Aрpellant Banco Bilbao Vizcaya Argen-taría (“the Bank”), a creditor in a Chapter 7 bankruptcy proceeding, claims that thе bankruptcy court wrongly refused to grant it relief, under Fed.R.Civ.P. 60(b) and Fed. R. Bankr.P. 9024, from a default judgment totaling $24,506.55. 1 The Bankruptcy Appellate Panel for the First Circuit (“BAP”) affirmed the bankruptcy court’s ruling, and we likewise find no reversible error.
Although this case reaches us by way of the BAP, we are charged with direct review of the bankruptcy court’s decision.
See In re Healthco Int’l, Inc.,
The Bank’s appeal has three primary prongs, two of which challenge the bankruptcy court’s legal authority to order the default. It argues that the court lacked jurisdiction to address appellees’ claims in light of the United States Supreme Court’s decision in
Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A.,
We briefly dispose of each of these contentions.
A. Jurisdiction.
In thеir complaint, plaintiffs relied on section 506(c) of the Bankruptcy Code to demand reimbursement of rent and other costs incurred at the restaurant premises while property in which the Bank had a security interest remained there.
See
11 U.S.C. § 506(c). The section provides that “[t]he trustee may recover from property securing an allowed secured claim the reasonable, necessary costs and expenses of preserving, or disposing of, such property to the extent of any benefit to the holder of such claim.”
Id.
In
Hartford Underwriters,
which was decided about one month after the bankruptcy court’s challenged ruling, the Supreme Court held that only a trustee, and not an administrativе claimant, is a proper party to seek recovery under section 506(c).
See
Although Hartford Underwriters would appear to negate Cuevas’s standing to bring a section 506(c) claim, it does not require us to disturb thе bankruptcy court’s judgment. The rents and related costs awarded to Cuevas also were incorporated within the cross-claims filеd by the trustee, who unquestionably had standing to pursue such relief. 2 We are thus satisfied that the bankruptcy court’s judgment was consistent with the princiрles espoused in Hartford Underwriters. 3
B. Lack of Hearing.
The Bank contends that the bankruptcy court could not grant judgment on the merits without a hearing to determine whether the claims and cross-claims were meritorious. To the contrary, it is precisely the right to contest liability that a party gives up when it declines to participate in the judicial process.
See Franco
v.
Selective Ins. Co.,
A hearing may be required, however, to set damages when the amount is in dispute or is not ascertainable from the pleadings.
See
Fed.R.Civ.P. 55(b)(2);
4
Ortiz-Gonzalez v. Fonovisa,
Where a court has jurisdictiоn over the subject matter and parties, the allegations in the complaint state a specific, cognizable claim for relief, and the defaulted party had fair notice of its opportunity to object, the court has the discretion to order a defаult judgment “without a hearing of any kind,”
HMG Property Investors,
C. Relief from the Default Judgment.
As noted earlier, a court’s refusal to set aside a default judgment is reviewed for abuse of discretion.
See supra
p. 113. On this issue, we find it unnecessary to add to the well reasoned decisions of the bankruptcy cоurt and BAP.
See Lawton v. State Mut. Life Assur. Co. of America,
Affirmed.
Notes
. The court's default judgment resolved two separate claims against the Bank for the costs of preserving or disposing of property оf the debtor in which the Bank had a security interest. See infra p. 113. The original complaint was filed by Family Restaurants, Inc. and its president, Hector Cuevas, who had subleased restaurant premises to the debtor, The Home Restaurants, Inc. Plaintiffs (whom we at times refer to collectively аs “Cuevas”) named both the Bank and the bankruptcy trustee, as representative of the debtor, as defendants. The trustee, in turn, filed cross-сlaims against the Bank. Cuevas sought reimbursement for rent and related costs; the trustee sought, in addition, the cost of electricity and a сontractor's services.
The Bank never responded to the cross-claims, and the court described its judgment in favor of the trustee аs "a simple default judgment.” Although the Bank filed an answer to the complaint, it took no further action until after the default judgment was entered. The court termed the default judgment for plaintiffs "a sanction for [the Bank's] repeated failure to comply with orders of the Court.”
. In Cоunt Two of his cross-claims, the trustee asked that the Bank be obliged to pay any "rent and preservation costs [that] erre due to plaintiff.”
. The court unquestionably had subject matter jurisdiction; both the claims and cross-claims were within the bankruptcy court’s core jurisdiction. See 28 U.S.C. § 157(b)(2)(A), (O) (core proceedings include "matters concerning the administration of the estate” and "other proceedings affeсting the liquidation of the assets of the estate,” with exceptions not relevant here).
.Rule 55(b)(2) states:
If, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings or order such references as it deems necessary and proper and shall accord a right of trial by jury to the parties when and as required by any statute of the United States.