In Re Debtor Tower Park Properties, LLC

• Court: District Court, C.D. California
• Decided: March 29, 2021
• Docket: 2:20-cv-06831
• Status: Unknown

Opinion

1 2 JS-6 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 In re: TOWER PARK PROPERTIES, Case No. 20-CV-06831-AB 10 LLC,

11 Debtor. Appeal from Bk. No. 2:20-AP-01010-BR

12 ORDER AFFIRMING BANKRUPTCY 13 SUNSET COAST HOLDINGS, LLC, COURT ORDERS 14 Appellant, 15 v. 16 HUGHES INVESTMENT 17 PARTNERSHIP LLC, a Delaware 18 limited liability company; MH HOLDINGS II H, LLC, a Delaware 19 limited liability company; MH LAND 20 HOLDINGS I-A, LLC, a Delaware limited liability company; MH LAND 21 HOLDINGS I-B, LLC, a Delaware 22 limited liability company; MH LAND HOLDINGS I-C, LLC, a Delaware 23 limited liability company; MH LAND 24 HOLDINGS I-D, LLC, a Delaware limited liability company; and DOES 25 1-20, 26 27 Appellees. 28 1 Plaintiff-Appellant Sunset Coast Holdings (“Plaintiff-Appellant”) appeals two 2 orders of the bankruptcy court. (Dkt. No. 27, “AOB”). Defendant-Appellees Hughes 3 Investment Partnership LLC, MH Holdings II H, LLC, MH Land Holdings I-A, LLC, 4 MH Land Holdings I-B, LLC, MH Land Holdings I-C, LLC, MH Land Holdings I-D, 5 LLC (“Defendant-Appellees”) filed an opposition, (Dkt. No. 28, “Opp’n”), and 6 Appellant filed a reply (Dkt. No. 30, “Reply”). For the reasons stated below, the 7 bankruptcy court’s orders are affirmed. 8 I. BACKGROUND 9 Plaintiff-Appellant’s appeal concerns the bankruptcy court’s denial of Plaintiff- 10 Appellant’s Motion to Remand, ER at 1–3, and its grant of Defendant-Appellees’ 11 Motion to Dismiss, ER at 27–28. This action has a storied history, with the 12 underlying issues beginning as far back as 2008. The Court relays the relevant facts 13 as set forth in the parties’ memoranda, the Excerpts of Record (Dkt. No. 27-1; 27-2; 14 27-3, “ER”), and the Supplemental Excerpts of Record (Dkt. Nos. 29-1; 29-2; 29-3; 15 29-4; 30-1, “SER”). 16 1. The Property 17 Underlying this dispute is 1652 Tower Grove Drive, Beverly Hills (the 18 “Property”). ER at 96 at ¶ 1. In the 1980s, Mark Hughes bought the Property. ER at 19 157. Before his death in 2000, Hughes established the Mark Hughes Family Trust 20 (the “Trust”); after he died, the Property passed to the Trust for the benefit of his son, 21 then a minor. ER at 157–58. In September 2004, Tower Park Properties, LLC 22 (“Tower Park” or “Debtor”) bought the Property from the Trust. ER at 158. The 23 Trust, through Defendant-Appellees, financed 100% of the sale and loaned more to 24 finance development. ER at 158. Defendant-Appellees initially made three loans to 25 Tower Park and an affiliate in 2004 to 2006 (the “Initial Loans”), all secured by 26 separate deeds of trust against the Property. ER at 158. Tower Park defaulted on the 27 Initial Loans when they matured in 2007. ER at 146. Defendant-Appellees recorded 28 1 notices of default against the Property. ER at 146. On July 11, 2008, Tower Park 2 filed the underlying chapter 11 bankruptcy case (Case No. 2:08-bk-20298-BR). ER at 3 159. Defendant-Appellees’ alleged liens against the Property totaling approximately 4 $60 million. ER at 147. La Jolla Capital Investors, LLC (“LJCI”) also held a deed of 5 trust against the Property totaling approximately $11 million. ER at 147. 6 2. Tower Park’s Bankruptcy and the Plan of Reorganization 7 On April 1, 2010, the bankruptcy Court confirmed Debtor’s plan of 8 reorganization (“Plan”). ER at 147; 179–81. Upon confirmation, all property of the 9 bankruptcy estate, including the Property, revested in the reorganized Debtor under 10 the terms of the Plan. ER at 159-60 ¶¶19–20; ER at 207–08. Under the Plan, 11 Defendant-Appellees agreed to lend Debtor up to $7 million in exit financing, (“Exit 12 Financing”), which was to be secured by a fourth deed of trust against the Property 13 (“Fourth Loan,” or “Exit Loan,” and together with the Initial Loans, “Property 14 Loans”). The Exit Financing was critical to Debtor’s Plan. ER at 147. In exchange 15 for this additional financing, Defendant-Appellees required that LJCI, whose lien on 16 the Property was already junior to the liens securing the three Initial Loans, 17 subordinate its lien to Defendant-Appellees’ Fourth Loan as well. ER at 96, 100 at ¶¶ 18 3, 26. Tower Park, Defendant-Appellees, and LJCI entered into an Intercreditor and 19 Subordination Agreement (“Intercreditor Agreement”) by which LJCI subordinated to 20 the new Exit Loan. ER at 99–100 at ¶¶ 25–26. 