                                                         FILED
                                                          MAY 22 2013
 1
                                                      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
 6   In re:                        )       BAP No. CC-12-1451-MoMkTa
                                   )
 7   RUTH M. MARROQUIN,            )       Bk. No.   LA 11-30683-VZ
                                   )
 8                  Debtor.        )
     ______________________________)
 9                                 )
     RUTH M. MARROQUIN,            )       M E M O R A N D U M1
10                                 )
                    Appellant.     )
11   ______________________________)
12                  Argued and Submitted on February 21, 2013
                             at Pasadena, California
13
                              Filed - May 22, 2013
14
               Appeal from the United States Bankruptcy Court
15                 for the Central District of California
16       Honorable Vincent P. Zurzolo, Bankruptcy Judge, Presiding
17
     Appearances:     William Harold Brownstein, Esq. argued for
18                    Appellant Ruth M. Marroquin.
19
     Before:   MONTALI,2 MARKELL and TAYLOR, Bankruptcy Judges.
20
     Memorandum by Judge Markell
21   Dissent by Judge Montali
22
23
24
          1
25           This disposition is not appropriate for publication.
     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 8013-1.
27
          2
             Hon. Dennis Montali, Bankruptcy Judge for the Northern
28   District of California, sitting by designation.
 1
 2        Debtor-Appellant Ruth M. Marroquin (“Marroquin”), whose
 3   prior bankruptcy case was dismissed with a bar on future filings
 4   absent leave of court, appeals an order denying her request to
 5   file a new bankruptcy case.   Because Marroquin no longer desires
 6   bankruptcy relief, the matter before us is moot and we will
 7   dismiss this appeal.
 8                               I. BACKGROUND
 9        Since 2009, Marroquin has filed four bankruptcy petitions.
10   She filed the first case under chapter 73 on March 17, 2009, and
11   received a discharge on September 14, 2009.   The case was closed
12   on October 5, 2009.
13        Following the discharge, Marroquin lost her family residence
14   and her investment property, retaining a condominium (the
15   “Condo”) in Santa Monica.   She filed her second case on April 15,
16   2010, as a foreclosure sale of the Condo was pending.   This
17   chapter 13 case was dismissed on May 24, 2010, for failure to
18   file schedules.   In a declaration filed in support of her motion
19   for leave to file a new case, Marroquin stated that she opted not
20   to continue prosecution of this 2010 case because a relative had
21   provided her with funds to cure the arrearages on the loans
22   secured by the Condo and the foreclosure sale had been cancelled.
23        Marroquin filed her third case (chapter 13) on February 16,
24   2011, which was dismissed on March 30, 2011, for failure to file
25   schedules.   In her declaration in support of her motion for leave
26
          3
27          Unless otherwise indicated, all chapter, section and rule
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
28   to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
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 1
 2   to file a new case, Marroquin stated that she had provided the
 3   required documentation to her attorney, Siamek Nehoray
 4   (“Nehoray”), but he failed to file it.      Nehoray informed her of
 5   his error and thereafter filed another chapter 13 case on May 12,
 6   2011.       Nehoray timely filed the plan, schedules and other
 7   required documents, but did not file a motion to value the liens
 8   on the Condo.
 9           On May 20, 2011, the chapter 13 trustee served on Marroquin
10   and her counsel a notice setting forth performance and payment
11   requirements; the notice cautioned that if those requirements
12   were not met by the July 12, 2011, meeting of creditors, the
13   trustee would ask the court to dismiss the case.      Such a
14   dismissal could have included a 180-day bar against refiling, as
15   the notice stated:
16           The Court may dismiss your case and restrict your ability to
             file any future bankruptcy case pursuant to Local Bankruptcy
17           Rule 3015-1 and 11 U.S.C. Sections 109(g)(1) and 349.4
18           Marroquin filed her chapter 13 plan on May 26, 2011.     The
19   chapter 13 plan on its face noted that the court would hold a
20   confirmation hearing at 9:00 a.m. on February 13, 2012.        The same
21   date and time for the confirmation hearing appeared in the notice
22   of creditors meeting and confirmation hearing filed and served by
23
24
             4
            Local Bankruptcy Rule 3015-1(c)(6) warns that failure to
25   comply with the requirements of subsection (c) could result in
26           dismissal of the case either (i) without prejudice or
             (ii) with a 180-day bar to refiling pursuant to 11 U.S.C.
27           § 109(g), if the court finds willful failure of the debtor
             to abide by orders of the court or to appear before the
28           court in proper prosecution of the case.
