In Re: Coeptis Equity Fund LLC v. Janina Hoskins

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAR 18 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

No. 23-60002 In re: COEPTIS EQUITY FUND LLC,

Debtor, BAP No. 22-1136

------------------------------ 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 order

converting this case from a Chapter 11 to a Chapter 7 bankruptcy (the “Conversion

Order”) and its subsequent denial of Coeptis’s Federal Rule of Bankruptcy

Procedure Rule 9024 motion for relief from the Conversion 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 for abuse of discretion a bankruptcy court’s decision to convert a

case to Chapter 7 and its denial of a Rule 9024 motion. In re Consol. Pioneer Mortg.

Entities, 264 F.3d 803, 806 (9th Cir. 2001); In re Gilman, 887 F.3d 956, 963 (9th

Cir. 2018).

The bankruptcy court did not abuse its discretion in converting this case from

Chapter 11 to Chapter 7. Coeptis argues that it was not provided with sufficient

notice of the hearing on the motion to convert and that it was not timely served with

notice of the motion. Federal Rule of Bankruptcy Procedure 2002(a)(4) and Local

Rules 2002-1(a) and 9014(1)(c)(2) of the United States Bankruptcy Court for the

Northern District of California require 21 days’ notice of a hearing on a motion to

convert a Chapter 11 case.1 The motion to convert this case was filed on April 15,

1 Coeptis argues that 28 days’ notice was required pursuant to Local Rule 9014-1(c)(1). The bankruptcy court rejected this argument. To the extent that

2 2022, exactly 21 days before the hearing on May 6, 2022. Thus, notice was

sufficient.

Coeptis argues that it was not served with the motion to convert until April

28, 2022, the day on which the Subchapter V trustee sent Stratton Barbee the motion

to convert. However, when the trustee filed its motion on April 15, Marc Voisenat,

not Mr. Barbee, was Coeptis’s counsel of record. The Subchapter V trustee

electronically served the motion on Mr. Voisenat on April 15, 2022, 21 days prior

to the hearing on the motion. Pursuant to Local Rules 9013-1 and 9013-3(c),

electronic service on Coeptis’s counsel of record was sufficient.

Conversion to Chapter 7 is appropriate if there is cause to convert under 11

U.S.C. § 1112(b) unless “the court finds and specifically identifies unusual

circumstances establishing that converting or dismissing the case is not in the best

interests of creditors, and the debtor or any other party in interest establishes [two

required showings].”2 11 U.S.C. § 1112(b)(2); see In re Baroni, 36 F.4th 958, 965

(9th Cir. 2022). The Subchapter V trustee established cause to convert by citing,

inter alia, Coeptis’s failure to file a Chapter 11 Plan of Reorganization. Coeptis

there is ambiguity in the local requirements for notice, we defer to the bankruptcy court’s interpretation and application of its own local rules. See Miranda v. S. Pac. Transp. Co., 710 F.2d 516, 521 (9th Cir. 1983); see also In re Nunez, 196 B.R. 150, 157–59 (9th Cir. BAP 1996). 2 This rule is subject to certain exceptions not applicable to this case. 11 U.S.C. §§ 1112(a), (b)(1).

3 claims that conversion was not in the best interests of the creditors under 11 U.S.C.

§ 1112(b) because at the time of the motion, the estate was “on the cusp of having

no more assets.” At the hearing on the motion, the bankruptcy court found that all

the assets in the estate had been or imminently would be liquidated, yet Coeptis had

not filed a Chapter 11 Plan of Reorganization detailing how proceeds would be

disbursed to the creditors. See 11 U.S.C. § 1189(a) (providing that only the debtor

may file a Plan under Subchapter V). The bankruptcy court granted the motion to

convert for that reason. Further, neither Coeptis nor any other party in interest has

established a reasonable likelihood that a plan will be confirmed as required by §

1112(b)(2)(A). Given that a plan was never filed, there is not a reasonable likelihood

that a plan will be confirmed. Thus, it was not an abuse of discretion for the

bankruptcy court to determine that conversion was in the best interest of the

creditors.

The bankruptcy court did not abuse its discretion in denying Coeptis’s Rule

9024 motion. Coeptis invokes Federal Rule of Civil Procedure 60(b)(6), which is

incorporated in Rule 9024. “Rule 60(b) was not intended to provide relief for error

on the part of the court or to afford a substitute for appeal.” Title v. United States,

263 F.2d 28, 31 (9th Cir. 1959). Rule 60(b)(6) is designed to provide relief only

when “extraordinary circumstances [] prevented or rendered [the movant] unable to

prosecute an appeal.” Martella v. Marine Cooks & Stewards Union, 448 F.2d 729,

4 730 (9th Cir. 1971).

Coeptis has not argued that “extraordinary circumstances” prevented it from

pursuing an appeal. Nor could it, as Coeptis was clearly able to appeal. Coeptis

treats its Rule 9024 motion as an additional appeal by re-arguing the same notice

and service defects that it raised in its initial opposition to the conversion motion and

that it argues in its direct appeal. As Coeptis did not demonstrate any circumstance

justifying reconsideration of the Conversion Order, the bankruptcy court properly

denied Coeptis’s Rule 9024 motion.

AFFIRMED.