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In re WLB-RSK Venture

United States Bankruptcy Appellate Panel of the Ninth Circuit
Nov 24, 2004
320 B.R. 221 (B.A.P. 9th Cir. 2004)

Opinion


320 B.R. 221 (9th Cir.BAP (Cal.) 2004) In re: WLB-RSK VENTURE, Debtor. Raymond S. KAPLAN, Appellant, v. Warren BRESLOW; Jerome Snyder; Jona Goldrich; WLB-RSK Venture, Appellees. No. BAP CC-03-1526-MOPMA, BK LA-03-16604-TD. United States Bankruptcy Appellate Panel of the Ninth Circuit November 24, 2004

        Argued and Submitted on Sept. 22, 2004.

        Alan F. Broidy, Esq., Law Offices of Alan F. Broidy, John B Marcin, Esq., Marcin & Barrera LLP, Los Angeles, CA, Ira Benjamin Katz, Esq., Law Offices of Ira Benjamin, Katz, P.C., Los Angeles, CA, for Appellant.

        WLB-RSK Venture, a California General Partner, Warren L. Breslow, Culver City, CA, pro se.

        Steven R. Friedman, Esq., Beverly Hills, CA, Edward M. Wolkowitz, Esq., Robinson, Diamant & Wolkowitz, Los Angeles, CA, Eve Wagner, Esq., Sauer & Wagner, Los Angeles, CA, for Appellees.

        Before MONTALI, PERRIS and MARLAR, Bankruptcy Judges.

        MEMORANDUM

This disposition is not appropriate for publication and may not be cited except when relevant under the doctrines of law of the case, resjudicata, or collateral estoppel. See 9th Cir. BAP Rule 8013-1.

        The bankruptcy court dismissed an involuntary bankruptcy petition filed by a general partner against a partnership. The general partner appeals and we AFFIRM.

        I.

        FACTS

In ruling on the motion underlying this appeal, the bankruptcy court sustained all evidentiary objections by the appellant to declarations supporting the motion. For that reason, unless otherwise stated, the panel's recitation of facts is based on (1) declarations filed by the appellant, inasmuch as those statements would be admissions; (2) pleadings filed by the appellant in other actions as well as the exhibits filed in support of such pleadings; or (3) judicial rulings in other actions.

        A. Overview

        Appellant Raymond S. Kaplan ("Kaplan") is one of two general partners in WLB-RSK Venture ("Venture"), a California general partnership. Appellee Warren L. Breslow ("Breslow") is the other general partner in Venture; Breslow and Kaplan each hold a fifty percent interest in Venture. Venture does not engage in any business activity; it has no income and it does not incur regular expenses. Its primary asset is a fifteen percent limited partnership interest in another entity. Kaplan has described only four debts owed by Venture: indebtedness arising from a promissory note in the amount of $900,000, indebtedness exceeding $100,000 arising from Kaplan's payment of legal fees on behalf of Venture, indebtedness in the approximate amount of $7,700 to Breslow arising from preparation of tax returns, and indebtedness in the amount of $100 to Kaplan for payment of Venture's fictitious business name statements. In various legal proceedings in other courts, Kaplan has disputed the indebtedness arising from the promissory note. Breslow disputes the other three debts.

Among the several items in the record demonstrating that Venture has no income and no regularly incurred expenses is a declaration of Breslow in support of the motion underlying this appeal. Kaplan objected to and filed a motion to strike Breslow's declaration. Among other things, Kaplan contended that Breslow's statements as to the expenses and liabilities of Venture were not based on personal knowledge. The bankruptcy court seemingly sustained the evidentiary objections, stating that "I'm going to grant each and every evidentiary objection to be on the safe side." Nonetheless, the court did state in the introduction of its memorandum decision on the underlying motion that it had considered "all declarations" included with or related to the motion, the opposition and the reply.

For example, in an answer filed by Kaplan and by Venture in litigation on the promissory note, they "deny specifically that any amounts are due and owing under the Note." Moreover, they filed cross-complaints against the plaintiffs seeking to enforce the note, claiming that the obligations underlying the note were "null and void" and that there was "no default in any of the obligations under the Note...."

