In re: Stephen Lee Beck and Donita M. Beck

FILED
FEB 01 2016
1 NOT FOR PUBLICATION
SUSAN M. SPRAUL, CLERK
2 U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
4 OF THE NINTH CIRCUIT
5 In re: ) BAP No. NC-15-1095-JuKuW
)
6 STEPHEN LEE BECK and DONITA M.) Bk. No. 11-54179-MEH
BECK, )
7 )
Debtors. )
8 ______________________________)
)
9 STEPHEN LEE BECK; DONITA M. )
BECK, )
10 )
Appellants, )
11 )
v. ) M E M O R A N D U M*
12 )
WELLS FARGO HOME MORTGAGE,** )
13 )
Appellee. )
14 ______________________________)
15 Argued and Submitted on January 21, 2016
at San Francisco, California
16
Filed - February 1, 2016
17
Appeal from the United States Bankruptcy Court
18 for the Northern District of California
19 Honorable M. Elaine Hammond, Bankruptcy Judge, Presiding
_________________________
20
Appearances: John G. Downing argued for appellants
21 Stephen Lee Beck and Donita M. Beck.
_________________________
22
23
24
25 *
This disposition is not appropriate for publication.
26 Although it may be cited for whatever persuasive value it may
have (see Fed. R. App. P. 32.1), it has no precedential value.
27 See 9th Cir. BAP Rule 8024-1.
28 **
Wells Fargo Bank did not participate in this appeal.
-1-
1 Before: JURY, KURTZ, and WANSLEE,*** Bankruptcy Judges.
2 Debtors Stephen Lee Beck and Donita M. Beck (Debtors) filed
3 a motion under Rule 3012 seeking to value their real property
4 under § 506(a) and (d) (Valuation Motion) prior to confirming
5 their fourth amended chapter 131 plan (FAP). Their plan treated
6 the second deed of trust held by Wells Fargo Bank, N.A. (Wells)
7 against their property as unsecured.
8 In the notice accompanying the Valuation Motion, Debtors
9 identified (1) Wells as the creditor with a second deed of trust
10 on their property; (2) the address of their property; (3) the
11 underlying loan number associated with the security; and (4) the
12 amount of the debt. They also stated that there was a lack of
13 equity in the property based on Stephen Beck’s opinion that the
14 value of the property was less than the sum owed to the creditor
15 who held the first deed of trust. While the Valuation Motion
16 reiterated this information, instead of referring to Wells’
17 current deed of trust which was recorded against their property
18 in 2004, Debtors mistakenly referred to a deed of trust recorded
19 in 2002 by Wells which had been reconveyed. The bankruptcy
20 court granted their Valuation Motion and the subsequent order
21 (Valuation Order) again listed the deed of trust recorded in
22 2002.
23
24 ***
Hon. Madeleine C. Wanslee, United States Bankruptcy Judge
for the District of Arizona, sitting by designation.
25
1
26 Unless otherwise indicated, all chapter and section
references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
27 “Rule” references are to the Federal Rules of Bankruptcy
Procedure and “Civil Rule” references are to the Federal Rules of
28 Civil Procedure.
-2-
1 The bankruptcy court then confirmed their FAP, which
2 treated Wells as an unsecured creditor. Having filed a proof of
3 claim (POC), Wells received over $20,000 in distributions as an
4 unsecured creditor over the course of Debtors’ plan. After
5 completing their plan payments, Debtors sought a judgment
6 voiding Wells’ lien. Although served with the Valuation Motion,
7 the Valuation Order, the plan and amended plans, and Debtors’
8 request for a judgment voiding its lien, Wells failed to
9 respond.
10 After Debtors realized that they had mistakenly referenced
11 the 2002 deed of trust as opposed to the 2004 deed of trust in
12 the Valuation Order, they filed a motion to correct it (Motion
13 to Correct) and again sought a judgment avoiding Wells’ lien.
14 Wells did not respond or appear at the hearing. The bankruptcy
15 court denied the motion, finding that relief under Civil
16 Rule 60(b)(1) was not available since the motion had been
17 brought more than one year after the Valuation Order was
18 entered. The court further found there was no mistake as
19 defined by case law since the information regarding Wells’ deed
20 of trust was readily available from the public records.
