Giovanazzi v. Schuette (In Re Lebbos)

FILED
NOT FOR PUBLICATION APR 10 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: BETSEY WARREN LEBBOS No. 13-60009
Debtor, BAP No. EC-11-1735-KiDJu
_______________________________ Bk. No. 06-22225-RSB
Adv. No. 11-2386-RSB
JOSEPH GIOVANAZZI, as trustee of the
Aida Madeleine Lebbos No. 2 Trust and
JOSEPH GIOVANAZZI, as trustee of the
Aida Madeline Lebbos Trust II,
MEMORANDUM*
Appellants,
v.
LINDA S. SCHUETTE,
Appellee.
Appeal from the United States Bankruptcy Appellate Panel
of the Ninth Circuit,
Kirscher, Dunn, and Jury, Bankruptcy Judges, Presiding
Submitted March 9, 2015**
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: NOONAN, W. FLETCHER, and DAVIS,*** Circuit Judges.
Linda Schuette (the “Trustee”), trustee of the Chapter 7 bankruptcy estate of
Betsey Warren Lebbos (the “Debtor”), filed this adversary proceeding against
Joseph Giovanazzi, in his capacity as trustee of the Aida Madeleine Lebbos No. 2
Trust and Aida Madeleine Lebbos Trust II (collectively, “AML Trust II”) in the
United States Bankruptcy Court for the Eastern District of California. Giovanazzi
appeals the bankruptcy court’s grant of summary judgment in favor of the Trustee
on her claims for preservation of interests in a condominium located in Long
Beach, California (the “Condo”) for the benefit of the bankruptcy estate; avoidance
of transfers of the Condo involving Giovanazzi; a permanent injunction against any
action by Giovanazzi that would affect title to or possession of the Condo; and a
declaratory judgment that Trustee is the sole owner of the Condo and that the
Condo is estate property. Giovanazzi also appeals the bankruptcy court’s denial of
his motion to dismiss, motion to disqualify the bankruptcy judge, motion to
transfer venue, and motions for reconsideration. The Bankruptcy Appellate Panel
(the “BAP”) affirmed the judgment of the bankruptcy court. Giovanazzi timely
filed a notice of appeal to this Court.
***
The Honorable Andre M. Davis, Senior Circuit Judge for the United
States Court of Appeals for the Fourth Circuit, sitting by designation.
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1. We review decisions of the BAP de novo, and therefore review the
decisions of the bankruptcy court “under the same standards used by the BAP.” In
re Kaypro, 218 F.3d 1070, 1073 (9th Cir. 2000). On review of the bankruptcy
court’s decision to deny the motion to dismiss, we accept as true “[a]ll well-
pleaded allegations of material fact in the complaint” and construe them “in the
light most favorable” to the Trustee in order to determine whether she has stated “a
claim to relief that is plausible on its face.” In re Fitness Holdings Int’l, Inc., 714
F.3d 1141, 1144–45 (9th Cir. 2013) (citations and internal quotation marks
omitted). On review of the bankruptcy court’s decision to grant summary
judgment, we view “the evidence and inferences therefrom in the light most
favorable to [Giovanazzi]” to determine whether “[the Trustee] has shown . . . that
there is no genuine issue of material fact[,]” and “whether [Giovanazzi] has come
forward with [his] own significant and probative evidence showing a genuine issue
of material fact as to the relevant claims or defenses.” In re Healthcentral.com, 504
F.3d 775, 788 (9th Cir. 2007) (citations and internal quotation marks omitted).
2. We find no error in the bankruptcy court’s conclusion that the instant
proceeding is not time barred. The one-year statute of limitations in 11 U.S.C. §
550(f) does not apply because the Trustee does not seek recovery of property
transferred in an avoided transfer under § 550(a). Rather, the Trustee sought and
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obtained in a prior adversary proceeding (the “Prior Action”) both avoidance of
transfers of interests in the Condo that occurred on August 19, 2004, and May 25,
2005, and recovery of these interests for the benefit of the bankruptcy estate. See In
re Lebbos, 422 B.R. 235 (E.D. Cal. 2009), aff’d, 362 F. App’x 863 (9th Cir. 2010).
The doctrine of laches does not bar the action because Giovanazzi fails to show
any unreasonable delay by the Trustee or any resulting prejudice. See Kling v.
Hallmark Cards Inc., 225 F.3d 1030, 1036 (9th Cir. 2000).
3. To establish preservation of an avoided transfer for the benefit of a
bankruptcy estate under 11 U.S.C. § 551, the trustee need only show that the
transfer was avoided under § 522, 544, 545, 547, 548, 549, or 724(a). See In re Van
de Kamp’s Dutch Bakeries, 908 F.2d 517, 519 (9th Cir. 1990). The Trustee both
alleged in her complaint and showed in support of her summary judgment motion
that she obtained in the Prior Action avoidance of transfers subject to preservation
under § 551. There was no error, therefore, in the bankruptcy court’s order denying
Giovanazzi’s motion to dismiss or its grant of summary judgment in favor of the
Trustee as to the preservation claim.
4. The lis pendens recorded on March 14, 2007, during the pendency of the
Prior Action, provided all information necessary to give notice of the Prior Action.
