FILED
APR 06 2015
SUSAN M. SPRAUL, CLERK
1 NOT FOR PUBLICATION U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
2
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
4 OF THE NINTH CIRCUIT
5 In re: ) BAP No. CC-14-1365-KiKuD
)
6 DANNY WAYNE PRYOR, ) Bk. No. 2:09-bk-23842-BR
)
7 Debtor. ) Adv. No. 2:09-ap-02322-BR
)
8 )
DANNY WAYNE PRYOR, )
9 )
Appellant, )
10 )
v. ) M E M O R A N D U M1
11 )
ITEC FINANCIAL, INC., )
12 )
Appellee. )
13 ______________________________)
14 Argued and Submitted on February 19, 2015,
at Los Angeles, California
15
Filed - April 6, 2015
16
Appeal from the United States Bankruptcy Court
17 for the Central District of California
18 Honorable Barry Russell, Bankruptcy Judge, Presiding
19
Appearances: Appellant Danny Wayne Pryor argued pro se; Michael
20 D. Franco argued for appellee, ITEC Financial, Inc.
21
Before: KIRSCHER, KURTZ and DUNN, Bankruptcy Judges.
22
23
24
25
26
1
This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may have
(see Fed. R. App. P. 32.1), it has no precedential value. See 9th
28 Cir. BAP Rule 8024-1.
1 Appellant, chapter 72 debtor Danny Wayne Pryor, appeals an
2 order denying his motion for relief from judgment under Civil
3 Rule 60(b)(1), (2), (3), (6) and (d)(3). In a prior proceeding,
4 the bankruptcy court: entered a default judgment; excepted from
5 discharge under § 523(a)(2)(A) the debt of appellee, ITEC
6 Financial, Inc.; and denied Pryor’s discharge under § 727(a)(2),
7 (3), (4) and (5) (“Judgment”). On appeal, the Panel affirmed the
8 bankruptcy court’s § 523(a)(2)(A) ruling but vacated the § 727
9 rulings for lack of evidence and remanded for entry of an amended
10 judgment. Pryor appealed the Panel’s decision to the Ninth
11 Circuit Court of Appeals, which affirmed. Several months later,
12 Pryor filed the instant motion before the bankruptcy court seeking
13 relief from the Judgment. We AFFIRM, in part, and VACATE and
14 REMAND, in part.
15 I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
16 The Panel’s Memorandum Decision issued on August 12, 2011, in
17 Case No. 10-1258, contains a more thorough background of this
18 appeal.
19 ITEC is engaged in the business of real estate investments,
20 construction and loan funding in Los Angeles. Pryor is a general
21 contractor and real estate developer. In 2006 and 2007, ITEC and
22 Pryor engaged in three real estate development projects owned by
23 Pryor. ITEC provided Pryor, either directly or through one of his
24 entities, various loans for the projects.
25
26
2
Unless specified otherwise, all chapter, code and rule
27 references are to the Bankruptcy Code,
11 U.S.C. §§ 101-1532, and
the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The
28 Federal Rules of Civil Procedure are referred to as “Civil Rules.”
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1 A. The underlying bankruptcy case and prior appeal
2 Pryor filed his first bankruptcy case under chapter 11 on
3 March 28, 2008. The bankruptcy court dismissed that case on
4 May 21, 2008, for cause under § 1112(b) and imposed a one-year bar
5 from filing another bankruptcy case. In violation of the order,
6 Pryor filed a chapter 7 case on March 9, 2009. The court promptly
7 dismissed that case on May 5, 2009.
8 On June 7, 2009, Pryor filed another chapter 7 case,
9 initiating the bankruptcy case involved in the prior appeal before
10 the Panel and this appeal. ITEC filed its complaint seeking
11 relief under §§ 523 and 727; Pryor filed his answer pro se. As a
12 sanction for Pryor’s failure to appear at a status conference or
13 comply with ITEC’s discovery requests, the bankruptcy court struck
14 his answer and entered a default. Pryor moved for reconsideration
15 of the order striking his answer; the bankruptcy court denied it.
16 Pryor failed to appeal that order.
17 ITEC then moved for a default judgment, which Pryor untimely
18 opposed on the day of ITEC’s prove-up hearing. ITEC offered a
19 declaration from the president of ITEC, Nina Patel, and extensive
20 exhibits. Pryor’s untimely response failed to address any of the
21 representations contained in Patel’s declaration. However,
22 according to the Judgment, Pryor did offer extensive oral
23 argument.
