NAI Horizon V. Amadeus Therapy, Inc. (In re: Amadeus Therapy, Inc.)

Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
22 hours 17 min ago

Case Type:

Business

Case Status:

Affirmed

Citation:

25-3867 (9th Circuit, Mar 06,2026) Not Published

Tag(s):

Ruling:

The U.S. Court of Appeals for the Ninth Circuit affirmed a Bankruptcy Appellate Panel decision upholding the bankruptcy court's denial of the appellant/plaintiff/creditor's motion for relief from a judgment, concluding the creditor failed to establish "fraud on the court" by the appellee/defendant/debtor or its principal by clear and convincing evidence.

Procedural context:

Previously, the creditor had appealed the bankruptcy court's decision sustaining the debtor's objection to the creditor's unsecured claim for a real estate commission. After the district court affirmed this ruling, the creditor did not take a further appeal to the Ninth Circuit. Instead, after receiving the district court's decision, the creditor filed a motion in the bankruptcy court under Federal Rule of Civil Procedure 60(d)(3), incorporated by Federal Rule of Bankruptcy Procedure 9024, contending the debtor committed fraud on the court through her trial testimony and introduction of a letter from a doctor. After the bankruptcy court denied this motion, the creditor pursued this separate appeal.

Facts:

The Sixth Circuit's recent opinion does not provide detail on the factual history of the case, but decisions from the U.S. District Court for the District of Arizona and from the U.S. Bankruptcy Appellate Panel for the Ninth Circuit contain pertinent background. Debtor Amadeus Therapy, Inc. acquired real property in Avondale, Arizona. About one year later, Debtor's principal, Bridget O'Brien, was diagnosed with stage three cancer and given a prognosis of likely death. Several weeks later, Debtor executed a Special Warranty Deed which, according to its terms, conveyed the property to a Living Trust in the name of Ms. O'Brien's friend and business associate. Nine months later, Debtor entered into an exclusive listing agreement with Appellant/Plaintiff/Creditor NAI Horizon to sell the property. Several weeks after Debtor executed the listing agreement, the Trust's principal recorded the Special Warranty Deed. But, about five months after that, the Trust quitclaimed the property back to Debtor. And shortly thereafter, Debtor filed a chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the District of Arizona. Finally, the property was sold while Debtor's chapter 11 case proceeded. Creditor filed an unsecured proof of claim in Debtor's bankruptcy case for a commission based on a breach of contract, insofar as Debtor had provided a deed to the Trust and yet represented to Creditor that it owned and had the right to sell the property in executing the listing agreement. Debtor objected and contended the deed provided to the Trust was intended to be conditional, i.e., that title to the property only would transfer to the Trust upon Ms. O'Brien's death. The court held a trial, found Ms. O'Brien's testimony credible and granted the objection disallowing the claim in its entirety. This =led to the first appeal that ended in the district court. Then, over a year after the trial concluded, and three weeks after the district court affirmed the bankruptcy court's ruling, Creditor filed a motion in the bankruptcy court under Civil Rule 60(b)(3), contending evidence Ms. O'Brien provided at the trial (a letter from a Dr. Wooten concerning her treatment) was "fraudulent" based the doctor's subsequent declaration about her treatment of Ms. O'Brien. As the BAP explained: "Without a hearing, the bankruptcy court entered an order denying NAI's motion, concluding that NAI failed to show fraud on the court. The court found that, contrary to NAI's assertions, the Wooten Declaration did not state that Dr. Wooten did not write the Wooten Letter, or demonstrate that anything in the Wooten Letter was false. Ms. O'Brien had testified that Dr. Wooten did not diagnose her breast cancer, and that Dr. Wooten provided naturopathic treatments in addition to the traditional treatments she received from other doctors. In the court's opinion, rather than demonstrating fraud on the court, the Wooten Declaration supported the statement in the Wooten Letter and Ms. O'Brien's testimony, that in 2020 she told Dr. Wooten that she was being treated at Mayo Clinic and other places for breast cancer." Creditor appealed the denial of the Civil Rule 60(b)(3) motion to the BAP, which affirmed. The appeal to the Ninth Circuit followed.

Judge(s):

Hawkins, Bybee, and Friedland

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