FILED MAY 29 2013
1 SUSAN M SPRAUL, CLERK
U.S. BKCY. APP. PANEL
2 OF THE NINTH CIRCUIT UNITED STATES BANKRUPTCY APPELLATE PANEL 3 OF THE NINTH CIRCUIT
4 5 In re: ) BAP No. AZ-12-1368-MkDJu )
6 PETER F. BRONSON AND SHERRI L. ) Bk. No. 08-00777 BRONSON, )
7 )
Debtors. )
8 _______________________________)
)
9 PETER F. BRONSON; SHERRI L. )
BRONSON, )
10 )
Appellants, )
11 )
v. ) MEMORANDUM* 12 )
THOMAS M. THOMPSON, )
13 )
Appellee. )
14 _______________________________) 15 Submitted Without Oral Argument on May 16, 2013
16 Filed – May 29, 2013
17 Appeal from the United States Bankruptcy Court 18 for the District of Arizona 19 Honorable George B. Nielsen, Jr., Bankruptcy Judge, Presiding 20 Appearances: Appellants Peter Bronson and Sherri Bronson on 21 brief pro se; Jimmie D. Smith on brief for appellee Thomas M. Thompson.
22 23 Before: MARKELL, DUNN and JURY, Bankruptcy Judges.
24 25 26 * This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8013-1.
1 INTRODUCTION 2 In August 2008, the bankruptcy court entered an order for 3 relief from the automatic stay (“Relief From Stay Order”) 4 permitting appellee Thomas Thompson (“TMT”) to foreclose on an 5 office building (“Office Building”) located in Miami, Arizona 6 owned by debtors and appellants Peter and Sherri Bronson 7 (“Bronsons”). By its terms, the Relief From Stay Order provided 8 that foreclosure could proceed on and after November 19, 2008, if 9 the Bronsons had not confirmed a chapter 111 plan by that date. 10 No plan was confirmed, and TMT succeeded in foreclosing on the 11 property in July 2009. Almost three years later, in May 2012, 12 the Bronsons filed a motion pursuant to Civil Rule 60(b) seeking 13 reconsideration of the Relief From Stay Order (“Reconsideration 14 Motion”). The bankruptcy court denied the Reconsideration 15 Motion, and the Bronsons appealed. We DISMISS this appeal as 16 moot. 17 FACTS 18 This is the third of three appeals that the Bronsons have 19 pursued before the Panel. The first, filed on February 1, 2012 20 (“BAP No. AZ-12-1058"), arose from an adversary proceeding that 21 was not fully disposed of by the order appealed and that was 22 still pending in the bankruptcy court during the course of the 23 appeal. We dismissed BAP No. AZ-12-1058 as interlocutory by 24 order entered on August 29, 2012. 25
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26 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and 27 all “Rule” references are to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. All “Civil Rule” references are to 28 the Federal Rules of Civil Procedure.
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1 The second appeal, filed on June 15, 2012 (“BAP No. AZ-12- 2 1320"), sought review of two orders: (1) an order converting the 3 Bronsons’ chapter 11 case to chapter 7, and (2) an order denying 4 reconsideration of the conversion order. We are disposing of BAP 5 No. AZ-12-1320 by a separate written decision issued 6 contemporaneously with this decision. The decision disposing of 7 BAP No. AZ-12-1320 contains a lengthy recitation of facts 8 concerning the Bronsons’ disputes with TMT. Accordingly, we only 9 recite here those facts that are directly relevant to our 10 disposition of this third appeal. 11 TMT was a secured creditor of the Bronsons. The Bronsons 12 defaulted on the loan they owed to TMT, so TMT commenced 13 foreclosure proceedings against the Office Building, which 14 secured the loan. In furtherance thereof, TMT recorded in 15 October 2007 a notice of trustee’s sale. 16 On January 28, 2008, the day before the scheduled trustee’s 17 sale, the Bronsons filed their chapter 11 bankruptcy petition.2 18 As a result of the automatic stay, the trustee’s sale could not 19 be held as scheduled. On July 2, 2008, TMT filed a motion for 20 relief from stay, seeking to proceed with foreclosure against the 21 Office Building. TMT noticed the “final hearing” on the relief 22 from stay motion for August 19, 2008. The Bronsons, who were 23 represented by counsel at the time, filed an opposition to the 24 relief from stay motion, but never requested an evidentiary 25 26 2 In April 2012, the court converted the Bronsons’ chapter 11 27 case to chapter 7. The conversion order, and the denial of reconsideration of the conversion order, are the subject of BAP 28 No. AZ-12-1320.