21 Tower Park’s Plan included a mechanism, named the “Court Deed Option,” 22 which enabled Defendant-Appellees to obtain the Property on an expedited basis if 23 Tower Park defaulted on the Exit Loan or the Initial Loans. ER at 100 at ¶ 28. If 24 Defendant-Appellees successfully exercised the Court Deed Option, the Property was 25 to be transferred to Defendant-Appellees subject to a right of redemption in favor of 26 LJCI (the “Right of Redemption”). ER at 100 at ¶ 30, 183–84, 402. Although Tower 27 Park defaulted, the Court Deed Option was never successfully exercised. 28 1 3. Post-Confirmation Transfer and Defendant-Appellees’ Foreclosure 2 Proceedings 3 Following confirmation of the Plan in April 2010 (see ER at 214-37, the 4 “Confirmation Order”), Tower Park again defaulted and new disputes arose, resulting 5 in further adversary proceedings in the bankruptcy court. See Adv. Pro. No. 2:11-ap- 6 02448-BR (Bankr. C.D. Cal.); Adv. Pro. No. 2:12-ap-01803-BR (Bankr. C.D. Cal.); 7 Adv. Pro. No. 2:12-ap-01485-BR (Bankr. C.D. Cal.). During this period, Tower Park 8 entered into a relationship with Secured Capital Partners, LLC (“SCP”) as a source of 9 funding. ER at 102 at ¶ 36. After learning of an unauthorized transfer of the Property 10 from Tower Park to SCP, Defendant-Appellees filed a complaint in Superior Court in 11 October 2016 to foreclose judicially on the lien securing the Fourth Loan (LASC Case 12 No. BC636286, the “Foreclosure Action”). ER at 518–19. Defendant-Appellees also 13 commenced a parallel non-judicial foreclosure as to the Fourth Loan, but that process 14 was halted when SCP obtained a preliminary injunction in early 2017. ER at 519. By 15 orders entered in December 2018, the Superior Court granted Defendant-Appellees’ 16 motion for summary adjudication of its judicial foreclosure cause of action against 17 SCP as to the Fourth Loan and dissolved the preliminary injunction. SER at 146–54. 18 In January 2019, Defendant-Appellees again initiated non-judicial foreclosure 19 proceedings, this time as to all four of their deeds of trust. ER at 104 at ¶ 46. On May 20 29, 2019, SCP filed a chapter 11 bankruptcy petition; the case was assigned to Judge 21 Russell because of its relationship to the initial Tower Park bankruptcy case. Case No. 22 2:19-bk-16243-BR (Bankr. C.D. Cal.). 23 Some time and other disputes later, a trustee’s foreclosure sale took place. SER 24 162. Defendant-Appellee MH Land Holdings I-D, LLC acquired title to the Property 25 through that foreclosure sale, not through exercise of the Court Deed Option in the 26 Plan. SER at 162. 27 // 28 1 4. Filing and Removal of this Action 2 On December 18, 2019, Plaintiff-Appellant filed the operative Complaint 3 commencing this action (the “Action”), asserting that it had received from SCP an 4 assignment of LJCI’s rights regarding the Property. ER at 97, 105 at ¶¶ 7, 57. 5 Plaintiff-Appellant’s Complaint included four causes of action: (1) breach of the 6 Intercreditor Agreement, (2) a breach of implied duty of good faith and fair dealing 7 with respect to the Intercreditor Agreement, (3) equitable and/or promissory estoppel 8 to preclude Defendant-Appellees from denying that Plaintiff-Appellant has the Right 9 of Redemption, and (4) seeking declaration that Plaintiff-Appellant is entitled to the 10 Right of Redemption. ER at 97–109. 11 On January 17, 2020, Defendant-Appellees removed the Action to the 12 bankruptcy court. ER at 145–55. Two weeks later, Defendant-Appellees moved to 13 dismiss the Complaint with prejudice (“Motion to Dismiss”) and to expunge a lis 14 pendens that Plaintiff-Appellant had recorded on the Property. ER at 510–29; ER at 15 81-82. Meanwhile, Plaintiff-Appellant filed a motion to remand the Action to state 16 court (the “Motion to Remand”). SER at 001-054. On March 24, 2020, Judge Russell 17 issued an oral ruling denying the Motion to Remand. ER at 20 at 17:1-11. On July 7, 18 2020, Judge Russell dismissed the Complaint with prejudice and expunged Plaintiff- 19 Appellant’s lis pendens. ER at 27–65. This appeal of the denial of the Motion to 20 Remand and the grant of the Motion to Dismiss followed. ER at 66–75. 