        On March 11, 2003, Kaplan filed an involuntary chapter 11 petition against Venture. Breslow filed a motion to dismiss the involuntary petition as a bad faith filing ("Motion to Dismiss") and Kaplan thereafter filed a motion to appoint a chapter 11 trustee ("Trustee Motion"). Holding that the petition had been filed in bad faith and, alternatively, that Kaplan had not demonstrated a failure by Venture to pay undisputed debts as they became due, the bankruptcy court granted the Motion to Dismiss and denied the Trustee Motion.

Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1330 and the Federal Rules of Bankruptcy Procedure, Rules 1001-9036.

Appellees Jerome Snyder ("Snyder") and Jona Goldrich ("Goldrich") filed a joinder to the Motion to Dismiss and filed a separate motion to dismiss. The bankruptcy court indicated that it would deny the motion to dismiss filed by Snyder and Goldrich for lack of standing, but no order has been entered.

        B. Prior Litigation

        Breslow and Kaplan formed Venture as a vehicle through which a fifteen percent interest in Channel Gateway, LP ("Channel") could be purchased and held. Channel was formed in March 1989 and its general partners were Snyder and Snyder Marina Enterprises, LP ("SME"), an entity comprised of several general partners and limited partners, including Goldrich. Channel's original fifteen percent limited partner was Marina East Holding Partnership ("MEHP"), a California partnership. Alan Robbins ("Robbins") at one time owned ninety-nine percent of MEHP as its general partner.

        Robbins borrowed money from Sumitomo Bank ("Sumitomo"). The loan was personally guaranteed by Snyder and Goldrich, and MEHP's fifteen percent interest in Channel was pledged by MEHP as security for the loan. Robbins later borrowed money from Independence Bank ("IBank"). This loan was not personally guaranteed by Snyder and Goldrich, but MEHP again pledged its fifteen percent interest in Channel to secure the IBank loan, even though it had previously pledged the interest to Sumitomo.

Both the bankruptcy court's memorandum decision and the appellee's brief filed by Breslow state that the loan from Sumitomo was made to Robbins. Breslow, however, has not cited to anything in the record which supports this statement. (He does cite to a declaration by Kaplan, but that declaration does not contain this specific information.) Kaplan, however, has not disputed the accuracy of the court's statement, even though he stated in one of his lawsuits that MEHP had borrowed the funds from Sumitomo. A state court has found that MEHP obtained the loan from Sumitomo.

        Subsequently, Robbins was indicted by the United States of America on corruption charges to which he pleaded guilty. Thereafter, the Sumitomo loan came due and the borrower defaulted. Snyder and Goldrich honored their guaranties and thus acquired Sumitomo's interest in the loan. MEHP filed a chapter 11 petition; Snyder and Goldrich obtained relief from the stay and foreclosed on MEHP's fifteen percent interest in Channel. Venture was the successful bidder at the foreclosure sale, which took place in September 1992. Prior to the foreclosure sale, MEHP filed an action in state court (the "MEHP Action") seeking to enjoin the foreclosure sale. Because MEHP was unable to post a bond, a temporary restraining order against a sale expired. The sale therefore went forward.

        In connection with its purchase and as the sole consideration for its acquired interest in Channel, Venture executed a promissory note in the sum of $900,000 in favor of Goldrich and Snyder ("Note"). Shortly after Venture's purchase of the MEHP interest in Channel, the FDIC (as successor to Ibank) filed an action in the federal district court ("the FDIC Litigation") against all of the parties involved in the foreclosure and sale seeking to set aside the sale. As a result of this litigation, two settlement agreements and an amendment to the Channel partnership agreement were executed in 1995 (collectively, "the Settlement") whereby MEHP was reinstated as a limited partner of Channel. All parties to the FDIC Litigation, including Breslow but excluding Kaplan and Venture, participated in the Settlement. The FDIC later dropped its suit against Kaplan.

        In 1996, Kaplan initiated actions (collectively, "the Kaplan Channel Actions") in the federal district court ("the Kaplan District Court Action") and Los Angeles Superior Court ("the Kaplan State Court Action") seeking, among other things, to set aside the Settlement. The District Court Action was dismissed, the dismissal was affirmed by the Ninth Circuit, and petitions for rehearing en banc in the Ninth Circuit and for certiorari before the United States Supreme Court were denied. Kaplan filed a motion for summary adjudication in the Kaplan State Court Action, which the court denied, holding that Kaplan lacked standing and that it lacked jurisdiction to upset the Settlement. The defendants' motion for summary judgment in the Kaplan State Court Action was granted in 2001.

