WENDOVER FINANCIAL SERVICES, APPELLANT,
V.
WILLIAM E. HERVEY, DEBTOR, AND DAVID D. COOP, TRUSTEE APPELLEES.
| [1] | United States Bankruptcy Appellate Panel FOR THE EIGHTH
CIRCUIT |
| [2] | No. 00-6030EA |
| [3] | Keywords: issued raised for the first time on appeal |
| [4] | September 15, 2000 |
| [5] | IN RE: WILLIAM E. HERVEY DEBTOR. WENDOVER FINANCIAL SERVICES, APPELLANT, V. WILLIAM E. HERVEY, DEBTOR, AND DAVID D. COOP, TRUSTEE APPELLEES. |
| [6] | Before Koger, Chief Judge, Kressel and Schermer,
Bankruptcy Judges. |
| [7] | The opinion of the court was delivered by: Kressel,
Bankruptcy Judge. |
| [8] | Appeal from the United States Bankruptcy Court for the
Eastern District of Arkansas |
| [9] | Submitted: August 10, 2000 |
| [10] | The debtor, William E. Hervey, filed a petition under
Chapter 13 of the Bankruptcy Code on February 8, 2000. OnMarch 23, 2000,
the bankruptcy court, *fn1 entered an
order confirming the debtor's Chapter 13 plan. No objections were filed
to the plan. Appellant, Wendover Financial Services, appeals from the
order confirming the plan. Because there is no record from the
bankruptcy court, and because Wendover's entire appeal raises legal
issues never presented to the bankruptcy court, we affirm. |
| [11] | BACKGROUND |
| [12] | The debtor filed a Chapter 13 petition on February 8,
2000. David D. Coop was appointed as the Chapter 13 trustee. The
debtor's Schedule A listed real property, a "homestead," with
debtor's interest valued at $40,000, with a secured claim of $30,000. In
Schedule D, the debtor indicated that the $30,000 secured claim was held
by: "Claibourne Crews, Esq. Agent for Bankers Trust Company, Wilson
& Associates, PLLC, 1521 Merrill Dr. Suite D-220, Little Rock, AR
72211." Bankers Trust was included in the debtor's creditor matrix,
for notice purposes, at the above stated address. |
| [13] | A "Notice of Commencement of Case Under Chapter 13
of the Bankruptcy Code, Meeting of Creditors, and Fixing of Dates"
was mailed to the debtor's creditors. This Notice advised that the
Meeting of Creditors would be held on March 8, 2000, and that any
objection to the confirmation of the debtor's plan must be filed and
served "on or before the tenth (10 th ) day after the meeting of
creditors takes place." Finally, the Notice stated that "[i]f
no objection is timely filed, the plan will be confirmed pursuant to
Bankruptcy Rule 3015." |
| [14] | The debtor's plan listed AMRESCO Mortgage *fn2
as the holder of a long-term claim. The plan proposed to make regular
monthly payments to AMRESCO, in the amount of $365.00, and cure a $6,000
arrearage by paying $167.00 per month. No objections to the plan were
filed, and the bankruptcy court entered an order confirming the plan on
March 23, 2000. Eight days later, on March 31, 2000, Wendover filed a
timely Notice of Appeal from the order confirming the plan. |
| [15] | DISCUSSION |
| [16] | We review the bankruptcy court's factual findings for
clear error and its conclusions of law de novo. Johnson v. Border State
Bank (In re Johnson), 230 B.R. 608, 609 (B.A.P. 8th Cir. 1999); Eilbert
v. Pelican (In re Eilbert), 162 F.3d 523, 525 (8th Cir. 1998). |
| [17] | On appeal, Wendover argues that the order confirming
the plan must be set aside because, allegedly: (i) prepetition, the
debtor defaulted on the terms of a note held by AMRESCO; (ii) Wendover's
predecessor-in-interest, Bankers Trust as trustee for AMRESCO, held a
foreclosure sale of the Property secured by AMRESCO's note on November
9, 1999; (iii) the Property was purchased at the foreclosure sale by
Bankers Trust for $25,650; and, (iv) AMRESCO transferred servicing of
the note and mortgage to Wendover effective December 1, 1999. Thus,
according to Wendover, the Plan's terms violate BankruptcyCode §
1322(c)(1) *fn3 (concerning the
debtor's ability to cure a default secured by a lien on the debtor's
residence) and should be set aside. Wendover also urges that foreclosure
sale extinguished the debtor's interests in the Property and satisfied
Wendover's alleged mortgage lien. Therefore, Wendover is not a creditor
