Case Type:
Case Status:
21-1152 & 21-1182 (9th Circuit, Jun 24,2022) Not Published
The U.S. Bankruptcy Appellate Panel of the Ninth Circuit (BAP) affirmed the judgement of the U.S. Bankruptcy Court for the Southern District of California (BC), and related rulings regarding the termination of sanctions and entry of default judgments, denying a discharge to a chapter 7 debtor, Thomas Oliver (DR), as sought by the U.S. Trustee (UST) in an adversary complaint pursuant to §§ 727(a)(2)(A) and 727(a)(4)(A), as well as its denial of the DR's motion for the recusal of the appointed BC judge.
Procedural context:
Several months after the DR filed his chapter 7 petition (Petition), the UST filed a complaint objecting to Oliver’s discharge under § 727(a)(4)(A) and (a)(2)(A). The UST alleged that the DR knowingly and fraudulently omitted from his schedules and the Statement of Financial Affairs (SOFA)--(1) a bank account in his mother’s name that he used for his own personal income and expenses; (2) his interest in and right to royalties from a book; and (3) the conveyance of a rental property located in Rhode Island to his mother and the recording of that deed--and testified that he never owned a parcel of rental property in West Palm Beach, Florida formerly owned by his father, under oath and at his § 343 examination. The DR's answer failed to admit or deny any of the UST's allegations; all it did was tar the objection to his discharge as "frivolous." Thereafter, discovery commenced. Over the course of the litigation, the UST twice moved to compel the DR to comply with discovery requirements. . These motions, prompted by the DR's recalcitrance, first yielded three orders and two awards of monetary sanctions against the DR. As to the second motion to compel, the BC heard from the DR but granted the motion as unopposed for lack of a written opposition; it also ordered the DR to appear for a deposition as part of its grant of the motion to compel. Shortly before that deposition's scheduled date and time, however, the DR filed a motion for recusal. Meanwhile, in light of the DR's failure to appear for his deposition, the UST filed an ex parte application for order shortening time for a hearing on a motion to extend the discovery cutoff date; the BC granted this application and scheduled the extension motion for hearing on shortened time. Upon service, the DR actually opposed the extension motion, stating that he would not attend without an attorney or witness and raising concerns related to the COVID-19 pandemic. Luckily for the DR, the BC accepted that the DR had apparently misunderstood what was intended as far as the arrangements for the deposition, i.e. that it would be virtual but nonetheless require him to appear at the court reporter's office; it thus reset the deposition, affording him a private room and, after further wrangling, allowing a witness to appear with him, so long as that witness merely observed and did not participate. After other details were ironed out, and clear directions imparted, the DR answered in the affirmative when queried about his comprehension as to the BC's orders and the proposed deposition's parameters. This time, however, the DR neither informed the UST that he was having difficulties with obtaining a witness within the 24 hour deadline set by the BC nor appeared at the rescheduled deposition. When the UST filed a report informing the BC of these failures, the DR responded with new demands. Accordingly, the UST moved for terminating sanctions, noting that the DR had not appeared at a scheduled deposition on two occasions, complied with the order granting its request for documents in the second motion to compel, supplemented his initial disclosures, or paid any of the monetary sanctions assessed against him. The DR challenged this motion for terminating sanctions. After a hearing, the BC awarded the relief requested by the UST and thus both struck the DR's answer and entered default against him. Subsequently, the UST applied for the entry of a default judgment. The BC granted that application and entered default judgment denying the DR's discharge on August 4, 2020. Later, the DR interposed a document, ostensibly opposing the application, bearing the title "Objection to ‘application for default judgment’ and the world’s largest crime syndicate’s entry of judgment by default.” Because the DR requested no specific relief, the BC simply treated it as an expression of the DR's displeasure. Having filed the aforementioned "objection," the DR timely appealed both the terminating sanctions order and the default judgment, but ignored the BAP's request for clarification regarding the nature of his objection. While the appeal was pending, a man named Brian Vukadinovich submitted a document identified as an Amicus Curiae brief in support of the DR's position on appeal. This filing failed to specifically address any of the controlling issues raised by the DR's pending appeal.
Prepetition, the DR apparently lived on "a significant amount of rental income," drew at least partly on a bank account in his mother's name, and held an interest in and right to royalties from one or more books. Less happily, a state court in Massachusetts had entered a judgment against the DR for $32,913.30 in favor of Alyssa Parent (Parent), d/b/a Sun Days Tanning. Parent was in the process of domesticating and enforcing her judgment against the DR's Rhode Island rental property, which the DR claimed not to have owned since 2014, though his signature appeared on the deed on January 31, 2020. The debt owed by Parent would be the only debt listed on the Petition, voluntarily filed in February 2020 seemingly "in the hopes of defeating ... [this] ... judgment debt," repeatedly characterized by the DR as "disputed."
Gary A. Spraker; Robert J. Faris; and Julia W. Brand

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