In re: William Robert Norrie
CC-15-1330-KiKuF
| 9th Cir. BAP | Jul 21, 2016Background
- Debtor William Norrie (chapter 7) had a 2010 state-court default judgment (Landlord/Tenant Judgment) against him; creditors later recorded an abstract and obtained large post-judgment fees.
- Creditors sued in a separate Fraud Action; Trustee in Debtor’s chapter 7 settled prepetition claims with Creditors by court-approved settlement releasing "any and all" prepetition claims (including unknown claims) in November 2014.
- In June 2015 Debtor (pro se) filed a state-court Motion to Set Aside the 2010 default judgment, asserting lack of service, violation of the automatic stay, and that the judgment was satisfied as to co-defendant Bliss.
- Creditors removed the Motion to Set Aside to bankruptcy court and moved to enforce the Trustee’s settlement and dismiss Debtor’s motion as precluded; bankruptcy court granted removal, denied remand, enforced the settlement, dismissed the motion, and awarded attorney’s fees as sanctions.
- Debtor appealed to the BAP. The Panel held Debtor lacked standing to challenge enforcement/dismissal (those claims belonged to the estate and were released by Trustee) but had standing to appeal the sanctions awarding attorney’s fees; the BAP affirmed enforcement and granted appellees’ motion for Rule 8020 sanctions against Debtor for a frivolous appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to appeal enforcement/dismissal of Motion to Set Aside | Norrie: he personally may attack the 2010 judgment as void for lack of service and stay violation | Creditors: Debtor's prepetition claims vested in the estate; Trustee settled them, so Debtor lacks standing | Held: Debtor lacks standing to challenge enforcement/dismissal because claims belonged to estate and were released by Trustee |
| Bankruptcy court’s authority to summarily enforce settlement | Norrie: settlement is voidable because based on alleged fraudulent default judgment | Creditors: settlement and Settlement Order are final; no material dispute about settlement terms; bankruptcy court has exclusive jurisdiction | Held: Court may summarily enforce where no material factual dispute; here enforcement was proper because Debtor lacked standing to raise the claims |
| Merits of Debtor’s substantive claims (lack of service, stay violation, satisfaction by Bliss) | Norrie: he was never served; judgment violated automatic stay; Bliss satisfied judgment | Creditors: record contradicts Norrie; service and other facts established; stay claim meritless; claims settled prepetition | Held: BAP found no clear error in bankruptcy court’s credibility findings rejecting Debtor’s assertions; claims were frivolous or precluded |
| Sanctions for frivolous appeal under Rule 8020 | Creditors: appeal is frivolous, merits obvious, distorted record; request fees for defending appeal | Norrie: (did not meaningfully contest sanctions on appeal) | Held: Appeal was frivolous; Rule 8020 sanctions granted; appellee ordered to submit fee records for a separate fee award determination |
Key Cases Cited
- Motor Vehicle Cas. Co. v. Thorpe Insulation Co., 677 F.3d 869 (9th Cir. 2012) (standing reviewed de novo)
- Callie v. Near, 829 F.2d 888 (9th Cir. 1987) (bankruptcy court may enforce settlements but cannot summarily enforce when material facts about existence/terms are disputed or settlement procured by fraud)
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (U.S. 1990) (sanctions standards reviewed for abuse of discretion)
- City Equities Anaheim, Ltd. v. Lincoln Plaza Dev. Co., 22 F.3d 954 (9th Cir. 1994) (motion to enforce settlement likened to summary judgment analysis)
- Sierra Switchboard Co. v. Westinghouse Elec. Corp., 789 F.2d 705 (9th Cir. 1986) (debtor’s prepetition claims become property of the estate under § 541)
- United States v. Whiting Pools, Inc., 462 U.S. 198 (U.S. 1983) (property of the estate includes prepetition claims)
- TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820 (9th Cir. 2011) (abuse of discretion standard: court abuses discretion if its findings are illogical, implausible, or without record support)
- Taylor v. Sentry Life Ins. Co., 729 F.2d 652 (9th Cir. 1984) (procedure for submitting fee records and supporting documentation for post-judgment fee awards)