21 II. STANDARD OF REVIEW 22 23 A district court may hear appeals from “final judgments, orders, and decrees, 24 and, with leave of the court, from interlocutory orders and decrees, of bankruptcy 25 judges.” 28 U.S.C. §158(a). Issues of jurisdiction and dismissal for failure to state a 26 claim are questions of law that are reviewed de novo. Audette v. ILWU, 195 F.3d 27 1107, 1111 (9th Cir.1999); N. Slope Borough v. Rogstad (In re Rogstad), 126 F.3d 28 1224, 1228 (9th Cir.1997). 1 Equitable remand decisions under 28 U.S.C. § 1452(b) are reviewed for abuse 2 of discretion. McCarthy v. Prince (In re McCarthy), 230 B.R. 414, 416 (9th Cir. BAP 3 1999). The denial of leave to amend is reviewed for an abuse of discretion. United 4 States ex rel. Anita Silingo v. WellPoint, Inc., 904 F.3d 667, 676 (9th Cir. 2018). “A 5 court abuses its discretion if it bases its decision on an erroneous view of the law or on 6 clearly erroneous factual findings.” Id. (citing Cooter & Gell v. Hartmarx Corp., 496 7 U.S. 384 (1990)). See also United States v. Hinkson, 585 F.3d 1247, 1261-62, n.20 8 (9th Cir. 2009) (en banc) (holding that a bankruptcy court’s factual findings should be 9 affirmed unless it is determined that those findings are illogical, implausible, or 10 without support in inferences that may be drawn from the facts in the record). 11 III. DISCUSSION 12 A. The Order Denying Plaintiff-Appellant’s Motion to Remand is 13 AFFIRMED 14 Plaintiff-Appellant’s appeal of Judge Russell’s denial of the Motion to Remand 15 presents the questions whether the bankruptcy court had the jurisdiction under 28 16 U.S.C. § 1334 that is prerequisite to removal under 28 U.S.C. § 1452(a), and whether 17 the bankruptcy court correctly determined the equitable issues involved in remand 18 under 28 U.S.C. § 1452(b). 19 1. Mandatory Remand under § 1452(a) 20 Plaintiff-Appellant contends that the Complaint pleads only causes of action 21 under state law and does not require Judge Russell to interpret his Confirmation Order 22 or the Plan. As such, Plaintiff-Appellant argues that the Action belonged in state court 23 because it was not a “core” proceeding arising out of title 11 nor was it “related to” 24 the Tower Park bankruptcy proceeding. AOB at 12–16; Reply at 2–4. The Court 25 disagrees. 26 A civil action may be removed under § 1452(a) only if the district court (of 27 which the bankruptcy court is a “unit”) has jurisdiction under section 1334 providing 28 1 for federal bankruptcy jurisdiction. 28 U.S.C. §§ 1334 & 1452(a). In re Miles, 294 2 B.R. 756, 762 (B.A.P. 9th Cir. 2003), aff’d, 430 F.3d 1083 (9th Cir. 2005). Under 28 3 U.S.C. § 1334, bankruptcy courts have subject matter jurisdiction over proceedings 4 “arising under title 11, or arising in or related to cases under title 11.” 28 U.S.C. § 5 1334(b)). Post-confirmation, a bankruptcy court has “related to” jurisdiction if there 6 is a “close nexus . . . between the current action and the original bankruptcy 7 proceeding.” In re Pegasus Gold Corp., 394 F.3d 1189, 1191 (9th Cir. 2005). “[A] 8 close nexus exists between a post-confirmation matter and a closed bankruptcy 9 proceeding sufficient to support jurisdiction when the matter ‘affect[s] the 10 interpretation, implementation, consummation, execution, or administration of the 11 confirmed plan.’” In re Wilshire Courtyard, 729 F.3d at 1289 (quoting In re Pegasus 12 Gold Corp., 394 F.3d at 1194). Because this Action is post-confirmation, the Court 13 will assess whether there is a “close nexus” between the Action and the original 14 Tower Park bankruptcy proceeding. 15 Here, Plaintiff-Appellant’s Complaint alleged that Defendants-Appellees (1) 16 breached the Intercreditor Agreement by “deliberately [choosing] to pursue statutory 17 foreclosure proceedings to avoid the Court Deed Option and unreasonably inflate[] 18 payoff demands as bad faith tactics to deny the holder of LJCI’s rights the [Right of 19 Redemption];” (2) by denying that the Right of Redemption exists and preventing 20 Plaintiff-Appellant from redeeming the Property under the Intercreditor Agreement’s 21 terms; and (3) making false promises to LJCI regarding the Right of Redemption and 22 its rights under the Intercreditor Agreement designed to induce LJCI to subordinate its 23 liens to those of the Defendant-Appellees. ER at 99, 104–05, 107–08 at ¶¶ 22–24, 52, 24 55-56, 68-70. Plaintiff-Appellant additionally sought a declaration that the Right of 25 Redemption permitted Plaintiff-Appellant to buy the Property from the Defendant- 26 Appellees in accordance with the Intercreditor Agreement’s terms. ER at 97, 108–09 27 ¶¶ 7, 74. 