Simon Rodriguez v. United States Bankruptcy Court for the District of Colorado

FILED
U.S. Bankruptcy Appellate Panel
of the Tenth Circuit
NOT FOR PUBLICATION
January 30, 2019
UNITED STATES BANKRUPTCY APPELLATE PANEL
Blaine F. Bates
OF THE TENTH CIRCUIT Clerk
_________________________________
IN RE LARRY WAYNE PARR, BAP No. CO-18-084
Debtor.
___________________________________
LARRY WAYNE PARR, Bankr. No. 15-14201
Chapter 7
Appellant,
v.
OPINION*
SIMON E. RODRIGUEZ,
Appellee.
_________________________________
Appeal from the United States Bankruptcy Court
for the District of Colorado
_________________________________
Submitted on the briefs.1
_________________________________
Before NUGENT, Chief Judge, CORNISH, and JACOBVITZ, Bankruptcy Judges.
_________________________________
* This unpublished opinion may be cited for its persuasive value, but is not
precedential, except under the doctrines of law of the case, claim preclusion, and issue
preclusion. 10th Cir. BAP L.R. 8026-6.
1 After examining the briefs and appellate record, the Court has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. Bankr. P. 8019(b). The case is therefore submitted without oral
argument.
CORNISH, Bankruptcy Judge.
Pro se Chapter 7 debtor Larry Parr (the “Debtor”) appeals the bankruptcy court’s
order denying his motion to convert his case to Chapter 11. The bankruptcy court
considered the motion as a motion for relief from judgment or order pursuant to Federal
Rule of Civil Procedure 60(b), made applicable by Federal Rule of Bankruptcy Procedure
9024.2 Upon finding the Debtor failed to present any evidence or legal arguments at an
evidentiary hearing, the bankruptcy court concluded the Debtor had not met his burden of
justifying relief pursuant to Civil Rule 60(b) and denied the Debtor’s motion. We
determine the bankruptcy court did not abuse its discretion and affirm.
I. Facts
The Debtor filed an individual petition for relief under Chapter 11 of Title 11 of
the United States Bankruptcy Code on April 21, 2015.3 The Debtor operated a
recreational vehicle storage site on his homestead in Englewood, Colorado called
Arapahoe Storage, Inc. On the petition date, Dennis Parr, the Debtor’s brother, held
unliquidated claims against the Debtor relating to a dispute over their mother’s probate
estate. Dennis Parr obtained relief from the automatic stay to liquidate the probate claims
in state court and ultimately won a judgment in excess of $2,000,000.
2 All references to “Rule” or “Rules” are to the Federal Rules of Bankruptcy
Procedure, unless otherwise indicated. All references to “Civil Rule” or “Civil Rules” are
to the Federal Rules of Civil Procedure, unless otherwise indicated.
3 All future references to “Code,” “Section,” and “§” are to the Bankruptcy Code,
Title 11 of the United States Code, unless otherwise indicated.
2
The United States Trustee and Dennis Parr both filed motions to convert the
Debtor’s case to Chapter 7 in June 2015. The Debtor did not file an objection to either
motion to convert but appeared at a hearing on the motions. The bankruptcy court entered
its order converting the Debtor’s case to Chapter 7 on July 21, 2015 (the “Conversion
Order”).4 The one-page Conversion Order converted the case “for good cause shown.”5
Simon E. Rodriguez was appointed as Chapter 7 trustee on July 23, 2015 (the “Trustee”).
Dennis Parr then filed an adversary complaint against the Debtor seeking to except his
judgment from discharge. The bankruptcy court entered a judgment in favor of Dennis
Parr on May 20, 2016, excepting his $2,080,871.20 judgment from the Debtor’s
discharge.
The Trustee determined the Debtor’s homestead had significant nonexempt equity,
and received court approval to sell the homestead to a neighboring storage business,
Global Storage, LLC. The terms of the sale provided Global Storage, LLC would pay the
estate $1,400,000. After the sale closed, the Trustee filed a report of sale on October 15,
2017. The Debtor, who did not include Schedule C in his original petition, then claimed
his homestead exempt. The Trustee objected to the claim of exemption. Sustaining the
Trustee’s objection, the bankruptcy court denied the Debtor’s homestead exemption
because the property was titled in the name of a revocable living trust instead of the
Debtor.