24 The bankruptcy court entered the Judgment on July 30, 2010.
25 Pryor timely appealed the Judgment to the Panel. On August 12,
26 2011, the Panel issued its Memorandum Decision and judgment
27 affirming the Judgment on the § 523(a)(2)(A) claim, vacating the
28 Judgment on the § 727 claims and remanding the appeal to the
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1 bankruptcy court to enter an amended judgment. The Panel denied
2 Pryor’s motion for rehearing. Pryor timely appealed the Panel’s
3 § 523(a)(2)(A) determination to the Ninth Circuit. ITEC did not
4 cross-appeal the Panel’s adverse ruling on the § 727 claims. On
5 October 23, 2013, the Ninth Circuit affirmed the Panel’s ruling
6 excepting ITEC’s Judgment from Pryor’s discharge under
7 § 523(a)(2)(A). During the pendency of the appeals, the
8 bankruptcy court ordered the estate’s claims, if any, against ITEC
9 abandoned to Pryor.
10 B. Pryor’s motion to set aside the Judgment
11 On April 23, 2014, Pryor moved the bankruptcy court to set
12 aside the Judgment under Civil Rule 60(b)(1), (2), (3), (6) and
13 (d)(3) (“Motion to Set Aside Judgment”). Although mostly
14 incomprehensible, the gist of Pryor’s motion alleges that ITEC
15 committed “extrinsic fraud” by failing to disclose to the
16 bankruptcy court that it failed to obtain a license to issue the
17 subject loans and that such loans contained usurious interest
18 charges and unenforceable provisions.
19 Pryor also contended that new evidence uncovered in the state
20 court trial now revealed ITEC’s unlicensed status and its
21 inability to conduct any actions requiring a license under the
22 laws of California, as set forth in Exhibit H in his Request for
23 Judicial Notice. Exhibit H consisted of Pryor’s motion for a new
24 trial filed in his state court action against ITEC, which
25 referenced the alleged new document obtained from the Department
26 of Real Estate (“DRE”) regarding Patel’s licensing history.
27 Pryor argued that the bankruptcy court entered the
28 $11 million judgment in favor of ITEC without knowing of the
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1 alleged fraud and thereby allowed ITEC to recover the judgment on
2 allegedly illegal and usurious loans as an exception to his
3 discharge. Thus, given the alleged voidness and unenforceability
4 of ITEC’s loans, Pryor argued the Judgment had to be set aside
5 under Civil Rule 60(b)(1), (2), (3), (6) and (d)(3).
6 ITEC opposed the Motion to Set Aside Judgment, contending
7 that: it had no merit; and it constituted a bad faith filing and
8 Pryor’s fourth attempt to defend against the allegations of the
9 dischargeability complaint. In addition to arguing that the
10 motion should be denied for being incomprehensible, ITEC argued
11 that Pryor failed to file the motion timely and failed to cite any
12 authority for vacating a judgment after two appeals. Furthermore,
13 the motion’s alleged “extrinsic fraud” involved an old and stale
14 issue; Pryor had raised this issue before the trial and appellate
15 courts. Each court determined the alleged “extrinsic fraud” claim
16 had no merit. ITEC additionally requested that the bankruptcy
17 court declare Pryor a vexatious litigant.
18 In reply, Pryor argued that he timely filed the Motion to Set
19 Aside Judgment because the one-year filing rule under Civil
20 Rule 60(c) did not start to run until the Ninth Circuit entered
21 its ruling on the Judgment on October 23, 2013. Pryor contended
22 that FRAP 41(a) and (c) and the Mandate entered by the Ninth
23 Circuit on May 15, 2014, failed to establish the finality of the
24 Judgment for purposes of Civil Rule 60 until October 23, 2013.
25 Pryor criticized ITEC for failing to address the substantial
26 evidence establishing that ITEC committed fraud against him and
27 the bankruptcy court. Pryor did not oppose the vexatious litigant
28 request, stating only that “[n]ow ITEC would like this Court to
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1 label PRYOR vexatious.” In support of his reply, Pryor filed a
2 Request for Judicial Notice containing the Mandate from the Ninth
3 Circuit, a copy of the DRE document regarding Patel’s licensing
4 history, and the adversary docket report.
