Tammy Phillips v. Kevan Gilman ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 25 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
TAMMY R. PHILLIPS, et al., No. 19-60056
Appellants, BAP No. 18-1100
v.
MEMORANDUM*
KEVAN HARRY GILMAN, et al.,
Appellees.
TAMMY R. PHILLIPS, et al., No. 19-60057
Appellants, BAP No. 18-1101
v.
KEVAN HARRY GILMAN,
Appellee.
TAMMY R. PHILLIPS, et al., No. 19-60058
Appellants, BAP No. 18-1066
v.
KEVAN HARRY GILMAN,
Appellee.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Taylor, Lafferty III, and Spraker, Bankruptcy Judges, Presiding
Submitted November 19, 2020**
Pasadena, California
Before: CALLAHAN and BUMATAY, Circuit Judges, and PRESNELL,***
District Judge.
Tammy R. Phillips and Tammy R. Phillips, A Professional Law Corporation
(Creditors), appeal three Bankruptcy Appellate Panel (BAP) dispositions that
affirm a number of adverse rulings in Bankruptcy Court proceedings of Kevan
Harry Gilman (Debtor): In re Gilman, 2019 WL 3096872 (9th Cir. BAP 2019)
(Gilman I); In re Gilman, 2019 WL 3074607 (9th Cir. BAP 2019) (Gilman II); In
re Gilman, 603 B.R. 437 (9th Cir. BAP 2019) (Gilman III).1 We have jurisdiction
under 28 U.S.C. § 158(d) and affirm all the rulings at issue.
“We review decisions of the BAP de novo, and we apply the same standard
of review to the bankruptcy court’s decision that the BAP applied.” In re Gardens
Reg’l Hosp. & Med. Ctr., Inc., 975 F.3d 926, 937 (9th Cir. 2020). “We review for
**
The panel unanimously concludes these cases are suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Gregory A. Presnell, United States District Judge for
the Middle District of Florida, sitting by designation.
1
Because the parties are familiar with the facts, we restate only those
necessary to explain our decision.
2
an abuse of discretion [a] court’s decision not to sanction [a party] under Rule 37.”
Magnetar Techs. Corp. v. Intamin, Ltd., 801 F.3d 1150, 1155 (9th Cir. 2015). “We
review the denial of sanctions under Bankruptcy Rule 9011 for an abuse of
discretion.” In re Marino, 37 F.3d 1354, 1358 (9th Cir. 1994). For rulings on
motions for sanctions under the Bankruptcy Court’s inherent power to sanction, we
also review for abuse of discretion. See In re Deville, 361 F.3d 539, 547 (9th Cir.
2004).
Under abuse of discretion, we affirm unless the court below “applied the
wrong legal standard or its findings were illogical, implausible or without support
in the record.” TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th Cir.
2011) (citing United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en
banc)). We may affirm “on any basis supported by the record.” United States v.
Gonzalez-Rincon, 36 F.3d 859, 866 (9th Cir. 1994) (citing United States v.
Washington, 969 F.2d 752, 755 (9th Cir. 1992)).
We review issues of statutory construction, such as whether California’s
anti-SLAPP statute applies to affirmative defenses, de novo. See Einstein/Noah
Bagel Corp. v. Smith (In re BCE W., L.P.), 319 F.3d 1166, 1170 (9th Cir. 2003).
We review questions of law concerning entitlement to attorney’s fees de novo, but
review the amount of attorney’s fees awarded for abuse of discretion. PSM
Holding Corp. v. Nat’l Farm Fin. Corp., 884 F.3d 812, 828 (9th Cir. 2018).
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1. Creditors’ challenge to the Bankruptcy Court’s denial of sanctions
under Rule 37 for Debtor’s denials of certain Requests for Admission is not
persuasive. Given Debtor’s medical history and then-ongoing medical evaluations,
Debtor “had a reasonable ground to believe that [he] might prevail on the matter.”
See Fed. R. Civ. P. 37(c)(2)(C). Creditors fail to show that the Bankruptcy Court’s
denial of Rule 37 sanctions was without basis in the record, or illogical or
implausible. See Hinkson, 585 F.3d at 1262.
2. We also find unpersuasive Creditors’ challenge to the Bankruptcy
Court’s denial of sanctions under Rule 9011, 11 U.S.C. § 105(a), and the
Bankruptcy Court’s inherent power to sanction (Rule 9011 Motion), asserting
generally that Debtor and his counsel acted in bad faith in litigating the disability
enhancement. Given the evidence of Debtor’s medical conditions and his
testimony regarding his depression and lack of full-time work, Creditors have not
shown that the Bankruptcy Court’s ruling was without support in the record,
implausible, or illogical. See id.
3. Similarly, Creditors fail to show that the Bankruptcy Court erred in
denying the Rule 9011 Motion as to Debtor’s request for mediation sanctions. The
Bankruptcy Court ordered all parties to appear personally at the mediation, but
Phillips failed to appear, although she was available by telephone. As such,
Phillips failed to follow the Bankruptcy Court’s order. Creditors likewise fail to
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establish that the Bankruptcy Court erred in denying the Rule 9011 sanctions as to
Debtor’s disqualification motion. The Bankruptcy Court recognized that Debtor’s
motion was colorable, because there existed state precedent supporting Debtor’s
position. Thus, the Bankruptcy Court’s finding that Debtor’s requests were not
baseless was not implausible, illogical, or without support in the record. See
Hinkson, 585 F.3d at 1262.