4 Order Granting Motion to Convert Chapter 11 Case to Chapter 7, in Appellee’s
App. at 84.
5 Id., in Appellee’s App. at 84.
3
The Debtor appealed the denial of his homestead exemption to this Court. The
BAP reversed the bankruptcy court and remanded for a determination of the amount of
the Debtor’s exemption pursuant to Colorado statute.6 The bankruptcy court determined
the Debtor was entitled to a $90,000 homestead exemption, which the Trustee paid.
The Debtor then filed a Verified Demand to Revert Movant’s Chapter 7 to Chapter
11 Due to Order Doc#:126 Being Void of Law (the “Motion”) on April 13, 2018. In the
Motion, the Debtor argued the bankruptcy court lacked authority to convert the case
pursuant to § 1112(c); movant Dennis Parr lacked standing to request conversion to
Chapter 7; and conversion to Chapter 7 deprived the Debtor of his sole means of income.
The Debtor also argued the United States Trustee and Dennis Parr orchestrated a fraud on
the bankruptcy court and the prospective application of the Conversion Order was no
longer equitable. The Debtor sought relief pursuant to Civil Rule 60 and requested the
case be “reinstated to its original CHAPTER 11 Status and allowed to proceed as
originally intended.”7
The Trustee, Global Storage, LLC, and Dennis Parr objected to the Motion. The
bankruptcy court conducted an evidentiary hearing on the Motion on July 25, 2018. The
Debtor, the Trustee, and counsel for Global Storage, LLC and Dennis Parr were present.
The Debtor did not present any evidence and waived the opportunity to present legal
arguments at the hearing. The Debtor explained, “the court documents that I’ve been
6 In re Parr, No. CO-17-021, 2018 WL 564572 (10th Cir. BAP Jan. 26, 2018).
7 Motion at 24, in Appellant’s App. at 32.
4
filing for the last year . . . speak for me personally, and I have no further comment.”8
When called as a witness by the Trustee, the Debtor refused to testify. The Trustee
testified, indicating he had sold the Debtor’s homestead for $1,400,000, sent the Debtor a
$90,000 check for his homestead exemption,9 and approximately $1,075,000 remained in
the estate. The Trustee testified all that remained before filing his final report and closing
the case was the filing of professional fee applications and filing the estate’s final tax
return.
Although the Debtor captioned it as a “Demand to Revert Movant’s Chapter 7 to
Chapter 11 Due to Order Doc #126 Being Void of Law,” the Motion contained
arguments seeking relief under Civil Rule 60(b) and (d), leading the bankruptcy court to
construe it as a motion for relief from judgment or order under Civil Rule 60.10 The
bankruptcy court entered the Order Denying Verified Demand to Revert Movant’s
Chapter 7 to Chapter 11 Due to Order Doc #126 Being Void of Law (the “Order Denying
Motion to Convert”) and Judgment on August 2, 2018. The bankruptcy court found the
Debtor failed to serve any exhibits on the objecting parties and declined to prosecute his
claims at the evidentiary hearing. Concluding Civil Rule 60(b) placed the burden to prove
the grounds for relief from an order or judgment on the Debtor, the bankruptcy court
found the Debtor failed to carry his burden. Specifically, the bankruptcy court found that
8 Tr. July 25, 2018 Hearing at 5, in Appellant’s App. at 66.
9 The Trustee indicated the Debtor had yet to cash the check. Tr. July 25, 2018
Hearing at 7, in Appellant’s App. at 68.
10 Made applicable to bankruptcy cases by Fed. R. Bankr. P. 9024.
5
although the Debtor’s pleadings in the matter were “verified,” they contained “classic
hearsay” and provided the court with no admissible evidence.11 Furthermore, the
bankruptcy court concluded it had no duty “to scour the file to determine which facts or
legal theories [the Debtor] relie[d] upon.”12 Accordingly, the bankruptcy court denied the
Motion for failure to prosecute. The Debtor appealed that Order Denying Motion to
Convert and the related Judgment to this Court on August 16, 2018.