of the debtor and cannot be bound by the terms of the confirmed Plan. *fn4 |
| [18] | However, Wendover's arguments suffer from two manifest
impediments: (1) none of the facts upon which Wendover relies are in the
record, and (2) the legal arguments made by Wendover are being raised
for the first time on appeal. |
| [19] | A. Debtor's Motion to Strike |
| [20] | The debtor filed a "Motion to Strike Appellant's
Appendix" asking that Wendover's entire Appendix be stricken, or,
alternatively, that designated exhibits be stricken. The basis of the
motion is that the Appendix contains documents which were never
introduced in the bankruptcy court, nor are they a part of the
bankruptcy court's record. We grant the alternative relief requested by
the Motion, and the documents labeled "A3" through and
including "A8" are stricken from Appellant's Appendix and are
not considered part of the record for review by this court. |
| [21] | It is well settled that "documents presented for
the first time at the appellate stage of any proceeding are generally
not considered part of the record for the review by the appellate
court." Hartford Fire Ins. Co. v. Norwest Bank (In re Lockwood
Corp.), 223 B.R. 170, 174 (B.A.P. 8th Cir. 1998), citing Huelsman v.
Civic Ctr. Corp., 873 F.2d 1171, 1175 (8th Cir. 1989). "[O]nly
those papers and exhibits filed in the [trial] court can constitute the
record on appeal." Huelsman, 873 F.2d at 1175. |
| [22] | InHuelsman, the Eighth Circuit Court of Appeals granted
a motion to strike an affidavit presented by appellant for the first
time on appeal. See id. Thus, the stricken affidavit could not be
considered by the court in ruling on the appeal. See id; see also Shea
v. Esensten, 208 F.3d 712, 720 (8th Cir. 2000) (granting motion to
strike portions of appellant's appendix and references to those
documents in appellant's brief where the documents were not before the
trial court when it ruled on the matter below); Barry v. Barry, 78 F.3d
375, 379 (8th Cir. 1996) (granting motion to strike and stating that
"only evidentiary materials that were before the trial court at the
time the . . . ruling was made" would be considered). |
| [23] | "When the interests of justice demand it,"
courts have recognized an exception to the general rule proscribing the
consideration of documents presented for the first time on appeal. See
Dakota Inds., Inc., v. Dakota Sportswear, Inc., 988 F.2d 61, 63 (8th
Cir. 1993); Lockwood, 223 B.R. at 174 n.3. However, "[t]his
authority to enlarge a record is rarely exercised and is a narrow
exception to the general rule . . . ." Dakota, 988 F.2d at 63. In
Dakota, for example, the court applied the exception where the
supplementalrecord contradicted a material misrepresentation made to the
lower court by the other party. See id. |
| [24] | Here, Appellant offers no explanation as to the why the
documents in question were never presented to the bankruptcy court. *fn5
See Barry, 78 F.3d at 379 (granting a motion to strike where no reason
was offered regarding why the documents were not submitted to the lower
court for its consideration). Therefore, the documents, *fn6
which appear to be copies of mortgage and loan papers, are stricken and
we will not consider them in our review. |
| [25] | B. Issues Raised for First Time on Appeal |
| [26] | Wendover's entire appeal is predicated upon issues and
arguments which Wendover raises for the first time on appeal: they were
never presented to the bankruptcy court for consideration. In addition,
as noted above, aside from the limited facts recited, there is no
factual record establishing any of Wendover's assertions as true. |
| [27] | First, without a factual record to demonstrate the
veracity of Wendover's assertions, it is not possible for us to
determine that the bankruptcy court committed clear error in its factual
findings. See generally, Johnson, 230 B.R. at 609; Eilbert, 162 F.3d at
525. |
| [28] | Second, issues raised for the first time on appeal are
ordinarily not considered by an appellate court as a basis for reversal.