4. Creditors’ objections to the Bankruptcy Court’s award of $2,000 to
Debtor for opposing the Rule 9011 Motion are unavailing. First, “[c]ase law
interpreting Rule 11 is applicable to Rule 9011.” Shalaby v. Mansdorf (In re
Nakhuda), 544 B.R. 886, 899 (9th Cir. BAP 2016) (citing Marsch v. Marsch (In re
Marsch), 36 F.3d 825, 829 (9th Cir. 1994)). Thus, Rule 9011 motions, like Rule
11 motions, “cannot be served after the [lower] court has decided the merits of the
underlying dispute giving rise to the questionable filing.” See Islamic Shura
Council of S. Cal. v. F.B.I., 757 F.3d 870, 873 (9th Cir. 2014).
Second, our subsequent vacation of the 2016 homestead exemption
judgment in 2018 does not change the fact that Creditors untimely filed their Rule
9011 Motion after the Bankruptcy Court had already ruled on “the underlying
dispute[s] giving rise to” the Rule 9011 Motion See id.
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 Third, Creditors’ contention that Debtor’s counsel has not filed a 11 U.S.C.
§ 329 statement fails to show that the Bankruptcy Court lacked discretion to shift
fees from Creditors to Debtor.
Finally, whether Debtor’s counsel may have some conflict issues (not before
this Court) does not establish that the Bankruptcy Court abused its discretion in
shifting fees from Creditors to Debtor, given that Debtor had to expend costs to
oppose the Rule 9011 Motion.
5. Nor do we agree with Creditors’ assertion that the BAP erred in
deferring to the district court’s ruling on the anti-SLAPP appeal because it was not
decided on the merits. The district court rejected the appeal precisely because it
held that the anti-SLAPP statute did not apply to Debtor’s affirmative defense. We
agree with the district court that the plain language of the statute and precedent
make clear that the statute does not apply to affirmative defenses such as Debtor’s
offset defense. The statute applies to a “cause of action” contained in a
“complaint” or a “cross-complaint.” Cal. Code Civ. Proc. § 425.16(b)(1), (h); see
also § 425.16(a) (stating that the purpose of the anti-SLAPP statute is to limit
“lawsuits”); Batzel v. Smith, 333 F.3d 1018, 1025–26 (9th Cir. 2003).
6. Creditors mistakenly contend that California Code of Civil Procedure
§ 685.080’s “two-year” provision limiting fees and costs does not apply to their
§ 685.040 fee motions because § 685.080 is procedural state law. We have
6
specifically held that where a party’s “right to recover post-judgment attorney fees
is dependent on section 685.040, [it is] required to comply with the timeliness
requirements for post-judgment attorney fee motions set forth in the [California
Enforcement of Judgments Law],” which includes § 685.080. Carnes v. Zamani,
488 F.3d 1057, 1061 (9th Cir. 2007). Creditors moved explicitly under § 685.040
for fees in enforcing their state court judgment.
Moreover, the BAP correctly noted that “the time limitations are built into
the statute itself and are more properly read as an element of recovery.” See
Gilman III, 603 B.R. at 443. Creditors have not established that the time limit can
be waived, tolled, or extended here. Creditors mistakenly rely on Highland
Springs Conference & Training Center v. City of Banning, 42 Cal. App. 5th 416
(2019), for the proposition that § 685.080 was tolled until they prevailed in the
Bankruptcy Court. Unlike in Highland, the Bankruptcy Court proceedings here
were not for the purpose of seeking pre-judgment fees incurred in obtaining a
judgment, see id. at 425, but post-judgment fees in enforcing the state court
judgment.
Furthermore, Creditors’ argument that 11 U.S.C. § 108(c) extends the time-
limit in § 685.080 fails. As the BAP correctly explained, § 108(c) does not apply
here because Creditors filed their fee motions in the Bankruptcy Court for fees
7
incurred after Debtor filed his bankruptcy petition. See Gilman III, 603 B.R. at
444–45.
7. While Creditors do not argue that the Bankruptcy Court abused its
discretion in denying any particular category of timely fees, they unpersuasively
assert that the Bankruptcy Court erred in not assessing recoverability at the
“macro” level by looking to the “purpose of the action,” citing Globalist Internet
Technologies, Inc. v. Reda, 167 Cal. App. 4th 1267 (2008). Globalist does not
support Creditors’ contrived “purpose of the action rule,” but rather assumes the
unremarkable proposition that it is within a trial court’s province to assess the
reasonableness of fees. Id. at 1276. Creditors also broadly argue that the
Bankruptcy Court was not specific enough in its fee cut explanations, contending
that a fee request should not be reduced more than ten percent without a more
specific explanation, citing Moreno v. City of Sacramento, 534 F.3d 1106 (9th Cir.
2008). However, the Bankruptcy Court spent six pages in its main case fee ruling
parsing Creditors’ individual fee categories and providing specific reasons for
disallowance, which the BAP further reviewed. See Gilman I, 2019 WL 3096872,
at *6. The Bankruptcy Court spent seven pages in its adversary proceeding fee
ruling reviewing the individual fee categories set forth in Creditors’ fee
application, which the BAP also further reviewed. See Gilman II, 2019 WL
3074607, at *17. Given the lack of specific objections from Creditors and the
8
detailed analyses by the Bankruptcy Court and the BAP, Creditors fail to establish
abuse of discretion in any particular fee disallowance.2
AFFIRMED.
2
Creditors’ requests for judicial notice, Dkt. 48 (Appeal No. 19-60056); Dkt.
39 (Appeal No. 19-60057); Dkt. 42 (Appeal No. 19-60058), are GRANTED.
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