Perry v. Key Auto Recovery (In re Perry)

Summarized by Hilda Montes de Oca , U.S. Bankruptcy Court, Central District of California
12 years 7 months ago

Citation:

2013 WL 3369310 (B.A.P. 9th Cir. July 2, 2013)

Tag(s):

Ruling:

Affirming the bankruptcy court, the Ninth Circuit Bankruptcy Appellate Panel (the “BAP”) held that the bankruptcy court did not abuse its discretion when it declined the debtor’s request for a hearing on his second motion for reconsideration and instead entered an order denying the second motion for reconsideration because the debtor did not set the second motion for reconsideration for hearing as required under the Local Bankruptcy Rules for the Central District of California. The BAP also held that the bankruptcy court did not abuse its discretion when it declined to consider the “new evidence” presented by the debtor in support of his second motion for reconsideration because the debtor could have submitted the “new evidence” from 2004 earlier to the bankruptcy court.

Procedural context:

Appeal from an order of the bankruptcy court for the Central District of California denying the debtor’s ex parte motion for reconsideration of an order closing his adversary proceeding under under Fed. R. Civ. P. 59(e) (applied to bankruptcy proceedings under Fed. R. Bankr. P. 9023), reviewed for abuse of discretion.

Facts:

Several years prepetition, the debtor financed the purchase of a 2001 Nissan Pathfinder (“Nissan”) through Chase Auto Finance (“Chase”), granting Chase a security interest in the Nissan. The debtor later defaulted on payments to Chase. Nine days before filing his chapter 7 bankruptcy petition, the debtor advised Chase that he intended to file for bankruptcy protection. Despite this forewarning, Chase’s agent, Key Auto Recovery (“Key Auto”), repossessed the Nissan. Nearly a week after he filed his bankruptcy petition, the debtor initiated a state court action against Chase and Key Auto (“state court action”), alleging that they unlawfully repossessed the Nissan and demanded that they return it. The debtor then initiated two adversary proceedings against Chase and Key Auto. In the first adversary proceeding, the debtor sought injunctive relief and to quiet title to the Nissan (“injunctive relief adversary proceeding”). Chase moved that the bankruptcy court abstain from adjudicating the claims in the injunctive relief adversary proceeding as they were based on state law. The bankruptcy court declined to abstain, however, it decided to stay the injunctive relief adversary proceeding pending the outcome of the state court action. In the second adversary proceeding, the debtor sought to remove the state court action to the bankruptcy court (“removal adversary proceeding”). Chase subsequently moved to remand the removal adversary proceeding to state court (“remand motion”). The bankruptcy court issued a tentative ruling granting Chase’s remand motion, noting that the removal adversary proceeding was “the same” as the injunctive relief adversary proceeding, which “[had] already been stayed pending a result from the state court.” The bankruptcy court later issued its memorandum decision, altering the tentative ruling. Instead of dismissing the injunctive relief adversary proceeding, the bankruptcy court decided to set a further status conference because it already had stayed the matter pending the outcome of the state court action. The bankruptcy court decided to close the removal adversary proceeding because “there [was] nothing more for [the bankruptcy] court to do on [it],” as all the appeals either had become final or had been dismissed. The bankruptcy court noted that “closing [the] case was a mere ministerial act.” Two days later, in the injunctive relief adversary proceeding, the debtor filed an ex parte motion for reconsideration to vacate/set aside the tentative ruling (“first motion to reconsider”). The bankruptcy court denied the first motion to reconsider and pointed out that, contrary to the debtor’s arguments, it did not dismiss the adversary proceedings. The bankruptcy court therefore determined that his first motion to reconsider was moot. Later, in the removal adversary proceeding, the debtor filed a “renewed motion” for reconsideration of the tentative ruling and the closing order (“second motion to reconsider”), requesting a hearing on it. He repeated his claim from the first motion to reconsider: that he had new evidence regarding Chase’s allegedly fraudulent lien in the Nissan. He moreover argued that the bankruptcy court denied him due process by refusing to set his motion to reconsider for hearing, even though he had new evidence. The bankruptcy court denied the second motion to reconsider without a hearing (“second reconsideration order”). The bankruptcy court explained that the closing of the removal adversary proceeding was “a ministerial act and [was] not equivalent to dismissal.

Judge(s):

Hon. Randall L. Dunn; Hon. Ralph B. Kirscher; Hon. Jim D. Pappas (U.S. Bankruptcy Appellate Panel, Ninth Circuit). Appeal from a ruling by Hon. Geraldine Mund (Bankruptcy Judge for the Central District of California)

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