28 1 Ultimately, Plaintiff-Appellant asserts that it is entitled to invoke the Right of 2 Redemption: an express right created under the Plan, the Intercreditor Agreement, and 3 other documents executed in connection with the Plan. ER at 183–84, 402; SER at 4 561. Before a Right of Redemption could arise, however, the documents state that the 5 parties first had to come before the bankruptcy court and obtain successful invocation 6 of the Court Deed Option (a form of relief created in the Plan), pursuant to which the 7 Property would be transferred to Defendant-Appellees. ER at 183, 402. Indeed, 8 Section 4 of the executed Intercreditor Agreement entitled “Right of Redemption,” 9 states: “The Plan provides . . . [t]he collateral so conveyed pursuant to the Court Deed 10 Option shall be transferred, as set forth in the plan and the Exit Loan Documents, . . . 11 subject to a right of redemption in favor of LJCI . . . .” ER at 402. 12 Plaintiff-Appellant’s claims beg the question of whether the Court Deed Option 13 under the Plan was Defendant-Appellees’ exclusive remedy for obtaining possession 14 of the Property. ER at 104–05. Thus, the Court finds that since Plaintiff-Appellant’s 15 claims could reasonably be resolved through review, consideration and interpretation 16 of the Plan, the Intercreditor Agreement and other agreements executed in Tower 17 Park’s bankruptcy case (e.g., the Exit Financing documents), there is a “close nexus” 18 between the Action and the closed bankruptcy proceeding sufficient to support Judge 19 Russell’s jurisdiction. Judge Russell approved and confirmed the Plan (which created 20 the Court Deed Option) and the form Intercreditor Agreement1 during the course of 21 Tower Park’s bankruptcy proceeding. When assessing the intent of the contracting 22 parties, which the Complaint questions, who better to interpret these documents than 23 the bankruptcy judge who approved them in the first place? See, e.g., see also in re 24 DPH Holdings Corp., 553 B.R. 20, 25-26 (Bankr. S.D.N.Y. 2016) (“For purposes of 25

26 1 Notably, the form Intercreditor Agreement approved by Judge Russell is substantively identical to the Intercreditor Agreement executed by the parties two 27 months later. Compare ER at 351-66 (April 2010 version) with ER at 397-419 (June 28 2010 version). 1 interpreting a confirmed chapter 11 plan, all documents which were confirmed 2 together to form the cont[r]act are added to the plan itself. Thus, the agreements 3 referred to in the relevant Plan provisions . . . are part of the contract set forth in the 4 Plan and need to be construed with it as a whole.”). 5 Thus, the bankruptcy court had “related to” jurisdiction under § 1334. Judge 6 Russell did not err in denying remand under § 1452(a). 7 2. Equitable Remand 8 Having concluded that the civil action was correctly removed, the question 9 becomes whether the bankruptcy court abused its discretion when it denied to remand 10 the Action on equitable grounds as permitted by § 1452(b). 11 Courts consider up to fourteen factors in determining whether to remand a 12 “related to” case on equitable grounds, including: “(1) the effect or lack thereof on the 13 efficient administration of the estate if the Court recommends [remand or] abstention; 14 (2) extent to which state law issues predominate over bankruptcy issues; (3) difficult 15 or unsettled nature of applicable law; (4) presence of related proceeding commenced 16 in state court or other non-bankruptcy proceeding; (5) jurisdictional basis, if any, other 17 than § 1334; (6) degree of relatedness or remoteness of proceeding to main 18 bankruptcy case; (7) the substance rather than the form of an asserted core proceeding; 19 (8) the feasibility of severing