Coastal Band of the Chumash v. Native Energy Farms ( 2018 )

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
NOV 06 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
In re: NATIVE ENERGY FARMS, LLC, No. 17-15725
______________________________
D.C. No. 2:16-cv-00843-JCM
COASTAL BAND OF THE CHUMASH
NATION,
MEMORANDUM*
Appellant,
v.
NATIVE ENERGY FARMS, LLC,
Appellee.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Submitted October 11, 2018**
San Francisco, California
Before: McKEOWN, W. FLETCHER, and BYBEE, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
In August 2014, Native Energy Farms, LLC (“Native Energy”) sought an
order to quiet title and for declaratory relief in the Bankruptcy Court for the
District of Nevada to obtain “absolute title free from all claims, interest and
restrictions” on a 78-acre parcel of land in Goleta, California. The Coastal Band of
the Chumash Nation (“CBCN”) allegedly granted the parcel to the Southern
Chumash Owl Clan in April 2013, and Native Energy purchased it in October
2013. The clerk entered a final default judgment in November 2014. In May
2015, the Bankruptcy Court granted Native Energy’s motion for summary
judgment quieting title in the land. CBCN filed a motion to set aside the default
judgment and order granting the motion for summary judgment quieting title in the
land. The Bankruptcy Court denied the motion, and the United States District
Court for the District of Nevada affirmed the judgment. On appeal, CBCN argues
that the Bankruptcy Court erred by not setting aside the judgment under Rules
60(b)(1), (3), (4), and (6); and by applying laches. We disagree.
“We review the district court’s decision on appeal from a bankruptcy court
de novo. We independently review the bankruptcy court’s decision and do not
give deference to the district court’s determinations.” In re Saxman, 325 F.3d
1168, 1172 (9th Cir. 2003) (internal quotation marks and citations omitted). We
review Rule 60(b) motions for relief from judgment for abuse of discretion. Casey
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v. Albertson’s Inc., 362 F.3d 1254, 1257 (9th Cir. 2004). However, we review de
novo whether a judgment is void under Rule 60(b)(4). Fid. Nat. Fin., Inc. v.
Friedman, 803 F.3d 999, 1001 (9th Cir. 2015). To determine whether the court
abused its discretion in analyzing Rule 60(b), we consider “whether the trial court
identified the correct legal rule to apply to the relief requested”; and “whether the
trial court’s application of the correct legal standard was (1) ‘illogical,’ (2)
‘implausible,’ or (3) without ‘support in inferences that may be drawn from the
facts in the record.’” Brandt v. Am. Bankers Ins. Co. of Fla., 653 F.3d 1108, 1110
(9th Cir. 2011) (quoting United States v. Signed Pers. Check No. 730 of Yubran S.
Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010)).
1. The Bankruptcy Court did not abuse its discretion by denying CBCN’s
motion for relief under Rule 60(b)(1), which allows a court to set aside a judgment
based on “excusable neglect.” To determine whether the judgment should be set
aside under Rule 60(b)(1), we weigh: (1) the danger of prejudice to the opposing
party, (2) the length of the delay and its potential impact on judicial proceedings,
(3) the reason for the delay and whether it was within the reasonable control of the
movant, and (4) whether the movant acted in good faith. Pioneer Inv. Servs. Co. v.
Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395 (1993).
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As for the first factor, the record supported the Bankruptcy Court’s finding
that Native Energy would be prejudiced. As for the second factor, the court found
that CBCN was aware of the proceedings and waited eight months to file suit,
which is a significant delay. Harvest v. Castro, 531 F.3d 737, 747 (9th Cir. 2008)
(finding a delay “substantial” when the movant did not “contact the district court
until 64 days after the court’s deadline”). As the Bankruptcy Court determined,
“[s]etting aside the judgment quieting title on [Native Energy’s] primary asset
would require the Court to revisit over a year’s worth of case administration and
activities.”
As for the third factor, the Bankruptcy Court found that “[t]he record
evidence at trial, and certainly the preponderance of the evidence in the record
here,” showed that CBCN’s “decision not to participate in the adversary
proceeding at all . . . was within CBCN’s reasonable control.” Lastly, the fourth
factor was “neutral in the calculus or weigh[ed] only slightly in favor” of CBCN
because CBCN did not act in bad faith. The court’s analysis of the four factors is
supported by the record and is neither illogical nor implausible. The Bankruptcy
Court did not abuse its discretion by denying CBCN’s motion for relief based on
Rule 60(b)(1).