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1 hearing in accordance with the bankruptcy court’s local rules.3 2 At the final hearing, the bankruptcy court orally announced its 3 finding that cause existed for modifying the stay. According to 4 the court, it was not persuaded that TMT’s interest in the Office 5 Building was adequately protected. With respect to the value of 6
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7 Those local rules provide in relevant part:
8 (a) Initial Hearing without Live Testimony. Pursuant to Bankruptcy Rule 9014(e), all hearings scheduled on 9 contested matters will be conducted without live testimony except as otherwise ordered by the court.
10 If, at such hearing, the court determines that there is 11 a material factual dispute, the court will schedule a continued hearing at which live testimony will be 12 admitted. 13 (b) Request for Live Testimony. 14 (1) Any party filing a motion, application, or 15 objection who reasonably anticipates that its resolution will require live testimony may file an 16 accompanying motion for an evidentiary hearing, stating:
17 18 (A) The estimated time required for receipt of all evidence, including live testimony;
19 (B) When the parties will be ready to present such 20 evidence; 21 (C) The estimated time required to complete all 22 formal and informal discovery;
23 (D) Whether a Bankruptcy Rule 7016 Scheduling Conference should be held; and, 24 25 (E) Whether any party who may participate at the evidentiary hearing is appearing pro se.
26 (2) The party requesting an evidentiary hearing shall 27 accompany the motion with a form of order. 28 Bankr. D. Ariz. R. 9014-2.
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1 the Office Building, the court acknowledged that the Bronsons had 2 listed the value of the Office Building in their schedules as 3 exceeding $1 million, but the court expressed doubt regarding the 4 scheduled value and opined that the scheduled value by itself was 5 not sufficient under the circumstances to satisfy the adequate 6 protection requirement. The court expressed particular concern 7 over rents from the property and the fact that nothing was being 8 paid either to secured creditors or for property taxes: 9 I’m concerned about a piece of property sitting there with no money to secured creditors, no money to pay for 10 taxes, and yet it throws off income [of $1,000 per month].
11 12 Hr’g Tr. (Aug. 19, 2008) at 24:15-17. 13 Nonetheless, the court further ruled that it did not want to 14 immediately terminate the stay. Instead, it wanted to give the 15 Bronsons a further opportunity to confirm a chapter 11 plan 16 and/or to sell or refinance the Office Building. Thus, the court 17 ruled that the stay would remain in effect, unless by November 18 19, 2008, the Bronsons had not confirmed a chapter 11 plan, at 19 which point the stay would be modified to permit TMT to foreclose 20 on the Office Building. 21 On August 22, 2008, the bankruptcy court entered the Relief 22 From Stay Order, which was consistent with the court’s oral 23 ruling. The Bronsons never appealed the Relief From Stay Order. 24 Nor did they ever confirm a chapter 11 plan. TMT ultimately 25 proceeded with the foreclosure sale on July 13, 2009, at which 26 TMT was the successful bidder based on a credit bid of $200,000.
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1 A trustee’s deed was recorded on July 17, 2009.4 2 The Bronsons did not file their Reconsideration Motion of 3 the Relief From Stay Order until May 24, 2012. By the time of 4 the filing of their Reconsideration Motion, the Bronsons were 5 representing themselves in their bankruptcy case. The 6 Reconsideration Motion sought relief based on Civil 7 Rule 60(b)(2), (3) and (6). While the Bronsons’ allegations were 8 wide ranging, the Reconsideration Motion hinged on the Bronsons’ 9 contention that TMT wrongfully failed to disclose certain facts 10 concerning TMT's foreclosure and subsequent resale of a parcel of 11 commercial real property located on Broad Street in Globe, 12 Arizona ("Broad Property"). According to the Bronsons, TMT 13 purchased the Broad Property in June 2008 at a foreclosure sale 14 for a credit bid of $384,000 and resold the Broad Property to a 15 third party in 2009 for $420,000 ("Broad Sale"). The Bronsons 16 contend that the the Broad Sale established the value of the 17 Broad Property, which in turn established the value of the Office 18 Building, by "extrapolation." Therefore, the Bronsons concluded, 19 TMT and his counsel should have disclosed the Broad Property and 20 its sale during the course of the relief from stay proceedings.5 21
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22 While the Bronsons have represented themselves in this appeal, they were represented by counsel during the entire period 23 of the events described above, from the time they filed bankruptcy through the time TMT foreclosed on the Office 24 Building.
25 5 The Bronsons twice claim in their opening brief that they 26 first learned about the Broad Property on or after May 24, 2011.
Aplt. Opn. Br. at pp. 3, 22. This claim is patently false. The 27 Bronsons asserted in November 2009, in their motion to dismiss TMT’s adversary complaint seeking a deficiency, that the Broad 28 (continued...)
