                                                               FILED
                                                                   FEB 27 2015
 1                          NOT FOR PUBLICATION
                                                            SUSAN M. SPRAUL, CLERK
                                                              U.S. BKCY. APP. PANEL
 2                                                            OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )       BAP Nos.     CC-14-1226-KuDKi
                                   )                    CC-14-1299-KuDKi
 6   JOSEPH DEBILIO,               )                    (related appeals)
                                   )
 7                   Debtor.       )       Bk. No.      09-23812
     ______________________________)
 8                                 )
     JOSEPH DEBILIO; JOHN STEWART, )
 9                                 )
                     Appellants,   )
10                                 )
     v.                            )       MEMORANDUM*
11                                 )
     JEFFREY IAN GOLDEN, Chapter 7 )
12   Trustee; VIBIANA DEBILIO,     )
                                   )
13                   Appellees.    )
     ______________________________)
14
                    Argued and Submitted on February 19, 2015
15                          at Los Angeles, California
16                          Filed – February 27, 2015
17             Appeal from the United States Bankruptcy Court
                   for the Central District of California
18
          Honorable Erithe A. Smith, Bankruptcy Judge, Presiding
19
20   Appearances:      David Bruce Dimitruk argued for appellants Joseph
                       DeBilio and John Stewart; David Edward Hays of
21                     Marshack Hays LLP argued for appellee Vibiana
                       DeBilio**
22
23   Before: KURTZ, DUNN and KIRSCHER, Bankruptcy Judges.
24
          *
           This disposition is not appropriate for publication.
25   Although it may be cited for whatever persuasive value it may
26   have (see Fed. R. App. P. 32.1), it has no precedential value.
     See 9th Cir. BAP Rule 8024-1.
27
          **
           Appellee Jeffrey Ian Golden, chapter 7 trustee has not
28   actively participated in this appeal.
 1                                INTRODUCTION
 2        In debtor Joseph DeBilio’s bankruptcy case, the chapter 71
 3   trustee Jeffrey Golden filed a motion seeking approval of a
 4   settlement and sale between the bankruptcy estate and Vibiana
 5   DeBilio, Joseph’s former spouse.2      The bankruptcy court granted
 6   the motion, and Joseph appealed.
 7        While Joseph’s appeal from the sale/settlement order was
 8   pending, Joseph recorded notices of pending actions – or lis
 9   pendens – based on the DeBilios’ state court marital dissolution
10   proceedings.     By recording the lis pendens, Joseph asserted a
11   continuing interest in a number of parcels of real property even
12   though the chapter 7 trustee had sold the estate’s interest in
13   those parcels in accordance with the sale/settlement order.
14        In response to the lis pendens,      Vibiana commenced civil
15   contempt proceedings in the bankruptcy court against Joseph and
16   his counsel John Stewart.     Ultimately, the court found Joseph and
17   Stewart in contempt of court, awarded civil contempt sanctions
18   and attorney fees, and expunged the lis pendens.      Joseph and
19   Stewart filed two new appeals which collectively challenged all
20   of these rulings.
21            In September 2014, the Panel issued a decision disposing of
22   the first appeal – the appeal from the sale/settlement order.
23   The panel vacated that order.     Because the bankruptcy court’s
24
          1
           Unless specified otherwise, all chapter and section
25   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
26   all "Rule" references are to the Federal Rules of Bankruptcy
     Procedure, Rules 1001-9037.
27
          2
           For ease of reference, we refer to the DeBilios by their
28   first names. No disrespect is intended.