21 Although Debtors’ Motion to Correct and request for judgment was
22 uncontested, the court declined to grant the motion on the basis
23 that Wells had not received adequate notice that Debtors
24 intended to strip its lien associated with the 2004 deed of
25 trust.
26 Debtors appeal from the bankruptcy court’s order denying
27 their Motion to Correct and request for judgment voiding lien.
28 For the reasons stated below, we REVERSE the bankruptcy court’s
-3-
1 determination that Wells' due process rights were violated,
2 VACATE the order denying the Motion to Correct, and REMAND this
3 matter to the bankruptcy court for further proceedings
4 consistent with this memorandum.
5 I. FACTS
6 On June 27, 2002, Debtors obtained a home equity loan from
7 Wells. The underlying note was secured by a second deed of
8 trust which was recorded on July 3, 2002, as Instrument Number
9 2002-0010687 (2002 Deed of Trust). On September 15, 2004, the
10 2002 Deed of Trust was reconveyed to Debtors.
11 On July 27, 2004, Stephen Beck executed a promissory note
12 for $97,000 in favor of Wachovia Bank of Delaware, N.A.
13 (Wachovia). The note was secured by a second deed of trust
14 against Debtors’ property located at 901 Freedom Drive,
15 Hollister, California (Property). The deed of trust was
16 recorded on August 3, 2004, as Instrument Number 2004-0013967
17 (2004 Deed of Trust). At some point, Wells became the successor
18 by merger to Wachovia. Its records identified Debtors’ loan by
19 a loan number ending in 6995.
20 On April 30, 2011, Debtors filed a chapter 13 petition.
21 One of their assets was their Property. Debtors filed their
22 chapter 13 plan with the petition and both were served on Wells
23 at 3476 Stateview, Fort Mill, South Carolina 29715 (South
24 Carolina Address). Among other things, the plan provided:
25 Debtors will file a motion to value lien of Wells
Fargo (loan ending in 6995), currently secured by a
26 2nd deed of trust on Debtor’s [sic] residence, and
seek treatment of that lien was [sic] completely
27 unsecured.
28 On June 2, 2011, Debtors filed the Valuation Motion. In
-4-
1 the notice, Debtors stated the address of the Property, named
2 Wells as the creditor, and valued the Property at $270,500,
3 which was less than the approximately $296,900 owed on their
4 first mortgage. Based on this value, Debtors asserted in the
5 notice that “0.00 of the Wells Fargo loan . . . ending in 6995
6 and secured by a second deed of trust against the Residence is
7 secured.” The accompanying motion reiterated this information,
8 but also stated:
9 There is also a home equity loan (number ending in
6995) made by Wells Fargo Bank (the “2nd Loan”). The
10 home equity loan is secured by a Short Form Deed of
Trust, recorded against the Residence on July 3, 2002
11 as Instrument Number 2002-0010687 in the Official
Public Records of San Benito County. Based on a claim
12 submitted by Wells Fargo Bank, there was $90,376.00
owed pursuant to that second deed of trust.
13
14 Debtors supported the motion with the declaration of Stephen
15 Beck who opined that the value of the Property was $270,500 and
16 reiterated the paragraph above.
17 Debtors served the notice and motion on Wells by regular
18 mail at the South Carolina Address and by certified mail
19 addressed to Stanley Stoup, General Counsel, Wells Fargo &
20 Company, 420 Montgomery Street, San Francisco, CA 94104 (San
21 Francisco Address) and Wells Fargo c/o CSC Lawyers Incorporating
22 Service, 2730 Gateway Oaks Dr., Ste. 100, Sacramento, CA 95833
23 (Sacramento Address). Wells did not respond to the motion.
24 On August 2, 2011, Debtors filed a second notice of
25 opportunity for hearing re the Valuation Motion. The notice
26 again referenced the address of the Property, the asserted value
27 of $270,000 which was less than what was owed on the first deed
28 of trust, and the loan ending in 6995. Debtors again asserted
-5-
1 that Wells’ second deed of trust was wholly unsecured. This
2 notice was served on Wells at the three addresses set forth
3 above. Again, Wells did not respond.