        In 2000, Kaplan filed an action against the United States seeking monetary damages and a declaratory judgment that the Settlement constituted an unlawful and unconstitutional taking of property. According to Breslow, that action was stayed pending resolution of the Kaplan State Court Action. Appellee's Opening Brief at page 8. In 2001, Kaplan filed another state court action (the "Dissolution Action") against Breslow, seeking dissolution of Venture and damages arising from Breslow's purported breach of fiduciary duty in executing the Settlement. According to Breslow (Appellee's Opening Brief at 8), the Dissolution Action was dismissed without leave to amend.

        Later, on September 7, 2001, Goldrich and Snyder initiated an action in the state court against Venture, Breslow, Kaplan, and others seeking to recover on the Note ("Note Action"). Kaplan filed a cross-complaint in the Note Action, alleging that the underlying obligation was null and void and that execution of the Settlement constituted breach of fiduciary duty, intentional and negligent interference with economic advantage, and breach of the implied covenant of good faith and fair dealing. The state court dismissed Kaplan's cross-complaint without leave to amend. One week later, Kaplan filed the involuntary petition. He then removed the Note Action to the bankruptcy court, which remanded it to the state court. The Note Action is still pending in state court.

        C. The Motions Underlying This Appeal

        On April 7, 2003, Breslow filed the Motion to Dismiss. On April 9, Kaplan filed the Trustee Motion. The bankruptcy court held a hearing on June 4, 2003, and took the Motion to Dismiss under advisement. On July 29, 2003, the bankruptcy court entered its memorandum decision on the Motion to Dismiss. On the same date, the court entered an order granting the Motion to Dismiss and dismissing the involuntary petition. On August 8, 2003, Kaplan filed a timely motion to amend ("Motion to Amend") Finding of Fact # 12 contained in the memorandum decision. The court entered an order denying the Motion to Amend on October 3, 2003.

This memorandum decision has been published. See In re WLB-RSK Venture, 296 B.R. 509 (Bankr.C.D.Cal.2003). While the memorandum decision presented alternate grounds for the court's decision to grant the Motion to Dismiss, it focused primarily on one ground: that Kaplan's actions in filing the involuntary petition would constitute a "bad faith filing" under section 1112(b) and would thus support a dismissal of the petition.

        Kaplan filed a timely notice of appeal on October 10, 2003. In addition to appealing the order granting the Motion to Dismiss and the order denying the Motion to Amend, Kaplan appealed the bankruptcy court's "oral order from the bench on June 4, 2003, denying [the Trustee Motion]." On February 18, 2004, the bankruptcy court entered a written order denying the Trustee Motion.

        After the notice of appeal was filed, Breslow filed a motion for damages under section 303(I) against Kaplan and his counsel. Likewise, Goldrich and Snyder filed a motion for damages (including attorneys fees) against Kaplan and his counsel. The bankruptcy court entered orders denying both motions on December 2, 2003. Breslow filed a notice of appeal; Goldrich filed a separate notice of appeal. The United States District Court for the Central District of California entered an order consolidating the appeals and staying them pending this panel's determination of this appeal. Kaplan has filed a request that this panel take judicial notice of the various orders of the bankruptcy court and the district court, the transcript of the hearing on the sanctions motion, and a docket and a case summary of certain state court matters. The panel has reviewed these documents, and although they are of questionable relevance to this appeal, it will grant Kaplan's request for judicial notice.

The panel entered an order on June 2, 2004, taking the request for judicial notice under advisement.

        Kaplan has also filed a motion to strike the appellate brief of Snyder and Goldrich. On August 9, 2004, the panel entered an order that the motion to strike will be considered in connection with disposition on the merits. Kaplan objects to the brief of Snyder and Goldrich because its citations to the record refer to declarations that were stricken or excluded from evidence by the bankruptcy court. In its review of the record, the panel has not relied on the declarations cited by Snyder and Goldrich. Because their citations to the record have not influenced the panel in any way, it is not necessary to strike their brief in its entirety. The motion to strike will thus be denied.