state law claims from core bankruptcy matters to allow 20 judgments to be entered in state court with enforcement left to the bankruptcy court; 21 (9) the burden on the bankruptcy court's docket; (10) the likelihood that the 22 commencement of the proceeding in bankruptcy court involves forum shopping by 23 one of the parties; (11) the existence of a right to a jury trial; (12) the presence in the 24 proceeding of non-debtor parties; (13) comity; and (14) the possibility of possibility of 25 prejudice to other parties in the action.” Federal Home Loan Bank of Chicago v. Banc 26 of America Securities LLC, 448 B.R. at 525, citing and quoting, In re Enron 27 Corp., 296 B.R. at 508 and n. 2. “Because [28 U.S.C. §] 1452(b) affords ‘an 28 1 unusually broad grant of authority,’ any one of the relevant factors may provide a 2 sufficient basis for equitable remand.” Federal Home Loan Bank of Chicago v. Banc 3 of America Securities LLC, 448 B.R. at 525, citing, In re Roman Catholic Bishop of 4 San Diego, 374 B.R. at 761. Nevertheless, “[w]hile these factors assist a court’s 5 remand decision, they do not control it.” In re Roman Catholic Bishop of San 6 Diego, 374 B.R. at 762. 7 Although the order denying remand does not expressly provide the bankruptcy 8 court’s reasoning behind denying equitable remand, it does state that the court 9 considered the memoranda and the arguments presented at the hearing on March 24, 10 2020. ER 1–3. The memoranda before the bankruptcy court present the applicable 11 legal standards and in relying on such standards, Judge Russell found “the history 12 does matter in this case and also it does require interpretation of the plan and my 13 orders relating thereto and even after.” ER at 20. Given the storied history of this 14 case, Judge Russell’s extensive involvement in the terms and documents at issue, and 15 the “close nexus” between the Action and the Tower Park bankruptcy proceeding, this 16 Court cannot say that Judge Russell unreasonably ignored any of the above equitable 17 factors nor that his findings were illogical, implausible, or without support. 18 Thus, the Court finds that Judge Russell did not abuse his discretion in denying 19 equitable remand. 20 3. Judicial Estoppel 21 Plaintiff-Appellant further argues that the bankruptcy court abused its discretion 22 by not applying judicial estoppel to the question of jurisdiction, given Defendant- 23 Appellees’ prior remand motions. AOB at 16. 24 The Court considers three factors in determining whether to apply the doctrine 25 of judicial estoppel: (1) whether a party’s later position is “clearly inconsistent” with 26 its earlier position, (2) whether the first court accepted the party's earlier position, and 27 (3) whether the party seeking to assert an inconsistent position would receive an unfair 28 1 advantage if not estopped. New Hampshire v. Maine, 532 U.S. 742, 750-51 (2001); 2 Becker v. Wells Fargo Bank, Nat. Ass’n, No. CIV. 2:12-1742 WBS, 2012 WL 3 5187792, at *3 (E.D. Cal. Oct. 18, 2012). 4 The bankruptcy court entered orders remanding two adversary proceedings, 5 Adv. Proc. Nos. 16-1485 and 18-1039, removed by SCP and Debtor, respectively, 6 after Defendant-Appellees sought remand. ER at 506–09. In these prior motions, 7 Defendant-Appellees were seeking remand of the Foreclosure Action, which sought 8 judicial foreclosure under state law. There, Defendant-Appellees took the position 9 that the Foreclosure Action should be remanded because Debtor had already 10 transferred the Property to SCP and because Debtor was not a party to the removed 11 claims. ER at 445; 488. In its opposition to this Motion to Remand, Defendant- 12 Appellees assert that these facts are irrelevant to the question of jurisdiction. 13 Due to the nature of the Foreclosure Action, questions of who owned the 14 Property, when the Plan was confirmed, and whether Debtor was a party to the action 15 were relevant to the question of “related to” jurisdiction. Here, however, Plaintiff- 16 Appellant is seeking remand of this Action, which asks the bankruptcy court to 17 interpret unique mechanisms related to the Plan, the Intercreditor Agreement, the 18 Court Deed Option, and other agreements related to the Tower Park bankruptcy 19 proceeding. Resolution of Plaintiff-Appellant’s claims in this Action do not hinge on 20 the same facts and questions (e.g., who owns the Property) as the Foreclosure Action. 