Fitzsimmons, In re

Decision Date06 October 1989
Docket Number88-2598,Nos. 88-2597,s. 88-2597
Citation920 F.2d 1468
Parties24 Collier Bankr.Cas.2d 562, Bankr. L. Rep. P 73,741 In re Edward R. FITZSIMMONS, Debtor. Edward R. FITZSIMMONS, Appellant, v. M. NOLDEN, Trustee of the Chapter 7 Estate of Edward R. Fitzsimmons; Chemgold, Inc., a California corporation; Trabefin, A.G., a Swiss corporation, Appellees. TRABEFIN, A.G., a Swiss corporation, Appellant, v. M. NOLDEN, Trustee of the Chapter 7 Estate of Edward R. Fitzsimmons; Edward R. Fitzsimmons; Chemgold, Inc., a California corporation, Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Edward R. Fitzsimmons, Mill Valley, Cal., pro. per.

Eric L. Henrikson, Henrikson & Gee, Oakland, Cal., for appellee, M. Nolden.

Debra L. Nolan, Law Office of Robert A. Huddleston, Walnut Creek, Cal., for appellee, Chemgold, Inc.

Howard L. Hibbard, Hibbard & Hibbard, Redwood City, Cal., for appellant, Trabefin, A.G., a Swiss Corp.

Appeal from the United States District Court for the Northern District of California.

Before TANG, HALL and BRUNETTI, Circuit Judges.

TANG, Circuit Judge:

Trabefin, A.G. and Edward R. Fitzsimmons appeal the district court's dismissal of their bankruptcy appeal. The district

court dismissed Trabefin's appeal under Northern District of California Local Rule 720-2 for failure to comply with Bankruptcy Rule 8006 which governs perfection of bankruptcy appeals. We affirm.


M. Nolden, the trustee of the bankrupt estate of Edward R. Fitzsimmons, filed suit in 1983 in bankruptcy court to establish whether a large amount of stock in Chemgold Inc. ("Chemgold"), a California mining company, belonged to Fitzsimmons (and hence to the estate) or to Trabefin, A.G. ("Trabefin"), a Swiss corporation which held the Chemgold stock. 1 The trustee alleged that Trabefin was Fitzsimmons' alter ego fraudulently created by Fitzsimmons to conceal his ownership of the Chemgold stock. 2 The bankruptcy court after a trial ruled in the trustee's favor on December 16, 1986.

On January 30, 1987, Trabefin mailed to opposing counsel a "Request for Record for Appeal." On February 2, 1987, Trabefin filed a timely notice of its appeal to the district court. Trabefin alleges that February 2nd is also the date when it personally served all parties, including the trustee's attorney, with a designation purportedly served of the record. The trustee's attorney denies receiving a copy of the designation on the 2nd.

On February 25, 1987, the trustee filed an objection to Trabefin's "Request for Record on Appeal" because it did not constitute a proper designation of record. On March 6, 1987, the trustee's attorney received in an envelope postmarked March 5, 1987, a copy of Trabefin's designation of the record. This copy bore a February 6, 1987 court file stamp with a proof of service dated February 17, 1987. On March 14, 1987, the trustee filed a counter-designation of record in response to the designation of the record mailed on March 5. On March 23, 1987, the bankruptcy court's official reporter mailed to Trabefin an estimate of the cost to prepare the reporter's transcripts. On April 16, 1987, Trabefin formally requested the bankruptcy court's official reporter to prepare the reporter's transcripts and to post the estimated cost of the transcripts.

On July 25, 1987, a bankruptcy clerk by letter requested of Trabefin (1) the money for the cost of preparing the clerk's transcripts, and (2) an amendment of the original designation of the record to correct misdesignated trial dates. The letter also advised Trabefin that the total estimate for copying the clerk's transcripts and the reporter's transcripts would be provided upon receipt of the amended designation. Approximately two months later, on September 25, 1987, Trabefin mailed the amended designation of record.

On October 14, 1987, a bankruptcy clerk informed the trustee's attorney that Trabefin had not yet posted the cost for preparing the clerk's transcripts; and therefore, that the preparation of the clerk's record had not yet begun. Two days later, on October 16, 1987, the trustee filed its motion to dismiss based on the delays in the designation of the record and the preparation of the transcripts.

Trabefin paid the bankruptcy court the required costs on October 23, 1987. The transcripts were forwarded to district court on November 1, 1987.