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2. The Bankruptcy Court did not abuse its discretion by denying CBCN’s
motion for relief under Rule 60(b)(3), which allows a court to set aside a judgment
based on fraud. CBCN’s only allegation of fraud is that Native Energy knew the
transfer from CBCN to Southern Chumash Owl Clam “was not a valid execution
of the Grant deed.” To establish fraud upon the court, “the moving party must
prove by clear and convincing evidence that the [judgment] was obtained through
fraud, misrepresentation, or other misconduct and the conduct complained of
prevented the losing party from fully and fairly presenting the defense.” De
Saracho v. Custom Food Mach., Inc., 206 F.3d 874, 880 (9th Cir. 2000). There is
no evidence that Native Energy’s actions prevented CBCN from presenting its
case, or that Native Energy intended to deceive CBCN or the court. See In re M/V
Peacock on Complaint of Edwards, 809 F.2d 1403, 1405 (9th Cir. 1987) (finding
the movant did not establish fraud on the court because she did not show that the
defendants’ misrepresentations “prevented her from discovering [the truth] . . . or
from presenting her case” or that the “misrepresentations had been made with the
intent to deceive [her] or her counsel”). CBCN’s decision not to respond to the
summary judgment motion—despite being properly served and aware of its
existence—is what precluded it from presenting its case, not any fraud by Native
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Energy. Thus the court did not abuse its discretion by denying CBCN’s motion for
relief under Rule 60(b)(3).
3. The Bankruptcy Court did not err by denying CBCN’s motion for relief
under Rule 60(b)(4), which allows the court to set aside a judgment if it is “void.”
“Rule 60(b)(4) applies only in the rare instance where a judgment is premised
either on a certain type of jurisdictional error or on a violation of due process that
deprives a party of notice or the opportunity to be heard.” United Student Aid
Funds, Inc. v. Espinosa, 559 U.S. 260, 271 (2010). CBCN argues it was deprived
of due process because it did not have notice of the suit and because the court
limited discovery, which left it “unable to develop and prove its claim of fraud.”
But CBCN provided no evidence of fraud and thus did not establish how the
discovery limitations deprived it of due process. In addition, Native Energy
completed service of process to the proper address, and CBCN concedes that it had
actual notice of the suit. Thus, it had a full and fair opportunity to develop its case
and present evidence. The Bankruptcy Court did not err in finding CBCN was not
deprived of due process and that the judgment was not void under Rule 60(b)(4).
4. The Bankruptcy Court did not abuse its discretion by denying CBCN’s
motion for relief under Rule 60(b)(6), which allows a judgment to be set aide for
“any other reason that justifies relief.” “A party seeking to re-open a case under
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Rule 60(b)(6) ‘must demonstrate both injury and circumstances beyond his control
that prevented him from proceeding with the prosecution or defense of the action
in a proper fashion.’” Delay v. Gordon, 475 F.3d 1039, 1044 (9th Cir. 2007)
(quoting Cmty. Dental Servs. v. Tani, 282 F.3d 1164, 1168 (9th Cir. 2002)). In
addition, the motion “must be based on grounds other than those listed in the
preceding clauses” of Rule 60(b) and is “reserved for ‘extraordinary
circumstances.’” Lafarge Conseils Et Etudes, S.A. v. Kaiser Cement & Gypsum
Corp., 791 F.2d 1334, 1338 (9th Cir. 1986) (quoting Corex Corp. v. United States,
638 F.2d 119, 121 (9th Cir. 1981)). CBCN brought the same allegations of fraud
and service under Rule 60(b)(6) that it did under the other Rule 60(b) clauses.
Regardless, no extraordinary circumstances prevented it from responding to the
entry of default or summary judgment proceedings. The Bankruptcy Court did not
abuse its discretion in denying CBCN’s Rule 60(b)(6) motion.
5. Lastly, CBCN argues the court abused its discretion by applying laches.
First, there is no indication that the bankruptcy court relied on laches when
reaching its decision. Regardless, even if it did, it was not an abuse of discretion.
“The defense of laches ‘requires proof of (1) lack of diligence by the party against
whom the defense is asserted, and (2) prejudice to the party asserting the defense.’”
State of Kan. v. State of Colo., 514 U.S. 673, 687 (1995) (quoting Costello v.
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United States, 365 U.S. 265, 282 (1961)). CBCN was not diligent in pursuing its
case, and Native Energy would be prejudiced by the delay.
The judgment of the District Court is AFFIRMED.
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