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 1   contempt finding, its sanctions award, its fee award and its
 2   expungement of the lis pendens all were founded on the vacated
 3   sale/settlement order, we must REVERSE all of those rulings.
 4                                   FACTS
 5        Joseph and Vibiana were engaged in lengthy and contentious
 6   marital dissolution proceedings in the Orange County Superior
 7   Court (Case No. 04D009547).   The state court entered an order of
 8   dissolution several years ago and entered a final support order
 9   in October 2012.   Joseph appealed the state court’s final support
10   order to the California Court of Appeal, which appeal is still
11   pending (Appeal No. G048015).    When Joseph filed his bankruptcy
12   case, the parties’ dispute spilled over into the bankruptcy
13   court.
14        In relevant part, Joseph opposed the chapter 7 trustee’s
15   motion for approval of a settlement and sale of estate assets
16   between the chapter 7 trustee and Vibiana, pursuant to which the
17   trustee agreed to sell to Vibiana virtually all of the estate’s
18   assets.    The facts and proceedings leading up to the bankruptcy
19   court’s order granting the sale/settlement motion already have
20   been described in the Panel’s September 11, 2014 memorandum
21   decision vacating the sale/settlement order (BAP No. CC-13-1441-
22   TaPaKi).    Therefore, we will limit our factual recitals in this
23   decision to the circumstances leading up to the court’s contempt,
24   sanctions, fee and expungement rulings.
25        In December 2013, after the bankruptcy court’s entry of the
26   sale/settlement order, Stewart recorded the lis pendens on behalf
27   of his client Joseph in the official records of both Orange
28   County and San Bernardino County.     Stewart then emailed Vibiana’s

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 1   counsel to advise him of the lis pendens and to raise the topic
 2   of whether it might be time to discuss a global settlement.     Upon
 3   learning of the lis pendens, Vibiana’s counsel advised Stewart
 4   that the recordation contravened the bankruptcy court’s
 5   sale/settlement order and that, unless Joseph voluntarily
 6   withdrew the lis pendens, Vibiana would seek expungement of the
 7   lis pendens as well as contempt sanctions against both Joseph and
 8   Stewart.
 9        In February 2014, Vibiana filed her motion for expungement
10   of the lis pendens and for entry of an order to show cause why
11   Joseph and Stewart should not be held in contempt.   The motion
12   was served on both Joseph and Stewart by overnight mail.    Neither
13   Joseph nor Stewart have raised any issue regarding the manner in
14   which the motion was served.   After reviewing the motion, the
15   bankruptcy court set a hearing date of April 2, 2014, and issued
16   an order directing Joseph and Stewart to show cause: (1) why they
17   should not be held in contempt; and (2) why the lis pendens
18   should not be ordered expunged.
19        Vibiana’s proofs of service indicate that Vibiana hired a
20   process server to serve the order to show cause personally on
21   both Joseph and Stewart.   In turn, the process server left a
22   service copy of the order to show cause with a receptionist at
23   Stewart’s place of business and did the same at Joseph’s place of
24   business.
25        Neither Joseph nor Stewart filed a written response to the
26   order to show cause.   At the hearing on the order to show cause,
27   no one appeared on behalf of Joseph, but an attorney by the name
28   of David Dimitruk specially appeared on behalf of Stewart and

                                       4
 1   argued that the order to show cause had not been properly served
 2   and, consequently, the bankruptcy court lacked personal
 3   jurisdiction over Stewart.
 4        The court rejected this jurisdictional argument and further
 5   found that both Joseph and Stewart were in contempt of the
 6   court’s sale/settlement order by virtue of the lis pendens they
 7   recorded.   However, the court did not immediately award any
 8   contempt sanctions against Joseph and Stewart.   Instead, the
 9   court set a continued hearing for the purpose of ascertaining the
10   status of the contempt in roughly thirty days.   The court further
11   gave Joseph and Stewart until April 9, 2014 (seven days from the
12   date of the first contempt hearing) to purge their contempt by
13   withdrawing the lis pendens, and provided that they would be
14   sanctioned $1,000 per day for every day after April 9 the lis
15   pendens remained in effect.   The court reserved the issues
16   concerning Vibiana’s requests for attorney fees and for
17   expungement of the lis pendens.   The court entered its order
18   finding Joseph and Stewart in contempt of court on April 18,
19   2014, and Joseph and Stewart timely appealed that order.
20         Joseph and Stewart did not purge their contempt.    At the
21   continued contempt hearing held on May 13, 2014, Dimitruk once
22   again appeared, this time for both Joseph and Stewart.    First,
23   the bankruptcy court rejected Joseph and Stewart’s oral request
24   that the court defer a further ruling in the contempt proceedings
25   until the Panel resolved their motion for a stay pending the
26   disposition of their appeal from the sale/settlement order.
27   Then, the court granted Vibiana’s request for an award of $3,500
28   in attorney fees she incurred in the contempt proceedings.