        II.

        ISSUE

        Did the bankruptcy court err in dismissing the involuntary petition?

        III.

        STANDARD OF REVIEW

        The panel reviews questions of law de novo and findings of fact for clear error. United States v. Wyle (In re Pacific Far East Lines, Inc.), 889 F.2d 242, 245 (9th Cir.1989); Wright v. Holm (In re Holm ), 931 F.2d 620, 623 (9th Cir.1991). It reviews for abuse of discretion a bankruptcy court's decision to dismiss a case as a "bad faith" filing under section 1112(b). Marsch v. Marsch (In re Marsch), 36 F.3d 825, 828 (9th Cir.1994); St. Paul Self Storage Ltd. P'ship v. Port Authority (In re St. Paul Self Storage Ltd. P'ship ), 185 B.R. 580, 582 (9th Cir.BAP1995). A finding of "bad faith" is reviewed for clear error. Id. The panel reviews "de novo whether the cause for dismissal" is within contemplation of section 1112(b). Marsch, 36 F.3d at 828.

        A determination of whether a debt is subject to a "bona fide dispute" for the purposes of section 303 is a factual inquiry subject to a clearly erroneous standard of review. Liberty Tool & Manufacturing v. Vortex Fishing Systems, Inc. (In re Vortex Fishing Systems, Inc.), 277 F.3d 1057, 1064 (9th Cir.2002).

        IV.

        JURISDICTION

        The bankruptcy court had jurisdiction pursuant to 28 U.S.C. § 1334 and § 157(b)(1) and (b)(2) and this panel has jurisdiction under 28 U.S.C. § 158(c). See In re G.T.I. Corp., 211 B.R. 241, 245 (Bankr.N.D.Ohio 1997) (bankruptcy courts have jurisdiction under section 1334(a) to decide whether to enter an order for relief on an involuntary petition).

        V.

        DISCUSSION

        Kaplan contends that the bankruptcy court erred both as a matter of fact and as a matter of law. With respect to the legal issue, Kaplan argues that the bankruptcy court erred in applying the standards of dismissal set forth in section 1112(b) and in considering whether the involuntary petition had been filed in bad faith. Kaplan contends that only section 303 governs whether a involuntary petition can be dismissed, and that the intent of the petitioning parties is irrelevant.

        With respect to factual issues, Kaplan contends that the court erred in finding that Venture has no undisputed debts which it is failing to pay as they become due; under section 303(h)(1), a bankruptcy court can order relief against a debtor in an involuntary case only if the debtor is generally not paying its debts as they become due unless the debts are the subject of a bona fide dispute. See 11 U.S.C. § 303(h)(1). Kaplan also asserts that the court erred in finding that the involuntary petition was filed in bad faith.

        A. The Court Did Not Err In Holding that Dismissal Was Proper Under Section 303(h)(1)

        The bankruptcy court held that because Venture does not have any undisputed, unsecured debts, section 303(h)(1) has not been satisfied. WLB-RSK, 296 B.R. at 515 n. 3. Pursuant to section 303(h)(1), a bankruptcy court may enter an order for relief on a involuntary petition only if the alleged debtor is generally not paying its undisputed debts as they become due. The petitioning party has the burden of proof on this issue. In re McEvoy, 37 B.R. 197, 199 (Bankr.E.D.Va.1984). The record reflects that Kaplan has not met this burden.

        The Ninth Circuit has adopted a "totality of the circumstances" test for determining whether a debtor is generally not paying its debts under section 303(h)(1). Vortex Fishing, 277 F.3d at 1072, citing Hayes v. Rewald (In re Bishop, Baldwin, Rewald, Dillingham & Wong, Inc.), 779 F.2d 471, 475 (9th Cir.1985). A finding that a debtor is generally not paying debts as they become due requires more than "establishing the existence of a few unpaid debts." Vortex Fishing, 277 F.3d at 1072. The amount of the delinquency, the materiality of the nonpayment, and the nature of the conduct of the debtor's affairs are to be considered under the "totality of circumstances test." Id. Here, Kaplan has not demonstrated that Venture has failed to pay any undisputed debts that are not de minimus.