See Von Kerssenbrock-Praschma v. Saunders, 121 F.3d 373, 375-76 (8th
Cir. 1997); Kelley v. Crunk, 713 F.2d 426, 427 (8th Cir. 1983) (per
curiam) (stating that this rule is "well settled"); Guy v.
Danzig (In re Danzig), 233 B.R. 85, 96 (B.A.P. 8th Cir. 1999)
("Ordinarily, we will not entertain issues raised for the first
time on appeal."), aff'd, 217 F.3d 620 (8th Cir. 2000). |
| [29] | This rule has been consistently applied in bankruptcy
matters on appeal. For example, in Amtech Lighting Srvs. Co. v. Payless
Cashways (In re Payless Cashways, Inc.), 230 B.R. 120 (B.A.P. 8th Cir.
1999), aff'd 203 F.3d 1081 (8th Cir. 2000), we declined to consider an
issue raised for the first time on appeal where additional evidence
would need to be presented and the outcome after presentation of such
evidence was uncertain. Amtech, 230 B.R. at 140 n.13; see also Drewes v.
Schonteich, 31 F.3d 674, 678 n.6 (8th Cir. 1994) (refusing to consider
an argument which the trustee raised on appeal but did not raise in the
bankruptcy or district courts); Stumpf v. Albracht (Matter of Snover),
982 F.2d 275, 277 (8th Cir. 1992) (stating that the trustee was barred
from raising a statute of limitations tolling argument whichhe failed to
raise in the court below); United States Trustee v. Harris, 960 F.2d 74,
77-78 (8th Cir. 1992) (agreeing with the district court that the
debtors' constitutional challenge to Bankruptcy Code § 707(b) could not
be considered since they did not raise the issue in the bankruptcy
court). |
| [30] | Three limited exceptions to the general rule have been
recognized. First, the Eighth Circuit has recognized an exception in
"exceptional cases where the obvious result would be a plain
miscarriage of justice or inconsistent with substantial justice."
Kelley, 713 F.2d at 427 (citations omitted) (emphasis added). Second,
where the resolution of the legal issues is "beyond any doubt"
an exception has been found. See Miller v. FEMA, 57 F.3d 687, 689 (8th
Cir. 1995); Thompson v. Brule, 37 F.3d 1297, 1302 (8th Cir. 1994)
(applying the exception where both parties agreed on the proper outcome
of the new legal issue raised, and noting that this situation presented
"one of the rare occasions" where deviation from the general
rule was warranted). Third, courts have applied an exception where the
new issue "involves a purely legal issue as to which additional
evidence would not affect the outcome. No new evidence is
necessary." Krigel v. Sterling Nat'l Bank (In re Ward), 230 B.R.
