FILED
JUL 12 2022
NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. EC-21-1265-TLB
LATASHA DENELL MITCHELL,
Debtor. Bk. No. 2:10-bk-41906-CMK
LATASHA RICHARDSON, aka Latasha Adv. No. 2:20-ap-02166-CMK
Denell Mitchell,
Appellant,
v. MEMORANDUM∗
SELECT PORTFOLIO SERVICING,
INC.,
Appellee.
Appeal from the United States Bankruptcy Court
for the Eastern District of California
Christopher M. Klein, Bankruptcy Judge, Presiding
Before: TAYLOR, LAFFERTY, and BRAND, Bankruptcy Judges.
INTRODUCTION
Appellant Latasha Richardson removed a two-year-old state court
lawsuit to the bankruptcy court approximately eight years after her
∗ This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
chapter 71 case closed. She then sought a determination of contempt based
on a theory never before the state court. The bankruptcy court remanded
the case and denied the motion alleging contempt.
Appellant never attempted an appeal of the remand order, but she
filed a motion seeking additional time to appeal the denial of sanctions (the
“Extension Motion”). In its caption and prayer, the Extension Motion also
requested a stay of remand. The bankruptcy court found that excusable
neglect justified a late notice of appeal, but it said nothing about a stay of
the remand.
Appellant then alleged a violation of the order based on the state
court defendant’s post-remand actions in the state court and filed a motion
again seeking sanctions. The bankruptcy court denied this motion, stating
“the court is not persuaded that there are any meritorious grounds for
discerning contempt.” Appellant appealed.
We AFFIRM.
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code,
11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure.
2
FACTS2
A. Appellant’s chapter 7 case and post-petition litigation with SPS
Appellant filed her chapter 7 petition and received her discharge in
2010. 3 The case closed in due course.
In 2018, Appellant filed a complaint against Select Portfolio Servicing,
Inc. (“SPS”) in the Superior Court for Sacramento County and asserted
causes of action based on alleged violations of her rights under Keep Your
Home California (the “State Court Action”). After almost two years of
litigation, the state court granted SPS’s motion for summary judgment.
Immediately thereafter, Appellant removed the State Court Action to
the bankruptcy court. SPS promptly sought remand; it relied on Rule
9027(a)(3) and argued that the removal was untimely. The bankruptcy
court agreed and remanded the case.
B. The Discharge Contempt Motion
During the period of temporary removal, Appellant filed a motion
for contempt against SPS. She alleged that SPS had violated both the
automatic stay and her discharge injunction by trying to collect a “void
2
We exercise our discretion to take judicial notice of documents electronically
filed in the adversary proceeding, Case No. 2:20-ap-02166. See Atwood v. Chase
Manhattan Mortg. Co. (In re Atwood),
293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
3 Case No. 10-41906 was filed under her name at the time, Latasha Denell
Mitchell.
3
loan.” 4 The bankruptcy court denied this motion (“Discharge Contempt
Order”).
Appellant failed to timely appeal the Discharge Contempt Order, but
she promptly filed the Extension Motion captioned as a Motion for
Extension of Time to File Notice of Appeal, For Leave of Court to File
Notice of Appeal, and to Stay Remand.” In this document, she moved for
an order extending the time to appeal the Discharge Contempt Order; the
bankruptcy court granted this request. 5
The separately filed notice of the Extension Motion included the
phrase “and to stay remand on the grounds of excusable neglect pursuant
to Rule 8002(d)(1)(B).” And the Extension Motion’s prayer stated, “Plaintiff
further moves this Court to stay the Remand Order issued January 15,
2021, pending outcome of the Court’s decision on this motion.” There is
otherwise no discussion of the stay request in Appellant’s documents.
Appellant identified neither facts nor legal theory nor authority justifying
such a stay. Further, there was no discussion of the stay request at the
hearing on the Extension Motion; the bankruptcy court focused solely on
the request for an extension of time. The order that followed (the
4
Appellant asserted the debt was “void” because the loan was discharged,
ignoring that it was secured by her home.
5 Appellant then proceeded with the appeal, the BAP subsequently affirmed, and
the matter is now before the Ninth Circuit Court of Appeals.
4
“Extension Order”) stated: “the motion is granted based on the findings
stated on the record.”
C. The Stay Contempt Motion
While the Extension Motion was pending, remand having been
granted, Appellant dismissed the State Court Action. SPS responded with a
motion to vacate the dismissal and for a judgment. Notwithstanding
Appellant’s own post-remand activity in the state court, Appellant asserted
that the state court could not act because the bankruptcy court stayed
remand. The state court disagreed, set aside the dismissal, and entered
judgment in favor of SPS.
Appellant then filed her “Verified Motion for Indicative Ruling on an
Order to Show Cause Why Douglas C. Straus, Tiffany F. Ng and Defendant
Should not be Held in Contempt of Court and Sanctioned for Failing to
Comply with a Court Order” (“Stay Contempt Motion”). It sought $100
million in sanctions and alleged contempt because SPS took post-remand
actions in the state court. The Stay Contempt Motion provided no new
analysis or argument related to the stay of remand request.
At the hearing on the Stay Contempt Motion, the bankruptcy court
made no comments and took the matter under submission. Its subsequent
order denied the contempt request, sparsely stating that: “Upon
consideration of the record, the court is not persuaded that there are any
meritorious grounds for discerning contempt.”
Appellant timely appealed.
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JURISDICTION
The bankruptcy court had jurisdiction under
28 U.S.C. §§ 1334 and
157(b)(2)(A). We have jurisdiction under
28 U.S.C. § 158 to hear an appeal
from the order on the Stay Contempt Motion. See Humphreys v. EMC Mortg.