        Section 303(h)(I) specifically requires that any debt subject to a bona fide dispute must be excluded from the calculation of whether or not the alleged debtor is meeting its current obligations. In the Ninth Circuit, a bankruptcy court need not evaluate the potential outcome of a dispute, but must merely determine whether there are facts that give rise to a legitimate disagreement over whether (or how much) money is owed. Vortex Fishing, 277 F.3d at 1064. Here, the record demonstrates that bona fide disputes exist as to almost all (if not all) of the debts of Venture listed by Kaplan.

        Venture has only one significant obligation: that one arising under the Note. Kaplan has hotly contested that obligation in various lawsuits, specifically denying that any amounts are due and owing under the Note and that the obligations represented by the Note are null and void. Kaplan has contended in judicial pleadings that Goldrich and Kaplan do not have any claim for breach of the Note. Yet, remarkably, Kaplan contends in his brief that the obligation under the Note is not subject to a bona fide dispute because Venture has merely stated a counterclaim for recoupment against Goldrich and Kaplan, and the existence of that counterclaim does not render their claims subject to a bona fide dispute. Kaplan's contentions are simply insupportable, both as a matter of fact and law.

        As noted previously, in various lawsuits over the last seven years, Kaplan has denied that Venture is liable under the Note. His denials are not simple counterclaims; they are disputes as to liability. Moreover, even if he had not denied liability, he cannot claim that his counterclaims are irrelevant in determining whether bona fide disputes exist. In Chicago Title Ins. Co. v. Seko Investment, Inc. (In re Seko Investment, Inc.), 156 F.3d 1005, 1008 (9th Cir.1998), the Ninth Circuit did state (as quoted by Kaplan in his opening brief) that "the existence of a counterclaim against a creditor does not automatically render the creditor's claim the subject of a 'bona fide dispute." ' What Kaplan fails to acknowledge in his brief, however, is that the Ninth Circuit then states that a claim or counterclaim for recoupment arising from the same transaction as the obligation is essentially a defense to that obligation and may render the debt "disputed." Id. at 1008-09. Yet Kaplan has admitted in his opening brief (at page 17) that Venture's counterclaims are recoupment claims "arising out of the same transaction as that giving rise to the [Note]." Under the very case he cites, therefore, the debt is disputed. In other words, the primary obligation owed by Venture is disputed.

        Kaplan then contends that he has an undisputed claim exceeding $100,000 for attorneys' fees arising out of his defense of Venture in the MEHP Action and the FDIC Action. The facts set forth in his opening brief, however, show that these fees are the subject of dispute. As set forth in paragraphs 6-9 (on pages 5 and 6) of his opening brief, Kaplan incurred legal fees after the Settlement to defend these lawsuits. He requested, and obtained, leave to defend the FDIC Action in August 1995 after Breslow refused to prosecute claims or assert defenses on behalf of Venture. As Kaplan notes in his opening brief, Breslow has testified that the Settlement prohibited any defense of the claims and that he would not authorize any counsel to undertake such defenses. Kaplan's opening brief also acknowledges that Breslow has stated that without his written consent, Venture could not give instructions to any counsel to proceed with such defenses. Kaplan proceeded with such defenses over Breslow's objections; in fact, he hired counsel to represent Venture even though Breslow objected and even though he did not obtain Breslow's written consent as required by the Venture partnership agreement. Yet Kaplan now contends that his claim for legal fees in pursuing such defenses is not subject to a bona fide dispute. Such a contention is patently absurd. An objective review of the record shows that such fees would be and are disputed by Breslow. Objectively, a bona fide dispute exists as to this claim.

In the memorandum decision, the bankruptcy court stated that these legal fees were incurred in actions initiated by Kaplan. As counsel for Breslow conceded at oral argument before this panel, however, the fees were incurred defending the FDIC and MEHP actions.

In a non sequitur, Kaplan argues that the fees are not disputed because he obtained leave from the court to appear and defend the FDIC action. A grant of leave to appear does not constitute approval of fees for so appearing, especially when one partner has opposed the appearance.

