KSB

Judge Karlin

12-40195 Moses (Doc. # 105)

In Re Moses, 12-40195 (Bankr. D. Kan. Oct. 16, 2013) Doc. # 105

PDFClick here for the pdf document.


SO ORDERED.
SIGNED this 15th day of October, 2013.

 

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF KANSAS


In re: Case No. 12-40195
Mary Carol Moses, Chapter 7

Debtor.

Order Denying Motions to Vacate of Debtor Mary Moses
and Intervenor Ruth Moses

Before me are two contested motions related to a default order entered more
than one year ago, on September 4, 2012 (the “Default Order”), namely: (1) Debtor
Mary Moses’ Motion to Vacate the Default Order on Debtor’s Homestead Exemption;1
and (2) Intervenor Ruth Moses’ Motion to Vacate the Default Order on Debtor’s
Homestead Exemption.2 In an attempt to untangle the web of family ties, the Trustee,

1 Doc. 76. The Trustee objected to this motion at Doc. 77.
2 Doc. 67. The Trustee objected to this motion at Doc. 75.

Case 12-40195 Doc# 105 Filed 10/15/13 Page 1 of 24


along with the Debtor and Intervenor, filed a Joint Stipulation of Facts3 and briefs
supporting their positions.4

After full consideration of those pleadings, I conclude that the motions to vacate
must be denied. Debtor Mary Moses has not carried her burden under Federal Rule of
Civil Procedure 60(b)(1) to show the alleged excusable neglect. Intervenor Ruth Moses
has not demonstrated that she has standing to attack the Default Order, and, even if
she did, she similarly fails to carry her burden under Rule 60(b).

I. Factual and Procedural Background
Debtor Mary Moses, and her sister, the Intervenor Ruth Moses, along with their
father Raymond Moses, moved into real property on Stafford Road in Ottawa, Kansas
in 1988. Debtor and her sister have lived there ever since. In 1992, their father deeded
his interest in the residence to them as joint tenants, with full rights of survivorship.
In 2010, the Franklin County Appraiser’s Office valued the real property at
approximately $200,000. At that time, the residence was “free and clear” of any
mortgage or other type of encumbrance, including real property taxes.

On or about October 1, 2010, Debtor contacted Legal Helpers Debt Resolution

3 Doc. 78 (Stipulation of Facts between Ruth Moses, Mary Moses, and the Trustee).
The parties informed the Court by e-mail at the time the stipulation was filed that the JointStipulation is complete, and no additional evidence is needed.

4 Doc. 84 (Trustee’s Brief in Opposition to Debtor’s Motion to Vacate Default Orderand Ruth Moses’ Motion to Vacate Default Order); Doc. 88 (Intervenor Ruth Moses’ Brief inSupport of Motion to Vacate Default Order Denying Debtor’s Claims of Exemptions); andDoc. 100 (Debtor’s Brief in Support of Debtor’s Motion to Vacate Default Order). Briefing onthis matter has been significantly delayed by several motions for extension of time. Themotion to vacate of Intervenor Ruth Moses, which brought this issue to the forefront, wasfiled May 21, 2013, but full briefing on the issues was not completed until October 8, 2013.

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Service (“Legal Helpers”) seeking options to repay her significant credit card debt,
which exceed $55,000. Debtor entered into a contract with Legal Helpers for its
services in reducing her credit card debt and, in compliance with their formal
agreement, she began forwarding approximately $700 per month for repayment of the
debt.

In April 2011, Citibank sued Debtor to obtain a judgment for the unpaid balance
due on the credit card account she had with it. After receiving the summons from
Citibank, Debtor contacted Legal Helpers by phone, and notified a representative that
Citibank had filed the lawsuit and that she was concerned about the lawsuit. During
a phone conversation with Legal Helpers in April or May 2011, Debtor understood the
representative to tell her that if she owned property or had a bank account, that she
should remove her name from the title of those items because of the Citibank lawsuit.
Debtor was not asked by Legal Helpers, and therefore did not inform Legal Helpers,
that she owned an undivided one-half interest in the real property in Ottawa, Kansas.

Because Debtor believed she had received sound legal advice from Legal
Helpers, she completed a quit claim deed form on May 27, 2011, transferring her
interest in the Ottawa, Kansas real property to her sister, Ruth Moses. The quit claim
deed was simultaneously filed with the Franklin County Register of Deeds. Debtor
admits she executed the quit claim deed on the real property in favor of her sister
based upon her understanding of the advice from Legal Helpers. Ruth paid Debtor no
consideration in connection with the transfer of Debtor’s interest via the quit claim
deed, which based on a value of $200,000, may have been worth about $100,000.

