Case No. 05-21390-B-7 D.C. No. None.United States Bankruptcy Court, E.D. California, Sacramento Division.
June 11, 2007
MEMORANDUM DECISION
THOMAS HOLMAN, Bankruptcy Judge
By this motion the debtors seek reconsideration of the court’s January 30, 2007 order (Dkt. 597) denying the debtors’ motion to remove the chapter 7 trustee, Susan Smith (“Smith”) and her counsel, Russell Cunningham (“Cunningham”) from this case. This matter came on for final hearing on April 17, 2007, at 9:30 a.m. Appearances are noted on the record. The following constitutes the court’s findings of fact and conclusions of law, pursuant to Federal Rule of Bankruptcy Procedure 7052.
Neither the respondent within the time for opposition nor the movant within the time for reply has filed a separate statement identifying each disputed material factual issue relating to the motion. Accordingly, both movant and respondent have consented to the resolution of the motion and all disputed material factual issues pursuant to FRCivP 43(e). LBR 9014-1(f)(1)(ii) and (iii).
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The motion is denied.
As an initial matter, the court notes that the motion violates Local Bankruptcy Rule (“LBR”) 9014-1(c)(1). The debtors have not assigned a docket control number to this motion. “In motions filed in the bankruptcy case, a Docket Control Number (designated as a DC No.) shall be included by all parties immediately below the case number on all pleadings and other documents, including proofs of service, filed in support of or opposition to motion.” LBR 9014-1(c)(1). The use of docket control numbers is particularly important in this case, where the docket now exceeds 630 entries. In addition, the debtors have filed their motion and exhibits together as a single document in violation of LBR 9014-1(d)(1) and the Revised Guidelines for Preparation of Documents. These documents should be filed separately. Despite these defects, however, the court addresses the merits of the motion.
ANALYSIS
The debtors seek relief from the January 30, 2007 order on the theory that in reaching its ruling on the debtors’ motion, the court failed to consider three things: (1) a change in controlling law since the court entered the January 30, 2007 order, (2) material facts presented to the court before it rendered its decision and before it entered the January 30, 2007 order, and (3) new material facts that have emerged since the court entered the January 30, 2007 order. The debtors assert that if the court had considered these things, it would have granted the motion to remove the trustee.
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The debtors do not explicitly address the standards for reconsideration either under Federal Rule of Bankruptcy Procedure 9023 incorporating Federal Rule of Civil Procedure 59 or Federal Rule of Bankruptcy Procedure 9024 incorporating Federal Rule of Civil Procedure 60. In this case, the debtors filed the motion for reconsideration within ten days after entry of the January 30, 2007 order, and the standard for relief under Rule 59(a) applies. Under Rule 59, reconsideration of a prior order is justified under the following circumstances: (1) there is an intervening change in controlling law, (2) the court is presented with newly discovered evidence, or (3) the court committed clear error or the initial decision was manifestly unjust. Nunes v.Ashcroft, 375 F.3d 805, 806-07 (9th Cir. 2004). In applying the debtors’ arguments to these standards, the court finds that vacating the January 30, 2007 order is not justified.
Intervening Change in Controlling Law
The debtors argue that a recent decision of the United States District Court for the Eastern District of California in Kincaidv. Fresno, 06-CV-1445, 2006 WL 3542732 (E.D. Cal 2006) represents an intervening change in controlling law that justifies reconsideration of the January 30, 2007 order. Kincaid addressed the Fourth and Fourteenth Amendment rights of homeless persons in connection with seizures of personal property by the City of Fresno, California. The Kincaid court held that the city’s routine seizure and destruction of the property of homeless persons without giving adequate written notice were violations of the Fourth and
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Fourteenth Amendments. The debtors seek to draw factual parallels between their case and Kincaid. They allege that Smith’s removal of certain items of personal property from real property of the bankruptcy estate in Penryn, California was a violation of their constitutional rights because Smith failed to give them written notice before removing, and, the debtors allege, destroying their property.
