In re Preston
| Decision Date | 18 September 2014 |
| Docket Number | Adversary No. 8:11–AP–01231–TA.,Bankruptcy No. 8:05–BK–50128–TA.,No. SACV 14–00163–VAP.,SACV 14–00163–VAP. |
| Citation | 516 B.R. 606 |
| Court | U.S. District Court — Central District of California |
| Parties | In re William E. PRESTON. |
Amy L. Goldman, Lawrence Neil Halperin, Scott Lee, Lewis Brisbois Bisgaard and Smith LLP, Los Angeles, CA, for Plaintiff.
Philip Dennis Dapeer, Philip D. Dapeer ALC, Westlake Village, CA, Janis L. Turner, Janis L. Turner Law Offices, San Diego, CA, for Defendant.
PROCEEDINGS: MINUTE ORDER AFFIRMING AND ADOPTING THE PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW (DOC. NO. 2) (IN CHAMBERS)
The Court has received and reviewed the Proposed Findings of Fact and Conclusions of Law Regarding Capacity of William E. Preston on the Date of the Filing of the Bankruptcy Petition (Doc. No. 2) (“Proposed Findings”) submitted by Bankruptcy Judge Gregg W. Zive in this adversary proceeding between Plaintiff R. Todd Neilson, as chapter 7 trustee for the bankruptcy estate of William E. Preston, and Defendants Joyce Moore, the Preston Music Group, Inc., the William Preston Trust (“Trust”), and Frederick Wilhelms III in his capacity as trustee for the William Preston Trust (collectively, “Defendants”). Moore and the Trust submitted objections to the Proposed Findings, but as explained below, the Court finds them untimely under Federal Rule of Bankruptcy Procedure (“FRBP”) 9033. After reviewing the Proposed Findings, the papers submitted, and the record in this action, this Court AFFIRMS and ADOPTS the Bankruptcy Court's Proposed Findings of Fact and Conclusions of Law.
The facts and precise procedural history are complicated and described in more detail in the Proposed Findings. This Order provides only a brief summary and the procedural history after the Bankruptcy Court's filing of the Proposed Findings.
On May 20, 2011, Plaintiff filed a Complaint against Defendants, seeking a judgment declaring that (1) William Preston, the deceased Debtor, was not incapacitated when he filed a chapter 11 bankruptcy petition on October 21, 2005 in the Central District of California, (2) the Trust remained revocable, and (3) the assets currently held by Neilson and any other assets of Debtor are assets of the bankruptcy estate. (See Proposed Findings at 1–2.) Pursuant to a January 30, 2013 Order, the Bankruptcy Court held a trial only on the issue of Preston's capacity on October 8–9, 2013 and November 19, 2013. (Id. at 2.) On February 4, 2014, the bankruptcy court filed its Proposed Findings in this “non-core” matter, and submitted it to this Court on February 5, 2014 for entry of a final judgment pursuant to 28 U.S.C. § 157(c)(1). (See In re William E. Preston, Adversary No. 8:11–ap–01231–TA (Bankr.C.D.Cal.), ECF No. 239; Doc. Nos. 1, 2.) In the Proposed Findings, the Bankruptcy Court found Defendants, who are contesting the validity of Preston's October 21, 2005 bankruptcy petition, have not submitted evidence sufficient to rebut the presumption that Preston had capacity when he signed the petition. (See Proposed Findings at 13–17.)
The clerk of the Bankruptcy Court did not file the Proof of Service of the Proposed Findings on the parties until June 9, 2014, but the Proof of Service clearly indicates the Proposed Findings was served on all the parties, including counsel for Joyce Moore and the Trust, on February 4, 2014 through notice of electronic filing and United States mail. (See In re William E. Preston, Adversary No. 8:11–ap01231–TA (Bankr.C.D.Cal.), ECF No. 246.)
On April 22, 2014, the Trust filed an Objection to the Proposed Findings. (Doc. No. 4.) On May 13, 2014, Moore filed a Joinder and Additional Objection to the Proposed Findings. (Doc. No. 8.) On May 27, 2014, Neilson filed a Response to the Objections, arguing the Objections were untimely filed, pursuant to FRBP 9033, which gives the parties fourteen days of service to file objections to the bankruptcy court's proposed findings. (Doc. No. 9.)
On May 30, 2014, Moore filed a Reply to Neilson's May 27, 2014 Response, contending she never received service of the Proposed Findings. (Doc. No. 11.) On June 3, 2014, Moore filed an additional Objection to the substance of the Proposed Findings. (Doc. No. 12.) On June 5, 2014, the Trust filed its Reply to Neilson's May 27, 2014 Response, arguing this Court is not bound by the deadlines set by FRBP 9033. (Doc. No. 13.)