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Debtor made all payments to Legal Helpers as agreed until late 2011, when she
discovered Legal Helpers was not in turn paying her credit card debt, as Legal Helpers
had agreed to do. On February 23, 2012, Debtor Mary Moses filed for Chapter 7
bankruptcy protection, claiming a homestead exemption for the Stafford Road real
property. At a continued § 341 meeting in July 2012,5 Debtor testified that she did not
hold an “interest” in the real property, meaning that she did not hold title in the
property. On August 8, 2012, the Trustee filed an objection to Debtor’s Claim of
Exemption of the homestead, along with a notice with a 21-day opportunity to object.6
If Debtor had objected, a hearing would have been set.

The Trustee mailed a copy of her Objection to Exemption and the Notice to
Debtor at her Stafford Road home on August 8, and Debtor freely admits receiving a
copy of this Objection to Exemption and Notice in August 2012. The Court’s docket
sheet also reflects that Debtor’s attorney was sent an electronic copy of both the
Objection and Notice through the Court’s electronic filing system at the electronic
address she maintains with the Court.7

Debtor did not object to the Trustee’s Objection to Exemption. As a result, when
the objection deadline expired, I construed the objection as uncontested, and, on

5 See 11 U.S.C. § 341 (requiring a “meeting of creditors” wherein the trustee “shallorally examine the debtor”).

6 Doc. 33 (Trustee’s Objection to Debtor’s Exemption); Doc. 34 (Notice withOpportunity for Hearing).

7 See Doc. 33 and 34 showing electronic service on August 8, 2012 to Counsel This email address is being protected from spambots. You need JavaScript enabled to view it. .

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September 4, 2012, entered an Order Denying Debtor’s Claim of Exemption.8 The
Default Order, which was prepared by the Trustee, states that the real property is not
subject to a claim of exemption under Kansas law.

Debtor also admits that she received a copy of the Default Order at her Stafford
Road residence in September 2012, and the Court’s docket sheet shows that Debtor’s
counsel was sent a copy of this order through the Court’s electronic filing system on
September 4, 2012.9 Approximately six months later, on March 21, 2013, the Trustee
filed an adversary proceeding against Debtor’s sister, Intervenor Ruth Moses, seeking
to recover the alleged cash value of the interest the Trustee alleges Debtor improperly
transferred to Ruth Moses.

Apparently in response to the filing of the adversary case against her sister,
Debtor filed a motion to convert her case to one under Chapter 13 on April 11, 2012;10
that motion to convert was set for an evidentiary hearing as a result of the Trustee’s
objection based on good faith.11 Two days before that evidentiary hearing, Ruth Moses
filed a motion to intervene in Debtor’s chapter 7 bankruptcy case12 and a motion to
vacate the Order Denying Debtor’s Claim of Exemption.13 Debtor then filed a motion

8 Doc. 37.
9 Doc. 38.
10 Doc. 57.
11 Doc. 62.
12 Doc. 69.
13 Doc. 67.


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to continue14 the evidentiary hearing on the motion to convert. At a hearing on the
motion to continue conducted one day before that trial, I granted Ruth Moses’ motion
to intervene and the motion to continue the evidentiary hearing. After I questioned
Ruth Moses’ standing at that hearing, Debtor promised to file her own motion to
vacate, which she filed two weeks later.15 I then set a briefing schedule for the motions
to vacate.

As a final preliminary matter, this is a core proceeding and the parties stipulate
this Court has jurisdiction to enter final judgment.16

II.
Analysis
A.
Debtor Mary Moses’ Motion to Vacate the Default Order on her
Homestead Exemption
Debtor seeks relief from the Default Order granting the Trustee’s objection to
her homestead exemption under Federal Rule of Civil Procedure 60(b)(1). Rule 60 is
applicable to bankruptcy proceedings via Federal Rule of Bankruptcy Procedure 9024.17

14 Doc. 68.

15 Doc. 76.

16 See 28 U.S.C. § 157(b)(2)(A) (stating that “matters concerning the administrationof the estate” are core proceedings that a bankruptcy judge has jurisdiction to hear anddetermine).

This Court has jurisdiction pursuant to 28 U.S.C. § 157(a) and 11 U.S.C. § 1334(a)
and (b) and by operation of a Standing Order dated August 1, 1984, effective July 10, 1984,
referenced in D. Kan. Rule 83.8.5, wherein the District Court for the District of Kansas
referred all cases and proceedings in, under, or related to Title 11 to the Districts’bankruptcy judges.

17 See Fed. R. Bank. P. 9024 (stating that Rule 60 is applicable to “cases under theCode” except for motions to reopen, complaints to revoke discharge, and complaints torevoke an order confirming a plan).