4 On August 17, 2011, Wells filed POC 3-1. The POC asserted
5 a secured claim in the amount of $98,809.30 and referenced the
6 loan number “708xxxxxx6995.” Attached as Exhibit “A” was an
7 itemization of the total debt and arrearages as of the time of
8 the filing. This itemization stated that the principal balance
9 as of the petition date (April 30, 2011) was $90,376.22, and
10 listed late charges as $262.45 and accrued interest of
11 $8,170.06. No arrearages were listed on the face of the POC.
12 Also attached to the POC was the 2004 Deed of Trust and the
13 promissory note dated July 27, 2004.
14 On March 27, 2012, Debtors filed a third amended plan which
15 stated:
16 Debtors have file [sic] a motion to value lien of
Wells Fargo (loan ending in 6995), currently secured
17 by a 2nd deed of trust on Debtor’s [sic] residence,
and seek treatment of that lien as completely
18 unsecured. Wells Fargo shall receive payment pursuant
to Class 2(d) above.
19
20 The third amended plan provided that the unsecured creditors in
21 Class 2(d) would receive twenty cents on the dollar. Debtors
22 served Wells with the third amended plan at the South Carolina
23 Address. Wells did not object to the third amended plan.
24 On April 23, 2012, Debtors filed the FAP which contained
25 the identical provision stated above. The plan, as amended,
26 further stated: “Notwithstanding section 2(d) above, general
27 unsecured creditors shall receive a minimum of $20,140.85.” The
28 plan did not provide for Debtors to make any direct payments to
-6-
1 Wells. Debtors served Wells with the FAP at the South Carolina
2 Address. Wells did not object.
3 The bankruptcy court granted Debtors’ Valuation Motion by
4 order dated May 2, 2012. The Valuation Order referred to the
5 2002 Deed of Trust and further stated:
6 The court finds that notice of the motion upon [Wells]
was proper. . . [Wells] having failed to file timely
7 opposition to Debtors’ motion, the court hereby orders
as follows:
8
(1) For purposes of Debtors’ Chapter 13 plan only, the
9 Lien is valued at zero. Wells Fargo Bank[], does not
have a secured claim, and the Lien may not be
10 enforced, pursuant to 11 U.S.C. §§ 506, 1322(b)(2) and
1327.
11
(2) This order shall become part of Debtors’ confirmed
12 Chapter 13 plan.
13 Debtors served Wells with the order by regular mail at the
14 South Carolina Address and by certified mail to Stanley Stroup,
15 General Counsel, Wells Fargo Bank, N.A., 101 N. Phillips Avenue,
16 Sioux Falls, South Dakota 57104 (South Dakota Address)2 and to
17 Wells at the Sacramento Address.
18 On June 5, 2012, the bankruptcy court confirmed the FAP.
19 Debtors elected to have property of the estate revest in Debtors
20 upon plan confirmation.
21 On October 17, 2014, the chapter 13 trustee filed her Final
22 Report and Account which stated that payments of $20,038.63 were
23 made to Wells on its unsecured claim.
24 On October 20, 2014, Debtors filed their application for
25 voiding lien. There, Debtors sought a judgment stating that the
26
2
27 The South Dakota Address used for Stanley Stroup was
different from the San Francisco Address that was used previously
28 for service.
-7-
1 2004 Deed of Trust listing Wells as a beneficiary was “for all
2 purposes void and unenforceable.” Debtors served the
3 application and accompanying declaration on Wells by regular
4 mail at Wells Fargo Home Mortgage, 1 Home Campus, MAC
5 #X2302-04C, Des Moines, IA 50328 (Iowa Address),3 and by
6 certified mail to Stanley Stroup at the South Dakota Address and
7 to Wells at the Sacramento Address. Wells did not respond.
8 At some point, Debtors discovered that they had mistakenly
9 referred to the 2002 Deed of Trust in the Valuation Motion and
10 Valuation Order. Accordingly, on February 12, 2015, Debtors
11 filed the Motion to Correct and again requested a judgment
12 voiding lien. Through the Motion to Correct, Debtors sought to
13 have the Valuation Order reflect that the lien affected by the
14 valuation was the 2004 Deed of Trust. The Motion to Correct was
15 based on Rule 9024, which incorporates Civil Rule 60(a),
16 Rule 3012, and the bankruptcy court’s Guidelines for Valuing and
17 Avoiding Liens in Chapter 11 and Chapter 13 cases.4
18
19
3
This address was listed on Wells’ POC as the address where
20 payment should be sent.