115, 119 (B.A.P. 8th Cir. 1999). *fn7 |
| [31] | None of these exceptions are applicable. This is not an
"exceptional case" where a plain miscarriage of justice will
result. The resolution of the legal issues is very questionable. See,
e.g., supra fn. 3 and accompanying discussion. And the issues raised by
Wendover are not "purely legal" in nature but instead, the
outcome is dependent, in part, on facts and evidence which are not a
part of the record. This case is not the exception. It is a case which
plainly calls for application of the general rule. |
| [32] | Courts have stated two reasons for the rule precluding
an appellate court's consideration of issues raised for the first time
on appeal: (1) "the record on appeal generally would not contain
the findings necessary to . . . evaluat[e] . . . the validity of an
appellant's arguments" and, (2) "there is an inherent
injustice in allowing an appellant to raise an issue for the first time
on appeal." Praschma, 121 F.3d at 376, quoting Stafford v. Ford
Motor Co., 790 F.2d 702, 706 (8th Cir. 1986) (citations omitted). In
Praschma, the court found that both of these reasons were present where
the record on appeal did not contain all of the factual findings
necessary to fully evaluate appellant's new argument, and the appellee
had no opportunity to introduce evidence on the new issue. See Praschma,
121 F.3d at 376. |
| [33] | In this case, both prongs of the rationale for the rule
are implicated. Not only does the record on appealcontain insufficient
findings, but it contains virtually no findings concerning the issues
Appellant raises before this court, for the first time. As in Praschma,
were we to attempt to address the legal issues raised herein, we would
be operating in a "factual vacuum." See Praschma, 121 F.3d at
376. We decline to do so. Further, the debtor has had no opportunity to
introduce evidence addressing the legal arguments Wendover makes for the
first time on appeal. The only injustice that would occur here is if we
were to consider Wendover's arguments. We conclude that none of the
issues raised by Wendover on appeal were considered by the bankruptcy
court below, and therefore, we shall not consider them. *fn8 |
| [34] | Wendover failed to object to confirmation of the plan,
failed to offer evidence at the confirmation hearing and failed to avail
itself of post-judgment remedies available to it under Federal Rules of
Bankruptcy Procedure 7052, 9023 and 9024. By so doing, Wendover has
forfeited its right to create a record or argue the propriety of the
debtor's plan and the order confirming it. |
| [35] | C. The Merit's of Appellant's Arguments |
| [36] | Withno materially relevant factual record to review,
and no legal issues raised by Wendover which we can consider, Wendover's
arguments on appeal are unavailing. We conclude, as we must, that: the
bankruptcy court made no erroneous findings of fact, nor any mistakes in
its conclusions of law, in its determination to confirm debtor's Chapter
13 plan. |
| [37] | D. Motion for Sanctions |
| [38] | The debtor also filed a "Motion for Damages and
Attorney's Fees" seeking damages in the form of debtor's attorney
fees and costs on appeal. The motion asserts that the appeal is
frivolous based upon Wendover's failure to file any objections or
pleadings, or to introduce any evidence, in the court below. The motion
seeks relief pursuant to Federal Rule of Appellate Procedure 38. As
F.R.A.P. 1 states, that rule is applicable only to proceedings in the
United States courts of appeal. See Fed. R. App.. P. 1(a). The
applicable rule here is Federal Rule of Bankruptcy Procedure 8020. This
rule provides that the bankruptcy appellate panel "may" award
damages and costs to the appellee if an appeal is deemed frivolous. See
Fed. R. Bankr. P. 8020. |
| [39] | We have reviewed and considered appellee's motion, the
response thereto and the briefs and record on appeal. Based upon our
review, we conclude that this matter is not appropriate for awarding
sanctions. The motion is therefore denied. |
| [40] | CONCLUSION |
| [41] | The order of the bankruptcy court confirming the
debtor's Chapter 13 plan is affirmed. |
| [42] | A true copy. |
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| Opinion Footnotes | |
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| [43] | *fn1
The Honorable James G. Mixon, Chief Judge, United States Bankruptcy
Court for the Eastern and Western Districts of Arkansas. |
| [44] | *fn2