See Cal. Civ. Proc. Code § 405.24. Giovanazzi fails to show that any of the alleged
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defects in the service of the lis pendens on the defendants to the Prior Action
failed, in whole or in part, to provide adequate and sufficient notice to him or the
beneficiaries of the conveyances of April 14, 2008, and August 13, 2008. We find
no error in the bankruptcy court’s conclusion that the judgment in the Prior Action
related back to March 14, 2007, and bound Giovanazzi and the beneficiaries of the
deed of trust of August 13, 2008. See Arrow Sand & Gravel, Inc. v. Super. Ct., 700
P.2d 1290, 1291–92 (Cal. 1985) (in bank); Slintak v. Buckeye Ret. Co., L.L.C., Ltd.,
43 Cal. Rptr. 3d 131, 139 (Cal. Ct. App. 2006).
5. Because interests in the Condo transferred on August 19, 2004, and May
25, 2005, were preserved for the benefit of the bankruptcy estate, and the lis
pendens related back to March 14, 2007, Thomas Carter and Jason Gold had no
interest in the Condo to convey to Giovanazzi when the quitclaim deed was
executed in April 2008, and Giovanazzi had no right to encumber the Condo by
deed of trust in August 2008. Therefore, we find no error in the bankruptcy court’s
conclusion that the Trustee was entitled to avoidance of the transfers of April 14,
2008 and August 13, 2008. None of the factual issues raised by Giovanazzi created
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a genuine dispute of material fact as to the Trustee’s entitlement to the relief
ordered by the bankruptcy court.†
6. We review the bankruptcy court’s issuance of declaratory and injunctive
relief for abuse of discretion. See Fortyune v. Am. Multi-Cinema, Inc., 364 F.3d
1075, 1079 (9th Cir. 2004); Exxon Shipping Co. v. Airport Depot Diner, Inc., 120
F.3d 166, 168 (9th Cir. 1997). The bankruptcy court had jurisdiction of the Condo
as estate property. See 28 U.S.C. § 1334(e). Giovanazzi fails to offer any
convincing explanation for his contention that the injunction was overly broad.
Insofar as Giovanazzi’s unlawful detainer action sought to interfere with the
Trustee’s ownership of the Condo, the bankruptcy court acted within its discretion
to declare that the action had no legal force or effect against the bankruptcy estate
or the Trustee’s ownership of the Condo. We find no abuse of discretion in the
bankruptcy court’s issuance of the injunction and its award of declaratory relief
against Giovanazzi.
7. We review the denial of Giovanazi’s motion to disqualify the bankruptcy
judge for abuse of discretion. Evenstad v. United States, 978 F.2d 1154, 1158 (9th
†
We reject Giovanazzi’s argument that the beneficiaries of the deed of
trust of August 13, 2008, are indispensable parties to the instant proceeding under
Rule 19 of the Federal Rules of Civil Procedure. As trustee of the AML Trust II,
Giovanazzi represented these beneficiaries’ interests below and represents their
interests on appeal.
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Cir. 1992). A bankruptcy judge is disqualified from presiding over a proceeding
“in which his impartiality might reasonably be questioned” or “[w]here he has a
personal bias or prejudice concerning a party.” 28 U.S.C. § 455(a),(b)(1); see also
Fed. R. Bankr. P. 5004(a). “Judicial impartiality is presumed.” First Interstate
Bank of Arizona, N.A. v. Murphy, Weir & Butler, 210 F.3d 983, 987 (9th Cir.
2000). Giovanazzi fails to show how any conduct by the bankruptcy judge in this
case reflects personal bias or prejudice or raises any question as to his impartiality.
That ex parte orders issued by the bankruptcy court proved adverse to Giovanazzi’s
interests is no evidence of partiality, personal bias, or prejudice. We hold that the
bankruptcy court did not abuse its discretion in denying Giovanazzi’s motion to
disqualify the bankruptcy judge.
8. We review the denial of Giovanazzi’s motion to transfer venue for abuse
of discretion. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 842
(9th Cir. 1986). A bankruptcy court may transfer an adversary proceeding to
another district “in the interest of justice or for the convenience of the parties.” 28
U.S.C. § 1412; see also Fed. R. Bankr. P. 7087. The Trustee is located in the
Eastern District of California. Giovanazzi is located in the Southern District of
California, and the Debtor is located in the Northern District of California, but
Giovanazzi did not seek transfer to either of those districts. The Condo is located in
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the Central District of California, but the location of the Condo has no effect on the
convenience of the parties or the interest of justice. Given the bankruptcy court’s
significant history with the parent bankruptcy case, the interest of justice favored
retention of the proceeding in the Eastern District of California. We hold that the
bankruptcy court did not abuse its discretion in denying Giovanazzi’s motion to
transfer the case.
9. We review the denial of Giovanazzi’s motions for reconsideration for
abuse of discretion. In re Onecast Media, Inc., 439 F.3d 558, 564 (9th Cir. 2006).
Courts enjoy “considerable discretion” in deciding reconsideration motions.
McDowell v. Calderon, 197 F.3d 1253, 1255 n.1 (9th Cir. 1999) (citation omitted).
Giovanazzi’s motions generally rehashed arguments he raised in some of his
original motions and in his opposition to the Trustee’s summary judgment motion.
As we have found no reversible error in the bankruptcy court’s decisions as to any
of the underlying motions, we hold that the bankruptcy court did not abuse its
considerable discretion in denying Giovanazzi’s motions for reconsideration.
AFFIRMED.
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