In Re: Coeptis Equity Fund LLC v. Janina Hoskins

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 15, 2024
• Docket: 23-60001
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAR 15 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

No. 23-60001 In re: COEPTIS EQUITY FUND LLC,

Debtor, BAP No. 22-1135

------------------------------ MEMORANDUM* COEPTIS EQUITY FUND LLC,

Appellant,

v.

JANINA HOSKINS,

Appellee.

Appeal from the Ninth Circuit Bankruptcy Appellate Panel Gan, Brand, and Spraker, Presiding

Submitted March 13, 2024** San Francisco, California

Before: S. THOMAS, MCKEOWN, and CHRISTEN, Circuit Judges.

Chapter 11 debtor Coeptis Equity Fund LLC (“Coeptis”) appeals the

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Bankruptcy Appellate Panel’s decision to affirm the bankruptcy court’s denial of

Coeptis’s Federal Rule of Bankruptcy Procedure 90241 motion for relief from the

court’s order removing Coeptis as debtor in possession (“DIP”) and appointing the

Subchapter V trustee as trustee in possession (the “Removal Order”). We have

jurisdiction under 28 U.S.C. § 158(d)(1). Because the parties are familiar with the

facts, we do not recount them here, except as necessary to provide context to our

ruling. We affirm.

We review denial of a Rule 9024 motion for abuse of discretion. In re Gilman,

887 F.3d 956, 963 (9th Cir. 2018). Coeptis invokes Rule 60(b)(6), which is

incorporated in Rule 9024. A party moving for relief under Rule 60(b)(6) must

“demonstrate both injury and circumstances beyond [its] control that prevented [it]

from proceeding with the prosecution or defense of the action in a proper fashion.”

Cmty. Dental Servs. v. Tani, 282 F.3d 1164, 1168 (9th Cir. 2002). Those

circumstances must be “extraordinary.” Martella v. Marine Cooks & Stewards

Union, 448 F.2d 729, 730 (9th Cir. 1971) (per curiam). Parties “may not use Rule

60(b) as an alternative to an appeal to obtain a reconsideration of the merits and

declare the original judgment void.” In re Atkins, 134 B.R. 936, 938–39 (9th Cir.

BAP 1992).

1 Fed. R. Bankr. P. 9024 expressly applies Federal Rule of Civil Procedure 60 to bankruptcy cases.

2 Coeptis does not identify any extraordinary circumstances beyond its control that

prevented it from proceeding with the appeal in the ordinary course. Rather, it

argues that the bankruptcy court made legal and procedural errors in the Removal

Order. But Coeptis does not contend that these legal arguments were unavailable to

it at a time when it could have timely appealed, such as due to a change in the law

governing the judgment. See Bynoe v. Baca, 966 F.3d 972, 983 (9th Cir. 2020).

Because Coeptis could have made its arguments to the bankruptcy court before entry

of final judgment, it did not establish extraordinary circumstances.

Even if Coeptis’s legal and procedural arguments were valid bases for relief

under Rule 60(b)(6), they lack merit. Coeptis contends that the bankruptcy court

abused its discretion when it issued the Removal Order because 11 U.S.C. § 1185(a)

provides that a debtor may be removed as DIP upon the motion of a party in interest,

and the bankruptcy court removed Coeptis as DIP on its own motion. Coeptis

contends that 11 U.S.C. § 105(a), which authorizes the bankruptcy court to issue

“any order” that is “necessary or appropriate,” does not authorize the Removal Order

because a Subchapter V trustee is a receiver and thus, the Removal Order violated

the prohibition in 11 U.S.C. § 105(b) against court-appointed receivers.

Coeptis’s arguments are not persuasive. The Subchapter V trustee was

appointed by the office of the United States Trustee, not by the bankruptcy court.

Even if the bankruptcy court had appointed the trustee, we have explicitly held that

3 bankruptcy courts “ha[ve] authority to act sua sponte to appoint a Chapter 11

trustee.” In re Bibo, Inc., 76 F.3d 256, 258–59 (9th Cir. 1996). This authority

follows from the fact that a bankruptcy trustee is not a receiver. “Bankruptcy trustees

and receivers have very different roles, duties and loyalties. A bankruptcy trustee is

the representative of the estate. A receiver, on the other hand, is appointed by the

court as a representative of the court to manage, control and deal with the property

that is the subject matter of a controversy.” In re Halvorson, 607 B.R. 680, 685

(Bankr. C.D. Cal. 2019) (citations omitted).

Coeptis’s reliance on FTC v. Word Wide Factors, Ltd., 882 F.2d 344,(9th Cir.

1989) is misplaced. That case did not hold that a bankruptcy trustee is a receiver;

rather, it held that a court-appointed special master was a receiver. Id. at 348. Nor

does Barton v. Barbour, 104 U.S. 126 (1881), or the application of the Barton

principle to bankruptcy proceedings, demonstrate that a bankruptcy trustee is a

receiver for purposes of § 105(b).

Finally, Coeptis argues that the bankruptcy court did not provide Coeptis with

28 days’ notice to respond to the court’s Order to Show Cause pursuant to B.L.R.

9014-1(c)(1). That rule applies to certain “motions,” “hearings on applications for

compensation,” and “objections,” B.L.R. 9014-1(b)(1), not to orders to show cause

issued by the bankruptcy court. The bankruptcy court did not abuse its discretion

when it denied Coeptis’s 9024 motion for relief from the Removal Order.

4 AFFIRMED.