Opinion
NOT FOR PUBLICATION
Argued and Submitted at Pasadena, California: May 15, 2008
Appeal from the United States Bankruptcy Court for the Central District of California. Bk. No. LA 07-19183-SB. Honorable Samuel L. Bufford, Bankruptcy Judge, Presiding.
Before: PETERSON, [ KLEIN and PAPPAS, Bankruptcy Judges.
Hon. John L. Peterson, U.S. Bankruptcy Judge for the District of Montana, sitting by designation.
MEMORANDUM
Appellant, Chapter 11 debtor Steven J. Stanwyck (" Debtor"), appeals the order of the bankruptcy court terminating the automatic stay under § 362(d)(1) so that his estranged wife, appellee Joan Stanwyck (" Mrs. Stanwyck"), could continue a marital dissolution proceeding pending in Los Angeles Superior Court, In re Marriage of Petitioner, Joan Stanwyck and Respondent, Steven Stanwyck, case no. BD 317414 (the " marital dissolution" proceeding). We AFFIRM.
Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. § § 101-1532, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
This account of the facts is, admittedly, sketchy because, as discussed below, Debtor provided no statement of facts in his appellate briefs. This is a violation of Rule 8010(a)(1)(D). The excerpts of record also provide little factual information. One promising source of facts in the excerpts, Mrs. Stanwyck's Memorandum of Points and Authorities in Support of Motion for Relief from Stay, indicates that a complete statement of facts in a declaration from her attorney was attached to the Memorandum. However, Debtor failed to include this attachment in the excerpts.
Debtor and Mrs. Stanwyck were married in 1969; the couple had several children.
In July 2000, Mrs. Stanwyck filed a petition for legal separation in Los Angeles County Superior Court. In that action, she requested that the state court grant her legal and physical custody of the children, award spousal support, give visitation rights to Debtor, and determine property rights.
On August 10, 2000, Debtor responded by filing a petition for dissolution of the marriage (the current marital dissolution proceeding). Debtor was, at that time, a debtor in a chapter 7 case which he had filed approximately nine years earlier. Bankr. C.D. Cal. 92-22475-SB, filed March 30, 1991, dismissed July 17, 2002. Debtor removed the marital dissolution proceeding to the bankruptcy court. On August 31, 2000, the bankruptcy court, acting through the same presiding judge involved in this appeal, ordered that the marital dissolution proceeding be remanded. In a harbinger of the current appeal, the bankruptcy court ruled in its remand decision that:
Superior Court is uniquely qualified to make a decision on all the issues relating to marital dissolution, including property division. This Court is uniquely unsuited for making any such decisions. This matter should be in Superior Court where that expertise exists and not in this Court where it does not.
Debtor appealed the remand order to this Panel, but withdrew his appeal at oral argument.
These events, including the judge's statement quoted above, were described in the Panel's Memorandum in Stanwyck v. Stanwyck (In re Stanwyck) (BAP nos. CC-00-1654/1676 MaBK, August 24, 2001). In addition, between 2000 and the present, Debtor and Mr Stanwyck were apparently involved in numerous other legal actions in addition to the marital dissolution proceeding. For example, Debtor filed another chapter 7 petition on May 28, 2002, Bankr. C.D. Cal. no. 02-25398-SB, in which discharge was denied on September 22, 2003. There was also a lawsuit, about which the record provides no detail, commenced by Debtor in district court against numerous parties, including the bankruptcy judge, C.D. Cal. No. CV-01-7749-GAF; this action was later dismissed, Debtor was sanctioned, and an order declaring Debtor a vexatious litigant was entered. Finally, there also are other pending actions involving these parties, although with no details in the record on appeal, in the U.S. Tax Court, and before the California Board of Equalization. There are also pending disciplinary proceedings against Debtor before the State Bar of California, In re Steven J. Stanwyck, 02-0-10226 and 05-0-02193DFM, filed July 10, 2006.