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Rule 60(b)(1) states:

(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. Onmotion and just terms, the court may relieve a party or its legalrepresentative from a final judgment, order or proceeding for thefollowing reasons:
(1) mistake, inadvertence, surprise, or excusable neglect[.]
The parties do not dispute that the Default Order was a final order, and I find that the
“Order Denying Debtor’s Claim of Exemption” was, in fact, a final order.18 A Rule
60(b)(1) motion to vacate “must be made within a reasonable time,” and “no more than
a year after entry of the judgment or order.” The Default Order that Debtor seeks to
vacate was entered on September 4, 2012, so Debtor’s motion to vacate, ultimately filed
on June 4, 2013, was filed almost ten months after the objection was filed (on August
8), and nine months after the order was entered.
Debtor alleges that Rule 60(b)(1) relief based on excusable neglect is justified
due to a calendaring error made by her attorney, which error was based on her
attorney’s medical condition during the winter of 2012 and spring of 2013. Specifically,
Debtor’s attorney alleges a “severe allergic reaction” in the winter of 2012, that
persisted for seven months. Counsel then alleges that in March 2013 she “developed
a neurological condition” and an injury that exacerbated the problem, requiring
medical treatment from March 2013 through June 2013. The relevant time period for

18 See Clark v. Brayshaw (In re Brayshaw), 912 F.2d 1255, 1256 (10th Cir. 1990)
(“Grant or denial of a claimed exemption is a final appealable order from a bankruptcyproceeding.”); see also Lampe v. Iola Bank & Trust (In re Lampe), 278 B.R. 205, 208 (10thCir. BAP 2002) (“The bankruptcy court’s order regarding the Debtor’s claim of exemption isan appealable order.”).

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the analysis of this motion is August and September of 2012—the months during which
the objection and order were filed and entered, and presumably during the months
following the alleged initial allergic reaction, although this latter fact is not clear.19

Debtor’s attorney alleges slightly different facts in the brief filed in support of
Debtor’s motion to vacate. In that brief, Counsel never mentions a calendaring error,
instead simply stating that she “failed to respond” to the August 2012 objection to
exemption and that “Debtor’s counsel’s health concerns and family turmoil prevented
her from realizing the error.” Her brief claims she suffered from medical conditions in
the winter of 2012, followed by a seven month severe allergic reaction and then a
spring 2013 neurologic problem. The brief then alleges, for the first time, that her
children also had health problems. These had not been mentioned in Debtor’s motion
to vacate; her affidavit states that these health issues occurred “during the first 341
[hearing].” Debtor’s first 341 hearing was in March 2012—some six months before
counsel’s response to the Trustee’s Objection to Exemptions was required, but counsel’s
brief is, frankly, not clear about this timing, and as a result I am unable to determine

19 Equally important to note, Debtor’s allegations are just that, allegations andargument. Despite asking for a Joint Stipulation of Fact concerning the motions to vacate,
the Joint Stipulation actually filed does not in any way address the facts alleged concerningcalendaring errors or medical issues. The parties confirmed that this Joint Stipulation wascomplete, and that they did not need additional evidence to support the motions to vacate.
For that reason, I cannot allow Debtor’s counsel to now add facts to which the Trustee has
not been given the opportunity to consider or consent. See Doc. 100 p.2 (Debtor’s brief insupport of her Motion to Vacate, admitting “[a]ll counsel agreed that there were no disputedfacts in regard to the Motions to Vacate”).

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the exact time frame of Counsel’s children’s health issues.20

Rule 60(b) relief “is extraordinary and may only be granted in exceptional
circumstances.”21 The Tenth Circuit utilizes the following factors to determine
excusable neglect: “the danger of prejudice to the opposing party, the length of the
delay and its potential impact on judicial proceedings, the reason for the delay,
including whether it was within the reasonable control of the movant, and whether the
movant acted in good faith.”22 “The determination of whether a party’s neglect is
excusable is at bottom an equitable one, taking account of all relevant circumstances
surrounding the party’s omission.”23 Debtor bears the burden of demonstrating
excusable neglect, although all doubts in the equitable analysis of excusable neglect
are to be resolved in her favor.24

After examining the pertinent factors, I find that Debtor has not shown
excusable neglect. Although Debtor alleges the Trustee (and thus the creditors of her
estate) would suffer no prejudice from vacating the default order, the Trustee argues
that the entire course of this case, and the related adversary proceeding, has been
plotted based on the Default Order. The Trustee has expended countless hours on these

20 Again, these allegations are not stipulated. Debtor’s counsel has, however,
submitted an affidavit that lays out some of the alleged facts.
21 Marcus Food Co. v. DiPanfilo, 671 F.3d 1159, 1166 (10th Cir. 2011).
22 Id. at 1172 (internal quotations omitted).
23 Segura v. Workman, 351 Fed. App’x 296, 298 (10th Cir. 2009) (unpublished)
(internal quotations omitted).
24 Id. at 1172.
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matters, relying on the finality of the order on Debtor’s homestead exemption.