II. Jurisdiction and Standard of Review
“With the consent of the parties, this Court has jurisdiction to hear timely-filed
appeals from ‘final judgments, orders, and decrees’ of bankruptcy courts within the Tenth
Circuit.”13 An order denying a motion brought pursuant to Civil Rule 60(b) is final for the
purposes of appellate review.14 No party elected for this appeal to be heard by the United
11 Order Denying Motion to Convert at 3, BAP ECF No. 1.
12 Id.
13 Straight v. Wyo. Dep’t of Trans. (In re Straight), 248 B.R. 403, 409 (10th Cir.
BAP 2000) (first quoting 28 U.S.C. § 158(a)(1), and then citing 28 U.S.C. § 158(b)(1),
(c)(1) and Fed. R. Bankr. P. 8002).
14 Mason v. Young (In re Young), 237 B.R. 791, 795 (10th Cir. BAP 1999); Apogee
Robotics, Inc. v. Foss Realty, Inc. (In re Apogee Robotics, Inc.), No. 97-1106, 1998 WL
85384, at *3 (10th Cir. Feb. 27, 1998).
6
States District Court pursuant to 28 U.S.C. § 158(c). Accordingly, this Court has
jurisdiction over this appeal.
An order denying a motion pursuant to Civil Rule 60(b) is reviewed for abuse of
discretion.15 An order denying a motion for failure to prosecute is also reviewed for abuse
of discretion.16 “Under the abuse of discretion standard: ‘a trial court’s decision will not
be disturbed unless the appellate court has a definite and firm conviction that the lower
court made a clear error of judgment or exceeded the bounds of permissible choice in the
circumstances.’”17 Abuse of discretion occurs when a trial court “makes an ‘arbitrary,
capricious or whimsical,’ or ‘manifestly unreasonable judgment.’”18 “A clear example of
an abuse of discretion exists where the trial court fails to consider the applicable legal
standard or the facts upon which the exercise of its discretionary judgment is based.”19
To the extent the bankruptcy court erred in determining the correct legal standard,
that conclusion is reviewed de novo.20 To the extent the bankruptcy court erred in making
15 Jackson v. Los Lunas Cmty. Program, 880 F.3d 1176, 1191 (10th Cir. 2018)
(citing Servants of Paraclete v. Does, 204 F.3d 1005, 1009 (10th Cir. 2000)).
16 Adams v. Wiley, 298 F. App’x 767, 768 (10th Cir. 2008).
17 In re Arenas, 535 B.R. 845, 849 (10th Cir. BAP 2015) (quoting Moothart v. Bell,
21 F.2d 1499, 1504 (10th Cir. 1994)).
18 Id. (quoting Moothart, 21 F.2d at 1504-05).
19 Jackson, 880 F.3d at 1191 (quoting Ohlander v. Larson, 114 F.3d 1531, 1537
(10th Cir. 1997)).
20 DSC Nat’l Props., LLC v. Johnson (In re Johnson), 477 B.R. 156, 168 (10th Cir.
BAP 2012) (concluding bankruptcy court’s determination of legal standard is reviewed
de novo (quoting Sender v. Johnson (In re Hedged-Invs. Assocs., Inc.), 84 F.3d 1267,
1268 (10th Cir. 1996))).
7
factual findings on which the decision to deny relief is based, those findings are reviewed
for clear error.21
III. Analysis
The Debtor titled the Motion as a motion to convert the case to Chapter 11 but
sought relief from the Conversion Order pursuant to Civil Rule 60(b). “In determining
whether a bankruptcy court abused its discretion, the Court ‘must be mindful that relief
under Rule 60(b) is extraordinary and may only be granted in exceptional
circumstances.’”22 A decision should only be reversed if the Court finds “a complete
absence of a reasonable basis and [is] certain that the [bankruptcy court’s] decision is
wrong.”23 A Civil Rule 60(b) motion is an “inappropriate vehicle[] to reargue an issue
previously addressed by the court when the motion merely advances new arguments, or
supporting facts which were available at the time of the original motion.”24 It is well
established that “a 60(b) motion cannot be used as a substitute for appeal.”25 An appellate
court reviews the appeal of a ruling on a Civil Rule 60(b) motion “only for abuse of
21 Id.
22 Sender v. Shifrin (In re Shifrin), No. CO-17-012, 2017 WL 4161897, at *3 (10th
Cir. BAP Sept. 20, 2017) (quoting In re Karbel, 220 B.R. 108, 113 (10th Cir. BAP
1998)).