The record provides little information concerning events in the marital dissolution proceeding in state court from the time of its remand in 2000 to the filing of Debtor's third bankruptcy petition on October 12, 2007. Bankr. C.D. Cal. 07-19183. Mrs. Stanwyck alleges that there was a hearing scheduled to occur on October 29, 2007, at which the state court would review a referee's report concerning alleged discovery violations of Debtor, another referee's report investigating allegations of Debtor's misappropriation of community assets and breach of fiduciary duty, and a conference to set a trial date in the marital dissolution proceeding. According to Mrs. Stanwyck, Debtor filed his chapter 11 petition on October 12 to impose the stay and prevent the hearings on October 29, 2007.
Mrs. Stanwyck filed a Motion for Relief from Stay on November 13, 2007. In her motion, she argued that Debtor's latest bankruptcy petition was filed in bad faith, that the claims at issue between the parties arise under nonbankruptcy law and can be most expeditiously handled in state court, and that Debtor has been declared a vexatious litigant as a result of his activities in bankruptcy-related proceedings. Debtor submitted a reply to this motion on November 21, 2007.
The bankruptcy court conducted a hearing on November 27, 2007. Debtor appeared pro se, Mrs. Stanwyck was represented by counsel, and both were heard. The court found that good cause for relief from stay existed, in that the state court had greater expertise in family law matters, and that the issues related to the marital dissolution were more properly decided in the state court. Tr. Hr'g 22:24 - 231. The bankruptcy court also found that Debtor's opposition to the motion and supporting exhibits were unintelligible, violated numerous local rules, and were not supported by " any evidence at all." Tr. Hr'g 1:10-14.
The bankruptcy court entered its order granting Mrs. Stanwyck's motion for relief from the automatic stay on November 29, 2007, terminating the stay as to the marital dissolution proceeding in state court. However, the bankruptcy court's order limited enforcement of any judgment obtained in state court to " non-ESTATE property or earnings."
Debtor filed a timely appeal on December 5, 2007.
JURISDICTION
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. § § 1334 and 157(b)(2)(G). We have jurisdiction pursuant to 28 U.S.C. § 158.
ISSUE
Whether the bankruptcy court abused its discretion in granting Mrs. Stanwyck relief from the automatic stay to continue the marital dissolution proceeding.
STANDARD OF REVIEW
A bankruptcy court's decision to grant relief from the automatic stay is reviewed for abuse of discretion. In re Skagit Pac. Corp., 316 B.R. 330, 335 (9th Cir. BAP 2004). A bankruptcy court necessarily abuses its discretion if it bases its decision on an erroneous view of law or clearly erroneous factual findings. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). An abuse of discretion will also be found if the Panel has a definite and firm conviction that the bankruptcy court committed a clear error of judgment in the conclusion it reached. Beatty v. Traub (In re Beatty), 162 B.R. 853, 855 (9th Cir. BAP 1994).
DISCUSSION
I.
Procedural Irregularities in this Appeal
Although appearing without counsel in this appeal, Debtor is apparently a seasoned attorney and member of the California bar. Despite his legal training, Debtor has created innumerable procedural difficulties in prosecuting this appeal that have significantly interfered with the Panel's ability to consider the issues.
The Debtor filed an eight-page Opening Brief, much of which is difficult to understand and fails to comply with the requirements of Rule 8010. For example,
o Debtor's one-line statement of appellate jurisdiction, required by Rule 8010(a)(1)(B), is " This appeal lies from an order granting relief fro[m] the automatic stay." This is not a jurisdictional statement. o Debtor declined to comply with Rule 8010(a)(1)(C)'s mandate that the Opening Brief provide a statement of the issues presented. Instead, Debtor states, " To fully address all of the issues on Appeal, Appellant/Debtor is awaiting Appellee/Movant's Proof of Claim, if any, due on or before February 29, 2008." Opening Br. at 1. Indeed, there is no real articulation of the issues on appeal to be found in Debtor's Opening Brief. o Debtor's statement of the case does not describe the nature of the underlying case, the course of proceedings in the bankruptcy court, or even identify the disposition in the bankruptcy court, all of which are required by Rule 8010(a)(1)(D). Further, Debtor's one-paragraph statement of facts provides none of the critical information concerning disputes between these parties that relate back at least to 2000, and it contains no references to the record on appeal, also required by Rule 8010(a)(1)(D). o Debtor's " argument" is a one-paragraph restatement of his unwillingness to discuss the issues until the filing of his Reply Brief. Specifically, Debtor fails to comply with Rule 8010(a)(1)(E)'s requirements that his Opening Brief contain, somewhere, Debtor's contentions on appeal with respect to the issues presented, and the reasons therefor. o The only relief sought in the conclusion to his Opening Brief that, upon remand to the bankruptcy court, the Panel should order this case reassigned to a different bankruptcy judge. Obviously, such relief is not justified by the record before us.