21 Thus, Defendant-Appellees’ positions are not so “clearly inconsistent” to be estopped. 22 Thus, Judge Russell did not abuse his discretion by not applying judicial estoppel to 23 the Motion to Remand in this Action. 24 4. Law of the Case 25 Plaintiff-Appellant also argues that Judge Russell abused his discretion when he 26 ignored the “law of the case” in granting the prior remand motions and denying this 27 one. AOB at 19. 28 1 Such a doctrine generally precludes a court from reconsidering an issue 2 previously decided by the same court, or a higher court, in the same case. Genesis Ins. 3 Co. v. Nat’l Union Fire Ins. Co., 783 F. App’x 683, 685 (9th Cir. 2019). For the 4 doctrine to apply, the issue must have been decided explicitly or by necessary 5 implication in the previous disposition. Id. 6 As discussed above, Defendant-Appellees’ motion to remand the Foreclosure 7 Action involved a state law claim for judicial foreclosure. This Action involves 8 Plaintiff-Appellant’s Right of Redemption, a right which arises from the Plan. The 9 question of whether the Right of Redemption exists was not explicitly or implicitly 10 decided in previous dispositions. Judge Russell did not abuse his discretion by not 11 applying the “law of the case” doctrine. 12 Accordingly, the bankruptcy court correctly denied Plaintiff-Appellant’s 13 Motion to Remand. Judge Russell’s ruling with respect to jurisdiction is therefore 14 AFFIRMED. 15 B. The Order Granting Defendant-Appellees’ Motion to Dismiss with 16 Prejudice is AFFIRMED 17 Next, Plaintiff-Appellant appeals the bankruptcy court’s dismissal with 18 prejudice of its claims against Defendant-Appellees for breach of contract and the 19 covenant of good faith and fair dealing. AOB at 24. 20 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the 21 legal sufficiency of the claims asserted in the complaint. The issue on a motion to 22 dismiss for failure to state a claim is not whether the claimant will ultimately prevail, 23 but whether the claimant is entitled to offer evidence to support the claims asserted. 24 Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997). Rule 12(b)(6) is 25 read in conjunction with Rule 8(a), which requires only a short and plain statement of 26 the claim showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). When 27 evaluating a Rule 12(b)(6) motion, the district court must accept all material 28 1 allegations in the complaint as true and construe them in the light most favorable to 2 the non-moving party. Moyo v. Gomez, 32 F.3d 1382, 1384 (9th Cir. 1994). 3 1. Breach of Contract 4 Plaintiff-Appellant argues that the bankruptcy court erroneously dismissed its 5 breach of contract claim because the bankruptcy court’s reading of the contract would 6 have made the Right of Redemption in the Intercreditor Agreement “illusory.” AOB 7 at 25. The Court disagrees and affirms the bankruptcy court. 8 The elements of a cause of action for breach of contract are: (1) the existence of 9 the contract; (2) performance by the plaintiff or excuse for nonperformance; (3) 10 breach by the defendant; and (4) damages. Neumayer v. Allstate Ins. Co., 2016 WL 11 4257691, at *2 (C.D. Cal. Aug. 9, 2016), aff’d, 765 F. App’x 321 (9th Cir. 2019) 12 (quoting Wall St. Network, Ltd. v. N.Y. Times Co., 164 Cal. App. 4th 1171, 1178 13 (2008)). A resolution of contractual claims on a motion to dismiss may be proper if 14 the terms of the contract are unambiguous, Monaco v. Bear Stearns Residential 15 Mortg. Corp., 554 F. Supp. 2d 1034, 1040 (C.D. Cal. 2008), but a motion to dismiss 16 should not be granted where the contract “leaves doubt as to the parties’ intent.” 