Breslow notified Kaplan that he must fully participate in any decision to engage counsel on behalf of Venture and that they (Breslow and Kaplan) must agree on all matters relating to Venture's prosecution of claims and defenses. He stated in a letter to Kaplan that "[i]ndeed, if you choose to act unilaterally without my equal and full participation, I will have no alternative but to institute appropriate legal action and to hold you liable for breach of your fiduciary duty to me and obstruction of the interests of Venture, among other relief. My concerns arise because the prior unilateral actions which you purported to take on behalf of Venture have significantly contributed to bringing us to this unfortunate situation."

        Kaplan also contends that Venture owes Breslow approximately $7,700 for "monies he advanced to prepare Venture's tax returns for the years 1995-2001." On the record, however, Breslow has indicated through counsel that he does not assert such a claim. Kaplan contended at oral argument before the panel that because a third party (Breslow) paid the debt for the accounting services, that debt was not paid when it became due for the purposes of section 303(h)(1), citing In re Food Gallery at Valleybrook, 222 B.R. 480 (W.D.Penn.1998). Valleybrook is not applicable here, however. In Valleybrook, a debtor paid a debt with funds borrowed from an insider; the insider still held a claim for such advances. The court therefore held that the debtor could not refer to payment of the initial debt as evidence that it was paying obligations as they became due. Here, however, it is Kaplan who is referring to a debt that has been released and thus no longer exists to demonstrate that Venture is not paying undisputed debts as they become due; Venture and Breslow are not citing to it as an example that Venture is paying debts on an ongoing basis. More importantly, unlike the insider who paid the initial debt in Valleybrook, Breslow has waived any right of repayment. Therefore, Kaplan cannot cite to this non-existent debt as an example of an undisputed debt that Venture failed to pay.

        The only remaining debt listed by Kaplan as an obligation of Venture is a debt owed to him in the amount of $100 as reimbursement for the payment of filing fees associated with Venture's fictitious business name expenses. Breslow indicates in his opening brief that he disputes this debt. Even assuming that this de minimus debt is undisputed, it is not material enough under the totality of circumstances test to demonstrate that Venture is not paying its undisputed debts as they become due, particularly where Venture has no ongoing regular expenses. Vortex Fishing, 277 F.3d at 1064; see also In re Smith, 123 B.R. 423, 426-27 (Bankr.M.D.Fla.1990) ("The general rule is that the failure of a debtor to meet the liability of a single creditor does not warrant the granting of an Order for Relief. Other factors must be considered, such as the amount of the debts not being paid and the number of creditors not being paid in determining whether the Debtor is generally paying his debts as they become due") (internal citations omitted).

        Consequently, Kaplan has not satisfied his burden of demonstrating that Venture is failing to pay undisputed debts as they become due. The bankruptcy court did not err in dismissing the involuntary petition, because the requisites of section 303(h)(1) were not met.

        B. Because the Requisites of Section 303(h)(1) Have Not Been Met, The Bankruptcy Court Did Not Have to Decide Whether the Involuntary Petition Had Been Filed in Bad Faith

        In light of this panel's decision to affirm the bankruptcy court's dismissal of the involuntary petition because Kaplan has failed to satisfy his burden under section 303(h)(1), it does not have to decide whether the bankruptcy court erred in dismissing the involuntary petition as being filed in bad faith.

That said, the panel doubts that a bankruptcy court should refer to section 1112 when deciding whether to enter an order for relief under section 303. Section 303 sets forth the standards for granting or denying an order for relief on an involuntary petition. If the grounds for relief exist under section 303, the good or bad faith of the petitioning creditor appears irrelevant; if it denies relief, section 303(I) addresses the consequences of a bad faith filing.

        C. The Bankruptcy Court Did Not Err When It Denied the Trustee Motion

        Because the court dismissed the involuntary petition, the Trustee Motion became moot and the court did not err in denying it.

        D. The Bankruptcy Court's Denial of the Motion to Amend Is Harmless Error, if It is Error at All

        Kaplan filed a motion to amend the language of Finding of Fact # 12 stating that in the Settlement, "MEHP was reinstated as a limited partner of Channel" and stating that "apparently these [Settlement] agreements were crafted specifically to leave Venture's interest untouched, though they may have resulted in some dilution of Venture's interest in Channel." Kaplan contended that the record did not support the quoted language and that the language could be used against him in other litigation.