5 The bankruptcy court held a brief hearing on the Motion to
6 Set Aside Judgment on June 25, 2014, during which it ruled:
7 I have read your motion, and as I indicated last time,
this is just not timely under Rule 60. It’s way -- you
8 seem to think that the remand of these things after an
appeal is a year. That is not true at all. You’re
9 talking about a judgment that was entered here a long
time -- has long since passed.
10
A lot of your stuff, quite frankly . . . Mr. Pryor, I’ve
11 seen your work before, it’s really incomprehensible. I
read through it and I can’t follow a lot of it.
12
In addition, . . . I think that you have filed so many of
13 these things that I am going to declare you a vexatious
litigant. Your arguments are just way beyond anything
14 that’s reasonable.
15 Hr’g Tr. (June 25, 2014) 1:15-2:7.
16 The bankruptcy court entered an order denying the Motion to
17 Set Aside Judgment and declaring Pryor a vexatious litigant on
18 July 7, 2014 (“Order”). Pryor timely appealed the Order.
19 II. JURISDICTION
20 The bankruptcy court had jurisdiction under
28 U.S.C. §§ 1334
21 and 157(b)(2)(A). We have jurisdiction under
28 U.S.C. § 158(b).
22 III. ISSUE
23 Did the bankruptcy court abuse its discretion when it denied
24 the Motion to Set Aside Judgment?
25 IV. STANDARD OF REVIEW
26 We review denials of motions for relief under Civil Rule 60
27 for an abuse of discretion. See United States v. Stonehill,
28
660 F.3d 415, 443 (9th Cir. 2011). Accordingly, we reverse where
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1 the bankruptcy court applied an incorrect legal rule or where its
2 application of the law to the facts was illogical, implausible or
3 without support in inferences that may be drawn from the record.
4 Ahanchian v. Xenon Pictures, Inc.,
624 F.3d 1253, 1258 (9th Cir.
5 2010) (citing United States v. Hinkson,
585 F.3d 1247, 1262 (9th
6 Cir. 2009) (en banc)). An appeal from an order denying a Civil
7 Rule 60 motion raises only the merits of the order denying the
8 motion and does not raise the merits of the underlying judgment,
9 unless it is filed within the time period required by 8002(b)(4).3
10 See Maraziti v. Thorpe,
52 F.3d 252, 254 (9th Cir. 1995).
11 V. DISCUSSION
12 Pryor contends the bankruptcy court abused its discretion in
13 denying the Motion to Set Aside Judgment as untimely. Pryor also
14 attempts to argue the underlying merits of the Judgment and
15 matters that have already been decided against him by the state
16 court. However, those matters are not properly before us. The
17 only issue relevant to this appeal is whether the bankruptcy court
18 abused its discretion in entering the Order.
19 A. The bankruptcy court did not abuse its discretion in denying
the Motion to Set Aside Judgment under Civil Rule 60(b)(1),
20 (2) or (3), but did abuse its discretion in denying it under
Civil Rule 60(d)(3).
21
Pryor sought relief from the Judgment under Civil Rule
22
60(b)(1), (2), (3), (6) and (d)(3). His motion, however, at best
23
only sets forth any facts, argument or authority for relief under
24
Civil Rule 60(b)(2) (newly discovered evidence), (b)(3) (fraud)
25
and (d)(3) (fraud on the court). He made no allegations as to any
26
27
3
28 Rule 8002(b)(4), given a rule amendment effective
December 1, 2014, is now designated Rule 8002(b)(1)(D).
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1 mistake, inadvertence, surprise or excusable neglect on his behalf
2 under (b)(1); nor did he provide any basis for the “catch all”
3 relief under (b)(6). In his reply, Pryor failed to even mention
4 (b)(6). Pryor also fails to cite to, or make any argument for,
5 (b)(6) on appeal. Thus, his claim for relief under Civil
6 Rule 60(b)(6) is considered waived. Golden v. Chi. Title Ins. Co.
7 (In re Choo),
273 B.R. 608, 613 (9th Cir. BAP 2002) (arguments not
8 raised in the appellant’s opening brief are deemed waived).
