entered in Siskiyou County Superior Court on 15 June 2004 (no. YKCVUD 04 0750), in favor of defendant Olson and against plaintiff Cove Mobile Villa. That judgment contained the finding that Cove Mobile Villa, through its agent Gust Kepreos, had acted willfully, maliciously, and with intent to harass Olson in bringing that action. The judgment specifically excluded Gust Kepreos in his individual capacity. Olson attached a copy of that judgment, which she indicated was " one of the actions that form the basis for" her later suit against Gust Kepreos and others alleging negligence and intentional torts, and seeking compensatory and punitive damages of $150, 000 against each defendant (Siskiyou County Superior Court no. SCSCCVPO 04 001554). A copy of that complaint was also attached to the adversary complaint.
Defendants answered, denying the allegations of the complaint, but did not raise the issue of timeliness. When Olson did not appear at a status conference set by the court, the bankruptcy court issued an order to show cause why the case should not be dismissed for lack of prosecution. Olson's response to that order indicated her disability and attendant difficulties with travel, and stated: " All Plaintiff wants is to proceed with her action in Siskyou County Superior Court on its own merits."
The bankruptcy court thereafter dismissed the adversary proceeding on 16 September 2005. In its accompanying memorandum, the court indicated it was dismissing the case because
[t]he judgment that the plaintiff wishes to be excepted from discharge specifically excludes Gust Kepreos as a judgment debtor. Rather, it is a judgment against Cove Mobile Villa and no one else. Accordingly, it is not a debt of the debtor . . . .
Olson timely moved for reconsideration, indicating that she was not asking for the judgment against Cove Mobile Villa to be excepted from discharge, but instead sought to be allowed to proceed with her Siskyou County Superior Court action against debtors and others. The bankruptcy court denied the motion for reconsideration on 3 October 2005 without elaboration. Olson timely appealed.
Appellees did not file a brief, and no one appeared for oral argument.
II. JURISDICTION
The bankruptcy court had jurisdiction via 28 U.S.C. § 1334 and § 157(b)(1) and (b)(2)(I), and we do under 28 U.S.C. § 158(c).
III. ISSUES
A. Whether the bankruptcy court erred in dismissing the adversary proceeding; and
B. Whether the bankruptcy court abused its discretion in denying appellant's motion for reconsideration.
IV. STANDARDS OF REVIEW
The bankruptcy court's dismissal order was, in essence, for failure to state a claim upon which relief could be granted. That is a legal determination which we review de novo. In re Saylor, 178 B.R. 209, 212 (9th Cir. BAP 1995), aff'd, 108 F.3d 219 (9th Cir. 1997).
We review a bankruptcy court's denial of a motion for reconsideration for abuse of discretion. In re Basham, 208 B.R. 926, 930 (9th Cir. BAP 1997), aff'd, 152 F.3d 924 (9th Cir. 1998) (table). A bankruptcy court necessarily abuses its discretion if it bases its decision on an erroneous view of the law or clearly erroneous factual findings. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990).
" We do not reverse for errors not affecting substantial rights of the parties, and may affirm for any reason supported by the record." In re Maximus Computers, Inc., 278 B.R. 189, 194 (9th Cir. BAP 2002); 28 U.S.C. § 2111; FRCP 61, incorporated by Rule 9005; Dittman v. California, 191 F.3d 1020, 1027 n. 3 (9th Cir. 1999).
V. DISCUSSION
A. Dismissal
The bankruptcy court misconstrued the relief sought by Olson. Presumably Olson's attachment of the $1, 000 judgment against Cove Mobile Villa caused the judge to think mistakenly that it was the subject of the nondischargeability action. But, as explained by Olson in her motion for reconsideration and on appeal, she wishes to pursue her separate state court action against debtors. This could be accomplished by removing the state court action to bankruptcy court and joining it with the adversary proceeding for trial, alleging the state law causes of action in an amended adversary complaint, or by staying the adversary proceeding pending the outcome of the state court action and granting relief from stay for that litigation. Because of the bankruptcy court's apparent misunderstanding of the relief requested, however, none of those options was explored.
Olson's Siskiyou County complaint alleges intentional torts and other causes of action which, if established, could satisfy the requirements for nondischargeability under § 523(a)(6). See In re Sicroff, 401 F.3d 1101, 1104-06 (9th Cir. 2005), cert. denied 545 U.S. 1139, 125 S.Ct. 2964, 162 L.Ed.2d 888 (2005), (debts for willful and malicious injury to another or to the property of another are nondischargeable; " willful" and " malicious" prongs are analyzed separately). Accordingly, dismissal was in error.
B. Reconsideration
Under FRCP 59(e), made applicable in bankruptcy proceedings by Rule 9023, a bankruptcy court may alter or amend (reconsider) an order. Motions for reconsideration should not be granted unless the trial court " is presented with newly discovered evidence, committed clear error, or if there is an intervening change in controlling law." Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). Reconsideration is also available to prevent manifest injustice. Navajo Nation v. Confederated Tribes and Bands of the Yakama Indian Nation, 331 F.3d 1041, 1046 (9th Cir. 2003).
Although Olson attempted to point out the court's mistaken premise in her motion for reconsideration, the court denied relief without explanation. As there are no findings of fact, it appears that the bankruptcy court remained under the impression that Olson was attempting to establish the nondischargeability of a judgment against someone other than a debtor. That was a clear error of fact, and thus denying reconsideration on that basis was technically an abuse of discretion.
C. Harmless Error?
Olson's complaint was not timely filed, but we will not affirm on that basis. The time limit set by Rule 4007(c) is not jurisdictional; it is an affirmative defense which is waived if not timely raised. See Kontrick v. Ryan, 540 U.S. 443, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004). Defendants here did not raise the defense in their answer, and thus may have waived it. Accordingly, the bankruptcy court did not have discretion to dismiss the complaint sua sponte as untimely, Levald, Inc. v. City of Palm Desert, 998 F.2d 680, 686-87 (9th Cir. 1993), and dismissal and denial of reconsideration were not harmless.
VI. CONCLUSION
The bankruptcy court's rulings were based on a misunderstanding of the relief requested. Accordingly, we vacate the orders on appeal and remand for further proceedings.
All " Rule" references are to the Federal Rules of Bankruptcy Procedure, and all " FRCP" references are to the Federal Rules of Civil Procedure.
Alert