23 Id. (quoting Karbel, 220 B.R. at 113).
24 Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000).
25 Morris v. Adams-Millis Corp., 758 F.2d 1352, 1357 (10th Cir. 1985) (first citing
Cessna Fin. Corp. v. Bielenberg Masonry Contracting, Inc., 715 F.2d 1442, 1444 (10th
Cir. 1983); and then citing Brown v. McCormick, 608 F.2d 410, 413 (10th Cir. 1979)).
8
discretion [as] an appeal from denial of Rule 60(b) relief does not bring up the underlying
judgment for review.”26
In his brief, the Debtor contests the conversion of his bankruptcy case from
Chapter 11 to Chapter 7 in addition to arguing the bankruptcy court erred in its
application of Civil Rule 60(b)(3)-(5). While we construe the pro se Debtor’s arguments
“liberally and [hold them] to a less stringent standard than formal pleadings drafted by
lawyers,”27 we must confine our review to the Order Denying Motion to Convert and will
not consider whether the underlying Conversion Order was correctly decided.
a. Civil Rule 60 Relief
Relief pursuant to Civil Rule 60(b)(3)and 60(d)(3)
In the Motion, the Debtor argued the Conversion Order resulted from fraud,
misrepresentation, and “fraud on the court.”28 However, in the numerous arguments
raised by the Debtor it is unclear whether he sought relief pursuant to Civil Rule 60(b)(3)
(for fraud), Civil Rule 60(d)(3) (for fraud on the court), or both.
A motion pursuant to Civil Rule 60(b)(3) must be brought “no more than a year
after the entry of the judgment or order.”29 Rule 9006(b) prevents the bankruptcy court
26 Id. (quoting Browder v. Dir., Dep’t of Corr. of Ill., 434 U.S. 257, 263 n.7 (1978)).
27 Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991) (citing Haines v. Kerner,
404 U.S. 519, 520-21 (1972)).
28 Motion at 19, 21, in Appellant’s App. at 27, 29.
29 Fed. R. Civ. P. 60(c)(1).
9
from enlarging the one-year period to file a Civil Rule 60(b)(3) motion.30 The bankruptcy
court did not address the timeliness of the Motion but found the Debtor failed to present
any evidence at the hearing. The transcript of the evidentiary hearing supports this
finding, revealing the Debtor declined to present evidence or arguments. In addition, the
Debtor’s motion was not filed within one year of entry of the Conversion Order and the
bankruptcy court lacked discretion to extend the time to file such a motion pursuant to
Rule 9006(b).
Furthermore, to the extent the Debtor argues a fraud on the court requires relief
pursuant to Civil Rule 60(d)(3), the Debtor failed to introduce any evidence of such
fraud. Accordingly, the bankruptcy court’s denial of relief under Civil Rule 60(b)(3) and
(d)(3) for failure to prosecute was proper and not an abuse of discretion.
Relief pursuant to Civil Rule 60(b)(4)
The Debtor’s argument that the Conversion Order is void pursuant to Civil Rule
60(b)(4) relies on three theories: (1) that the bankruptcy court lacked authority and
jurisdiction to convert the case based on § 1112(c); (2) that Dennis Parr’s debt was a
postpetition debt, depriving him of standing to seek conversion of the case; and (3) the
Conversion Order resulted in violation of Colorado homestead law.
The Debtor argues the bankruptcy court lacked jurisdiction to convert his case,
rendering the Conversion Order void. It is well-established that bankruptcy courts have
30 Fed. R. Bankr. P. 9006(b)(2) (“The court may not enlarge the time for taking
action under Rule[] . . . 9024.”; In re Onyeabor, No. UT-14-047, 2015 WL 1726692, at
*4 (10th Cir. BAP Apr. 15, 2015).
10
jurisdiction over all civil proceedings arising under the Bankruptcy Code.31 The
Conversion Order granted relief pursuant to § 1112, which conferred jurisdiction in the
bankruptcy court.32 Accordingly, this argument must fail.
