112 B.R. 341 (9th Cir.BAP (Cal.) 1990), 487-0004, In re Hammer
| Citation | 112 B.R. 341 |
| Party Name | In re Brian D. HAMMER, Debtor. Brian D. HAMMER, Appellant, v. Michael DRAGO and Ed Summers, Appellees. BAP No. NC-89-1864-AsRO. Bankruptcy No. 486-04397 CN. |
| Case Date | April 10, 1990 |
| Court | United States Bankruptcy Courts, Ninth Circuit |
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Argued and Submitted Feb. 15, 1990.
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[Copyrighted Material Omitted]
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Brian D. Hammer, Los Altos, Cal., in pro. per.
Mark W. Frisbie, Elliott Abrams, Walnut Creek, Cal., for appellees.
Before ASHLAND, RUSSELL and OLLASON, Bankruptcy Judges.
OPINION
ASHLAND, Bankruptcy Judge:
The debtor Brian Hammer appeals from the bankruptcy court's denial of his request for relief from a default judgment entered against him in an adversary proceeding for nondischargeability of debt. We affirm.
FACTS
In 1982 Hammer hired appellees Drago and Summers to maintain his swimming pool at his personal residence. The three became personal friends and during November, 1985 appellees began investing in several business enterprises under Hammer's control. The investments totaled approximately $285,000 and were "secured" with phony deeds of trust. All the phony deeds of trust were dated pre-petition. In September, 1986 Hammer filed for Chapter 7 bankruptcy. It is undisputed that on October 23, 1986 he made out a deed of trust on his personal residence to appellees as the beneficiaries in the amount of $400,000.
In October, 1986 debtor was indicted for mail fraud. On February 6, 1987 he surrendered for incarceration at Lompoc federal prison.
On January 5, 1987 appellees filed a complaint for nondischargeability of debt on grounds of fraud and false pretenses under 11 U.S.C. § 523(a)(2)(A). On January 9, 1987 they served debtor with a summons and complaint by first-class mail at the residence address provided by debtor in his bankruptcy petition and sent copies of these documents to debtor's former attorney. This service of process was made in accordance with Bankruptcy Rule 7004(b)(9) which authorizes service of process to be made upon the debtor by first-class mail by "mailing copies of the summons and complaint to the debtor at the address shown in the petition ... or to such other address as the debtor may designate in writing filed with the court and, and if the debtor is represented by an attorney, to the attorney at his post-office address." In his brief, debtor admitted having discharged his attorney in December, 1986. Debtor filed no answer to this action.
On or about January 25, 1987 the summons and complaint were returned to appellees' counsel marked, "return to sender, moved left no address." Subsequently, appellees' counsel contacted Robert Ward, debtor's former attorney, who told him that debtor had not responded to Mr. Ward's correspondence nor informed him of debtor's whereabouts. Mr. Ward indicated that he did not intend to represent debtor in connection with this adversary proceeding. Appellees' counsel also contacted the bankruptcy court clerk to ascertain debtor's address only to discover that no notice of change of address was filed. At trial, Hammer testified that he moved from the residence listed in his bankruptcy petition in November, 1986. Also at trial, appellees denied having knowledge of debtor's whereabouts prior to being notified by the U.S. Attorney's office that debtor was at Lompoc federal prison.
On March 7, 1987 a default judgment was entered against Hammer in the amount of $310,866.86. This judgment remains outstanding. In December, 1987 appellees
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levied a writ of execution on debtor's Merrill Lynch securities brokerage account which contained approximately $300. Appellees insisted that two pieces of evidence demonstrate that Hammer knew about this levy and its import: 1) a process receipt verifying that the marshall notified debtor of the levy by certified mail, and 2) a letter written by Hammer on January 31, 1989 to appellees' attorney demanding that appellees return the "$300 improperly seized in 1987 from our account." In January, 1989 appellees levied a writ of execution against debtor's 1987 Mercury Topaz. Debtor claimed this was the first time he received knowledge of the default judgment.
Debtor filed in bankruptcy court a claim of exemption for his vehicle, which appellees opposed. Shortly thereafter, he filed in federal district court a motion to quash levy and writ of execution and stay further enforcement proceedings, which appellees also opposed. On February 16, 1989 the bankruptcy court denied debtor's claim of exemption. Since appellees were not present at the marshall's sale and no bid was made on the automobile, it was released back to the debtor and appellees re-levied on the car immediately. This time, debtor filed a claim of exemption in federal district court and obtained a hearing date for his pending motion to quash execution and stay further enforcement proceedings. The district court judge took all these matters under submission and on August 7, 1989 issued its Order Dismissing Action, ruling that the district court was without jurisdiction to entertain these matters, and referred debtor's case to bankruptcy court pursuant to Local Rule 700-2.
Pending the district court judge's decision, debtor filed in bankruptcy court a motion entitled Application to Set Aside Right to Attach Order And Release Attached Property, Etc., which appellees opposed. Appellees interpreted this to be a motion under Federal Rule of Civil Procedure 60(b)(6), which provides that a court may vacate a final judgment for "any other reason justifying relief from the operation of the judgment." On July 3, 1989 the bankruptcy court decided not to rule on the motion because a similar motion was already before the district court. After the district court judge issued his order, debtor renewed his claim of exemption in bankruptcy court and appellees obtained September 11, 1989 as the hearing date for their objection to this exemption claim. At this hearing, the court also heard arguments regarding debtor's Rule 60(b)(6) motion. Debtor maintained that such relief should be granted on grounds of lack of notice and opportunity to defend. He argued that since service of process was not made in accordance with Fed.R.Civ.P. 4(c)(2)(C)(ii) nor Fed.R.Civ.P. 4(d) nor Bankruptcy Rule 7004(b)(1), it was improper and therefore, the default judgment is void.
The bankruptcy court determined that service was proper pursuant to Rule 7004(b)(9) since the summons and complaint were mailed by first-class mail to the address listed in debtor's petition, and noted that the rule expressly states that debtor's correct address is the address he indicates in his petition. The court added that once a debtor files a bankruptcy petition and subsequently moves to different premises, it is his responsibility to apprise his attorney or the bankruptcy court clerk of his forwarding address.
Appellees also argued that in order...
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