Even though the Kincaid decision was reached on December 8, 2006, after the debtors filed their motion for removal of the trustee, it does not represent a change in the law controlling this case. Neither Kincaid nor the other case the debtors cite,Pottinger v. City of Miami, 810 F. Supp., 1551, 1573 (S.D. Fla. 1992) is applicable to this motion. The debtors have not shown that the trustee violated either their Fourth or Fourteenth Amendment rights. The personal property removed from the Penryn property was property of the bankruptcy estate; the items listed in the motion for reconsideration do not appear on the debtors’ schedules and they do not appear on the debtors’ list of claimed exemptions. Smith removed personal property from the Penryn property for the purpose of preparing the latter for sale, but she did so only after filing a motion with the court, giving notice to the debtors, and receiving permission from the court.See D.C. No. DNL-9. The debtors’ Fourth and Fourteenth Amendment rights were not violated in this case; they have shown no evidence of an unreasonable search and seizure or of a deprivation of their right to due process. Therefore, the authority cited by the debtors is not an intervening change in controlling law justifying
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reconsideration of the court’s prior order.
Newly Discovered Evidence
The debtors also assert that they have discovered new evidence that justifies reconsideration of the January 30, 2007 order. They allege that Larry Odbert (“Odbert”), the settlor and trustee of a trust that purchased another parcel of real property from the bankruptcy estate, owes two million dollars in back taxes to the federal government. They also allege that because Cunningham’s law firm assisted Odbert in establishing the trust several years before this case was filed, a connection that was disclosed to the court prior to the sale, Smith and Cunningham have aided Mr. Odbert in committing the crime of tax evasion. The debtors assert that this is improper conduct that justifies reconsideration and removal of the trustee. The debtors argue that this is newly discovered evidence because they set forth the allegation of tax evasion for the first time in a late-filed pleading the morning of the hearing on the motion to remove the trustee. They have raised the allegation again because they argue that the court did not consider the allegation in reaching its ruling on the removal motion.
However, the fact that the debtors set forth the allegation of tax evasion for the first time in a late filed pleading, and the fact that the court declined to consider the allegation in reaching its ruling does not satisfy the standard for newly discovered evidence justifying reconsideration of a prior order. “To establish that a district court abused its discretion in denying such a motion based on newly discovered evidence, the movant must
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show that: `(1) the evidence was discovered after trial, (2) the exercise of due diligence would not have resulted in the evidence being discovered at an earlier stage and (3) the newly discovered evidence is of such magnitude that production of it earlier would likely have changed the outcome of the case.'” Far OutProductions, Inc. v. Oskar, 247 F.3d 986, 992-93 (9th Cir. 2001) (quoting Defenders of Wildlife v. Bernal, 204 F.3d 928, 929 (9th
Cir. 2000)). The debtors satisfy none of these three elements. They have not shown that the evidence was discovered only after the hearing, they have not shown that an exercise of due diligence would not have resulted in its earlier discovery and they have not shown that the evidence is of such magnitude that its earlier production would have changed the outcome of the ruling on their motion to remove the trustee.
Indeed, the debtors have not presented any competent evidence of tax evasion at all. They have simply made an allegation that Odbert owes money to the federal government, an allegation which they have made previously. See Dkt. No. 418 at 17. The debtors’ allegation of tax evasion is apparently founded on nothing more than hearsay evidence and the debtors’ argument that the court can infer that Odbert has committed the crime from the debtors’ various statements regarding Odbert’s purchase of property of the bankrutpcy estate on behalf of the C J Family Trust, his attempts to take possession of the property, his relationship with the trust, his alleged prior arrests, and the alleged money he owes in back taxes. The court will not infer that Odbert has committed a serious crime based on these allegations. Nor will the court infer
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that the trustee or her counsel aided Odbert in committing an alleged crime simply because Odbert negotiated the purchase of real property from the bankruptcy estate on behalf of the trust.
Clear Error/Manifest Injustice
The debtors also argue that the court should reconsider the January 30, 2007 order because the court failed to “address . . . the fact of destruction of Kincaid’s personal belongings.” (Dkt. No. 626 at 5). They also seek to re-raise their earlier allegation that Cunningham has committed a fraud on the court because he misrepresented the identity of the purchaser of the real property at 805 F Street in Sacramento, implying that the court previously failed to address the allegation. (Dkt. no. 606 at 5).