The Debtor’s argument that the bankruptcy court lacked authority to convert the
case pursuant to § 1112(c) misinterprets the statute. Section 1112(c) provides “[t]he court
may not convert a case . . . if the debtor is a farmer or a corporation that is not a
moneyed, business, or commercial corporation, unless the debtor requests such
conversion.”33 The Debtor asserts the bankruptcy court could not convert the bankruptcy
case without his consent absent proof the Debtor was “a moneyed corporation or [a]
moneyed business.”34 However, the Debtor does not argue he is a farmer or that he is not
a moneyed, business, or commercial corporation and if he did, neither argument would be
supported by the record. The Debtor’s petition indicates he is an “Individual.”35 The
Bankruptcy Code defines “corporation” to include only artificial entities, not
31 28 U.S.C. § 1334(b) (“[T]he district courts shall have original but not exclusive
jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases
under title 11.”); 28 U.S.C.§ 157 (referring cases under title 11 to bankruptcy courts).
32 In re Lacy, 304 B.R. 439, 444 (D. Colo. 2004) (concluding bankruptcy court had
jurisdiction under 28 U.S.C. § 1334 and 28 U.S.C. § 157 and authority under 11 U.S.C.
§ 1112).
33 11 U.S.C. § 1112(c). The committee notes indicate subsection (c) applies to cases
concerning a farmer or an eleemosynary institution.
34 Appellant’s Br. 17.
35 Voluntary Petition, Case No. 15-14201, Bankruptcy ECF No. 2.
11
individuals.36 Furthermore, in order to be classified as a farmer, eighty percent of a
person’s income must be derived from a farming operation.37 As there is no evidence in
the record to support finding the Debtor is a farmer or not a moneyed, business, or
commercial corporation, § 1112(c) does not apply.
The Debtor argues his brother, Dennis Parr, lacked standing to seek conversion of
the case because his claim against the Debtor arose postpetition. The Bankruptcy Code
defines a claim as a “right to payment, whether or not such right is reduced to judgment,
liquidated, [or] unliquidated.”38 The record indicates Dennis Parr’s probate claims arose
from a state court complaint heard prepetition on April 6, 2015.39 After the petition date,
the bankruptcy court entered an order granting Dennis Parr’s motion for relief from stay
to proceed with the state court complaint.40 The state court then liquidated Dennis Parr’s
prepetition claim by entering a judgment postpetition.41 Although the judgment was
entered postpetition, the claim that was reduced to judgment arose prior to
36 11 U.S.C. § 101(9).
37 11 U.S.C. § 101(20).
38 11 U.S.C. § 101(5)(A).
39 Order Denying Defendant’s Motion to Set Aside Default and Granting Plaintiff’s
Motion for Default Judgment at 2, in Appellee’s App. at 106.
40 Bankruptcy ECF No. 173, in Appellee’s App. at 29.
41 Lacking any evidence to suggest Dennis Parr’s claim arose postpetition the
Trustee saw no cause to object to the claim. Tr. July 25, 2018 Hearing at 43, in
Appellant’s App. at 104 (“[T]here’s no basis for . . . even asserting that Dennis Parr’s
claim arose post-petition.”).
12
commencement of the bankruptcy case and therefore is a prepetition claim. Accordingly,
the record supports the conclusion Dennis Parr had standing to request conversion.
Finally, the Debtor argues the Conversion Order is void “because it allowed and
created a series of Colorado Law violations” namely resulting in the sale of the Debtor’s
homestead.42 The Debtor asserts his right to a homestead exemption under Colorado law
precluded levy and execution by creditors. However, the Colorado homestead exemption
the Debtor references does not exempt the Debtor’s entire homestead, it only exempts a
statutory amount of equity in the homestead.43 The bankruptcy court ordered the statutory
amount be paid. The Debtor exhausted his appellate rights of the bankruptcy court’s
orders allowing the sale of the homestead and valuing the homestead exemption. Those
orders are now final.44 Furthermore, the Debtor admits the Arapahoe County Court
entered a judgment against him in a forcible entry and detainer eviction proceeding in
May 2017.45 The Rooker-Feldman doctrine prevents the bankruptcy court from revisiting
42 Appellant’s Br. 5.
43 Colo. Rev. Stat. § 38-41-201 (2007) (authorizing an elderly owner to exempt up to
$90,000 in a homestead as of the Debtor’s petition date)
44 The Debtor appealed the order allowing the sale and the order denying his
homestead exemption to the BAP. The BAP dismissed the appeal of the order allowing
sale for lack of standing, and the Tenth Circuit affirmed. In re Parr, 732 F. App’x 714
(10th Cir. 2018). The BAP reversed and remanded the order denying the Debtor’s
homestead exemption, ordering the bankruptcy court to determine the amount of the
exemption. In re Parr, No. CO-17-021, 2018 WL 564572 (10th Cir. BAP Jan. 26, 2018).
