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Holt v. Holland

United States District Court, D. Nevada

January 17, 2018

TRUMAN HOLT, et al., Appellants,
v.
GAIL HOLLAND, et al., Appellees.

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This case was taken on appeal from the Bankruptcy Court on March 18, 2015. Appellants filed their Opening Brief on May 4, 2015. (ECF No. 6). Appellees filed their Answering Brief on May 19, 2015. (ECF No. 8). Appellants filed their Reply Brief on June 4, 2015. (ECF No. 9). The Court held a hearing on the appeal on June 21, 2017, and incorporates the findings made at that hearing by reference.

         II. BACKGROUND

         A. Factual Background

         This case is on appeal from a final order of the Bankruptcy Court issued on March 3, 2015. On that date, the Bankruptcy Court entered an order denying Appellants' Motion to Reconsider its ruling on a contempt order. The Bankruptcy Court had granted a Motion for Contempt against Appellants for violation of the bankruptcy stay in a state court case.

         The Bankruptcy Court made the following factual findings at its hearing on March 2, 2015:

         Counsel for Holt and counsel for Howard, Mr. Barney, were made aware of the filing of the bankruptcy case by separate telefaxes dated September 3, 2014. When counsel was made aware of the filing, a proposed default judgment in favor of their clients and against the debtors was pending in state court litigation between the parties in the Nevada District Court for Clark County, case number A-12-667650-C. A related hearing had been conducted in the state court case on May 22, 2014, and was ultimately concluded on August 28, 2014. Counsel for the debtors filed a notice of bankruptcy filing in the state court case on September 4, 2014. Counsel for Holt and Barney took no steps to ensure that the pending default judgment was not signed by the judge in the state court case.

         On September 10, 2014, a default judgment against the debtors was filed in the principal amount of $638, 427.07, along with punitive damages, and signed by the Honorable J. Charles Thompson in the state court case. The state court judgment was not entered on the docket in the state court case. However, counsel for Holt and Barney referred to it not less than 29 times in the bankruptcy case in advancing their legal positions.

         The contempt motion was set for a hearing before the bankruptcy court on December 29, 2014. Counsel for the debtors prepared a related notice of hearing and filed it with the court on November 30, 2014. The notice of hearing accurately reflected the December 29, 2014 hearing date and time and also expressly required any oppositions to the contempt motion to be filed “No later than 14 days preceding the hearing date for the contempt motion in compliance with Local Rule 9014(d)(1).” As required by that Local Rule, the notice of hearing also contained the following express warning, “If you object to the relief requested, you must file a written response to this pleading with the Court. You must also serve your written response on the person who sent you this notice. If you do not file a written response with the Court or if you do not serve your written response on the person who sent you this notice, then first, the Court may refuse to allow you to speak at the scheduled hearing, and second, the Court may rule against you without formally calling the matter at the hearing.” On December 2, 2014, the notice of the hearing and the contempt motion were served on Holt, Howard, and Barney. A related certificate of service was filed with the Court by counsel for the debtors the next day on December 3, 2014. No opposition, timely or otherwise, was ever filed in response to the properly noticed and served contempt motion.

         On December 29, 2014, the contempt motion came on for a hearing as scheduled. Counsel for the debtors appeared and argued in support of the relief requested in the contempt motion. Despite not having filed an opposition of any kind, counsel for Holt was afforded the opportunity to present argument and opposition to the contempt motion. Because no timely opposition had been filed, however, no supporting affidavits or declarations that conform to Local Rule 9014(c) were part of the record at the December 29, 2014 hearing.

         Based upon the record developed and presented at the hearing, the Court entered the contempt order on January 13, 2015, which, first, granted the relief requested in the contempt motion; second, held that the judgment that formed the evidentiary predicate for the contempt motion was void as a violation of the automatic stay in bankruptcy pursuant to 11 U.S.C. 362(a); and third, set forth a briefing schedule governing the issue of the amount of damages to be awarded in connection with the contempt motion. On January 16, 2015, Appellants filed the reconsideration motion on the contempt order.

         B. Bankruptcy Court Order

         The Bankruptcy Court applied Fed.R.Civ.P. 59(e) and 60(b), and Federal Rule of Bankruptcy Procedure 9023, to determine that there was no good cause to reconsider its earlier order, absent any newly discovered evidence, a determination of clear error on its part, or an intervening change in the controlling law. Marlyn ...


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