The length of the delay in this case—the Default Order was entered nine months
before Debtor filed her motion to vacate—and that delay’s impact on the judicial
proceedings, is also not in Debtor’s favor. “Rule 60(b) has dual timeliness standards:
a ‘reasonable time’ standard for all motions filed under 60(b), and a maximum one-year
statute of limitations from entry of the order for motions filed under 60(b)(1).”25
Although Debtor’s motion to vacate was filed within the one-year statute of limitations,
the nine month delay is not reasonable. Debtor has personally known, as has the
attorney she voluntarily elected to hire to represent her, since at least August 2012,
and very likely earlier due to questioning at repeated, continued 341 hearings, that the
Trustee opposed Debtor’s homestead exemption.26 Accordingly, it should not have come
as a surprise to Debtor herself, or her attorney, when the objection to the homestead
exemption arrived in the mail. I may consider “whether the attorney attempted to
correct his action promptly after discovering the mistake.”27 I find there was not a
timely correction made here.

Debtor and her counsel also received actual notice in early September 2012

25 Davis v. Warden, Fed. Transfer Ctr., 259 Fed. App’x 92, 94 (10th Cir. 2007)
(unpublished). See also Cummings v. Gen. Motors Corp., 365 F.3d 944, 954 (10th Cir. 2004)
(noting that the “reasonable time” requirement of Rule 60(b) applies to Rule 60(b)(1), (2),
and (3), and is not necessarily satisfied by filing within one year), abrogated on other
grounds by United Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394 (2006).

26 Debtor’s counsel admits this in her Motion to Vacate when she states, at ¶7, that“Debtor’s counsel repeatedly clarified to the Trustee during the 341 meetings that Debtorbelieved her share of the homestead to be exempt.” Doc. 76.

27 Jennings v. Rivers, 394 F.3d 850, 857 (10th Cir. 2005).

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when the Default Order was entered sustaining the Trustee’s objection.28 In addition,
the dispute about Debtor’s homestead is at the center of this entire bankruptcy case,
so there have been repeated notices of this issue. Even Debtor’s counsel admits in her
motion to vacate that she and the Trustee “conversed through many emails before and
after” the Trustee’s objection was filed,29 and Debtor and her Counsel were notified of
the filing of the adversary case related to the real property in March 2013.

Debtor’s delay has also resulted in significant impact on the judicial proceedings.
I was required to continue the evidentiary hearing on Debtor’s motion to convert
because of the late-filed motions to vacate, which also likely prejudiced the Trustee,
who undoubtedly had already prepared for the trial scheduled to start less than 24
hours later. A “sufficient justification” must be given for any delay in filing a Rule 60(b)
motion,30 and no sufficient justification is shown here.31

Next, I consider the reason for the delay, including whether it was within the
reasonable control of Debtor as movant. “Fault in the delay remains a very important
factor—perhaps the most important single factor—in determining whether neglect is
excusable. . . . Likewise, a court may take into account whether the mistake was a

28 Debtor admits receiving both the objection and Default Order at her home
address.

29 Doc. 76 at 2, ¶ 9.

30 Sorbo v. United Parcel Serv., 432 F.3d 1169, 1178 (10th Cir. 2005).

31 See, e.g., Calhoun v. Schultze, 197 F.R.D. 461, 463 (D. Kan. 2000) (calling a delayof three months “significant;” failure to respond caused court to grant unopposed motionand cancel pretrial conference).

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single unintentional incident (as opposed to a pattern of deliberate dilatoriness and
delay).”32 Although Debtor’s failure to respond was a singular mistake, and not one in
a series of dilatory tactics, I find that the fault for the delay in this case must reside
with Debtor and her Counsel.33

Even if her attorney’s calendaring error was the cause of the attorney’s failure
to timely respond to the Trustee’s motion, there is simply no explanation why Debtor
failed to respond at all, even after receiving the Default Order, and why she ignored
this matter for the subsequent nine months. The stipulated facts show that Debtor is
employed at Washburn University as a Transcript Analyst,34 so she is apparently well
able to read, write and otherwise communicate with her Counsel. And Debtor admits
she also personally received both the Trustee’s Objection to Exemption and the Court’s
Default Order at her home address. What is missing from her argument is why she
then elected not to contact her attorney to question why her attorney had failed to
oppose the objection to exemptions, or to promptly seek relief from the Default Order
regarding the exemptions.

Although Debtor’s Counsel’s attempts to explain her own failure to respond
based on a calendaring error due to her own medical problems, she does not attempt

32 Segura v. Workman, 351 Fed. App’x 296, 298–99 (10th Cir. 2009) (unpublished)
(internal quotations omitted).

33 Clients must “be held accountable for the acts and omissions of their chosen
counsel.” Pioneer Inv. Servs. Co. v. Brunswick Assoc. Ltd. P’ship, 507 U.S. 380, 396 (1993).

34 Doc. 78, Stipulation No. 8. Debtor’s sister, Ruth, with whom she lives, is a SeniorAdministrative Assistant with the Kansas Corporation Commission. Stipulation 7.