45 History of the Parr Family at 10, in Appellant’s App. at 137.
13
the state court’s final determination.46 As such, even if the Debtor had presented evidence
and argument on the homestead issue, such arguments were not viable. Accordingly, the
bankruptcy court did not abuse its discretion in determining the Debtor failed to
prosecute the Motion based on his homestead argument.
Relief pursuant to Civil Rule 60(b)(5)
Finally, the Debtor seeks relief from the Conversion Order pursuant to Civil Rule
60(b)(5), arguing when the Conversion Order is applied prospectively, it is no longer
equitable. The Debtor suggests that the ultimate sale of his homestead resulted in his loss
of his home, business, and source of income. We interpret this argument as another
attempt to seek relief from the bankruptcy court’s orders on the homestead exemption
and sale and the Colorado court’s eviction. We will not consider this argument because
the bankruptcy court’s homestead and sale orders are now final and the Rooker-Feldman
doctrine prevented the bankruptcy court from revisiting the state court’s orders.
b. Remaining Arguments47
46 In re Miller, 666 F.3d 1255, 1261 (10th Cir. 2012) (“The Rooker–Feldman
doctrine precludes a losing party in state court who complains of injury caused by the
state-court judgment from bringing a case seeking review and rejection of that judgment
in federal court.” (citing Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280,
291-92 (2005))).
47 We note the bankruptcy court denied the Motion for failure to prosecute without
considering the legal arguments related to jurisdiction and the application of the
Bankruptcy Code raised by the Debtor in his pleadings. The Debtor did not raise the issue
of the bankruptcy court’s failure to address adequately pleaded legal arguments in his
brief and has waived that issue. Therrien v. Target Corp., 617 F.3d 1242, 1252-53 (10th
Cir. 2010) (holding failure to raise an argument sufficiently in the opening brief waives
that argument). Furthermore, this Court’s review suggests the legal arguments lacked
14
In addition to the arguments made pursuant to Civil Rule 60, the Debtor argues the
bankruptcy court erred by failing to reconsider the Conversion Order sua sponte and in
conducting an evidentiary hearing on the Motion. The Debtor argues Judge Rosania erred
in failing to review the prior bankruptcy judge’s orders upon reassignment of the case.
Civil Rule 60 authorizes a court to make corrections to an order or judgment based on
clerical mistakes “on motion or on its own.”48 Otherwise, Civil Rule 60(b) states relief
from an order or judgment must be requested “[o]n motion and just terms.”49 Despite this,
appellate courts routinely conclude a trial court may grant such relief sua sponte so long
as the court provides notice satisfying due process requirements.50 However, a court is
not required to grant Civil Rule 60 relief. Whether to grant Civil Rule 60 relief is within
the court’s discretion. Further, the record on appeal does not show that anything was
brought to the bankruptcy court’s attention prior to the Debtor’s filing of the Motion that
would prompt the court to review the prior judge’s Conversion Order under Civil Rule
merit, rendering any error harmless. See Fed. R. Bankr. P. 9005 (applying Fed. R. Civ. P.
61).
48 Fed. R. Civ. P. 60(a).
49 Fed. R. Civ. P. 60(b).
50 Fort Knox Music Inc. v. Baptiste, 257 F.3d 108, 111 (2d Cir. 2001) (concluding on
remand, district court had authority to vacate original judgment sua sponte); Kingvision
Pay-Per-View Ltd. v. Lake Alice Bar, 168 F.3d 347, 352 (9th Cir. 1999) (reversing sua
sponte vacation of prior order where parties not provided with notice); Fed. R. Civ. P.
