Orange Blossom Ltd. Partnership v. IBT International, Inc. ( 2011 )

FILED
NOT FOR PUBLICATION JAN 27 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
In the Matter of: SOUTHERN No. 09-56292
CALIFORNIA SUNBELT DEVELOPERS,
INC., D.C. No. 8:06-cv-00269-DDP
Debtor,
MEMORANDUM *
ORANGE BLOSSOM LIMITED
PARTNERSHIP; PEAR TREE LIMITED
PARTNERSHIP; BANYAN LIMITED
PARTNERSHIP; DON W. GRAMMER;
TRAILS END LIMITED PARTNERSHIP;
SHOWTHUNDER INC.; BIRCH
INTERNATIONAL LIMITED
PARTNERSHIP; DTG LIMITED
PARTNERSHIP; SLEVIN LIMITED
PARTNERSHIP, THOMAS W.
DRESSLER,
Appellants,
v.
IBT INTERNATIONAL, INC.;
SOUTHERN CALIFORNIA SUNBELT
DEVELOPERS,
Appellees,
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
UNITED STATES TRUSTEE,
Trustee.
In the Matter of: IBT INTERNATIONAL, No. 09-56293
INC.,
D.C. No. 8:06-cv-00276-DDP
Debtor,
DON W. GRAMMER; BANYAN LIMITED
PARTNERSHIP; PEAR TREE LIMITED
PARTNERSHIP; ORANGE BLOSSOM
LIMITED PARTNERSHIP; THOMAS W.
DRESSLER; DTG LIMITED
PARTNERSHIP; SLEVIN LIMITED
PARTNERSHIP; SHOWTHUNDER INC.;
TRAILS END LIMITED PARTNERSHIP;
BIRCH INTERNATIONAL LIMITED
PARTNERSHIP,
Appellants,
v.
IBT INTERNATIONAL, INC.,
Appellee,
and
UNITED STATES TRUSTEE,
Trustee.
Appeal from the United States District Court
for the Central District of California
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Dean D. Pregerson, District Judge, Presiding
Submitted November 17, 2010 **
Pasadena, California
Before: SCHROEDER, FISHER, and N.R. SMITH, Circuit Judges.
This is an appeal from an order of the district court awarding sanctions under
Rule 8020 of the Federal Rules of Bankruptcy Procedure. We have jurisdiction
under 28 U.S.C. § 158(d) and we affirm in part, vacate in part and remand.
1. Given that appellants raised both frivolous and nonfrivolous
arguments, the district court properly awarded partial sanctions, requiring
appellants to pay appellees’ attorney’s fees only with respect to the frivolous
arguments. See Gaskell v. Weir, 10 F.3d 626, 629-30 (9th Cir. 1993). Appellants
offer no authority for the proposition that partial sanctions should not be awarded
unless the court finds that frivolous arguments predominated over nonfrivolous
ones.
2. The district court’s finding that appellants mischaracterized the facts
and the law is not clearly erroneous. Appellants’ numerous claims that two
California state court decisions made findings that Dan Baer looted joint venture
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
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assets are not supported by the record. Appellants also mischaracterized a pair of
Florida decisions setting aside fraudulent conveyances made by Tedder.
3. The district court also properly found that appellants’ challenge to
Judge Smith’s reconsideration of Judge Alberts’ fee order was frivolous. As the
district court explained, appellants “did not raise any legitimate arguments or
support for their appeal of the bankruptcy court’s decision to amend its original
judgment.”
4. The district court’s conclusion that appellants’ punitive damages
argument regarding Planned Parenthood of Columbia/Willamette Inc. v. American
Coalition of Life Activists, 422 F.3d 949, 962 (2005), was frivolous, however, was
in error. Appellants argued that a standalone punitive damages award under 11
U.S.C. § 303(i) would violate due process because the ratio of punitive to actual
damages would be infinite – and thus in excess of the 4:1 or 9:1 ratios suggested
by the Supreme Court in State Farm Mutual Automobile Insurance Co. v.
Campbell, 538 U.S. 408, 425 (2003). The district court concluded that this
argument was frivolous because, in its view, appellants had misstated the holding
of Planned Parenthood. That finding is not supported by the record. Furthermore,
appellants’ novel “infinite ratio” argument, although unpersuasive, was not
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“wholly without merit.” In re George, 322 F.3d 586, 591 (9th Cir. 2003) (per
curiam).
We affirm the district court’s frivolousness findings in most respects. The
district court erred, however, in finding appellants’ punitive damages argument
frivolous. We therefore vacate that portion of the district court’s order and remand
for a recalculation of sanctions accordingly. Each party shall bear its own costs on
appeal.
AFFIRMED IN PART, VACATED IN PART and REMANDED.
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