Schacher v. Dolph (In re Dolph)
Oregon Bankruptcy Court Adversary Proceeding No. 07-3326-rld
June 11, 2008 opinion; July 24, 2008 reconsideration denied
Unpublished
The Oregon Bankruptcy Court's website entry under this adversary proceeding in fact contains two separate Memorandum Opinions by Judge Randall Dunn, the first consisting of his decisions resolving issues from the adversary proceeding trial, and the second his denial of plaintiff's motion for reconsideration of the first. Inexplicably, these two opinions were uploaded to the Court's website just last week although they were filed last June and July. This Litigation Report addresses the Memorandum Opinion on the motion for reconsideration.
(This website's Bankruptcy Bulletin dated November 4, 2008 will review the first Memorandum Opinion.)
Background
The litigation is part of a lengthy inheritance fight among stepbrothers and stepsisters: plaintiff Jim Schacher is a stepson of decedent Patricia Schacher, while defendant Donald Dolph, the Chapter 13 debtor, is a son. Plaintiff seeks to impose a constructive trust on assets of defendant, particularly his residence, because of transfers made by the decedent to defendant allegedly in violation of a 1988 Agreement to Execute Wills between the decedent and her husband, plaintiff's father. After trial in the adversary proceeding, Judge Dunn imposed a constructive trust on defendant's residence, but in the amount of only about $1,850 instead of the $90,000 amount plaintiff wanted. Before judgment was entered, plaintiff filed a motion for reconsideration on the amount of the constructive trust.
The Standard for Motions for Reconsideration
Federal Rule of Bankrutpcy Procedure 9023 incorporates Rule 59 F.R.Civ.P. into cases under the Bankruptcy Code, making motions for reconsideration "analogous to a motion for a new trial or to alter or amend the judgment pursuant to FRCP 59." Rule 59(a)(2) specifies the grounds for granting a new trial, where the trial was without a jury: "for any of the reasons for which rehearings have heretofore been granted in suits of equity in the courts of the United States . . . ." Judge Dunn referred to three reasons cited by the Ninth Circuit under Rule 59(a)(2): "(1) manifest error of law; (2) manifest error of fact; and (3) newly discovered evidence.”
Application of the Standard for Motion for Reconsideration
1) "Newly discovered evidence": The judge dispensed with this potential reason for reconsideration by stating that he had "closed the evidentiary record" immediately after the trial, had reminded plaintiff's counsel of this at the scheduling hearing on this motion, but plaintiff made no request under FRCP 59 to reopen the evidentiary record. So there is no "newly discovered evidence" here. (Had additional evidence been offered, the judge would have "need[ed] to evaluate whether any additional evidence offered is 'new' evidence that was not available at the time of Trial.")
2) "Manifest error of law," "manifest error of fact":
First, plaintiff contends that the calculations for determining the constructive trust amount should take into account "the cost to the Probate Estate inherent in the delay in recovering the funds wrongfully received by Mr. Dolph."
To the contrary, Judge Dunn held that a constructive trust does not "affect rights in the res until it is imposed," and therefore property appreciation or other impacts on the property prior to a court imposition of the constructive trust on the property do not benefit the plaintiff.
Second, plaintiff argues that the calculation should not include a credit for defendant's "legitimate share of the Probate Estate, either because that share cannot be determined at this time or, alternatively, because Mr. Dolph has waived that share through his confirmed chapter 13 plan."
As to the defendant's plan's purported waiver of his claim against plaintiff, the judge ruled that this was specifically a waiver "by Mr. Dolph of the right to receive any additional distribution he otherwise might be entitled to receive from the Probate Estate," and the plan provision did NOT "preclude Mr. Dolph from asserting, as an offset for purposes of calculating the amount by which he was unjustly enriched."
As to plaintiff's objection to crediting defendant's legitimate share of the estate, "[i]n order to calculate the amount Mr. Dolph was unjustly enriched, I am required to subtract the amount Mr. Dolph was entitled to receive from the Probate Estate from the amount he actually received."
Since the only evidence presented at trial of Mr. Dolph's legitimate share was plaintiff's proof of claim, the judge used this for his calculations over plaintiff's objections. Plaintiff argued that the appropriate offset amount would not be known until the other potential wrongdoers--Mr. Dolph's two sisters--had paid their obligations back to the estate. Judge Dunn rejected this, saying that if he accepted that argument, the various siblings would be dead before the matter was resolved! Since the plaintiff failed to provide evidence of the diminished value of the probate estate, he cannot now argue that as a consequence the constructive trust was larger than the evidence indicated.
With a lack of "newly discovered evidence" or of any "manifest error of law or fact," the judge denied plaintiff's motion for reconsideration.