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1 On July 10, 2012, the bankruptcy court entered an order 2 denying the Reconsideration Motion, in essence holding that the 3 Bronsons were not entitled to relief because their motion was 4 untimely and because they had not established adequate grounds 5 for relief under Civil Rule 60(b)(2), (3) or (6). The Bronsons 6 timely filed a notice of appeal from the Order denying their 7 Reconsideration Motion on July 16, 2012.6 8 JURISDICTION 9 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 10 §§ 1334 and 157(b)(2)(G). Subject to the mootness discussion set 11 forth below, we have jurisdiction under 28 U.S.C. § 158. 12 ISSUE 13 Is this appeal moot? 14 STANDARD OF REVIEW 15 We have an independent duty to determine whether an appeal 16 is moot within the meaning of Article III’s case or controversy 17 requirement, and the mootness issue is considered de novo. See 18 U.S. v. Golden Valley Elec. Ass'n, 689 F.3d 1108, 1112 (9th Cir. 19 20 5 (...continued)
21 Sale for $420,000 established that TMT was not entitled to any deficiency.
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Prior to entering the July 10, 2012 order, the bankruptcy 23 court entered on June 27, 2012 what it referred to as an “interim order” denying the Reconsideration Motion (“Interim Order”). If 24 the Interim Order qualified as a final and appealable order, then 25 the Bronsons’ appeal of the denial of the reconsideration motion would be untimely. See Slimick v. Silva (In re Slimick), 26 928 F.2d 304, 306-07 (9th Cir. 1990). However, we do not consider the Interim Order to be a final and appealable order, 27 because it is clear from the language of the Interim Order that the court did not intend that order to be its “final act in the 28 matter.” Id.
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1 2012); Hunt v. Imperial Merchant Servs., Inc., 560 F.3d 1137, 2 1141 (9th Cir. 2009). 3 DISCUSSION 4 As a threshold matter, we note that the only ruling properly 5 before this Panel is the denial of the Bronsons’ Reconsideration 6 Motion. All other matters the Bronsons have raised are beyond 7 the scope of this appeal, including but not limited to TMT’s 8 adversary proceeding seeking a deficiency judgment, the Bronsons’ 9 plan confirmation proceedings, and TMT’s motion to convert the 10 case from chapter 11 to chapter 7. The Relief From Stay Order, 11 entered on August 22, 2008, also is beyond the scope of this 12 appeal. If the Bronsons desired to appeal that order, they 13 should have timely filed an appeal from it no later than 14 September 2008. See Rule 8002; see also United Student Aid 15 Funds, Inc. v. Espinosa, 130 S.Ct. 1367, 1380 (2010) (holding 16 that bankruptcy court’s erroneous order nonetheless was binding 17 and enforceable against appellant because appellant had notice of 18 the proceedings but did not appeal that order). 19 We also should note the scope of relief that we may grant to 20 an appellant who prevails on appeal. Under Rule 8013, if the 21 Bronsons were to prevail, we could reverse or modify the order on 22 appeal, and we could remand for further proceedings consistent 23 with our determination as to whether the bankruptcy court erred 24 in entering the order appealed. 25 Here, however, the Bronsons ask us to do much more than 26 merely determine whether the court erred in denying the 27 Reconsideration Motion. The Bronsons also request the following 28 additional relief: (1) unwinding of the trustee’s sale of the
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1 Office Building that took place in July 2009; (2) return of 2 ownership of the Office Building to the Bronsons; 3 (3) reconversion of their bankruptcy case to chapter 11; 4 (4) reversal of all other rulings of the bankruptcy court since 5 June 2008; (5) a determination that TMT and his counsel are 6 guilty of misconduct; (6) direction to the bankruptcy court to 7 hold evidentiary hearings to determine whether sanctions against 8 TMT and his counsel are appropriate under Civil Rules 11 and 37; 9 (7) compulsion of TMT and his counsel to respond to the Bronsons’ 10 subpoenas and other discovery requests; (8) award of all of the 11 Bronsons’ attorney’s fees and costs; and (9) direction to the 12 Ninth Circuit Court of Appeals to conduct a judicial misconduct 13 investigation of the bankruptcy judge presiding over their 14 bankruptcy case. 15 The Bronsons have not pointed us to any authority that would 16 permit us, by virtue of this appeal, to grant such relief. Nor 17 are we aware of any such authority. Simply put, our role in this 18 appeal necessarily is limited to review of the order denying the 19 Bronsons’ Reconsideration Motion. But we may not fulfill even 20 that limited role unless this appeal presents a live case or 21 controversy, as discussed immediately below. 22 Even if we were to reverse the order on appeal and direct 23 full reinstatement of the automatic stay, the reinstatement of 24 the automatic stay would not prevent TMT from foreclosing. That 25 foreclosure occurred some years ago, in July 2009. In other 26 words, the action the Bronsons wanted to enjoin – the foreclosure 27 of the Office Building – already has occurred. This calls into 28 question whether this appeal presents a live case or controversy.