9 Even if not waived, a movant under Civil Rule 60(b)(6) “is
10 required to establish the existence of extraordinary
11 circumstances, which prevented or rendered him unable to prosecute
12 an appeal.” Mackey v. Hoffman,
682 F.3d 1247, 1251 (9th Cir.
13 2012) (citation omitted). Because Pryor successfully prosecuted
14 two appeals of the Judgment, he cannot establish a claim for
15 relief under (b)(6). Further, Pryor had asserted claims for
16 “fraud on the court” and “newly discovered evidence,” which are
17 enumerated reasons in Civil Rule 60(b)(1)-(5). See Gonzales v.
18 Crosby,
545 U.S. 524, 528-29 (2005) (Civil Rule 60(b)(6) permits
19 relief when the movant shows any reason justifying relief from the
20 judgment other than those more specific circumstances set out in
21 Civil Rule 60(b)(1)-(5)). To the extent Pryor argues he had a
22 claim under Civil Rule 60(b)(1), as we explain more thoroughly
23 below, his claim was untimely.
24 Civil Rule 60(b), incorporated by Rule 9024, provides that
25 the court may relieve a party from a final judgment for several
26 reasons, including: (1) mistake, inadvertence, surprise or
27 excusable neglect; (2) newly discovered evidence that, with
28 reasonable diligence, could not have been discovered in time to
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1 move for new trial under Civil Rule 59(b); or (3) fraud (whether
2 extrinsic or intrinsic), misrepresentation, or misconduct by an
3 opposing party. A motion under Civil Rule 60(b) for reasons (1),
4 (2) and (3) must be filed no more than one year after entry of the
5 judgment. Civil Rule 60(c).
6 Pryor contends that the one-year limitation period for filing
7 a motion under Civil Rule 60(b)(1), (2) and (3) did not begin to
8 run until October 23, 2013, the day the Ninth Circuit entered its
9 ruling on the Judgment, as indicated by its Mandate issued on
10 May 15, 2014. He cites FRAP 41(a) and (c)4 as support for his
11 position. Pryor argues that he timely filed the Motion to Set
12 Aside Judgment within one year of October 23, 2013, and the
13 bankruptcy court erred by holding otherwise. We disagree.
14 In ruling that the Motion to Set Aside Judgment was untimely,
15 the bankruptcy court correctly denied the motion as to Pryor’s
16 claims under Civil Rule 60 (b)(1), (2) and (3). The one-year
17 limitation period is not tolled during an appeal. Nevitt v.
18 United States,
886 F.2d 1187, 1188 (9th Cir. 1989). In Nevitt,
19 the movant had appealed an adverse district court judgment, which
20 was affirmed by the Ninth Circuit.
Id. About one month after the
21 Ninth Circuit’s affirmance of the judgment and two years after the
22 judgment was initially entered by the district court, the movant
23 filed a motion for relief from judgment under Civil Rule 60(b)(2)
24
4
25 FRAP 41(a) and (c) provides:
26 (a) Contents. Unless the court directs that a formal mandate
issue, the mandate consists of a certified copy of the
27 judgment, a copy of the court’s opinion, if any, and any
direction about costs.
28 . . . .
(c) Effective Date. The mandate is effective when issued.
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1 in the district court, which it denied.
Id. On appeal, the Ninth
2 Circuit determined that the pendency of an appeal does not toll
3 the one-year period for a motion under Civil Rule 60(b)(1), (2) or
4 (3).
Id. See also The Tool Box, Inc. v. Ogden City Corp.,
5
419 F.3d 1084, 1088-89 (10th Cir. 2005) (holding same). Thus, the
6 movant’s motion was untimely, filed two years after the judgment,
7 and the district court lacked jurisdiction to consider it.
Id.
8 In implementing this rule, the Ninth Circuit noted that allowing
9 an appeal to toll the one-year limit “would unduly impair the
10 finality of judgments for appellate proceedings may take months
11 and even years to complete.” Nevitt,
886 F.2d at 1188 (citation
12 omitted).