17 Consul Ltd. v. Solide Enters., Inc., 802 F.2d 1143, 1149 (9th Cir.1986); see Westlands 18 Water Dist. v. U.S. Dep’t of Interior, 850 F. Supp. 1388, 1408 (E.D.Cal.1994). A 19 contract provision is ambiguous where it is capable of two or more reasonable 20 interpretations. Bay Cities Paving & Grading, Inc. v. Lawyers’ Mut. Ins. Co., 5 21 Cal.4th 854, 867, 21 Cal.Rptr.2d 691, 855 P.2d 1263 (1993). Mutual intention of the 22 parties at the time the contract is formed governs interpretation of the contract. Id. 23 That intent “is to be inferred, if possible, solely from the written provisions of the 24 contract,” and “reliance on the common understanding of language is bedrock.” Id.; 25 see Cal. Civ. Code §§ 1636, 1638, 1639. “[L]anguage in a contract must be construed 26 in the context of that instrument as a whole, and in the circumstances of that case, and 27 cannot be found to be ambiguous in the abstract.” Bank of the West v. Superior Court, 28 1 2 Cal.4th 1254, 1265, 10 Cal.Rptr.2d 538, 833 P.2d 545 (1992). See also Trustees of 2 So. Cal. IBEW v. Flores, 519 F.3d 1045, 1047 (9th Cir. 2008). 3 This Court agrees with the bankruptcy court that the terms of the Plan and the 4 Intercreditor Agreement are unambiguous with respect to the Right of Redemption. 5 ER at 59 at 31:14-16 (“[The Right of Redemption] just doesn’t exist because the -- 6 that [Court Deed] option was never exercised. It’s really that simple.”). The Plan and 7 Intercreditor Agreement are clear that the Right of Redemption applied only to 8 “collateral so conveyed pursuant to the Court Deed Option,” and that option was “in 9 addition to all other rights and remedies of [Defendant-Appellees] under the Exit Loan 10 Documents or at law or equity.” ER at 183-86 ER at 402; see also ER at 184. Thus, 11 by these express terms, LJCI had no Right of Redemption unless Defendant-Appellees 12 obtained relief under the Court Deed Option. ER at 183–84, 402. Defendant- 13 Appellees did not exercise the Court Deed Option; nor did the terms require them to 14 do so. ER at 183-86. By the plain terms of the Plan and the Intercreditor Agreement, 15 no Right of Redemption existed. Ergo, Plaintiff-Appellant is unable to allege breach 16 based on an entitlement to invoke such right. 17 Plaintiff-Appellant provides no alternative reading but states that this reading of 18 the Right of Redemption would render such right “illusory” and unenforceable given 19 an apparent lack of consideration. However, this Court agrees with the bankruptcy 20 court and Defendant-Appellees that there is indeed consideration. First, by agreeing 21 to the Right of Redemption formulation, LJCI did not “give up” its lien, but 22 subordinated its lien to the Exit Loan as part of the agreed Exit Financing. ER at 399. 23 Second, under the Plan and Intercreditor Agreement, Defendant-Appellees agreed to 24 provide up to $7 million in Exit Financing to pay off creditors, to allow for 25 improvements to the Property, and to pay LJCI $1 million as part of a settlement 26 agreement between Tower Park and LJCI. ER at 180, 398. Thus, the Plan and the 27 Intercreditor Agreement are supported by adequate consideration. 28 1 Additionally, Plaintiff-Appellant argues that even if a guaranteed right of 2 redemption is not express, an implied right is facially plausible. AOB at 28. 3 However, “plausible” is a higher standard than “possible” and nothing in the Plan, the 4 Confirmation Order, or the Intercreditor Agreement supports the conclusion that there 5 is an implied right of redemption irrespective of successful exercise of the Court Deed 6 Option. Implying a right of redemption no matter what remedy Defendant-Appellees 7 sought contradicts the express language of the Plan and Intercreditor Agreement. 8 Neither this Court nor the bankruptcy court can rewrite contracts to “add a nonexistent 9 contract term.” AdTrader, Inc. v. Google LLC, 2018 WL 3428525, at *11 (N.D. Cal. 10 2018). 11 Lastly, Plaintiff-Appellant argues that Judge Russell erroneously barred 12 statements made by Conrad Klein, one of the three former trustees of the Trust, to 13 Daren Barone of LJCI. See ER at 99 at ¶¶ 21–25. Such statements allegedly suggest 14 that the parties intended for a right of redemption irrespective of the Court Deed 15 Option’s exercise. AOB at 30. However, as stated above, there is no ambiguity in the 16 fully integrated Plan or Intercreditor Agreement with respect to the Right of 17 Redemption, and thus no basis to look beyond its text. In re Platinum Oil Props., 18 LLC, 465 B.R. 621, 647 (Bankr. D.N.M. 2011) (“Courts apply the parol evidence rule 19 to interpret a confirmed chapter 11 plan . . . .”); In re Victory Markets, Inc., 221 B.R. 20 298, 303 (B.A.P. 2d Cir. 1998) (“Unless some ambiguity is to be found within the 21 plan itself, the Court has no basis to look beyond its text.”). Judge Russell did not err 22 in barring these statements. 