In re Canter

• Decision Date: 15 August 2002
• Docket Number: No. 01-56151.,01-56151.
• Citation: 299 F.3d 1150
• Parties: In re Deborah M. CANTER, aka D. Maristina Canter, Debtor, Alan Canter; Canter Family Trust, Creditors-Appellants, v. Deborah M. Canter, aka D. Maristina Canter, Debtor-Appellee, and Edwina E. Dowell, Chapter 13 Trustee, Trustee.
• Court: U.S. Court of Appeals — Ninth Circuit

299 F.3d 1150

In re Deborah M. CANTER, aka D. Maristina Canter, Debtor, Alan Canter; Canter Family Trust, Creditors-Appellants, v. Deborah M. Canter, aka D. Maristina Canter, Debtor-Appellee, and Edwina E. Dowell, Chapter 13 Trustee, Trustee.

No. 01-56151.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 7, 2002.

Filed August 15, 2002.

Herbert Katz, Kelly Lytton & Vann LLP, Los Angeles, CA, for the creditors-appellants.

Andrew E. Smyth, Los Angeles, CA, for the debtor-appellee.

Appeal from the United States District Court for the Central District of California; Manuel L. Real, District Judge, Presiding. D.C. No. CV-00-1185-R.

Before THOMAS and RAWLINSON, Circuit Judges, and ARMSTRONG,^* District Judge.

OPINION

RAWLINSON, Circuit Judge.

Creditors/Appellants Alan ("Alan") and Elizabeth ("Elizabeth") Canter, and the Canter Family Trust ("Canter Trust") appeal the district court's sua sponte withdrawal of reference, and its order denying their motion to vacate the stay of the municipal court's judgment in an unlawful detainer action against Debtor/Appellee Deborah M. Canter ("Deborah").

Because the district court erred when it sua sponte withdrew the reference to the bankruptcy court without showing cause, and improperly enjoined the enforcement of the municipal court judgment, we vacate the withdrawal of reference and stay order, and remand the matter to the bankruptcy court.

BACKGROUND

On September 11, 1991, Alan and Elizabeth Canter purchased 446 S. Highland Avenue, Los Angeles, California ("446 S. Highland") as an investment. Alan and Elizabeth's son, Gary Canter ("Gary"), and Gary's wife Deborah resided in Alan and Elizabeth's house from September 25, 1991, until February 24, 1999, when Gary and Deborah separated. Since purchasing the property in 1991, Alan and Elizabeth have been the only persons with legal or equitable title to the property. They transferred title to the Canter Family Trust in 1997.

In Gary and Deborah's divorce proceedings, neither was found to have any ownership interest in the property. When Deborah filed for bankruptcy once in 1992 and twice in 1996, she never claimed an interest in the property, although she listed the property as her residence in both 1996 proceedings. In Deborah's 1999 bankruptcy, she listed the property under schedule A as property in which she had an interest, but did not claim an exemption for it.

When Gary and Deborah separated, Gary moved out of his parents' house. Although Gary consistently paid rent to his father during his residency, Alan has not received a rent payment since shortly after Gary moved out. On August 13, 1999, Alan filed an unlawful detainer action against Deborah, seeking her eviction and $5,000 past due rent. The matter was set for trial on October 26, 1999, but the proceedings were stayed when Deborah filed her Chapter 13 bankruptcy petition twenty-four minutes before trial was to begin. On January 26, 2000, the bankruptcy court lifted the stay at the Canter Trust's request, thereby allowing pursuit of the unlawful detainer action. Alan and Deborah subsequently signed a stipulated judgment providing that Deborah vacate the premises. The municipal court entered a judgment pursuant to the stipulation on February 7, 2000, and ordered that Alan recover possession of the realty from Deborah.

On February 17, 2000, the district court withdrew the reference to the bankruptcy court, and on February 29, 2000, stayed enforcement of the municipal court's judgment. The district court twice denied the Canter Trust's motion to lift the stay. When the Canter Trust inquired why the stay was reinstated, the district court's only explanation was, "because I said it." The district court also denied the Canter Trust's motion to vacate the stay of the judgment. Alan, Elizabeth, and the Canter Trust filed a timely appeal of the district court's sua sponte withdrawal of reference and subsequent denial of the motions to lift the automatic stay or vacate the order staying enforcement of the municipal court judgment.

DISCUSSION

A. Jurisdiction

As a threshold matter, we must determine whether we have jurisdiction over this appeal. Webb v. Ada County, 285 F.3d 829, 835 (9th Cir.2002). We have previously held that "we do not have jurisdiction over interlocutory appeals from orders withdrawing reference of cases to the bankruptcy court." Packerland Packing Co. v. Griffith Brokerage Co. (In re Kemble), 776 F.2d 802, 806 (9th Cir.1985); Abney v. Kissel Co. (In re Kissel Co.), 105 F.3d 1324, 1325 (9th Cir.1997). Although we have not addressed jurisdiction over appeals from a sua sponte order withdrawing reference, the Third Circuit has defined such an order as "interlocutory and unreviewable under § 1291." In re Pruitt; Landmark Sav. Ass'n (In re Pruitt), 910 F.2d 1160, 1166 (3d Cir.1990). In its ruling, the Third Circuit reasoned that the sua sponte withdrawal "merely determine[d] the forum in which a final decision on the merits will be reached." Id.