21 4
The guidelines require the debtor to file a separate
motion to obtain valuation of a secured creditor’s claim. The
22
motion must be served upon the affected lienholder in accordance
23 with Bankruptcy Local Rule (BLR) 9014-1(b) & (c) and in the
manner required by the Rules; “in particular, Rule 7004(b) and
24 7004(h).” The guidelines further provide that the motion must be
resolved before the plan is confirmed. Finally, the guidelines
25 require that the motion be supported by a memorandum of points
26 and authorities and any declarations under penalty of perjury
establishing all facts necessary to entitle debtor to the relief
27 required. “At minimum, required declarations include statements
by competent witnesses regarding the value of the collateral and
28 the balance due on each lien relevant to the motion.”
-8-
1 Attached to the motion was the supporting declaration of
2 Debtors’ attorney, John G. Downing. Downing declared that at
3 the time the Valuation Motion was filed (1) the only deed of
4 trust in his file was the 2002 Deed of Trust; (2) this deed of
5 trust was reconveyed on September 15, 2004; and (3) Wells had
6 not filed its POC until after the Valuation Motion was decided.
7 Based on these facts, Downing contended that the Valuation Order
8 contained a clerical mistake and should be corrected pursuant to
9 Civil Rule 60(a) to reference the 2004 Deed of Trust and the
10 requested judgment should reflect that lien. Also attached to
11 the motion was the 2002 Deed of Trust and the reconveyance of
12 that deed of trust recorded on September 15, 2004.
13 On February 13, 2015, Debtors served a corrected notice of
14 hearing on Wells in connection with the Motion to Correct and
15 their request for judgment. This notice was served on Wells by
16 regular mail at the Iowa Address and by certified mail to
17 Stanley Stroup at the South Dakota Address and Wells at the
18 Sacramento Address. Wells did not respond.
19 On March 12, 2015, the bankruptcy court heard the matter.
20 Wells did not appear at the hearing. Downing argued that Wells
21 received notice and that it was effective because the Valuation
22 Motion referenced the loan ending in 6995, which was the correct
23 loan number. Downing further argued that Wells had notice of
24 their Motion to Correct and request for judgment voiding lien
25 and, therefore, Debtors were entitled to entry of default
26 against Wells under Civil Rule 55(a), made applicable to
27 contested matters by Rule 9014(c).
28 The bankruptcy court denied the motion on several grounds.
-9-
1 First, referring to Rule 60(b)(1), the court found that the
2 motion was untimely since motions under that subsection had to
3 be brought within a year. Second, the court did not find there
4 was a mistake or excusable neglect as the original Valuation
5 Motion and Valuation Order clearly stated that Debtors were
6 seeking to avoid a junior lien that was recorded on July 3,
7 2002, and described a document number recorded in 2002. The
8 bankruptcy court stated that there was no such lien in existence
9 at that time so there was no basis for Wells to object to the
10 Valuation Motion, and they did not.
11 The court also denied Debtors’ motion and request for
12 judgment on due process grounds. The court found that although
13 the notice to Wells may have had the correct loan number for a
14 loan they had pending, this was not sufficient notice when other
15 information was incorrect. The bankruptcy court further opined
16 that the information was publicly available at the time and
17 could have been obtained, but it was not.
18 The bankruptcy court entered the order denying Debtors’
19 Motion to Correct and request for judgment voiding lien on
20 March 12, 2015. Debtors filed a timely notice of appeal.
21 II. JURISDICTION
22 The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
23 §§ 1334 and 157(b)(2)(A). We have jurisdiction under 28 U.S.C.
24 § 158.
25 III. ISSUES
26 Did the bankruptcy court err by finding that Wells had
27 inadequate notice of Debtors’ intent to value their Property for
28 the purpose of treating Wells’ claim as wholly unsecured and
-10-
1 stripping its lien after completing their chapter 13 plan?