(This website's Bankruptcy Bulletin dated November 4, 2008 will review the first Memorandum Opinion.)
Background
The litigation is part of a lengthy inheritance fight among stepbrothers and stepsisters: plaintiff Jim Schacher is a stepson of decedent Patricia Schacher, while defendant Donald Dolph, the Chapter 13 debtor, is a son. Plaintiff seeks to impose a constructive trust on assets of defendant, particularly his residence, because of transfers made by the decedent to defendant allegedly in violation of a 1988 Agreement to Execute Wills between the decedent and her husband, plaintiff's father. After trial in the adversary proceeding, Judge Dunn imposed a constructive trust on defendant's residence, but in the amount of only about $1,850 instead of the $90,000 amount plaintiff wanted. Before judgment was entered, plaintiff filed a motion for reconsideration on the amount of the constructive trust.
The Standard for Motions for Reconsideration
Federal Rule of Bankrutpcy Procedure 9023 incorporates Rule 59 F.R.Civ.P. into cases under the Bankruptcy Code, making motions for reconsideration "analogous to a motion for a new trial or to alter or amend the judgment pursuant to FRCP 59." Rule 59(a)(2) specifies the grounds for granting a new trial, where the trial was without a jury: "for any of the reasons for which rehearings have heretofore been granted in suits of equity in the courts of the United States . . . ." Judge Dunn referred to three reasons cited by the Ninth Circuit under Rule 59(a)(2): "(1) manifest error of law; (2) manifest error of fact; and (3) newly discovered evidence.”
Application of the Standard for Motion for Reconsideration
1) "Newly discovered evidence": The judge dispensed with this potential reason for reconsideration by stating that he had "closed the evidentiary record" immediately after the trial, had reminded plaintiff's counsel of this at the scheduling hearing on this motion, but plaintiff made no request under FRCP 59 to reopen the evidentiary record. So there is no "newly discovered evidence" here. (Had additional evidence been offered, the judge would have "need[ed] to evaluate whether any additional evidence offered is 'new' evidence that was not available at the time of Trial.")
2) "Manifest error of law," "manifest error of fact":
First, plaintiff contends that the calculations for determining the constructive trust amount should take into account "the cost to the Probate Estate inherent in the delay in recovering the funds wrongfully received by Mr. Dolph."
To the contrary, Judge Dunn held that a constructive trust does not "affect rights in the res until it is imposed," and therefore property appreciation or other impacts on the property prior to a court imposition of the constructive trust on the property do not benefit the plaintiff.
Second, plaintiff argues that the calculation should not include a credit for defendant's "legitimate share of the Probate Estate, either because that share cannot be determined at this time or, alternatively, because Mr. Dolph has waived that share through his confirmed chapter 13 plan."
As to the defendant's plan's purported waiver of his claim against plaintiff, the judge ruled that this was specifically a waiver "by Mr. Dolph of the right to receive any additional distribution he otherwise might be entitled to receive from the Probate Estate," and the plan provision did NOT "preclude Mr. Dolph from asserting, as an offset for purposes of calculating the amount by which he was unjustly enriched."
As to plaintiff's objection to crediting defendant's legitimate share of the estate, "[i]n order to calculate the amount Mr. Dolph was unjustly enriched, I am required to subtract the amount Mr. Dolph was entitled to receive from the Probate Estate from the amount he actually received."
Since the only evidence presented at trial of Mr. Dolph's legitimate share was plaintiff's proof of claim, the judge used this for his calculations over plaintiff's objections. Plaintiff argued that the appropriate offset amount would not be known until the other potential wrongdoers--Mr. Dolph's two sisters--had paid their obligations back to the estate. Judge Dunn rejected this, saying that if he accepted that argument, the various siblings would be dead before the matter was resolved! Since the plaintiff failed to provide evidence of the diminished value of the probate estate, he cannot now argue that as a consequence the constructive trust was larger than the evidence indicated.
With a lack of "newly discovered evidence" or of any "manifest error of law or fact," the judge denied plaintiff's motion for reconsideration.
by: Andrew Toth-Fejel
Bankruptcy Litigation Support for Attorneys
Andy@BLSforAttorneys.com
Please note that this writer is not licensed to practice law in Oregon. This means that he is not legally permitted to give any legal advice or provide and legal services. This Bulletin and the entire contents of this website is written only for attorneys. and is not intended for the public. If any non-attorney is reading this, you must consult an attorney about ANYTHING you read here. Nothing in this website is intended to be nor should be read as being legal advice to anyone.
© 2008 Bankruptcy Litigation Support for Attorneys
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