Groetken v. Davis (In re Davis)

• Decision Date: 24 May 2002
• Docket Number: 00-4071.
• Citation: 35 F. App'x 826
• Parties: In re Todd D. DAVIS, Debtor, Phillip J. Groetken, doing business as Phil Groetken Livestock, Plaintiff-Appellee, v. Todd D. Davis, Defendant-Appellant, BARRETT & DAINES; N. George Daines; Christopher L. Daines, Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

35 F. App'x 826

In re Todd D. DAVIS, Debtor,Phillip J. Groetken, doing business as Phil Groetken Livestock, Plaintiff-Appellee, v. Todd D. Davis, Defendant-Appellant,BARRETT & DAINES; N. George Daines; Christopher L. Daines, Appellants.

No. 00-4071.

United States Court of Appeals, Tenth Circuit

May 24, 2002

Before EBEL, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and MILLER, District Judge.^*

ORDER AND JUDGMENT^**

EBEL, Circuit Judge.

This is an appeal from a judgment of the Bankruptcy Appellate Panel ("BAP") pursuant to 28 U.S.C. § 158.

On May 24, 1993, Philip J. Groetken, doing business as Phil Groetken Livestock ("Groetken"), a cattle trader in Iowa, sold 62 head of cattle to Todd D. Davis, a cattle trader in Utah. Davis paid for the 62 head of cattle with a check in the amount of $44,496.00, which failed to clear because of insufficient funds in Davis's bank account. On May 26, 1993, Groetken sold Davis 127 head of cattle, for which Davis "promised" to pay $91,160.06 by wire "the next morning." Davis failed to do so. Davis later paid Groetken the following sums: $14,496.00 on June 30, 1993; $30,000.00 on July 14, 1993; $9,000.00 on August 4, 1993; and $23,000.00 on September 14, 1993. (Tr. 22-23.) These payments totaled $76,496.00, leaving $59,160.06 still owed to Groetken by Davis on the two sales.

In March 1994, Groetken filed suit in Utah state court alleging Davis had defrauded him and owed him $59,160.06. Thereafter, and prior to trial of Groetken's claim, Davis filed a bankruptcy proceeding in Utah. In that proceeding, Groetken filed a complaint to determine the dischargeability of the indebtedness incurred by Davis in these two transactions. After a hearing, the bankruptcy judge held that both transactions involved fraud and deception on the part of Davis and therefore were nondischargeable under 11 U.S.C. § 523(a)(2)(A). (App.165-66.) The bankruptcy judge then entered judgment in favor of Groetken against Davis in the principal amount of $59,160.06, together with both pre-judgment and post-judgment interest. (App.167.) Additionally, the bankruptcy judge held, sua sponte, that Groetken was entitled to the recovery of reasonable and necessary attorney's fees and costs from Davis and his attorneys because of Davis's misconduct in incurring the debt and his attempt to avoid liability through a frivolous defense. The court held Davis and his attorneys jointly and severally liable to pay Groetken $10,071.86 in attorney's fees as a sanction pursuant to Federal Rule of Bankruptcy Procedure 9011. (App.171.) The bankruptcy court also awarded Groetken's costs in the amount of $4,520.06. (App.171.)

Pursuant to 28 U.S.C. § 158(b), Davis appealed to BAP, the latter affirming the bankruptcy court's finding of nondischargeability and its award of costs. In particular, BAP found that the bankruptcy court had erred in holding that the indebtedness incurred in connection with the May 24th check transaction was nondischargeable, but it refrained from reversing the bankruptcy court on that issue, believing that such was "moot," given that Davis's payments of $14,496.00 on June 30, and $30,000.00 on July 14 had paid in full his obligation on the May 24th check transaction, and that accordingly "there is no longer a debt to be excepted from discharge." Groetken v. Davis (In re Davis), 246 B.R. 646, 653 (10th Cir. BAP2000). BAP then went on to hold that the bankruptcy court was correct in ruling that Davis's debt arising from the May 26 transaction was nondischargeable. Id. In so doing, BAP also rejected Davis's claim that he was denied a fair trial because the bankruptcy judge was prejudiced and biased. Id. at 653-55. BAP also dismissed the attempted appeal of Barrett & Dairies, the law firm representing Davis, because the firm was not listed as a party in the notice of appeal. Id. at 656.

As to the award of attorney's fees to Groetken against Davis by way of sanction for Davis's misconduct, BAP remanded that phase of this dispute to the bankruptcy court for further proceedings because the bankruptcy court had not followed Rule 9011 since it failed to give Davis notice and an opportunity to respond to Groetken's request that he be awarded attorney's fees because of Davis's frivolous and vexatious defense to his claim of nondisehargeability, citing Braley v. Campbell, 832 F.2d 1504, 1514 (10th Cir.1987) (en banc). In re Davis, 246 B.R. at 657. In so doing, BAP noted, inter alia, "the sanctioning of a party requires specific findings that the party was aware of the wrong doing," citing White v. General Motors Corp., 908 F.2d 675, 685 (10th Cir.1990). In re Davis, 246 B.R. at 657. BAP went on to state that "on remand the court should make findings regarding who, if anyone, bears the fault for the various actions warranting sanctions." Id.

