Pham v. Golden (In re Pham)
| Decision Date | 02 September 2015 |
| Docket Number | BAP No. CC–14–1342–KiBrD,Adv. No. SA 12–01619–CB,Bk. No. SA 12–18847–CB |
| Citation | 536 B.R. 424 |
| Parties | In re: Tony Pham and Lindsie Kim Pham, Debtors. Tony Pham; Lindsie Kim Pham; Jonathan T. Nguyen, Appellants, v. Jeffrey I. Golden, Chapter 7 Trustee, Appellee. |
| Court | U.S. Bankruptcy Appellate Panel, Ninth Circuit |
Appellants Tony Pham, Lindsie Kim Pham and Jonathan T. Nguyen did not appear at oral argumentAshley McDow of Baker & Hostetler LLP argued for appellee Jeffrey I. Golden, Chapter 7 Trustee.
Before: KIRSCHER, BRANDT1 and DUNN, Bankruptcy Judges.
Tony and Lindsie Kim Pham (“Debtors”) and their attorney, Jonathan T. Nguyen (“Nguyen”) (collectively, “Appellants”), appeal an order compelling Debtors to appear for depositions and to produce certain documents and sanctioning Appellants for the chapter 72 trustee's expenses incurred in bringing the motion to compel under Local Bankruptcy Rules (“LBR”) 1001–1(f), 7026–1(c) and 9011–3.3
Debtors have already produced the required documents and have been deposed. The $17,515 sanction for attorney's fees has been paid. Appellants challenge only the sanctions award. Because the bankruptcy court could not rely on these local rules to sanction Appellants, we VACATE and REMAND.
Jeffrey I. Golden (“Trustee”) was appointed chapter 7 trustee in Debtors' case. He scheduled and held at least 15 continued § 341(a) meetings of creditors to interview Debtors and to review documents.
The Trustee filed an adversary complaint against two individuals, Phat The Bui (“Bui”) and Thuan Tran (“Tran”).4 The Trustee alleged that Mrs. Pham had fraudulently transferred four condominium units approximately sixteen months prior to the petition date—three units to Bui and one to Tran. Debtors disclosed the transfers to Bui in their statement of financial affairs; they did not disclose the transfer to Tran. The Trustee sought to avoid and recover the transferred property under the Code and California law. Nguyen, who has practiced law for twenty-one years, represented defendants Bui and Tran. Debtors were not named as defendants and have never been parties to that action.
The Trustee issued subpoenas to Debtors pursuant to Civil Rule 45, commanding them to appear for depositions and to produce documents. Nguyen accepted service of the subpoenas on behalf of Debtors via email. Debtors did not object to the subpoenas.
Just prior to this, the Trustee's counsel Michael Delaney (“Delaney”) emailed Nguyen regarding dates for Debtors to be deposed. Ultimately, Delaney scheduled Mrs. and Mr. Pham's depositions for March 17 and March 19, 2014, respectively. On March 17, Nguyen and Mrs. Pham arrived at Delaney's office prior to the scheduled 10:00 a.m. start time. The attorney intending to conduct Mrs. Pham's deposition, Ashley McDow (“McDow”), was not there and neither were the court reporter or the Vietnamese interpreter. McDow arrived at 10:45 a.m. and asked Nguyen and Mrs. Pham to wait for the interpreter, who was running late. The court reporter arrived at 11:45 a.m. Around noon, when the interpreter had still not arrived, McDow offered to take Mrs. Pham's deposition on March 19 at 1:00 p.m. at Nguyen's office and credit her the two hours she and Nguyen were left waiting.
McDow took Mrs. Pham's deposition as planned on March 19 between 1:13 p.m. and 6:00 p.m. McDow and Delaney arrived around 1:00 p.m. without enough copies of certain documents, so Nguyen offered to let Delaney use his office's copier, at no charge, to make the necessary copies, approximately 180 pages. Nguyen said that at 4:00 p.m. Delaney and McDow unilaterally took a 20–25 minute lunch break while he, Mrs. Pham, the court reporter and the interpreter waited. At this point, the stories diverge. Nguyen claims he told McDow during normal breaks and again at 5:30 p.m. that he had to leave promptly at 6:00 p.m. McDow contends that at 6:00 p.m. Nguyen prematurely terminated Mrs. Pham's deposition without ever advising her of his intent to do so. McDow believed she had 55 minutes remaining of her allowed time to depose Mrs. Pham, after deducting time for breaks.
According to the deposition transcript, at 5:54 p.m. Nguyen stated for the record that he had told McDow during the last recess he had to leave at 6:00 p.m. to pick up his son from soccer practice. McDow stated that Nguyen had just told her for the first time five minutes before of his need to leave by 6:00 p.m. Nguyen then indicated that he would speak to McDow later about when she could complete her last hour of deposition with Mrs. Pham. McDow proceeded for the next six minutes with questions to Mrs. Pham. At 6:00 p.m., Nguyen announced he was leaving. While McDow tried to ask Nguyen about scheduling the last hour, he walked off.