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1 See Murphy v. Hunt, 455 U.S. 478, 481 (1982). This type of 2 mootness is jurisdictional and arises from Article III of the 3 Constitution, which provides that a dispute is not justiciable in 4 federal court unless it presents a live case or controversy. See 5 Arizonans for Official English v. Ariz., 520 U.S. 43, 66-67 6 (1997). As the Supreme Court stated in Arizonans for Official 7 English: “To qualify as a case fit for federal-court 8 adjudication, ‘an actual controversy must be extant at all stages 9 of review, not merely at the time the complaint is filed.’” Id. 10 at 67 (quoting Preiser v. Newkirk, 422 U.S. 395, 401 (1975)). 11 When the action sought to be enjoined already has occurred, 12 an appeal from the denial or the discontinuance of injunctive 13 relief becomes constitutionally moot. See, e.g., Vegas Diamond 14 Props., LLC v. FDIC, 669 F.3d 933, 936 (9th Cir. 2012); 15 In Defense of Animals v. Dep’t of Interior, 648 F.3d 1012, 1013 16 (9th Cir. 2011); Ctr. for Biological Diversity v. Lohn, 511 F.3d 17 960, 963-64 (9th Cir. 2007); Seven Words LLC v. Network 18 Solutions, 260 F.3d 1089, 1095 (9th Cir. 2001); Friends of the 19 Earth, Inc. v. Bergland, 576 F.2d 1377, 1379 (9th Cir. 1978). 20 We acknowledge that, when the order on appeal authorizes a 21 sale of real property, we have invoked a different mootness 22 doctrine – bankruptcy sale mootness – in declaring an appeal from 23 the sale order moot. See Vista Del Mar Assocs., Inc. v. W. Coast 24 Land Fund (In re Vista Del Mar Assocs., Inc.), 181 B.R. 422, 425 25 (9th Cir. BAP 1995). This mootness doctrine focuses on the 26 “particular need” for the finality of bankruptcy sale orders, and 27 it applies whenever the appellant fails to obtain a stay pending 28 appeal and the sale is consummated. See id. at 424. Vista Del
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1 Mar Assocs. recognized two exceptions to bankruptcy sale 2 mootness: “(1) where the debtor has a statutory right of 3 redemption, and (2) where other state law would permit the sale 4 to be set aside.” Id. at 425 (citing Ewell v. Diebert 5 (In re Ewell), 958 F.2d 276, 280 (9th Cir. 1992)). We tend to 6 doubt that the exceptions to bankruptcy sale mootness apply in 7 the context of an appeal from an order denying or discontinuing 8 an injunction, when the act sought to be enjoined already has 9 occurred. See Vegas Diamond, 669 F.3d at 936 (fact that sale 10 might be subject to unwinding did not prevent appeal of order 11 denying preliminary injunction from becoming moot when the sale 12 sought to be enjoined already had occurred). 13 However, even if we were to consider the bankruptcy sale 14 mootness exceptions, these exceptions would not help the Bronsons 15 here. Under the facts of this case, Arizona law does not give 16 the Bronsons either a right of redemption or the right to unwind 17 the sale. Indeed, Arizona law explicitly provides that the 18 foreclosure sale itself cut off any such rights that the Bronsons 19 otherwise might have asserted. See A.R.S. § 33-811(C) and (E); 20 see also T Capital, LLC v. TD Serv. Co. of Ariz., 275 P.3d 598, 21 600 (Ariz. 2012); Madison v. Groseth, 279 P.3d 633, 637-38 (Ariz. 22 Ct. App. 2012). 23 In sum, we cannot grant any effective relief to the 24 Bronsons. Even if they were to prevail on appeal, and even if we 25 were to remand for reconsideration of the Relief From Stay Order, 26 the act the Bronsons sought to prevent by invocation of the stay, 27 the foreclosure of the Office Building, already has occurred. 28 And we know of no authority that would enable the Bronsons to
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1 unwind that sale. 2 CONCLUSION 3 For the reasons set forth above, we DISMISS this appeal as 4 moot.7 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
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Even if we were to reach the merits of this appeal, we 22 would be inclined to affirm. The Bronsons’ requests for relief under Civil Rule 60(b)(2), (3) and (6) were untimely and hinged 23 upon their contention that TMT had some sort of duty to disclose 24 the particulars concerning the Broad Property. We know of no such duty. Any reliance of the Bronsons on Civil Rule 26(a) is 25 misplaced. It does not apply in contested matters, which include relief from stay motions. See Rule 9014(c). Moreover, just 26 because the Bronsons believed that the Broad Property was comparable to the Office Building does not necessarily make it so 27 for valuation and disclosure purposes. Thus, we are not 28 persuaded that the bankruptcy court erred in denying the Bronsons’ Reconsideration Motion.