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to explain why she did not immediately react after receiving the Court’s Order Denying
Debtor’s Claim of Exemptions on September 4, 2012.35 While I am very sympathetic
with Counsel’s series of medical ailments, under these facts, this is insufficient:
“Parties desiring relief must particularize, and generally do not acquit themselves of
responsibility by showing merely that they placed the case in the hands of an
attorney.”36 Indeed, “[c]arelessness by a litigant does not afford a basis for relief under
Rule 60(b)(1).”37 And Counsel has not made it clear whether her own, or her children’s,
health problems overlapped the pertinent time period.38

Finally, I must assess whether Debtor has acted in good faith throughout this
litigation, and I find that this factor also does not favor Debtor. Although not explicit,
Debtor’s motion to vacate actually implies that the failure to timely respond to the
objection to exemption or the Default Order was a strategic choice.39 Debtor’s Counsel

35 See, e.g., United States v. Williams, 257 Fed. App’x 65, 68 (10th Cir. 2007)
(unpublished) (affirming decision of lower court that even a complete failure to know abouta court order “did not justify her complete failure to check up on the status of an on-goingIRS proceeding”).

36 Pelican Prod. Corp. v. Marino, 893 F.2d 1143, 1146 (10th Cir. 1990).

37 Calhoun v. Schultze, 197 F.R.D. at 462 (citing Pelican Prod. Corp. v. Marino, 893
F.2d 1143, 1146 (10th Cir. 1990)).

38 For example, counsel alleges a “severe allergic reaction” in “winter 2012,” withlingering symptoms for seven months. But this time frame is so vague that the Courtcannot determine that it even overlaps the relevant August to September 2012 time frame.
Even if these facts were more clearly presented, the parties agreed that their Stipulation ofFacts was complete, and those facts do not contain any evidence about counsel’s medicalproblems.

39 The Trustee also notes in her brief that while Debtor’s counsel argues that hermedical issues reasonably prevented her from responding to the initial Objection toExemptions or in timely moving to vacate the resulting Default Order, that Debtor’s

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states that “Counsel believed resolution would be obtained by converting to a Chapter

13. After meeting with counsel for [Ruth Moses] and deciding upon another course of
action, it was necessary to respond to Trustee’s objection to Debtor’s Exemptions.”40
Frankly, it strains credulity to think that Debtor’s Counsel only realized that an order
was entered on an adverse objection to exemption at the time the motion to vacate was
filed, given that the real property exemption had been front and center of this
bankruptcy case from the beginning. The more likely scenario seems to be that Debtor
and her Counsel chose not to fight the exemption, and planned all along to convert if
an adversary was filed. But when Debtor’s sister became involved after the Trustee
filed the adversary proceeding, they elected a new litigation tactic. “[A] party who
simply misunderstands or fails to predict the legal consequences of his deliberate acts
cannot later, once the lesson is learned, turn back the clock to undo those mistakes.”41
Debtor has not carried her burden to show excusable neglect that justifies
vacating the Court’s Order. Debtor did not show that “culpable conduct did not cause
the default.”42 Debtor’s motion to vacate43 is denied.

counsel was nevertheless medically able to file other pleadings in the case, referring to aRequest for Transcript, Doc. 35, filed August 14, 2012. See also Doc. 50, Debtor’s Objectionto Motion for Turnover filed December 31, 2012 (five months before Debtor’s counsel filedthe Motion to Vacate).

40 Doc. 76 at 4, ¶ 19.

41 Yapp v. Excel Corp., 186 F.3d 1222, 1231 (10th Cir. 1999).

42 Zimmerling v. Affinity Fin. Corp., 478 Fed. App’x 505, 508 (10th Cir. 2012)

(unpublished) (internal quotations omitted).
43 Doc. 76.
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B.
Intervenor Ruth Moses’ Motion to Vacate the Default Order on
Debtor’s Homestead Exemption
Intervenor Ruth Moses argues that the Default Order on Debtor’s Homestead
Exemption should be set aside based on Rule 60(b)(6). Rule 60(b)(6) permits a court to
“relieve a party or its legal representative from a final judgment, order, or proceeding”
for “any other reason that justifies relief.” Ruth Moses argues she is entitled to relief
because: (1) she did not have notice of the Trustee’s objection to exemption, “or any
information that would signal to [Ruth] that her interests in the property rights of her
home were in jeopardy,” and was “substantially prejudiced” by the Default Order; and

(2) the Default Order misstates Kansas law, because it states that “under Kansas law,
the Debtor is prohibited from exempting real property which the Debtor does not own
and, therefore, the Real Property is not subject to a claim of exemption under Kansas
law.” The Trustee responds that Intervenor Ruth Moses lacks standing to seek relief
from the Default Order because she was not a party to that order. The Trustee also
argues that Intervenor cannot meet her burden under Rule 60(b).
I must first assure myself that Intervenor Ruth Moses has standing to challenge
the Default Order.44 Standing jurisprudence encompasses both constitutional standing
and jurisdictional standing.45 Constitutional standing requires the presence of a “case

44 See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 102 (1998) (detailing thelimit of courts’ jurisdiction and the requirement of standing to sue).

