In re: Frances Diane Toth
AZ-15-1425-FLJu
| 9th Cir. BAP | Oct 13, 2016Background
- Debtor Frances Diane Toth owned an Arizona home subject to a domesticated Colorado judgment in favor of her ex-partner Troy Short; Short recorded a judgment lien and obtained a writ of execution.
- Toth filed Chapter 7 and claimed a homestead exemption; Short filed an adversary action seeking nondischargeability under § 523(a)(6) and objected to the exemption. Toth received a Chapter 7 discharge while those matters were pending.
- The Chapter 7 trustee proposed a compromise permitting Short to market and sell the Arizona Property; Toth initially conditionally approved, then withdrew and asserted an alleged side-agreement to pay ~$22,000 to retain the home.
- Toth’s bankruptcy counsel (Stoker) moved to withdraw days before a December 1 hearing; Stoker’s withdrawal was granted and Toth appeared pro se and asked for a continuance, which the court denied.
- At the December 1 hearing the bankruptcy court denied Toth’s motion to convert to Chapter 13 and disapproved the proposed compromise; instead the court ordered the trustee (not Short) to market and attempt to sell the property for six months, with abandonment if no adequate offer.
- Toth appealed, arguing denial of counsel/effective assistance, denial of fair trial and due process; the BAP affirmed both the denial of conversion and denial of the compromise (and approval of alternative relief).
Issues
| Issue | Plaintiff's Argument (Toth) | Defendant's Argument (Short/Trustee) | Held |
|---|---|---|---|
| Whether Toth was denied a constitutional right to counsel/effective assistance in bankruptcy proceedings | Stoker’s advice, withdrawal, and failures deprived Toth of counsel and effective assistance, warranting reversal | No constitutional right to counsel in civil/bankruptcy cases; errors of private counsel don’t implicate Sixth Amendment | Held for defendants: no Sixth Amendment right to counsel in bankruptcy; counsel errors do not require reversal |
| Whether denial of conversion to Chapter 13 was erroneous | Conversion requested to save the home; claimed lack of informed counsel and bad faith denial | Creditor argued conversion was in bad faith; court cited creditor’s reasons in denying conversion | Held for defendants: denial of conversion affirmed |
| Whether the bankruptcy court erred by disapproving the trustee’s proposed compromise and instead granting alternative relief (trustee to market property) | Court should have approved the compromise or enforced Toth’s asserted $22,000 deal; concerned the court changed terms without opportunity to respond | Trustee/Short: no binding $22,000 agreement; court’s alternative relief was consistent with Toth’s objections and in estate’s interest | Held for defendants: disapproval affirmed; alternative relief (trustee markets property for six months) was appropriate and favorable to Toth |
| Whether Toth was denied a fair process by evidentiary handling or acceptance of the Colorado judgment | Argued fraud, improper service, court ignored her evidence and denied ability to examine documents | Many factual/contention issues were outside scope of this appeal; record did not show specific evidentiary error before bankruptcy court | Held for defendants: no reversible evidentiary or due process error in the orders on appeal; challenges to the Colorado judgment/domestication are beyond scope |
Key Cases Cited
- Hedges v. Resolution Trust Corp., 32 F.3d 1360 (9th Cir. 1994) (no absolute right to counsel in civil proceedings)
- Davis v. Central Bank (In re Davis), 23 B.R. 773 (9th Cir. BAP 1982) (Sixth Amendment applies to criminal prosecutions; no right to counsel in bankruptcy)
- Cutter v. Seror (In re Cutter), [citation="468 F. App'x 657"] (9th Cir. 2011) (rejecting claim of Sixth Amendment right to counsel in bankruptcy proceedings)
- Turner v. Rogers, 564 U.S. 431 (2011) (Due Process does not automatically require appointment of counsel in certain civil contempt proceedings)
- Goodwin v. Mickey Thompson Entm’t Grp., Inc. (In re Mickey Thompson Entm’t Grp., Inc.), 292 B.R. 415 (9th Cir. BAP 2003) (standards for approval of compromises under Rule 9019)
- Hansen v. Moore (In re Hansen), 368 B.R. 868 (9th Cir. BAP 2007) (standards of review for bankruptcy factual and legal determinations)