                                       5
 1   Relying on Cal. Civil Procedure Code (“C.C.P.”) §§ 405.30, et
 2   seq., the court also granted Vibiana’s request for expungement of
 3   the lis pendens.   In addition, the court followed through with
 4   its imposition of sanctions of $1,000 per day, payable to the
 5   court, for a period of 24 days (from April 10, 2014 to May 13,
 6   2014).
 7        On May 27, 2014, the court entered its order memorializing
 8   its rulings on expungement, sanctions and fees.   Joseph and
 9   Stewart also timely appealed that order.
10                              JURISDICTION
11        We discuss the bankruptcy court’s jurisdiction below.     We
12   have jurisdiction under 28 U.S.C. § 158.
13                                 ISSUES
14   1.   Did the bankruptcy court have personal jurisdiction over
15        Joseph and Stewart?
16   2.   Did the bankruptcy court have subject matter jurisdiction
17        over Vibiana’s motion?
18   3.   Must we set aside the bankruptcy court’s contempt,
19        sanctions, fee and expungement rulings in light of the
20        Panel’s prior decision vacating the sale/settlement order?
21                           STANDARDS OF REVIEW
22        When, as here, the facts relevant to the bankruptcy court’s
23   exercise of jurisdiction are undisputed, we review de novo
24   questions regarding personal jurisdiction and subject matter
25   jurisdiction.   Sherrie Keys v. 701 Mariposa Project, LLC
26   (In re 701 Mariposa Project, LLC), 514 B.R. 10, 14 (9th Cir. BAP
27   2014); Wilshire Courtyard v. Cal. Franchise Tax Bd.
28   (In re Wilshire Courtyard), 729 F.3d 1279, 1284 (9th Cir. 2013).

                                      6
 1        We review for an abuse of discretion the bankruptcy court’s
 2   contempt, sanctions and fee rulings.      See Nash v. Clark Cnty.
 3   Dist. Atty's Office (In re Nash), 464 B.R. 874, 878 (9th Cir. BAP
 4   2012).   We also review for an abuse of discretion the bankruptcy
 5   court's expungement order.   Gonzalez v. Aurora Loan Servs. LLC
 6   (In re Gonzalez), 2012 WL 603747, *5 (9th Cir. BAP Feb. 2, 2012)
 7   (Mem. Dec.); Weston v. Rodriguez, 110 B.R. 452, 460 (E.D. Cal.
 8   1989), aff'd, 967 F.2d 596 (9th Cir. 1992) (table).
 9        The bankruptcy court abuses its discretion if its decision
10   was based on an incorrect legal rule or its factual findings were
11   illogical, implausible, or without support in the record.      United
12   States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc).
13                                DISCUSSION
14        We will first address Joseph and Stewart’s jurisdictional
15   arguments.   Joseph and Stewart contend that the bankruptcy court
16   lacked personal jurisdiction over them.      Joseph and Stewart point
17   out that Central District of California Local Bankruptcy
18   Rule 9020-1(e)(2) requires personal service of orders to show
19   cause regarding contempt “on any entity not previously subject to
20   the personal jurisdiction of the court.”      According to Joseph and
21   Stewart, Vibiana’s attempt to personally serve the order to show
22   cause on both of them was defective because, under Rules 7004(a),
23   9014(b) and 9020 (making Civil Rule 4(e) applicable in contempt
24   proceedings), personal service sufficient to confer personal
25   jurisdiction over them could not be accomplished by merely
26   leaving a copy of the order to show cause with their
27   receptionists.
28        However, Joseph and Stewart’s personal jurisdiction argument