45 The Wilderness Soc’y v. Kane County, Utah, 632 F.3d 1162, 1168 (10th Cir. 2011)
(“The Supreme Court’s standing jurisprudence contains two strands: Article III standing,
which enforces the Constitution’s case-or-controversy requirement, and prudential standingwhich embodies judicially self-imposed limits on the exercise of federal jurisdiction.”
(internal quotations omitted)).

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or controversy,” and requires that the individual has suffered “an ‘injury in fact’ that
a favorable judgment will address.”46 Prudential standing requires that the litigant
assert its own particular rights, and forbids a litigant from “‘rest[ing] his claim for
relief on the legal rights or interest of third parties.’”47

Admittedly, a joint tenant can be a party in interest concerning real estate, and
assert his or her rights to co-owned property of the estate. For example, a Tenth Circuit
BAP case, In re Kasparek, 48 discusses a joint tenant’s rights to contest a chapter 7
trustee’s motion to sell under § 363 of the Code. In Kasparek, however, the joint tenant
had his own real property interest at stake: the trustee was seeking to sell not only the
Debtor’s interest in the property, but also the joint tenant’s interest, and the joint
tenant was a named defendant in the adversary case being appealed.49

No party has cited to any case, however, that supports the Intervenor’s standing
to vacate a default order on the Debtor’s claim of a homestead exemption. Intervenor
Ruth Moses claims that her intervenor status makes her a party in interest, and
permits her to challenge the Default Order, based on the case of Ruiz v. Estelle. 50 In

46 Id. (quoting Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 12 (2004)); see
also Steel Co., 523 U.S. at 103–04 (“This triad of injury in fact, causation, and redressabilityconstitutes the core of Article III’s case or controversy requirement, and the party invokingfederal jurisdiction bears the burden of establishing its existence.”).

47 Id. (quoting Warth v. Seldin, 422 U.S. 490, 499 (1975)).

48 426 B.R. 332 (10th Cir. BAP 2010).

49 Id. at 339–40. There is no actual reference in Kasparek to standing. Kasparek is

merely an example case where a joint tenant pursued remedies from a bankruptcy court.
50 161 F.3d 814 (5th Cir. 1998).
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Ruiz, the Fifth Circuit considered intervention in a prison conditions lawsuit under
Federal Rule of Civil Procedure 24(a)—intervention of right—based on a provision of
the Prison Litigation Reform Act that granted a right to intervene to state legislators.51
The Ruiz Court analyzed the statutory intervention language, and concluded that the
individual legislators were given an unconditional right to intervene in the prison
litigation.52 The Court then examined the constitutionality of the statutory intervention
language, based on the argument that granting legislators the right to intervene would
violate Article III of the Constitution for lack of the legislators’ standing.53 The Ruiz
Court concluded that Article III did not require the intervenors to independently
possess standing where the intervention was into a subsisting and continuing Article
III case or controversy, and the relief sought by the intervenors was “also being sought
by at least one subsisting party with standing to do so.”54

51 Id. at 816–18.

52 Id. at 821.

53 Id. at 828–29.

54 Id. at 830 (relying on Diamond v. Charles, 476 U.S. 54, 64 (1986)). The TenthCircuit discusses the same rule in San Juan County, Utah v. United States, 503 F.3d 1163
(10th Cir. 2007).

The Supreme Court has recently analyzed the Diamond case, the Supreme Courtcase upon which Ruiz relies, and limited it to the conclusion there present—that apediatrician engaged in private practice was not permitted to defend the constitutionality ofan abortion law after the state chose not to appeal an adverse ruling—when it ruled in
Hollingsworth v. Perry, 133 S. Ct. 2652, 2668 (2013), that a private party does not havestanding to defend the constitutionality of a state statute. In Hollingsworth, the SupremeCourt reiterated that a “party must seek a remedy for personal and tangible harm.” Id. at
2661. See also Arizonans for Official English v. Arizona, 520 U.S. 43, 65 (1997) (“Anintervenor cannot step into the shoes of the original party unless the intervenorindependently fulfills the requirements of Article III.” (internal quotations omitted)).

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The intervenor in this case takes the language from Ruiz too far. The Ruiz Court
held that a party seeking to intervene under Rule 24 need not establish Article III
standing as long as another party with constitutional standing remained in the case
on the same side as the intervenor. But this standing to intervene is not the same as
standing to challenge a default order. The longstanding doctrine of prudential standing
requires that each party assert his or her own individual and particular rights, and
forbids a litigant from “‘rest[ing] his claim for relief on the legal rights or interest of
third parties.’”55 Simply stated, prudential standing forbids Ruth from asserting her
sister Mary’s rights.56

Here, although Intervenor and Debtor are related, there is no connection
between an order overruling Debtor’s claim of a homestead exemption and the
Intervenor—the order ruled on the Debtor’s rights, not the Intervenor’s rights. The
Intervenor can still assert her own homestead exemption in any proceeding.
Furthermore, Intervenor certainly does not have standing to make Debtor’s arguments
for her, which is what Intervenor is asking this Court to allow. Intervenor Ruth Moses
is not arguing that her own rights were impacted by the Default Order, just that her
sister, Mary Moses’ rights were impacted. These are arguments that Debtor Mary
Moses could have, and should have, made for herself.