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 1
 2   Nehoray on July 10, 2011. That notice also warned of a possible
 3   180-day bar, as it cautioned that:
 4           Unexcused failure by the debtor(s) to appear at either the
             Section 341(a) meeting or the confirmation hearing may
 5           result in dismissal of the case. The dismissal order may
             include a prohibition on filing any other bankruptcy case
 6           for a period of 180 days pursuant to 11 U.S.C. § 109(g).
 7   That notice was signed by Marroquin’s counsel.
 8           The chapter 13 trustee filed an objection to confirmation of
 9   Marroquin’s plan, warning again that failure to appear at the
10   confirmation hearing “may result in dismissal or conversion of
11   the case.”    The objection enumerated five different grounds for
12   the trustee’s objection.    U.S. National Bank also filed an
13   objection to confirmation, observing that Marroquin had filed
14   four cases since 2009 and had failed to provide for or include
15   its claim in her plan.
16           Marroquin’s case was called on the 9:00 a.m. calendar on
17   February 13, 2012.    Nehoray was not present.   Counsel for the
18   trustee stated:
19           In this matter, your Honor, Debtor is deficient one plan
             payment. We haven’t seen any mortgage declarations on the
20           two pieces of real property, and Debtor is ineligible for
             Chapter 13.
21
22   Transcript of February 13 Hearing at 1:8-11.
23           After the court observed that Marroquin had filed three
24   bankruptcy cases, trustee’s counsel and counsel for U.S. Bank
25   noted that the case was her fourth one, but her third within a
26   year.    The court replied “O.K. I order the case dismissed under
27   section 349.”
28
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 1
 2           The transcript reflects that other matters were then heard
 3   by the court, after which Marroquin’s case was called again, with
 4   Nehoray appearing.    The court questioned why Nehoray had not been
 5   on time previously and Nehoray replied that he had been running
 6   late.
 7           Thereafter the court and Nehoray engaged in a brief
 8   colloquy, the essence of which was that Nehoray may have been
 9   outside the courtroom when Marroquin’s case was called earlier
10   and that Nehoray had not checked in with the court reporter.    The
11   court expressed concern that trustee’s counsel had arrived at
12   7:00 a.m., but Nehoray had not.
13           Trustee’s counsel then repeated his contentions about a plan
14   payment deficiency, the absence of mortgage declarations, and a
15   failure to provide 2009/2010 tax returns and to file the required
16   “rights and responsibilities” form.5     He also questioned
17   Marroquin’s eligibility to file this chapter 13 case.
18           Both counsel for the trustee and for U.S. Bank repeated to
19   the court that this was Marroquin’s fourth case.     Nehoray stated
20   that Marroquin did not even know about one of the prior
21   bankruptcies.    In response to the court’s query about the
22   untimeliness of the plan payments, Nehoray replied that Marroquin
23   had lost her husband and “wasn’t providing everything to me, but
24   she has made all the mortgage payments.”
25           The court’s disposition was short and to the point:
26
             5
27          We assume the trustee’s counsel was referring to a Rights
     and Responsibilities Agreement between the Chapter 13 Debtor and
28   her counsel.
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 1
 2         The court: Yeah, the ruling stands. Case dismissed. Debtor
           is barred from filing any bankruptcy case - I’m using my
 3         discretion under Section 349 - without filing a motion on
           twenty-one days of notice with admissible evidence served on
 4         all creditors establishing cause as to why she should be
           able to file a bankruptcy case.
 5
           On February 4, 2012, the court issued an order and notice of
 6
     dismissal (the “Dismissal Order”) referring to the court’s
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     “findings and conclusions made at the confirmation hearing.”
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     The order provided that
 9
           (3) pursuant to Bankruptcy Code Section 349, debtor is
10         prohibited from filing any new bankruptcy petition unless:
11              (a) debtor files a motion to request permission to file
           a new bankruptcy case (‘Motion’), and the Motion is
12         supported by admissible evidence;
13               (b) the Motion is served upon all creditors;
14               (c) the Motion is set for hearing on regular notice;
           and
15
                 (d) the court grants the Motion.
16
     Id.
17
           Curiously, the docket entry for the Dismissal Order states,
18
     in part, “Debtor Dismissed for 20 years.    Barred Debtor
19
     Marroquin, Ruth M. starting 2/14/2012 to 2/16/2032.”     Thus,
20
     despite the prior notices about a possible 180-day bar, the court
21
     barred Marroquin either indefinitely (per the Order), or for
22
     twenty years (per the docket), from filing another case without
23
     complying with the terms set forth above.      Marroquin did not
24
     appeal the Dismissal Order and it is now final.