On appeal, Wendover asserts, and the debtor does not dispute, that
Bankers Trust was acting as the trustee for AMRESCO on the loan for the
property. |
| [45] | *fn3
Section 1322(c)(1) provides, in pertinent part, that "a default
with respect to, or that gave rise to, a lien on the debtor's principal
residence may be cured . . . until such residence is sold at a
foreclosure sale that is conducted in accordance with applicable
non-bankruptcy law . . . ." 11 U.S.C. § 1322(c)(1). Some courts
have determined that this section means that a foreclosure sale
conducted in accordance with applicable state law is final when the
right to cure terminates. See Impac Funding Corp. v. Simpson (In re
Simpson), 240 B.R. 559, 561 n.4 (B.A.P. 8th Cir. 1999), and citations
therein. "Other courts have held that § 1322(c)(1) means that the
right to cure terminates at the time of the foreclosure auction
(conducted pursuant to state law but regardless of state law on finality
of the foreclosure process)." Id., and citations therein. |
| [46] | *fn4
See 11 U.S.C. § 1327 (providing that "[t]he provisions of a
confirmed plan bind the debtor and each creditor") (emphasis
added). |
| [47] | *fn5
At oral argument on this appeal, but not in its brief, Wendover
intimated that it did not receive proper notice of debtor's bankruptcy
filing. However, as with the entire basis for Wendover's appeal, there
is no evidence in the record which supports this. We do note though,
that the law firm representing Wendover on appeal is the same firm that
was listed on the debtor's creditor matrix as agent for Wendover's
alleged predecessor-in-interest, Bankers Trust. Generally, where a
creditor's attorney has actual knowledge of the debtor's bankruptcy
case, this is considered sufficient notice to the creditor of not only
the bankruptcy case, but also of applicable bar dates and filing
deadlines. See Lompa v. Price (In re Price), 871 F.2d 97, 99 (9th Cir.
1989); Ford Motor Credit Co. v. Weaver, 680 F.2d 452, 457 (6th Cir.
1982); In re Tribble, 205 B.R. 405, 406 (Bankr. Ark. 1997); see also
Tonelli v. United States, 60 F.3d 492, 495 (8th Cir. 1995) ("As a
general rule, notice to an agent is effective if the agent has a duty to
receive that knowledge and report it to the principal.") (citations
omitted). Moreover, Wendover never argued that it did not receive notice
of the debtor's proposed Chapter 13 plan. |
| [48] | *fn6
Appellant's Appendix "A3" through and including
"A8." |
| [49] | *fn7
Courts outside the Eighth Circuit have applied similar exceptions. See
R.D.F. Devs., Inc., v. Sysco Corp (In re R.D.F. Devs., Inc.), 239 B.R.
336, 340-41 (B.A.P. 6th Cir. 1999); Franchise Tax Bd. v. Roberts (In re
Roberts), 175 B.R. 339, 345 (B.A.P. 9th Cir. 1994). |
| [50] | *fn8
Our decision in Impac Funding Corp. v. Simpson (In re Simpson), 240 B.R.
559, 561 n.4 (B.A.P. 8th Cir. 1999) does not mandate a different result.
In that case, appellant did not appeal an order confirming debtor's
Chapter 13 plan, but instead, appealed the bankruptcy court's denial of
appellant's motion to validate an alleged prepetition foreclosure sale
and to obtain relief from stay. We dismissed the appeal as moot because
there was no appeal from the order confirming the plan and thus, the
order was final and binding. See id. at 560-61. In so doing, we stated,
in dictum, that if a creditor disagrees with the treatment of its claim
under debtor's plan, "the creditor's only potential remedy . . . is
to appeal the order of confirmation." Id. at 562. However, that
statement was made in the context of a case where the creditor failed to
object to the plan, failed to appeal the plan confirmation order, and
instead, sought to collaterally attack the plan confirmation order by
appealing the court's denial of a related motion. These circumstances
raised the issue of res judicata, not, as in the instant appeal, the
lack of a record on appeal. In Simpson, there was a record on appeal
from the court below and the issues raised in the appeal had been raised
below, via appellant's foreclosure validation and relief from stay
motion. We certainly did not hold in Simpson, nor have we ever held,
that a party may sit on the sidelines and fail to object to a proposed
plan, fail to introduce any evidence into the bankruptcy court record,
fail to raise any issues before the bankruptcy court, and then attempt
to create a record and raise legal issues for the first time on appeal.
Such a result would make us a trial court. |