55 The Wilderness Soc’y v. Kane County, Utah, 632 F.3d 1162, 1168 (10th Cir. 2011)
(quoting Warth v. Seldin, 422 U.S. 490, 499 (1975)).

56 See Raley v. Hyundai Motor Co., Ltd., 642 F.3d 1271, 1275 (10th Cir. 2011)
(noting that prudential standing requires that an individual not “seek to pursue anotherperson’s legal rights, litigate a mere generalized grievance, or raise a challenge fallingoutside the zone of interests protected by the law involved”).

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The Tenth Circuit has recently addressed the problem presented when parties
who are indirectly affected by bankruptcy court orders attempt to mire a bankruptcy
case in endless litigation.57 The Tenth Circuit in Krause discussed the additional
prudential standing requirement for appeals from bankruptcy court orders that the
party appealing be a “person aggrieved” by the bankruptcy court order being appealed.
The Tenth Circuit noted that this requirement has been maintained “because, without
such a requirement, bankruptcy litigation could easily ‘become mired in endless
appeals brought by a myriad of parties who are indirectly affected by every bankruptcy
court order.’”58 The Tenth Circuit then stated:

‘Bankruptcy proceedings regularly involve numerous parties, each ofwhom might find it personally expedient to assert the rights of anotherparty even though that other party is present in the proceedings and iscapable of representing himself. . . . In this context, the courts have beenunderstandably skeptical of the litigant’s motives and have often deniedstanding as to any claim that asserts only third-party rights.’59

Although not dealing with a matter on appeal, the Circuit’s reasoning applies equally
here. Intervenor Ruth Moses seeks to assert the homestead rights of Debtor Mary
Moses. Mary Moses is represented by counsel and is bound by the choices she has made
in this litigation. Clearly, her sister would have made different choices, but the fact
remains that Debtor Mary Moses was the one whose exemptions were affected by the

57 United States v. Krause (In re Krause), 637 F.3d 1160, 1167–69 (10th Cir. 2011).
58 Id. at 1168 (quoting Holmes v. Silver Wings Aviation, Inc., 881 F.2d 939, 940 (10thCir. 1989)).
59 Id. (quoting Kane v. Johns-Manville Corp., 843 F.2d 636, 644 (2d Cir. 1988)).
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Default Order, not any property right of Intervenor Ruth.60

Even if Intervenor Ruth Moses had standing to challenge the Default Order
entered against Debtor Mary Moses, she also has failed to meet the Rule 60(b)
standards for vacating that Default Order. Although in her motion to vacate, she
mentions both Rule 60(b)(4) and Rule 60(b)(6), her support brief never actually
articulates under which provision of Rule 60(b) she proceeds. Because she repeatedly
argues that the Default Order should be vacated in the interest of justice, however, I
will assume Intervenor is proceeding under Rule 60(b)(6).

Rule 60(b)(6) permits a court to vacate an order based on any “reason that
justifies relief.” Although relief under Rule 60(b)(6) is reserved for extraordinary
circumstances, “the rule should be liberally construed when substantial justice will
thus be served.”61 The decision on a Rule 60(b)(6) motion is a discretionary decision.62

Intervenor claims she is entitled to relief under this provision because she did
not have notice of the original objection to Debtor’s claim of exemption, and thus was
not notified before the Default Order was entered. She also claims the Default Order
was based on statements by the Trustee in her objection to exemption that are not
supported by Kansas law.

60 The Court had no jurisdiction over Intervenor Ruth Moses when the DefaultOrder was entered, and the Default Order cannot have possibly affected Intervenor RuthMoses’s rights. This Court only has jurisdiction to alter the rights of Ruth Moses in theadversary proceeding that has since been filed against her by the Trustee in this case.

61 McGraw v. Barnhart, 450 F.3d 493, 505 (10th Cir. 2006) (internal quotationsomitted).

62 Id.

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The Court questions the timeliness of the Intervenor’s motion to vacate. As
previously noted, the Default Order that is the subject of this dispute was filed in
September 2012. Intervenor Ruth Moses asserts she first learned of this dispute when
she was served with summons in the adversary proceeding on or about March 26,
2013.63 She asserts this notwithstanding she and her sister live in the same home and
apparently commute to work every work day with one another in their only, shared
car,64 and notwithstanding, as Ruth claims, “The Sisters have a very close relationship
and have shared a residence together nearly all of their lives.”65 Even using the March
2013 date, however, she then waited almost two months—until May 21, 2013—to file
her motion.66 Although the parties’ extensive Joint Stipulation of Facts implies that
Ruth Moses has or should have known for some time about the Trustee’s objection to
Mary Moses’ exemption of the property, Rule 60(c)(1) requires only that a motion to
vacate be filed “within a reasonable time.” The time lapse here was not significant