The court has previously considered both of these claims and found them to be without merit. With respect to the allegations that Cunningham has committed fraud or has otherwise concealed information from or misrepresented facts to the court, the court considered these allegations in ruling on the motion to remove the trustee, but did not find them credible or persuasive. (See
Dkt. No. 595 at 6.)
With respect to the argument that the court failed to address the destruction of the debtors’ personal belongings, the allegation has been brought to the court’s attention a number of times since the trustee removed various items of personal property from the Penryn property to prepare the latter for sale in November 2005. The debtors have submitted the declarations of witnesses to the cleanup of the property (Dkt. No. 452). They have also previously
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submitted a letter written to the United States trustee (Dkt. No. 555 at 5-7) describing the Penryn cleanup operation and listing items of personal property removed by the trustee in support of their opposition to the sale of the Penryn property. They also re-submitted these documents as exhibits in support of their motion to remove Smith and Cunningham from the case. However, the debtors’ motion was based on Smith and Cunningham’s relationship to Larry Odbert and the C J Family Trust, not the circumstances of the Penryn property cleanup operation. As a result, the court was well aware of the debtors’ submission of the exhibits, but did not address them in its ruling because the exhibits were not relevant to the facts or legal argument set forth in the debtors’ motion.
The court also does not find any manifest injustice in denying the motion to remove Smith and Cunningham from the case. The court denied the motion because there was no legal merit to the debtors’ arguments. As with all of the debtors’ motions, the court took care to consider all of the debtors’ arguments and to issue a written ruling that clearly set forth a logical argument supported by legal authority and the facts in the record of the case.
The debtors’ repeated submission of evidence and their failure to prevail on any of their arguments in this motion for reconsideration highlight a larger trend in this case, which was filed on January 10, 2005. Since that time, the litigation in this case has followed a familiar pattern: whenever the court has entered a ruling adverse to the debtors, whether it is by denying a motion brought by the debtors or granting the motion of another party in interest to this case, the debtors have repeatedly sought
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to reverse those rulings by filing repeated motions for reconsideration or other motions seeking relief that will effectively undo every decision that is adverse to them. In some instances they have sought reconsideration of the same order multiple times, or have filed repeated requests for the same relief. In support of their motions, they often attach copies of prior motions, declarations, and exhibits that they have previously filed and that the court has previously considered.
The court does not question the debtors’ right to file motions seeking relief such as that requested in the instant motion for reconsideration. The court only notes that the debtors have frequently been denied the relief they seek because many of their motions simply reargue the same issues again and again. “Motions for reconsideration that merely revisit the same issues already ruled upon by the bankruptcy court, or advance supporting facts that were otherwise available when the issues were originally briefed, will generally not be granted.” In re Branam, 226 B.R. 45, 54 (9th Cir. BAP 1998), aff’d, 206 F.3d 1350 (9th Cir. 1999) (table).
This motion for reconsideration exemplifies the trend described above. Although the debtors argue that they have identified new controlling legal theories, new evidence, and evidence that the court previously failed to consider, their pleadings contain nothing that the court has not previously considered, and, more importantly, no new evidence that could not have previously been presented and no new legal theories that could not have been previously argued. Instead, the debtors appear to
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view this motion for reconsideration as an opportunity to supplement their original motion with additional facts and legal authority, having had the benefit of time to review the court’s ruling denying the motion and to perform additional legal research.
A motion for reconsideration is not a vehicle for making a second attempt at the same argument. It is instead intended to provide the court with new information or to point out a clear error in the court’s ruling that leads the court to conclude that the order that is the subject of the reconsideration motion should not have entered. Thus, in order to prevent a party from using a reconsideration motion as an opportunity to extend litigation, delay a final decision on a matter, or merely revisit issues already considered by the court, the circumstances under which reconsideration is appropriate are limited. The standard does not permit reconsideration based on evidence that is “new” solely by virtue of the fact that it appears on the record for the first time with the motion for reconsideration or because the moving party chooses to present it for the first time with the motion for reconsideration. Nor does it permit reconsideration based on recent cases which apply long-standing legal principles to unique factual situations, particularly when those legal principles do not control the case before the court and the facts are distinguishable. The motion for reconsideration has not been properly used here.
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CONCLUSION
For the reasons set forth above, the motion is denied. The court will issue a separate order consistent with the foregoing decision.
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