United States v. 2005-02-02 | 03-55251 | EHRENBERG VCALIFORNIA STATE UNIVERSITY | precedential |…

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 In re: BEACHPORT ENTERTAINMENT,
Debtor,
HOWARD M. EHRENBERG, Chapter 7 No. 03-55251
Trustee, BAP No.
Appellant,  CC-02-01268-KBaP
v. OPINION
CALIFORNIA STATE UNIVERSITY,
FULLERTON FOUNDATION, a Non-
Profit corporation,
Appellee. 
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Perris, Klein, and Baum, Bankruptcy Judges, Presiding
Argued and Submitted
November 2, 2004—Pasadena, California
Filed February 3, 2005
Before: A. Wallace Tashima, Raymond C. Fisher, and
Richard C. Tallman, Circuit Judges.
Opinion by Judge Tashima
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COUNSEL
Rebekah L. Parker, Los Angeles, California, for the appellant.
Paul L. Gale, Stradling Yocca Carlson & Rauth, Newport
Beach, California, for the appellee.
OPINION
TASHIMA, Circuit Judge:
Howard Ehrenberg, the Chapter 7 trustee (“Trustee”),
appeals a decision of the Bankruptcy Appellate Panel
(“BAP”), dismissing his appeal from an order of the bank-
ruptcy court granting summary judgment in favor of the Cali-
fornia State University, Fullerton Foundation (“Foundation”).
The Trustee had brought an adversary proceeding in the bank-
ruptcy court seeking to avoid an allegedly fraudulent transfer
made by debtor Beachport Entertainment (“Debtor”) to the
Foundation. The BAP dismissed the Trustee’s appeal for fail-
ure to provide the BAP with the judgment or the order being
appealed, the complaint, and the answer, in violation of Fed-
eral Rule of Bankruptcy Procedure 8009. Our jurisdiction is
pursuant to 28 U.S.C. § 158(d). While we appreciate the
BAP’s frustration with counsel’s failure to follow the proce-
dural rules, we conclude, based on the record before us, that
dismissal was an inappropriately harsh sanction. Accordingly,
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we reverse and remand for the BAP to consider alternate
sanctions.
BACKGROUND
The Foundation was established to provide administrative
and support services for contracts entered into between Cali-
fornia State University, Fullerton (“University”), and third par-
ties.1 In January 1998, the University entered into a contract
with Debtor, granting Debtor the right to conduct events in
the University Sports Complex. In exchange, Debtor was to
place $1,000,000 in an escrow account, to be used by the Uni-
versity to make improvements to the Sports Complex.
When the University received the first payment of
$500,000 from Debtor, it delivered the funds to the Founda-
tion, which, in turn, began making plans to begin the
improvements. Debtor made the second payment of $500,000
directly to the Foundation, apparently in March 1998. The
second payment is the one at issue in this case.
Debtor filed a petition under Chapter 7 of the Bankruptcy
Code in August 1999. In August 2001, the Trustee initiated an
adversary proceeding against the Foundation in bankruptcy
court, seeking to avoid the second $500,000 payment as a
fraudulent transfer. The Foundation filed a motion for sum-
mary judgment, contending that the suit was barred by the
Eleventh Amendment because the Foundation is an instru-
mentality of the State of California. The Foundation further
contended that the Trustee’s avoidance action was time-
barred pursuant to 11 U.S.C. § 548, and that the transfer was
not a fraudulent transfer for purposes of the Bankruptcy Code
and California law. The bankruptcy court granted the Founda-
tion’s motion without explanation.
1The Trustee acknowledged in his opposition to the motion for sum-
mary judgment that the facts are not in dispute.
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The Trustee appealed the order to the BAP. The Trustee’s
notice of appeal was filed on May 20, 2002. Federal Rule of
Bankruptcy Procedure 8006 required the Trustee, as the
appellant, to file his designation of record and statement of
issues within 10 days of filing the notice of appeal. He did not
do so. On June 5, 2002, the Clerk of the BAP sent the Trustee
a notice of deficient appeal and impending dismissal, stating
that the appeal was subject to dismissal for failure to prose-
cute because of the Trustee’s failure to file the designation of
record, statement of issues, transcript order notice, and tran-
scripts. The notice further stated that the appeal would be dis-
missed unless the Trustee “provide[d] an adequate legal
explanation as to why the appeal should not be dismissed”
within 14 days.