25
           On July 9, 2012, Marroquin, represented by new counsel (who
26
     represented her in her initial two cases and who represents her
27
     in this appeal) filed an application for authority to file a new
28
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 1
 2   bankruptcy case (the “Application”).6      Accompanying the
 3   Application was a declaration by Marroquin reciting the history
 4   of her prior filings, her employment of Nehoray, and Nehoray’s
 5   admission to her of his failure to timely file various papers in
 6   the February 2011 case.      She explained that “during this time”
 7   she had been caring for her bedridden husband (who passed away)
 8   and her two children, and that she lost her job.      She was
 9   attempting to “restart her life,” and explained what she intended
10   to do in her new case if she were allowed to file it, including
11   her commitment to comply fully with the provisions of the
12   Bankruptcy Code, to file all required filings, to appear at all
13   hearings and to diligently pursue her case.      Her counsel also
14   filed a declaration explaining his meeting with Marroquin in May
15   2012, and what he committed to do for her in a new chapter 13
16   case.       He served all known creditors with the Application,
17   setting it for hearing on August 7, 2012.
18           No one appeared at the August 7 hearing other than
19   Marroquin’s counsel.      Counsel repeated the request that the court
20   grant Marroquin authority to file, asking the court to “put a
21   very tight leash on it so that everything is done properly, and
22   this time it will be done right if the court’s kind enough to
23   grant our motion.”
24           The court responded that this was not an issue of kindness,
25   but an issue of whether or not Marroquin had carried her burden
26
             6
27          In Marroquin’s Amended Opening Brief on appeal, her
     counsel describes the Application as a Motion For
28   Reconsideration.
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 1
 2   to show that there was a reasonable likelihood that she could
 3   reorganize or obtain a discharge, the two legitimate purposes of
 4   bankruptcy cases.   Without citing to any specifics in Marroquin’s
 5   prior cases, the court noted that she had utilized the bankruptcy
 6   process in multiple filings primarily to obtain the benefit of
 7   the automatic stay, and ignored those cases when it was
 8   inconvenient or difficult for her or she just chose not to go
 9   forward.   The court concluded, in part:
10        [T]he fact that we have four bankruptcy cases prior - and I
          consider that and I consider the actions of Debtor in those
11        bankruptcy cases, I find that she has not carried her burden
          to show that she has a legitimate purpose for the filing of
12        this bankruptcy case and that she can mount a reasonable
          effort to reorganize or to obtain a discharge of debt.
13
14   The court denied the Application and, on August 17, 2012, entered
15   its order denying Marroquin’s motion for permission to file a new
16   bankruptcy case (the “Denial Order”).   This timely appeal of that
17   order followed.
18                            II. JURISDICTION
19        The bankruptcy court had jurisdiction under 28 U.S.C. § 157,
20   and we would normally have jurisdiction to review the Denial
21   Order under 28 U.S.C. § 158.7   At oral argument, however, counsel
22   stated that even if the panel were to reverse the Denial Order,
23
          7
24          In her Amended Opening Brief, Marroquin argued that the
     Denial Order and the Dismissal Order were both improper, but, as
25   noted above, the Dismissal Order has become final. On
     January 23, 2013, we issued an order directing Marroquin to file
26   a supplemental brief no later than February 9 to show us why we
     could review the Dismissal Order. No such brief was filed;
27   counsel stated at oral argument that he had not received the
     January 23 order. He sought no further relief, nor asked us to
28   review the Dismissal Order, so we do not.
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 1
 2   Marroquin has no present intent to prosecute a bankruptcy case.
 3   Under the circumstances, as discussed below, we do not have
 4   jurisdiction to review the Denial Order.
 5                               III. ISSUE
 6        Is this appeal moot?
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 2                             IV. DISCUSSION
 3        We must consider whether Marroquin’s counsel’s statement
 4   that his client no longer needs bankruptcy relief renders the
 5   appeal moot and deprives us of jurisdiction to afford Marroquin
 6   any relief.   See Motor Vehicle Cas. Co. v. Thorpe Insulation Co.
 7   (In re Thorpe Insulation Co.), 677 F.3d 869, 880 (9th Cir. 2012)
 8   (citing Felster Publ'g v. Burrell (In re Burrell), 415 F.3d 994,
 9   998 (9th Cir. 2005)).
10        An appeal is considered moot, and does not present a live
11   case or controversy, when it would be impossible for us to grant
12   any effective or meaningful relief to an appellant even if it
13   were to prevail on the merits of its appeal.    See id.