Davis appealed BAP's ruling, but before briefing commenced in this court, we asked the parties to address two jurisdictional matters: (1) whether BAP's opinion and judgment were final and appealable under 28 U.S.C. § 1291 in light of the partial remand to the bankruptcy court; and (2) whether N. George Daines has standing to appeal BAP's decision, as the record did not suggest that he was impacted by the ruling. In response, Davis and his attorneys contend that BAP's decision is not final and appealable, and that N. George Daines does have standing because he was potentially impacted by the decision. Groetken argued that the decision is appealable because the remanded sanctions issue is separable and distinguishable from the decision on the merits of the case, and that Davis's attorneys lack standing because they were not listed as parties in the notice of appeal from the bankruptcy court's decision. We will address these issues before reaching the merits.

I. FINAL JUDGMENT

At the outset, we are faced with a jurisdictional problem of whether BAP's remand of the bankruptcy court's imposition of sanctions against Davis in the form of attorneys' fees rendered the balance of BAP's ruling non-final and not immediately appealable. We believe the remand relates to a peripheral issue not calling for significant further proceedings and does not render the rest of BAP's ruling non-final and not immediately appealable. In Budinich v. Becton Dickinson & Co., 486 U.S. 196, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988), the Supreme Court held that "as a general matter, at least, we think it indisputable that a claim for attorney's fees is not part of the merits of the action to which the fees pertain" and that, accordingly, a decision on the merits is a final decision under 28 U.S.C. § 1291 and therefore immediately appealable even though "the recoverability or amount of attorneys' fees for litigation remains to be determined." Id. at 199-200, 108 S.Ct. 1717.¹

II. PARTIES

We next discuss the question of just who are "parties" to the present appeal in this court. The Notice of Appearance filed in the bankruptcy court was as follows: "[The] undersigned attorneys, N. George Daines and Christopher L. Daines, hereby enter their appearances as co-counsel with Stephen W. Jewell for Todd D. Davis, defendant, in this adversary proceeding." (App.40.) That notice was in the name of "Barrett & Daines" and signed by N. George Daines as "attorney for defendant Todd D. Davis." (App.40.) However, it would appear that it was Christopher L. Daines who appeared and participated in the hearing in bankruptcy court on behalf of the firm. By his order and judgment, the bankruptcy judge entered "[a] separate Judgment against Defendant's attorneys named herein in the amount of $10,071.86 for which said attorneys are jointly and severally liable with the Defendant in accordance with sanctions imposed by the Court under Bankruptcy Rule 9011." (App.171.) To that order and judgment, a timely notice of appeal was filed. That notice of appeal in its first paragraph stated that "Todd D. Davis, the defendant[,] appeals under 28 U.S.C. § 158(a) or (b) from the Judgment of the bankruptcy judge[,] John H. Allen[,] entered in this adversary proceeding on the 30th day of March, 1999." (App.173.) In that same notice, "[t]he names of all parties to the judgment appealed from" were identified as "Plaintiff: Phillip J. Groetken dba Phil Groetken Livestock," and the "defendant" was listed only as "Todd D. Davis." Respective counsel and co-counsel for the "parties" were then identified in the notice byname. (App.173-74.)

In its opinion and judgment, BAP, relying on Fed. R. Bankr.P. 8001(a), dismissed "the appeal of Barrett & Daines" because the firm is not listed as a "party" in the notice of appeal filed in the bankruptcy court. 246 B.R. at 656. On appeal in this court, that ruling is challenged, counsel contending that "this court has jurisdiction over the attorney portion of the sanctions order." (App't Br. at 39.) We disagree and hold that BAP did not err in dismissing the "attempted" appeal to BAP by Barrett & Daines from the bankruptcy court's order and judgment. In dismissing the appeal, BAP relied on Torres v. Oakland Scavenger Company, 487 U.S. 312, 314, 108 S.Ct. 2405, 101 L.Ed.2d 285 (1988), in which the Supreme Court stated, in interpreting Fed. R.App. P. 3(c), that "[t]he failure to name a party in a notice of appeal is more than excusable 'informality;' it constitutes a failure of that party to appeal," and Storage Technology Corporation v. United States District Court for the District of Colorado, 934 F.2d 244, 248 (10th Cir.1991), in which this court held that "each and every party must be specifically named in the notice of appeal or in a functionally equivalent document properly listing the appealing parties and filed within the appeal period."² We are not here confronted with any "functionally equivalent document."

III. DISCHARGEABILITY

As above stated, the bankruptcy court found that the obligations incurred by Davis on both the May 24th and May 26th transactions involved fraud and deception on his part and that neither...