2 Did the bankruptcy court abuse its discretion by denying
3 Debtors’ Motion to Correct under Civil Rule 60(a)?
4 IV. STANDARDS OF REVIEW
5 Whether adequate due process notice was given in any
6 particular instance is a mixed question of law and fact that we
7 review de novo. Berry v. U.S. Trustee (In re Sustaita),
8 438 B.R. 198, 207 (9th Cir. BAP 2010). However, to the extent
9 an issue within the mixed question can be identified as solely a
10 question of fact, it is subject to a clearly erroneous standard
11 of review. See Rose v. United States, 905 F.2d 1257, 1259 (9th
12 Cir. 1990).
13 A bankruptcy court’s denial of a motion under Civil Rule 60
14 is reviewed for an abuse of discretion. Lemoge v. United
15 States, 587 F.3d 1188, 1191–92 (9th Cir. 2009).
16 Review for abuse of discretion has two parts. First, “we
17 determine de novo whether the bankruptcy court identified the
18 correct legal rule to apply to the relief requested.” U.S. v.
19 Hinkson, 585 F.3d 1247, 1261–62 (9th Cir. 2009) (en banc). If
20 so, we then determine under the clearly erroneous standard
21 whether the bankruptcy court’s factual findings and its
22 application of the facts to the relevant law were
23 “(1) illogical; (2) implausible; or (3) without support in
24 inferences that may be drawn from the facts in the record.” Id.25 at 1262.
26 V. DISCUSSION
27 A. Due Process
28 The bankruptcy court concluded that to modify the Valuation
-11-
1 Order to pertain to the 2004 Deed of Trust would deny Wells due
2 process. We disagree with this conclusion because due process
3 was served. “The standard for what amounts to constitutionally
4 adequate notice, [], is fairly low; it’s ‘notice reasonably
5 calculated, under all the circumstances, to apprise interested
6 parties of the pendency of the action and afford them an
7 opportunity to present their objection.’” Espinosa v. United
8 Student Aid Funds, Inc., 553 F.3d 1193, 1202 (9th Cir. 2008)
9 (citing Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306,
10 314–15, (1950)), aff’d, 559 U.S. 260 (2010).
11 Here, the key inquiry is in connection with the second part
12 of the Mullane test which requires that the notice provided must
13 afford the affected party an opportunity to present objections.
14 Mullane, 339 U.S. at 314. While Mullane revolved principally
15 around the constitutional adequacy of service by publication,
16 the court stated that “[t]he notice must be of such nature as
17 reasonably to convey the required information.” Id.; see also
18 Fogel v. Zell, 221 F.3d 955, 962 (7th Cir. 2000) (“If notice is
19 unclear, the fact that it was received will not make it
20 adequate.”).
21 In the notice accompanying their Valuation Motion, Debtors
22 identified the address of their Property and stated that its
23 value was less than owed on the first deed of trust. Debtors
24 also identified (1) Wells as the creditor whose lien in the
25 second position was affected; (2) the loan number associated
26 with its security; and (3) the amount of the loan. Both the
27 loan number and the amount of the loan were identical to that
28 identified by Wells in its POC which was based on the 2004 Deed
-12-
1 of Trust. This information was sufficient to allow Wells to
2 identify the loan in question as the one secured by its current
3 deed of trust and that the basis for treating Wells as wholly
4 unsecured was the lack of equity in the Property and § 506(a).5
5 In sum, the notice reasonably conveyed the required information
6 under the standards set forth in Mullane and thus satisfied
7 Wells’ due process rights.
8 Further, the record shows that Wells was served with
9 Debtors’ plan and amended plans which clearly stated the
10 proposed treatment of Wells’ claim was as an unsecured creditor.
11 The plans referred to Debtors’ pending Valuation Motion in
12 connection with Wells’ second deed of trust and loan number
13 ending in 6955. Again, this was sufficient to put Wells on
14 notice that its in rem rights associated with its current deed
15 of trust in the second position would be affected. Wells had
16 notice of its treatment under Debtors’ plan and amended plans
17 and yet failed to timely object.
18 There is no indication in the record that Wells expected
19 direct payments from Debtors to satisfy its secured debt over
20 the long term. Indeed, the confirmed plan did not provide for
21 any such payments. In accordance with the terms of the
22
5
23 Section 506(a) governs the amount and treatment of secured
claims. In a reorganization case, § 506 is relevant regarding
24 what claims get paid through the plan, “and the would-be secured
creditor whose claim is allowed only as unsecured gets paid as an
25 unsecured creditor.” Laskin v. First Nat’l Bank of Keystone
26 (In re Laskin), 222 B.R. 872, 876 (9th Cir. BAP 1998). Rule 3012
implements the substantive rights of § 506(a). It provides that
27 the bankruptcy court may determine the value of a secured claim,
upon motion of a party in interest, and after hearing on notice
28 to the holder of the secured claim.