On June 9, 2014, as noted above, the clerk of the Bankruptcy Court filed the Proof of Service on the parties, including on counsel for Moore and the Trust, effectuated on February 4, 2014. Relying on this Proof of Service, on June 16, 2014 Neilson filed an additional Response to the Replies by Moore and the Trust, asserting Rule 9033 applies here, the Proposed Findings was served on Moore and the Trust through their counsel on February 4, 2014, and thus the April 22, 2014 and May 13, 2014 filings of the Objections by Moore and the Trust were untimely under FRBP 9033. (Doc. No. 14.) On June 24, 2014, Moore filed another Reply, asserting that (1) Rule 9033 does not apply here, (2) any service of the Proposed Findings on her then-counsel on February 4, 2014 cannot be construed as service on her because her then-counsel filed a motion to withdraw as her counsel on the same day without notifying her of either the motion or the Proposed Findings, and (3) the Bankruptcy Court clerk's June 9, 2014 filing of the February 4, 2014 Proof of Service does not constitute evidence of service on Moore. (Doc. No. 15.)
District courts have original jurisdiction over bankruptcy cases and all civil proceedings “arising under title 11, or arising in or related to cases under title 11.” 28 U.S.C. § 1334. Pursuant to 28 U.S.C. § 157(a), a district court may refer actions within its bankruptcy jurisdiction to the bankruptcy court of that district. A bankruptcy judge may hear a non-core proceeding that is “related to” a case under title 11 and submit proposed findings of fact and conclusions of law to the district court. 28 U.S.C. § 157(c)(1). A bankruptcy court's conclusions of law are reviewed de novo and findings of fact are reviewed for clear error. Zurich Am. Ins. Co. v. Int'l Fibercom, Inc., 503 F.3d 933, 940 (9th Cir.2007) (citing cases); cf . Fed. R. Bankr.P. 8013. Pursuant to FRBP 9033, the district court only “make[s] a de novo review ... of any portion of the bankruptcy judge's findings of fact or conclusion of law to which specific written objection has been made in accordance with this rule” and “[w]ithin 14 days after being served with a copy of the proposed findings of fact and conclusions of law....” Fed. R. Bankr.P. 9033(b), (d). Similarly, § 157(c) of the Bankruptcy Code mandates de novo review only of “those matters to which any party has timely and specifically objected.” 28 U.S.C. § 157(c). See also Messer v. Peykar Int'l Co., Inc., 510 B.R. 31, 38 (S.D.N.Y.2014). After conducting its required review, the district court “may accept, reject, or modify the proposed findings of fact or conclusions of law.” Fed. R. Bankr.P. 9033(d).
As a preliminary matter, contrary to the assertions of Defendants William Preston Trust and Joyce Moore, the deadlines for filing objections to the proposed findings of fact and conclusions of law as set forth in FRBP 9033 apply here. (See Trust's June 5, 2014 Response at 2; Moore's June 24, 2014 Reply at 1.) The rules of the FRBP “govern procedure in cases under title 11 of the United States Code,” whether in the bankruptcy court or the district court. See Infrastructure Serv. Co., LLC v. Firestone, 328 B.R. 804, 806–07 (C.D.Cal.2005). See also Thomas v. Del Biaggio, No. 13–CV–2794 YGR, 2014 WL 3950898, at *5 (N.D.Cal. Aug. 11, 2014) ; In re Ulberg, No. 2:13–cv–02219 JAM, 2014 WL 545905, at *1 (E.D.Cal. Feb. 10, 2014) ; In re IndyMac Bancorp Inc., No. CV 12–02967–RGK, 2012 WL 1951474, at *1–2 .
Applying FRBP 9033, the Court finds Moore and the Trust untimely filed their Objections. As already noted, the Bankruptcy Court filed its Proposed Findings on February 4, 2014. On June 9, 2014, the Bankruptcy Court clerk filed the Proof of Service, showing service was effectuated on all Defendants, including counsel for Moore and the Trust on February 4, 2014. Pursuant to FRBP 7005 and Federal Rule of Civil Procedure 5(b)(1), service of the Proposed Findings on counsel for Moore and the Trust was proper. Although Moore argues service of the Proposed Findings on her counsel was insufficient because her then-counsel filed a motion to withdraw on the same day, the Court notes the Bankruptcy Court did not grant the motion to withdraw until February 6, 2014. (See In re William E. Preston, Bankruptcy No. 8:05–bk–50128–TA (Bankr.C.D.Cal.), ECF No. 625.) Service on Moore's counsel thus was proper under FRBP 7005 and Rule 5(b)(1). Also, although the Proof of Service on Defendants was not filed until June 9, 2014, the belated filing of the Proof of Service does not affect the validity of service, as even “[f]ailure to prove service does not affect the validity of service.” See Fed.R.Civ.P. 4(l ).
As the Court finds service of the Proposed Findings was effectuated properly on Moore and the Trust on February 4, 2014, the deadline for filing objections was February 18, 2014, fourteen days after the filing of the Proposed Findings, as required by FRBP 9033(b). Neither Moore nor the Trust filed timely objections. Nor did either Defendant file a request for additional time to file objections, pursuant to FRBP 9033(c).
The Trust and Moore filed their Objections for the first time on April 22, 2014 and May 13, 2014, respectively—with this Court, and not with the Bankruptcy Judge, as required. This Court thus considers Moore and the Trust to have waived their right to object to the Proposed Findings and to receive a de novo review. See Messer, 510 B.R. at 38 ; Infrastructure Serv., 328 B.R. at 807–08. The...
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