As for Mr. Pham, Nguyen contended that he told McDow on March 17 that Mr. Pham would not be appearing for his deposition or producing documents on March 19, because he had recently suffered a stroke. He also gave McDow a copy of a doctor's note. McDow contended that she did not learn of Mr. Pham's nonappearance until Nguyen handed her the doctor's note, which was illegible except for Mr. Pham's name and the word “stroke.”
A series of emails between counsel ensued. On March 21, Delaney emailed Nguyen inquiring about when Mrs. Pham's deposition could be completed. Delaney warned that if he heard nothing from Nguyen by 2:00 p.m. March 25, he would file a motion to compel. Not hearing from Nguyen, Delaney sent a second email on March 25 at 5:27 p.m., stating his intention to prepare a motion to compel Debtors' depositions, as the doctor's note failed to provide any justification for denying the Trustee's right to depose Mr. Pham. Delaney requested that counsel meet and confer by April 1 to resolve any discovery disputes, citing LBR 7026–1(c)(2).
Nguyen responded to Delaney's email on March 26, indicating that he was not presenting Mrs. Pham for further deposition based on the March 17 incident and the events that occurred on March 19.
On April 15, another attorney for the Trustee, Yulia Fradkin (“Fradkin”), emailed Nguyen reminding him that he had failed to meet and confer with the Trustee's counsel by April 1 to discuss Mrs. Pham's last hour of deposition pursuant to LBR 7026–1(c)(2). Fradkin warned that if Nguyen did not provide a date and time to meet and confer within the next two days, they would proceed with preparing a joint stipulation of any remaining discovery disputes. If their issues could not be resolved, Fradkin warned they would file a motion to compel the remainder of Mrs. Pham's deposition. Fradkin requested further information about Mr. Pham's medical condition and inquired whether or not he would be appearing for deposition.
On April 18, Fradkin sent Nguyen another email regarding his apparent refusal to meet and confer about Debtors' depositions. Fradkin warned that if Nguyen did not provide information for the joint stipulation of remaining discovery disputes by April 21, the Trustee's counsel would file a motion to compel Debtors' depositions. Fradkin advised Nguyen they would seek sanctions under LBR 1001–1(f), 7026–1(c)(4), 9011–3 and 9020–1.
Nguyen responded to Fradkin's April 18 email, stating that he had already met and conferred with McDow and then again with Delaney.
1. The Trustee's motion
Shortly thereafter, the Trustee moved for an order: (1) compelling Debtors to attend depositions and to produce documents; and (2) awarding attorney's fees and costs jointly and severally against Appellants (“Motion to Compel”).5 Overall, the Trustee blamed Nguyen for the “intentional and purposeful interference in discovery,” which the Trustee alleged severely disadvantaged his efforts to void the fraudulent transfers. He questioned Mrs. Pham's need for an interpreter, considering that she had lived in the U.S. for 30 years, attended high school and college here, and had never requested an interpreter at any of the § 341(a) meetings. The Trustee contended that Nguyen, as part of a delay tactic, had repeatedly interfered in Mrs. Pham's deposition, contradicting the interpreter and “correcting” his interpretation of certain questions and answers. Besides the remaining 55 minutes, the Trustee argued he was entitled to an additional two hours of deposition time with Mrs. Pham due to Nguyen's interference.6
As for Mr. Pham, the Trustee contended that other than the doctor's note, which he argued was insufficient to excuse Mr. Pham's nonappearance, Nguyen provided no reason why Mr. Pham could not appear for deposition or produce the subpoenaed documents. The Trustee argued that if Mr. Pham wanted relief from the subpoena, he had to move to quash it. Absent such relief, argued the Trustee, he was entitled to depose Mr. Pham for seven hours per Civil Rule 30.7
In his request for sanctions, the Trustee contended Appellants' bad faith conduct had cost the estate approximately $12,000. In particular, the Trustee contended that Nguyen had refused to meet and confer and to provide information for the joint discovery stipulation as required by LBR 7026–1(c)(3). The Trustee argued that LBR 1001–1(f), 7026–1(c)(4) and 9011–3 all provided for imposing sanctions on “counsel or a party” for failing to comply with the local rules, to cooperate in discovery procedures or to provide information necessary to prepare the joint discovery stipulation.
2. Appellants' opposition
Appellants opposed the Motion to Compel, countering that it was the Trustee's counsel who failed to show good faith efforts to resolve any discovery disputes. Nguyen contended that on March 19 he believed the Trustee's counsel was no longer interested in taking Mr. Pham's deposition because: (1) he had explained to counsel that Mr. Pham was bed-ridden due to a recent stroke and gave...
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