60(d)(3) (stating the court may set aside a judgment for fraud on the court); see also
Kupferman v. Consolidated Research & Mfg. Corp., 459 F.2d 1072, 1074, n.1 (2d Cir.
1972) (concluding court could sua sponte vacate a judgment upon a finding of fraud).
15
60. Accordingly, we see no error in the bankruptcy court’s failure to revisit the prior
judge’s rulings upon reassignment of the case.
The Debtor also argues the bankruptcy court erred in holding an evidentiary
hearing on the Motion. Civil Rule 60 does not require the bankruptcy court to conduct a
hearing on a motion for relief from a judgment or order.51 However, the bankruptcy court
noted the Debtor sought relief from the Conversion Order based on theories that the order
was no longer equitable and was based on “fraud on the court.”52 The Tenth Circuit has
held that a “party seeking [equitable] relief bears the burden of establishing that changed
circumstances warrant relief.”53 Similarly, “[p]roof of fraud upon the court must be by
clear and convincing evidence.”54 As such, the bankruptcy court properly held a hearing
“so [the Debtor] would have his ‘day in court’ to establish his factual allegations of fraud
or other equitable grounds to obtain relief from the [Conversion Order].”55
51 Scott v. Weaver, 736 F. App’x 715, 719 (10th Cir. 2018) (concluding district court
did not abuse its discretion in summarily denying Civil Rule 60(b) motion); Jones v.
Theodoroff, 104 F. App’x 141, 145 (10th Cir. 2004) (concluding district court did not
abuse its discretion in denying Civil Rule 60(b) motion without a hearing) (citing Steele
v. Fed. Bureau of Prisons, 355 F.3d 1204, 1214 (10th Cir. 2003)).
52 Motion at 18-19, in Appellant’s App. at 26-27.
53 Horne v. Flores, 557 U.S. 433, 447 (2009) (citing Rufo v. Inmates of Suffolk Cty.
Jail, 502 U.S. 367, 383 (1992)).
54 United States v. Buck, 281 F.3d 1336, 1342 (10th Cir. 2002) (citing Weese v.
Schukman, 98 F.3d 542, 552 (10th Cir. 1996)).
55 Order Denying Motion to Convert at 2, in BAP ECF No. 1.
16
While in some cases a verified pleading may be treated as an affidavit, the
affidavit must be made on personal knowledge, set forth facts that would be admissible as
evidence, and indicate the affiant is willing to testify to the matters described in the
affidavit.56 A court “need not treat a verified complaint as an affidavit if ‘the allegations
contained in the pleading are merely conclusory.’”57 As the Debtor refused to argue or
testify at the evidentiary hearing, we see no error in the bankruptcy court’s decision not to
consider the verified pleading as evidence. Furthermore, as we take judicial notice of the
number of appeals stemming from the Debtor’s bankruptcy case, we believe the
bankruptcy court prudently sought to establish a sufficient record in the event of an
appeal.58 Accordingly, the bankruptcy court did not abuse its discretion by conducting a
hearing on the Motion.
IV. Conclusion
The conversion of the bankruptcy case set in motion the liquidation of the
Debtor’s estate. The Debtor sought relief from the order converting his case based on
fraud and equitable grounds. However, the Debtor failed to introduce any evidence or
make any argument to support his allegations, leaving the bankruptcy court with no
choice but to deny the Motion. Accordingly, as we hold the bankruptcy court did not
56 Fed. R. Civ. P 56(c)(4), made applicable by Fed. R. Bankr. P. 7056.
57 Lantec, Inc. v. Novell, Inc., 306 F.3d 1003, 1019 (10th Cir. 2002) (quoting
Conaway v. Smith, 853 F.2d 789, 793 (10th Cir. 1988)).
58 BAP Case Nos. CO-15-022, 17-018, 17-019, 17-021, and 18-084. See St. Louis
Baptist Temple, Inc. v. Fed. Deposit Ins. Corp., 605 F.2d 1169, 1172 (10th Cir. 1979
(explaining a court may sua sponte take judicial notice of its own records and files which
are part of its public records (citing 29 Am. Jur. 2d Evidence, § 85)).
17
abuse its discretion in denying the Motion, the bankruptcy court’s decision is
AFFIRMED.
18