Weinman v. Kelley (In re Kelley)

Case Type:
Case Status:
16-1498 (10th Circuit, Aug 09,2017) Not Published
Rule 60(b) relief is extraordinary and may only be granted in exceptional circumstances and is not properly granted where a party merely revisits the original issues and seeks to challenge the legal correctness of the bankruptcy court’s judgment by arguing that the bankruptcy court misapplied the law or misunderstood the party’s position. Further, pursuant to Fed. R. Bankr. P. 8019(f), the BAP can proceed with oral argument if one party fails to appear.
Procedural context:
The bankruptcy court entered default judgment against debtor who filed a motion to set aside the default judgment. The bankruptcy court denied the motion and debtor filed a motion to reconsider which was denied. The 10th Circuit BAP affirmed. The 10th Circuit affirmed stating that debtor is a real-estate investor who attempts to use the bankruptcy laws to wrongfully retain his tenants’ security deposits. Legal determinations were reviewed de novo and factual findings were reviewed for clear error.
Debtor filed a Chapter 11 petition to thwart his tenants’ efforts at recovering their security deposits, but that case was dismissed. He moved to Colorado and filed bankruptcy there after the North Carolina Attorney General instituted a state-court action there charging him with unfair and deceptive trade practices. The North Carolina action resulted in a judgment against debtor for restitution, civil penalties, and attorney’s fees. He also was permanently enjoined from accepting additional security deposits. The trustee filed a complaint objecting to debtor’s discharge under §§ 727(a)(2)(A), (3), (4)(D), and (5). The complaint was served on debtor at his Denver address. Trustee filed an amended complaint on debtor that was also served on debtor at his Denver address and he failed to respond. Trustee filed a default judgment motion and served that on debtor at his Denver and North Carolina addresses. Default judgment entered and two weeks later, debtor Kelley moved set aside the default judgment under Fed. R. Civ. P. 60(b) arguing excusable neglect, claiming there was newly discovered evidence that the trustee introduced slanderous statements, and asserting the trustee engaged in fraud by misrepresenting his actions to the bankruptcy court.
Lucero, Holmes, Bacharach

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