13 Accordingly, the one-year limitation period for Pryor’s
14 claims for relief under Civil Rule 60(b)(1), (2) and (3) began to
15 run when the Judgment was entered on July 30, 2010. It did not
16 begin to run from the date of the Ninth Circuit’s decision
17 reviewing the Judgment. Thus, the bankruptcy court correctly
18 determined the untimeliness of Pryor’s motion with respect to
19 these claims as Pryor filed his motion nearly four years later on
20 April 23, 2014. Contrary to Pryor’s argument, FRAP 41 has no
21 effect on this rule. All FRAP 41 establishes is when a Ninth
22 Circuit judgment is final for purposes of filing an appeal to the
23 United States Supreme Court; it does not determine when a judgment
24 is final for purposes of a motion for relief from judgment under
25 Civil Rule 60(b).
26 Nonetheless, Pryor also sought to set aside the Judgment for
27 “fraud on the court” under Civil Rule 60(d)(3). Such fraud
28 “embraces only that species of fraud which does or attempts to,
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1 defile the court itself, or is a fraud perpetrated by officers of
2 the court so that the judicial machinery can not perform in the
3 usual manner its impartial task of adjudging cases that are
4 presented for adjudication.” Latshaw v. Trainer Wortham & Co.,
5
452 F.3d 1097, 1104 (9th Cir. 2006) (quotations and citations
6 omitted) (applying Civil Rule 60(b)). “Fraud on the court should
7 be read narrowly, in the interest of preserving the finality of
8 judgments.”
Id. (quoting Toscano v. Comm’r,
441 F.2d 930, 934
9 (9th Cir. 1971)).
10 The Ninth Circuit places a high burden on a plaintiff seeking
11 relief from a judgment based on fraud on the court.
Id. See
12 Stonehill,
660 F.3d at 443 (burden of proof is a “clear and
13 convincing” standard). The type of fraud asserted here must
14 involve egregious conduct, such as an unconscionable plan or
15 scheme designed to improperly influence the court in its decision.
16 Latshaw,
452 F.3d at 1104 (citing Abatti v. Comm’r,
859 F.2d 115,
17 118 (9th Cir. 1988); Toscano,
441 F.2d at 934). “Mere
18 nondisclosure of evidence is typically not enough to constitute
19 fraud on the court, and “’perjury by party or witness, by itself,
20 is not normally fraud on the court.’” Stonehill,
660 F.3d at 444
21 (citing Levander v. Prober (In re Levander),
180 F.3d 1114, 1119
22 (9th Cir. 1999)).
23 The bankruptcy court only ruled that Pryor untimely filed his
24 Motion to Set Aside Judgment. As a result, the court incorrectly
25 applied a standard of law as to his claim for relief under Civil
26 Rule 60(d)(3). Motions to set aside judgments for “fraud on the
27 court” have no time limit. Wood v. McEwen,
644 F.2d 797, 801 (9th
28 Cir. 1981); Valerio v. Boise Cascade Corp.,
80 F.R.D. 626, 640
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1 n.10 (N.D. Cal. 1978) (no statute of limitations for fraud on the
2 court), aff’d,
645 F.2d 699 (9th Cir. 1981); C. Wright, A. Miller
3 & M. Kane, FEDERAL PRACTICE AND PROCEDURE § 2870 at 574-75 (2012).
4 Further, a claim under Civil Rule 60(d)(3) may not be limited only
5 to “extrinsic” fraud, but may also include claims for “intrinsic”
6 fraud. See Kalt v. Hunter (In re Hunter),
66 F.3d 1002, 1005 (9th
7 Cir. 1995) (questioning additional holding in Wood that
8 independent actions for “fraud on the court” can be maintained
9 only for extrinsic fraud, a distinction previously abolished in
10 Civil Rule 60(b)).
11 Accordingly, because the bankruptcy court applied an
12 incorrect standard of law as to Pryor’s claim for relief under
13 Civil Rule 60(d)(3), it abused its discretion. Ahanchian,
14
624 F.3d at 1258.
15 B. Pryor does not contest the vexatious litigant determination.
16 In the Order, the bankruptcy court designated Pryor as a
17 vexatious litigant. Pryor did not explicitly contest ITEC’s
18 request that he be declared a vexatious litigant; he does not
19 contest the bankruptcy court’s ruling on appeal. Thus, Pryor
20 waived this issue and we do not address it. In re Choo,
273 B.R.
21 at 613.
22 VI. CONCLUSION
23 The bankruptcy court correctly determined that Pryor untimely
24 filed his Motion to Set Aside Judgment under the time limitations
25 imposed under Civil Rule 60(b)(1), (2) and (3). However, it
26 abused its discretion in denying his motion on his claim for
27 “fraud on the court” under Civil Rule 60(d)(3). Accordingly, we
28 AFFIRM the Order, in part, and VACATE and REMAND it, in part. On
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1 remand, the bankruptcy court must determine whether Pryor is
2 entitled to any relief under Civil Rule 60(d)(3).
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