63 See Doc. 5 in AP 13-7007, showing service of summons was mailed to Intervenoron March 26, 2013.

64 Doc. 78 ¶ 9, ¶ 48 (Joint Stipulation).

65 Ruth Moses’ Motion to Intervene, Doc. 69 ¶ 1, and again in her Brief in Support ofMotion to Vacate, Doc. 88 p.2. The parties also stipulate that Ruth and Mary share livingexpenses, jointly care for their shared vehicle, and even share bank accounts where bothdeposit their paychecks and pay bills. Doc. 78 ¶ 45, ¶ 49.

66 The Trustee’s objection to Debtor’s Motion to Convert states that she made“demand upon Ruth Moses to recover the value of the transfers and the demand has goneunsatisfied.” Doc. 62 ¶ 24. The objection seems to discuss the time line of the case inchronological order, suggesting that even before the Trustee served Ruth Moses with theMarch 21, 2013 adversary complaint, that the Trustee had contacted Ruth demandingrepayment of the alleged transfer pursuant to 11 U.S.C. § 548. Accordingly, although I neednot, and do not, rely on this fact to decide these motions, it certainly seems possible thatRuth Moses knew about all of this before March 21, 2013.

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enough to wholly ban consideration of the motion.

A movant seeking relief under Rule 60(b)(6), however, must show “extraordinary
circumstances justifying the reopening of a final judgment.”67 “Rule 60(b)(6) relief is
difficult to attain and is appropriate only when it offends justice to deny such relief.”68

The only circumstances Intervenor Ruth Moses alleges are not extraordinary.69
First, she argues that she was not given formal notice of the Trustee’s objection to
exemption, or the resulting Default Order. But the Trustee had no obligation to give
non-parties to this bankruptcy case any notice of her objection to the Debtor’s claimed
exemptions. Intervenor cites to no provisions of the Bankruptcy Code or the Federal
Rules of Bankruptcy Procedure that require notice to a joint tenant when a Trustee
challenges the Debtor joint tenant’s exemption of property. To the contrary, Federal
Rule of Bankruptcy Procedure 4003(b)(4) specifically delineates who shall receive
notice of objections to exemptions, and requires notice only to “the trustee, the debtor
and the debtor’s attorney, and the person filing the [exemption] list and that person’s
attorney.”

Intervenor Ruth Moses’ second argument for relief—that the Default Order is
based on misstatements of Kansas law—is also not sufficient to justify relief under

67 Gonzalez v. Crosby, 545 U.S. 524, 535 (2005).

68 Morales v. Jones, 480 Fed. App’x 898, 901 (10th Cir. 2012) (unpublished) (internalquotations omitted).

69 See Cashner v. Freedom Stores, Inc., 98 F.3d 572, 580 (10th Cir. 1996) (“Reliefunder Rule 60(b)(6) is appropriate when circumstances are so unusual or compelling thatextraordinary relief is warranted, or when it offends justice to deny such relief.” (internalquotations omitted)).

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Rule 60(b)(6). “Courts have found few narrowly-defined situations that clearly present
‘other reasons justifying relief’ under Rule 60(b)(6).’” 70 Generally, for example, courts
have granted relief under this Rule when a party shows fraud by the party’s own
counsel, failure to receive notice of judgment in time to file an appeal, or cases of
extreme hardship where adequate redress is prohibited.71 These facts are simply not
present here. Intervenor Ruth Moses has neither argued, let alone demonstrated, that
she has experienced “extraordinary circumstances” justifying vacatur of the Default
Order. Ruth Moses is not even a party to the order, and her personal rights are not
determined by that Default Order. The burden under Rule 60(b)(6) is steep, and Ruth
Moses has not met it here.

III. Conclusion
I deny both the motion to vacate of Debtor Mary Moses,72 and the motion to
vacate of Intervenor Ruth Moses.73

There are two motions that remain pending: Debtor’s motion to convert her case
to one under Chapter 13 of the Bankruptcy Code,74 and the Trustee’s motion for

70 11 C. Wright, A. Miller, & M. Kane, Federal Practice & Procedure § 2864 at351–52 (2d Cir. 1995).

71 Id.

72 Doc. 76.

73 Doc. 67.

74 Doc. 57. The Trustee’s objection to this motion is Doc. 62.

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turnover, seeking $2416.46 from bank account funds Debtor held on the filing date.75
The Court sets both these motions for evidentiary hearing on the Court’s stacked
docket on November 21/22, 2013. Trial briefs are due on November 15, 2013.

It is so ordered.
# # #


75 Doc. 46. Debtor’s objection to this motion is Doc. 50.
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