-13-
1 confirmed plan, the chapter 13 trustee made payments to Wells
2 over forty-two months on the basis that its claim was unsecured.
3 The plan is preclusive as to the treatment of Wells’ claim. See
4 Lomas Mortgage USA v. Wiese, 980 F.2d 1279, 1284 (9th Cir.
5 1992), vacated on other grounds, 508 U.S. 958 (1993) (“An order
6 confirming a Chapter 13 plan is res judicata as to all
7 justiciable issues which were or could have been decided at the
8 confirmation hearing.”); see also Fietz v. Great W. Sav.
9 (In re Fietz), 852 F.2d 455, 458 (9th Cir. 1988) (“Once a
10 Chapter 13 plan is confirmed, all of the property of the estate
11 vests in the debtor and creditors are precluded from asserting
12 any other interest than that provided for them in the confirmed
13 plan.”).
14 Under these circumstances, we conclude that Wells had
15 adequate notice regarding the stripping of its current deed of
16 trust recorded in 2004 and Debtors’ proposed treatment of its
17 wholly unsecured claim in their confirmed FAP. It is not
18 possible to tell from the record whether the bankruptcy court
19 applied the legal standards for notice and due process set forth
20 in Mullane. Assuming that it did not, under a de novo review,
21 the court’s ruling that Wells had inadequate notice was in
22 error. Moreover, to the extent the finding of inadequate notice
23 is purely one of fact, it is not supported by the record and
24 thus is clearly erroneous.
25 B. Civil Rule 60(a): Clerical Mistakes, Oversights and
Omissions
26
27 In their Motion to Correct, Debtors requested the
28 bankruptcy court to correct the Valuation Order based on Civil
-14-
1 Rule 60(a), incorporated by Rule 9024.6 Under Civil Rule 60(a),
2 a bankruptcy court may “correct a clerical mistake or a mistake
3 arising from oversight or omission whenever one is found in a
4 judgment, order, or other part of the record.” Relief under
5 Civil Rule 60(a) is not limited to clerical mistakes committed
6 only by the clerk; the rule applies to mistakes by the court,
7 the parties, and the jury as well. Icho v. Hammer, 434 F.Appx.
8 588, 2001 WL 1979163, at *1 (9th Cir. May 23, 2011 (citing Day
9 v. McDonough, 547 U.S. 198, 210–11 (2006)); see also Warner v.
10 Bay St. Louis, 526 F.2d 1211, 1212 (5th Cir. 1976) (mistakes
11 correctable by [Civil] Rule 60(a) are “not necessarily made by
12 the clerk”); Pattiz v. Schwartz, 386 F.2d 300, 303 (8th Cir.
13 1968) (mistakes by parties correctable by [Civil] Rule 60(a)).
14 Corrections pursuant to Civil Rule 60(a) have no time limit.
15 In determining whether a mistake may be corrected under
16 Civil Rule 60(a), the Ninth Circuit focuses on what the court
17 originally intended to do. Tattersalls, Ltd. v. Dehaven,
18 745 F.3d 1294, 1297 (9th Cir. 2014). Further, Civil Rule 60(a)
19 covers more than the “quintessential clerical error” such as
20 where the court errs in transcribing the judgment or makes a
21 computational mistake. See Korea Exchange Bank v. Hanil Bank,
22 Ltd. (In re Jee), 799 F.2d 532 (9th Cir. 1986) (Civil
23 Rule 60(a) used to amend a prior dismissal order where the
24 record and the recollection of the judge who entered the order
25 indicated that the dismissal was intended to be without
26
27
6
In denying the motion, the court referenced Civil
28 Rule 60(b), not 60(a).
-15-
1 prejudice); Jones & Guerrero Co. v. Sealift Pac., 650 F.2d 10722 (9th Cir. 1981) (Civil Rule 60(a) used to correct a blanket
3 order dismissing twenty-two diversity cases, where the court
4 intended to remand one of those cases — the only one not
5 originally filed in federal court — to territorial court); Robi
6 v. Five Platters, Inc., 918 F.2d 1439, 1444-45 (9th Cir. 1990)
7 (uncorrected judgment “ordered, among other things, that [a
8 party’s trademark] be canceled,” but it “failed to identify the
9 particular trademark to be canceled or to include any trademark
10 registration numbers or dates of issuance.” The United States
11 Patent and Trademark Office was unable to identify the
12 trademarks to be cancelled, the district court amended its
13 judgment under Civil Rule 60(a) to identify the trademarks with
14 more particularity.); Garamendi v. Henin, 683 F.3d 1069, 1180-81
15 (9th Cir. 2012) (Civil Rule 60(a) used to clarify a judgment
16 that could not be domesticated in a foreign country because its
17 reasoning was not sufficiently detailed).