Corp. (In re Mack), BAP Nos. CC-06-1123-MoDK, CC-06-1242-MoDK,
2007
WL 7545163, at *3 (9th Cir. BAP Mar. 28, 2007) (“[W]here a contempt order
disposes of the only matter before the court, the order is appealable as a
final judgment.”).
ISSUE
Whether the bankruptcy court erred in denying the Stay Contempt
Motion.
STANDARD OF REVIEW
A bankruptcy court’s decision whether to hold a party in civil
contempt is reviewed for abuse of discretion. Knupfer v. Lindblade (In re
Dyer),
322 F.3d 1178, 1191 (9th Cir. 2003). To determine whether the
bankruptcy court has abused its discretion, we conduct a two-step inquiry:
(1) we review de novo whether the bankruptcy court “identified the correct
legal rule to apply to the relief requested” and (2) if it did, we consider
whether the bankruptcy court’s application of the legal standard was
illogical, implausible, or without support in inferences that may be drawn
from the facts in the record. United States v. Hinkson,
585 F.3d 1247, 1262
(9th Cir. 2009) (en banc).
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DISCUSSION
A. The bankruptcy court did not abuse its discretion when it denied
the Stay Contempt Motion.
Bankruptcy courts have enormous discretion in deciding whether
sanctions are appropriate. “Because of their very potency, inherent powers
must be exercised with restraint and discretion.” Chambers v. NASCO, Inc.,
501 U.S. 32, 43 (1991). “The standard for finding a party in civil contempt is
well settled: the moving party has the burden of showing by clear and
convincing evidence that the contemnors violated a specific and definite
order of the court.” In re Dyer,
322 F.3d at 1190-1191 (citation omitted).
Here no specific and definite order stayed the remand. In fact, the
Extension Order says nothing more than “the motion” is granted for the
reasons stated orally on the record, and no discussions or findings on the
record relating to the requested stay exist. Thus, the record supports that
the bankruptcy court exercised its discretion appropriately: there was no
clear and convincing evidence that SPS violated its order. Indeed, there is
no clear and convincing evidence that the bankruptcy court granted a stay.
Appellant attempts to stretch the bankruptcy court’s simple order
into the entry of a specific and definite order staying the already
accomplished remand. But the bankruptcy court entered the Extension
Order and knew what it intended. Further, a court may amend or clarify its
order at a later time, on its own motion and even without notice, pursuant
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to Civil Rule 60(a).6 When the bankruptcy court ruled that there were no
“meritorious grounds for discerning contempt,” it clarified, to the extent
necessary, that it had not stayed remand. We find no abuse of discretion in
this determination and any implicit clarification.
B. There was no legal basis to enter a stay.
The only legal basis cited by Appellant as authority for the entry of a
stay of remand was the reference to Rule 8002(d)(1)(B) in the notice of the
Extension Motion. But that Rule only allows the bankruptcy court to
extend time to file a notice of appeal. So, Appellant articulates no legal
basis for her remand stay request, and we know of none.
Removal is instantaneous. Sec. Farms v. Int’l Bhd. of Teamsters,
Chauffers, Warehousemen & Helpers,
124 F.3d 999, 1010 (9th Cir. 1997) (Upon
removal, the state court proceeding has been extinguished.) Remand
operates in the same fashion.
The Supreme Court noted in Roman Catholic Archdiocese of San Juan,
Puerto Rico v. Acevedo Feliciano,
140 S. Ct. 696 (2020), that after the notice of
removal was filed, “the case remained in federal court until that court . . .
reached a decision about the motion to remand that was pending before it.
The [state court’s] actions in the interim . . . are void.”
Id. at 701. Similarly,
6
Rule 9024 makes Civil Rule 60(a) applicable in bankruptcy proceedings. It states:
“The court may correct a . . . mistake arising from oversight or omission whenever one
is found in a judgment, order, or other part of the record. The court may do so on
motion or on its own, with or without notice.”
8
entry of the order remanding the State Court Action extinguished the post-
removal bankruptcy court proceeding and any bankruptcy court
jurisdiction. Remand could not be stayed by the bankruptcy court after the
remand order became final.
And what effect did the stay have when it was supposedly entered?
The remand order had been entered nearly a month earlier. Appellant’s
own post-remand activity acknowledged that the litigation was pending in
state court and not at the bankruptcy court. Appellant has offered no
argument that the bankruptcy court had the legal ability to stay
prosecution of a case that was no longer before it.
C. If the bankruptcy court granted the stay of remand as requested,
the stay ended when the bankruptcy court ruled on the Extension
Motion.
Appellant’s Extension Motion prayed for a stay “pending outcome of
the Court’s decision on this motion.” She argues that this request was
granted by implication when the bankruptcy court ruled that “the motion
is granted.”
But limiting the effect of such an order is the ephemeral nature of the
requested stay. If granted as requested, it would exist only until the
bankruptcy court made its decision on the Extension Motion. Thus, the
requested stay would arise and terminate simultaneously. It could not be
violated.
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D. Even assuming a stay, denial of contempt was not an abuse of
discretion.
Given the above, the bankruptcy court’s decision to deny the Stay
Contempt Motion could not be an abuse of discretion. “[A] person should
not be held in contempt if his action ‘appears to be based on a good faith
and reasonable interpretation of the [court’s order].’” Go-Video, Inc. v.
Motion Picture Ass’n of Am. (In re Dual-Deck Video Cassette Recorder Antitrust
Litig.),
10 F.3d 693, 695 (9th Cir. 1993). To argue that the Extension Order
unambiguously stayed remand or the State Court Action is frivolous.
CONCLUSION
Based on the foregoing, we AFFIRM.
10
