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In re Duffie

United States District Court, D. Montana, Butte Division

November 14, 2017

In Re MARY KAY DUFFIE, Debtor.
v.
STEVE GOTCHER AND SHARON GOTCHER, Appellees. MARY KAY DUFFIE Appellant,

          ORDER

          Brian Morris United States District Court Judge

         The United States Bankruptcy Court for the District of Montana entered a Memorandum of Decision in this matter on June 3, 2015. (Doc. 19-8 at 118.) Judge Kirscher excepted $88, 348.61 from Duffle's bankruptcy discharge, pursuant to 11 U.S.C. § 523(a)(2)(A). Id. at 143. Appellant Mary Kay Duffle filed a brief appealing the decision by Judge Kirscher on August 18, 2017. (Doc. 19.) Appellees Steve and Sharon Gotcher ("Gotchers") filed their response on September 25, 2017. (Doc. 24.) The Court conducted a hearing on October 26, 2017. (Doc. 28.)

         BACKGROUND

         The Court will recite the facts only as necessary for this appeal. Duffie, d/b/a SRO LIVE, purchased the Rialto Theater in Bozeman, Montana in November of 2010. (Doc. 19-1 at 40-49.) Duffie also purchased the Covellite Theater in Butte, Montana in May of 2011. Id. at 31-39. Duffie entered into Commercial Lease Agreements for both properties with Stephen Michael Rangel ("Michael"), her significant other. (Doc. 19-17 at 51-54.)

         Michael met Steve and Sharon Gotcher during the summer of 2011. (Doc. 29 at 22.) Michael and Duffie extended an offer to the Gotchers in August of 2011 to become co-owners of the two theaters. Id. at 23. Duffie typed the Co-Ownership Agreement at this meeting. Id. at 12, 23. Duffie and Michael signed the Co-Ownership Agreement at the meeting. Id. at 27. The Gotchers did not sign. Id. at 24.

         Michael returned a few days later and presented the Gotchers with a second Co-Ownership Agreement. Id. at 25. Pursuant to the second agreement, Gotchers purchased a 10% equity interest in the Covellite Theater and the Rialto Theater in exchange for $140, 000. Id. at 26. Gotchers and Stephen Michael signed this second Co-Ownership Agreement. Id. at 27. Duffie typed the second Co-Ownership Agreement, but did not sign. Id. at 28. The second Co-Ownership Agreement, similar to the first, nevertheless listed her as a party in the recitals of the final page. (Doc. 19-1 at 14-17.) The second Co-Ownership Agreement also contained a space for her signature. Id.

         Gotchers made several payments totaling $87, 000.00 under the second Co-Ownership Agreement. (Doc. 29 at 71.) Gotchers made these payments by taking cash advances on credit cards, selling a vehicle, and refinancing a building that the Gotchers own in Butte, Montana. Id. at 71-72. The parties' relationship eventually soured. Gotchers advised Michael and Duffie in February 2012 that they wanted to discontinue the business relationship. (Doc. 19-4 at 65.) Gotchers further demanded a refund of all money that they had invested. Id. Gotchers stopped making payments under the second Co-Ownership Agreement and retained legal counsel. (Doc. 29 at 74.)

         Gotchers filed an action against "Mary Kay Duffie and Stephen Michael, d/b/a SRO Live" in Montana's Second Judicial District Court in Silver Bow County. The Clerk of Court entered judgments by default in the amount of $97, 960.00 jointly against Duffie and Michael on November 9, 2012. (Doc. 19-1 at 29.) Duffie persuaded the state court to set aside her default. Id. at 27. Duffie eventually responded to Gotcher's complaint and asserted counterclaims for slander of title, breach of contract, use of space, consulting and website, and lost profits. Id. at 19-26.

         Duffie sought protection under Chapter 13 of the Bankruptcy Code on December 7, 2013. (Doc. 19-3 at 17.) The bankruptcy court confirmed her Chapter 13 plan on April 30, 2014. (Doc. 19-3 at 13.) Gotchers commenced an adversary proceeding in United States Bankruptcy Court for the District of Montana on May 7, 2014. (Doc. 19-1 at 13.)

         Duffie retained local counsel and counsel from North Carolina to represent her. (Doc. 19-3 at 4.) Duffie had to travel to California before the originally scheduled trial. Health problems made it difficult for Duffie to return to Montana. (Doc. 19-8 at 74-76.) Judge Kirscher allowed Duffie and her North Carolina based counsel to appear by video at various pre-trial proceedings. Judge Kirscher also granted Duffie's motion for a 60-day continuance on the original trial date to accommodate her health issues. (Doc. 19-7 at 8.)

         Judge Kirscher denied a motion by Duffie to allow her and her North Carolina based counsel to appear by video at the trial. (Doc. 19-8 at 84.) Judge Kirscher cited Steve Gotcher's hearing difficulties as the basis for the denial. Id. Judge Kirscher held a trial regarding this matter on March 30, 2015. Duffle's local counsel represented her at the trial. Duffie did not appear.

         DISCUSSION

         The Court possesses jurisdiction to hear appeals from final judgments, orders, and decrees of bankruptcy courts. 28 U.S.C.A. § 158(a)(1). Courts review the bankruptcy court's findings of fact for clear error and its conclusions of law de novo. In re Kimura, 969 F.2d 806, 810 (9th Cir. 1992). Courts review for abuse of discretion decisions made by bankruptcy courts concerning docket management. In re Fletcher Intern., Ltd., 536 B.R. 551, 557 (S.D.N.Y. 2015) see also In re Tukhi, 568 B.R. 107, 116 (B.A.P. 9th Cir. 2017).

         The Court declines to dismiss summarily this matter for Duffle's failure to comply with the ...


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