On July 10, 2002, the Foundation moved to dismiss the
appeal for failure to prosecute, pursuant to Bankruptcy Rules
8001 and 8006.2 The Foundation argued that the Trustee did
not file his designation of record and statement of issues until
June 26, 2002, a week after the deadline set by the court, and
that the Trustee had failed to serve the documents on the
Foundation.
The BAP denied the motion to dismiss on July 30, 2002,
stating that the Trustee had filed the designation of the record
and the statement of issues and that the record was now com-
plete. It reasoned that the Foundation had not been prejudiced
by the Trustee’s delay in completing the record on appeal.
Oral argument before the BAP was held on November 20,
2002. Both parties argued the merits of the case, and there
was no indication that the BAP was unfamiliar with any
aspects of the case. Following oral argument, the BAP issued
a decision in which it noted that neither the Trustee nor the
Foundation included in its excerpts of record on appeal a copy
2Rule 8001 permits the dismissal of an appeal if the appellant fails to
take any step other than filing a notice of appeal.
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of the order appealed from, although both parties stated that
the Foundation’s motion had been granted. The BAP thus
framed the issue as whether the appeal should be dismissed
for failure to comply with Federal Rule of Bankruptcy Proce-
dure 8009(b), which delineates the documents that must be
included in the excerpts of record on appeal to the BAP.3
Because the Trustee’s excerpts of record failed to include the
judgment or order appealed from, the complaint, and the
answer, in violation of Rule 8009(b), the BAP dismissed the
appeal, stating that, “[w]ith this sorry record, we are unable
to conduct a meaningful review.” It further noted that it had
“conscientiously reviewed the snippets of the record that have
been provided and [did] not have the sense that our action in
dismissing the appeal constitutes a miscarriage of justice.”
The Trustee filed a timely notice of appeal.
STANDARD OF REVIEW
Generally, “[d]ecisions of the BAP generally are reviewed
de novo.” Carrillo v. Su (In re Su), 290 F.3d 1140, 1142 (9th
Cir. 2002). However, “the BAP’s imposition of sanctions for
non-compliance with non-jurisdictional procedural require-
ments” is reviewed for an abuse of discretion. Morrissey v.
Stuteville (In re Morrissey), 349 F.3d 1187, 1190 (9th Cir.
2003); see also Nat’l Bank of Long Beach v. Donovan (In re
Donovan), 871 F.2d 807, 808 (9th Cir. 1989) (per curiam)
(reviewing for an abuse of discretion the BAP’s dismissal of
3Documents that must be included in the excerpts of record are: “(1)
The complaint and answer or other equivalent pleadings; (2) Any pretrial
order; (3) The judgment, order, or decree from which the appeal is taken;
(4) Any other orders relevant to the appeal; (5) The opinion, findings of
fact, or conclusions of law filed or delivered orally by the court and cita-
tions of the opinion if published; (6) Any motion and response on which
the court rendered decision; (7) The notice of appeal; (8) The relevant
entries in the bankruptcy docket; and (9) The transcript or portion thereof,
if so required by a rule of the [BAP].” Fed. R. Bankr. P. 8009(b). The rule
itself does not explicitly provide for any sanction for failure to comply
with its requirements.
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an appeal for failure to comply with a bankruptcy rule).
“Where, under that standard, summary affirmance is an
appropriate sanction by the BAP, we do not reach the merits
of the bankruptcy court’s ruling.” In re Morrissey, 349 F.3d
at 1190.
DISCUSSION
[1] In determining whether to dismiss summarily an appeal
for non-compliance with a procedural rule, the BAP must
consider the impact of the sanction, alternative sanctions, and
“the relative culpability of the appellant and his attorney,
because dismissal may inappropriately punish the appellant
for the neglect of his counsel.” In re Donovan, 871 F.2d at
808; see also In re Morrissey, 349 F.3d at 1190 (stating that
“ ‘the selection of the sanction to be imposed must take into
consideration the impact of the sanction and the alternatives
available to achieve assessment of the penalties in conformity
with fault’ ”) (quoting Myers v. Shekter (In re Hill), 775 F.2d
1385, 1387 (9th Cir. 1985) (per curiam)). Although summary
dismissal is within the BAP’s discretion, it “should first con-
sider whether informed review is possible in light of what
record has been provided.” Kyle v. Dye (In re Kyle), 317 B.R.
390, 393 (B.A.P. 9th Cir. 2004).