14        As a threshold matter, the problem for Marroquin here is the
15   Dismissal Order, not the Denial Order.     The Dismissal Order is
16   certainly not moot, and it is likely preclusive, but it is final,
17   and not subject to appeal.   We may not properly consider in this
18   appeal the wisdom and propriety of the Dismissal Order, which
19   requires Marroquin to comply with prefiling procedures and to
20   demonstrate legitimate need before she files bankruptcy.
21        The Denial Order, in contrast, has been properly appealed,
22   but it is moot; the preclusive effect, if any, of the Denial
23   Order that troubles the dissent is just too attenuated to support
24   a present live controversy, especially given the degree of
25   discretion built into the Dismissal Order upon presentation of
26   new evidence.
27        The fact that a future judge might see the Denial Order and
28   be influenced by it (which is as far as the matter might go

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 1
 2   because he or she most certainly would not be bound by it) does
 3   not save this appeal from being dismissed as moot.      Any potential
 4   future preclusive effect is hypothetical and is at most a
 5   collateral legal consequence of the bankruptcy court’s decision.
 6   When faced with such potential consequences, federal courts
 7   generally consider vacatur, dismissing the appeal only after
 8   vacating the order being appealed.       See, e.g., Camreta v. Greene,
 9   131 S.Ct. 2020, 2035-36 (2011); U.S. Bancorp Mortgage Co. v.
10   Bonner Mall Partnership, 513 U.S. 18, 25-28 (1994).      Log Cabin
11   Republicans v. U.S., 658 F.3d 1162, 1168 (9th Cir. 2011).      To the
12   extent the appeal is moot, such mootness arises from the actions
13   of the appellant (i.e., her choice not to pursue bankruptcy
14   relief even if she prevails).    Consequently, vacatur does not
15   appear to be an option.   See Bonner Mall 513 U.S. at 24-29,
16   (where mootness results from the voluntary forfeiture of legal
17   remedy by the losing party, the equitable remedy of vacatur is
18   surrendered).   As noted by the Ninth Circuit:
19        Vacatur is in order when mootness occurs through
          happenstance . . . [or] the unilateral action of the
20        party who prevailed in the lower court.” Arizonans for
          Official English v. Arizona, 520 U.S. 43, 71-72, 117
21        S.Ct. 1055, 137 L.Ed.2d 170 (1997) (citation and
          internal quotation marks omitted). Vacatur is not
22        necessarily appropriate where mootness arises as a
          result of the voluntary actions of the party who lost
23        below.
24   United States v. Pattullo (In re Pattullo), 271 F.3d 898, 902
25   (9th Cir. 2001) (citation to Bonner Mall omitted).
26        Even though vacatur is not appropriate here, that does not
27   mean the potential collateral legal consequences of the unvacated
28   judgment make an appeal from that judgment any less moot.      There

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 1
 2   still is no live case or controversy.   Accordingly, we DISMISS.
 3                     Dissent begins on next page.
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 2        Montali, J, dissenting:
 3        I respectfully dissent.    I agree that an appeal is
 4   considered moot, and does not present a live case or controversy,
 5   when it would be impossible for us to grant any effective or
 6   meaningful relief to Marroquin even if she were to prevail on the
 7   merits of its appeal.   Here, however, we could provide her with
 8   effective relief, notwithstanding the statement of Marroquin’s
 9   counsel at oral argument.    As the Denial Order remains extant, it
10   precludes Marroquin from filing a case in the future, even the
11   very near future, particularly where the Dismissal Order provided
12   for either a 20 year ban or a lifetime ban.   By addressing the
13   merits of Marroquin’s appeal, we would ensure that the Denial
14   Order has no preclusive effect and that she can file a future
15   case without the Denial Order barring such relief.
16        While section 349 does not specifically permit dismissal of
17   a case “with prejudice,” the Ninth Circuit has held that such
18   dismissals are authorized under appropriate circumstances.8
19   Leavitt v. Soto, 171 F.3d 1219 (9th Cir. 1999) (“Leavitt I”),
20   affirming 209 B.R. 935 (9th Cir. BAP 1997); Ellsworth, 455 B.R.
21   at 922.   Dismissal with prejudice is a “drastic remedy reserved
22   for ‘extreme situations.’”   Ellsworth, 455 B.R. at 922, quoting
23   Colonial Auto Center v. Tomlin (In re Tomlin), 105 F.3d 933, 937
24   (4th Cir. 1997).   As BAP stated in Ellsworth:
25        [A] bankruptcy court rarely uses its authority to bar
26
          8
           In contrast, section 109(g) provides a specific 180-day bar
27   if a debtor’s case was dismissed for willful failure to abide by
     orders of the court or to appear before the court in proper
28   prosecution of the case.

