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In re Griswold-Stanton

United States District Court, D. Nevada

July 19, 2018

IN RE KATHERINE GRISWOLD-STANTON Debtor.
v.
KATHERINE GRISWOLD-STANTON, Appellees. CIT BANK, N.A. Appellants,

          ORDER

         Presently before the court is CIT Bank, N.A.'s (“CIT”) appeal from the decision of the United States Bankruptcy Court for the District of Nevada (“the bankruptcy court”). Appellant CIT filed an opening brief. (ECF No. 5). Appellee Katherine Griswold-Stanton filed an answering brief (ECF No. 7), to which CIT replied (ECF No. 10).

         I. Facts

         This appeal arises from a dispute regarding an order sanctioning CIT and awarding attorney's fees.

         On November 22, 2016, Stanton filed a voluntary petition for relief under chapter 13 of the bankruptcy code. (ECF No. 6-44). Stanton also filed a chapter 13 plan of reorganization. Id. At the time she filed her petition, she owned and resided in a residential property located at 9847 Mount Madera Street, Las Vegas, Nevada. Id. Pursuant to a deed of trust dated July 28, 2006, CIT held a claim against Stanton and her estate, secured by Stanton's residential property. (ECF No. 6-16).

         On November 29, 2016, CIT filed an objection to confirmation of Stanton's chapter 13 plan. Id. CIT argued that Stanton's plan did not specifically provide for the curing of CIT's pre-petition arrearage amount of $69, 286.36. Id.

         On February 15, 2017, CIT filed a first notice of post-petition mortgage fees, expenses, and charges pursuant to Federal Rule of Bankruptcy Procedure 3002.1(d). (ECF No. 7 at 7). On June 9, 2017, CIT filed a second notice of mortgage fees, expenses, and charges (“the second notice”). (ECF No. 6-14). In the second notice, CIT informed Stanton and the bankruptcy court that it intended to assess a total of $1, 406 in post-petition fees and expenses against Stanton. Id. The charges included attorneys' fees of $850, bankruptcy/proof of claim charges of $400, appraisal/broker's opinion fees of $145, and property inspection fees of $11. Id.

         On June 19, 2017, Stanton prepared and mailed a letter to CIT pursuant to Bankruptcy Rule 9011 demanding that CIT withdraw the second notice or “amend or supplement the notice with documentation supporting the asserted post-petition charges.” (ECF No. 6-24). Stanton attached a copy of a proposed motion for sanctions to the letter. Id.

         On July 21, 2017, Stanton filed a motion for sanctions for violation of Bankruptcy Rule 9011. (ECF No. 6-24). The motion alleged that CIT's filing of the second notice violated Bankruptcy Rule 9011 (b)(3). Id. On August 15, 2017, CIT filed an opposition to Stanton's sanctions motion. (ECF No. 6-28). Moreover, on August 18, 2017, CIT withdrew the second notice. (ECF No. 6-29). On August 22, 2017, Stanton filed a reply in support of the sanctions motion. (ECF No. 6-31).

         On August 30, 2017, the bankruptcy court held a hearing on the motion. (ECF No. 6- 43). On September 19, 2017, the bankruptcy court entered its oral ruling. (ECF No. 6-41). In the oral ruling, the bankruptcy court held that CIT violated Bankruptcy Rule 9011 and awarded Stanton's counsel its attorneys' fees and expenses incurred in connection with the sanctions motion. Id.

         On September 22, 2017, the bankruptcy court's order granting the motion for sanctions was entered on the docket. (ECF No. 6-33). The order incorporated the findings of fact and conclusions of law entered into the record in the oral ruling. Id. On September 23, 2017, Stanton's counsel filed a declaration setting forth attorneys' fees in the amount of $9, 603. (ECF No. 6-36).

         Thereafter, on October 11, 2017, the bankruptcy court entered its amended order, in which it imposed sanctions in the amount of $9, 603 against CIT. (ECF No. 6-38).

         On October 26, 2017, CIT filed its notice of appeal. (ECF No. 6-39). CIT appeals the final judgment arising from the bankruptcy court's granting of Stanton's motion for sanctions for violations of Bankruptcy Rule 9011. Id.

         II. Jurisdiction

         A district court has jurisdiction over a bankruptcy appeal from the bankruptcy court's “final judgments, orders, or decrees.” 28 U.S.C. § 158(a)(1), (3). “An order is final if it constitutes a complete adjudication of the issues at bar and clearly evidences the judge's intention that it be final.” In re Wiersma, 483 F.3d 933, 938 (9th Cir. 2007).

         III. Standard of Review

         This court acts as an appellate court in reviewing a bankruptcy court's decision, applying the same standards of review applied by the Ninth Circuit. In re Mortg. Store, Inc., 773 F.3d 990, 994 (9th Cir. 2014).

         An appellate court applies an abuse of discretion standard in reviewing a bankruptcy court's order granting sanctions. See Retail Flooring Dealers of Am., Inc. v. Beaulieu of Am, LLC, 339 F.3d 1146, 1150 (9th Cir. 2003). “A bankruptcy court abuses its discretion if it applies the law incorrectly or if it rests its decision on a clearly erroneous finding of a material fact.” In re Brotby, 303 B.R. 177, 184 (9th Cir. BAP 2003). Conclusions of law are subject to de novo review. In re Rains, 428 F.3d 893, 900 (9th Cir. 2005). Factual findings are clearly erroneous only if the findings leave the definite and firm conviction that the bankruptcy court made a mistake. Id.

         An appellate court may affirm a bankruptcy court's decision “on any ground fairly supported by the record.” In re Warren, 568 F.3d 1113, 1116 (9th Cir. 2009). However, the bankruptcy court must explain its reasons for granting or denying a motion. See Liti v. C.I.R., 289 F.3d 1103, 1105 (9th Cir. 2002).

         IV. ...


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