We see no logical basis for distinguishing between withdrawal of reference at the request of a party and sua sponte withdrawal of reference. Accordingly, we follow the holding of the Third Circuit and conclude that a sua sponte order withdrawing reference to the bankruptcy court is interlocutory and unreviewable under 28 U.S.C. § 1291.

However, In re Kemble, 776 F.2d at 806 n. 5, presciently noted the availability of a writ of mandamus to review the otherwise unreviewable order withdrawing reference to the bankruptcy judge. The Third Circuit expressly applied this notion to review a sua sponte withdrawal of reference. In re Pruitt, 910 F.2d at 1167. We are persuaded that appellate review of the district court's sua sponte withdrawal of reference is consistent with "the traditional use of the writ ... to confine an inferior court to a lawful exercise of its prescribed jurisdiction...." Id. (citation, internal quotation marks and alterations omitted). Accordingly, we grant Appellants' alternative request to treat their appeal as a petition for a writ of mandamus, over which we have jurisdiction. See id.

B. Appropriateness of Mandamus Relief

We apply the following five-factor test to determine whether the exercise of mandamus jurisdiction is proper:

(1) The party seeking the writ has no other adequate means, such as a direct appeal, to attain the relief he or she desires.

(2) The petitioner will be damaged or prejudiced in a way not correctable on appeal....

(3) The district court's order is clearly erroneous as a matter of law.

(4) The district court's order is an oft-repeated error, or manifests a persistent disregard of the federal rules.

(5) The district court's order raises new and important problems, or issues of law of first impression.

DeGeorge v. United States Dist. Ct. for the Cent. Dist. of Cal., 219 F.3d 930, 934 (9th Cir.2000) (quoting Bauman v. United States Dist. Ct., 557 F.2d 650, 654-55 (9th Cir.1977)). We have acknowledged that the application of these factors is "by no means precise," United States v. Amlani, 169 F.3d 1189, 1194 (9th Cir.1999), and the "factors should be weighed together based on the facts of the individual case." SG Cowen Sec. Corp. v. United States Dist. Ct. for the N. Dist. of Cal., 189 F.3d 909, 913 (9th Cir.1999).

Application of the Bauman factors in this case favors granting the writ. Appellants have no other adequate means of obtaining the relief desired. They may not directly appeal the withdrawal of reference because "we do not have jurisdiction over interlocutory appeals from orders withdrawing reference of cases to the bankruptcy court." In re Kemble, 776 F.2d at 806; see In re Kissel Co., 105 F.3d at 1325. Appellants therefore satisfy the first Bauman factor. See SG Cowen, 189 F.3d at 914.

Appellants "will be damaged [and] prejudiced in a way not correctable on appeal." DeGeorge, 219 F.3d at 934. This factor is "closely related to the preceding one." Id. at 935. Because the first two factors are closely related, and our case law precludes Appellants' direct appeal of the sua sponte withdrawal, the damage and prejudice Appellants have suffered thus far cannot be corrected on direct appeal. See id. The withdrawal occurred over two years ago, and Appellants sit in limbo despite two attempts to lift the stay on the enforcement of the unlawful detainer order. With the enforcement of the judgment stayed, Deborah continues to reside in the property at 446 S. Highland without making any rental payments, and Appellants are denied beneficial use of the property. Because Appellants' ability to bring a direct appeal is actually limited, and the type of damage and prejudice are relevant in determining mandamus relief, the second Bauman factor weighs in favor of Appellants. See id.

The district court clearly erred in withdrawing the reference. The Bankruptcy Code provides that the district court may withdraw the reference of a bankruptcy case on its own motion for cause shown. 28 U.S.C. § 157(d) (Supp. V 1987). However, the district court failed to articulate any cause for its withdrawal of reference in this case.

We have considered the following factors in determining whether cause exists under § 157(d): "the efficient use of judicial resources, delay and costs to the parties, uniformity of bankruptcy administration, the prevention of forum shopping, and other related factors." Security Farms v. Int'l Bhd. of Teamsters, Chauffers, Warehousemen, & Helpers, 124 F.3d 999, 1008 (9th Cir.1997) (citing In re Orion Pictures Corp., 4 F.3d 1095, 1101 (2d Cir. 1993)).

The district court's withdrawal of reference in this case was an inefficient allocation of judicial resources, especially because the bankruptcy court was more familiar with the facts and issues of the case, and had already lifted the stay to allow the unlawful detainer proceedings to continue.

Rather than enhancing efficiency, the district court's action created inefficiency,...