        The quoted language is not relevant to the court's conclusion that no undisputed debts existed. In addition, the quoted language is irrelevant to the court's finding of bad faith. In other words, the language "could have been deleted without seriously impairing the analytical foundations of the holding." Sarnoff v. Am. Home Prods. Corp., 798 F.2d 1075, 1084 (7th Cir.1986) (defining dictum). As such, the language is dictum and could not have any preclusive effect in other litigation, because it was not necessary to the determination of whether to dismiss the involuntary petition. United States v. Wetlands Water District, 134 F.Supp.2d 1111, 1133 (E.D.Cal.2001) (noting that dicta are statements not essential to determination of relief and that "[d]icta are not binding as law of the case"); see also Weston v. Cibula, 101 B.R. 202, 205 n. 11 (Bankr.E.D.Cal.1989), aff'd, 123 B.R. 466 (9th Cir. BAP1991), aff'd, 967 F.2d 596 (9th Cir.1992) (res judicata and collateral estoppel would not apply to dicta). Therefore, whether or not the bankruptcy court erred in denying Kaplan's motion to amend, Kaplan is not harmed by the bankruptcy court's decision not to amend. Any error is harmless and we will not reverse.

        VI.

        CONCLUSION

        For the foregoing reasons, we AFFIRM.

        NOTICE OF ENTRY OF JUDGMENT

        A separate Judgment was entered in this case on NOVEMBER 24, 2004.

        BILL OF COSTS:

        Bankruptcy Rule 8014 provides that costs on appeal shall be taxed by the Clerk of the Bankruptcy Court. Cost bills should be filed with the Clerk of the Bankruptcy Court from which the appeal was taken. 9th Cir. BAP Rule 8014-1

        ISSUANCE OF THE MANDATE:

        The mandate, a certified copy of the judgment sent to the Clerk of the Bankruptcy Court from which the appeal was taken, will be issued 7 days after the expiration of the time for filing a petition for rehearing unless such a petition is filed or the time is shortened or enlarged by order. See Federal Rule of Appellate Procedure 41.

        APPEAL TO COURT OF APPEALS:

        An appeal to the Ninth Circuit Court of Appeals is initiated by filing a notice of appeal with the Clerk of this Panel. The Notice of Appeal should be accompanied by payment of the $255 filing fee (effective November 1, 2003) and a copy of the order or decision on appeal. Checks may be made payable to the U.S. Court of Appeals for the Ninth Circuit. See Federal Rules of Appellate Procedure 6 and the corresponding Rules of the United States Court of Appeals for the Ninth Circuit for specific time requirements.

        CERTIFICATE OF MAILING

        The undersigned, deputy clerk of the U.S. Bankruptcy Appellate Panel of the Ninth Circuit, hereby certifies that a copy of the document on which this certificate appears was mailed this date to all parties of record to this appeal.

        If the court did indeed consider the declaration of Breslow, it did not err. Breslow is a general partner holding a fifty percent interest in Venture. Kaplan acknowledges that Breslow was responsible for filing tax returns for Venture. Breslow therefore does have personal knowledge of Venture, particularly since he has been involved for many years in litigation involving Venture. Kaplan's objection to Breslow's declaration is therefore not well-taken. In any event, Kaplan's own declaration indicates that Venture generates no income.

        In his opening brief, Kaplan contends that the indebtedness represented by the promissory note is not subject to a bona fide dispute because he and Venture have only asserted set-off claims against the indebtedness. This contention is, as noted above, contradicted by the record.


Summaries of

In re WLB-RSK Venture

United States Bankruptcy Appellate Panel of the Ninth Circuit
Nov 24, 2004
320 B.R. 221 (B.A.P. 9th Cir. 2004)
Case details for

In re WLB-RSK Venture

Case Details

Full title:In re: WLB-RSK VENTURE, Debtor. Raymond S. KAPLAN, Appellant, v. Warren…

Court:United States Bankruptcy Appellate Panel of the Ninth Circuit

Date published: Nov 24, 2004

Citations

320 B.R. 221 (B.A.P. 9th Cir. 2004)

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