Debtor's demand apparently refers back to a statement on page 3 of Debtor's Opening Brief, which is presented here in full as a fair example of the clarity of Debtor's arguments:
Simply put, while Debtor did provide a table of contents and authorities as required by Rule 8010(a)(1)(A), his brief violated or failed to comply with every other provision of Rule 8010(a)(1). We agree with Mrs. Stanwyck that she has been unfairly prejudiced by Debtor's failure to present any substantive arguments whatsoever in his Opening Brief, in that she was deprived of any meaningful opportunity to respond to Debtor's positions in her brief.
We would be more sympathetic to Mrs. Stanwyck's concern that she did not have any opportunity to respond to Debtor's arguments had counsel for Mrs. Stanwyck appeared at oral argument before the Panel or at least provided an excuse in advance for her absence.
Moreover, although Debtor's Opening Brief indicated that he would present his arguments on appeal in his Reply Brief, his four-page Reply Brief is likewise deficient. Instead, the Reply Brief merely repeats Debtor's complaint that Mrs. Stanwyck has not yet filed a Proof of Claim in Debtor's bankruptcy case.
It is not clear why Debtor insists that Mrs. Stanwyck must file a Proof of Claim before he will address the substance of the issues in this appeal. Debtor states " Appellee . . . is simply trying to avoid the inevitable by even strategically delaying her Proof of Claim under oath, to avoid meaningful review here as to what was or was not substantively [to be] relieved from." Reply Br. at 1. Debtor's concerns about obtaining a " substantive, " " meaningful review" of Mrs. Stanwyck's claims do not amount to a defense to Mrs. Stanwyck's motion. The disposition by the bankruptcy court of a motion for relief from stay does not require a full adjudication of the merits of parties' claims. Biggs v. Stovin (In re Luz Int'l), 219 B.R. 837, 842 (9th Cir. BAP 1998); In re Johnson, 756 F.2d 738, 740 (9th Cir.1985)(" Hearings on relief from the automatic stay are thus handled in a summary fashion. The validity of the claim or contract underlying the claim is not litigated during the hearing."). Instead, in ruling on Mrs. Stanwyck's motion, the bankruptcy court properly focused on the preferred forum in which the " review" of the issues should occur.
Finally, on May 12, 2008, three days before oral argument in this appeal, Debtor filed a " Supplemental Brief" including 180 pages of exhibits. This act violated Rule 8009(a)(3), which provides that, after the filing of a reply brief, " [n]o further briefs may be filed except with leave of . . . the bankruptcy appellate panel." Debtor made no request for leave to submit further briefing, nor do we grant it. Accordingly, Mrs. Stanwyck's request that we STRIKE Debtor's Supplemental Brief and exhibits is GRANTED.
The Clerk of the BAP sent a " Notice of Case Set for Hearing" to Debtor and Mrs. Stanwyck on April 3, 2008. The notice advised the parties that they may submit citations to relevant decisions rendered since the filing of their last brief, but makes clear that no further argument is permitted, and that any citations must be submitted no later than one week before oral argument. Debtor's late-filed brief contains no such citations.
Debtor has not provided the essential information required by the Rules so the Panel may perform an effective review of the decision of the bankruptcy court. Debtor's failure to properly present and argue issues in an Opening Brief, in and of itself, can justify our refusal to consider those issues. Lewis v. Fairchild Indus., Inc., 797 F.2d 727, 738 (9th Cir. 1986) (" The Court of Appeals will not ordinarily consider matters on appeal that are not specifically and distinctly argued in appellant's opening brief."); Busseto Foods v. Laizure (In re Laizure), 349 B.R. 604, 608 (9th Cir. BAP 2006) (" [O]n appeal, arguments not raised by a party in its opening brief are deemed waived.").