                                      7
 1   incorrectly assumes that they were not already subject to the
 2   bankruptcy court’s personal jurisdiction.   In contested matters,
 3   the bankruptcy court typically obtains personal jurisdiction over
 4   the respondents when the motion is served upon the respondents in
 5   accordance with Rules 9014(b) and 7004.   See In re 701 Mariposa
 6   Project, LLC, 514 B.R. at 16.   Here, the record reflects that
 7   Vibiana served her contempt motion on both Joseph and Stewart by
 8   overnight mail at their usual places of business in accordance
 9   with Rules 9014(b) and 7004(b)(1).    When the governing procedural
10   rule (in this case, Rule 7004(b)(1)) permits service by mail,
11   service by overnight mail falls within the scope of the rule.
12   See Lyons P'ship, L.P. v. D & L Amusement & Entm't, 702 F.Supp.2d
13   104, 112 & n.2 (E.D.N.Y. 2010).   Moreover, Joseph and Stewart
14   never have raised any issue regarding service of the motion.
15   Therefore, for purposes of the contempt proceedings, the
16   bankruptcy court already had personal jurisdiction over both
17   Joseph and Stewart at the time of service of the order to show
18   cause; there was no need for the bankruptcy court to obtain
19   personal jurisdiction over them a second time when the order to
20   show cause was served.
21        Joseph and Stewart alternately contend that the bankruptcy
22   court lacked subject matter jurisdiction.   We disagree.   Up until
23   the time the trustee sold the estate’s assets to Vibiana, those
24   assets were property of the estate, and the trustee’s
25   sale/settlement motion covering those assets was a core
26   bankruptcy proceeding over which the bankruptcy court duly
27   exercised jurisdiction.   See 28 U.S.C. § 157(b)(2)(A) and (N);
28   see also 28 U.S.C. § 1334(e) (stating that federal court has

                                       8
 1   exclusive jurisdiction over estate property); Teel v. Teel
 2   (In re Teel), 34 B.R. 762, 763–64 (9th Cir. BAP 1983) (same).
 3        After the sale, the bankruptcy court continued to have
 4   ancillary jurisdiction to interpret and enforce the
 5   sale/settlement order.   See Travelers Indem. Co. v. Bailey,
 6   557 U.S. 137, 151 (2009).    As the Ninth Circuit Court of Appeals
 7   has explained, bankruptcy courts have ancillary jurisdiction “to
 8   secure or preserve the fruits and advantages of a judgment or
 9   decree” it previously entered.    In re Wilshire Courtyard,
10   729 F.3d at 1290 (citing Local Loan Co. v. Hunt, 292 U.S. 234,
11   239 (1934)).
12        Joseph and Stewart nonetheless maintain that the bankruptcy
13   court lacked subject matter jurisdiction to expunge the lis
14   pendens because only “the court in which the action is pending”
15   has authority to expunge a lis pendens under C.C.P. § 405.30.
16   The “pending action” on which Joseph and Stewart based their lis
17   pendens was the dissolution proceedings.    Thus, they make a
18   credible argument that any request to expunge under C.C.P.
19   § 405.30 should have been brought in the state court that
20   presided over the dissolution proceedings.    See Formula Inc. v.
21   Super. Ct., 168 Cal.App.4th 1455, 1464 (2008).
22        Even so, C.C.P. § 405.30 is not the exclusive remedy for an
23   improperly filed lis pendens.    Other California and federal
24   authority arguably would have permitted the bankruptcy court to
25   set aside the lis pendens.   See Formula Inc., 168 Cal.App.4th at
26   1465 (citing Ward v. Super. Ct., 55 Cal.App.4th 60, 66–67
27   (1997)); see also § 105(a) (permitting bankruptcy courts to enter
28   appropriate orders to carry out the provisions of the Bankruptcy