23 Accordingly, because no Right of Redemption existed after Defendant- 24 Appellees elected not to exercise the Court Deed Option, Plaintiff-Appellant cannot 25 state a breach of contract claim based on a theory that it was entitled to invoke such 26 right. Judge Russell did not err in dismissing Plaintiff-Appellant’s breach of contract 27 claim. 28 1 2. Breach of the Implied Duty of Good Faith and Fair Dealing 2 Lastly, Plaintiff-Appellant argues that the bankruptcy court was wrong that the 3 implied duty of good faith and fair dealing contradicts the Intercreditor Agreement. 4 AOB at 31. The Court disagrees and affirms the bankruptcy court. 5 Plaintiff-Appellant alleges that Defendant-Appellees “had an obligation to 6 pursue any default against [Tower Park] and any effort to recover the Property in a 7 manner that honored their promises and obligations to LJCI and its successors.” ER at 8 107 at ¶ 65. But as discussed, there is no basis for an implied right of redemption and 9 Defendant-Appellees had no obligation under the terms of either the Intercreditor 10 Agreement or the Plan to pursue the Court Deed Option in the event of a default. ER 11 at 185–86, 402. As noted by Plaintiff-Appellant, the covenant of good faith and fair 12 dealing will not be implied to vary the terms of an express, unambiguous contract 13 provision. Third Story Music, Inc. v. Waits, 41 Cal. App. 4th 798, 808 (1995). 14 The Court agrees with Defendant-Appellees that Plaintiff-Appellant is 15 attempting to use the covenant of implied good faith and fair dealing to impose duties 16 beyond, and in conflict with, those incorporated in the Intercreditor Agreement and 17 Plan. Judge Russell did not err in dismissing this claim.2 18 3. Leave to Amend 19 20 The bankruptcy court did not abuse its discretion when dismissing without 21 leave to amend Plaintiff-Appellant’s claims. The bankruptcy court’s decision was 22 based on a lengthy oral argument and comprehensive briefing, which Judge Russell 23

24 2 Judge Russell also dismissed Plaintiff-Appellant’s claims for promissory estoppel and declaratory relief. ER 27–28. Plaintiff-Appellant did not raise these claims in its 25 AOB or its Reply. Accordingly, Plaintiff-Appellant has waived any argument on 26 appeal that dismissal of its promissory estoppel and declaratory relief claims were erroneous. United States v. Kama, 394 F.3d 1236, 1238 (9th Cir. 2005) (“Generally, 27 an issue is waived when the appellant does not specifically and distinctly argue the 28 issue in his or her opening brief.”). | | read “several times.” ER at 37. Given the express, unambiguous terms discussed 2 | above, this Court cannot say that Judge Russell erred when he found that Plaintiff- 3 Appellant cannot offer any additional set of facts demonstrating that Defendant- 4 Appellees breached the Intercreditor Agreement, the Plan, or the implied covenant of 5 good faith and fair dealing. Thus, the denial of leave to amend as to Plaintiff- 6 Appellant’s claims was not based on an “erroneous view of the law or on clearly 7 | erroneous factual findings” and must be affirmed. See United States ex rel. Anita 8 Silingo v. WellPoint, Inc., 904 F.3d 667, 676 (9th Cir. 2018). 9 With respect to Plaintiff-Appellant’s desire to add an unjust enrichment claim to 10 | its Complaint, Plaintiff-Appellant did not assert such a claim or allege that Defendant- Appellees were unjustly enriched in its initial Complaint. Thus, Plaintiff-Appellant 12 may not make such a claim in its opposition to the Motion to Dismiss. See A.C.C.S. v. 13 | Nielsen, 2019 WL 7841860, at *7 (C.D. Cal. 2019) (“[P]laintiff’s statements in his 14 opposition brief cannot amend the Complaint.”’). 15 Accordingly, Judge Russell’s order dismissing Plaintiff-Appellant’s Complaint 16 | without leave to amend is AFFIRMED. IV. CONCLUSION For the foregoing reasons, the bankruptcy court’s Orders are AFFIRMED. IT IS SO ORDERED.

*1'! Dated: March 29, 2021 (nd — 22 HONORABLE ANDRE BIROTTE JR. 23 UNITED STATES DISTRICT COURT JUDGE CC: BK Court 25 26 27 28 17.