On January 15, 1988, the district court granted the trustee's motion to dismiss. The district court noted in its order that it was reluctant to dismiss, but that this was an "extreme case." The district court highlighted the following factors as justifying dismissal: (1) Trabefin did not serve the designation of the record for a month, well after the ten days provided by Bankruptcy Rule 8006 had expired; (2) Trabefin failed to take prompt steps to have the reporter's transcripts prepared; (3) Trabefin failed for two months to amend its On April 20, 1988, the district court affirmed its January 15, 1988 decision and denied Trabefin's motion for reconsideration. Trabefin filed a timely appeal.

"slipshod" designation of the record; (4) Trabefin failed to post the necessary fees or to contact the reporter until after the dismissal motion was filed; and (5) the consequences of these delays were not purely procedural but that in a bankruptcy case creditors can incur substantial prejudice from delay.

This court reviews the district court's dismissal for non-compliance with non-jurisdictional bankruptcy rules for an abuse of discretion. Sierra Switchboard Co. v. Westinghouse Elec. Corp., 789 F.2d 705, 706-07 (9th Cir.1986).


Trabefin argues that the district court abused its discretion when it dismissed its case pursuant to Bankruptcy Rule 8006 for four reasons. First, Trabefin claims that its conduct was not the product of willfulness, bad faith or fault. Second, no dismissal should have been entered because Trabefin did not disobey a court order prior to dismissal. Third, the district court did not consider alternative sanctions. Lastly, no party suffered prejudice.

1. Willfulness, Bad Faith and Fault

We strongly disagree with Trabefin's characterization of its own conduct. We conclude that Trabefin acted in bad faith. The extent of its bad faith becomes clear upon review of what occurred in this case:

Trabefin lost in its claim to some $1.5 million in stock proceeds against the trustee in December of 1986 in bankruptcy court. Trabefin should have served its notice of the designation of record within 10 days of its February 2, 1987 notice of appeal. Bankruptcy Rule 8006. Instead, Trabefin took well over a month, until March 5, 1987, to effect proper service.

Because Trabefin was to designate transcripts, upon filing of the designation of record, it had "immediately " to (1) send a written request for transcripts to the bankruptcy clerk, and (2) make arrangements for the payment of the transcripts. Id. (Emphasis added). These two tasks should have been completed around mid-February. Instead, Trabefin waited two months after filing the designation of record to make a formal request of transcripts of the clerk. Moreover, because this initial request was, as the district court put it, "slipshod," the bankruptcy clerk was forced to demand an amended request. Trabefin did not act immediately even when notified of its error; rather, it waited another two months to send the amended request.

Trabefin's behavior with the payment for the transcripts was no less dilatory. Trabefin did not pay the fees for the transcripts until late October of 1987, some eight months after the fees should have been posted. We note that Trabefin posted the fees only after the trustee had filed a motion to dismiss. Had the trustee not done this, one can only speculate how long Trabefin might have continued to delay.

We note also that another two years of delay has occurred because of this litigation on appeal of the motion to dismiss. Altogether, three years have been wasted because of Trabefin's failure to follow a few simple procedural steps. This delay has continued to put off the day when the rights to the $1.5 million are finally decided.

Trabefin's explanation of its delays indicates that there was misrepresentation to the district court about the facts of service of its designation of record. Trabefin claims it personally served all parties on February 2. However, the trustee's attorney denies receiving service on the 2nd. This denial is supported by the fact that (1) Trabefin served by mail a copy of the designation on March 5 (as evidenced by the postmark) to the trustee's attorney; and (2) the trustee filed objection to the lack of a designation of the record on February 25. Neither action is explicable if, as Trabefin claims, service was completed on February In sum, Trabefin has caused a delay of three years. Moreover, when called upon to explain the delay, Trabefin has apparently misrepresented the facts to the district court. Such behavior is clearly bad faith conduct.

                2.  Why would one serve a document twice?    Why would the trustee object to the lack of a document already served and received and assert it had never been received?    And if, as Trabefin now claims, it served the document on the 2nd, why did it not so respond when the trustee filed the objection?    Moreover, Trabefin has never produced a February 2nd proof of service
2. Disobedience of Prior Order

We disagree with Trabefin's assertion that dismissal can be granted only after a district court's prior order has been disobeyed. No actual disobedience of an order is necessary; it is enough if the district court considers alternative sanctions in lieu of dismissal. See In re Hill, 775 F.2d 1385, 1387 (9th Cir.1985). Moreover, in egregious circumstances such as these, not even consideration of alternative sanctions is necessary before dismissal. See In re Donovan, 871 F.2d 807, 808-09 (9th...

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