18 In short, the Ninth Circuit has construed Civil Rule 60(a)
19 broadly, holding that the “[r]ule ‘allows a court to clarify a
20 judgment in order to correct a failure to memorialize part of
21 its decision, to reflect the necessary implications of the
22 original order, to ensure that the court’s purpose is fully
23 implemented, or to permit enforcement.” Garmendi, 683 F.3d at
24 1079.
25 We thus conclude that the bankruptcy court erred by not
26 considering and applying Civil Rule 60(a) to correct the error
27 in the Valuation Order. We provide our analysis on the
28 applicability of Civil Rule 60(a) with the hope that such
-16-
1 guidance might be utilized by Debtors and the bankruptcy court
2 on remand. McDonald v. Sperna (In re Sperna), 173 B.R. 654 (9th
3 Cir. BAP 1994) (providing guidance to the bankruptcy court on
4 remand); Sapper v. Lenco Blade, Inc., 704 F.2d 1069, 1072 (9th
5 Cir. 1983) (addressing a question to provide guidance on
6 remand).
7 As noted above, the error can be made by a party and here
8 it appears to have been a mistake arising from oversight on the
9 part of Debtors and their counsel. Furthermore, the correction
10 proposed by Debtors would not change the Valuation Order’s
11 operative substantive terms or result in a different outcome —
12 the value of Debtors’ Property remains the same and Wells’
13 second deed of trust (which had been correctly identified by
14 loan number and amount) was wholly unsecured due to that value.
15 Wells suffers no prejudice because the relief sought by Debtors
16 is the very same relief that would have been granted in May 2012
17 in connection with the Valuation Order, but for the unfortunate
18 oversight of Debtors regarding the date of Wells’ deed of trust.
19 Moreover, Wells received payments as an unsecured creditor over
20 the course of Debtors’ plan. In addition, the use of Civil
21 Rule 60(a) is not precluded by the fact that Debtors submitted
22 new evidence relating to the lien in question. Tattersalls,
23 745 F.3d at 1299 (permitting new evidence relating to loss of
24 value) (citing Robert Lewis Rosen Assocs., Ltd. v. Webb,
25 473 F.3d 498, 504–06 (2d Cir. 2007) (permitting the admission of
26 new evidence to correct a judgment)). Finally, the proposed
27 correction would not reflect any change in reasoning that led
28 the bankruptcy court to enter the Valuation Order in the first
-17-
1 place. Accordingly, modifying the Valuation Order to reflect
2 the 2004 Deed of Trust is warranted as there are no obstacles to
3 a proper application of Civil Rule 60(a).
4 C. Civil Rule 60(b)(1): Mistake or Excusable Neglect
5 Civil Rule 60(b)(1) permits a court to reopen judgments for
6 reasons of “mistake, inadvertence, surprise, or excusable
7 neglect, but only on motion made within one year of the
8 judgment.” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd.
9 P’ship, 507 U.S. 380, 393 (1993). If a Civil Rule 60(b)(1)
10 motion is untimely, the bankruptcy court lacks jurisdiction to
11 consider the merits of the motion. Nevitt v. United States,
12 886 F.2d 1187, 1188 (9th Cir. 1989). The bankruptcy court
13 correctly concluded that to the extent Debtors relied upon Civil
14 Rule 60(b)(1) to correct the Valuation Order, their motion was
15 untimely.
16 VI. CONCLUSION
17 For the reasons stated below, we REVERSE the bankruptcy
18 court’s determination that Wells' due process rights were
19 violated, VACATE the order denying the Motion to Correct, and
20 REMAND this matter to the bankruptcy court for further
21 proceedings consistent with this memorandum.
22
23
24
25
26
27
28
-18-