In re: CHRISTIAN ALEXANDER THEROUX and FRANCESCA I. THEROUX

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: July 30, 2021
• Docket: NC-20-1272-BSF
• Status: Unpublished

Opinion

FILED JUL 30 2021 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT

In re: BAP No. NC-20-1272-BSF CHRISTIAN ALEXANDER THEROUX and FRANCESCA I. THEROUX, Bk. No. 19-52045-HLB Debtors.

STEPHEN A. MAGIDA, as Trustee of The Gerhard R. Andlinger Irrevocable Trust, Appellant, v. MEMORANDUM∗ CHRISTIAN ALEXANDER THEROUX; FRANCESCA I. THEROUX, Appellees.

Appeal from the United States Bankruptcy Court for the Northern District of California Hannah L. Blumenstiel, Bankruptcy Judge, Presiding

Before: BRAND, SPRAKER, and FARIS, Bankruptcy Judges.

Christian and Francesca Theroux filed their chapter 131 bankruptcy case

on October 8, 2019. Prior to the petition date, the Therouxs borrowed $200,000

from Mr. Theroux's uncle, Gerhard R. Andlinger, as evidenced by an

∗ This disposition is not appropriate for publication. Although it may be cited for

whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. 1 Unless specified otherwise, all chapter and section references are to the

Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all "Rule" references are to the Federal Rules of Bankruptcy Procedure. 1 unsecured promissory note signed by the Therouxs. The Therouxs made only

some of the loan payments before filing for bankruptcy.

During the plan confirmation process, Stephen A. Magida, as Trustee of

The Gerhard R. Andlinger Irrevocable Trust ("Trust"), filed objections to the

Therouxs' proposed plans, arguing that the case and plans were filed in bad

faith, that the plans failed to meet the liquidation test, and that the Therouxs,

who were above-median-income debtors, were not committing all of their

disposable income to the plans. The Trust's primary complaint was that the

Therouxs were spending $600.00 per month on a luxury timeshare rather

than paying their unsecured creditors.

After some oral rulings and plan revisions, the bankruptcy court

entered a final order overruling the Trust's remaining objections and

confirming the Therouxs' chapter 13 plan, which allowed the $600.00 monthly

timeshare expense. The Trust timely appealed the confirmation order and the

bankruptcy court's prior rulings on confirmation issues.

While this appeal was pending, on April 27, 2021, the chapter 13 trustee

served the Therouxs with a notice of default under their plan and demand for

cure. 2 The Therouxs were given 21 days to cure their missed plan payments

or risk having the bankruptcy case dismissed. When the Therouxs failed to

respond, on May 25, 2021, the chapter 13 trustee filed a notice of intent to

dismiss. The Therouxs again did not respond. Thereafter, the chapter 13

2 We exercise our discretion to take judicial notice of documents electronically filed in the bankruptcy court, where appropriate. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003). 2 trustee moved to dismiss the case. On June 10, 2021, the bankruptcy court

entered an order dismissing the Therouxs' case. No party appealed the

dismissal order, and the time for an appeal has run. Rule 8002(a) & (d).

We lack jurisdiction over the Trust's appeal if dismissal of the Therouxs'

bankruptcy case rendered it moot. U.S. CONST., art. III, § 2; see also United

States v. Pattullo (In re Pattullo), 271 F.3d 898, 900 (9th Cir. 2001) ("If a case

becomes moot while pending on appeal, it must be dismissed."); Cook Inlet

Treaty Tribes v. Shalala, 166 F.3d 986, 989 (9th Cir. 1999) (federal courts have no

jurisdiction to hear a case where no actual or live controversy exists).

"[W]hether a case or controversy remains after the dismissal of a

bankruptcy case depends on whether the issue being litigated directly

involves the reorganization of the debtor's estate." Spacek v. Tabatabay (In re

Universal Farming Indus.), 873 F.2d 1332, 1333 (9th Cir. 1989) (citations

omitted). "When the issue being litigated directly involves the debtor's

reorganization the case is mooted by the dismissal of the bankruptcy." Id.

The Trust's appeal challenging the plan confirmation order directly

involves the debtor's reorganization and is entirely dependent on the

existence of the chapter 13 case. Without a case, there is no plan, and hence no

controversy between the parties.

Accordingly, this appeal is moot, and we must DISMISS it.