More significantly, that Debtor failed to present the issues and his arguments on appeal in his Opening Brief, and magnified this error by failure to rectify it in his Reply Brief, would almost surely allow the Panel to dismiss this appeal. We are, however, mindful of the counsel of our Court of Appeals in Ehrenberg v. Cal. State Univ. (In re Beachport Entm't), 396 F.3d 1083, 1087 (9th Cir. 2005): " Although summary dismissal is within the BAP's discretion, it 'should first consider whether informed review is possible in light of what record has been provided'. Kyle v. Dye (In re Kyle), 317 B.R. 390, 393 (B.A.P. 9th Cir. 2004)." The Panel therefore declines to dismiss the appeal. Instead, while Debtor's submissions on appeal are quite dismal, we will endeavor to examine the merits of this appeal.
II.
The Bankruptcy Court did not Abuse its Discretion by Granting Relief from the Automatic Stay to Continue the Marital Dissolution Proceeding
Section 362(d)(1) governs relief from stay in this instance, and provides that " On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying or conditioning such stay - (1) for cause[.]" Determination of whether cause exists for stay relief is made on a case-by-case basis, because the Bankruptcy Code does not define " cause." Christensen v. Tucson Estates, Inc. (In re Tucson Estates, Inc.), 912 F.2d 1162, 1166 (9th Cir. 1990).
In this case, the bankruptcy court found cause for termination of the stay to allow the marital dissolution proceedings to continue because of the nature of the issues and the state court's extensive experience in family law matters. The bankruptcy judge observed,
Family law matters, according to my view, belong in the Family Law Court. I have no expertise on such matters. . . . [I]n contrast, just up the street in the Family Law Court, we have judges who are enormously well versed in those matters, and that's the place to litigate family law matters insofar as . . . giving appropriate weight in the Court's view to all the matters. . . . What's before the court today is a motion to proceed in family law court. That motion is granted.
Tr. Hr'g 22:14 - 23:1 (November 27, 2007.
The bankruptcy court's decision that cause existed to terminate the stay of the marital dissolution proceedings is consistent with the law of this circuit.
It is appropriate for bankruptcy courts to avoid incursions into family law matters " out of consideration of court economy, judicial restraint, and deference to our state court brethren and their established expertise in such matters." . . . Schulze v. Schulze, 15 B.R. 106, 109 (Bankr. S.D. Ohio 1981) (granting debtor's wife relief from stay to complete state proceedings for divorce, child custody and property division).
The Schulze case specifically ruled that " cause" existed because a nondebtor spouse's rights would be seriously compromised if bankruptcy proceedings continued while divorce proceedings were stayed indefinitely. Schulze, 15 B.R. at 109.
MacDonald v. MacDonald (In re MacDonald), 755 F.2d 715, 717 (9th Cir. 1985). MacDonald, and this excerpt, have been oft-cited by other circuits to support similar rulings that cause may exist to terminate the stay in regard to marital dissolution proceedings. See e.g., Carver v. Carver, 954 F.2d 1573, 1578 (11th Cir. 1992) (holding that courts should liberally grant relief " to avoid entangling the federal courts in family law matters"); In re Robbins, 964 F.2d 342, 346 (4th Cir. 1992) (holding that cause exists where lifting the stay promotes judicial economy); In re White, 851 F.2d 170, 173 (6th Cir. 1988)(holding that cause exists when bankruptcy court defers to greater expertise of the divorce court). Indeed, the bankruptcy court's position here aligns with the counsel provided by the Supreme Court in Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 12, 124 S.Ct. 2301, 159 L.Ed.2d 98 (2004):
One of the principal areas in which this Court has customarily declined to intervene is the realm of domestic relations. Long ago we observed that " [t]he whole subject of the domestic relations of husband and wife, parent and child, belongs to the laws of the States and not to the laws of the United States." In re Burrus, 136 U.S. 586, 593, 34 L.Ed. 500, 10 S.Ct. 850 (1890). See also Mansell v. Mansell, 490 U.S. 581, 587, 104 L.Ed.2d 675, 109 S.Ct. 2023 (1989) (" [D]omestic relations are preeminently matters of state law"); Moore v. Sims, 442 U.S. 415, 435, 60 L.Ed.2d 994, 99 S.Ct. 2371 (1979) (" Family relations are a traditional area of state concern"). So strong is our deference to state law in this area that we have recognized a " domestic relations exception" that " divests the federal courts of power to issue divorce, alimony, and child custody decrees." Ankenbrandt v. Richards, 504 U.S. 689, 703, 119 L.Ed.2d 468, 112 S.Ct. 2206 (1992). We have also acknowledged that it might be appropriate for the federal courts to decline to hear a case involving " elements of the domestic relationship, " id., at 705, 119 L.Ed.2d 468, 112 S.Ct. 2206, even when divorce, alimony, or child custody is not strictly at issue[.]