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 1   Code).
 2        In any event, for jurisdictional purposes, we need not
 3   decide whether the bankruptcy court erred when it expunged the
 4   lis pendens.   It suffices for us to say that Joseph and Stewart’s
 5   argument regarding the bankruptcy court’s lack of authority under
 6   C.C.P. § 405.30 does not implicate or alter the bankruptcy
 7   court’s subject matter jurisdiction under the ancillary
 8   jurisdiction doctrine to interpret and enforce its prior
 9   sale/settlement order, which is precisely what the bankruptcy
10   court was doing when it ordered the lis pendens expunged.    Simply
11   put, the bankruptcy court had ancillary jurisdiction over the
12   subject matter of Vibiana’s motion regardless of whether the
13   court had authority under C.C.P. § 405.30 to expunge the lis
14   pendens.
15        Having dispensed with Joseph and Stewart’s jurisdictional
16   arguments, the only other issue we need to address is the effect
17   of the Panel’s prior decision disposing of the appeal from the
18   sale/settlement order.   It is well established in the Ninth
19   Circuit that a civil contempt ruling does not survive when an
20   appellate court has set aside the underlying judgment or order on
21   which the civil contempt ruling was based.   See, e.g., World Wide
22   Rush, LLC v. City of Los Angeles, 606 F.3d 676, 689 (9th Cir.
23   2010); Kirkland v. Legion Ins. Co., 343 F.3d 1135, 1142-43 (9th
24   Cir. 2003); Scott & Fetzer Co. v. Dile, 643 F.2d 670, 675 (9th
25   Cir. 1981).
26        It makes no difference that the bankruptcy court here
27   awarded both attorney fees and coercive contempt sanctions.    The
28   Ninth Circuit has explicitly held that both compensatory and

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 1   coercive contempt sanctions are civil in nature, and both must be
 2   set aside when the underlying order or judgment has been set
 3   aside.    Scott & Fetzer Co., 643 F.2d at 675.   Nor can we let
 4   stand the bankruptcy court’s expungement ruling.      The Panel’s
 5   prior decision vacating the sale/settlement order is the law of
 6   the case.    The expungement ruling patently hinged on the efficacy
 7   of the sale/settlement order.    Therefore, now that the
 8   sale/settlement order has been set aside, law of the case
 9   principles do not permit us to let stand the bankruptcy court’s
10   expungement ruling.    See Two Lontsmon Magnolia, LLC v.
11   Papanicolaou (In re Papanicolaou), 2005 WL 7142136, at *1 (9th
12   Cir. BAP Feb. 16, 2005) (Mem. Dec.) (holding that, under law of
13   the case doctrine, panel was compelled to reverse orders awarding
14   prevailing party attorney fees when prior panel had reversed
15   underlying bankruptcy court judgment on which fee awards had been
16   based); see also Am. Express Travel Related Servs. Co. v.
17   Fraschilla (In re Fraschilla), 235 B.R. 449, 454 (9th Cir. BAP
18   1999), aff'd, 242 F.3d 381 (9th Cir. 2000) (table) (generally
19   explaining law of the case doctrine).
20          Vibiana argues that we are not obliged to overturn the
21   bankruptcy court’s contempt rulings just because the panel
22   vacated the underlying sale/settlement order.     We disagree.    The
23   Ninth Circuit decisions we cited above are controlling and
24   mandate this result.    See World Wide Rush, LLC, 606 F.3d at 689;
25   Kirkland, 343 F.3d at 1142-43; Scott & Fetzer Co., 643 F.2d at
26   675.    The cases Vibiana relies on are inapposite.    See, e.g.,
27   Maness v. Meyers, 419 U.S. 449, 454 (1975); Chapman v. Pac. Tel.
28   & Tel. Co., 613 F.2d 193, 195 (9th Cir. 1979).     They are criminal

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 1   contempt cases, and criminal contempt sanctions (unlike civil
 2   contempt sanctions) can and do survive the reversal of the
 3   underlying order.   See ePlus, Inc. v. Lawson Software, Inc.,
 4   760 F.3d 1350, 1357 (Fed. Cir. 2014).
 5        Vibiana alternately argues that Joseph and Stewart forfeited
 6   this argument because they did not raise it first in the
 7   bankruptcy court.   But the Ninth Circuit cases we cited above
 8   simply do not require the prevailing party to raise first in the
 9   trial court the court of appeals’ reversal of the underlying
10   order.   Therefore, we reject Vibiana’s forfeiture argument.
11                                CONCLUSION
12        While Joseph and Stewart’s current appeals raise a number of
13   other issues regarding the correctness of the bankruptcy court’s
14   sanctions and expungement rulings, it is not necessary for us to
15   reach any of those issues.   For the reasons set forth above, we
16   REVERSE the bankruptcy court’s contempt, sanctions, fee and
17   expungement rulings.
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