[2] The failure to take into consideration “the impact of the
sanction and the alternatives available to achieve assessment
of the penalties in conformity with fault” constitutes an abuse
of discretion. In re Hill, 775 F.2d at 1387. Where the proce-
dural violations have been egregious, however, we have not
required an explicit discussion of alternative sanctions. See
Moneymaker v. CoBen (In re Eisen), 31 F.3d 1447, 1454-55
(9th Cir. 1994) (stating that “[w]e have ‘never held that
explicit discussion of alternatives is necessary for an order of
dismissal to be upheld’ ”) (quoting Malone v. United States
Postal Serv., 833 F.2d 128, 132 (9th Cir. 1987)); Fitzsimmons
v. Nolden (In re Fitzsimmons), 920 F.2d 1468, 1472 (9th Cir.
1990) (stating that, “in egregious circumstances such as these,
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not even consideration of alternative sanctions is necessary
before dismissal”).
In In re Morrissey, for example, the appellant’s brief to the
BAP “egregiously violated the requirements of Fed. R. Bankr.
P. 8010” by failing to include, inter alia, a statement of appel-
late jurisdiction, an intelligible statement of the issues pre-
sented, a statement of the case, and “citations to the authori-
ties, statutes, and parts of the record relied upon.” In re Mor-
rissey, 349 F.3d at 1189 (internal quotation marks omitted).
The excerpts of record similarly violated Ninth Circuit BAP
Rule 8006-1 by failing to include a transcript crucial to the
appellant’s claim, making it impossible for the BAP to review
“the multiple questions of fact” that the appellant raised. Id.
The BAP detailed the numerous failures and summarily
affirmed the bankruptcy court in a seven-page memorandum
disposition, noting that it was not the court’s duty to “ ‘de-
velop debtor’s arguments for him, find the legal authority to
support those arguments, or guess at what part of the record
may be relevant.’ ” Id. (internal quotation omitted). We
affirmed the BAP. Id. at 1191. Although the BAP “did not
explicitly mention the possibility of alternative sanctions, the
inadequacy of the record and the briefing afforded the BAP
little choice but to affirm summarily, as the memorandum
made clear.” Id. at 1190-91.
[3] Here, however, the BAP appeared to be missing only
the Foundation’s answer to the complaint and the bankruptcy
court order.4 The Trustee and the Foundation included in their
excerpts of record all of the declarations included in the
record on appeal to this court and also included the memo-
randa in support of the motion for summary judgment and the
Foundation’s statement of uncontroverted facts. Thus, unlike
In re Morrissey, in which “the inadequacy of the record and
4The bankruptcy court order (which in fact gave no explanation for the
ruling) was actually filed with the BAP as a part of the Trustee’s notice
of appeal, as well as with the Foundation’s motion to dismiss the appeal.
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the briefing afforded the BAP little choice but to affirm sum-
marily,” the record before the BAP appears to include every-
thing needed in order to address the merits of the appeal. Id.
at 1191.
[4] Although we sympathize with the BAP’s frustration and
we recognize the necessity of complying with procedural
rules, in this instance, the sanction of summary dismissal was
inappropriately harsh in relation to the harm that was actually
caused. The failure to comply with procedural rules places an
added burden on the court and on opposing counsel. In no
way do we condone the conduct of the Trustee’s counsel.
Nonetheless, the record before us does not persuade us that
dismissal was warranted. The transcript of oral argument
before the BAP indicates that the BAP was concerned only
with the merits of the case. There is no indication that the
BAP was unfamiliar with the facts of the case or the legal
issues involved. After oral argument on the merits, the BAP
submitted the appeal for decision. Moreover, the BAP gave
no prior indication that it considered the record to be defi-
cient, and the Trustee was given no opportunity to argue why
dismissal was too harsh a sanction. When the BAP had earlier
denied the Foundation’s motion to dismiss the appeal for fail-
ure to prosecute, the court stated that the record was complete
and that the Foundation had not been prejudiced by the Trust-
ee’s delay in completing the record.
[5] Summary dismissal in this situation does not further the
goal of “the swift and efficient resolution of disputes pertain-
ing to the distribution of the bankruptcy estate.” Zer-Ilan v.
Frankford (In re CPDC Inc.), 221 F.3d 693, 700 (5th Cir.
2000). We therefore conclude that the BAP’s summary dis-
missal of the appeal without considering alternative sanctions
constitutes an abuse of discretion, and we remand for recon-
sideration “in the light of possible effective sanctions alterna-
tive to dismissal.” In re Hill, 775 F.2d at 1387; see also In re
Donovan, 871 F.2d at 809 (vacating and remanding “for con-
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sideration of alternative sanctions and relative fault”). Each
party shall bear his or its own costs on appeal.
REVERSED and REMANDED.
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