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 1
 2        the discharge of debts in a later case. In any court, a
          dismissal order that bars subsequent litigation is a
 3        severe sanction warranted only by egregious misconduct.
          Given that the Bankruptcy Code’s central purpose is
 4        remedial, i.e., to afford insolvent debtors an
          opportunity to enjoy a new opportunity in life with a
 5        clear field for future effort, unhampered by the
          pressure and discouragement of preexisting debt, such
 6        an order is particularly devastating in a bankruptcy
          case. For this reason, a permanent bar to discharge is
 7        at times referred to as the capital punishment of
          bankruptcy, for it removes much of the benefit of the
 8        bankruptcy system.
 9   Ellsworth, 455 B.R. at 933, quoting Tomlin, 105 F.3d at 937.
10        The transcript of the hearing that led to the Dismissal
11   Order makes obvious that the court was frustrated with Nehoray’s
12   conduct and troubled by yet another case of a repeat filer.    But
13   nothing in the record suggests that the court considered any of
14   Marroquin’s conduct egregious and certainly made no findings to
15   that effect.
16        Because section 109(g) provides a specific bar to refiling
17   when a debtor has had a prior case or cases dismissed for willful
18   failure to comply with court order, a dismissal with prejudice
19   requires more than multiple filings.    Certainly there must be bad
20   faith.   Leavitt I, 171 F.3d at 1224.   To determine whether such
21   bad faith exists, the court should consider the following
22   factors:
23        (1) whether the debtor misrepresented facts in his or
          her petition or plan, unfairly manipulated the
24        Bankruptcy Code, or otherwise filed his or her chapter
          13 petition or plan in an inequitable manner;
25
          (2) the debtor’s history of filings and dismissals;
26
          (3) whether the debtor only intended to defeat state
27        court litigation; and
28        (4) whether egregious behavior is present.

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 1
 2   Id.
 3           Although we are not reviewing the Dismissal Order, I note
 4   that even though the warnings and notices provided to Marroquin
 5   mentioned only the possibility of a 180-day bar, the court barred
 6   her indefinitely unless she received court permission to file.
 7   Moreover, apart from reciting Marroquin’s history of previous
 8   findings, the court did not make any findings as to the other
 9   three factors identified in Leavitt I.      Implicit in the Dismissal
10   Order is a further requirement of court approval of any
11   subsequent bankruptcy filing, but absent from the order are any
12   standards beyond supporting such a request with admissible
13   evidence, service on all creditors, and setting it for hearing.
14           Marroquin filed exactly what was required by the Dismissal
15   Order, supported it by two sworn declarations, and served it on
16   all creditors with adequate notice.      In the Application, she
17   explained the circumstances of her chapter 13 cases in 2010 and
18   2011.    In the first instance, she dismissed her case because she
19   was able to reinstate her loan on the Condo and in the second
20   case she had provided the necessary documents to her counsel who
21   failed to file them.    She further explained how she had engaged
22   new counsel, intended to deal with existing defaults in a
23   chapter 13 plan, keep the Condo, keep payments current, and cure
24   the arrearages once the correct amount was determined.     She
25   stated that she intended to fully comply with the provisions of
26   the Bankruptcy Code, to timely file all required filings, to
27   appear at all hearings, and to diligently pursue her case.       She
28   added that there was no current notice of default or foreclosure

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 1
 2   and that she wanted to seek a valuation of the property and to
 3   determine arrearages owed to her creditors.
 4           The court made no determination of whether she had complied
 5   with the Dismissal Order.    Clearly she had.   Instead, it focused
 6   on the existence of the prior cases and reiterated its view of
 7   the Debtor’s motivations for filing them.    It did not examine
 8   whether any of the other “bad faith” factors existed.      Debtor,
 9   however, did explain the circumstances for filing those cases and
10   did state that she was prepared to prosecute fully her chapter 13
11   case.    Given these representations, and given that the court
12   based its denial of leave to file the new case primarily on the
13   existence of the prior cases (when section 109(g) provides the
14   remedy for that particular issue), I believe that the court
15   abused its discretion in entering the Denial Order, especially as
16   nothing in the record demonstrated egregious or other conduct to
17   support a bad faith finding that would justify dismissal of the
18   new case under section 1307.
19           Marroquin should not have suffered the draconian
20   consequences of the 20 year or lifetime ban of the Dismissal
21   Order.    Just as any other debtor who endures and outlasts a
22   180-day bar may file again, Marroquin should be able to.     We
23   should reverse the Denial Order.    Therefore I dissent from the
24   dismissal of this appeal.
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