In sum, the bankruptcy court appropriately found cause for relief from the automatic stay existed based on the expertise of the state court in family law matters. Where cause for relief from the automatic stay is established, " the burden of going forward and the burden of persuasion shifts to the party opposing relief [from the stay] on all issues." In re 15375 Memorial Corp., 382 B.R. 652, 686 (Bankr. D. Del. 2008). The bankruptcy court's ruling is consistent with the law of this circuit and, thus, the bankruptcy court did not abuse its discretion in granting relief from the automatic stay so that the marital dissolution proceeding could continue.
The bankruptcy court also found Debtor's opposition to the motion unintelligible, violated various local rules, and lacked evidentiary support.
Although the bankruptcy court's order granting relief from the automatic stay to allow the marital dissolution proceedings to continue was consistent with case law, and not an abuse of discretion, it was perhaps unnecessary. In 2005, Congress amended § 362(b) by adding a " dissolution of a marriage" exception to the list of actions and proceedings to which the automatic stay does not apply. The Code now provides that:
CONCLUSION
We AFFIRM the order of the bankruptcy court.
Appellee/Movant in her moving papers by reference to a 2000 civil case brought by Appellant/Debtor including against Judge Bufford, App. Exhibit D, pages 44 and 49-58, Related Parties and cases #2 and #8, respectively, has intentionally inserted prejudicial, infectious, inflammatory and on its face disqualifying matter. In the interests of justice, Appellant/Debtor address whether now this " Sword of Damocles" in this case should continue before Judge Bufford, who now may even be a witness due to Appellee/Movant's insertion which likely will be focused on by other persons. Appellant/Debtor necessarily addresses this with trepidation.
THE COURT: The tentative is to grant the motion [for relief from stay] on several grounds. One is that [Debtor's] opposition is unintelligible. Second, the pages are not numbered, contrary to local rule, and, third, that we couldn't find any evidence. DEBTOR: Your Honor, as to the third point, I'm not sure whether the Court can't find the evidence submitted or whether it finds the evidence insufficient. THE COURT: We didn't find any evidence at all, sir. We found points, not much by way of authorities. We found argument, but we didn't find any evidentiary submission at all. Tr. Hr'g 1:10-23. The bankruptcy court's rulings in this regard are consistent with our observations of Debtor's approach in this appeal, as we discuss above. See Discussion, Section I, supra.
(b) The filing of a petition under section 301, 302, or 303 of this title . . . does not operate as a stay -. . . (2) under subsection (a) - (A) of the commencement or continuation of a civil action or proceeding - . . . (iv) for the dissolution of a marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate[.]
§ 362(b)(2)(A)(iv). Since Debtor's bankruptcy case was filed in 2007, after the effective date of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), there was no automatic stay in effect to prohibit continuation of the marital dissolution proceedings as to non-estate property issues. And if there are any issues in the marital dissolution proceedings that purport to affect property of Debtor's bankruptcy estate, something we can not discern from the record, the order entered by the bankruptcy court specifically limits enforcement of any judgment in the divorce court to non-estate property or earnings." Since the terms of the bankruptcy court's order appear to be consistent with the express provisions of § 362(b)(2)(A)(iv), Debtor was not prejudiced by entry of that order.